Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 28, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | Peoples Bancorp of North Carolina, Inc. | ||
Entity Central Index Key | 0001093672 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 5,637,021 | ||
Entity Public Float | $ 125,528,065 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-27205 | ||
Entity Incorporation State Country Code | NC | ||
Entity Tax Identification Number | 56-2132396 | ||
Entity Address Address Line 1 | 518 West C Street | ||
Entity Address City Or Town | Newton | ||
Entity Address State Or Province | NC | ||
Entity Address Postal Zip Code | 28658 | ||
City Area Code | 828 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Elliott Davis, PLLC | ||
Auditor Location | Raleigh, North Carolina | ||
Auditor Firm Id | 149 | ||
Local Phone Number | 464-5620 | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Cash and due from banks, including reserve requirements of $0 at both 12/31/22 and 12/31/21 | $ 50,061 | $ 44,711 |
Interest-bearing deposits | 21,535 | 232,788 |
Cash and cash equivalents | 71,596 | 277,499 |
Investment securities available for sale | 445,394 | 406,549 |
Other investments | 2,656 | 3,668 |
Total securities | 448,050 | 410,217 |
Mortgage loans held for sale | 211 | 3,637 |
Loans | 1,032,608 | 884,869 |
Less allowance for loan losses | (10,494) | (9,355) |
Net loans | 1,022,114 | 875,514 |
Premises and equipment, net | 18,205 | 16,104 |
Cash surrender value of life insurance | 17,703 | 17,365 |
Right of use lease asset | 5,116 | 4,612 |
Accrued interest receivable and other assets | 37,932 | 19,245 |
Total assets | 1,620,927 | 1,624,193 |
Deposits: | ||
Noninterest-bearing demand | 523,088 | 514,319 |
Interest-bearing demand, MMDA & savings | 814,128 | 797,179 |
Time, $250,000 or more | 31,001 | 26,333 |
Other time | 66,998 | 74,917 |
Total deposits | 1,435,215 | 1,412,748 |
Securities sold under agreements to repurchase | 47,688 | 37,094 |
Junior subordinated debentures | 15,464 | 15,464 |
Lease liability | 5,185 | 4,677 |
Accrued interest payable and other liabilities | 12,180 | 11,841 |
Total liabilities | 1,515,732 | 1,481,824 |
Shareholders' equity: | ||
Preferred stock, no par value; authorized 5,000,000 shares; no shares issued and outstanding | 0 | 0 |
Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,636,830 shares at December 31, 2022 and 5,661,569 shares at December 31, 2021 | 52,636 | 53,305 |
Common stock held by deferred compensation trust, at cost; 169,004 shares at December 31, 2022 and 162,193 shares at December 31, 2021 | (2,181) | (1,992) |
Deferred compensation | 2,181 | 1,992 |
Retained earnings | 100,156 | 88,968 |
Accumulated other comprehensive income (loss) | (47,597) | 96 |
Total shareholders' equity | 105,195 | 142,369 |
Total liabilities and shareholders' equity | $ 1,620,927 | $ 1,624,193 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks, reserve requirements | $ 0 | $ 0 |
Liabilities and Shareholders' Equity | ||
Time | $ 250,000,000 | $ 0 |
Shareholders' equity: | ||
Preferred stock, stated value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 5,000,000,000 | 5,000,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 20,000,000,000 | 20,000,000,000 |
Common stock, shares issued (in shares) | 5,636,830,000 | 5,661,569,000 |
Common stock, shares outstanding (in shares) | 5,636,830,000 | 5,661,569,000 |
Common Stock Held By Deferred Compensation Trust | 169,004,000 | 162,193,000 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest income: | |||
Interest and fees on loans | $ 43,077,000 | $ 41,186,000 | $ 42,314,000 |
Interest on due from banks | 2,223,000 | 258,000 | 127,000 |
Interest on federal funds sold | 204,000 | ||
Interest on investment securities: | |||
U.S. Government sponsored enterprises | 4,962,000 | 2,478,000 | 2,361,000 |
States and political subdivisions | 4,075,000 | 3,146,000 | 2,691,000 |
Other | 94,000 | 111,000 | 261,000 |
Total interest income | 54,431,000 | 47,179,000 | 47,958,000 |
Interest expense: | |||
Demand deposits, MMDA & savings deposits | 2,019,000 | 2,029,000 | 1,962,000 |
Time deposits | 562,000 | 752,000 | 947,000 |
FHLB borrowings | 357,000 | ||
Junior subordinated debentures | 529,000 | 280,000 | 370,000 |
Other | 213,000 | 144,000 | 200,000 |
Total interest expense | 3,323,000 | 3,205,000 | 3,836,000 |
Net interest income | 51,108,000 | 43,974,000 | 44,122,000 |
Provision for (recovery of) loan losses | 1,472,000 | (1,163,000) | 4,259,000 |
Net interest income after provision for loan losses | 49,636,000 | 45,137,000 | 39,863,000 |
Non-interest income: | |||
Service charges | 5,290,000 | 3,921,000 | 3,528,000 |
Other service charges and fees | 734,000 | 803,000 | 742,000 |
Gain on sale of securities | 2,639,000 | ||
Mortgage banking income | 393,000 | 2,505,000 | 2,469,000 |
Insurance and brokerage commissions | 945,000 | 1,035,000 | 897,000 |
Appraisal management fee income | 11,663,000 | 8,890,000 | 6,754,000 |
Gain (loss) on sale of premises and equipment | (85,000) | 105,000 | 0 |
Gain (loss) on sales and write-downs of other real estate, net | 21,000 | (47,000) | |
Miscellaneous | 7,749,000 | 7,639,000 | 5,932,000 |
Total non-interest income | 26,689,000 | 24,919,000 | 22,914,000 |
Non-interest expense: | |||
Salaries and employee benefits | 26,130,000 | 24,506,000 | 23,538,000 |
Occupancy | 8,048,000 | 7,858,000 | 7,933,000 |
Professional fees | 1,915,000 | 1,826,000 | 1,580,000 |
Advertising | 693,000 | 536,000 | 787,000 |
Debit card expense | 1,224,000 | 1,000,000 | 1,012,000 |
FDIC insurance | 461,000 | 415,000 | 263,000 |
Appraisal management fee expense | 9,264,000 | 7,112,000 | 5,274,000 |
Other | 8,295,000 | 7,874,000 | 8,544,000 |
Total non-interest expense | 56,030,000 | 51,127,000 | 48,931,000 |
Earnings before income taxes | 20,295,000 | 18,929,000 | 13,846,000 |
Income tax expense | 4,172,000 | 3,796,000 | 2,489,000 |
Net earnings | $ 16,123,000 | $ 15,133,000 | $ 11,357,000 |
Basic net earnings per share | $ 2.94 | $ 2.71 | $ 2.01 |
Diluted net earnings per share | 2.85 | 2.63 | 1.95 |
Cash dividends declared per share | $ 0.87 | $ 0.66 | $ 0.75 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | $ 16,123 | $ 15,133 | $ 11,357 |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) on securities available for sale | 61,919 | 6,886 | 4,919 |
Reclassification adjustment for gains on securities available for sale included in net earnings | (2,639) | ||
Total other comprehensive income (loss), before income taxes | (61,919) | (6,886) | 2,280 |
Income tax expense (benefit) related to other comprehensive income (loss): | |||
Unrealized holding gain (losses) on securities available for sale | (14,226) | (1,582) | 1,130 |
Reclassification adjustment for gains on securities available for sale included in net earnings | (606) | ||
Total income tax expense (benefit) related to other comprehensive income (loss) | (14,226) | (1,582) | 524 |
Total other comprehensive income (loss), net of tax | (47,693) | (5,304) | 1,756 |
Total comprehensive income (loss) | $ (31,570) | $ 9,829 | $ 13,113 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Retained Earnings (Accumulated Deficit) | Deferred Compensation | Common Stock Held By Deferred Compensation Trust | Accumulated other comprehensive loss |
Balance, shares at Dec. 31, 2019 | 5,912,300 | |||||
Balance, amount at Dec. 31, 2019 | $ 134,120 | $ 59,813 | $ 70,663 | $ 1,588 | $ (1,588) | $ 3,644 |
Common stock repurchase, shares | (126,800) | |||||
Common stock repurchase, amount | (2,999) | $ (2,999) | 0 | 0 | 0 | 0 |
Cash dividends declared on common stock | (4,392) | $ 0 | (4,392) | 0 | 0 | 0 |
Restricted stock units exercised, shares | 2,004 | |||||
Restricted stock units exercised, amount | 57 | $ 57 | 0 | 0 | 0 | 0 |
Equity incentive plan, net | 0 | 0 | 0 | 208 | (208) | 0 |
Net earnings | 11,357 | 0 | 11,357 | 0 | 0 | 0 |
Change in accumulated other comprehensive income, net of tax | 1,756 | $ 0 | 0 | 0 | 0 | 1,756 |
Balance, shares at Dec. 31, 2020 | 5,787,504 | |||||
Balance, amount at Dec. 31, 2020 | 139,899 | $ 56,871 | 77,628 | 1,796 | (1,796) | 5,400 |
Common stock repurchase, shares | (127,597) | |||||
Common stock repurchase, amount | (3,605) | $ (3,605) | 0 | 0 | 0 | 0 |
Cash dividends declared on common stock | (3,793) | $ 0 | (3,793) | 0 | ||
Restricted stock units exercised, shares | 1,662 | |||||
Restricted stock units exercised, amount | 39 | $ 39 | 0 | 0 | 0 | 0 |
Equity incentive plan, net | 0 | 0 | 0 | 196 | (196) | 0 |
Net earnings | 15,133 | 0 | 15,133 | 0 | 0 | 0 |
Change in accumulated other comprehensive income, net of tax | (5,304) | $ 0 | 0 | 0 | 0 | (5,304) |
Balance, shares at Dec. 31, 2021 | 5,661,569 | |||||
Balance, amount at Dec. 31, 2021 | 142,369 | $ 53,305 | 88,968 | 1,992 | (1,992) | 96 |
Common stock repurchase, shares | (26,200) | |||||
Common stock repurchase, amount | (710) | $ (710) | 0 | 0 | 0 | 0 |
Cash dividends declared on common stock | (4,935) | $ 0 | (4,935) | 0 | ||
Restricted stock units exercised, shares | 1,461 | |||||
Restricted stock units exercised, amount | 41 | $ 41 | 0 | 0 | 0 | 0 |
Equity incentive plan, net | 0 | 0 | 0 | 189 | (189) | 0 |
Net earnings | 16,123 | 0 | 16,123 | 0 | 0 | 0 |
Change in accumulated other comprehensive income, net of tax | (47,693) | $ 0 | 0 | 0 | 0 | (47,693) |
Balance, shares at Dec. 31, 2022 | 5,636,830 | |||||
Balance, amount at Dec. 31, 2022 | $ 105,195 | $ 52,636 | $ 100,156 | $ 2,181 | $ (2,181) | $ (47,597) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net earnings | $ 16,123 | $ 15,133 | $ 11,357 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation, amortization and accretion | 6,031 | 5,569 | 4,183 |
Provision for (recovery of) loan losses | 1,472 | (1,163) | 4,259 |
Deferred income taxes | (541) | (227) | (560) |
Gain on sale of investment securities | 0 | 0 | (2,639) |
Gain on sale of other real estate | 0 | (21) | 0 |
Write-down of other real estate | 0 | 0 | 47 |
(Gain) loss on sale and writedowns of premises and equipment | 85 | (105) | 0 |
Restricted stock units expense | 249 | 181 | 27 |
Proceeds from sales of loans held for sale | 22,659 | 98,365 | 112,426 |
Origination of loans held for sale | (19,233) | (92,863) | (117,148) |
Change in: | |||
Cash surrender value of life insurance | (403) | (397) | (380) |
Right of use lease asset | 1,677 | 738 | 199 |
Other assets | (3,920) | (554) | (596) |
Lease liability | (1,673) | (721) | (176) |
Other liabilities | 131 | 2,965 | (1,837) |
Net cash provided by operating activities | 22,657 | 26,900 | 9,162 |
Cash flows from investing activities: | |||
Purchases of investment securities available for sale | (149,738) | (209,306) | (127,893) |
Proceeds from sales, calls and maturities of investment securities available for sale | 7,875 | 9,540 | 62,408 |
Proceeds from paydowns of investment securities available for sale | 37,400 | 28,536 | 19,169 |
Purchases of other investments | 0 | 0 | (45) |
Proceeds from paydowns of other investment securities | 1,162 | 201 | 176 |
Net change in FHLB stock | (105) | 331 | (55) |
Net change in loans | (148,072) | 64,380 | (99,971) |
Purchases of premises and equipment | (4,563) | (484) | (2,492) |
Purchases of bank owned life insurance | 0 | 0 | (269) |
Proceeds from sale of premises and equipment | 0 | 515 | 0 |
Proceeds from sale of other real estate and repossessions | 0 | 149 | |
Proceeds from bank owned life insurance | 65 | 0 | 0 |
Net cash used by investing activities | (255,976) | (106,138) | (148,972) |
Cash flows from financing activities: | |||
Net change in deposits | 22,467 | 191,662 | 254,569 |
Net change in securities sold under agreement to repurchase | 10,594 | 10,893 | 1,980 |
Proceeds from FHLB borrowings | 0 | 0 | 70,000 |
Repayments of FHLB borrowings | 0 | 0 | (70,000) |
Proceeds from FRB borrowings | 1 | 1 | 1 |
Repayments of FRB borrowings | (1) | (1) | (1) |
Proceeds from Fed Funds Purchased | 162 | 162 | 7,011 |
Repayments of Fed Funds Purchased | (162) | (162) | (7,011) |
Repayments of Junior Subordinated Debentures | (155) | ||
Common stock repurchased | (710) | (3,605) | (2,999) |
Cash dividends paid on common stock | (4,935) | (3,793) | (4,392) |
Net cash provided by financing activities | 27,416 | 195,157 | 249,003 |
Net change in cash and cash equivalents | (205,903) | 115,919 | 109,193 |
Cash and cash equivalents at beginning of period | 277,499 | 161,580 | 52,387 |
Cash and cash equivalents at end of period | 71,596 | 277,499 | 161,580 |
Cash paid during the year for: | |||
Interest | 3,284 | 3,224 | 3,856 |
Income taxes | 4,659 | 3,669 | 2,781 |
Noncash investing and financing activities: | |||
Change in unrealized gain (loss) on investment securities available for sale, net | (47,693) | (5,304) | 1,756 |
Transfer of loans to other real estate | 0 | 0 | 175 |
Issuance of accrued restricted stock units | 41 | 39 | 57 |
Initial recognition of lease right of use asset and lease liability | $ 2,181 | $ 1,927 | $ 942 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies Organization Peoples Bancorp of North Carolina, Inc. (the “Company”) has served as the holding company to Peoples Bank (the “Bank”) since 1999. The Company is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for the Bank. The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina Commissioner of Banks (the “Commissioner”). The Bank is primarily regulated by the Commissioner and the Federal Deposit Insurance Corporation (the “FDIC”) and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake counties in North Carolina. Peoples Investment Services, Inc. (“PIS”) is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. Real Estate Advisory Services, Inc. (“REAS”) is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. Community Bank Real Estate Solutions, LLC (“CBRES”) is a wholly owned subsidiary of the Bank and began operations in 2009 as a “clearing house” for appraisal services for community banks. Other banks are able to contract with CBRES to find and engage appropriate appraisal companies. In 2019, the Company launched PB Insurance Agency, which operated as a division of CBRES, until it was discontinued in 2022. PB Real Estate Holdings, LLC (“PBREH”) is a wholly owned subsidiary of the Bank and began operation in 2015. PBREH acquires, manages and disposes of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. The Bank operates three banking offices focused on the Latino population that were formerly operated as a division of the Bank under the name Banco de la Gente (“Banco”). These offices, which offer the same banking services as our other branches offer, now operate under the same name as our other offices; however, we continue to separately categorize mortgage loans originated from these offices. Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary, the Bank, along with the Bank’s wholly owned subsidiaries, PIS, REAS, CBRES and PBREH. All significant intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“GAAP”) and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans. Business Segments Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Management has determined that the Company has two significant operating segment: Banking Operations and CBRES, as discussed more fully in Note 16. In determining the appropriateness of segment definition, the Company considers the criteria of ASC 280, Segment Reporting. Cash and Cash Equivalents Cash, due from banks, interest-bearing deposits and federal funds sold are considered cash and cash equivalents for cash flow reporting purposes. Investment Securities The Company uses three classifications for its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2022 and 2021, the Company classified all of its investment securities as available for sale. Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized. Management evaluates investment securities for other-than-temporary impairment on a quarterly basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold. Other Investments Other investments include equity securities with no readily determinable fair value. These investments are carried at cost. Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings. Allowance for Loan Losses The allowance for loan losses (“ALLL” or “allowance”) reflects management’s assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: · the Bank’s loan loss experience; · the amount of past due and non-performing loans; · specific known risks; · the status and amount of other past due and non-performing assets; · underlying estimated values of collateral securing loans; · current and anticipated economic conditions; and · other factors which management believes affect the allowance for potential credit losses. Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank’s originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan’s performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank’s Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank’s Credit Administration. Any issues regarding the risk assessments are addressed by the Bank’s senior credit administrators and factored into management’s decision to originate or renew the loan. The Bank’s Board of Directors reviews, on a monthly basis, an analysis of the Bank’s reserves relative to the range of reserves estimated by the Bank’s Credit Administration. As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than or equal to $1.5 million as well as a periodic sample of commercial relationships with exposures below $1.5 million, excluding loans in default, and loans in process of litigation or liquidation. The third party’s evaluation and report is shared with management and the Board of Directors of the Bank (“Bank Board”). Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance. The provision for loan losses charged or credited to earnings is based upon management’s judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management’s assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance. The allowance is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management’s current evaluation of the Bank’s loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four, or five years’ loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. Qualitative factors applied in the Bank’s ALLL model include the impact to the economy from the COVID-19 pandemic and reserves on loans with payment modifications as a result of the COVID-19 pandemic. There were no loans with existing modifications as a result of the COVID-19 pandemic at December 31, 2022 and 2021. At December 31, 2022 and 2021, the Bank maintained a pool of loans that were previously modified as a result of the COVID-19 pandemic. The loan balances associated with those loans that were previously modified as a result of the COVID-19 pandemic related modifications have been grouped into their own pool within the Bank’s ALLL model as management considers that they have a higher risk profile, and a higher reserve rate has been applied to this pool. As such, a higher reserve rate has been applied to this pool. Loans included in this pool totaled $70.5 million and $88.7 million at December 31, 2022 and December 31, 2021, respectively. The unallocated allowance is determined through management’s assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management’s acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management’s evaluation of the factors affecting the assumptions used in calculating the allowance. There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. Effective December 31, 2012, certain mortgage loans from the former Banco division of the Bank were analyzed separately from other single family residential loans in the Bank’s loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg, North Carolina and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. SBA PPP loans are excluded from the allowance as PPP loans are 100 percent guaranteed by the SBA. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance adequate to cover the estimated losses inherent in the Bank’s loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company. Mortgage Banking Activities Mortgage banking income represents income from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank’s origination of single-family residential mortgage loans. Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $285,000, $351,000 and $578,000 at December 31, 2022, 2021 and 2020, respectively. Mortgage servicing rights related to these loans are immaterial for all periods presented. The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements. Mortgage loans held for sale are carried at the lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for that period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: Buildings and improvements 10 - 50 years Furniture and equipment 3 - 10 years Other Real Estate Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value less estimated selling costs declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company’s financial position, results of operations or disclosures. Advertising Costs Advertising costs are expensed as incurred. Stock-Based Compensation The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the “2009 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. The 2009 Plan expired on May 7, 2019 but still governs the rights and obligations of the parties for grants made thereunder. No new awards may be made after May 7, 2019. The Company granted 16,583 restricted stock units under the 2009 Plan at a grant date fair value of $16.34 per share during the first quarter of 2015. The Company granted 5,544 restricted stock units under the 2009 Plan at a grant date fair value of $16.91 per share during the first quarter of 2016. The Company granted 4,114 restricted stock units under the 2009 Plan at a grant date fair value of $25.00 per share during the first quarter of 2017. The Company granted 3,725 restricted stock units under the 2009 Plan at a grant date fair value of $31.43 per share during the first quarter of 2018. The Company granted 5,290 restricted stock units under the 2009 Plan at a grant date fair value of $28.43 per share during the first quarter of 2019. The number of restricted stock units granted and grant date fair values for the restricted stock units granted in 2015 through 2017 have been restated to reflect the 10% stock dividend that was paid in the fourth quarter of 2017. The Company recognizes compensation expense on the restricted stock units over the vesting period (four years from the grant date for the 2015, 2016, 2017, 2018 and 2019 grants). The amount of expense recorded each period reflects the changes in the Company’s stock price during such period. As of December 31, 2022, the total unrecognized compensation expense related to the restricted stock unit grants under the 2009 Plan was $3,000. The Company also has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2020 (the “2020 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 300,000 shares were reserved for possible issuance under the 2020 Plan when it was adopted. As of December 31, 2021, a total of 285,305 shares out of the initial 300,000 shares reserved remain available for future issuance under the 2020 Plan. No new awards may be made after May 7, 2030 (ten years from the 2020 Plan effective date). The Company granted 7,635 restricted stock units under the 2020 Plan at a grant date fair value of $17.08 per share during the second quarter of 2020. The Company granted 7,060 restricted stock units under the 2020 Plan at a grant date fair value of $22.04 per share during the first quarter of 2021. The Company granted 5,385 restricted stock units under the 2020 Plan at a grant date fair value of $27.99 per share during the first quarter of 2022. The Company recognizes compensation expense on the restricted stock units over the vesting period (four years from the grant date for 2020, 2021 and 2022 grants). As of December 31, 2022, the total unrecognized compensation expense related to the restricted stock unit grants under the 2020 Plan was $334,000. The Company recognized compensation expense for restricted stock units granted under the 2009 Plan and 2020 Plan of $249,000, $181,000 and $27,000 for the years ended December 31, 2022, 2021 and 2020, respectively. Net Earnings Per Share Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. The reconciliations of the amounts used in the computation of both “basic earnings per common share” and “diluted earnings per common share” for the years ended December 31, 2022, 2021 and 2020 are as follows: For the year ended December 31, 2022 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 16,123 5,480,123 $ 2.94 Effect of dilutive securities: Restricted stock units - unvested - 15,467 Shares held in deferred comp plan by deferred compensation trust 165,599 Diluted earnings per share $ 16,123 5,661,189 $ 2.85 For the year ended December 31, 2021 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 15,133 5,576,099 $ 2.71 Effect of dilutive securities: Restricted stock units - unvested - 13,935 Shares held in deferred comp plan by deferred compensation trust 158,831 Diluted earnings per share $ 15,133 5,748,865 $ 2.63 For the year ended December 31, 2020 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 11,357 5,657,025 $ 2.01 Effect of dilutive securities: Restricted stock units - 14,203 Shares held in deferred comp plan by deferred compensation trust - 150,394 Diluted earnings per share $ 11,357 5,821,622 $ 1.95 Recent Accounting Pronouncements The following tables provide a summary of Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) that the Company has recently adopted. Recently Adopted Accounting Guidance ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Guidance that provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022. March 12, 2020 through December 31, 2022 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. The following tables provide a summary of ASU’s issued by the FASB that the Company has not adopted as of December 31, 2022, which may impact the Company’s financial statements. Recently Issued Accounting Guidance Not Yet Adopted ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2016-13: Measurement of Credit Losses on Financial Instruments Provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. See ASU 2019-10 below. The Company will apply this guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company is still evaluating the impact of this guidance on its consolidated financial statements. The Company has formed a Current Expected Credit Losses (“CECL”) committee and implemented a model from a third-party vendor for running CECL calculations. The Company has developed CECL model assumptions and is comparing results to current allowance for loan loss calculations. Parallel processing of the existing allowance for loan losses model with the CECL was completed during the fourth quarter of 2022. At this time, the Company expects its allowance for credit losses related to all financial assets will increase by approximately $1.1 million upon adoption compared to its allowance for loan losses at December 31, 2022 of approximately $10.5 million. The impact of the initial adoption will be reflected in the Company's SEC Form 10-Q for the period ended March 31, 2023. ASU 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses Aligns the implementation date of the topic for annual financial statements of nonpublic companies with the implementation date for their interim financial statements. The guidance also clarifies that receivables arising from operating leases are not within the scope of the topic, but rather, should be accounted for in accordance with the leases topic. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Addresses unintended issues accountants flagged when implementing ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-05: Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief Guidance to provide entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2019-10: Financial Instruments Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates Guidance to defer the effective dates for private companies, not-for-profit organizations, and certain smaller reporting companies applying standards on current expected credit losses (CECL), leases and hedging. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2019-11: Codification Improvements to Topic 326, Financial Instruments Credit Losses Guidance that addresses issues raised by stakeholders during the implementation of ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments affect a variety of Topics in the ASC. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2020-03: Codification Improvements to Financial Instruments Guidance to clarify that the contractual term of a net investment in a lease, determined in accordance with the leases standard, should be the contractual term used to measure expected credit losses under ASC 326. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2022-02: Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Eliminates the guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 2 and amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations or financial position but will impact future disclosure requirements and reduce individually evaluated loan totals. Other accounting standards that have been issued or proposed by FASB or other standards-setting bodi |
Investment Securities
Investment Securities | 12 Months Ended |
Dec. 31, 2022 | |
Investment Securities | |
Investment Securities | (2) Investment Securities Investment securities available for sale at December 31, 2022 and 2021 are as follows: (Dollars in thousands) December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S Treasuries $ 10,951 - 1,137 9,814 U.S. Government sponsored enterprises 12,245 - 706 11,539 Mortgage-backed securities 299,222 445 25,829 273,838 State and political subdivisions 184,768 91 34,656 150,203 Total $ 507,186 536 62,328 445,394 (Dollars in thousands) December 31, 2021 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S Treasuries $ 7,964 - 75 7,889 U.S. Government sponsored enterprises 14,252 200 185 14,267 Mortgage-backed securities 218,402 1,769 3,019 217,152 State and political subdivisions 165,804 3,694 2,257 167,241 Total $ 406,422 5,663 5,536 406,549 The current fair value and associated unrealized losses on investments in debt securities with unrealized losses at December 31, 2022 and 2021 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) December 31, 2022 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasuries $ 2,878 104 6,936 1,033 9,814 1,137 U.S. Government sponsored enterprises 2,904 87 8,635 619 11,539 706 Mortgage-backed securities 128,241 8,740 120,464 17,089 248,705 25,829 State and political subdivisions 65,880 7,766 76,291 26,890 142,171 34,656 Total $ 199,903 16,697 212,326 45,631 412,229 62,328 (Dollars in thousands) December 31, 2021 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasuries $ 7,889 75 - - 7,889 75 U.S. Government sponsored enterprises 5,232 15 3,263 170 8,495 185 Mortgage-backed securities 131,483 2,477 19,632 542 151,115 3,019 State and political subdivisions 80,076 1,981 5,922 276 85,998 2,257 Total $ 224,680 4,548 28,817 988 253,497 5,536 At December 31, 2022, unrealized losses in the investment securities portfolio relating to debt securities totaled $62.3 million. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the December 31, 2022 tables above, all three of the U.S. Treasury securities, 149 of the 158 securities issued by state and political subdivisions contained unrealized losses, all seven of the securities issued by U.S. Government sponsored enterprises, and 123 of the 133 mortgage-backed securities, contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations on each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. The Company periodically evaluates its investments for any impairment which would be deemed other-than-temporary. No investment impairments were deemed other-than-temporary in 2022, 2021 or 2020. The amortized cost and estimated fair value of investment securities available for sale at December 31, 2022, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2022 (Dollars in thousands) Amortized Cost Fair Value Due within one year $ 240 240 Due from one to five years 8,434 8,128 Due from five to ten years 58,540 49,599 Due after ten years 140,750 113,589 Mortgage-backed securities 299,222 273,838 Total $ 507,186 445,394 No securities available for sale were sold during 2022 and 2021. During 2020, proceeds from sales of securities available for sale were $56.3 million and resulted in gross gains of $2.7 million and gross losses of $56,000. Securities with a fair value of approximately $96.0 million and $98.6 million at December 31, 2022 and 2021, respectively, were pledged to secure public deposits, FHLB borrowings and for other purposes as required by law. GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. There is a three-level fair value hierarchy for fair value measurements. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The table below presents the balance of securities available for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2022 and 2021. (Dollars in thousands) December 31, 2022 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation U. S Treasuries $ 9,814 - 9,814 - U.S. Government sponsored enterprises $ 11,539 - 11,539 - Mortgage-backed securities $ 273,838 - 273,838 - State and political subdivisions $ 150,203 - 150,203 - (Dollars in thousands) December 31, 2021 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation U. S Treasuries $ 7,889 - 7,889 -88.7 U.S. Government sponsored enterprises $ 14,267 - 14,267 - Mortgage-backed securities $ 217,152 - 217,152 - State and political subdivisions $ 167,241 - 167,241 - Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. |
Loans
Loans | 12 Months Ended |
Dec. 31, 2022 | |
Loans | |
Loans | (3) Loans Major classifications of loans at December 31, 2022 and 2021 are summarized as follows: (Dollars in thousands) December 31, 2022 December 31, 2021 Real estate loans: Construction and land development $ 114,446 95,760 Single-family residential 322,262 266,111 Single-family residential - Banco de la Gente non-traditional 20,019 23,147 Commercial 406,750 337,841 Multifamily and farmland 65,562 58,366 Total real estate loans 929,039 781,225 Loans not secured by real estate: Commercial loans 81,307 91,172 Farm loans 938 796 Consumer loans 6,834 6,436 All other loans 14,490 5,240 Total loans 1,032,608 884,869 Less allowance for loan losses (10,494 ) (9,355 ) Total net loans $ 1,022,114 875,514 The above table includes deferred costs, net of deferred fees, totaling $909,000 at December 31, 2022. The above table includes deferred costs, net of deferred fees, totaling $198,000 at December 31, 2021 including $945,000 in deferred PPP loan fees. The Bank makes loans and extensions of credit primarily within the Catawba Valley region of North Carolina, which encompasses Catawba, Alexander, Iredell and Lincoln counties and also in Mecklenburg, Wake, Rowan and Forsyth counties of North Carolina. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, the value of which is dependent upon the real estate market. Risk characteristics of the major components of the Bank’s loan portfolio are discussed below: · Construction and land development loans – The risk of loss is largely dependent on the initial estimate of whether the property’s value at completion equals or exceeds the cost of property construction and the availability of take-out financing. During the construction phase, a number of factors can result in delays or cost overruns. If the estimate is inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan, sale of the property, or by seizure of collateral. · Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. · Commercial real estate loans – Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they are generally not fully amortizing over the loan period, but rather have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property. · Commercial loans – Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in value based on the success of the business. · Multifamily and farmland loans – Decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. Loans are considered past due if the required principal and interest payments have not been received within 30 days of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Generally, a loan is placed on non-accrual status when it is over 90 days past due and there is reasonable doubt that all principal will be collected. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. On March 27, 2020, President Trump signed the CARES Act, which established a $2 trillion economic stimulus package, including cash payments to individuals, supplemental unemployment insurance benefits and a $349 billion loan program administered through the PPP. Under the PPP, small businesses, sole proprietorships, independent contractors and self-employed individuals were able to apply for loans from existing SBA lenders and other approved regulated lenders, subject to certain limitations and eligibility criteria. A second round of PPP funding provided a total of $320 billion additional funding for the PPP. The Bank participated as a lender in the PPP. Total PPP loans originated during the years ended December 31, 2020 and 2021 amounted to $128.1 million. The outstanding balance of PPP loans was $103,000 and $18.0 million at December 31, 2022 and 2021, respectively. These loans are classified as commercial loans in the tables above. The Bank recognized $948,000 and $3.4 million of PPP loan fee income for the year ended December 31, 2022 and year ended December, 2021, respectively. The following tables present an age analysis of past due loans, by loan type, as of December 31, 2022 and 2021: December 31, 2022 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 363 - 363 114,083 114,446 - Single-family residential 4,318 256 4,574 317,688 322,262 - Single-family residential - Banco de la Gente non-traditional 2,977 264 3,241 16,778 20,019 - Commercial 306 - 306 406,444 406,750 - Multifamily and farmland - - - 65,562 65,562 - Total real estate loans 7,964 520 8,484 920,555 929,039 - Loans not secured by real estate: Commercial loans 3 - 3 81,304 81,307 - Farm loans - - - 938 938 - Consumer loans 71 - 71 6,763 6,834 - All other loans - - - 14,490 14,490 - Total loans $ 8,038 520 8,558 1,024,050 1,032,608 - December 31, 2021 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ - - - 95,760 95,760 - Single-family residential 2,323 634 2,957 263,154 266,111 - Single-family residential - Banco de la Gente non-traditional 2,593 112 2,705 20,442 23,147 - Commercial 488 - 488 337,353 337,841 - Multifamily and farmland - - - 58,366 58,366 - Total real estate loans 5,404 746 6,150 775,075 781,225 - Loans not secured by real estate: Commercial loans 43 - 43 91,129 91,172 - Farm loans - - - 796 796 - Consumer loans 38 - 38 6,398 6,436 - All other loans - - - 5,240 5,240 - Total loans $ 5,485 746 6,231 878,638 884,869 - The following table presents the Bank’s non-accrual loans as of December 31, 2022 and 2021: (Dollars in thousands) December 31, 2022 December 31, 2021 Real estate loans: Construction and land development $ 53 - Single-family residential 1,914 1,642 Single-family residential - Banco de la Gente non-traditional 1,532 1,232 Commercial 129 200 Multifamily and farmland 91 105 Total real estate loans 3,719 3,179 Loans not secured by real estate: Commercial loans - 49 Consumer loans 9 2 Total $ 3,728 3,230 At the end of each reporting period, the Bank determines which loans are impaired. Accordingly, the Bank’s impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan that is collateral-dependent is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by REAS, a subsidiary of the Bank. REAS is staffed by certified appraisers who also perform appraisals for third parties. Factors, including the assumptions and techniques utilized by the appraiser, are considered by management in determining the fair value of collateral. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. An allowance for each impaired loan that is not collateral dependent is calculated based on the present value of projected cash flows. If the recorded investment in the impaired loan exceeds the present value of projected cash flows, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans under $250,000 are not individually evaluated for impairment with the exception of the Bank’s Troubled Debt Restructurings (“TDR loans”) in the residential mortgage loan portfolio, which are individually evaluated for impairment. Impaired loans collectively evaluated for impairment totaled $4.9 million and $5.3 million at December 31, 2022 and 2021, respectively. Accruing impaired loans were $15.4 and $18.3 million at December 31, 2022 and December 31, 2021, respectively. Interest income recognized on accruing impaired loans was $862,000 and $1.0 million for the years ended December 31, 2022 and 2021, respectively. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. The following tables present the Bank’s impaired loans as of December 31, 2022, 2021 and 2020: December 31, 2022 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 110 - 110 110 2 75 8 Single-family residential 3,912 236 3,300 3,536 60 5,194 194 Single-family residential - Banco de la Gente non-traditional 10,441 - 9,748 9,748 611 8,757 552 Commercial 1,785 421 1,346 1,767 9 1,916 93 Multifamily and farmland 104 - 91 91 - 96 5 Total impaired real estate loans 16,352 657 14,595 15,252 682 16,038 852 Loans not secured by real estate: Commercial loans 116 - 116 116 1 137 8 Consumer loans 11 - 9 9 - 15 2 Total impaired loans $ 16,479 657 14,720 15,377 683 16,190 862 December 31, 2021 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 73 - 73 73 3 82 6 Single-family residential 5,138 524 4,374 4,898 86 6,017 253 Single-family residential - Banco de la Gente non-traditional 11,753 - 10,922 10,922 687 10,325 609 Commercial 2,138 435 1,608 2,043 11 2,385 109 Multifamily and farmland 113 - 105 105 - 110 6 Total impaired real estate loans 19,215 959 17,082 18,041 787 18,919 983 Loans not secured by real estate: Commercial loans 282 49 170 219 2 271 19 Consumer loans 8 - 4 4 - 11 1 Total impaired loans $ 19,505 1,008 17,256 18,264 789 19,201 1,003 December 31, 2020 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 108 - 108 108 4 134 8 Single-family residential 5,302 379 4,466 4,845 33 4,741 262 Single-family residential - Banco de la Gente non-traditional 13,417 - 12,753 12,753 862 13,380 798 Commercial 2,999 1,082 1,891 2,973 14 2,940 139 Multifamily and farmland 119 - 117 117 - 29 6 Total impaired real estate loans 21,945 1,461 19,335 20,796 913 21,224 1,213 Loans not secured by real estate: Commercial loans 515 211 244 455 5 564 32 Consumer loans 41 - 37 37 1 60 5 Total impaired loans $ 22,501 1,672 19,616 21,288 919 21,848 1,250 The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at December 31, 2022 and 2021 are presented below. The Bank’s valuation methodology is discussed in Note 16. (Dollars in thousands) Fair Value Measurements December 31, 2022 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 211 - - 211 Impaired loans $ 14,694 - - 14,694 (Dollars in thousands) Fair Value Measurements December 31, 2021 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 3,637 - - 3,637 Impaired loans $ 17,475 - - 17,475 Fair Value December 31, 2022 Fair Value December 31, 2021 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 211 $ 3,637 Rate lock commitment N/A N/A Impaired loans $ 14,694 $ 17,475 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% The following table presents changes in the allowance for loan losses for the year ended December 31, 2022. PPP loans are excluded from the allowance for loan losses as PPP loans are 100 percent guaranteed by the SBA. (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2022 Allowance for loan losses: Beginning balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Charge-offs - (128 ) - - - (33 ) - (591 ) - (752 ) Recoveries - 229 - 9 - 72 - 109 - 419 Provision 222 208 (101 ) 964 14 (93 ) - 586 (328 ) 1,472 Ending balance $ 1,415 2,322 763 3,207 164 657 - 214 1,752 10,494 Allowance for loan losses December 31, 2022 Ending balance: individually evaluated for impairment $ - 36 597 6 - - - - - 639 Ending balance: collectively evaluated for impairment 1,415 2,286 166 3,201 164 657 - 214 1,752 9,855 Ending balance $ 1,415 2,322 763 3,207 164 657 - 214 1,752 10,494 Loans at December 31, 2022 Ending balance $ 114,446 322,262 20,019 406,750 65,562 81,307 938 21,324 - 1,032,608 Ending balance: individually evaluated for impairment $ - 537 8,555 1,388 - - - - - 10,480 Ending balance: collectively evaluated for impairment $ 114,446 321,725 11,464 405,362 65,562 81,307 938 21,324 - 1,022,128 Changes in the allowance for loan losses for the year ended December 31, 2021 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2021 Allowance for loan losses: Beginning balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Charge-offs - (89 ) - - - (293 ) - (380 ) - (762 ) Recoveries 121 271 - 52 3 786 - 139 - 1,372 Provision (124 ) (12 ) (188 ) (30 ) 25 (1,127 ) - 223 70 (1,163 ) Ending balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Allowance for loan losses December 31, 2021 Ending balance: individually evaluated for impairment $ 1 57 672 7 - - - - - 737 Ending balance: collectively evaluated for impairment 1,192 1,956 192 2,227 150 711 - 110 2,080 8,618 Ending balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Loans at December 31, 2021 Ending balance $ 95,760 266,111 23,147 337,841 58,366 91,172 796 11,676 - 884,869 Ending balance: individually evaluated for impairment $ 6 1,633 9,795 1,437 - 49 - - - 12,920 Ending balance: collectively evaluated for impairment $ 95,754 264,478 13,352 336,404 58,366 91,123 796 11,676 - 871,949 Changes in the allowance for loan losses for the year ended December 31, 2020 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2020 Allowance for loan losses: Beginning balance $ 694 1,274 1,073 1,305 120 688 - 138 1,388 6,680 Charge-offs (5 ) (65 ) - (7 ) - (903 ) - (434 ) - (1,414 ) Recoveries 36 70 - 70 - 34 - 173 - 383 Provision 471 564 (21 ) 844 2 1,526 - 251 622 4,259 Ending balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Allowance for loan losses December 31, 2020 Ending balance: individually evaluated for impairment $ 1 4 844 8 - - - - - 857 Ending balance: collectively evaluated for impairment 1,195 1,839 208 2,204 122 1,345 - 128 2,010 9,051 Ending balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Loans at December 31, 2020 Ending balance $ 94,124 272,325 26,883 332,971 48,880 161,740 855 10,861 - 948,639 Ending balance: individually evaluated for impairment $ 7 1,558 11,353 2,118 - 212 - - - 15,248 Ending balance: collectively evaluated for impairment $ 94,117 270,767 15,530 330,853 48,880 161,528 855 10,861 - 933,391 Impaired loans collectively evaluated for impairment totaled $4.9 million, $5.3 million and $5.8 million at December 31, 2022, 2021 and 2020, respectively and are included in the tables above. Allowance on impaired loans collectively evaluated for impairment totaled $44,000, $42,000 and 61,000 at December 31, 2022, 2021 and 2020, respectively. The Bank utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis. A description of the general characteristics of the eight risk grades is as follows: · Risk Grade 1 – Excellent Quality: Loans are well above average quality and a minimal amount of credit risk exists. CD or cash secured loans or properly margined actively traded stock or bond secured loans would fall in this grade. · Risk Grade 2 – High Quality: Loans are of good quality with risk levels well within the Bank’s range of acceptability. The organization or individual is established with a history of successful performance though somewhat susceptible to economic changes. · Risk Grade 3 – Good Quality: Loans of average quality with risk levels within the Bank’s range of acceptability but higher than normal. This may be a new organization or an existing organization in a transitional phase (e.g. expansion, acquisition, market change). · Risk Grade 4 – Management Attention: These loans have higher risk and servicing needs but still are acceptable. Evidence of marginal performance or deteriorating trends is observed. These are not problem credits presently, but may be in the future if the borrower is unable to change its present course. · Risk Grade 5 – Watch: These loans are currently performing satisfactorily, but there has been some recent past due history on repayment and there are potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank’s position at some future date. · Risk Grade 6 – Substandard: A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged (if there is any). There is a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. · Risk Grade 7 – Doubtful: Loans classified as Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. · Risk Grade 8 – Loss: Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be realized in the future. Loss is a temporary grade until the appropriate authority is obtained to charge the loan off. The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of December 31, 2022 and 2021. December 31, 2022 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 2,782 - - - 1,365 - 527 - 4,674 2- High Quality 14,912 138,124 - 33,353 17 13,302 - 2,384 1,366 203,458 3- Good Quality 94,113 166,329 7,442 340,926 63,270 64,422 938 3,663 12,851 753,954 4- Management Attention 5,257 10,615 8,968 27,957 2,061 1,507 - 244 128 56,737 5- Watch 54 922 1,136 3,963 123 711 - 1 145 7,055 6- Substandard 110 3,490 2,473 551 91 - - 15 - 6,730 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 114,446 322,262 20,019 406,750 65,562 81,307 938 6,834 14,490 1,032,608 December 31, 2021 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 5,923 - - - 371 - 581 - 6,875 2- High Quality 11,752 109,337 - 28,546 19 16,177 - 2,039 1,309 169,179 3- Good Quality 80,325 129,856 8,712 272,786 54,945 68,183 792 3,510 3,931 623,040 4- Management Attention 3,534 14,964 10,478 30,937 2,754 5,214 4 284 - 68,169 5- Watch 76 2,464 1,703 4,938 543 1,177 - 1 - 10,902 6- Substandard 73 3,567 2,254 634 105 50 - 21 - 6,704 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 95,760 266,111 23,147 337,841 58,366 91,172 796 6,436 5,240 884,869 Past due TDR loans and non-accrual TDR loans totaled $3.7 million and $2.2 million at December 31, 2022 and December 31, 2021, respectively. The terms of these loans have been renegotiated to provide a concession to original terms, including a reduction in principal or interest as a result of the deteriorating financial position of the borrower. There were no performing loans classified as TDR loans at December 31, 2022 and December 31, 2021. There were no new TDR modifications during the years ended December 31, 2022 and 2021. There were no TDR loans with a payment default occurring within 12 months of the restructure date, and the payment default occurring during the years ended December 31, 2022 and 2021. TDR loans are deemed to be in default if they become past due by 90 days or more. |
Premises and Equipment
Premises and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Premises and Equipment | |
Premises and Equipment | (4) Premises and Equipment Major classifications of premises and equipment at December 31, 2022 and 2021 are summarized as follows: (Dollars in thousands) 2022 2021 Land $ 3,851 3,857 Buildings and improvements 18,371 18,359 Furniture and equipment 26,156 25,420 Construction in process 3,028 - Total premises and equipment 51,406 47,636 Less accumulated depreciation (33,201 ) (31,532 ) Total net premises and equipment $ 18,205 16,104 The Bank recognized depreciation expense totaling $2.4 million, $2.6 million and $2.5 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Bank had $85,000 net losses on the sale of and write-downs on premises and equipment for the year ended December 31, 2022. The Bank had $105,000 net gains on the sale of and write-downs on premises and equipment for the year ended December 31, 2021. The Bank had no gains or losses on the sale of or write-downs on premises and equipment for the year ended December 31, 2020. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | (5) Leases The Bank leases various office spaces for banking and operational facilities and equipment under operating lease arrangements. Total rent expense was approximately $976,000, $703,000 and $880,000 for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, the Bank had operating right of use assets of $5.1 million and operating lease liabilities of $5.2 million. The Bank maintains operating leases on land and buildings for some of the Bank’s branch facilities and loan production offices. Most leases include one option to renew, with renewal terms extending up to 15 years. The exercise of renewal options is based on the judgment of management as to whether or not the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Bank if the option is not exercised. Leases with a term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term. The following table presents lease cost and other lease information as of December 31, 2022. (Dollars in thousands) December 31, 2022 Operating lease cost $ 888 Other information: Cash paid for amounts included in the measurement of lease liabilities 873 Operating cash flows from operating leases - Right-of-use assets obtained in exchange for new lease liabilities - operating leases 1,726 Weighted-average remaining lease term - operating leases 9.26 Weighted-average discount rate - operating leases 2.23 % The following table presents lease maturities as of December 31, 2022. (Dollars in thousands) Maturity Analysis of Operating Lease Liabilities: December 31, 2022 2023 $ 805 2024 750 2025 694 2026 577 2027 528 Thereafter 2,418 Total 5,727 Less: Imputed Interest (542 ) Operating Lease Liability $ 5,185 |
Time Deposits
Time Deposits | 12 Months Ended |
Dec. 31, 2022 | |
Time Deposits | |
Time Deposits | (6) Time Deposits At December 31, 2022, the scheduled maturities of time deposits are as follows: (Dollars in thousands) 2023 $ 59,099 2024 26,526 2025 7,380 2026 3,420 2027 and thereafter 1,574 Total $ 97,999 At December 31, 2022 and 2021, the Bank had approximately $15.0 million and $11.1 million, respectively, in time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service (“CDARS”) on behalf of local customers. CDARS balances totaled $7.1 million and $3.0 million as of December 31, 2022 and 2021, respectively. The weighted average rate of brokered deposits as of December 31, 2022 and 2021 was 1.27% and 1.49%, respectively. |
Federal Home Loan Bank and Fede
Federal Home Loan Bank and Federal Reserve Bank Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Federal Home Loan Bank and Federal Reserve Bank Borrowings | |
Federal Home Loan Bank and Federal Reserve Bank Borrowings | (7) Federal Home Loan Bank (FHLB) and Federal Reserve Bank Borrowings The Bank had no borrowings from the FHLB at December 31, 2022 and 2021. FHLB borrowings are collateralized by a blanket assignment on all residential first mortgage loans, home equity lines of credit and loans secured by multi-family real estate that the Bank owns. At December 31, 2022, the carrying value of loans pledged as collateral totaled approximately $149.4 million. The remaining availability under the line of credit with the FHLB was $86.5 million at December 31, 2022. The Bank incurred a $1.1 million prepayment penalty on the prepayment of a $70.0 million FHLB advance in 2020. The Bank is required to purchase and hold certain amounts of FHLB stock in order to obtain FHLB borrowings. No ready market exists for the FHLB stock, and it has no quoted market value. The stock is redeemable at $100 per share subject to certain limitations set by the FHLB. The Bank owned $812,000 and $707,000 of FHLB stock, included in other investments, at December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Bank had no borrowings from the Federal Reserve Bank (“FRB”). FRB borrowings are collateralized by a blanket assignment on all qualifying loans that the Bank owns which are not pledged to the FHLB. At December 31, 2022, the carrying value of loans pledged as collateral totaled approximately $585.0 million. Availability under the line of credit with the FRB was $445.1 million at December 31, 2022. |
Junior Subordinated Debentures
Junior Subordinated Debentures | 12 Months Ended |
Dec. 31, 2022 | |
Junior Subordinated Debentures | |
Junior Subordinated Debentures | (8) Junior Subordinated Debentures In June 2006, the Company formed a second wholly owned Delaware statutory trust, PEBK Capital Trust II (“PEBK Trust II”), which issued $20.0 million of guaranteed preferred beneficial interests in the Company’s junior subordinated deferrable interest debentures. All of the common securities of PEBK Trust II are owned by the Company. The proceeds from the issuance of the common securities and the trust preferred securities were used by PEBK Trust II to purchase $20.6 million of junior subordinated debentures of the Company. The proceeds received by the Company from the sale of the junior subordinated debentures were used to repay in December 2006 the trust preferred securities issued in December 2001 by PEBK Capital Trust, a wholly owned Delaware statutory trust of the Company, and for general purposes. The debentures represent the sole assets of PEBK Trust II. PEBK Trust II is not included in the consolidated financial statements. The Company redeemed $5.0 million of outstanding trust preferred securities in 2019. The trust preferred securities issued by PEBK Trust II accrue and pay interest quarterly at a floating rate of three-month LIBOR plus 163 basis points. The Company has guaranteed distributions and other payments due on the trust preferred securities. The net combined effect of all the documents entered into in connection with the trust preferred securities is that the Company is liable to make the distributions and other payments required on the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity of the debentures on June 28, 2036. The Company has the right to redeem the debentures purchased by PEBK Trust II, in whole or in part, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount plus any accrued but unpaid interest. The Company has no financial instruments tied to LIBOR other than the trust preferred securities issued by PEBK Trust II, which are tied to three-month LIBOR. The one-week and two-month U.S. dollar-denominated (USD) LIBOR rates ceased to be published on December 31, 2021. The overnight, one-month, three-month, nine-month, and 12-month USD LIBOR rates will continue to be published through June 30, 2023. Management has reviewed the implications of the Adjustable Interest Rate Act (LIBOR Act) enacted in March 2022 and the related Federal Reserve regulations with legal counsel, and is currently working with the trustee to complete required updates prior to June 30, 2023. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | (9) Income Taxes The provision for income taxes is summarized as follows: (Dollars in thousands) 2022 2021 2020 Current expense $ 4,713 4,023 3,049 Deferred income tax benefit (541 ) (227 ) (560 ) Total income tax $ 4,172 3,796 2,489 The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows: (Dollars in thousands) 2022 2021 2020 Tax expense at statutory rate $ 4,262 3,975 2,908 State income tax, net of federal income tax effect 395 339 261 Tax-exempt interest income (445 ) (497 ) (649 ) Increase in cash surrender value of life insurance (71 ) (83 ) (80 ) Tax credits (230 ) (234 ) (234 ) Nondeductible interest and other expense 24 30 46 Other 237 266 237 Total $ 4,172 3,796 2,489 The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities. The net deferred tax asset is included as a component of other assets at December 31, 2022 and 2021. (Dollars in thousands) 2022 2021 Deferred tax assets: Allowance for loan losses $ 2,411 2,149 Accrued retirement expense 1,174 1,148 Restricted stock 245 209 Interest income on nonaccrual loans 1 2 Lease liability 1,191 1,075 Unrealized loss on available for sale securities 14,197 - Total gross deferred tax assets 19,219 4,583 Deferred tax liabilities: Deferred loan fees 209 263 Accumulated depreciation 438 563 Prepaid expenses 3 4 ROU Asset 1,175 1,060 Other (93 ) (55 ) Unrealized gain on available for sale securities - 29 Total gross deferred tax liabilities 1,732 1,864 Net deferred tax asset $ 17,487 2,719 The Company has analyzed the tax positions taken or expected to be taken in its tax returns and has concluded that it has no liability related to uncertain tax positions. As of December 31, 2022, the Company’s Federal income tax filings for years 2019 through 2021 are open to audit by the Internal Revenue Service. The Company’s North Carolina income tax returns are currently under audit for tax year 2014-2016, tax years 2019, 2020, 2021 and 2022 remain open to audit by the North Carolina Department of Revenue. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | (10) Related Party Transactions The Company conducts transactions with its directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. In accordance with Regulation O of the Federal Reserve, it is the policy of the Bank that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans for 2022 and 2021: (Dollars in thousands) 2022 2021 Beginning balance $ 2,687 1,852 Disbursements 4,090 3,636 Repayments (3,396 ) (2,801 ) Ending balance $ 3,381 2,687 At December 31, 2022 and 2021, the Company had deposit relationships with related parties of approximately $44.5 million and $43.4 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | (11) Commitments and Contingencies The Bank is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments. The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. In most cases, the Bank requires collateral or other security to support financial instruments with credit risk. (Dollars in thousands) Contractual Amount 2022 2021 Financial instruments whose contract amount represent credit risk: Commitments to extend credit $ 382,699 304,258 Standby letters of credit $ 4,352 4,892 Commitments to extend credit are conditional agreements to lend to a customer. Commitments generally have fixed expiration dates and because they may expire without being drawn upon, the total commitment amount of $387.1 million does not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued by the Bank to pay a third party on behalf of a customer. Those letters of credit are primarily issued to businesses in the Bank’s delineated market area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds real estate, equipment, automobiles and customer deposits as collateral supporting those commitments for which collateral is deemed necessary. In the normal course of business, the Company is a party (both as plaintiff and defendant) to lawsuits. In the opinion of management and counsel, none of these cases should have a material adverse effect on the financial position of the Company. The Company and the Bank have entered into employment agreements with certain key employees. The agreements, among other things, include salary, bonus, incentive compensation, and change in control provisions. The Company has $110.5 million available for the purchase of overnight federal funds from five correspondent financial institutions as of December 31, 2022. At December 31, 2017, the Bank committed to invest $3.0 million in an income tax credit partnership owning and developing two multifamily housing developments in Charlotte, North Carolina, with $1.5 million allocated to each property. As of December 31, 2022, the Bank has funded $2.9 million of this commitment. At December 31, 2022, the Bank had $1.5 million in unfunded commitments for SBA Small Business Investment Company (“SBIC”) investments. |
Employee and Director Benefit P
Employee and Director Benefit Programs | 12 Months Ended |
Dec. 31, 2022 | |
Employee and Director Benefit Programs | |
Employee and Director Benefit Programs | (12) Employee and Director Benefit Programs The Bank has a profit sharing and 401(k) plan for the benefit of substantially all employees subject to certain minimum age and service requirements. Under the 401(k) plan, the Bank matched employee contributions to a maximum of 4.00% of annual compensation in 2020, 2021 and 2022. The Company’s contribution pursuant to this formula was approximately $719,000, $709,000 and $692,000 for the years ended December 31, 2022, 2021 and 2020, respectively. Investments made available under the 401(k) plan are determined by a committee comprised of senior management. No investments in Company stock are available under the 401(k) plan. Contributions to the 401(k) plan are vested immediately. In December 2001, the Company initiated a retirement benefit plan to provide retirement benefits to key officers and its Board of Directors and to provide death benefits for their designated beneficiaries. Under the postretirement benefit plan, the Company purchased life insurance policies on the lives of the key officers and each director. The increase in cash surrender value of the policies constitutes the Company’s contribution to the postretirement benefit plan each year. Postretirement benefit plan participants are to be paid annual benefits for a specified number of years commencing upon retirement. Expenses incurred for benefits relating to the postretirement benefit plan were approximately $369,000, $447,000 and $368,000 for the years ended December 31, 2022, 2021 and 2020, respectively. The Company paid medical benefits for certain retired employees through the first quarter of 2022. The Company did not incur any postretirement medical benefits expense in 2022, 2021 and 2020 due to an excess accrual balance. The following table sets forth the change in the accumulated benefit obligation for the Company’s two postretirement benefit plans described above: (Dollars in thousands) 2022 2021 Benefit obligation at beginning of period $ 5,011 4,870 Service cost 325 359 Interest cost 63 70 Benefits paid (289 ) (288 ) Benefit obligation at end of period $ 5,110 5,011 The amounts recognized in the Company’s Consolidated Balance Sheet as of December 31, 2022 and 2021 are shown in the following two tables: (Dollars in thousands) 2022 2021 Benefit obligation $ 5,110 5,011 Fair value of plan assets - - (Dollars in thousands) 2022 2021 Funded status $ (5,110 ) (5,011 ) Unrecognized prior service cost/benefit - - Unrecognized net actuarial loss - - Net amount recognized $ (5,110 ) (5,011 ) Unfunded accrued liability $ (5,110 ) (5,011 ) Intangible assets - - Net amount recognized $ (5,110 ) (5,011 ) Net periodic benefit cost of the Company’s postretirement benefit plans for the years ended December 31, 2022, 2021 and 2020 consisted of the following: (Dollars in thousands) 2022 2021 2020 Service cost $ 325 359 359 Interest cost 63 70 70 Net periodic cost $ 388 429 429 Weighted average discount rate assumption used to determine benefit obligation 5.50 % 5.50 % 5.49 % The Company paid postretirement plan benefits totaling $289,000, $288,000 and $216,000 during the years ended December 31, 2022, 2021 and 2020, respectively. Information about the expected benefit payments for the Company’s two postretirement benefit plans is as follows: (Dollars in thousands) Year ending December 31, 2023 $ 329 2024 $ 353 2025 $ 370 2026 $ 368 2027 $ 494 Thereafter $ 8,358 |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2022 | |
Regulatory Matters | |
Regulatory Matters | (13) Regulatory Matters The Company and the Bank are subject to 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 direct 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 the assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification 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 Company and the Bank to maintain minimum capital ratios in relation to both on- and off-balance sheet items at various risk weights. Total capital consists of two tiers of capital. Tier 1 capital includes common shareholders’ equity and trust preferred securities less adjustments for intangible assets. Tier 2 capital consists of the allowance for loan losses, up to 1.25% of risk-weighted assets and other adjustments. Management believes, as of December 31, 2022, that the Company and the Bank meet all capital adequacy requirements to which they are subject. As of December 31, 2022, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank’s category. In 2013, the Federal Reserve approved its final rule on the Basel III capital standards, which implement changes to the regulatory capital framework for banking organizations. The Basel III capital standards, which became effective January 1, 2015, include new risk-based capital and leverage ratios, which were phased in from 2015 to 2019. The new minimum capital level requirements applicable to the Company and the Bank under the final rules are as follows: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total risk based capital ratio of 8% (unchanged from previous rules); and (iv) a Tier 1 leverage ratio of 4% (unchanged from previous rules). An additional capital conservation buffer was added to the minimum requirements for capital adequacy purposes beginning on January 1, 2016 and was phased in through 2019. This resulted in the following minimum ratios beginning in 2019: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. Under the final rules, institutions would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained earnings that could be utilized for such actions. The Company’s and the Bank’s actual capital amounts and ratios are presented below: (Dollars in thousands) Actual Minimum Regulatory Capital Ratio Minimum Ratio plus Capital Conservation Buffer Amount Ratio Amount Ratio Amount Ratio As of December 31, 2022: Total Capital (to Risk-Weighted Assets) Consolidated $ 178,286 14.04 % 101,608 8.00 % N/A N/A Bank $ 176,923 13.93 % 101,606 8.00 % 133,357 10.50 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 167,792 13.21 % 76,206 6.00 % N/A N/A Bank $ 166,429 13.10 % 76,204 6.00 % 107,956 8.50 % Tier 1 Capital (to Average Assets) Consolidated $ 167,792 9.82 % 68,347 4.00 % N/A N/A Bank $ 166,429 9.68 % 68,780 4.00 % 68,780 4.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 152,792 12.03 % 57,154 4.50 % N/A N/A Bank $ 166,429 13.10 % 57,153 4.50 % 88,905 7.00 % (Dollars in thousands) Actual Minimum Regulatory Capital Ratio Minimum Ratio plus Capital Conservation Buffer Amount Ratio Amount Ratio Amount Ratio As of December 31, 2021: Total Capital (to Risk-Weighted Assets) Consolidated $ 166,628 16.35 % 81,547 8.00 % N/A N/A Bank $ 164,975 16.19 % 81,539 8.00 % 107,020 10.50 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 157,273 15.43 % 61,160 6.00 % N/A N/A Bank $ 155,620 15.27 % 61,154 6.00 % 86,635 8.50 % Tier 1 Capital (to Average Assets) Consolidated $ 157,273 9.64 % 65,258 4.00 % N/A N/A Bank $ 155,620 9.50 % 65,557 4.00 % 65,557 4.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 142,273 13.96 % 45,870 4.50 % N/A N/A Bank $ 155,620 15.27 % 45,866 4.50 % 71,347 7.00 % |
Other Operating Income and Expe
Other Operating Income and Expense | 12 Months Ended |
Dec. 31, 2022 | |
Other Operating Income and Expense | |
Other Operating Income and Expense | (14) Other Operating Income and Expense Miscellaneous non-interest income for the years ended December 31, 2022, 2021 and 2020 included the following items: (Dollars in thousands) 2022 2021 2020 Visa debit card income $ 4,901 5,045 4,237 Bank owned life insurance income 458 397 380 Other 2,390 2,197 1,315 $ 7,749 7,639 5,932 Other non-interest expense for the years ended December 31, 2022, 2021 and 2020 included the following items: (Dollars in thousands) 2022 2021 2020 ATM expense $ 629 619 567 Data processing 777 643 635 Deposit program expense 348 415 426 Dues and subscriptions 628 588 538 FHLB advance prepayment penalty - - 1,100 Internet banking expense 949 768 729 Office supplies 532 374 538 Telephone 691 730 794 Other 3,741 3,737 3,217 $ 8,295 7,874 8,544 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (15) Fair Value of Financial Instruments The Company is required to disclose fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination, or issuance. The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: · Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. · Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. · Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. Cash and Cash Equivalents For cash, due from banks and interest-bearing deposits, the carrying amount is a reasonable estimate of fair value. Cash and cash equivalents are reported in the Level 1 fair value category. Investment Securities Available for Sale Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Fair values for investment securities with quoted market prices are reported in the Level 1 fair value category. Fair value measurements obtained from independent pricing services are reported in the Level 2 fair value category. All other fair value measurements are reported in the Level 3 fair value category. Other Investments For other investments, the carrying value is a reasonable estimate of fair value. Other investments are reported in the Level 3 fair value category. Mortgage Loans Held for Sale Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Mortgage loans held for sale are reported in the Level 3 fair value category. Loans The fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit, and nonperformance risk of the loans. Loans are reported in the Level 3 fair value category, as the pricing of loans is more subjective than the pricing of other financial instruments. Mutual Funds For mutual funds held in the deferred compensation trust, the carrying value is a reasonable estimate of fair value. Mutual funds held in the deferred compensation trust are included in other assets on the balance sheet and reported in the Level 2 fair value category. Deposits The fair value of demand deposits, interest-bearing demand deposits and savings is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Deposits are reported in the Level 3 fair value category. Securities Sold Under Agreements to Repurchase For securities sold under agreements to repurchase, the carrying value is a reasonable estimate of fair value. Securities sold under agreements to repurchase are reported in the Level 2 fair value category. FHLB Borrowings The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discount rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 3 fair value category. Junior Subordinated Debentures Because the Company’s junior subordinated debentures were issued at a floating rate, the carrying amount is a reasonable estimate of fair value. Junior subordinated debentures are reported in the Level 2 fair value category. Commitments to Extend Credit and Standby Letters of Credit Commitments to extend credit and standby letters of credit are generally short-term and at variable interest rates. Therefore, both the carrying value and estimated fair value associated with these instruments are immaterial. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The fair value presentation for recurring assets is presented in Note 2. There were no recurring liabilities at December 31, 2022 and 2021. The fair value presentation for non-recurring assets is presented in Note 3. There were no non-recurring liabilities at December 31, 2022 and 2021. The carrying amount and estimated fair value of the Company’s financial instruments at December 31, 2022 and 2021 are as follows: (Dollars in thousands) Fair Value Measurements at December 31, 2022 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 71,596 71,596 - - 71,596 Investment securities available for sale 445,394 - 445,394 - 445,394 Other investments 2,656 - - 2,656 2,656 Mortgage loans held for sale 211 - - 211 211 Loans, net 1,022,114 - - 998,587 998,587 Mutual funds held in deferred compensation trust 1,327 - 1,327 - 1,327 Liabilities: Deposits $ 1,435,215 - - 1,434,871 1,434,871 Securities sold under agreements to repurchase 47,688 - 47,688 - 47,688 Junior subordinated debentures 15,464 - 15,464 - 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2021 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 277,499 277,499 - - 277,499 Investment securities available for sale 406,549 - 406,549 - 406,549 Other investments 3,668 - - 3,668 3,668 Mortgage loans held for sale 3,637 - - 3,637 3,637 Loans, net 875,514 - - 855,814 855,814 Mutual funds held in deferred compensation trust 1,510 - 1,510 - 1,510 Liabilities: Deposits $ 1,412,748 - - 1,401,833 1,401,833 Securities sold under agreements to repurchase 37,094 - 37,094 - 37,094 Junior subordinated debentures 15,464 - 15,464 - 15,464 The tables below present the balance of mutual funds held in the deferred compensation trust, which are measured at fair value on a recurring basis by level within the fair value hierarchy, as of December 31, 2022 and 2021. (Dollars in thousands) December 31, 2022 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mutual funds held in deferred compensation trust $ 1,327 - 1,327 - (Dollars in thousands) December 31, 2021 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mutual funds held in deferred compensation trust $ 1,510 - 1,510 - |
Reportable Segments
Reportable Segments | 12 Months Ended |
Dec. 31, 2022 | |
Reportable Segments | |
Reportable Segments | (16) Reportable Segments The Company has two reportable segments as described below. Banking Operations – This segment reflects the consolidated Bank, excluding CBRES. The primary source of revenue for this segment is net interest income. CBRES – A Bank subsidiary that provides appraisal management services to community banks. The primary source of revenue for this segment is appraisal management fee income. The following table presents financial information for the reportable segments. The information provided under the caption “Other” represents the parent company, which is not considered to be a reportable segment, is included to reconcile the results of the operating segments to the consolidated financial statements prepared in conformity with GAAP. (Dollars in thousands) Banking Operations CBRES Other Consolidated As of and for the year ended December 31, 2022 Interest income $ 54,416 $ - $ 15 $ 54,431 Interest expense 2,796 - 527 3,323 Net interest income 51,620 - (512 ) 51,108 Provision for loan losses 1,472 - - 1,472 Noninterest income 15,012 14 - 15,026 Appraisal management fee income - 11,663 - 11,663 Noninterest expense 44,433 1,695 638 46,766 Appraisal management fee expense - 9,264 - 9,264 Income tax expense (benefit) 4,248 166 (242 ) 4,172 Net income (loss) $ 16,479 $ 552 $ (908 ) $ 16,123 Total assets $ 1,617,212 $ 3,227 $ 488 $ 1,620,927 As of and for the year ended December 31, 2021 Interest income $ 47,171 $ - $ 8 $ 47,179 Interest expense 2,930 - 275 3,205 Net interest income 44,241 - (267 ) 43,974 Recovery of loan losses (1,163 ) - - (1,163 ) Noninterest income 16,014 15 - 16,029 Appraisal management fee income - 8,890 - 8,890 Noninterest expense 42,239 1,163 613 44,015 Appraisal management fee expense - 7,112 - 7,112 Income tax expense (benefit) 3,836 145 (185 ) 3,796 Net income (loss) $ 15,343 $ 485 $ (695 ) $ 15,133 Total assets $ 1,620,933 $ 2,692 $ 568 $ 1,624,193 As of and for the year ended December 31, 2020 Interest income $ 47,926 $ - $ 32 $ 47,958 Interest expense 3,473 - 363 3,836 Net interest income 44,453 - (331 ) 44,122 Provision for loan losses 4,259 - - 4,259 Noninterest income 16,148 12 - 16,160 Appraisal management fee income - 6,754 - 6,754 Noninterest expense 42,041 991 625 43,657 Appraisal management fee expense - 5,274 - 5,274 Income tax expense (benefit) 2,574 116 (201 ) 2,489 Net income (loss) $ 11,727 $ 385 $ (755 ) $ 11,357 |
Peoples Bancorp of North Caroli
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements | 12 Months Ended |
Dec. 31, 2022 | |
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements | |
Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements | (17) Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements Balance Sheets December 31, 2022 and 2021 (Dollars in thousands) Assets 2022 2021 Cash $ 384 561 Interest-bearing time deposit 1,000 1,000 Investment in subsidiaries 118,832 155,716 Investment in PEBK Capital Trust II 464 464 Other assets 24 105 Total assets $ 120,704 157,846 Liabilities and Shareholders' Equity Junior subordinated debentures $ 15,464 15,464 Liabilities 45 13 Shareholders' equity 105,195 142,369 Total liabilities and shareholders' equity $ 120,704 157,846 Statements of Earnings For the Years Ended December 31, 2022, 2021 and 2020 (Dollars in thousands) Revenues: 2022 2021 2020 Interest and dividend from subsidiary $ 6,240 7,419 7,539 Total revenues 6,240 7,419 7,539 Expenses: Interest 529 280 370 Other operating expenses 639 613 625 Total expenses 1,168 893 995 Income before income tax benefit and equity in undistributed earnings of subsidiaries 5,072 6,526 6,544 Income tax benefit 242 185 201 Income before equity in undistributed earnings of subsidiaries 5,314 6,711 6,745 Equity in undistributed earnings of subsidiaries 10,809 8,422 4,612 Net earnings $ 16,123 15,133 11,357 Statements of Cash Flows For the Years Ended December 31, 2022, 2021 and 2020 (Dollars in thousands) 2022 2021 2020 Cash flows from operating activities: Net earnings $ 16,123 15,133 11,357 Adjustments to reconcile net earnings to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries (10,809 ) (8,422 ) (4,612 ) Change in: Other assets 81 545 (19 ) Other liabilities 32 - (10 ) Net cash provided by operating activities 5,427 7,256 6,716 Cash flows from investing activities: Proceeds from calls and maturities of investment securities available for sale - - 250 Net cash provided by investing activities - - 250 Cash flows from financing activities: Repayment of junior subordinated debentures - - (155 ) Cash dividends paid on common stock (4,935 ) (3,793 ) (4,392 ) Stock repurchase (710 ) (3,605 ) (2,999 ) Proceeds from exercise of restricted stock units 41 39 57 Net cash used by financing activities (5,604 ) (7,359 ) (7,489 ) Net change in cash (177 ) (103 ) (523 ) Cash at beginning of year 561 664 1,187 Cash at end of year $ 384 561 664 |
Quarterly Data
Quarterly Data | 12 Months Ended |
Dec. 31, 2022 | |
Quarterly Data | |
Quarterly Data | (18) Quarterly Data 2022 2021 (Dollars in thousands, except per share amounts) First Second Third Fourth First Second Third Fourth Total interest income $ 11,329 11,992 14,611 16,499 $ 11,922 12,517 11,421 11,319 Total interest expense 663 644 818 1,198 815 842 861 687 Net interest income 10,666 11,348 13,793 15,301 11,107 11,675 10,560 10,632 Provision for loan losses 71 410 408 583 (455 ) (226 ) (182 ) (300 ) Other income 7,046 7,328 6,793 5,522 5,873 6,040 6,040 6,966 Other expense 13,341 14,243 13,455 14,991 12,268 12,132 12,568 14,159 Income before income taxes 4,300 4,023 6,723 5,249 5,167 5,809 4,214 3,739 Income tax expense 848 806 1,416 1,102 1,046 1,194 824 732 Net earnings 3,452 3,217 5,307 4,147 4,121 4,615 3,390 3,007 Basic net earnings per share $ 0.63 0.59 0.96 0.76 $ 0.73 0.82 0.61 0.55 Diluted net earnings per share $ 0.61 0.57 0.93 0.74 $ 0.71 0.80 0.59 0.53 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | (19) Subsequent Events The Company has reviewed and evaluated subsequent events and transactions for material subsequent events through the date the financial statements are issued. Management has concluded that there were no material subsequent events other than the event noted below. In January and February 2023, the Bank sold securities available for sale totaling $53.5 million, which resulted in gross losses of $2.7 million and gross gains of $177,000. The transaction was intended to reduce risk in the investment portfolio provided by favorable conditions that had developed for this class of security in the first part of 2023, and to provide the Bank with more flexibility to take advantage of a higher interest rate environment in 2023. Between March 10, 2023 and March 12, 2023, two financial institutions unrelated to the Company experienced a significant run on deposits, leading to insolvency. These institutions failed and were placed into receivership by the FDIC. These institutions also had deposit concentrations related to higher-risk customer types, such as venture capital and cryptocurrency. The Federal Reserve determined that these institutions were a systemic risk and therefore, in concert with the FDIC, have determined that all deposits held by these two institutions will be insured. These events have created market volatility for the financial sector; however, the ongoing ramifications of these events have yet to be seen. These events have not caused any significant changes in deposit balances at Peoples Bank. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Organization | Peoples Bancorp of North Carolina, Inc. (the “Company”) has served as the holding company to Peoples Bank (the “Bank”) since 1999. The Company is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for the Bank. The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina Commissioner of Banks (the “Commissioner”). The Bank is primarily regulated by the Commissioner and the Federal Deposit Insurance Corporation (the “FDIC”) and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell and Wake counties in North Carolina. Peoples Investment Services, Inc. (“PIS”) is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. Real Estate Advisory Services, Inc. (“REAS”) is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. Community Bank Real Estate Solutions, LLC (“CBRES”) is a wholly owned subsidiary of the Bank and began operations in 2009 as a “clearing house” for appraisal services for community banks. Other banks are able to contract with CBRES to find and engage appropriate appraisal companies. In 2019, the Company launched PB Insurance Agency, which operated as a division of CBRES, until it was discontinued in 2022. PB Real Estate Holdings, LLC (“PBREH”) is a wholly owned subsidiary of the Bank and began operation in 2015. PBREH acquires, manages and disposes of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. The Bank operates three banking offices focused on the Latino population that were formerly operated as a division of the Bank under the name Banco de la Gente (“Banco”). These offices, which offer the same banking services as our other branches offer, now operate under the same name as our other offices; however, we continue to separately categorize mortgage loans originated from these offices. |
Principles of Consolidation | The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary, the Bank, along with the Bank’s wholly owned subsidiaries, PIS, REAS, CBRES and PBREH. All significant intercompany balances and transactions have been eliminated in consolidation. |
Basis of Presentation | The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“GAAP”) and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans. |
Business Segments | Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Management has determined that the Company has two significant operating segment: Banking Operations and CBRES, as discussed more fully in Note 16. In determining the appropriateness of segment definition, the Company considers the criteria of ASC 280, Segment Reporting. |
Cash and Cash Equivalents | Cash, due from banks, interest-bearing deposits and federal funds sold are considered cash and cash equivalents for cash flow reporting purposes. |
Investment Securities | The Company uses three classifications for its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2022 and 2021, the Company classified all of its investment securities as available for sale. Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized. Management evaluates investment securities for other-than-temporary impairment on a quarterly basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold. |
Other Investments | Other investments include equity securities with no readily determinable fair value. These investments are carried at cost. |
Loans | Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings. |
Allowance for Loan Losses | The allowance for loan losses (“ALLL” or “allowance”) reflects management’s assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: · the Bank’s loan loss experience; · the amount of past due and non-performing loans; · specific known risks; · the status and amount of other past due and non-performing assets; · underlying estimated values of collateral securing loans; · current and anticipated economic conditions; and · other factors which management believes affect the allowance for potential credit losses. Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank’s originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan’s performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank’s Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank’s Credit Administration. Any issues regarding the risk assessments are addressed by the Bank’s senior credit administrators and factored into management’s decision to originate or renew the loan. The Bank’s Board of Directors reviews, on a monthly basis, an analysis of the Bank’s reserves relative to the range of reserves estimated by the Bank’s Credit Administration. As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than or equal to $1.5 million as well as a periodic sample of commercial relationships with exposures below $1.5 million, excluding loans in default, and loans in process of litigation or liquidation. The third party’s evaluation and report is shared with management and the Board of Directors of the Bank (“Bank Board”). Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance. The provision for loan losses charged or credited to earnings is based upon management’s judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management’s assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance. The allowance is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management’s current evaluation of the Bank’s loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four, or five years’ loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. Qualitative factors applied in the Bank’s ALLL model include the impact to the economy from the COVID-19 pandemic and reserves on loans with payment modifications as a result of the COVID-19 pandemic. There were no loans with existing modifications as a result of the COVID-19 pandemic at December 31, 2022 and 2021. At December 31, 2022 and 2021, the Bank maintained a pool of loans that were previously modified as a result of the COVID-19 pandemic. The loan balances associated with those loans that were previously modified as a result of the COVID-19 pandemic related modifications have been grouped into their own pool within the Bank’s ALLL model as management considers that they have a higher risk profile, and a higher reserve rate has been applied to this pool. As such, a higher reserve rate has been applied to this pool. Loans included in this pool totaled $70.5 million and $88.7 million at December 31, 2022 and December 31, 2021, respectively. The unallocated allowance is determined through management’s assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management’s acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management’s evaluation of the factors affecting the assumptions used in calculating the allowance. There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. Effective December 31, 2012, certain mortgage loans from the former Banco division of the Bank were analyzed separately from other single family residential loans in the Bank’s loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg, North Carolina and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. SBA PPP loans are excluded from the allowance as PPP loans are 100 percent guaranteed by the SBA. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance adequate to cover the estimated losses inherent in the Bank’s loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company. |
Mortgage Banking Activities | Mortgage banking income represents income from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank’s origination of single-family residential mortgage loans. Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $285,000, $351,000 and $578,000 at December 31, 2022, 2021 and 2020, respectively. Mortgage servicing rights related to these loans are immaterial for all periods presented. The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements. Mortgage loans held for sale are carried at the lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. |
Premises and Equipment | Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for that period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: Buildings and improvements 10 - 50 years Furniture and equipment 3 - 10 years |
Other Real Estate | Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value less estimated selling costs declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate. |
Income Taxes | Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company’s financial position, results of operations or disclosures. |
Advertising Costs | Advertising costs are expensed as incurred. |
Stock-Based Compensation | The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the “2009 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. The 2009 Plan expired on May 7, 2019 but still governs the rights and obligations of the parties for grants made thereunder. No new awards may be made after May 7, 2019. The Company granted 16,583 restricted stock units under the 2009 Plan at a grant date fair value of $16.34 per share during the first quarter of 2015. The Company granted 5,544 restricted stock units under the 2009 Plan at a grant date fair value of $16.91 per share during the first quarter of 2016. The Company granted 4,114 restricted stock units under the 2009 Plan at a grant date fair value of $25.00 per share during the first quarter of 2017. The Company granted 3,725 restricted stock units under the 2009 Plan at a grant date fair value of $31.43 per share during the first quarter of 2018. The Company granted 5,290 restricted stock units under the 2009 Plan at a grant date fair value of $28.43 per share during the first quarter of 2019. The number of restricted stock units granted and grant date fair values for the restricted stock units granted in 2015 through 2017 have been restated to reflect the 10% stock dividend that was paid in the fourth quarter of 2017. The Company recognizes compensation expense on the restricted stock units over the vesting period (four years from the grant date for the 2015, 2016, 2017, 2018 and 2019 grants). The amount of expense recorded each period reflects the changes in the Company’s stock price during such period. As of December 31, 2022, the total unrecognized compensation expense related to the restricted stock unit grants under the 2009 Plan was $3,000. The Company also has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2020 (the “2020 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 300,000 shares were reserved for possible issuance under the 2020 Plan when it was adopted. As of December 31, 2021, a total of 285,305 shares out of the initial 300,000 shares reserved remain available for future issuance under the 2020 Plan. No new awards may be made after May 7, 2030 (ten years from the 2020 Plan effective date). The Company granted 7,635 restricted stock units under the 2020 Plan at a grant date fair value of $17.08 per share during the second quarter of 2020. The Company granted 7,060 restricted stock units under the 2020 Plan at a grant date fair value of $22.04 per share during the first quarter of 2021. The Company granted 5,385 restricted stock units under the 2020 Plan at a grant date fair value of $27.99 per share during the first quarter of 2022. The Company recognizes compensation expense on the restricted stock units over the vesting period (four years from the grant date for 2020, 2021 and 2022 grants). As of December 31, 2022, the total unrecognized compensation expense related to the restricted stock unit grants under the 2020 Plan was $334,000. The Company recognized compensation expense for restricted stock units granted under the 2009 Plan and 2020 Plan of $249,000, $181,000 and $27,000 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Net Earnings Per Share | Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. The reconciliations of the amounts used in the computation of both “basic earnings per common share” and “diluted earnings per common share” for the years ended December 31, 2022, 2021 and 2020 are as follows: For the year ended December 31, 2022 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 16,123 5,480,123 $ 2.94 Effect of dilutive securities: Restricted stock units - unvested - 15,467 Shares held in deferred comp plan by deferred compensation trust 165,599 Diluted earnings per share $ 16,123 5,661,189 $ 2.85 For the year ended December 31, 2021 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 15,133 5,576,099 $ 2.71 Effect of dilutive securities: Restricted stock units - unvested - 13,935 Shares held in deferred comp plan by deferred compensation trust 158,831 Diluted earnings per share $ 15,133 5,748,865 $ 2.63 For the year ended December 31, 2020 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 11,357 5,657,025 $ 2.01 Effect of dilutive securities: Restricted stock units - 14,203 Shares held in deferred comp plan by deferred compensation trust - 150,394 Diluted earnings per share $ 11,357 5,821,622 $ 1.95 |
Recent Accounting Pronouncements | The following tables provide a summary of Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) that the Company has recently adopted. Recently Adopted Accounting Guidance ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2020-04: Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Guidance that provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is intended to help stakeholders during the global market-wide reference rate transition period. Therefore, it will be in effect for a limited time through December 31, 2022. March 12, 2020 through December 31, 2022 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. The following tables provide a summary of ASU’s issued by the FASB that the Company has not adopted as of December 31, 2022, which may impact the Company’s financial statements. Recently Issued Accounting Guidance Not Yet Adopted ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2016-13: Measurement of Credit Losses on Financial Instruments Provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. See ASU 2019-10 below. The Company will apply this guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company is still evaluating the impact of this guidance on its consolidated financial statements. The Company has formed a Current Expected Credit Losses (“CECL”) committee and implemented a model from a third-party vendor for running CECL calculations. The Company has developed CECL model assumptions and is comparing results to current allowance for loan loss calculations. Parallel processing of the existing allowance for loan losses model with the CECL was completed during the fourth quarter of 2022. At this time, the Company expects its allowance for credit losses related to all financial assets will increase by approximately $1.1 million upon adoption compared to its allowance for loan losses at December 31, 2022 of approximately $10.5 million. The impact of the initial adoption will be reflected in the Company's SEC Form 10-Q for the period ended March 31, 2023. ASU 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses Aligns the implementation date of the topic for annual financial statements of nonpublic companies with the implementation date for their interim financial statements. The guidance also clarifies that receivables arising from operating leases are not within the scope of the topic, but rather, should be accounted for in accordance with the leases topic. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Addresses unintended issues accountants flagged when implementing ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU 2019-05: Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief Guidance to provide entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. See ASU 2019-10 below. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. See ASU 2016-13 above. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2019-10: Financial Instruments Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates Guidance to defer the effective dates for private companies, not-for-profit organizations, and certain smaller reporting companies applying standards on current expected credit losses (CECL), leases and hedging. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2019-11: Codification Improvements to Topic 326, Financial Instruments Credit Losses Guidance that addresses issues raised by stakeholders during the implementation of ASU 2016-13, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments affect a variety of Topics in the ASC. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2020-03: Codification Improvements to Financial Instruments Guidance to clarify that the contractual term of a net investment in a lease, determined in accordance with the leases standard, should be the contractual term used to measure expected credit losses under ASC 326. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations, financial position or disclosures. ASU 2022-02: Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Eliminates the guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 2 and amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination. January 1, 2023 The adoption of this guidance is not expected to have a material impact on the Company s results of operations or financial position but will impact future disclosure requirements and reduce individually evaluated loan totals. Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company’s results of operations, financial position or disclosures. |
Reclassification | Certain amounts in the 2021 and 2020 consolidated financial statements have been reclassified to conform to the 2022 presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of premises and equipment | Buildings and improvements 10 - 50 years Furniture and equipment 3 - 10 years |
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share | For the year ended December 31, 2022 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 16,123 5,480,123 $ 2.94 Effect of dilutive securities: Restricted stock units - unvested - 15,467 Shares held in deferred comp plan by deferred compensation trust 165,599 Diluted earnings per share $ 16,123 5,661,189 $ 2.85 For the year ended December 31, 2021 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 15,133 5,576,099 $ 2.71 Effect of dilutive securities: Restricted stock units - unvested - 13,935 Shares held in deferred comp plan by deferred compensation trust 158,831 Diluted earnings per share $ 15,133 5,748,865 $ 2.63 For the year ended December 31, 2020 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 11,357 5,657,025 $ 2.01 Effect of dilutive securities: Restricted stock units - 14,203 Shares held in deferred comp plan by deferred compensation trust - 150,394 Diluted earnings per share $ 11,357 5,821,622 $ 1.95 |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investment Securities | |
Investment securities available for sale | (Dollars in thousands) December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S Treasuries $ 10,951 - 1,137 9,814 U.S. Government sponsored enterprises 12,245 - 706 11,539 Mortgage-backed securities 299,222 445 25,829 273,838 State and political subdivisions 184,768 91 34,656 150,203 Total $ 507,186 536 62,328 445,394 (Dollars in thousands) December 31, 2021 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S Treasuries $ 7,964 - 75 7,889 U.S. Government sponsored enterprises 14,252 200 185 14,267 Mortgage-backed securities 218,402 1,769 3,019 217,152 State and political subdivisions 165,804 3,694 2,257 167,241 Total $ 406,422 5,663 5,536 406,549 |
current fair value and associated unrealized losses on investments in debt securities with unrealized losses | (Dollars in thousands) December 31, 2022 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasuries $ 2,878 104 6,936 1,033 9,814 1,137 U.S. Government sponsored enterprises 2,904 87 8,635 619 11,539 706 Mortgage-backed securities 128,241 8,740 120,464 17,089 248,705 25,829 State and political subdivisions 65,880 7,766 76,291 26,890 142,171 34,656 Total $ 199,903 16,697 212,326 45,631 412,229 62,328 (Dollars in thousands) December 31, 2021 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. Treasuries $ 7,889 75 - - 7,889 75 U.S. Government sponsored enterprises 5,232 15 3,263 170 8,495 185 Mortgage-backed securities 131,483 2,477 19,632 542 151,115 3,019 State and political subdivisions 80,076 1,981 5,922 276 85,998 2,257 Total $ 224,680 4,548 28,817 988 253,497 5,536 |
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity | December 31, 2022 (Dollars in thousands) Amortized Cost Fair Value Due within one year $ 240 240 Due from one to five years 8,434 8,128 Due from five to ten years 58,540 49,599 Due after ten years 140,750 113,589 Mortgage-backed securities 299,222 273,838 Total $ 507,186 445,394 |
Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs | (Dollars in thousands) December 31, 2022 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation U. S Treasuries $ 9,814 - 9,814 - U.S. Government sponsored enterprises $ 11,539 - 11,539 - Mortgage-backed securities $ 273,838 - 273,838 - State and political subdivisions $ 150,203 - 150,203 - (Dollars in thousands) December 31, 2021 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation U. S Treasuries $ 7,889 - 7,889 -88.7 U.S. Government sponsored enterprises $ 14,267 - 14,267 - Mortgage-backed securities $ 217,152 - 217,152 - State and political subdivisions $ 167,241 - 167,241 - |
Loans (Tables)
Loans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loans | |
Major classifications of loans | (Dollars in thousands) December 31, 2022 December 31, 2021 Real estate loans: Construction and land development $ 114,446 95,760 Single-family residential 322,262 266,111 Single-family residential - Banco de la Gente non-traditional 20,019 23,147 Commercial 406,750 337,841 Multifamily and farmland 65,562 58,366 Total real estate loans 929,039 781,225 Loans not secured by real estate: Commercial loans 81,307 91,172 Farm loans 938 796 Consumer loans 6,834 6,436 All other loans 14,490 5,240 Total loans 1,032,608 884,869 Less allowance for loan losses (10,494 ) (9,355 ) Total net loans $ 1,022,114 875,514 |
Age analysis of past due loans, by loan type | December 31, 2022 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 363 - 363 114,083 114,446 - Single-family residential 4,318 256 4,574 317,688 322,262 - Single-family residential - Banco de la Gente non-traditional 2,977 264 3,241 16,778 20,019 - Commercial 306 - 306 406,444 406,750 - Multifamily and farmland - - - 65,562 65,562 - Total real estate loans 7,964 520 8,484 920,555 929,039 - Loans not secured by real estate: Commercial loans 3 - 3 81,304 81,307 - Farm loans - - - 938 938 - Consumer loans 71 - 71 6,763 6,834 - All other loans - - - 14,490 14,490 - Total loans $ 8,038 520 8,558 1,024,050 1,032,608 - December 31, 2021 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ - - - 95,760 95,760 - Single-family residential 2,323 634 2,957 263,154 266,111 - Single-family residential - Banco de la Gente non-traditional 2,593 112 2,705 20,442 23,147 - Commercial 488 - 488 337,353 337,841 - Multifamily and farmland - - - 58,366 58,366 - Total real estate loans 5,404 746 6,150 775,075 781,225 - Loans not secured by real estate: Commercial loans 43 - 43 91,129 91,172 - Farm loans - - - 796 796 - Consumer loans 38 - 38 6,398 6,436 - All other loans - - - 5,240 5,240 - Total loans $ 5,485 746 6,231 878,638 884,869 - |
Non-accrual loans | (Dollars in thousands) December 31, 2022 December 31, 2021 Real estate loans: Construction and land development $ 53 - Single-family residential 1,914 1,642 Single-family residential - Banco de la Gente non-traditional 1,532 1,232 Commercial 129 200 Multifamily and farmland 91 105 Total real estate loans 3,719 3,179 Loans not secured by real estate: Commercial loans - 49 Consumer loans 9 2 Total $ 3,728 3,230 |
Schedule Of Bank's impaired loans | December 31, 2022 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 110 - 110 110 2 75 8 Single-family residential 3,912 236 3,300 3,536 60 5,194 194 Single-family residential - Banco de la Gente non-traditional 10,441 - 9,748 9,748 611 8,757 552 Commercial 1,785 421 1,346 1,767 9 1,916 93 Multifamily and farmland 104 - 91 91 - 96 5 Total impaired real estate loans 16,352 657 14,595 15,252 682 16,038 852 Loans not secured by real estate: Commercial loans 116 - 116 116 1 137 8 Consumer loans 11 - 9 9 - 15 2 Total impaired loans $ 16,479 657 14,720 15,377 683 16,190 862 December 31, 2021 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 73 - 73 73 3 82 6 Single-family residential 5,138 524 4,374 4,898 86 6,017 253 Single-family residential - Banco de la Gente non-traditional 11,753 - 10,922 10,922 687 10,325 609 Commercial 2,138 435 1,608 2,043 11 2,385 109 Multifamily and farmland 113 - 105 105 - 110 6 Total impaired real estate loans 19,215 959 17,082 18,041 787 18,919 983 Loans not secured by real estate: Commercial loans 282 49 170 219 2 271 19 Consumer loans 8 - 4 4 - 11 1 Total impaired loans $ 19,505 1,008 17,256 18,264 789 19,201 1,003 December 31, 2020 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 108 - 108 108 4 134 8 Single-family residential 5,302 379 4,466 4,845 33 4,741 262 Single-family residential - Banco de la Gente non-traditional 13,417 - 12,753 12,753 862 13,380 798 Commercial 2,999 1,082 1,891 2,973 14 2,940 139 Multifamily and farmland 119 - 117 117 - 29 6 Total impaired real estate loans 21,945 1,461 19,335 20,796 913 21,224 1,213 Loans not secured by real estate: Commercial loans 515 211 244 455 5 564 32 Consumer loans 41 - 37 37 1 60 5 Total impaired loans $ 22,501 1,672 19,616 21,288 919 21,848 1,250 |
Fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis | (Dollars in thousands) Fair Value Measurements December 31, 2022 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 211 - - 211 Impaired loans $ 14,694 - - 14,694 (Dollars in thousands) Fair Value Measurements December 31, 2021 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 3,637 - - 3,637 Impaired loans $ 17,475 - - 17,475 Fair Value December 31, 2022 Fair Value December 31, 2021 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 211 $ 3,637 Rate lock commitment N/A N/A Impaired loans $ 14,694 $ 17,475 Appraised value and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% |
Changes in the allowance for loan losses | (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2022 Allowance for loan losses: Beginning balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Charge-offs - (128 ) - - - (33 ) - (591 ) - (752 ) Recoveries - 229 - 9 - 72 - 109 - 419 Provision 222 208 (101 ) 964 14 (93 ) - 586 (328 ) 1,472 Ending balance $ 1,415 2,322 763 3,207 164 657 - 214 1,752 10,494 Allowance for loan losses December 31, 2022 Ending balance: individually evaluated for impairment $ - 36 597 6 - - - - - 639 Ending balance: collectively evaluated for impairment 1,415 2,286 166 3,201 164 657 - 214 1,752 9,855 Ending balance $ 1,415 2,322 763 3,207 164 657 - 214 1,752 10,494 Loans at December 31, 2022 Ending balance $ 114,446 322,262 20,019 406,750 65,562 81,307 938 21,324 - 1,032,608 Ending balance: individually evaluated for impairment $ - 537 8,555 1,388 - - - - - 10,480 Ending balance: collectively evaluated for impairment $ 114,446 321,725 11,464 405,362 65,562 81,307 938 21,324 - 1,022,128 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2021 Allowance for loan losses: Beginning balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Charge-offs - (89 ) - - - (293 ) - (380 ) - (762 ) Recoveries 121 271 - 52 3 786 - 139 - 1,372 Provision (124 ) (12 ) (188 ) (30 ) 25 (1,127 ) - 223 70 (1,163 ) Ending balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Allowance for loan losses December 31, 2021 Ending balance: individually evaluated for impairment $ 1 57 672 7 - - - - - 737 Ending balance: collectively evaluated for impairment 1,192 1,956 192 2,227 150 711 - 110 2,080 8,618 Ending balance $ 1,193 2,013 864 2,234 150 711 - 110 2,080 9,355 Loans at December 31, 2021 Ending balance $ 95,760 266,111 23,147 337,841 58,366 91,172 796 11,676 - 884,869 Ending balance: individually evaluated for impairment $ 6 1,633 9,795 1,437 - 49 - - - 12,920 Ending balance: collectively evaluated for impairment $ 95,754 264,478 13,352 336,404 58,366 91,123 796 11,676 - 871,949 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Twelve months ended December 31, 2020 Allowance for loan losses: Beginning balance $ 694 1,274 1,073 1,305 120 688 - 138 1,388 6,680 Charge-offs (5 ) (65 ) - (7 ) - (903 ) - (434 ) - (1,414 ) Recoveries 36 70 - 70 - 34 - 173 - 383 Provision 471 564 (21 ) 844 2 1,526 - 251 622 4,259 Ending balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Allowance for loan losses December 31, 2020 Ending balance: individually evaluated for impairment $ 1 4 844 8 - - - - - 857 Ending balance: collectively evaluated for impairment 1,195 1,839 208 2,204 122 1,345 - 128 2,010 9,051 Ending balance $ 1,196 1,843 1,052 2,212 122 1,345 - 128 2,010 9,908 Loans at December 31, 2020 Ending balance $ 94,124 272,325 26,883 332,971 48,880 161,740 855 10,861 - 948,639 Ending balance: individually evaluated for impairment $ 7 1,558 11,353 2,118 - 212 - - - 15,248 Ending balance: collectively evaluated for impairment $ 94,117 270,767 15,530 330,853 48,880 161,528 855 10,861 - 933,391 |
Credit risk profile of each loan type based on internally assigned risk grade | December 31, 2022 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 2,782 - - - 1,365 - 527 - 4,674 2- High Quality 14,912 138,124 - 33,353 17 13,302 - 2,384 1,366 203,458 3- Good Quality 94,113 166,329 7,442 340,926 63,270 64,422 938 3,663 12,851 753,954 4- Management Attention 5,257 10,615 8,968 27,957 2,061 1,507 - 244 128 56,737 5- Watch 54 922 1,136 3,963 123 711 - 1 145 7,055 6- Substandard 110 3,490 2,473 551 91 - - 15 - 6,730 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 114,446 322,262 20,019 406,750 65,562 81,307 938 6,834 14,490 1,032,608 December 31, 2021 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ - 5,923 - - - 371 - 581 - 6,875 2- High Quality 11,752 109,337 - 28,546 19 16,177 - 2,039 1,309 169,179 3- Good Quality 80,325 129,856 8,712 272,786 54,945 68,183 792 3,510 3,931 623,040 4- Management Attention 3,534 14,964 10,478 30,937 2,754 5,214 4 284 - 68,169 5- Watch 76 2,464 1,703 4,938 543 1,177 - 1 - 10,902 6- Substandard 73 3,567 2,254 634 105 50 - 21 - 6,704 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 95,760 266,111 23,147 337,841 58,366 91,172 796 6,436 5,240 884,869 |
Premises and Equipment (Tables)
Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Premises and Equipment | |
Summary of premises and equipment | (Dollars in thousands) 2022 2021 Land $ 3,851 3,857 Buildings and improvements 18,371 18,359 Furniture and equipment 26,156 25,420 Construction in process 3,028 - Total premises and equipment 51,406 47,636 Less accumulated depreciation (33,201 ) (31,532 ) Total net premises and equipment $ 18,205 16,104 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Lease expense | (Dollars in thousands) December 31, 2022 Operating lease cost $ 888 Other information: Cash paid for amounts included in the measurement of lease liabilities 873 Operating cash flows from operating leases - Right-of-use assets obtained in exchange for new lease liabilities - operating leases 1,726 Weighted-average remaining lease term - operating leases 9.26 Weighted-average discount rate - operating leases 2.23 % |
Maturity analysis of operating lease liabilities | (Dollars in thousands) Maturity Analysis of Operating Lease Liabilities: December 31, 2022 2023 $ 805 2024 750 2025 694 2026 577 2027 528 Thereafter 2,418 Total 5,727 Less: Imputed Interest (542 ) Operating Lease Liability $ 5,185 |
Time Deposits (Tables)
Time Deposits (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Time Deposits | |
Scheduled maturities of time deposits | (Dollars in thousands) 2023 $ 59,099 2024 26,526 2025 7,380 2026 3,420 2027 and thereafter 1,574 Total $ 97,999 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Components of income tax expense (benefit) | (Dollars in thousands) 2022 2021 2020 Current expense $ 4,713 4,023 3,049 Deferred income tax benefit (541 ) (227 ) (560 ) Total income tax $ 4,172 3,796 2,489 |
Schedule of effective income Tax rate reconciliation | (Dollars in thousands) 2022 2021 2020 Tax expense at statutory rate $ 4,262 3,975 2,908 State income tax, net of federal income tax effect 395 339 261 Tax-exempt interest income (445 ) (497 ) (649 ) Increase in cash surrender value of life insurance (71 ) (83 ) (80 ) Tax credits (230 ) (234 ) (234 ) Nondeductible interest and other expense 24 30 46 Other 237 266 237 Total $ 4,172 3,796 2,489 |
Schedule of deferred tax assets and liabilities | (Dollars in thousands) 2022 2021 Deferred tax assets: Allowance for loan losses $ 2,411 2,149 Accrued retirement expense 1,174 1,148 Restricted stock 245 209 Interest income on nonaccrual loans 1 2 Lease liability 1,191 1,075 Unrealized loss on available for sale securities 14,197 - Total gross deferred tax assets 19,219 4,583 Deferred tax liabilities: Deferred loan fees 209 263 Accumulated depreciation 438 563 Prepaid expenses 3 4 ROU Asset 1,175 1,060 Other (93 ) (55 ) Unrealized gain on available for sale securities - 29 Total gross deferred tax liabilities 1,732 1,864 Net deferred tax asset $ 17,487 2,719 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Summary of activity for related party loans | (Dollars in thousands) 2022 2021 Beginning balance $ 2,687 1,852 Disbursements 4,090 3,636 Repayments (3,396 ) (2,801 ) Ending balance $ 3,381 2,687 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Financial instruments with credit risk | (Dollars in thousands) Contractual Amount 2022 2021 Financial instruments whose contract amount represent credit risk: Commitments to extend credit $ 382,699 304,258 Standby letters of credit $ 4,352 4,892 |
Employee and Director Benefit_2
Employee and Director Benefit Programs (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Employee and Director Benefit Programs | |
Change in accumulated benefit obligation | (Dollars in thousands) 2022 2021 Benefit obligation at beginning of period $ 5,011 4,870 Service cost 325 359 Interest cost 63 70 Benefits paid (289 ) (288 ) Benefit obligation at end of period $ 5,110 5,011 |
Amounts recognized in the Consolidated Balance Sheet | (Dollars in thousands) 2022 2021 Benefit obligation $ 5,110 5,011 Fair value of plan assets - - (Dollars in thousands) 2022 2021 Funded status $ (5,110 ) (5,011 ) Unrecognized prior service cost/benefit - - Unrecognized net actuarial loss - - Net amount recognized $ (5,110 ) (5,011 ) Unfunded accrued liability $ (5,110 ) (5,011 ) Intangible assets - - Net amount recognized $ (5,110 ) (5,011 ) |
Schedule of net benefit costs | (Dollars in thousands) 2022 2021 2020 Service cost $ 325 359 359 Interest cost 63 70 70 Net periodic cost $ 388 429 429 Weighted average discount rate assumption used to determine benefit obligation 5.50 % 5.50 % 5.49 % |
Schedule of expected benefit payments | (Dollars in thousands) Year ending December 31, 2023 $ 329 2024 $ 353 2025 $ 370 2026 $ 368 2027 $ 494 Thereafter $ 8,358 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Regulatory Matters | |
Bank's actual capital amounts and ratios | (Dollars in thousands) Actual Minimum Regulatory Capital Ratio Minimum Ratio plus Capital Conservation Buffer Amount Ratio Amount Ratio Amount Ratio As of December 31, 2022: Total Capital (to Risk-Weighted Assets) Consolidated $ 178,286 14.04 % 101,608 8.00 % N/A N/A Bank $ 176,923 13.93 % 101,606 8.00 % 133,357 10.50 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 167,792 13.21 % 76,206 6.00 % N/A N/A Bank $ 166,429 13.10 % 76,204 6.00 % 107,956 8.50 % Tier 1 Capital (to Average Assets) Consolidated $ 167,792 9.82 % 68,347 4.00 % N/A N/A Bank $ 166,429 9.68 % 68,780 4.00 % 68,780 4.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 152,792 12.03 % 57,154 4.50 % N/A N/A Bank $ 166,429 13.10 % 57,153 4.50 % 88,905 7.00 % (Dollars in thousands) Actual Minimum Regulatory Capital Ratio Minimum Ratio plus Capital Conservation Buffer Amount Ratio Amount Ratio Amount Ratio As of December 31, 2021: Total Capital (to Risk-Weighted Assets) Consolidated $ 166,628 16.35 % 81,547 8.00 % N/A N/A Bank $ 164,975 16.19 % 81,539 8.00 % 107,020 10.50 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated $ 157,273 15.43 % 61,160 6.00 % N/A N/A Bank $ 155,620 15.27 % 61,154 6.00 % 86,635 8.50 % Tier 1 Capital (to Average Assets) Consolidated $ 157,273 9.64 % 65,258 4.00 % N/A N/A Bank $ 155,620 9.50 % 65,557 4.00 % 65,557 4.00 % Common Equity Tier 1 (to Risk-Weighted Assets) Consolidated $ 142,273 13.96 % 45,870 4.50 % N/A N/A Bank $ 155,620 15.27 % 45,866 4.50 % 71,347 7.00 % |
Other Operating Income and Ex_2
Other Operating Income and Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Operating Income and Expense | |
Schedule Of Miscellaneous non-interest income | (Dollars in thousands) 2022 2021 2020 Visa debit card income $ 4,901 5,045 4,237 Bank owned life insurance income 458 397 380 Other 2,390 2,197 1,315 $ 7,749 7,639 5,932 |
Schedule Of Other non-interest expense | (Dollars in thousands) 2022 2021 2020 ATM expense $ 629 619 567 Data processing 777 643 635 Deposit program expense 348 415 426 Dues and subscriptions 628 588 538 FHLB advance prepayment penalty - - 1,100 Internet banking expense 949 768 729 Office supplies 532 374 538 Telephone 691 730 794 Other 3,741 3,737 3,217 $ 8,295 7,874 8,544 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value of Financial Instruments | |
Carrying amount and estimated fair value of the Company's financial instruments | (Dollars in thousands) Fair Value Measurements at December 31, 2022 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 71,596 71,596 - - 71,596 Investment securities available for sale 445,394 - 445,394 - 445,394 Other investments 2,656 - - 2,656 2,656 Mortgage loans held for sale 211 - - 211 211 Loans, net 1,022,114 - - 998,587 998,587 Mutual funds held in deferred compensation trust 1,327 - 1,327 - 1,327 Liabilities: Deposits $ 1,435,215 - - 1,434,871 1,434,871 Securities sold under agreements to repurchase 47,688 - 47,688 - 47,688 Junior subordinated debentures 15,464 - 15,464 - 15,464 (Dollars in thousands) Fair Value Measurements at December 31, 2021 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 277,499 277,499 - - 277,499 Investment securities available for sale 406,549 - 406,549 - 406,549 Other investments 3,668 - - 3,668 3,668 Mortgage loans held for sale 3,637 - - 3,637 3,637 Loans, net 875,514 - - 855,814 855,814 Mutual funds held in deferred compensation trust 1,510 - 1,510 - 1,510 Liabilities: Deposits $ 1,412,748 - - 1,401,833 1,401,833 Securities sold under agreements to repurchase 37,094 - 37,094 - 37,094 Junior subordinated debentures 15,464 - 15,464 - 15,464 |
summary of present the balance of mutual funds | (Dollars in thousands) December 31, 2022 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mutual funds held in deferred compensation trust $ 1,327 - 1,327 - (Dollars in thousands) December 31, 2021 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mutual funds held in deferred compensation trust $ 1,510 - 1,510 - |
Reportable Segments (Tables)
Reportable Segments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Reportable Segments | |
presents financial information for the reportable segments | (Dollars in thousands) Banking Operations CBRES Other Consolidated As of and for the year ended December 31, 2022 Interest income $ 54,416 $ - $ 15 $ 54,431 Interest expense 2,796 - 527 3,323 Net interest income 51,620 - (512 ) 51,108 Provision for loan losses 1,472 - - 1,472 Noninterest income 15,012 14 - 15,026 Appraisal management fee income - 11,663 - 11,663 Noninterest expense 44,433 1,695 638 46,766 Appraisal management fee expense - 9,264 - 9,264 Income tax expense (benefit) 4,248 166 (242 ) 4,172 Net income (loss) $ 16,479 $ 552 $ (908 ) $ 16,123 Total assets $ 1,617,212 $ 3,227 $ 488 $ 1,620,927 As of and for the year ended December 31, 2021 Interest income $ 47,171 $ - $ 8 $ 47,179 Interest expense 2,930 - 275 3,205 Net interest income 44,241 - (267 ) 43,974 Recovery of loan losses (1,163 ) - - (1,163 ) Noninterest income 16,014 15 - 16,029 Appraisal management fee income - 8,890 - 8,890 Noninterest expense 42,239 1,163 613 44,015 Appraisal management fee expense - 7,112 - 7,112 Income tax expense (benefit) 3,836 145 (185 ) 3,796 Net income (loss) $ 15,343 $ 485 $ (695 ) $ 15,133 Total assets $ 1,620,933 $ 2,692 $ 568 $ 1,624,193 As of and for the year ended December 31, 2020 Interest income $ 47,926 $ - $ 32 $ 47,958 Interest expense 3,473 - 363 3,836 Net interest income 44,453 - (331 ) 44,122 Provision for loan losses 4,259 - - 4,259 Noninterest income 16,148 12 - 16,160 Appraisal management fee income - 6,754 - 6,754 Noninterest expense 42,041 991 625 43,657 Appraisal management fee expense - 5,274 - 5,274 Income tax expense (benefit) 2,574 116 (201 ) 2,489 Net income (loss) $ 11,727 $ 385 $ (755 ) $ 11,357 |
Peoples Bancorp of North Caro_2
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements | |
Balance Sheets | Balance Sheets December 31, 2022 and 2021 (Dollars in thousands) Assets 2022 2021 Cash $ 384 561 Interest-bearing time deposit 1,000 1,000 Investment in subsidiaries 118,832 155,716 Investment in PEBK Capital Trust II 464 464 Other assets 24 105 Total assets $ 120,704 157,846 Liabilities and Shareholders' Equity Junior subordinated debentures $ 15,464 15,464 Liabilities 45 13 Shareholders' equity 105,195 142,369 Total liabilities and shareholders' equity $ 120,704 157,846 |
Statements of Earnings | Statements of Earnings For the Years Ended December 31, 2022, 2021 and 2020 (Dollars in thousands) Revenues: 2022 2021 2020 Interest and dividend from subsidiary $ 6,240 7,419 7,539 Total revenues 6,240 7,419 7,539 Expenses: Interest 529 280 370 Other operating expenses 639 613 625 Total expenses 1,168 893 995 Income before income tax benefit and equity in undistributed earnings of subsidiaries 5,072 6,526 6,544 Income tax benefit 242 185 201 Income before equity in undistributed earnings of subsidiaries 5,314 6,711 6,745 Equity in undistributed earnings of subsidiaries 10,809 8,422 4,612 Net earnings $ 16,123 15,133 11,357 |
Statements of Cash Flows | Statements of Cash Flows For the Years Ended December 31, 2022, 2021 and 2020 (Dollars in thousands) 2022 2021 2020 Cash flows from operating activities: Net earnings $ 16,123 15,133 11,357 Adjustments to reconcile net earnings to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries (10,809 ) (8,422 ) (4,612 ) Change in: Other assets 81 545 (19 ) Other liabilities 32 - (10 ) Net cash provided by operating activities 5,427 7,256 6,716 Cash flows from investing activities: Proceeds from calls and maturities of investment securities available for sale - - 250 Net cash provided by investing activities - - 250 Cash flows from financing activities: Repayment of junior subordinated debentures - - (155 ) Cash dividends paid on common stock (4,935 ) (3,793 ) (4,392 ) Stock repurchase (710 ) (3,605 ) (2,999 ) Proceeds from exercise of restricted stock units 41 39 57 Net cash used by financing activities (5,604 ) (7,359 ) (7,489 ) Net change in cash (177 ) (103 ) (523 ) Cash at beginning of year 561 664 1,187 Cash at end of year $ 384 561 664 |
Quarterly Data (Tables)
Quarterly Data (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Quarterly Data | |
Schedule of quarterly financial information | 2022 2021 (Dollars in thousands, except per share amounts) First Second Third Fourth First Second Third Fourth Total interest income $ 11,329 11,992 14,611 16,499 $ 11,922 12,517 11,421 11,319 Total interest expense 663 644 818 1,198 815 842 861 687 Net interest income 10,666 11,348 13,793 15,301 11,107 11,675 10,560 10,632 Provision for loan losses 71 410 408 583 (455 ) (226 ) (182 ) (300 ) Other income 7,046 7,328 6,793 5,522 5,873 6,040 6,040 6,966 Other expense 13,341 14,243 13,455 14,991 12,268 12,132 12,568 14,159 Income before income taxes 4,300 4,023 6,723 5,249 5,167 5,809 4,214 3,739 Income tax expense 848 806 1,416 1,102 1,046 1,194 824 732 Net earnings 3,452 3,217 5,307 4,147 4,121 4,615 3,390 3,007 Basic net earnings per share $ 0.63 0.59 0.96 0.76 $ 0.73 0.82 0.61 0.55 Diluted net earnings per share $ 0.61 0.57 0.93 0.74 $ 0.71 0.80 0.59 0.53 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Building Improvements | Minimum | |
Estimated useful lives | 10 |
Building Improvements | Maximum | |
Estimated useful lives | 50 |
Furniture and equipment | Minimum | |
Estimated useful lives | 3 |
Furniture and equipment | Maximum | |
Estimated useful lives | 10 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Earnings Available to Common Shareholders | |||||||||||
Net earnings | $ 16,123,000 | $ 15,133,000 | $ 11,357,000 | ||||||||
Effect of dilutive securities: Restricted stock units | 0 | 0 | 0 | ||||||||
Diluted earnings per common share | $ 16,123,000 | $ 15,133,000 | $ 11,357,000 | ||||||||
Common Shares | |||||||||||
Basic earnings per common share (in shares) | 5,480,123 | 5,576,099 | 5,657,025 | ||||||||
Effect of dilutive securities: Restricted stock units (in shares) | 15,467 | 13,935 | 14,203 | ||||||||
Shares held in deferred comp plan | 165,599 | 158,831 | 150,394 | ||||||||
Diluted earnings per common share (in shares) | 5,661,189 | 5,748,865 | 5,821,622 | ||||||||
Per Share Amount | |||||||||||
Basic earnings per common share (in dollars per share) | $ 0.76 | $ 0.96 | $ 0.59 | $ 0.63 | $ 0.55 | $ 0.61 | $ 0.82 | $ 0.73 | $ 2.94 | $ 2.71 | $ 2.01 |
Diluted earnings per common share (in dollars per share) | $ 0.74 | $ 0.93 | $ 0.57 | $ 0.61 | $ 0.53 | $ 0.59 | $ 0.80 | $ 0.71 | $ 2.85 | $ 2.63 | $ 1.95 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | Jun. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Unpaid principal balances of mortgage loans serviced for others | $ 285,000 | $ 351,000 | $ 578,000 | ||||||||
Loans | 70,500,000 | 88,700,000 | |||||||||
Under the 2009 Plan and 2020 Plan [Member] | |||||||||||
Compensation expense for restricted stock units | 249,000 | $ 181,000 | $ 27,000 | ||||||||
2009 Plan | |||||||||||
Unrecognized compensation expense related to the restricted stock unit grants | 3,000 | ||||||||||
Shares of restricted stock units granted | 5,290 | 3,725 | 4,114 | 5,544 | 16,583 | ||||||
Fair value of restricted stock units granted | $ 28.43 | $ 31.43 | $ 25 | $ 16.91 | $ 16.34 | ||||||
2020 Plan | |||||||||||
Unrecognized compensation expense related to the restricted stock unit grants | $ 334,000 | ||||||||||
Fair value of restricted stock units granted | $ 5,385 | $ 7,060 | $ 7,635 | ||||||||
Shares of restricted stock units granted | $ 27.99 | $ 22.04 | $ 17.08 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Amortized cost | $ 507,186 | $ 406,422 |
Gross unrealized gains | 536 | 5,663 |
Gross unrealized losses | 62,328 | 5,536 |
Estimated fair value | 445,394 | 406,549 |
U.S Treasuries [Member] | ||
Amortized cost | 10,951 | 7,964 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 1,137 | 75 |
Estimated fair value | 9,814 | 7,889 |
Mortgage-backed securities | ||
Amortized cost | 299,222 | 218,402 |
Gross unrealized gains | 445 | 1,769 |
Gross unrealized losses | 25,829 | 3,019 |
Estimated fair value | 273,838 | 217,152 |
U.S. Government sponsored enterprises | ||
Amortized cost | 12,245 | 14,252 |
Gross unrealized gains | 0 | 200 |
Gross unrealized losses | 706 | 185 |
Estimated fair value | 11,539 | 14,267 |
State and political subdivisions | ||
Amortized cost | 184,768 | 165,804 |
Gross unrealized gains | 91 | 3,694 |
Gross unrealized losses | 34,656 | 2,257 |
Estimated fair value | $ 150,203 | $ 167,241 |
Investment Securities (Details
Investment Securities (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Less than 12 months, fair value | $ 199,903,000 | $ 224,680,000 |
Less than 12 months, unrealized losses | 16,697,000 | 4,548,000 |
12 months or more, fair value | 212,326,000 | 28,817,000 |
12 months or more, unrealized losses | 45,631,000 | 988,000 |
Total, fair value | 412,229,000 | 253,497,000 |
Total, unrealized losses | 62,328,000 | 5,536,000 |
U.S Treasuries [Member] | ||
Less than 12 months, fair value | 2,878,000 | 7,889,000 |
Less than 12 months, unrealized losses | 104,000 | 75,000 |
12 months or more, fair value | 6,936,000 | 0 |
12 months or more, unrealized losses | 1,033,000 | 0 |
Total, fair value | 9,814,000 | 7,889,000 |
Total, unrealized losses | 1,137,000 | 75,000 |
Mortgage-backed securities | ||
Less than 12 months, fair value | 128,241,000 | 131,483,000 |
Less than 12 months, unrealized losses | 8,740,000 | 2,477,000 |
12 months or more, fair value | 120,464,000 | 19,632,000 |
12 months or more, unrealized losses | 17,089,000 | 542,000 |
Total, fair value | 248,705,000 | 151,115,000 |
Total, unrealized losses | 25,829,000 | 3,019,000 |
U.S. Government sponsored enterprises | ||
Less than 12 months, fair value | 2,904,000 | 5,232,000 |
Less than 12 months, unrealized losses | 87,000 | 15,000 |
12 months or more, fair value | 8,635,000 | 3,263,000 |
12 months or more, unrealized losses | 619,000 | 170,000 |
Total, fair value | 11,539,000 | 8,495,000 |
Total, unrealized losses | 706,000 | 185,000 |
State and political subdivisions | ||
Less than 12 months, fair value | 65,880,000 | 80,076,000 |
Less than 12 months, unrealized losses | 7,766,000 | 1,981,000 |
12 months or more, fair value | 76,291,000 | 5,922,000 |
12 months or more, unrealized losses | 26,890,000 | 276,000 |
Total, fair value | 142,171,000 | 85,998,000 |
Total, unrealized losses | $ 34,656,000 | $ 2,257,000 |
Investment Securities (Detail_2
Investment Securities (Details 2) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Amortized Cost | ||
Due within one year | $ 240 | |
Due from one to five years | 8,434 | |
Due from five to ten years | 58,540 | |
Due after ten years | 140,750 | |
Mortgage-backed securities | 299,222 | |
Total | 507,186 | $ 406,422 |
Estimated Fair Value | ||
Due within one year | 240 | |
Due from one to five years | 8,128 | |
Due from five to ten years | 49,599 | |
Due after ten years | 113,589 | |
Mortgage-backed securities | 273,838 | |
Total | $ 445,394 |
Investment Securities (Detail_3
Investment Securities (Details 3) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Estimated fair value | $ 445,394,000 | $ 406,549,000 |
U.S Treasuries [Member] | ||
Level 1 valuation | 0 | 0 |
Level 2 valuation | 9,814,000 | 7,889,000 |
Level 3 valuation | 0 | (88,700) |
Estimated fair value | 9,814,000 | 7,889,000 |
Mortgage-backed securities | ||
Level 1 valuation | 0 | 0 |
Level 2 valuation | 273,838,000 | 217,152,000 |
Level 3 valuation | 0 | 0 |
Estimated fair value | 273,838,000 | 217,152,000 |
U.S. Government sponsored enterprises | ||
Level 1 valuation | 0 | 0 |
Level 2 valuation | 11,539,000 | 14,267,000 |
Level 3 valuation | 0 | 0 |
Estimated fair value | 11,539,000 | 14,267,000 |
State and political subdivisions | ||
Level 1 valuation | 0 | 0 |
Level 2 valuation | 150,203,000 | 167,241,000 |
Level 3 valuation | 0 | 0 |
Estimated fair value | $ 150,203,000 | $ 167,241,000 |
Investment Securities (Detail_4
Investment Securities (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Investment Securities | |||
Unrealized losses in the investment securites portfolio relating to debt securities | $ 62,300,000 | ||
Proceeds from sales of investment securities available for sale | $ 56,300,000 | ||
Gross losses | 56,000 | ||
Gains on sales of available for sale securities | $ 2,700,000 | ||
Securities pledged to secure public deposits | $ 96,000,000 | $ 98,600,000 |
Loans (Details)
Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Major Classifications | ||
Total Loans | $ 1,032,608 | $ 884,869 |
Less allowance for loan losses | (10,494) | (9,355) |
Net loans | 1,022,114 | 875,514 |
Construction and Land Development | ||
Major Classifications | ||
Total Loans | 114,446 | 95,760 |
Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Major Classifications | ||
Total Loans | 20,019 | 23,147 |
Farm Loans (Not Secured by Real Estate) | ||
Major Classifications | ||
Total Loans | 938 | 796 |
All Other Loans (Not Secured by Real Estate) | ||
Major Classifications | ||
Total Loans | 14,490 | 5,240 |
Total Real Estate Loans | ||
Major Classifications | ||
Total Loans | 929,039 | 781,225 |
Single-Family Residential | ||
Major Classifications | ||
Total Loans | 322,262 | 266,111 |
Commercial | ||
Major Classifications | ||
Total Loans | 406,750 | 337,841 |
Commercial Loans (Not Secured by Real Estate) | ||
Major Classifications | ||
Total Loans | 81,307 | 91,172 |
Consumer Loans (Not Secured by Real Estate) | ||
Major Classifications | ||
Total Loans | 6,834 | 6,436 |
Multifamily and Farmland | ||
Major Classifications | ||
Total Loans | $ 65,562 | $ 58,366 |
Loans (Details 1)
Loans (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Loans 30-89 Days Past Due | $ 8,038,000 | $ 5,485,000 |
Loans 90 Or More Days Past Due | 520,000 | 746,000 |
Total Past Due Loans | 8,558,000 | 6,231,000 |
Total Current Loans | 1,024,050,000 | 878,638,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Total Loans | 1,032,608,000 | 884,869,000 |
Construction and Land Development | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 363,000 | 0 |
Total Current Loans | 114,083,000 | 95,760,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 363,000 | 0 |
Total Loans | 114,446,000 | 95,760,000 |
Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Loans 90 Or More Days Past Due | 264,000 | 112,000 |
Total Past Due Loans | 3,241,000 | 2,705,000 |
Total Current Loans | 16,778,000 | 20,442,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 2,977,000 | 2,593,000 |
Total Loans | 20,019,000 | 23,147,000 |
Farm Loans (Not Secured by Real Estate) | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 0 | 0 |
Total Current Loans | 938,000 | 796,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 0 | 0 |
Total Loans | 938,000 | 796,000 |
All Other Loans (Not Secured by Real Estate) | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 0 | 0 |
Total Current Loans | 14,490,000 | 5,240,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 0 | 0 |
Total Loans | 14,490,000 | 5,240,000 |
Total Real Estate Loans | Total Real Estate [Member] | ||
Loans 90 Or More Days Past Due | 520,000 | 746,000 |
Total Past Due Loans | 8,484,000 | 6,150,000 |
Total Current Loans | 920,555,000 | 775,075,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 7,964,000 | 5,404,000 |
Total Loans | 929,039,000 | 781,225,000 |
Single-Family Residential | ||
Loans 90 Or More Days Past Due | 256,000 | 634,000 |
Total Past Due Loans | 4,574,000 | 2,957,000 |
Total Current Loans | 317,688,000 | 263,154,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 4,318,000 | 2,323,000 |
Total Loans | 322,262,000 | 266,111,000 |
Commercial | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 306,000 | 488,000 |
Total Current Loans | 406,444,000 | 337,353,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 306,000 | 488,000 |
Total Loans | 406,750,000 | 337,841,000 |
Commercial Loans (Not Secured by Real Estate) | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 3,000 | 43,000 |
Total Current Loans | 81,304,000 | 91,129,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 3,000 | 43,000 |
Total Loans | 81,307,000 | 91,172,000 |
Consumer Loans (Not Secured by Real Estate) | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 71,000 | 38,000 |
Total Current Loans | 6,763,000 | 6,398,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 71,000 | 38,000 |
Total Loans | 6,834,000 | 6,436,000 |
Multifamily and Farmland | ||
Loans 90 Or More Days Past Due | 0 | 0 |
Total Past Due Loans | 0 | 0 |
Total Current Loans | 65,562,000 | 58,366,000 |
Accruing Loans 90 Or More Days Past Due | 0 | 0 |
Loans 30-89 Days Past Due | 0 | 0 |
Total Loans | $ 65,562,000 | $ 58,366,000 |
Loans (Details 2)
Loans (Details 2) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Non-accrual Loans | $ 3,728 | $ 3,230 |
Construction and Land Development | ||
Non-accrual Loans | 53 | 0 |
Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Non-accrual Loans | 1,532 | 1,232 |
Total Real Estate Loans | ||
Non-accrual Loans | 3,719 | 3,179 |
Single-Family Residential | ||
Non-accrual Loans | 1,914 | 1,642 |
Commercial | ||
Non-accrual Loans | 129 | 200 |
Commercial Loans (Not Secured by Real Estate) | ||
Non-accrual Loans | 0 | 49 |
Consumer Loans (Not Secured by Real Estate) | ||
Non-accrual Loans | 9 | 2 |
Multifamily and Farmland | ||
Non-accrual Loans | $ 91 | $ 105 |
Loans (Details 3)
Loans (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Impaired Loans | |||
Unpaid Contractual Principal Balance | $ 16,479 | $ 19,505 | $ 22,501 |
Recorded Investment With No Allowance | 657 | 1,008 | 1,672 |
Recorded Investment With Allowance | 14,720 | 17,256 | 19,616 |
Recorded Investment In Impaired Loans | 15,377 | 18,264 | 21,288 |
Related Allowance | 683 | 789 | 919 |
Average Outstanding Impaired Loans | 16,190 | 19,201 | 21,848 |
Interest Income Recognized | 862 | 1,003 | 1,250 |
Construction and Land Development | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 110 | 73 | 108 |
Recorded Investment With No Allowance | 0 | 0 | 0 |
Recorded Investment With Allowance | 110 | 73 | 108 |
Recorded Investment In Impaired Loans | 110 | 73 | 108 |
Related Allowance | 2 | 3 | 4 |
Average Outstanding Impaired Loans | 75 | 82 | 134 |
Interest Income Recognized | 8 | 6 | 8 |
Single-Family Residential - Banco de la Gente Non-Tradtional | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 10,441 | 11,753 | 13,417 |
Recorded Investment With No Allowance | 0 | 0 | 0 |
Recorded Investment With Allowance | 9,748 | 10,922 | 12,753 |
Recorded Investment In Impaired Loans | 9,748 | 10,922 | 12,753 |
Related Allowance | 611 | 687 | 862 |
Average Outstanding Impaired Loans | 8,757 | 10,325 | 13,380 |
Interest Income Recognized | 552 | 609 | 798 |
Total Real Estate Loans | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 16,352 | 19,215 | 21,945 |
Recorded Investment With No Allowance | 657 | 959 | 1,461 |
Recorded Investment With Allowance | 14,595 | 17,082 | 19,335 |
Recorded Investment In Impaired Loans | 15,252 | 18,041 | 20,796 |
Related Allowance | 682 | 787 | 913 |
Average Outstanding Impaired Loans | 16,038 | 18,919 | 21,224 |
Interest Income Recognized | 852 | 983 | 1,213 |
Single-Family Residential | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 3,912 | 5,138 | 5,302 |
Recorded Investment With No Allowance | 236 | 524 | 379 |
Recorded Investment With Allowance | 3,300 | 4,374 | 4,466 |
Recorded Investment In Impaired Loans | 3,536 | 4,898 | 4,845 |
Related Allowance | 60 | 86 | 33 |
Average Outstanding Impaired Loans | 5,194 | 6,017 | 4,741 |
Interest Income Recognized | 194 | 253 | 262 |
Commercial | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 1,785 | 2,138 | 2,999 |
Recorded Investment With No Allowance | 421 | 435 | 1,082 |
Recorded Investment With Allowance | 1,346 | 1,608 | 1,891 |
Recorded Investment In Impaired Loans | 1,767 | 2,043 | 2,973 |
Related Allowance | 9 | 11 | 14 |
Average Outstanding Impaired Loans | 1,916 | 2,385 | 2,940 |
Interest Income Recognized | 93 | 109 | 139 |
Commercial Loans (Not Secured by Real Estate) | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 116 | 282 | 515 |
Recorded Investment With No Allowance | 0 | 49 | 211 |
Recorded Investment With Allowance | 116 | 170 | 244 |
Recorded Investment In Impaired Loans | 116 | 219 | 455 |
Related Allowance | 1 | 2 | 5 |
Average Outstanding Impaired Loans | 137 | 271 | 564 |
Interest Income Recognized | 8 | 19 | 32 |
Consumer Loans (Not Secured by Real Estate) | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 11 | 8 | 41 |
Recorded Investment With No Allowance | 0 | 0 | 0 |
Recorded Investment With Allowance | 9 | 4 | 37 |
Recorded Investment In Impaired Loans | 9 | 4 | 37 |
Related Allowance | 0 | 0 | 1 |
Average Outstanding Impaired Loans | 15 | 11 | 60 |
Interest Income Recognized | 2 | 1 | 5 |
Multifamily and Farmland | |||
Impaired Loans | |||
Unpaid Contractual Principal Balance | 104 | 113 | 119 |
Recorded Investment With No Allowance | 0 | 0 | 0 |
Recorded Investment With Allowance | 91 | 105 | 117 |
Recorded Investment In Impaired Loans | 91 | 105 | 117 |
Related Allowance | 0 | 0 | 0 |
Average Outstanding Impaired Loans | 96 | 110 | 29 |
Interest Income Recognized | $ 5 | $ 6 | $ 6 |
Loans (Details 4)
Loans (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Mortgage Loans Held For Sale | $ 211 | $ 3,637 |
Impaired Loans | 14,694 | 17,475 |
Impaired Loans | ||
Impaired Loans | $ 14,694 | 17,475 |
Valuation Technique | Appraised value and discounted cash flows | |
Significant Unobservable Inputs | Discounts to reflect current market conditions and ultimate collectability | |
General Range Of Significant Unobservable Input Values | 0 - 25 | |
Mortgage loans held for sale | ||
Mortgage Loans Held For Sale | $ 211 | 3,637 |
Valuation Technique | Rate lock commitment | |
Significant Unobservable Inputs | N/A | |
General Range Of Significant Unobservable Input Values | N/A | |
Level 1 | ||
Mortgage Loans Held For Sale | $ 0 | 0 |
Impaired Loans | 0 | 0 |
Level 2 | ||
Mortgage Loans Held For Sale | 0 | 0 |
Impaired Loans | 0 | 0 |
Level 3 | ||
Mortgage Loans Held For Sale | 211 | 3,637 |
Impaired Loans | $ 14,694 | $ 17,475 |
Loans (Details 5)
Loans (Details 5) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Beginning Balance | $ 9,355 | $ 9,908 | $ 6,680 |
Charge-offs | (752) | (762) | (1,414) |
Recoveries | 419 | 1,372 | 383 |
Provision | 1,472 | (1,163) | 4,259 |
Ending Balance | 10,494 | 9,355 | 9,908 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 639 | 737 | 857 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 9,855 | 8,618 | 9,051 |
Allowance For Loan Losses, Ending Balance | 10,494 | 9,355 | 9,908 |
Loans, Ending Balance | 1,032,608 | 884,869 | 948,639 |
Loans, Ending Balance: Individually Evaluated For Impairments | 10,480 | 12,920 | 15,248 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 1,022,128 | 871,949 | 933,391 |
Unallocated | |||
Beginning Balance | 2,080 | 2,010 | 1,388 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | (328) | 70 | 622 |
Ending Balance | 1,752 | 2,080 | 2,010 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 1,752 | 2,080 | 2,010 |
Allowance For Loan Losses, Ending Balance | 1,752 | 2,080 | 2,010 |
Loans, Ending Balance | 0 | 0 | 0 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 0 | 0 | 0 |
Consumer And All Other [Member] | |||
Beginning Balance | 110 | 128 | 138 |
Charge-offs | (591) | (380) | (434) |
Recoveries | 109 | 139 | 173 |
Provision | 586 | 223 | 251 |
Ending Balance | 214 | 110 | 128 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 214 | 110 | 128 |
Allowance For Loan Losses, Ending Balance | 214 | 110 | 128 |
Loans, Ending Balance | 21,324 | 11,676 | 10,861 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 21,324 | 11,676 | 10,861 |
Multifamily and Farmland | |||
Beginning Balance | 150 | 122 | 120 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 3 | 0 |
Provision | 14 | 25 | 2 |
Ending Balance | 164 | 150 | 122 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 164 | 150 | 122 |
Allowance For Loan Losses, Ending Balance | 164 | 150 | 122 |
Loans, Ending Balance | 65,562 | 58,366 | 48,880 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 65,562 | 58,366 | 48,880 |
Commercial loans (not secured by real estate) | |||
Beginning Balance | 711 | 1,345 | 688 |
Charge-offs | (33) | (293) | (903) |
Recoveries | 72 | 786 | 34 |
Provision | (93) | (1,127) | 1,526 |
Ending Balance | 657 | 711 | 1,345 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 657 | 711 | 1,345 |
Allowance For Loan Losses, Ending Balance | 657 | 711 | 1,345 |
Loans, Ending Balance | 81,307 | 91,172 | 161,740 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 49 | 212 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 81,307 | 91,123 | 161,528 |
Construction and Land Development | |||
Beginning Balance | 1,193 | 1,196 | 694 |
Charge-offs | 0 | 0 | (5) |
Recoveries | 0 | 121 | 36 |
Provision | 222 | (124) | 471 |
Ending Balance | 1,415 | 1,193 | 1,196 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 1 | 1 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 1,415 | 1,192 | 1,195 |
Allowance For Loan Losses, Ending Balance | 1,415 | 1,193 | 1,196 |
Loans, Ending Balance | 114,446 | 95,760 | 94,124 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 6 | 7 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 114,446 | 95,754 | 94,117 |
Single-Family Residential - Banco de la Gente Non-Tradtional | |||
Beginning Balance | 864 | 1,052 | 1,073 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | (101) | (188) | (21) |
Ending Balance | 763 | 864 | 1,052 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 597 | 672 | 844 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 166 | 192 | 208 |
Allowance For Loan Losses, Ending Balance | 763 | 864 | 1,052 |
Loans, Ending Balance | 20,019 | 23,147 | 26,883 |
Loans, Ending Balance: Individually Evaluated For Impairments | 8,555 | 9,795 | 11,353 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 11,464 | 13,352 | 15,530 |
Farm Loans (Not Secured by Real Estate) | |||
Beginning Balance | 0 | 0 | 0 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | 0 | 0 | 0 |
Ending Balance | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 0 | 0 | 0 |
Allowance For Loan Losses, Ending Balance | 0 | 0 | 0 |
Loans, Ending Balance | 938 | 796 | 855 |
Loans, Ending Balance: Individually Evaluated For Impairments | 0 | 0 | 0 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 938 | 796 | 855 |
Single-Family Residential | |||
Beginning Balance | 2,013 | 1,843 | 1,274 |
Charge-offs | (128) | (89) | (65) |
Recoveries | 229 | 271 | 70 |
Provision | 208 | (12) | 564 |
Ending Balance | 2,322 | 2,013 | 1,843 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 36 | 57 | 4 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 2,286 | 1,956 | 1,839 |
Allowance For Loan Losses, Ending Balance | 2,322 | 2,013 | 1,843 |
Loans, Ending Balance | 322,262 | 266,111 | 272,325 |
Loans, Ending Balance: Individually Evaluated For Impairments | 537 | 1,633 | 1,558 |
Loans, Ending Balance: Collectively Evaluated For Impairments | 321,725 | 264,478 | 270,767 |
Commercial | |||
Beginning Balance | 2,234 | 2,212 | 1,305 |
Charge-offs | 0 | 0 | (7) |
Recoveries | 9 | 52 | 70 |
Provision | 964 | (30) | 844 |
Ending Balance | 3,207 | 2,234 | 2,212 |
Allowance For Loan Losses, Ending Balance: Individually Evaluated For Impairments | 6 | 7 | 8 |
Allowance For Loan Losses, Ending Balance: Collectively Evaluated For Impairments | 3,201 | 2,227 | 2,204 |
Allowance For Loan Losses, Ending Balance | 3,207 | 2,234 | 2,212 |
Loans, Ending Balance | 406,750 | 337,841 | 332,971 |
Loans, Ending Balance: Individually Evaluated For Impairments | 1,388 | 1,437 | 2,118 |
Loans, Ending Balance: Collectively Evaluated For Impairments | $ 405,362 | $ 336,404 | $ 330,853 |
Loans (Details 6)
Loans (Details 6) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total Loans | $ 1,032,608 | $ 884,869 |
Construction and Land Development | ||
Total Loans | 114,446 | 95,760 |
Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 20,019 | 23,147 |
Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 938 | 796 |
All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 14,490 | 5,240 |
Single-Family Residential | ||
Total Loans | 322,262 | 266,111 |
Commercial | ||
Total Loans | 406,750 | 337,841 |
Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 81,307 | 91,172 |
Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 6,834 | 6,436 |
Multifamily and Farmland | ||
Total Loans | 65,562 | 58,366 |
Good Quality | Construction and Land Development | ||
Total Loans | 94,113 | 80,325 |
Watch | ||
Total Loans | 7,055 | 10,902 |
Watch | Construction and Land Development | ||
Total Loans | 54 | 76 |
Watch | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 1,136 | 1,703 |
Watch | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Watch | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 145 | 0 |
Watch | Single-Family Residential | ||
Total Loans | 922 | 2,464 |
Watch | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 711 | 1,177 |
Watch | Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 1 | 1 |
Watch | Multifamily and Farmland | ||
Total Loans | 123 | 543 |
Watch | Commercial | ||
Total Loans | 3,963 | 4,938 |
Management Attention | ||
Total Loans | 56,737 | 68,169 |
Management Attention | Commercial loans (not secured by real estate) | ||
Total Loans | 1,507 | 5,214 |
Management Attention | Consumer loans (not secured by real estate) | ||
Total Loans | 244 | 284 |
Management Attention | Construction and Land Development | ||
Total Loans | 5,257 | 3,534 |
Management Attention | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 8,968 | 10,478 |
Management Attention | Multifamily and Farmland | ||
Total Loans | 2,061 | 2,754 |
Management Attention | Commercial | ||
Total Loans | 27,957 | 30,937 |
Management Attention | Single-Family Residential [Member] | ||
Total Loans | 10,615 | 14,964 |
Management Attention | All Other Loans (Not Secured by Real Estate) [Member] | ||
Total Loans | 128 | 0 |
Excellent Quality | ||
Total Loans | 4,674 | 6,875 |
Excellent Quality | Construction and Land Development [Member] | ||
Total Loans | 0 | 0 |
Excellent Quality | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 0 | 0 |
Excellent Quality | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Excellent Quality | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Excellent Quality | Commercial | ||
Total Loans | 0 | 0 |
Excellent Quality | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 1,365 | 371 |
Excellent Quality | Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 527 | 581 |
Excellent Quality | Multifamily and Farmland | ||
Total Loans | 0 | 0 |
Excellent Quality | Single-Family Residential [Member] | ||
Total Loans | 2,782 | 5,923 |
High Quality | ||
Total Loans | 203,458 | 169,179 |
High Quality | Commercial loans (not secured by real estate) | ||
Total Loans | 13,302 | 16,177 |
High Quality | Consumer loans (not secured by real estate) | ||
Total Loans | 2,384 | 2,039 |
High Quality | Construction and Land Development | ||
Total Loans | 14,912 | 11,752 |
High Quality | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 0 | 0 |
High Quality | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
High Quality | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 1,366 | 1,309 |
High Quality | Single-Family Residential | ||
Total Loans | 138,124 | 109,337 |
High Quality | Commercial | ||
Total Loans | 33,353 | 28,546 |
High Quality | Multifamily and Farmland | ||
Total Loans | 17 | 19 |
Good Quality | ||
Total Loans | 753,954 | 623,040 |
Good Quality | Consumer loans (not secured by real estate) | ||
Total Loans | 3,663 | 3,510 |
Good Quality | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 7,442 | 8,712 |
Good Quality | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 938 | 792 |
Good Quality | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 12,851 | 3,931 |
Good Quality | Commercial | ||
Total Loans | 340,926 | 272,786 |
Good Quality | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 64,422 | 68,183 |
Good Quality | Multifamily and Farmland | ||
Total Loans | 63,270 | 54,945 |
Good Quality | Single-Family Residential [Member] | ||
Total Loans | 166,329 | 129,856 |
Substandard | ||
Total Loans | 6,730 | 6,704 |
Substandard | Construction and Land Development | ||
Total Loans | 110 | 73 |
Substandard | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 2,473 | 2,254 |
Substandard | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Substandard | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Substandard | Single-Family Residential | ||
Total Loans | 3,490 | 3,567 |
Substandard | Commercial | ||
Total Loans | 551 | 634 |
Substandard | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 50 |
Substandard | Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 15 | 21 |
Substandard | Multifamily and Farmland | ||
Total Loans | 91 | 105 |
Doubtful | ||
Total Loans | 0 | 0 |
Doubtful | Construction and Land Development | ||
Total Loans | 0 | 0 |
Doubtful | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 0 | 0 |
Doubtful | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Doubtful | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Doubtful | Single-Family Residential | ||
Total Loans | 0 | 0 |
Doubtful | Commercial | ||
Total Loans | 0 | 0 |
Doubtful | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Doubtful | Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Doubtful | Multifamily and Farmland | ||
Total Loans | 0 | 0 |
Loss | ||
Total Loans | 0 | 0 |
Loss | Construction and Land Development | ||
Total Loans | 0 | 0 |
Loss | Single-Family Residential - Banco de la Gente Non-Tradtional | ||
Total Loans | 0 | 0 |
Loss | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Loss | All Other Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Loss | Single-Family Residential | ||
Total Loans | 0 | 0 |
Loss | Commercial | ||
Total Loans | 0 | 0 |
Loss | Commercial Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Loss | Consumer Loans (Not Secured by Real Estate) | ||
Total Loans | 0 | 0 |
Loss | Multifamily and Farmland | ||
Total Loans | 0 | 0 |
Management Attention | Farm Loans (Not Secured by Real Estate) | ||
Total Loans | $ 0 | $ 4 |
Loans (Details Narrative)
Loans (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 27, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total past due TDR loans and non-accrual TDR loans | $ 3,700,000 | $ 2,200,000 | ||
Allowance For Loan And Leases Losses | 44,000 | 42,000 | $ 61,000 | |
Net of deferred fees | 909,000 | 198,000 | ||
Deferred PPP loan fees | 945,000 | |||
Impaired LoanAC | 4,900,000 | 5,300,000 | 5,800,000 | |
Interest Income Recognized On Accruing Impaired Loans | 862,000 | 1,003,000 | 1,250,000 | |
TDR loans | ||||
Impaired Loan | 4,900,000 | 5,300,000 | ||
Paycheck Protection Program [Member] | ||||
Ppp Loan Amount | 128,100,000 | $ 128,100,000 | ||
Ppp Loan Program Description | On March 27, 2020, President Trump signed the CARES Act, which established a $2 trillion economic stimulus package, including cash payments to individuals, supplemental unemployment insurance benefits and a $349 billion loan program administered through the PPP. | |||
Additional Funding Loan, Description | A second round of PPP funding provided a total of $320 billion additional funding for the PPP. | |||
Ppp Loan Outstanding Amount | 103,000 | 18,000,000 | ||
Recognized Ppp Loan Fee Income | 948,000 | 3,400,000 | ||
Allowance for Loan and Lease Losses [Member] | ||||
Accruing Impaired Loans | 154,000 | 18,300,000 | ||
Interest Income Recognized On Accruing Impaired Loans | 862,000 | $ 1,000,000 | ||
Tdr Residential Mortage Portfolio Loan Amount | $ 250,000 |
Premises and Equipment (Details
Premises and Equipment (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Premises and Equipment | ||
Land | $ 3,851,000 | $ 3,857,000 |
Buildings and improvements | 18,371,000 | 18,359,000 |
Furniture and equipment | 26,156,000 | 25,420,000 |
Construction in process | 3,028,000 | 0 |
Total premises and equipment | 51,406,000 | 47,636,000 |
Less accumulated depreciation | (33,201,000) | (31,532,000) |
Total net premises and equipment | $ 18,205,000 | $ 16,104,000 |
Premises and Equipment (Detai_2
Premises and Equipment (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Premises and Equipment | |||
Depreciation expense | $ 2,400,000 | $ 2,600,000 | $ 2,500,000 |
Net losses on the sale of and write-downs on premises and equipment | $ (85,000) | $ (105,000) |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Leases | |
Operating lease cost | $ 888 |
Cash paid for amounts included in the measurement of lease liabilities | 873 |
Operating cash flows from operating leases | 0 |
Right-of-use assets obtained in exchange for new lease liabilities - operating leases | $ 1,726 |
Weighted-average remaining lease term - operating leases | 9 years 3 months 3 days |
Weighted-average discount rate - operating leases | 2.23% |
Leases (Details 1)
Leases (Details 1) $ in Thousands | Dec. 31, 2022 USD ($) |
Leases | |
2023 | $ 805 |
2024 | 750 |
2025 | 694 |
2026 | 577 |
2027 | 528 |
Thereafter | 2,418 |
Total | 5,727 |
Less: imputed interest | (542) |
Operating lease liability | $ 5,185 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases | |||
Operating ROU assets | $ 5,100,000 | ||
Operating lease liabilities | 5,200,000 | ||
Rent expense | $ 976,000 | $ 703,000 | $ 880,000 |
Lease term | 15 years |
Time Deposits (Details)
Time Deposits (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Time Deposits | |
2023 | $ 59,099 |
2024 | 26,526 |
2025 | 7,380 |
2026 | 3,420 |
2027 and thereafter | 1,574 |
Total | $ 97,999 |
Time Deposits (Details Narrativ
Time Deposits (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Time Deposits | ||
Time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service ("CDARS") on behalf of local customers | $ 15,000,000 | $ 11,100,000 |
CDARS balances | $ 7,100 | $ 3,000 |
Weighted average rate of brokered deposits | 1.27% | 1.49% |
Federal Home Loan Bank and Fe_2
Federal Home Loan Bank and Federal Reserve Bank Borrowings (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Federal Home Loan Bank and Federal Reserve Bank Borrowings | |||
Loans pledged as collateral to the FHLB | $ 110,000 | ||
FHLB stock owned | $ 812,000 | $ 707,000 | |
Carrying value of loans pledged as collateral to the FHLB | 14,940,000 | ||
Remaining availability credit with the FHLB | 8,650,000 | ||
Prepayment of penalty | $ 70,000,000 | ||
Availability under the line of credit with the FRB | 445,100,000 | ||
Fair value under the line of credit with the FRB3E | $ 585,000,000 | ||
Common stock Per shjare | $ 100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||||||||||
Current expense | $ 4,713 | $ 4,023 | $ 3,049 | ||||||||
Deferred income tax expense | (541) | (227) | (560) | ||||||||
Total income tax | $ 1,102 | $ 1,416 | $ 806 | $ 848 | $ 732 | $ 824 | $ 1,194 | $ 1,046 | $ 4,172 | $ 3,796 | $ 2,489 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||||||||||
Tax expense at statutory rate | $ 4,262,000 | $ 3,975,000 | $ 2,908,000 | ||||||||
Differences: | |||||||||||
State income tax, net of federal income tax effect | 395,000 | 339,000 | 261,000 | ||||||||
Tax exempt interest income | (445,000) | (497,000) | (649,000) | ||||||||
Increase in cash surrender value of life insurance | (71,000) | (83,000) | (80,000) | ||||||||
Tax credits | (230) | (234) | (234) | ||||||||
Nondeductible interest and other expense | 24,000 | 30,000 | 46,000 | ||||||||
Other | 237,000 | 266,000 | 237,000 | ||||||||
Total income tax | $ 1,102,000 | $ 1,416,000 | $ 806,000 | $ 848,000 | $ 732,000 | $ 824,000 | $ 1,194,000 | $ 1,046,000 | $ 4,172,000 | $ 3,796,000 | $ 2,489,000 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Allowance for loan losses | $ 2,411,000 | $ 2,149,000 |
Accrued retirement expense | 1,174,000 | 1,148,000 |
Restricted stock | 245,000 | 209,000 |
Interest income on nonaccrual loans | 1,000 | 2,000 |
Lease liability | 1,191,000 | 1,075,000 |
Unrealized loss on available for sale securities | 14,197 | 0 |
Total gross deferred tax assets | 19,219,000 | 4,583,000 |
Deferred tax liabilities: | ||
Deferred loan fees | 209,000 | 263,000 |
Accumulated depreciation | 438,000 | 563,000 |
Prepaid expenses | 3,000 | 4,000 |
ROU Asset | 1,175,000 | 1,060,000 |
Other | 93,000 | (55,000) |
Unrealized gain on available for sale securities | 0 | 29,000 |
Total gross deferred tax liabilities | 1,732,000 | 1,864,000 |
Net deferred tax asset | $ 17,487,000 | $ 2,719,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Beginning balance | $ 2,687,000 | $ 1,852,000 |
Disbursements | 4,090,000 | 3,636,000 |
Repayments | (3,396,000) | (2,801,000) |
Ending balance | $ 3,381,000 | $ 2,687,000 |
Related Party Transactions (D_2
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions | ||
Related party deposits | $ 44,500 | $ 4,340 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Standby letters of credit and financial guarantees written | ||
Commitments and contingencies | $ 4,352 | $ 4,892 |
Commitments to extend credit | ||
Commitments and contingencies | $ 382,699 | $ 304,258 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2017 |
Commitments and Contingencies | ||
Overnight federal funds | $ 11,050 | |
Commitments | 2,900 | |
Unfunded commitments | 1,500 | |
Investments | $ 300 | |
Alloted to each property | $ 150 | |
Future cash requirements | $ 38,710 |
Employee and Director Benefit_3
Employee and Director Benefit Programs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee and Director Benefit Programs | |||
Benefit obligation at beginning of period | $ 5,011 | $ 4,870 | |
Service cost | 325 | 359 | $ 359 |
Interest cost | 63 | 70 | 70 |
Benefits paid | (289) | (288) | |
Benefit obligation at end of period | $ 5,110 | $ 5,011 | $ 4,870 |
Employee and Director Benefit_4
Employee and Director Benefit Programs (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee and Director Benefit Programs | |||
Funded status | $ (5,110,000) | $ (5,011,000) | |
Unrecognized prior service cost/benefit | 0 | 0 | |
Unrecognized net actuarial loss | 0 | 0 | |
Net amounts recognized | (5,011,000) | (5,110,000) | |
Intangible assets | 0 | 0 | |
Unfunded accrued liability | (5,110,000) | (5,011,000) | |
Net amounts recognized | $ (5,110,000) | $ (5,011,000) | $ (4,870,000) |
Employee and Director Benefit_5
Employee and Director Benefit Programs (Details 2) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Employee and Director Benefit Programs | |||
Benefit obligation at beginning of period | $ 5,110 | $ 5,011 | $ 4,870 |
Fair value of plan assets | $ 0 | $ 0 |
Employee and Director Benefit_6
Employee and Director Benefit Programs (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee and Director Benefit Programs | |||
Service cost | $ 325 | $ 359 | $ 359 |
Interest cost | 63 | 70 | 70 |
Net periodic cost | $ 388 | $ 429 | $ 429 |
Weighted average discount rate assumption used to determine benefit obligation | 5.50% | 5.50% | 5.49% |
Employee and Director Benefit_7
Employee and Director Benefit Programs (Details 4) $ in Thousands | Dec. 31, 2022 USD ($) |
Employee and Director Benefit Programs | |
2022 | $ 329 |
2023 | 353 |
2024 | 370 |
2025 | 368 |
2026 | 494 |
Thereafter | $ 8,358 |
Employee and Director Benefit_8
Employee and Director Benefit Programs (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee and Director Benefit Programs | |||
Matching of employee contributions, percentage | 4% | 4% | 4% |
Defined Benefit Plan, Contributions by Employer | $ 19,000 | $ 709,000 | $ 692,000 |
Expenses incurred for benefits relating to the postretirement benefit plan | 369,000 | 447,000 | 368,000 |
Postretirement Benefits paid | $ 289,000 | $ 288,000 | $ 216,000 |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total capital (to Risk-Weighted Assets) | Consolidated | ||
Actual, amount | $ 178,286,000 | $ 166,628,000 |
Actual, ratio | 14.04% | 16.35% |
For capital adequacy purposes, amount | $ 101,608,000 | $ 81,547,000 |
For capital adequacy purposes, ratio | 8% | 8% |
To be well capitalized under prompt corrective action provisions, amount | $ 0 | $ 0 |
To be well capitalized under prompt corrective action provisions, ratio | 0% | 0% |
Total capital (to Risk-Weighted Assets) | Bank | ||
Actual, amount | $ 176,923,000 | $ 164,975,000 |
Actual, ratio | 13.93% | 16.19% |
For capital adequacy purposes, amount | $ 101,606,000 | $ 81,539,000 |
For capital adequacy purposes, ratio | 8% | 8% |
To be well capitalized under prompt corrective action provisions, amount | $ 133,357,000 | $ 107,020,000 |
To be well capitalized under prompt corrective action provisions, ratio | 10.50% | 10.50% |
Tier 1 Capital (to Risk- Weighted Assets) | Consolidated | ||
Actual, amount | $ 167,792,000 | $ 157,273,000 |
Actual, ratio | 13.21% | 15.43% |
For capital adequacy purposes, amount | $ 76,206,000 | $ 61,160,000 |
For capital adequacy purposes, ratio | 6% | 6% |
To be well capitalized under prompt corrective action provisions, amount | $ 0 | $ 0 |
To be well capitalized under prompt corrective action provisions, ratio | 0% | 0% |
Tier 1 Capital (to Risk- Weighted Assets) | Bank | ||
Actual, amount | $ 166,429,000 | $ 155,620,000 |
Actual, ratio | 13.10% | 15.27% |
For capital adequacy purposes, amount | $ 76,204,000 | $ 61,154,000 |
For capital adequacy purposes, ratio | 6% | 6% |
To be well capitalized under prompt corrective action provisions, amount | $ 107,956,000 | $ 86,635,000 |
To be well capitalized under prompt corrective action provisions, ratio | 8.50% | 8.50% |
Tier 1 Capital (Average Assets) | Consolidated | ||
Actual, amount | $ 167,792,000 | $ 157,273,000 |
Actual, ratio | 9.82% | 9.64% |
For capital adequacy purposes, amount | $ 68,347,000 | $ 65,258,000 |
For capital adequacy purposes, ratio | 4% | 4% |
To be well capitalized under prompt corrective action provisions, amount | $ 0 | $ 0 |
To be well capitalized under prompt corrective action provisions, ratio | 0% | 0% |
Tier 1 Capital (Average Assets) | Bank | ||
Actual, amount | $ 166,429,000 | $ 155,620,000 |
Actual, ratio | 9.68% | 9.50% |
For capital adequacy purposes, amount | $ 68,780,000 | $ 65,557,000 |
For capital adequacy purposes, ratio | 4% | 4% |
To be well capitalized under prompt corrective action provisions, amount | $ 68,780,000 | $ 65,557,000 |
To be well capitalized under prompt corrective action provisions, ratio | 4% | 4% |
Common Equity Tier 1 (to Risk-Weighted Assets) | Consolidated | ||
Actual, amount | $ 152,792,000 | $ 142,273,000 |
Actual, ratio | 12.03% | 13.96% |
For capital adequacy purposes, amount | $ 57,154,000 | $ 45,870,000 |
For capital adequacy purposes, ratio | 4.50% | 4.50% |
To be well capitalized under prompt corrective action provisions, amount | $ 0 | $ 0 |
To be well capitalized under prompt corrective action provisions, ratio | 0% | 0% |
Common Equity Tier 1 (to Risk-Weighted Assets) | Bank | ||
Actual, amount | $ 166,429,000 | $ 155,620,000 |
Actual, ratio | 13.10% | 15.27% |
For capital adequacy purposes, amount | $ 57,153,000 | $ 45,866,000 |
For capital adequacy purposes, ratio | 4.50% | 4.50% |
To be well capitalized under prompt corrective action provisions, amount | $ 88,905,000 | $ 71,347,000 |
To be well capitalized under prompt corrective action provisions, ratio | 7% | 7% |
Other Operating Income and Ex_3
Other Operating Income and Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Operating Income and Expense | |||
Visa debit card income | $ 4,901 | $ 5,045 | $ 4,237 |
Bank owned life insurance income | 458 | 397 | 380 |
Other | 2,390 | 2,197 | 1,315 |
Miscellaneous non-interest income | 7,749 | 7,639 | 5,932 |
ATM expense | 629 | 619 | 567 |
Data processing | 777 | 643 | 635 |
Deposit program expense | 348 | 415 | 426 |
Dues and subscriptions | 628 | 588 | 538 |
FHLB advance prepayment penalty | 0 | 0 | 1,100 |
Internet banking expense | 949 | 768 | 729 |
Office supplies | 532 | 374 | 538 |
Telephone | 691 | 730 | 794 |
Other | 3,741 | 3,737 | 3,217 |
Other | $ 8,295 | $ 7,874 | $ 8,544 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Investment securities available for sale | $ 445,394 | $ 406,549 |
Mortgage loans held for sale | 211 | 3,637 |
Level 1 | ||
Assets: | ||
Investment securities available for sale | 0 | 0 |
Mortgage loans held for sale | 0 | 0 |
Liabilities: | ||
Cash and cash equivalents | 71,596 | 277,499 |
Other investments | 0 | 0 |
Mutual funds held in deferred compensation trust, amount measured at fair value on a recurring basis | 0 | 0 |
Loans, net | 0 | 0 |
Mutual funds held in deferred compensation trust | 0 | 0 |
Deposits | 0 | 0 |
Securities sold under agreements to repurchase | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Level 2 | ||
Assets: | ||
Investment securities available for sale | 445,394 | 406,549 |
Mortgage loans held for sale | 0 | 0 |
Liabilities: | ||
Cash and cash equivalents | 0 | 0 |
Other investments | 0 | 0 |
Mutual funds held in deferred compensation trust, amount measured at fair value on a recurring basis | 1,510 | 1,327 |
Loans, net | 0 | 0 |
Mutual funds held in deferred compensation trust | 1,327 | 1,510 |
Deposits | 0 | 0 |
Securities sold under agreements to repurchase | 47,688 | 37,094 |
Junior subordinated debentures | 15,464 | 15,464 |
Level 3 | ||
Assets: | ||
Investment securities available for sale | 0 | 0 |
Mortgage loans held for sale | 211 | 3,637 |
Liabilities: | ||
Cash and cash equivalents | 0 | 0 |
Other investments | 2,656 | 3,668 |
Mutual funds held in deferred compensation trust, amount measured at fair value on a recurring basis | 0 | 0 |
Loans, net | 998,587 | 855,814 |
Mutual funds held in deferred compensation trust | 0 | 0 |
Deposits | 1,434,871 | 1,401,833 |
Securities sold under agreements to repurchase | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Carrying Amount | ||
Assets: | ||
Investment securities available for sale | 445,394 | 406,549 |
Mortgage loans held for sale | 211 | 3,637 |
Liabilities: | ||
Cash and cash equivalents | 71,596 | 277,499 |
Other investments | 2,656 | 3,668 |
Loans, net | 1,022,114 | 875,514 |
Mutual funds held in deferred compensation trust | 1,327 | 1,510 |
Deposits | 1,435,215 | 1,412,748 |
Securities sold under agreements to repurchase | 47,688 | 37,094 |
Junior subordinated debentures | 15,464 | 15,464 |
Fair Value | ||
Liabilities: | ||
Mutual funds held in deferred compensation trust, amount measured at fair value on a recurring basis | 1,510 | 1,327 |
Estimated Fair Value | ||
Assets: | ||
Investment securities available for sale | 445,394 | 406,549 |
Mortgage loans held for sale | 211 | 3,637 |
Liabilities: | ||
Cash and cash equivalents | 71,596 | 277,499 |
Other investments | 2,656 | 3,668 |
Loans, net | 998,587 | 855,814 |
Mutual funds held in deferred compensation trust | 1,327 | 1,510 |
Deposits | 1,434,871 | 1,401,833 |
Securities sold under agreements to repurchase | 47,688 | 37,094 |
Junior subordinated debentures | $ 15,464 | $ 15,464 |
Reportable Segments (Details)
Reportable Segments (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest expense | $ 3,323,000 | $ 3,205,000 | $ 3,836,000 | ||||||||
Provision for loan losses | $ 583,000 | $ 408,000 | $ 410,000 | $ 71,000 | $ 300,000 | $ 182,000 | $ 226,000 | $ 455,000 | 1,472,000 | (1,163,000) | 4,259,000 |
Noninterest income | 5,522,000 | 6,793,000 | 7,328,000 | 7,046,000 | 6,966,000 | 6,040,000 | 6,040,000 | 5,873,000 | 26,689,000 | 24,919,000 | 22,914,000 |
Noninterest expense | 14,991,000 | 13,455,000 | 14,243,000 | 13,341,000 | 14,159,000 | 12,568,000 | 12,132,000 | 12,268,000 | 8,295,000 | 7,874,000 | 8,544,000 |
Total income tax | 1,102,000 | 1,416,000 | 806,000 | 848,000 | 732,000 | 824,000 | 1,194,000 | 1,046,000 | 4,172,000 | 3,796,000 | 2,489,000 |
Net earnings | 4,147,000 | $ 5,307,000 | $ 3,217,000 | $ 3,452,000 | 3,007,000 | $ 3,390,000 | $ 4,615,000 | $ 4,121,000 | 16,123,000 | 15,133,000 | 11,357,000 |
Total assets | 1,620,927,000 | 1,624,193,000 | 1,620,927,000 | 1,624,193,000 | |||||||
Banking Operations [Member] | |||||||||||
Interest income | 54,416 | 47,171 | 47,926 | ||||||||
Interest expense | 2,796 | 2,930 | 3,473 | ||||||||
Net interest income | 51,620 | 44,241 | 44,453 | ||||||||
Provision for loan losses | 1,472 | (1,163) | 4,259 | ||||||||
Noninterest income | 15,012 | 16,014 | 16,148 | ||||||||
Appraisal management fee income | 0 | 0 | 0 | ||||||||
Noninterest expense | 44,433 | 42,239 | 42,041 | ||||||||
Appraisal management fee expense | 0 | 0 | 0 | ||||||||
Total income tax | 4,248 | 3,836 | 2,574 | ||||||||
Net earnings | 16,479 | 15,343 | 11,727 | ||||||||
Total assets | 1,617,212 | 1,620,933 | 1,617,212 | 1,620,933 | |||||||
CBRES [Member] | |||||||||||
Interest income | 0 | 0 | 0 | ||||||||
Interest expense | 0 | 0 | 0 | ||||||||
Net interest income | 0 | 0 | 0 | ||||||||
Provision for loan losses | 0 | 0 | 0 | ||||||||
Noninterest income | 14 | 15 | 12 | ||||||||
Appraisal management fee income | 11,663 | 8,890 | 6,754 | ||||||||
Noninterest expense | 1,695 | 1,163 | 991 | ||||||||
Appraisal management fee expense | 9,264 | 7,112 | 5,274 | ||||||||
Total income tax | 166 | 145 | 116 | ||||||||
Net earnings | 552 | 485 | 385 | ||||||||
Total assets | 3,227 | 2,692 | 3,227 | 2,692 | |||||||
Other [Member] | |||||||||||
Interest income | 527 | 275 | 363 | ||||||||
Interest expense | 15 | 8 | 32 | ||||||||
Net interest income | (512) | (267) | (331) | ||||||||
Provision for loan losses | 0 | 0 | 0 | ||||||||
Noninterest income | 0 | 0 | 0 | ||||||||
Appraisal management fee income | 0 | 0 | 0 | ||||||||
Noninterest expense | 638 | 613 | 625 | ||||||||
Appraisal management fee expense | 0 | 0 | 0 | ||||||||
Total income tax | (242) | (185) | (201) | ||||||||
Net earnings | (908) | (695) | (755) | ||||||||
Total assets | 488 | 568 | 488 | 568 | |||||||
Consolidated [Member] | |||||||||||
Interest income | 54,431 | 47,179 | 47,958 | ||||||||
Interest expense | 3,323 | 3,205 | 3,836 | ||||||||
Net interest income | 51,108 | 43,974 | 44,122 | ||||||||
Provision for loan losses | 1,472 | (1,163) | 4,259 | ||||||||
Noninterest income | 15,026 | 16,029 | 16,160 | ||||||||
Appraisal management fee income | 11,663 | 8,890 | 6,754 | ||||||||
Noninterest expense | 46,766 | 44,015 | 43,657 | ||||||||
Appraisal management fee expense | 9,264 | 7,112 | 5,274 | ||||||||
Total income tax | 4,172 | 3,796 | 2,489 | ||||||||
Net earnings | 16,123 | 15,133 | $ 11,357 | ||||||||
Total assets | $ 1,620,927 | $ 1,624,193 | $ 1,620,927 | $ 1,624,193 |
Peoples Bancorp of North Caro_3
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2017 |
Assets | |||||
Interest-bearing time deposit | $ 21,535 | $ 232,788 | |||
Investment in subsidiaries | $ 300 | ||||
Total assets | 1,620,927 | 1,624,193 | |||
Junior subordinated debentures | 15,464 | 15,464 | |||
Total liabilities | 1,515,732 | 1,481,824 | |||
Total shareholders' equity | 105,195 | 142,369 | $ 139,899 | $ 134,120 | |
Total liabilities and shareholders' equity | 1,620,927 | 1,624,193 | |||
Parent Company | |||||
Assets | |||||
Cash | 384 | 561 | $ 664 | $ 1,187 | |
Interest-bearing time deposit | 1,000 | 1,000 | |||
Investment in subsidiaries | 118,832 | 155,716 | |||
Investment in PEBK Capital Trust II | 464 | 464 | |||
Other assets | 24 | 105 | |||
Total assets | 120,704 | 157,846 | |||
Junior subordinated debentures | 15,464 | 15,464 | |||
Total liabilities | 45 | 13 | |||
Total shareholders' equity | 105,195 | 142,369 | |||
Total liabilities and shareholders' equity | $ 120,704 | $ 157,846 |
Peoples Bancorp of North Caro_4
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements Statements of Earnings (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Expenses: | |||||||||||
Interest | $ 3,323 | $ 3,205 | $ 3,836 | ||||||||
Other operating expenses | 213 | 144 | 200 | ||||||||
Total income tax | $ 1,102 | $ 1,416 | $ 806 | $ 848 | $ 732 | $ 824 | $ 1,194 | $ 1,046 | 4,172 | 3,796 | 2,489 |
Net earnings | $ 4,147 | $ 5,307 | $ 3,217 | $ 3,452 | $ 3,007 | $ 3,390 | $ 4,615 | $ 4,121 | 16,123 | 15,133 | 11,357 |
Parent Company | |||||||||||
Revenues | |||||||||||
Interest and dividend from subsidiary | 6,240 | 7,419 | 7,539 | ||||||||
Total revenues | 6,240 | 7,419 | 7,539 | ||||||||
Expenses: | |||||||||||
Interest | 529 | 280 | 370 | ||||||||
Other operating expenses | 639 | 613 | 625 | ||||||||
Total expenses | 1,168 | 893 | 995 | ||||||||
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 5,072 | 6,526 | 6,544 | ||||||||
Total income tax | 242 | 185 | 201 | ||||||||
Income before equity in undistributed earnings of subsidiaries | 5,314 | 6,711 | 6,745 | ||||||||
Equity in undistributed earnings of subsidiaries | 10,809 | 8,422 | 4,612 | ||||||||
Net earnings | $ 16,123 | $ 15,133 | $ 11,357 |
Peoples Bancorp of North Caro_5
Peoples Bancorp of North Carolina Inc (Parent Company Only) Condensed Financial Statements (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net earnings | $ 4,147 | $ 5,307 | $ 3,217 | $ 3,452 | $ 3,007 | $ 3,390 | $ 4,615 | $ 4,121 | $ 16,123 | $ 15,133 | $ 11,357 |
Other assets | 3,920 | 554 | 596 | ||||||||
Net cash provided by operating activities | 22,657 | 26,900 | 9,162 | ||||||||
Proceeds from calls and maturities of investment securities available for sale | 7,875 | 9,540 | 62,408 | ||||||||
Net cash used by investing activities | (255,976) | (106,138) | (148,972) | ||||||||
Net cash (used) provided by financing activities | 27,416 | 195,157 | 249,003 | ||||||||
Net cash provided by financing activities | 27,416 | 195,157 | 249,003 | ||||||||
Net change in cash and cash equivalents | (205,903) | 115,919 | 109,193 | ||||||||
Parent Company | |||||||||||
Net earnings | 16,123 | 15,133 | 11,357 | ||||||||
Equity in undistributed earnings of subsidiaries | (10,809) | (8,422) | (4,612) | ||||||||
Other assets | 81 | 545 | (19) | ||||||||
Other liabilities | 32 | 0 | (10) | ||||||||
Net cash provided by operating activities | 5,427 | 7,256 | 6,716 | ||||||||
Proceeds from calls and maturities of investment securities available for sale | 0 | 0 | 250 | ||||||||
Net cash used by investing activities | 0 | 0 | 250 | ||||||||
Repayments of Junior Subordinated Debentures | 0 | 0 | 155 | ||||||||
Cash dividends paid on common stock | (4,935) | (3,793) | (4,392) | ||||||||
Stock repurchase | 710 | 3,605 | (2,999) | ||||||||
Proceeds from exercise of restricted stock units | 41 | 39 | 57 | ||||||||
Net cash (used) provided by financing activities | (5,604) | (7,359) | (7,489) | ||||||||
Net cash provided by financing activities | (5,604) | (7,359) | (7,489) | ||||||||
Net change in cash and cash equivalents | (177) | (103) | (523) | ||||||||
Cash at beginning of year | $ 561 | $ 664 | 561 | 664 | 1,187 | ||||||
Cash at end of year | $ 384 | $ 561 | $ 384 | $ 561 | $ 664 |
Quarterly Data (Details)
Quarterly Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Quarterly Data | |||||||||||
Total interest income | $ 16,499 | $ 14,611 | $ 11,992 | $ 11,329 | $ 11,319 | $ 11,421 | $ 12,517 | $ 11,922 | |||
Total interest expense | 1,198 | 818 | 644 | 663 | 687 | 861 | 842 | 815 | |||
Net interest income | 15,301 | 13,793 | 11,348 | 10,666 | 10,632 | 10,560 | 11,675 | 11,107 | |||
Provision for loan losses | 583 | 408 | 410 | 71 | 300 | 182 | 226 | 455 | $ 1,472 | $ (1,163) | $ 4,259 |
Other income | 5,522 | 6,793 | 7,328 | 7,046 | 6,966 | 6,040 | 6,040 | 5,873 | 26,689 | 24,919 | 22,914 |
Noninterest expense | 14,991 | 13,455 | 14,243 | 13,341 | 14,159 | 12,568 | 12,132 | 12,268 | 8,295 | 7,874 | 8,544 |
Income before income taxes | 5,249 | 6,723 | 4,023 | 4,300 | 3,739 | 4,214 | 5,809 | 5,167 | 20,295 | 18,929 | 13,846 |
Total income tax | 1,102 | 1,416 | 806 | 848 | 732 | 824 | 1,194 | 1,046 | 4,172 | 3,796 | 2,489 |
Net earnings | $ 4,147 | $ 5,307 | $ 3,217 | $ 3,452 | $ 3,007 | $ 3,390 | $ 4,615 | $ 4,121 | $ 16,123 | $ 15,133 | $ 11,357 |
Basic net earnings per share | $ 0.76 | $ 0.96 | $ 0.59 | $ 0.63 | $ 0.55 | $ 0.61 | $ 0.82 | $ 0.73 | $ 2.94 | $ 2.71 | $ 2.01 |
Diluted net earnings per share | $ 0.74 | $ 0.93 | $ 0.57 | $ 0.61 | $ 0.53 | $ 0.59 | $ 0.80 | $ 0.71 | $ 2.85 | $ 2.63 | $ 1.95 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Feb. 28, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Gross losses | $ 62,328,000 | $ 5,536,000 | |
Gross gains | $ 536,000 | $ 5,663,000 | |
Subsequent Event [Member] | |||
Securities available for sale, sold | $ 53,500,000 | ||
Gross losses | 2,700,000 | ||
Gross gains | $ 177,000 |