Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 07, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | F&M BANK CORP | ||
Entity Central Index Key | 0000740806 | ||
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 | 3,457,976 | ||
Entity Public Float | $ 89,373,811 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-13273 | ||
Entity Incorporation State Country Code | VA | ||
Entity Tax Identification Number | 54-1280811 | ||
Entity Address Address Line 1 | P.O. Box 1111 | ||
Entity Address City Or Town | Timberville | ||
Entity Address State Or Province | VA | ||
Entity Address Postal Zip Code | 22853 | ||
City Area Code | 540 | ||
Local Phone Number | 896-8941 | ||
Security 12g Title | Common Stock - $5 Par value per share | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Yount, Hyde & Barbour, P.C | ||
Auditor Location | Roanoke, Virginia | ||
Auditor Firm Id | 613 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 17,926 | $ 8,516 |
Money market funds and interest-bearing deposits in other banks | 687 | 2,938 |
Federal funds sold | 16,340 | 76,667 |
Cash and cash equivalents | 34,953 | 88,121 |
Securities: | ||
Held to maturity, at amortized cost - fair value of $125 in 2022 and 2021 | 125 | 125 |
Available for sale, at fair value | 392,095 | 403,882 |
Other investments | 11,317 | 9,210 |
Loans held for sale, at fair value | 1,373 | 4,887 |
Loans held for investment, net of deferred fees and costs | 743,604 | 662,421 |
Less: allowance for loan losses | (7,936) | (7,748) |
Net loans held for investment | 735,668 | 654,673 |
Bank premises and equipment, net | 19,587 | 17,063 |
Bank premises held for sale | 0 | 300 |
Interest receivable | 3,995 | 3,117 |
Goodwill | 3,082 | 3,082 |
Bank owned life insurance | 23,554 | 22,878 |
Other assets | 20,153 | 12,004 |
Total Assets | 1,245,902 | 1,219,342 |
Deposits: | ||
Noninterest bearing | 293,596 | 280,993 |
Interest bearing | 789,781 | 799,302 |
Total deposits | 1,083,377 | 1,080,295 |
Short-term debt | 70,000 | 0 |
Long-term debt | 6,890 | 21,772 |
Other liabilities | 14,843 | 16,819 |
Total Liabilities | 1,175,110 | 1,118,886 |
Stockholders' Equity | ||
Common stock $5 par value, 6,000,000 shares authorized, 200,000 designated, 3,456,237 and 3,414,306 shares issued and outstanding (26,456 and 15,859 unvested restricted shares) | 17,149 | 17,071 |
Additional paid in capital - common stock | 10,577 | 10,127 |
Retained earnings | 83,078 | 78,350 |
Accumulated other comprehensive loss | (40,012) | (5,092) |
Total Stockholders' Equity | 70,792 | 100,456 |
Total Liabilities and Stockholders' Equity | $ 1,245,902 | $ 1,219,342 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Held to maturity - fair value | $ 125,000 | $ 125,000 |
Stockholders' Equity | ||
Common stock, shares par value | $ 5 | $ 5 |
Common stock, shares designated | 200,000 | 200,000 |
Common stock, shares authorized | 6,000,000 | 6,000,000 |
Common stock, shares issued | 3,456,237 | 3,414,306 |
Common stock, shares outstanding | 3,456,237 | 3,414,306 |
Common stock, unvested restricted shares | 26,456 | 15,859 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Interest and Dividend Income | ||
Interest and fees on loans held for investment | $ 34,268 | $ 32,374 |
Interest from loans held for sale | 106 | 186 |
Interest from money market funds and federal funds sold | 190 | 142 |
Interest from debt securities | 7,620 | 2,874 |
Total interest and dividend income | 42,184 | 35,576 |
Interest Expense | ||
Total interest on deposits | 5,735 | 3,336 |
Interest from short-term debt | 760 | 0 |
Interest from long-term debt | 750 | 966 |
Total interest expense | 7,245 | 4,302 |
Net Interest Income | 34,939 | 31,274 |
Provision for (Recovery of) Loan Losses | 866 | (2,821) |
Net Interest Income After Provision for (Recovery of) Loan Losses | 34,073 | 34,095 |
Noninterest Income | ||
Service charges on deposit accounts | 1,062 | 1,133 |
Investment services and insurance income | 883 | 944 |
Mortgage banking income | 1,834 | 4,646 |
Title insurance income | 1,578 | 2,074 |
Income on bank owned life insurance | 701 | 671 |
Low-income housing partnership losses | (817) | (861) |
ATM and check card fees | 2,462 | 2,311 |
Net investment securities losses | (2,852) | (525) |
Gain on sale of limited partnership investment | 3,785 | 0 |
Other operating income | 998 | 913 |
Total noninterest income | 9,634 | 11,306 |
Noninterest Expenses | ||
Salaries | 15,439 | 14,102 |
Employee benefits | 4,593 | 4,385 |
Occupancy expense | 1,412 | 1,262 |
Equipment expense | 1,174 | 1,200 |
FDIC insurance assessment | 563 | 414 |
Other real estate owned, net | 59 | 0 |
Marketing expense | 848 | 748 |
Legal and professional expense | 821 | 1,068 |
ATM and check card fees | 1,308 | 1,113 |
Telecommunication and data processing expense | 2,948 | 2,672 |
Directors' fees | 560 | 493 |
Bank Franchise tax | 704 | 711 |
Impairment of long-lived assets | 0 | 171 |
Other operating expenses | 4,480 | 5,001 |
Total noninterest expenses | 34,909 | 33,340 |
Income before income taxes | 8,798 | 12,061 |
Income tax expense | 480 | 1,323 |
Net Income attributable to F & M Bank Corp. | 8,318 | 10,738 |
Dividends paid/accumulated on preferred stock | 0 | (196) |
Net income available to common stockholders | $ 8,318 | $ 10,542 |
Per Common Share Data | ||
Net income - basic | $ 2.41 | $ 3.25 |
Net income - diluted | 2.41 | 3.12 |
Cash dividends on common stock | $ 1.04 | $ 1.04 |
Weighted average common shares outstanding - basic | 3,449,343 | 3,245,086 |
Weighted average common shares outstanding - diluted | 3,449,343 | 3,442,173 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Comprehensive (Loss) Income | ||
Net Income attributable to F & M Bank Corp. | $ 8,318 | $ 10,738 |
Other comprehensive (loss) income: | ||
Pension plan adjustment | 4,722 | 671 |
Other comprehensive (loss) income Tax effect | 992 | 141 |
Pension plan adjustment, net of tax | 3,730 | 530 |
Unrealized holding losses on available-for-sale securities | (51,776) | (3,823) |
Tax effect | 10,873 | 803 |
Unrealized holding losses, net of tax | (40,903) | (3,020) |
Less: | ||
Reclassifications adjustment for losses included in net income | 2,852 | 525 |
Tax effect after adyustment | 599 | 110 |
Realized losses on sale of available-for-sale securities, net | 2,253 | 415 |
Total other comprehensive loss | (34,920) | (2,075) |
Total comprehensive (loss) income | $ (26,602) | $ 8,663 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Balance, amount at Dec. 31, 2020 | $ 95,629 | $ 4,558 | $ 16,017 | $ 6,866 | $ 71,205 | $ (3,017) |
Net Income | 10,738 | 0 | 0 | 0 | 10,738 | 0 |
Other comprehensive (loss) | (2,075) | 0 | 0 | 0 | 0 | (2,075) |
Dividends on preferred stock ($0.96 per share) | (196) | 0 | 0 | 0 | (196) | 0 |
Dividends on common stock ($1.04 per share) | (3,397) | 0 | 0 | 0 | (3,397) | 0 |
Common stock issued (9,332 shares) | 263 | 0 | 47 | 216 | 0 | 0 |
Preferred stock converted to common (180,261 shares) | 0 | (3,931) | 1,001 | 2,930 | 0 | 0 |
Preferred stock redeemed (25,066 shares) | (627) | (627) | 0 | 0 | 0 | 0 |
Common stock issued for Stock-based Compensation (1,332 shares) | 35 | 0 | 6 | 29 | 0 | 0 |
Stock-based compensation expense | 86 | 0 | 0 | 86 | 0 | 0 |
Balance, amount at Dec. 31, 2021 | 100,456 | 0 | 17,071 | 10,127 | 78,350 | (5,092) |
Net Income | 8,318 | 0 | 0 | 0 | 8,318 | 0 |
Other comprehensive (loss) | (34,920) | 0 | 0 | 0 | 0 | (34,920) |
Dividends on common stock ($1.04 per share) | (3,590) | 0 | 0 | 0 | (3,590) | 0 |
Common stock issued (9,332 shares) | 279 | 0 | 52 | 227 | 0 | 0 |
Stock-based compensation expense | 193 | 0 | 0 | 193 | 0 | 0 |
Common stock issued for Stock-based Compensation (5,265 shares) | 56 | 0 | 26 | 30 | 0 | 0 |
Balance, amount at Dec. 31, 2022 | $ 70,792 | $ 0 | $ 17,149 | $ 10,577 | $ 83,078 | $ (40,012) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net income | $ 8,318 | $ 10,738 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,101 | 1,164 |
Amortization of intangibles | 37 | 71 |
Amortization of securities | 23,220 | 1,004 |
Proceeds from sale of loans held for sale originated | 147,053 | 203,681 |
Gain on sale of loans held for sale originated | (2,528) | (4,679) |
Loans held for sale originated | (141,011) | (189,582) |
Provision for (recovery of) loan losses | 866 | (2,821) |
Deferred tax (benefit) expense | (91) | 476 |
Increase in interest receivable | (878) | (390) |
Decrease in other assets | 1,495 | 2,560 |
Decrease in accrued liabilities | 2,763 | (2,076) |
Loss on sale of investment securities | 2,852 | 525 |
Gain on sale of limited partnership investment | (3,785) | 0 |
Amortization of limited partnership investments | 817 | 861 |
Amortization of debt issuance costs | 118 | 0 |
(Gain) loss on sale of fixed assets, net | (10) | 114 |
Loss on sale and valuation adjustments of other real estate owned | 59 | 0 |
Income from life insurance investment | (701) | (671) |
Share based compensation expense | 193 | 86 |
Loss on sale of assets held for sale | 0 | 220 |
Net Cash Provided by Operating Activities | 39,888 | 21,281 |
Cash Flows from Investing Activities | ||
Proceeds from maturities of securities available for sale | 4,000 | 19,130 |
Proceeds from sales of securities available for sale | 40,847 | 25,917 |
Purchases of securities available for sale and other investments | (108,057) | (346,857) |
Proceeds from the redemption of restricted stock, net | 0 | 790 |
Purchases of restricted stock, net | (2,741) | 0 |
Proceeds from sale of limited partnership investments | 3,823 | 0 |
Investment in limited partnership investment | (220) | 0 |
Net increase in loans held for investment | (82,058) | (998) |
Net decrease in loans held for sale participations | 0 | 44,372 |
Net purchase of property and equipment | (3,642) | (563) |
Proceeds from sale of other real estate owned | 138 | 0 |
Proceeds from life insurance benefits | 0 | 421 |
Proceeds from the sale of property and equipment | 27 | 142 |
Cash received in branch acquisition (net of cash paid) | 0 | 13,946 |
Net Cash Used in Investing Activities | (147,883) | (243,700) |
Cash Flows from Financing Activities | ||
Net change in deposits | 3,082 | 247,484 |
Net change in short-term debt | 70,000 | 0 |
Dividends paid in cash | (3,590) | (3,593) |
Proceeds from sale of common stock | 279 | 263 |
Proceeds from issuance of common stock | 56 | 35 |
Repurchase of preferred stock | 0 | (627) |
Repayments of long-term debt | (15,000) | (11,430) |
Net Cash Provided by Financing Activities | 54,827 | 232,132 |
Net (Decrease) increase in Cash and Cash Equivalents | (53,168) | 9,713 |
Cash and Cash Equivalents, Beginning of Year | 88,121 | 78,408 |
Cash and Cash Equivalents, End of Year | 34,953 | 88,121 |
Cash paid for: | ||
Interest | 7,441 | 4,071 |
Income taxes | 32 | 2,012 |
Supplemental non-cash disclosures: | ||
Change in unrealized loss on securities available for sale, net | (48,924) | (3,298) |
Minimum pension liability adjustment, net | 3,730 | 530 |
Transfer from loans to other real estate owned | 197 | 0 |
Conversion of preferred stock to common stock | 0 | (3,931) |
Assets held for sale: | ||
Donation of assets held for sale | 0 | 161 |
Write down of assets held for sale | 0 | 59 |
Branch purchase: | ||
Tangible assets acquired (net of cash received) | 0 | 61 |
Identifiable intangible assets acquired | 0 | 73 |
Liabilities assumed | $ 0 | $ 14,044 |
NATURE OF BANKING ACTIVITIES AN
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES F & M Bank Corp. (the “Company”), through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state-chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers located primarily in the counties of Rockingham, Shenandoah, and Augusta, and the cities of Harrisonburg, Staunton, Waynesboro and Winchester in Virginia. Services are provided at thirteen branch offices and a Dealer Finance Division loan production office. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance Company (“TEB”), Farmers & Merchants Financial Services, Inc, (“FMFS”), VBS Mortgage, LLC (dba “F&M Mortgage”) and VSTitle, LLC (“VST”). The accounting and reporting policies of the Company and its subsidiaries conform to generally accepted accounting principles and to accepted practice within the banking industry. The following is a summary of significant policies: Principles of Consolidation The consolidated financial statements include the accounts of the Company, Bank, TEB, FMFS, F&M Mortgage, and VST. Significant inter-company accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term are the determination of the allowance for loan losses, fair value, and pension accounting. Business Segments The Company primarily operates two business segments, commercial banking, through F&M Bank, and mortgage banking, through F&M Mortgage. The commercial banking segment includes both commercial and consumer lending and provides customers with products such as commercial loans, real estate loans, other business financing and consumer loans. In addition, this segment provides customers with several choice deposit products, including demand deposit accounts, savings accounts, and certificates of deposit. The mortgage banking segment engages primarily in the origination of residential mortgages for sale into the secondary market. Various other services are offered through TEB, FMFS and VST. For additional information, refer to Note 20,” Business Segments.” Cash and Cash Equivalents Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. Securities At the time of purchase, debt securities are classified as held to maturity, available for sale or trading. Debt securities that the Company has both the positive intent and ability to hold to maturity are classified as held to maturity. Held to maturity securities are stated at amortized cost adjusted for amortization of premiums and accretion of discounts on purchase using a method that approximates the effective interest method. Investments classified as trading or available for sale are stated at fair value. Changes in the fair value of available for sale investments are excluded from current earnings and reported, net of taxes, as a separate component of other comprehensive loss. Amortization of premiums and accretion of discounts on securities are reported as adjustments to interest income using the effective interest method. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold using the specific identification method. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security. These gains and losses are credited or charged to stockholders’ equity, whereas realized gains and losses flow through the Company’s current earnings. The fair value of investment securities available for sale is estimated based on quoted prices for similar assets determined by bid quotations received from independent pricing services. Declines in the fair value of securities below their amortized cost that are other than temporary are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost basis, the Company considers our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. Other Investments The Company has investments in low-income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. Due to restrictions on the Company’s investments in the FHLB and the Federal Reserve Bank of Richmond (“FRB”), these securities are considered restricted and carried at cost. The FHLB requires the Bank to maintain stock in an amount equal to 3.75% of outstanding borrowings. The FRB requires the Company to maintain stock with a par value equal to 6% of its outstanding capital and surplus. Loans Held for Investment The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and net of any deferred fees and origination costs. Loan fees collected and certain costs incurred related to loan originations are deferred and amortized as an adjustment to interest income over the life of the related loans. Deferred fees and costs are recorded as an adjustment to interest income using a method that approximates a constant yield. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless well-secured and in process of collection. Past due status is based on the contractual terms of the loan. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. Loans Held for Sale Loans held for sale consist of one-to-four family conforming residential real estate loans originated for sale in the secondary market by F&M Mortgage. Credit risk associated with these loans is mitigated by entering sales commitments with third party investors to purchase the loans after they are originated; the Company does not service these loans after they are sold. The Company records loans held for sale via the fair value option; see Note 15 “Derivative Instruments and Hedging Activities, Mortgage Banking Derivatives” for additional information. The change in the fair value of loans held for sale is included in “Mortgage banking income” on the Company’s Consolidated Statements of Income. Troubled Debt Restructuring In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). The restructured terms may include rate reductions, principal forgiveness, payment forbearance or other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. All TDRs are considered impaired loans and may be on accrual or nonaccrual status. Allowance for Loan and Losses The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Loans, other than dealer finance and credit cards, are assigned an internal risk rating based on certain credit quality indicators. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Specific allowances are established for individually evaluated impaired loans based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Assets Held for Sale Assets held for sale at December 31, 2021 included one branch building that was closed during 2020. The Company periodically evaluates the value of assets held for sale and records an impairment charge for any subsequent declines in fair value less selling costs. The branch building was sold during 2022 at carrying cost. There were no assets held for sale as of December 31, 2022. Other Real Estate Owned (OREO) OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Bank Premises and Equipment Land is carried at cost. Buildings and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. Estimated useful lives range from 10 to 39 years for buildings, and 5 to 10 years for furniture and equipment. Maintenance, repairs, and minor improvements are charged to operations as incurred; major improvements are capitalized. Gains and losses on dispositions are reflect-ed in other income or expense. Goodwill and Intangible Assets Goodwill, the excess of purchase price over the fair value of the identifiable net assets acquired, is evaluated for impairment by comparing the fair value of a reporting unit with its carrying amount. Impairment testing is performed annually as of December 31, as well as when an event triggering event may have occurred. The Company performed the internal evaluation of goodwill for December 31, 2022, and based on the results, no impairment was deemed necessary. Acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. Bank Owned Life Insurance The Company has purchased life insurance policies on certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Pension Plans The Bank has a qualified noncontributory defined benefit pension plan which covers all full-time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company recognizes the over-funded or under‑funded status of pension and other postretirement benefit plans on the balance sheet. Gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive loss, net of tax effects, until they are amortized as a component of net periodic cost. As of February 15, 2023, the Virginia Bankers Association Defined Benefit Plan for Farmers & Merchants Bank was amended to stop the accrual of future benefits. Income Taxes Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the temporary differences between the book and tax bases of assets and liabilities and give current recognition to changes in tax rates and laws. When the Company’s federal tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would ultimately be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties, if any, associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of income. Advertising Costs The Company follows the policy of charging the cost of advertising to expense as incurred. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Bank-Owned Life Insurance The Company owns insurance on the lives of a certain group of key employees. The policies were purchased to help offset the increase in the costs of various fringe benefit plans, including healthcare. The cash surrender value of these policies is included as an asset on the consolidated balance sheets, and any increase in cash surrender value is recorded as income from bank owned life insurance on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company receives a death benefit which is also recorded as income from bank owned life insurance. The Company is exposed to credit risk to the extent an insurance company is unable to fulfill its financial obligations under a policy. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the consolidated financial statements. Reclassifications Certain reclassifications have been made in the 2021 financial statements to conform to reporting for 2022. These reclassifications are not considered material and had no impact on prior year’s net income, balance sheet or stockholders’ equity. Earnings per Share Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding. Nonvested restricted shares are included in the weighted average number of common shares used to compute basic earnings per share because of the dividend participation and voting rights. Diluted earnings per share includes the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. All the Company’s outstanding preferred stock was redeemed by the Company for cash or converted to common stock during the fourth quarter of 2021. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented (dollars in thousands): For the year ended December 31, 2022 December 31, 2021 Earnings Available to Common Stockholders: Net Income $ 8,318 $ 10,738 Preferred stock dividends - 196 Net Income Available to Common Stockholders $ 8,318 $ 10,542 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated (dollars in thousands): For the year ended December 31, 2022 December 31, 2021 Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,318 3,449,343 $ 2.41 $ 10,542 3,245,086 $ 3.25 Effect of Dilutive Securities: Convertible Preferred Stock - - - 196 197,087 (0.13 ) Diluted EPS $ 8,318 3,449,343 $ 2.41 $ 10,738 3,442,173 $ 3.12 Recent Accounting Pronouncements During June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU, as amended, requires an entity to measure expected credit losses for financial assets carried at amortized cost based on historical experience, current conditions, and reasonable and supportable forecasts. Among other things, the ASU also amended the impairment model for available for sale securities and addressed purchased financial assets with deterioration. The Company adopted ASU 2016-13 as of January 1, 2023, in accordance with the required implementation date and recorded the impact of adoption to retained earnings, net of deferred income taxes, as required by the standard. The adjustment recorded at adoption was not significant to the overall allowance for credit losses or shareholders’ equity as compared to December 31, 2022, and consisted of adjustments to the allowance for credit losses on loans, as well as an adjustment to the Company’s reserve for unfunded loan commitments. Subsequent to adoption, the Company will record adjustments to its allowance(s) for credit losses and reserves for unfunded commitments through the provision for credit losses in the consolidated statements of income. The Company is utilizing a third-party model to tabulate its estimate of current expected credit losses, using the remaining life methodology. In accordance with ASC 326, the Company has segmented its loan portfolio based on similar risk characteristics which included call report code. The Company primarily utilizes a qualitative scorecard for its reasonable and supportable forecasting of current expected credit losses. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company will consider the nine qualitative adjustment factors outlined in the 2006 interagency policy statement on the ALLL. The Company’s CECL implementation process was overseen by the CECL Committee and included an assessment of data availability and gap analysis, data collection, consideration and analysis of multiple loss estimation methodologies, an assessment of relevant qualitative factors and correlation analysis of multiple potential loss drivers and their impact on the Company’s historical loss experience. During 2022, the Company calculated its current expected credit losses model in parallel to its incurred loss model to further refine the methodology and model. In addition, the Company engaged a third-party to perform a comprehensive model validation. Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (SAB) 119. SAB 119 updated portions of SEC interpretative guidance to align with FASB ASC 326, “Financial Instruments – Credit Losses.” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”. ASU 2022-06 extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The objective of the guidance in Topic 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. In 2021, the UK Financial Conduct Authority (FCA) delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The ASU is effective for all entities upon issuance. The Company transitioned all loan agreements, other than SWAP loans, away from LIBOR during 2022. The SWAP loans have amended Rate Protection Agreements executed by the borrower in preparation of transition away from LIBOR by the swap holder. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company does not expect the adoption of ASU 2022-03 to have a material impact on its consolidated financial statements. In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-02, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. For ent |
SECURITIES
SECURITIES | 12 Months Ended |
Dec. 31, 2022 | |
SECURITIES | |
SECURITIES | NOTE 2 SECURITIES The amortized cost and fair value, with unrealized gains and losses, of securities held to maturity were as follows (dollars in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U. S. Treasuries $ 125 $ - $ 13 $ 112 December 31, 2021 U. S. Treasuries $ 125 $ - $ - $ 125 The amortized cost and fair value of securities available for sale are as follows (dollars in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U. S. Treasuries $ 39,902 $ - $ 3,259 $ 36,643 U. S. Government sponsored enterprises 143,473 - 13,725 129,748 Securities issued by States and political subdivisions of the U.S. 46,331 27 4,160 42,198 Mortgage-backed obligations of federal agencies 183,044 77 26,246 156,875 Corporate debt securities 30,550 - 3,919 26,631 Total Securities Available for Sale $ 443,300 $ 104 $ 51,309 $ 392,095 December 31, 2021 U. S. Treasuries $ 29,847 $ - $ 365 $ 29,482 U. S. Government sponsored enterprises 134,466 - 752 133,714 Securities issued by States and political subdivisions of the U.S. 34,078 406 147 34,337 Mortgage-backed obligations of federal agencies 185,216 522 2,091 183,647 Corporate debt securities 22,555 372 225 22,702 Total Securities Available for Sale $ 406,162 $ 1,300 $ 3,580 $ 403,882 The amortized cost and fair value of securities at December 31, 2022, by contractual maturity are shown below (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125 $ 112 $ 19,823 $ 19,203 Due after one year through five years - - 164,328 151,279 Due after five years through ten years - - 101,571 87,643 Due after ten years - - 157,578 133,970 Total $ 125 $ 112 $ 443,300 $ 392,095 The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the years ended December 31, 2022 and 2021 (dollars in thousands): 2022 2021 Realized losses: Gross realized losses $ (2,852 ) $ (525 ) Net realized losses $ (2,852 ) $ (525 ) Proceeds from sales of securities $ 40,847 $ 25,917 There were no pledged securities at December 31, 2022 or 2021. As of December 31, 2022, other investments consist of investments in twelve low-income housing and historic equity partnerships (carrying basis of $5.9 million), stock in the FHLB (carrying basis of $3.6 million), and various other investments (carrying basis of $1.2 million). The interests in the low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks are restricted as to sales. The market values of these securities are estimated to approximate their carrying values as of December 31, 2022. At December 31, 2022, the Company was committed to invest an additional $796 thousand in three low-income housing limited partnerships. These funds will be paid as requested by the general partner to complete the projects. This additional investment has been reflected in the above carrying basis and in accrued liabilities on the consolidated balance sheet. The primary purpose of the investment portfolio is to generate income and meet liquidity needs of the Company through readily saleable financial instruments. The portfolio includes fixed rate bonds, whose prices move inversely with rates and variable rate bonds. At the end of any accounting period, the investment portfolio has unrealized gains and losses. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes and credit risk changes for other than temporary impairment. The primary concern in a loss situation is the credit quality of the issuer behind the instrument. Bonds deteriorate in value due to credit quality of the individual issuer and changes in market conditions. A summary of unrealized losses and the length of time in a continuous loss position, by security type of December 31, 2022 and 2021 were as follows (dollars in thousands): Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2022 U. S. Government treasuries $ 9,657 $ 362 $ 26,987 $ 2,897 $ 36,644 $ 3,259 U. S. Government sponsored enterprises 13,914 1,083 115,835 12,642 129,749 13,725 Securities issued by State and political subdivisions in the U.S. 21,805 1,426 18,710 2,734 40,515 4,160 Mortgage-backed obligations of federal agencies 32,823 2,429 119,892 23,817 152,715 26,246 Corporate debt securities 16,252 2,198 10,379 1,721 26,631 3,919 Total $ 94,451 $ 7,498 $ 291,803 $ 43,811 $ 386,254 $ 51,309 Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2021 U. S. Government treasuries $ 29,481 $ 365 $ - $ - $ 29,481 $ 365 U. S. Government sponsored enterprises 93,714 752 - - 93,714 752 Securities issued by State and political subdivisions in the U.S. 13,308 147 - - 13,308 147 Mortgage-backed obligations of federal agencies 126,501 1,871 10,074 220 136,575 2,091 Corporate debt securities 8,825 225 - - 8,825 225 Total $ 271,829 $ 3,360 $ 10,074 $ 220 $ 281,903 $ 3,580 At December 31, 2022 there were $291.8 million or 74 instances of individual available for sale securities that had been in a continuous loss position for more than 12 months and had an aggregate unrealized loss of $43.8 million. At December 31, 2021 there were $10.0 million or 4 instances of individual available for sale securities that had been in a continuous loss position for more than 12 months and had an aggregate unrealized loss of $220 thousand. The Company has evaluated AFS securities in an unrealized loss position for credit related impairment at December 31, 2022 and 2021 and concluded no impairment existed based on several factors which included: (1) the majority of these securities are of high credit quality, (2) unrealized losses are primarily the result of market volatility in increased interest rates, (3) the contractual terms of the investments do not permit the issuer(s) to settle the securities at a price less than the cost basis of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis. Additionally, most the Company’s mortgage-backed securities are issued by FNMA, FHLMC, and GNMA and do not have credit risk given the implicit and explicit government guarantees associated with these agencies. |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2022 | |
LOANS | |
LOANS | NOTE 3 LOANS Loans held for investment as of December 31, 2022, and 2021 were as follows (dollars in thousands): 2022 2021 Construction/Land Development $ 68,671 $ 75,236 Farmland 74,322 66,344 Real Estate 153,281 139,552 Multi-Family 9,622 4,887 Commercial Real Estate 195,163 163,564 Home Equity – closed end 4,707 6,262 Home Equity – open end 46,928 44,247 Commercial & Industrial – Non-Real Estate 56,625 44,224 Consumer 6,488 8,036 Dealer Finance 125,125 107,346 Credit Cards 3,242 3,000 Gross loans 744,174 662,698 Less: Deferred loan fees, net of costs (570 ) (277 ) Total $ 743,604 $ 662,421 The Company has pledged loans held for investment as collateral for borrowings with the FHLB totaling $209.8 million and $163.3 million as of December 31, 2022 and 2021, respectively. The Company maintains a blanket lien on its entire residential real estate portfolio and certain commercial and home equity loans. Loans held for sale consists of loans originated by F&M Mortgage for sale in the secondary market. The volume of loans fluctuates due to changes in secondary market rates, which affects demand for mortgage loans. Loans held for sale as of December 31, 2022 and 2021 were $1.4 million and $4.9 million, respectively. The following table shows the recorded investment in impaired loans by segment as of December 31, 2022 and 2021 (dollars in thousands). The Recorded Investment is defined as the principal balance less principal payments and charge-offs. December 31, 2022 December 31, 2021 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 332 $ 332 $ - $ 645 $ 645 $ - Farmland 2,535 2,079 - 2,619 2,286 - Real Estate 1,882 1,882 - 2,748 2,748 - Multi-Family - - - - - - Commercial Real Estate 8,131 8,131 - 8,511 8,494 - Home Equity – closed end - - - 148 147 - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - 5 5 - Credit cards - - - - - - Dealer Finance 7 7 - 12 12 - 12,887 12,431 - 14,688 14,337 - Impaired loans with a valuation allowance Construction/Land Development 521 521 228 - - - Farmland - - - - - - Real Estate 1,378 1,378 92 1,172 1,172 119 Multi-Family - - - - - - Commercial Real Estate 980 980 11 6,004 6,004 603 Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - - - - Credit cards - - - - - - Dealer Finance 55 55 13 95 95 14 2,934 2,934 344 7,271 7,271 736 Total impaired loans $ 15,821 $ 15,365 $ 344 $ 21,959 $ 21,608 $ 736 The following table shows the average recorded investment and interest income recognized for the Company’s impaired loans (dollars in thousands): December 31, 2022 December 31, 2021 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 474 $ 19 $ 984 $ 29 Farmland 2,137 161 1,760 126 Real Estate 2,107 101 4,575 155 Multi-Family - - - - Commercial Real Estate 8,851 393 9,225 253 Home Equity – closed end - - 414 18 Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - 2 - Consumer - - 1 - Credit cards - - - - Dealer Finance 11 1 14 1 13,580 675 16,975 582 Impaired loans with a valuation allowance Construction/Land Development 261 24 - - Farmland - - 420 - Real Estate 1,466 71 1,399 45 Multi-Family - - - - Commercial Real Estate 1,935 47 6,201 172 Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance 62 6 112 9 3,724 148 8,132 226 Total impaired loans $ 17,304 $ 823 $ 25,107 $ 808 The following table is an aging analysis of the recorded investment of the Company’s portfolio loans held for investment at December 31, 2022 and 2021 (dollars in thousands): 30-59 Days Past due 60-89 Days Past due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2022 Construction/Land Development $ 477 $ 539 $ 21 $ 1,037 $ 67,634 $ 68,671 $ 21 $ - Farmland 85 18 - 103 74,219 74,322 1,458 - Real Estate 1,825 282 86 2,193 151,088 153,281 419 - Multi-Family - - - - 9,622 9,622 - - Commercial Real Estate 234 82 - 316 194,847 195,163 - - Home Equity – closed end 3 - - 3 4,704 4,707 - - Home Equity – open end 385 177 - 562 46,366 46,928 - - Commercial & Industrial – Non- Real Estate 104 - 104 208 56,417 56,625 101 31 Consumer 11 11 15 37 6,451 6,488 15 - Dealer Finance 1,117 228 199 1,544 123,581 125,125 210 5 Credit Cards 51 9 2 62 3,180 3,242 - 2 Less: Deferred loan fees, net of costs - - - - (570 ) (570 ) - - Total $ 4,292 $ 1,346 $ 427 $ 6,065 $ 737,539 $ 743,604 $ 2,224 $ 38 30-59 Days Past due 60-89 Days Past due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2021 Construction/Land Development $ 360 $ 41 $ 38 $ 439 $ 74,797 $ 75,236 $ 302 $ - Farmland - - - - 66,344 66,344 1,320 - Real Estate 1,254 89 395 1,738 137,814 139,552 827 - Multi-Family - - - - 4,887 4,887 - - Commercial Real Estate - - 108 108 163,456 163,564 2,975 - Home Equity – closed end 53 - - 53 6,209 6,262 - - Home Equity – open end 471 216 - 687 43,560 44,247 - - Commercial & Industrial – Non- Real Estate 35 1 43 79 44,145 44,224 - 43 Consumer 9 67 - 76 7,960 8,036 1 - Dealer Finance 694 91 16 801 106,545 107,346 40 - Credit Cards 16 - - 16 2,984 3,000 - - Less: Deferred loan fees, net of costs - - - - (277 ) (277 ) - - Total $ 2,892 $ 505 $ 600 $ 3,997 $ 658,424 $ 662,421 $ 5,465 $ 43 |
ALLOWANCE FOR LOAN LOSSES
ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2022 | |
ALLOWANCE FOR LOAN LOSSES | |
ALLOWANCE FOR LOAN LOSSES | NOTE 4 ALLOWANCE FOR LOAN LOSSES A summary of changes in the allowance for loan losses for the years ended December 31, 2022 and 2021 is as follows (dollars in thousands): December 31, 2022 Beginning Balance Charge-offs Recoveries Provision for (Recovery of) Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 977 $ - $ - $ 41 $ 1,018 $ 228 $ 790 Farmland 448 - - 122 570 - 570 Real Estate 1,162 17 - 243 1,388 92 1,296 Multi-Family 29 - - 42 71 - 71 Commercial Real Estate 2,205 - - (190 ) 2,015 11 2,004 Home Equity – closed end 41 - - (3 ) 38 - 38 Home Equity – open end 407 84 130 (8 ) 445 - 445 Commercial & Industrial – Non- Real Estate 288 46 49 159 450 - 450 Consumer 520 153 84 (370 ) 81 - 81 Dealer Finance 1,601 1,280 691 780 1,792 13 1,779 Credit Cards 70 66 14 50 68 - 68 Total $ 7,748 $ 1,646 $ 968 $ 866 $ 7,936 $ 344 $ 7,592 December 31, 2021 Beginning Balance Charge-offs Recoveries Provision for (Recovery of) Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 1,249 $ - $ 307 $ (579 ) $ 977 $ - $ 977 Farmland 731 - - (283 ) 448 - 448 Real Estate 1,624 - 76 (538 ) 1,162 119 1,043 Multi-Family 54 - - (25 ) 29 - 29 Commercial Real Estate 3,662 - 19 (1,476 ) 2,205 603 1,602 Home Equity – closed end 55 - - (14 ) 41 - 41 Home Equity – open end 463 - 13 (69 ) 407 - 407 Commercial & Industrial – Non-Real Estate 363 40 37 (72 ) 288 - 288 Consumer 521 33 24 8 520 - 520 Dealer Finance 1,674 1,038 754 211 1,601 14 1,587 Credit Cards 79 54 29 16 70 - 70 Total $ 10,475 $ 1,165 $ 1,259 $ (2,821 ) $ 7,748 $ 736 $ 7,012 The following table presents the recorded investment in loans based on impairment method as of December 31, 2022 and 2021 (dollars in thousands): December 31, 2022 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 68,671 $ 853 $ 67,818 Farmland 74,322 2,079 72,243 Real Estate 153,281 3,260 150,021 Multi-Family 9,622 - 9,622 Commercial Real Estate 195,163 9,111 186,052 Home Equity – closed end 4,707 - 4,707 Home Equity –open end 46,928 - 46,928 Commercial & Industrial – Non-Real Estate 56,625 - 56,625 Consumer 6,488 - 6,488 Dealer Finance 125,125 62 125,063 Credit Cards 3,242 - 3,242 Gross Loans 744,174 15,365 728,809 Less: Deferred loan fees, net of costs (570 ) - (570 ) Total $ 743,604 $ 15,365 $ 728,239 December 31, 2021 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 75,236 $ 645 $ 74,591 Farmland 66,344 2,286 64,058 Real Estate 139,552 3,920 135,632 Multi-Family 4,887 - 4,887 Commercial Real Estate 163,564 14,498 149,066 Home Equity – closed end 6,262 147 6,115 Home Equity –open end 44,247 - 44,247 Commercial & Industrial – Non-Real Estate 44,224 - 44,224 Consumer 8,036 5 8,031 Dealer Finance 107,346 107 107,239 Credit Cards 3,000 - 3,000 Gross Loans 662,698 21,608 641,090 Less: Deferred loan fees, net of costs (277 ) - (277 ) Total $ 662,421 $ 21,608 $ 640,813 The following table shows the Company’s loan portfolio broken down by internal loan grade as of December 31, 2022 and 2021 (dollars in thousands): December 31, 2022 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 4 $ 11,112 $ 42,684 $ 13,116 $ 1,213 $ 542 $ - $ 68,671 Farmland 155 269 11,373 38,051 22,069 947 1,458 - 74,322 Real Estate - 553 27,003 86,269 28,560 6,950 3,946 - 153,281 Multi-Family - - 963 5,116 3,430 113 - - 9,622 Commercial Real Estate - 3,097 55,662 72,779 41,749 13,878 7,998 - 195,163 Home Equity – closed end - 48 1,065 2,560 639 382 13 - 4,707 Home Equity – open end 27 1,272 18,671 23,207 2,091 1,611 49 - 46,928 Commercial & Industrial - Non-Real Estate 10 516 12,934 26,310 15,613 911 331 - 56,625 Consumer (excluding dealer) 33 286 2,965 3,105 68 16 15 - 6,488 Gross loans $ 225 $ 6,045 $ 141,748 $ 300,081 $ 127,335 $ 26,021 $ 14,352 $ - $ 615,807 Less: Deferred loan fees, net of costs (570 ) Total $ 615,237 Credit Cards Dealer Finance Performing $ 3,240 $ 124,910 Nonperforming 2 215 Total $ 3,242 $ 125,125 December 31, 2021 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 6 $ 9,952 $ 43,861 $ 19,457 $ 1,658 $ 302 $ - $ 75,236 Farmland 56 291 6,804 42,615 13,620 1,638 1,320 - 66,344 Real Estate - 1,128 30,268 61,940 28,895 12,462 4,859 - 139,552 Multi-Family - - 1,021 2,586 1,154 126 - - 4,887 Commercial Real Estate - 2,124 36,308 72,414 35,444 4,428 12,846 - 163,564 Home Equity – closed end - 61 1,268 3,103 762 1,068 - - 6,262 Home Equity – open end - 1,293 17,333 21,296 2,477 1,632 216 - 44,247 Commercial & Industrial - Non-Real Estate - 1,001 7,562 21,527 13,538 533 63 - 44,224 Consumer (excluding dealer) 10 522 2,919 3,526 980 79 - - 8,036 Gross loans $ 66 $ 6,426 $ 113,435 $ 272,868 $ 116,327 $ 23,624 $ 19,606 $ - $ 552,352 Less: Deferred loan fees, net of costs (277 ) Total $ 552,075 Credit Cards Dealer Finance Performing $ 3,000 $ 107,330 Nonperforming - 16 Total $ 3,000 $ 107,346 Description of internal loan grades: Grade 1 – Minimal Risk Grade 2 – Modest Risk Grade 3 – Average Risk Grade 4 – Acceptable Risk Grade 5 – Marginally acceptable s Grade 6 – Watch Grade 7 – Substandard Grade 8 – Doubtful Credit card and dealer finance loans are classified as performing or nonperforming. A loan is nonperforming when payments of principal and interest are past due 90 days or more. |
TROUBLED DEBT RESTRUCTURING
TROUBLED DEBT RESTRUCTURING | 12 Months Ended |
Dec. 31, 2022 | |
TROUBLED DEBT RESTRUCTURING | |
TROUBLED DEBT RESTRUCTURING | NOTE 5 TROUBLED DEBT RESTRUCTURING Troubled debt restructurings include modifications of interest rates, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan current, or any combination thereof. All TDRs are reviewed for impairment in accordance with the Company’s ALLL methodology. The Company considers loans placed on nonaccrual status or 90 days past due to be nonperforming. There were no nonperforming TDRs at December 31, 2022 or 2021. The following table shows, by modification type, TDRs that occurred during 2022 and 2021 (dollars in thousands): December 31, 2022 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Extended maturity 3 $ 44 $ 44 Change in terms 1 $ 162 $ 162 Total 4 $ 206 $ 206 December 31, 2021 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Change in terms 3 $ 1,080 $ 1,080 Total 3 $ 1,080 $ 1,080 |
BANK PREMISES AND EQUIPMENT
BANK PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
BANK PREMISES AND EQUIPMENT | |
BANK PREMISES AND EQUIPMENT | Note 6 Bank Premises and Equipment Bank premises and equipment as of December 31 are summarized as follows (dollars in thousands): 2022 2021 Land $ 4,115 $ 4,115 Buildings and improvements 16,040 15,956 Furniture and equipment 13,483 10,052 33,638 30,123 Less ‑ accumulated depreciation (14,051 ) (13,060 ) Net $ 19,587 $ 17,063 Depreciation of $1.1 million in 2022 and $1.2 million in 2021 was charged to operations. |
OTHER REAL ESTATE OWNED
OTHER REAL ESTATE OWNED | 12 Months Ended |
Dec. 31, 2022 | |
OTHER REAL ESTATE OWNED | |
OTHER REAL ESTATE OWNED | NOTE 7 OTHER REAL ESTATE OWNED The table below reflects other real estate owned (OREO) activity for 2022 (dollars in thousands). There was no OREO activity in 2021. 2022 Balance as of January 1 $ - Loans transferred to OREO 197 Sale of OREO (138 ) Write down of OREO and losses on sale (59 ) Balance as of December 31 $ - Activity in the valuation allowance was as follows: 2022 Balance as of January 1 $ - Provision charged to expense - Reductions from sales of real estate owned - Balance as of December 31 $ - (Income) expenses related to foreclosed assets include: 2022 Net loss on sales $ 59 (Income) expenses related to foreclosed assets $ 59 There were no real estate owned properties at December 31, 2022 and 2021. At December 31, 2022, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure procedures are in process is $82 thousand. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2022 | |
DEPOSITS | |
DEPOSITS | NOTE 8 DEPOSITS Time deposits that meet or exceed the FDIC insurance limit of $250 thousand at year end 2022 and 2021 were $12.7 million and $12.4 million. At December 31, 2022, the scheduled maturities of all time deposits are as follows (dollars in thousands): 2023 $ 67,295 2024 31,265 2025 12,979 2026 4,755 2027 2,898 Thereafter - Total $ 119,192 |
SHORT-TERM DEBT
SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM DEBT | |
SHORT-TERM DEBT | NOTE 9 SHORT‑TERM DEBT Short-term debt, all maturing within 12 months, as of December 31, 2022 is summarized as follows (dollars in thousands). There was no short-term debt outstanding at December 31, 2021. Highest Month- End Balance Outstanding at Year End Average Balance Weighted Average Rate 2022 Federal funds purchased $ 1,989 $ - $ 883 2.99 % FHLB short-term 70,000 70,000 25,241 2.81 % Totals $ 70,000 $ 26,124 2.82 % The Company utilizes short-term debt such as Federal funds purchased and FHLB short-term borrowings to support loan growth and provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short-term debt can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the needs of the Company. FHLB advances are secured by a blanket lien on the qualifying loans in the Company’s residential, commercial and home equity loan portfolios. Short-term debt totaled $70.0 million at December 31, 2022, and consisted of FHLB advances which were used to fund loan growth. As of December 31, 2022, the Company had unsecured lines of credit with correspondent banks totaling $90.0 million which may be used in the management of short-term liquidity, on which none was outstanding. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM DEBT | |
LONG-TERM DEBT | NOTE 10 LONG-TERM DEBT At December 31, 2022 and December 31, 2021 long-term borrowings from the FHLB were $0 and $10.0 million, respectively. The interest rates on long-term debt are fixed at the time of the advance; the weighted average interest rate was .81% at December 31, 2021. The Bank has a $15.0 million letter of credit at FHLB that is pledged to the Commonwealth of Virginia to secure public funds. On July 29, 2020, the Company sold and issued to certain institutional accredited investors $5.0 million in aggregate principal amount of 5.75% fixed rated subordinated notes due July 31, 2027 (the “2027 Notes”) and $7.0 million in aggregate principal amount of 6.00% fixed to floating rate subordinated notes due July 31, 2030 (the “2030 Notes”). The 2027 Notes bear interest at 5.75% per annum, payable semi-annually in arrears. On July 29, 2022 the Company redeemed the $5.0 million in 2027 notes. The 2030 Notes bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears. From and including July 31, 2025 through July 30, 2030, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 593 basis points, payable quarterly in arrears. Beginning on July 31, 2025 through maturity, the 2030 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date. The 2030 Notes will mature on July 31, 2030. The subordinated notes, net of issuance costs totaled $6.9 million and $11.8 million at December 31, 2022 and December 31, 2021, respectively. |
INCOME TAX EXPENSE
INCOME TAX EXPENSE | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAX EXPENSE | |
INCOME TAX EXPENSE | NOTE 11 INCOME TAX EXPENSE The components of income tax expense were as follows (dollars in thousands): 2022 2021 Current expense $ 571 $ 847 Deferred expense (benefit) (91 ) 476 Total Income Tax Expense $ 480 $ 1,323 The components of deferred taxes as of December 31, were as follows (dollars in thousands): 2022 2021 Deferred Tax Assets: Allowance for loan losses $ 1,667 $ 1,627 Split Dollar Life Insurance 3 3 Nonqualified deferred compensation 580 757 Low-income housing partnerships losses 375 326 Core deposit amortization 29 29 SBA fees - 47 Lease Liability 170 172 Unfunded pension benefit obligation - 875 VST income - 2 Assets available for sale - 32 Prepaid pension 45 - Unvested restricted stock 19 - Net unrealized loss on securities available for sale 10,753 479 Total Assets $ 13,641 $ 4,349 2022 2021 Deferred Tax Liabilities: Unearned low-income housing credits $ 34 $ 63 Depreciation 506 567 Prepaid pension - 114 Unfunded pension benefit obligation 117 - Goodwill tax amortization 583 576 Right of Use Asset 165 149 Total Liabilities 1,405 1,469 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 12,236 $ 2,880 The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rates (dollars in thousands): 2022 2021 Tax expense at federal statutory rates $ 1,848 $ 2,533 Increases (decreases) in taxes resulting from: Tax-exempt income (228 ) (172 ) LIH and historic credits (868 ) (913 ) Other (272 ) (125 ) Total Income Tax Expense $ 480 $ 1,323 The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions in accordance with accounting guidance related to income taxes. The Company and its subsidiaries file federal income tax returns and state income tax returns. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for years before 2019. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | NOTE 12 EMPLOYEE BENEFITS Defined Benefit Pension Plan The Company has a qualified noncontributory defined benefit pension plan which covers substantially all employees hired before April 1, 2012. The benefits are primarily based on years of service and earnings. The Company uses December 31 st The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets for 2022 and 2021 (dollars in thousands): 2022 2021 Change in Benefit Obligation Benefit obligation, beginning $ 15,557 $ 15,456 Service cost 759 862 Interest cost 415 379 Actuarial loss (5,421 ) - Benefits paid (1,145 ) (1,140 ) Decrease in Obligation due to Curtailment (2,154 ) - Benefit obligation, ending $ 8,011 $ 15,557 Change in Plan Assets Fair value of plan assets, beginning $ 11,235 $ 11,201 Actual return on plan assets (2,303 ) 1,174 Benefits paid (1,145 ) (1,140 ) Fair value of plan assets, ending $ 7,787 $ 11,235 Funded status at the end of the year $ (224 ) $ (4,322 ) The fair value of plan assets is measured based on the fair value hierarchy as discussed in Note 17, “Fair Value Measurements” to the Consolidated Financial Statements. The valuations are based on third party data received as of the balance sheet date. All plan assets are considered Level 1 assets, as quoted prices exist in active markets for identical assets. 2022 2021 Amount recognized in the Consolidated Balance Sheet (Accrued) prepaid benefit cost $ (780 ) $ (156 ) Over funded (unfunded) pension benefit obligation under ASC 325-960 556 (4,166 ) Deferred taxes (995 ) 875 Amount recognized in accumulated other comprehensive income (loss) Net income (loss) $ 556 $ (4,166 ) Prior service cost - - Amount recognized 556 (4,166 ) Deferred taxes (117 ) 875 Amount recognized in accumulated comprehensive (loss) $ (439 ) $ (3,291 ) Accrued benefit detail Benefit obligation $ (8,011 ) $ (15,557 ) Fair value of assets 7,787 11,235 Unrecognized net actuarial (income) loss (556 ) 4,166 Accrued benefits $ (780 ) $ (156 ) Components of net periodic benefit cost Service cost $ 758 $ 862 Interest cost 415 379 Expected return on plan assets (781 ) (791 ) Recognized net actuarial loss 232 289 Net periodic benefit cost $ 624 $ 739 Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Net gain $ (4,722 ) $ (671 ) Amortization of prior service cost - - Total recognized in other comprehensive income $ (4,722 ) $ (671 ) Total recognized in net periodic benefit cost and other Comprehensive (loss) income $ (4,098 ) $ 67 Additional disclosure information Accumulated benefit obligation $ 8,011 $ 11,473 Vested benefit obligation $ 8,011 $ 11,473 Discount rate used for net pension cost 2.75 % 2.50 % Discount rate used for disclosure 5.00 % 2.75 % Expected return on plan assets 7.25 % 7.25 % Rate of compensation increase 3.00 % 3.00 % Average remaining service (years) 10.89 11.26 Funding Policy Due to the current funding status of the plan, the Company did not make a contribution in 2022 or 2021. The net periodic pension cost of the plan for 2023 will be approximately ($150 thousand). The Company was not subject to settlement accounting in 2022 and does not anticipate being subject to settlement accounting in 2023. As of February 15, 2023, the Virginia Bankers Association Defined Benefit Plan for Farmers & Merchants Bank was amended to stop the accrual of future benefits. Long-Term Rate of Return The Company, as plan sponsor, selects the expected long-term rate of return on assets assumption in consultation with investment advisors and the plan actuary. This rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (net of inflation) for the major asset classes held or anticipated to be held by the trust. Undue weight is not given to recent experience, which may not continue over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions. Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further, and solely for this purpose, the plan is assumed to continue in force and not terminate during the period during which the assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the trust, and expenses (both investment and non-investment) typically paid from plan assets (to the extent such expenses are not explicitly estimated within periodic cost). Asset Allocation The trust fund is sufficiently diversified to maintain a reasonable level of risk without imprudently sacrificing return, with a targeted asset allocation of 39% fixed income and 61% equity. The Investment Manager selects investment fund managers with demonstrated experience and expertise, and funds with demonstrated historical performance, for the implementation of the Plan’s investment strategy. The Investment Manager will consider both actively and passively managed investment strategies and will allocate funds across the asset classes to develop an efficient investment structure. The pension plan’s allocations as of December 31, 2022 and 2021 were 38% fixed income and 62% equity. Estimated Future Benefit Payments, which reflect expected future service, as appropriate, as of December 31, 2022, are as follows (dollars in thousands): 2023 $ 1,252 2024 48 2025 548 2026 998 2027 1,223 2028-2032 2,587 $ 6,656 Employee Stock Ownership Plan (ESOP) The Company sponsors an ESOP which provides stock ownership to substantially all employees of the Company. The Plan provides total vesting upon the attainment of five years of service. Contributions to the plan are made at the discretion of the Board of Directors and are allocated based on the compensation of each employee relative to total compensation paid by the Company. All shares issued and held by the Plan are considered outstanding in the computation of earnings per share. Dividends on Company stock are allocated and paid to participants at least annually. Shares of Company stock, when distributed, have restrictions on transferability. The Company contributed $400 thousand in 2022 and $472 thousand in 2021 to the Plan and charged this expense to operations. The shares held by the ESOP totaled 170,905 and 158,905 at December 31, 2022 and 2021, respectively. 401(k) Plan The Company sponsors a 401(k) savings plan under which eligible employees may choose to save up to 20 percent of their salary on a pretax basis, subject to certain IRS limits. Under the Federal Safe Harbor rules employees are automatically enrolled at 3% (this increases by 1% per year up to 6%) of their salary unless elected otherwise. The Company matches one hundred percent of the first 1% contributed by the employee and fifty percent from 2% to 6% of employee contributions. Vesting in the contributions made by the Company is 100% after two years of service. Contributions under the plan amounted to $475 thousand and $444 thousand in 2022 and 2021, respectively. Deferred Compensation Plan The Company has a nonqualified deferred compensation plan for its key employees and directors. The Company may make annual contributions to the plan, and the employee or director has the option to defer a portion of their salary or bonus based on qualifying annual elections. Contributions to the plan totaled $187 thousand in 2022 and $125 thousand in 2021. A liability is accrued for the obligation under the plan and totaled $3.4 million and $3.9 million at December 31, 2022 and 2021, respectively. Investments in Life Insurance Contracts The Bank currently offers a variety of benefit plans to all full-time employees. The costs of these plans are generally tax deductible to the Bank; however, to help offset the benefit costs and to attract and retain qualified employees, the Bank purchased Bank Owned Life Insurance (BOLI) contracts that will provide benefits to employees during their lifetime. Dividends received on these policies are tax-deferred and the death benefits under the policies are tax exempt. Rates of return on a tax-equivalent basis are favorable when compared to other long-term investments which the Bank might make. The accrued liability related to the BOLI contracts was $729 thousand and $669 thousand for December 31, 2022 and 2021, respectively. Stock Incentive Plan The Company has a Stock Incentive Plan, which was designed to further the long-term stability and financial success of the Company by attracting and retaining personnel, including employees, directors, and consultants, using stock and stock-based incentives. The plan was adopted by the Company’s Board, effective upon shareholder approval on May 2, 2020 and will expire on March 18, 2030. The plan provides for the granting of an option, restricted stock, restricted stock unit, stock appreciation right, or stock award to employees, directors, and consultants. It authorizes the issuance of up to 200,000 shares of the Company’s common stock. The Company’s Compensation Committee of the Board of Directors administers the plan including designating employees, directors, or other recipients to whom awards are to be granted, the amount of the award or equity to be granted, and the terms and conditions applicable to each award. On March 7, 2023, the Company’s Compensation Committee awarded 23,556 shares with a fair value of $526 thousand from this plan to selected employees. These shares vest 25% over each of the next four years. The Committee also awarded 1,309 shares with a fair value of $29 thousand to directors. These shares vested upon issuance. As of December 31, 2022 and 2021 the total unrecognized compensation cost related to the nonvested restricted stock awards were $580 thousand and $338 thousand, respectively. The following table summarizes the status of the Company’s nonvested awards for the year ended December 31, 2022: Shares Weighted-Average Grant Date Fair Value Per Share Nonvested at December 31, 2021 15,869 $ 26.78 Granted 18,908 30.85 Vested (5,265 ) 27.72 Forfeited (3,056 ) 29.05 Nonvested at December 31, 2022 26,456 29.24 |
CONCENTRATIONS OF CREDIT
CONCENTRATIONS OF CREDIT | 12 Months Ended |
Dec. 31, 2022 | |
CONCENTRATIONS OF CREDIT | |
CONCENTRATIONS OF CREDIT | NOTE 13 CONCENTRATIONS OF CREDIT The Company had cash deposits in other commercial banks in excess of FDIC insurance limits totaling $4.6 million and $3.9 million at December 31, 2022 and 2021, respectively. The Bank has established procedures for measuring and monitoring the concentration risk in correspondent banks and performs quarterly reviews of the financial condition of correspondent banks to assess and monitor risks. The Company grants commercial, residential real estate and consumer loans to customers located primarily in the Shenandoah Valley of Virginia. There were no loan concentration areas greater than 25% of capital. Collateral required by the Company is determined on an individual basis depending on the purpose of the loan and the financial condition of the borrower. As of December 31, 2022, approximately 74% of the loan portfolio was secured by real estate. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies | |
COMMITMENTS | NOTE 14 COMMITMENTS The Company makes commitments to extend credit in the normal course of business and issues standby letters of credit to meet the financing needs of its customers. The amount of the commitments represents the Company's exposure to credit loss that is not included in the consolidated balance sheet. As of the December 31, 2022 and 2021, the Company had the following commitments outstanding (dollars in thousands): 2022 2021 Commitments to extend credit $ 265,976 $ 257,229 Standby letters of credit 2,696 2,818 The Company uses the same credit policies in making commitments to extend credit and issue standby letters of credit as it does for the loans reflected in the consolidated balance sheet. Commitments to extend credit are agreements to lend to a customer if there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. Collateral required, if any, upon extension of credit is based on management's evaluation of the borrower’s ability to pay. Collateral may include accounts receivable, inventory, property, plant and equipment. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2022 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 15 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Mortgage Banking Derivatives Loans Held for Sale The Company, through the Bank’s mortgage banking subsidiary, F&M Mortgage Company, originates residential mortgage loans for sale in the secondary market. Residential mortgage loans held for sale are sold to the permanent investor with the mortgage servicing rights released. Fair value of the Company’s LHFS is based on observable market prices for the identical instruments traded in the secondary mortgage loan markets in which the Company conducts business total $1.4 million as of December 31, 2022 of which $1.4 million is related to unpaid principal. The Company’s portfolio of LHFS is classified as Level 2. Interest Rate Lock Commitments and Forward Sales Commitments The Company, through F&M Mortgage Company, enters commitments to originate residential mortgage loans in which the interest rate on the loan is determined prior to funding, termed interest rate lock commitments (IRLCs). Such rate lock commitments on mortgage loans to be sold in the secondary market are derivatives. Upon entering a commitment to originate a loan, the Company protects itself from changes in interest rates during the period prior to sale by requiring a firm purchase agreement from a permanent investor before a loan can be closed (forward sales commitment). The Company locks in the loan and rate with an investor and commits to deliver the loan if settlement occurs on a best-efforts basis, thus limiting interest rate risk. Certain additional risks exist if the investor fails to meet its purchase obligation; however, based on historical performance and the size and nature of the investors the Company does not expect them to fail to meet their obligation. The Company determines the fair value of the IRLCs based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best-efforts basis while taking into consideration the probability that the rate loan commitments will close. The fair value of these derivative instruments is reported in “Other liabilities” in the Consolidated Balance Sheet at December 31, 2022, and totaled $92 thousand, with a notional amount of $12.2 million and total positions of 38. The fair value of the IRLCs at December 31, 2021 totaled $258 thousand, with a notional amount of $18.8 million and total positions of 70. Changes in fair value are recorded as a component of “Mortgage banking income” in the Consolidated Income Statement for the period ended December 31, 2021. The Company’s IRLCs are classified as Level 2. At December 31, 2022 and 2021, each IRLC and all LHFS were subject to a forward sales commitment on a best- efforts basis. The Company uses fair value accounting for its forward sales commitments related to IRLCs and LHFS under ASC 825-10-15-4(b). The fair value of forward sales commitments was reported in “Other Assets” in the Consolidated Balance Sheet at December 31, 2022 totaled $186 thousand, with a notional amount of $13.6 million and total positions of 43. The fair value of forward sales commitments is reported in “Other Assets” in the Consolidated Balance Sheet at December 31, 2021, and totaled $112 thousand, with a notional amount of $23.7 million and total positions of 91. Derivative Financial Instruments In the past, the Company issued certificates of deposit with an interest rate derived from the rate of return based on The Dow Jones Industrial Average. To manage the interest rate risk associated with this deposit product, the Company purchased a series of forward option contracts. These contracts were accounted for as fair value hedges. Because the certificates of deposit can be redeemed by the customer at any time and the related forward options contracts cannot be cancelled by the Company, the hedge is not considered effective. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. There was no ineffective portion included in the consolidated income statement for the years ended December 31, 2022 and 2021. At December 31, the information pertaining to the forward option contracts, included in other assets and other liabilities on the balance sheet, is as follows (dollars in thousands): 2022 2021 Notional amount $ - $ 7 Fair value of contracts, included in other assets - 3 The last certificate of deposit matured in April 2022 and the Company no longer issues this deposit product. |
TRANSACTIONS WITH RELATED PARTI
TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2022 | |
TRANSACTIONS WITH RELATED PARTIES | |
TRANSACTIONS WITH RELATED PARTIES | NOTE 16 TRANSACTIONS WITH RELATED PARTIES Executive officers, directors and their affiliates are customers of the Bank and had transactions with the Company in the normal course of business. Management believes these transactions were made on substantially the same terms as those prevailing for other customers and did not involve any abnormal risk. Loan transactions with related parties are shown in the following table (dollars in thousands): 2022 2021 Total loans, beginning of year $ 23,379 $ 22,685 New loans 5,073 6,506 Relationship changes (75 ) (98 ) Repayments (5,950 ) (5,714 ) Total loans, end of year $ 22,427 $ 23,379 Deposits of executive officers, directors and their affiliates were $9.2 million and $8.8 million on December 31, 2022 and 2021, respectively. Management believes these deposits were made under the same terms available to other customers of the bank. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 17 FAIR VALUE MEASUREMENTS Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements: Securities Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The carrying value of restricted FRB and FHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table. Loans Held for Sale The Company uses the fair value accounting for its entire portfolio of originated loans held for sale in accordance with ASC 820 – Fair Value Measurement and Disclosures. Fair value of the Company’s originated loans held for sale through F&M Mortgage is based on observable market prices for similar instruments traded in the secondary mortgage loan markets in which the Company conducts business. The Company’s portfolio of loans held for sale through F&M Mortgage is classified as Level 2. Gains and losses on the sale of loans are recorded within mortgage banking income on the Consolidated Statements of Income. Derivative assets – IRLCs The Company recognizes IRLCs at fair value based on the price of the underlying loans obtained from an investor for loans that will be delivered on a best-efforts basis while taking into consideration the probability that the rate lock commitments will close. The Company’s IRLCs are classified as Level 2. Derivative Asset/Liability – Forward Sale Commitments The Company uses the fair value accounting for its forward sales commitments related to IRLCs and LHFS. Best-efforts sales commitments are entered into for loans intended for sale in the secondary market at the time the borrower commitment is made. The best-efforts commitments are valued using the committed price to the counterparty against the current market price of the interest rate lock commitment or mortgage loan held for sale. The Company’s forward sale commitments are classified Level 2. Derivative Asset/Liability – Indexed Certificate of Deposit The Company’s derivatives, which are associated with the Indexed Certificate of Deposit (ICD) product once offered, are recorded at fair value based on third party vendor supplied information using discounted cash flow analysis from observable-market based inputs, which are considered Level 2 inputs. This product is no longer offered, and the remaining certificates of deposits matured in April 2022. The following tables present the balances of financial assets measured at fair value on a recurring basis as of December 31, 2022, and 2021 (dollars in thousands): December 31, 2022 Total Level 1 Level 2 Level 3 Assets: Loans held for sale, F&M Mortgage $ 1,373 $ - $ 1,373 $ - U. S. Treasury securities 36,643 - 36,643 - U.S. Government sponsored enterprises 129,748 - 129,748 - Securities issued by States and political subdivisions of the US 42,198 - 42,198 - Mortgage-backed obligations of federal agencies 156,875 - 156,875 - Corporate debt securities 26,631 - 26,631 - Forward sales commitments 186 - 186 - Assets at Fair Value $ 393,654 $ - $ 393,654 $ - Liabilities: IRLC $ 92 $ - $ 92 $ - Liabilities at Fair Value $ 92 $ - $ 92 $ - December 31, 2021 Total Level 1 Level 2 Level 3 Assets: Loans held for sale, F&M Mortgage $ 4,887 $ - $ 4,887 $ - IRLC 258 - 258 - U. S. Treasury securities 29,482 - 29,482 - U.S. Government sponsored enterprises 133,714 - 133,714 - Securities issued by States and political subdivisions of the US 34,337 - 34,337 - Mortgage-backed obligations of federal agencies 183,647 - 183,647 - Corporate debt securities 22,702 - 22,702 - Forward sales commitments 112 - 112 - Assets at Fair Value $ 409,139 $ - $ 409,139 $ - Liabilities: Derivatives – ICD $ 3 $ - $ 3 $ - Liabilities at Fair Value $ 3 $ - $ 3 $ - Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements: Assets Held for Sale Assets held for sale were transferred from bank premises at the lower of cost less accumulated depreciation or fair value at the date of transfer. The Company evaluates the value of assets held for sale and records an impairment charge for any subsequent declines in fair value less selling costs, as needed. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the assets held for sale as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the asset held for sale as nonrecurring Level 3. Impaired Loans Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. TDRs are impaired loans. Impaired loans are measured at fair value on a nonrecurring basis. If an individually-evaluated impaired loan’s balance exceeds fair value, the amount is allocated to the allowance for loan losses. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income. The fair value of an impaired loan and measurement of associated loss is based on one of three methods: the observable market price of the loan, the present value of projected cash flows, or the fair value of the collateral. The observable market price of a loan is categorized as a Level 1 input. The present value of projected cash flows method results in a Level 3 categorization because the calculation relies on the Company’s judgment to determine projected cash flows, which are then discounted at the current rate of the loan, or the rate prior to modification if the loan is a TDR. Loans measured using the fair value of collateral method are categorized in Level 3. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable; most collateral is real estate. The Company bases collateral method fair valuation upon the “as-is” value of independent appraisals or evaluations. The value of real estate collateral is determined by an independent appraisal utilizing an income or market valuation approach. The Company discounts the appraised value by estimated selling costs to arrive at net fair value. Appraisals conducted by an independent, licensed appraiser outside of the Company using observable market data is categorized as Level 3. The value of business equipment is based upon an outside appraisal (Level 3) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). As of December 31, 2022 and 2021, the fair value measurements for impaired loans with specific allocations were primarily based upon the fair value of the collateral. The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis during the period (dollars in thousands): December 31, 2022 Total Level 1 Level 2 Level 3 Construction/Land Development $ 293 $ - $ - $ 293 Real Estate 1,286 - - 1,286 Commercial Real Estate 969 - - 969 Dealer Finance 42 - - 42 Impaired loans $ 2,590 $ - $ - $ 2,590 Bank premises held for sale $ - $ - $ - $ - December 31, 2021 Total Level 1 Level 2 Level 3 Real Estate $ 1,053 $ - $ - $ 1,053 Commercial Real Estate 5,401 - - 5,401 Dealer Finance 81 - - 81 Impaired loans $ 6,535 $ - $ - $ 6,535 Bank premises held for sale $ 300 $ - $ - $ 300 The following table presents information about Level 3 Fair Value Measurements for December 31, 2022 and 2021: Fair Value at December 31, 2022 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 2,590 thousand Discounted appraised value Discount for selling costs and marketability 10.00%-33.00% (Average 19.00%) Fair Value at December 31, 2021 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 6,535 thousand Discounted appraised value Discount for selling costs and marketability 11.76%-28.00% (Average 17.31%) Other Real Estate Owned Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. Valuation of OREO is determined using current appraisals from independent parties, a level three input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor, estimated selling costs reduce the fair value, resulting in a valuation based on Level 3 inputs. The Company markets OREO both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs. The Company did not have any OREO at December 31, 2022 and 2021. The following presents the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments as of December 31, 2022 and 2021. Fair values for December 31, 2022 and 2021 are estimated under the exit price notion in accordance with the adoption of ASU 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities. The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows (dollars in thousands): Fair Value Measurements at December 31, 2022 Using Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2022 Assets: Cash and cash equivalents $ 34,953 $ 34,953 $ - $ - $ 34,953 Securities 392,220 - 392,220 - 392,220 Loans held for sale 1,373 - 1,373 - 1,373 Loans held for investment, net 743,604 - - 720,806 720,806 Interest receivable 3,995 - 3,995 - 3,995 Bank owned life insurance 23,554 - 23,554 - 23,554 Forward sales commitments 186 - 186 - 186 Total $ 1,199,885 $ 34,953 $ 421,328 $ 720,806 $ 1,177,087 Liabilities: Deposits $ 1,083,377 $ - $ 1,080,909 $ - $ 1,080,909 Short-term debt 70,000 - - 70,000 70,000 Long-term debt 6,890 - - 6,778 6,778 IRLC 92 - 92 - 92 Interest payable 295 - 295 - 295 Total $ 1,160,654 $ - $ 1,081,296 $ 76,778 $ 1,158,074 Fair Value Measurements at December 31, 2021 Using Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2021 Assets: Cash and cash equivalents $ 88,121 $ 88,121 $ - $ - $ 88,121 Securities 404,007 - 404,007 - 404,007 Loans held for sale 4,887 - 4,887 - 4,887 IRLC 258 - 258 - 258 Loans held for investment, net 662,421 - - 652,096 652,096 Interest receivable 3,117 - 3,117 - 3,117 Bank owned life insurance 22,878 - 22,878 - 22,878 Forward sales commitments 112 - 112 - 112 Total $ 1,185,801 $ 88,121 $ 435,259 $ 652,096 $ 1,175,476 Liabilities: Deposits $ 1,080,295 $ - $ 968,604 $ 123,718 $ 1,092,322 Long-term debt 21,772 - - 22,443 22,443 Interest payable 491 - 491 - 491 Total $ 1,102,558 $ - $ 969,095 $ 146,161 $ 1,115,256 |
DIVIDEND LIMITATIONS ON SUBSIDI
DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | 12 Months Ended |
Dec. 31, 2022 | |
DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | |
DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | NOTE 18 DIVIDEND LIMITATIONS ON SUBSIDIARY BANK The principal source of funds of F & M Bank Corp. is dividends paid by the Bank. The Federal Reserve Act restricts the amount of dividends the Bank may pay. Approval by the Board of Governors of the Federal Reserve System is required if the dividends declared by a state member bank, in any year, exceed the sum of (1) net income of the current year and (2) income net of dividends for the preceding two years. As of January 1, 2023, approximately $18.9 million was available for dividend distribution without permission of the Board of Governors. Dividends paid by the Bank to the Company totaled $6.0 million in 2022 and $2.2 million in 2021. |
REGULATORY MATTERS
REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY MATTERS | |
REGULATORY MATTERS | NOTE 19 REGULATORY MATTERS Banking regulators have established a uniform system to address the adequacy of capital for financial institutions. The rules require minimum capital levels based on risk-adjusted assets. 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 impact on the Bank’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 Bank’s assets, liabilities, and certain off balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer requirement is 2.50%. The Company’s capital conservation buffer for 2022 was 5.64% and for 2021 was 7.00%. The capital conservation buffer is designed to strengthen an institution’s financial resilience during economic cycles. Financial institutions are required to maintain a minimum buffer as required by the Basel III final rules to avoid restrictions on capital distributions and other payments. The minimum capital amounts and ratios are defined in the regulations and the amounts are set forth in the table below (dollars in thousands). The Bank has maintained capital levels far above the minimum requirements throughout the year, and as of December 31, 2022 and 2021, the Bank meets all capital adequacy requirements to which they are subject. Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2022 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 114,455 13.64 % $ 67,124 8.00 % $ 83,905 10.00 % Tier 1 risk-based ratio 106,519 12.70 % 50,343 6.00 % 67,124 8.00 % Common equity tier 1 106,519 12.70 % 37,757 4.50 % 54,538 6.50 % Tier 1 leverage ratio 106,519 8.22 % 51,842 4.00 % 64,802 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2021 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 111,389 15.00 % $ 59,425 8.00 % $ 74,282 10.00 % Tier 1 risk-based ratio 103,641 13.95 % 44,569 6.00 % 59,425 8.00 % Common equity tier 1 103,641 13.95 % 33,427 4.50 % 48,283 6.50 % Tier 1 leverage ratio 103,641 8.62 % 48,100 4.00 % 60,125 5.00 % |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS SEGMENTS | |
BUSINESS SEGMENTS | NOTE 20 BUSINESS SEGMENTS The following tables show the statement of operations and assets by segment as of December 31, 2022 and 2021 (dollars in thousands). December 31, 2022 F&M Bank F&M Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 42,066 $ 106 $ 34 $ - $ 46 $ (68 ) $ 42,184 Service charges on deposits 1,062 - - - - - 1,062 Investment services and insurance income - - 894 - - (11 ) 883 Mortgage banking income, net - 2,595 - - - (761 ) 1,834 Title insurance income - - - 1,578 - - 1,578 Net investment securities losses (2,852 ) (2,852 ) Gain on sale of limited partnership investment - - 3,785 - - - 3,785 Other operating income 3,343 1 - - - - 3,344 Total income (loss) 43,619 2,702 4,713 1,578 46 (840 ) 51,818 Expenses: Interest Expense 6,567 35 - - 711 (68 ) 7,245 Provision for loan losses 866 - - - - - 866 Salary and benefit expense 15,897 2,430 456 1,249 - - 20,032 Other operating expenses 14,375 884 66 326 (2 ) (772 ) 14,877 Total expense 37,705 3,349 522 1,575 709 (840 ) 43,020 Net income (loss) before taxes 5,914 (647 ) 4,191 3 (663 ) - 8,798 Income tax expense (benefit) (229 ) - 881 - (172 ) - 480 Net Income (Loss) $ 6,143 $ (647 ) $ 3,310 $ 3 $ (491 ) $ - $ 8,318 Total Assets $ 1,250,185 $ 9,878 $ 3,897 $ 3,298 $ 77,994 $ (99,350 ) $ 1,245,902 Goodwill $ 2,868 $ - $ - $ 3 $ 211 $ - $ 3,082 December 31, 2021 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 35,414 $ 198 $ 107 $ - $ 1 $ (144 ) $ 35,576 Service charges on deposits 1,133 - - - - - 1,133 Investment services and insurance income - - 953 - - (9 ) 944 Mortgage banking income, net - 4,646 - - - - 4,646 Title insurance income - - - 2,074 - - 2,074 Other operating income 2,499 134 - - (124 ) - 2,509 Total income 39,046 4,978 1,060 2,074 (123 ) (153 ) 46,882 Expenses: Interest Expense 3,591 123 - - 732 (144 ) 4,302 (Recovery of) Provision for loan losses (2,800 ) - (21 ) - - - (2,821 ) Salaries and benefits 14,392 2,501 369 1,225 - - 18,487 Other operating expenses 13,510 893 51 327 81 (9 ) 14,853 Total expense 28,693 3,517 399 1,552 813 (153 ) 34,821 Income before income taxes 10,353 1,461 661 522 (936 ) - 12,061 Income tax expense (benefit) 1,266 - 134 - (77 ) - 1,323 Net Income attributable to F & M Bank Corp. $ 9,087 $ 1,461 $ 527 $ 522 $ (859 ) $ - $ 10,738 Total Assets $ 1,227,059 $ 10,334 $ 8,803 $ 3,135 $ 112,586 $ (142,575 ) $ 1,219,342 Goodwill $ 2,868 $ 47 $ - $ 3 $ 164 $ - $ 3,082 |
PARENT COMPANY ONLY FINANCIAL S
PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | NOTE 21 PARENT COMPANY ONLY FINANCIAL STATEMENTS Balance Sheets December 31, 2022 and 2021 (dollars in thousands) 2022 2021 Assets Cash and cash equivalents $ 6,747 $ 8,824 Investment in subsidiaries 71,093 102,808 Other investments 355 135 Income tax receivable (including due from subsidiary) - 463 Goodwill and intangibles 258 190 Receivable from subsidiary bank - 149 Total Assets $ 78,453 $ 112,569 Liabilities Deferred income taxes 24 47 Income taxes payable 54 - Payable to subsidiary bank 515 - Accrued interest 178 294 Long-term liability 6,890 11,772 Total Liabilities $ 7,661 $ 12,113 Stockholders’ Equity Common stock 17,149 17,071 Additional paid in capital 10,577 10,127 Retained earnings 83,078 78,350 Accumulated other comprehensive loss (40,012 ) (5,092 ) Total Stockholders' Equity 70,792 100,456 Total Liabilities and Stockholders' Equity $ 78,453 $ 112,569 Statements of Income For the years ended December 31, 2022 and 2021 (dollars in thousands) 2022 2021 Income Dividends from affiliate $ 6,000 $ 2,232 Other income 49 1 Total Income 6,049 2,233 Expenses Total expenses 711 812 Net income before income tax expense and undistributed subsidiary net income 5,338 1,421 Income tax benefit (172 ) (77 ) Income before undistributed subsidiary net income 5,510 1,498 Undistributed subsidiary net income 2,808 9,240 Net Income F&M Bank Corp. $ 8,318 $ 10,738 2022 2021 Cash Flows from Operating Activities Net income $ 8,318 $ 10,738 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (2,808 ) (9,240 ) Deferred tax benefit (420 ) (35 ) Decrease (increase) in other assets 544 (409 ) Increase in other liabilities 453 19 Long-term debt fee amortization 118 32 Share based compensation expense 193 86 Net Cash Provided by Operating Activities 6,398 1,191 Cash Flows from Investing Activities Purchase limited liability interest (220 ) - Net Cash Used in Investing Activities (220 ) - Cash Flows from Financing Activities Repayments of long-term debt (5,000 ) - Repurchase of preferred stock - (627 ) Proceeds from the sale of common stock 279 263 Proceeds from issuance of common stock 56 35 Dividends paid in cash (3,590 ) (3,593 ) Net Cash Used in Financing Activities (8,255 ) (3,922 ) Net decrease in Cash and Cash Equivalents (2,077 ) (2,731 ) Cash and Cash Equivalents, Beginning of Year 8,824 11,555 Cash and Cash Equivalents, End of Year $ 6,747 $ 8,824 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE 22 ACCUMULATED OTHER COMPREHENSIVE LOSS The balances in accumulated other comprehensive loss are shown in the following table (dollars in thousands): Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December, 31, 2020 $ 804 $ (3,821 ) $ (3,017 ) Change in unrealized securities gains (losses), net of tax benefit of $803 (3,020 ) - (3,020 ) Change in unfunded pension liability, net of tax of $141 - 530 530 Reclassification for previously unrealized net losses realized in income, net of tax benefit of $110 415 - 415 Balance at December, 31, 2021 $ (1,801 ) $ (3,291 ) $ (5,092 ) Change in unrealized securities gains (losses), net of tax benefit of $10,873 (40,903 ) - (40,903 ) Change in unfunded pension liability, net of tax of $992 - 3,730 3,730 Reclassification for previously unrealized net losses realized in income, net of tax benefit of $599 2,253 - 2,253 Balance at December, 31, 2022 $ (40,451 ) $ 439 $ (40,012 ) During 2022 and 2021, respectively, there were security losses of $2.9 million, net of tax of $599 thousand and $525 thousand, net of tax of $110 thousand, that were reclassified out of unrealized gains on available for sale securities and reclassified into net investment security losses on the consolidated statements of income. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 23 REVENUE RECOGNITION The majority of the Company’s noninterest income is generated from short-term contracts related to fees on deposit accounts, ATM and check cards, and annuity and insurance commissions that is within the scope of Topic 606, “Revenue from Contracts with Customers.” Typically, the duration of a contract does not extend beyond the services performed. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account maintenance charges and overdrawn account fees. The Company’s performance obligation is generally satisfied, and the related revenue recognized, immediately, when the transaction occurs, or by month-end. Investment Services and Insurance Income Investment services and insurance income consists primarily of commissions received on mutual funds and other investment sales that are recognized on the trade date, which is when the Company has satisfied its performance obligation. Title Insurance Income VST provides title insurance and real estate settlement services; revenue is recognized at the time the real estate transaction is completed. ATM and Check Card Fees ATM and Check Card Fees are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. The Company’s performance obligation is generally satisfied, and the related revenue recognized, immediately, when the transaction occurs, or by month-end. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized no less than monthly. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for December 31, 2022 and 2021 (dollars in thousands). Twelve Months Ended December 31, 2022 2021 Noninterest Income In-scope of Topic 606: Service Charges on Deposits $ 1,062 $ 1,133 Investment Services and Insurance Income 883 944 Title Insurance Income 1,578 2,074 ATM and check card fees 2,462 2,311 Other 814 807 Noninterest Income (in-scope of Topic 606) 6,799 7,269 Noninterest Income (out-of-scope of Topic 606) 2,835 4,037 Total $ 9,634 $ 11,306 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE 24 LEASES Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. The Company’s long-term lease agreements are classified as operating leases. Certain of these leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably assured of being exercised. The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The Company has five operating leases for office properties. The following tables present information about the Company’s leases (dollars in thousands): December 31, 2022 December 31, 2021 Lease Liabilities (included in other liabilities) $ 886 $ 957 Right-of-use assets (included in other assets) $ 861 $ 937 Weighted average remaining lease term 2.54 years 3.37 years Weighted average discount rate 3.22 % 3.01 % 2022 2021 Lease cost Operating lease cost $ 151 $ 121 Total lease cost $ 151 $ 121 Cash paid for amounts included in the measurement of lease liabilities $ 177 $ 145 A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total of operating lease liabilities is as follows (dollars in thousands): Lease payments due As of December 31, 2022 Twelve months ending December 31, 2023 $ 162 Twelve months ending December 31, 2024 177 Twelve months ending December 31, 2025 121 Twelve months ending December 31, 2026 70 Twelve months ending December 31, 2027 56 Thereafter 463 Total undiscounted cash flows $ 1,049 Discount (163 ) Lease liabilities $ 886 |
NATURE OF BANKING ACTIVITIES _2
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company, Bank, TEB, FMFS, F&M Mortgage, and VST. Significant inter-company accounts and transactions have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term are the determination of the allowance for loan losses, fair value, and pension accounting. |
Business Segments | The Company primarily operates two business segments, commercial banking, through F&M Bank, and mortgage banking, through F&M Mortgage. The commercial banking segment includes both commercial and consumer lending and provides customers with products such as commercial loans, real estate loans, other business financing and consumer loans. In addition, this segment provides customers with several choice deposit products, including demand deposit accounts, savings accounts, and certificates of deposit. The mortgage banking segment engages primarily in the origination of residential mortgages for sale into the secondary market. Various other services are offered through TEB, FMFS and VST. For additional information, refer to Note 20,” Business Segments.” |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. |
Securities | At the time of purchase, debt securities are classified as held to maturity, available for sale or trading. Debt securities that the Company has both the positive intent and ability to hold to maturity are classified as held to maturity. Held to maturity securities are stated at amortized cost adjusted for amortization of premiums and accretion of discounts on purchase using a method that approximates the effective interest method. Investments classified as trading or available for sale are stated at fair value. Changes in the fair value of available for sale investments are excluded from current earnings and reported, net of taxes, as a separate component of other comprehensive loss. Amortization of premiums and accretion of discounts on securities are reported as adjustments to interest income using the effective interest method. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the securities sold using the specific identification method. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair value of each security. These gains and losses are credited or charged to stockholders’ equity, whereas realized gains and losses flow through the Company’s current earnings. The fair value of investment securities available for sale is estimated based on quoted prices for similar assets determined by bid quotations received from independent pricing services. Declines in the fair value of securities below their amortized cost that are other than temporary are reflected in earnings or other comprehensive income, as appropriate. For those debt securities whose fair value is less than their amortized cost basis, the Company considers our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. |
Other Investments | The Company has investments in low-income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. Due to restrictions on the Company’s investments in the FHLB and the Federal Reserve Bank of Richmond (“FRB”), these securities are considered restricted and carried at cost. The FHLB requires the Bank to maintain stock in an amount equal to 3.75% of outstanding borrowings. The FRB requires the Company to maintain stock with a par value equal to 6% of its outstanding capital and surplus. |
Loans Held for Investment | The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and net of any deferred fees and origination costs. Loan fees collected and certain costs incurred related to loan originations are deferred and amortized as an adjustment to interest income over the life of the related loans. Deferred fees and costs are recorded as an adjustment to interest income using a method that approximates a constant yield. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless well-secured and in process of collection. Past due status is based on the contractual terms of the loan. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. |
Loans Held for Sale | Loans held for sale consist of one-to-four family conforming residential real estate loans originated for sale in the secondary market by F&M Mortgage. Credit risk associated with these loans is mitigated by entering sales commitments with third party investors to purchase the loans after they are originated; the Company does not service these loans after they are sold. The Company records loans held for sale via the fair value option; see Note 15 “Derivative Instruments and Hedging Activities, Mortgage Banking Derivatives” for additional information. The change in the fair value of loans held for sale is included in “Mortgage banking income” on the Company’s Consolidated Statements of Income. |
Troubled Debt Restructuring | In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). The restructured terms may include rate reductions, principal forgiveness, payment forbearance or other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. All TDRs are considered impaired loans and may be on accrual or nonaccrual status. |
Allowance for Loan and Losses | The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Loans, other than dealer finance and credit cards, are assigned an internal risk rating based on certain credit quality indicators. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Specific allowances are established for individually evaluated impaired loans based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. |
Assets Held for Sale | Assets held for sale at December 31, 2021 included one branch building that was closed during 2020. The Company periodically evaluates the value of assets held for sale and records an impairment charge for any subsequent declines in fair value less selling costs. The branch building was sold during 2022 at carrying cost. There were no assets held for sale as of December 31, 2022. |
Other Real Estate Owned (OREO) | OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. |
Bank Premises and Equipment | Land is carried at cost. Buildings and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. Estimated useful lives range from 10 to 39 years for buildings, and 5 to 10 years for furniture and equipment. Maintenance, repairs, and minor improvements are charged to operations as incurred; major improvements are capitalized. Gains and losses on dispositions are reflect-ed in other income or expense. |
Goodwill and Intangible Assets | Goodwill, the excess of purchase price over the fair value of the identifiable net assets acquired, is evaluated for impairment by comparing the fair value of a reporting unit with its carrying amount. Impairment testing is performed annually as of December 31, as well as when an event triggering event may have occurred. The Company performed the internal evaluation of goodwill for December 31, 2022, and based on the results, no impairment was deemed necessary. Acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. |
Bank Owned Life Insurance | The Company has purchased life insurance policies on certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Pension Plans | The Bank has a qualified noncontributory defined benefit pension plan which covers all full-time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company recognizes the over-funded or under‑funded status of pension and other postretirement benefit plans on the balance sheet. Gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive loss, net of tax effects, until they are amortized as a component of net periodic cost. As of February 15, 2023, the Virginia Bankers Association Defined Benefit Plan for Farmers & Merchants Bank was amended to stop the accrual of future benefits. |
Income Taxes | Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the temporary differences between the book and tax bases of assets and liabilities and give current recognition to changes in tax rates and laws. When the Company’s federal tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would ultimately be sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties, if any, associated with unrecognized tax benefits are classified as additional income taxes in the consolidated statements of income. |
Advertising Costs | The Company follows the policy of charging the cost of advertising to expense as incurred. |
Transfers of Financial Assets | Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Bank-Owned Life Insurance | The Company owns insurance on the lives of a certain group of key employees. The policies were purchased to help offset the increase in the costs of various fringe benefit plans, including healthcare. The cash surrender value of these policies is included as an asset on the consolidated balance sheets, and any increase in cash surrender value is recorded as income from bank owned life insurance on the consolidated statements of income. In the event of the death of an insured individual under these policies, the Company receives a death benefit which is also recorded as income from bank owned life insurance. The Company is exposed to credit risk to the extent an insurance company is unable to fulfill its financial obligations under a policy. |
Loss Contingencies | Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the consolidated financial statements. |
Reclassifications | Certain reclassifications have been made in the 2021 financial statements to conform to reporting for 2022. These reclassifications are not considered material and had no impact on prior year’s net income, balance sheet or stockholders’ equity. |
Earnings per Share | Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding. Nonvested restricted shares are included in the weighted average number of common shares used to compute basic earnings per share because of the dividend participation and voting rights. Diluted earnings per share includes the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. All the Company’s outstanding preferred stock was redeemed by the Company for cash or converted to common stock during the fourth quarter of 2021. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented (dollars in thousands): For the year ended December 31, 2022 December 31, 2021 Earnings Available to Common Stockholders: Net Income $ 8,318 $ 10,738 Preferred stock dividends - 196 Net Income Available to Common Stockholders $ 8,318 $ 10,542 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated (dollars in thousands): For the year ended December 31, 2022 December 31, 2021 Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,318 3,449,343 $ 2.41 $ 10,542 3,245,086 $ 3.25 Effect of Dilutive Securities: Convertible Preferred Stock - - - 196 197,087 (0.13 ) Diluted EPS $ 8,318 3,449,343 $ 2.41 $ 10,738 3,442,173 $ 3.12 |
Recent Accounting Pronouncements | During June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU, as amended, requires an entity to measure expected credit losses for financial assets carried at amortized cost based on historical experience, current conditions, and reasonable and supportable forecasts. Among other things, the ASU also amended the impairment model for available for sale securities and addressed purchased financial assets with deterioration. The Company adopted ASU 2016-13 as of January 1, 2023, in accordance with the required implementation date and recorded the impact of adoption to retained earnings, net of deferred income taxes, as required by the standard. The adjustment recorded at adoption was not significant to the overall allowance for credit losses or shareholders’ equity as compared to December 31, 2022, and consisted of adjustments to the allowance for credit losses on loans, as well as an adjustment to the Company’s reserve for unfunded loan commitments. Subsequent to adoption, the Company will record adjustments to its allowance(s) for credit losses and reserves for unfunded commitments through the provision for credit losses in the consolidated statements of income. The Company is utilizing a third-party model to tabulate its estimate of current expected credit losses, using the remaining life methodology. In accordance with ASC 326, the Company has segmented its loan portfolio based on similar risk characteristics which included call report code. The Company primarily utilizes a qualitative scorecard for its reasonable and supportable forecasting of current expected credit losses. To further adjust the allowance for credit losses for expected losses not already included within the quantitative component of the calculation, the Company will consider the nine qualitative adjustment factors outlined in the 2006 interagency policy statement on the ALLL. The Company’s CECL implementation process was overseen by the CECL Committee and included an assessment of data availability and gap analysis, data collection, consideration and analysis of multiple loss estimation methodologies, an assessment of relevant qualitative factors and correlation analysis of multiple potential loss drivers and their impact on the Company’s historical loss experience. During 2022, the Company calculated its current expected credit losses model in parallel to its incurred loss model to further refine the methodology and model. In addition, the Company engaged a third-party to perform a comprehensive model validation. Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (SAB) 119. SAB 119 updated portions of SEC interpretative guidance to align with FASB ASC 326, “Financial Instruments – Credit Losses.” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”. ASU 2022-06 extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The objective of the guidance in Topic 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published. In 2021, the UK Financial Conduct Authority (FCA) delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The ASU is effective for all entities upon issuance. The Company transitioned all loan agreements, other than SWAP loans, away from LIBOR during 2022. The SWAP loans have amended Rate Protection Agreements executed by the borrower in preparation of transition away from LIBOR by the swap holder. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The ASU is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company does not expect the adoption of ASU 2022-03 to have a material impact on its consolidated financial statements. In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-02, “Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. The amendments in this ASU should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. For entities that have adopted ASU 2016-13, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted ASU 2016-13, the effective dates for ASU 2022-02 are the same as the effective dates in ASU 2016-13. Early adoption is permitted if an entity has adopted ASU 2016-13. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company is currently assessing the impact that ASU 2022-02 will have on its consolidated financial statements. In March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2022-01, “Derivatives and Hedging (Topic 815), Fair Value Hedging—Portfolio Layer Method.” ASU 2022-01 clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets and is intended to better align hedge accounting with an organization’s risk management strategies. In 2017, FASB issued ASU 2017-12 to better align the economic results of risk management activities with hedge accounting. One of the major provisions of that standard was the addition of the last-of-layer hedging method. For a closed portfolio of fixed-rate prepayable financial assets or one or more beneficial interests secured by a portfolio of prepayable financial instruments, such as mortgages or mortgage-backed securities, the last-of-layer method allows an entity to hedge its exposure to fair value changes due to changes in interest rates for a portion of the portfolio that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flows. ASU 2022-01 renames that method the portfolio layer method. For public business entities, ASU 2022-01 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company does not expect the adoption of ASU 2022-01 to have a material impact on its consolidated financial statements. In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. In addition, the amendment updates the disclosure requirements for convertible instruments to increase the information transparency. For public business entities, excluding smaller reporting companies, the amendments in the ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-06 to have a material impact on its consolidated financial statements. Recently Adopted Accounting Developments In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity – Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).” The ASU addresses how an issuer should account for modifications, or an exchange of freestanding written call options classified as equity that is not within the scope of another Topic. ASU 2021-04 was effective for the Company on January 1, 2022. There was no material impact due to the adoption of ASU 2021-04. |
NATURE OF BANKING ACTIVITIES _3
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | |
Earnings per share | For the year ended December 31, 2022 December 31, 2021 Earnings Available to Common Stockholders: Net Income $ 8,318 $ 10,738 Preferred stock dividends - 196 Net Income Available to Common Stockholders $ 8,318 $ 10,542 |
Schedule of reconciliation of net income | For the year ended December 31, 2022 December 31, 2021 Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,318 3,449,343 $ 2.41 $ 10,542 3,245,086 $ 3.25 Effect of Dilutive Securities: Convertible Preferred Stock - - - 196 197,087 (0.13 ) Diluted EPS $ 8,318 3,449,343 $ 2.41 $ 10,738 3,442,173 $ 3.12 |
SECURITIES (Tables)
SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SECURITIES | |
Schedule of securities with unrealized losses | Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2022 U. S. Government treasuries $ 9,657 $ 362 $ 26,987 $ 2,897 $ 36,644 $ 3,259 U. S. Government sponsored enterprises 13,914 1,083 115,835 12,642 129,749 13,725 Securities issued by State and political subdivisions in the U.S. 21,805 1,426 18,710 2,734 40,515 4,160 Mortgage-backed obligations of federal agencies 32,823 2,429 119,892 23,817 152,715 26,246 Corporate debt securities 16,252 2,198 10,379 1,721 26,631 3,919 Total $ 94,451 $ 7,498 $ 291,803 $ 43,811 $ 386,254 $ 51,309 Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2021 U. S. Government treasuries $ 29,481 $ 365 $ - $ - $ 29,481 $ 365 U. S. Government sponsored enterprises 93,714 752 - - 93,714 752 Securities issued by State and political subdivisions in the U.S. 13,308 147 - - 13,308 147 Mortgage-backed obligations of federal agencies 126,501 1,871 10,074 220 136,575 2,091 Corporate debt securities 8,825 225 - - 8,825 225 Total $ 271,829 $ 3,360 $ 10,074 $ 220 $ 281,903 $ 3,580 |
Schedule amortized cost and fair value for securities | Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U. S. Treasuries $ 125 $ - $ 13 $ 112 December 31, 2021 U. S. Treasuries $ 125 $ - $ - $ 125 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2022 U. S. Treasuries $ 39,902 $ - $ 3,259 $ 36,643 U. S. Government sponsored enterprises 143,473 - 13,725 129,748 Securities issued by States and political subdivisions of the U.S. 46,331 27 4,160 42,198 Mortgage-backed obligations of federal agencies 183,044 77 26,246 156,875 Corporate debt securities 30,550 - 3,919 26,631 Total Securities Available for Sale $ 443,300 $ 104 $ 51,309 $ 392,095 December 31, 2021 U. S. Treasuries $ 29,847 $ - $ 365 $ 29,482 U. S. Government sponsored enterprises 134,466 - 752 133,714 Securities issued by States and political subdivisions of the U.S. 34,078 406 147 34,337 Mortgage-backed obligations of federal agencies 185,216 522 2,091 183,647 Corporate debt securities 22,555 372 225 22,702 Total Securities Available for Sale $ 406,162 $ 1,300 $ 3,580 $ 403,882 Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125 $ 112 $ 19,823 $ 19,203 Due after one year through five years - - 164,328 151,279 Due after five years through ten years - - 101,571 87,643 Due after ten years - - 157,578 133,970 Total $ 125 $ 112 $ 443,300 $ 392,095 |
Schedule of gain and losses on sales of debt and equity securities | 2022 2021 Realized losses: Gross realized losses $ (2,852 ) $ (525 ) Net realized losses $ (2,852 ) $ (525 ) Proceeds from sales of securities $ 40,847 $ 25,917 |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LOANS | |
Schedule of loans held for investment | 2022 2021 Construction/Land Development $ 68,671 $ 75,236 Farmland 74,322 66,344 Real Estate 153,281 139,552 Multi-Family 9,622 4,887 Commercial Real Estate 195,163 163,564 Home Equity – closed end 4,707 6,262 Home Equity – open end 46,928 44,247 Commercial & Industrial – Non-Real Estate 56,625 44,224 Consumer 6,488 8,036 Dealer Finance 125,125 107,346 Credit Cards 3,242 3,000 Gross loans 744,174 662,698 Less: Deferred loan fees, net of costs (570 ) (277 ) Total $ 743,604 $ 662,421 |
Schedule impaired loans | December 31, 2022 December 31, 2021 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 332 $ 332 $ - $ 645 $ 645 $ - Farmland 2,535 2,079 - 2,619 2,286 - Real Estate 1,882 1,882 - 2,748 2,748 - Multi-Family - - - - - - Commercial Real Estate 8,131 8,131 - 8,511 8,494 - Home Equity – closed end - - - 148 147 - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - 5 5 - Credit cards - - - - - - Dealer Finance 7 7 - 12 12 - 12,887 12,431 - 14,688 14,337 - Impaired loans with a valuation allowance Construction/Land Development 521 521 228 - - - Farmland - - - - - - Real Estate 1,378 1,378 92 1,172 1,172 119 Multi-Family - - - - - - Commercial Real Estate 980 980 11 6,004 6,004 603 Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - - - - Credit cards - - - - - - Dealer Finance 55 55 13 95 95 14 2,934 2,934 344 7,271 7,271 736 Total impaired loans $ 15,821 $ 15,365 $ 344 $ 21,959 $ 21,608 $ 736 December 31, 2022 December 31, 2021 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 474 $ 19 $ 984 $ 29 Farmland 2,137 161 1,760 126 Real Estate 2,107 101 4,575 155 Multi-Family - - - - Commercial Real Estate 8,851 393 9,225 253 Home Equity – closed end - - 414 18 Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - 2 - Consumer - - 1 - Credit cards - - - - Dealer Finance 11 1 14 1 13,580 675 16,975 582 Impaired loans with a valuation allowance Construction/Land Development 261 24 - - Farmland - - 420 - Real Estate 1,466 71 1,399 45 Multi-Family - - - - Commercial Real Estate 1,935 47 6,201 172 Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance 62 6 112 9 3,724 148 8,132 226 Total impaired loans $ 17,304 $ 823 $ 25,107 $ 808 |
Schedule of aging of the recorded investment of past due loans | 30-59 Days Past due 60-89 Days Past due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2022 Construction/Land Development $ 477 $ 539 $ 21 $ 1,037 $ 67,634 $ 68,671 $ 21 $ - Farmland 85 18 - 103 74,219 74,322 1,458 - Real Estate 1,825 282 86 2,193 151,088 153,281 419 - Multi-Family - - - - 9,622 9,622 - - Commercial Real Estate 234 82 - 316 194,847 195,163 - - Home Equity – closed end 3 - - 3 4,704 4,707 - - Home Equity – open end 385 177 - 562 46,366 46,928 - - Commercial & Industrial – Non- Real Estate 104 - 104 208 56,417 56,625 101 31 Consumer 11 11 15 37 6,451 6,488 15 - Dealer Finance 1,117 228 199 1,544 123,581 125,125 210 5 Credit Cards 51 9 2 62 3,180 3,242 - 2 Less: Deferred loan fees, net of costs - - - - (570 ) (570 ) - - Total $ 4,292 $ 1,346 $ 427 $ 6,065 $ 737,539 $ 743,604 $ 2,224 $ 38 30-59 Days Past due 60-89 Days Past due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2021 Construction/Land Development $ 360 $ 41 $ 38 $ 439 $ 74,797 $ 75,236 $ 302 $ - Farmland - - - - 66,344 66,344 1,320 - Real Estate 1,254 89 395 1,738 137,814 139,552 827 - Multi-Family - - - - 4,887 4,887 - - Commercial Real Estate - - 108 108 163,456 163,564 2,975 - Home Equity – closed end 53 - - 53 6,209 6,262 - - Home Equity – open end 471 216 - 687 43,560 44,247 - - Commercial & Industrial – Non- Real Estate 35 1 43 79 44,145 44,224 - 43 Consumer 9 67 - 76 7,960 8,036 1 - Dealer Finance 694 91 16 801 106,545 107,346 40 - Credit Cards 16 - - 16 2,984 3,000 - - Less: Deferred loan fees, net of costs - - - - (277 ) (277 ) - - Total $ 2,892 $ 505 $ 600 $ 3,997 $ 658,424 $ 662,421 $ 5,465 $ 43 |
ALLOWANCE FOR LOAN LOSSES (Tabl
ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ALLOWANCE FOR LOAN LOSSES | |
Schdule of allowance for loan losses | December 31, 2022 Beginning Balance Charge-offs Recoveries Provision for (Recovery of) Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 977 $ - $ - $ 41 $ 1,018 $ 228 $ 790 Farmland 448 - - 122 570 - 570 Real Estate 1,162 17 - 243 1,388 92 1,296 Multi-Family 29 - - 42 71 - 71 Commercial Real Estate 2,205 - - (190 ) 2,015 11 2,004 Home Equity – closed end 41 - - (3 ) 38 - 38 Home Equity – open end 407 84 130 (8 ) 445 - 445 Commercial & Industrial – Non- Real Estate 288 46 49 159 450 - 450 Consumer 520 153 84 (370 ) 81 - 81 Dealer Finance 1,601 1,280 691 780 1,792 13 1,779 Credit Cards 70 66 14 50 68 - 68 Total $ 7,748 $ 1,646 $ 968 $ 866 $ 7,936 $ 344 $ 7,592 December 31, 2021 Beginning Balance Charge-offs Recoveries Provision for (Recovery of) Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 1,249 $ - $ 307 $ (579 ) $ 977 $ - $ 977 Farmland 731 - - (283 ) 448 - 448 Real Estate 1,624 - 76 (538 ) 1,162 119 1,043 Multi-Family 54 - - (25 ) 29 - 29 Commercial Real Estate 3,662 - 19 (1,476 ) 2,205 603 1,602 Home Equity – closed end 55 - - (14 ) 41 - 41 Home Equity – open end 463 - 13 (69 ) 407 - 407 Commercial & Industrial – Non-Real Estate 363 40 37 (72 ) 288 - 288 Consumer 521 33 24 8 520 - 520 Dealer Finance 1,674 1,038 754 211 1,601 14 1,587 Credit Cards 79 54 29 16 70 - 70 Total $ 10,475 $ 1,165 $ 1,259 $ (2,821 ) $ 7,748 $ 736 $ 7,012 |
Investment in loans based on impairment method | December 31, 2022 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 68,671 $ 853 $ 67,818 Farmland 74,322 2,079 72,243 Real Estate 153,281 3,260 150,021 Multi-Family 9,622 - 9,622 Commercial Real Estate 195,163 9,111 186,052 Home Equity – closed end 4,707 - 4,707 Home Equity –open end 46,928 - 46,928 Commercial & Industrial – Non-Real Estate 56,625 - 56,625 Consumer 6,488 - 6,488 Dealer Finance 125,125 62 125,063 Credit Cards 3,242 - 3,242 Gross Loans 744,174 15,365 728,809 Less: Deferred loan fees, net of costs (570 ) - (570 ) Total $ 743,604 $ 15,365 $ 728,239 December 31, 2021 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 75,236 $ 645 $ 74,591 Farmland 66,344 2,286 64,058 Real Estate 139,552 3,920 135,632 Multi-Family 4,887 - 4,887 Commercial Real Estate 163,564 14,498 149,066 Home Equity – closed end 6,262 147 6,115 Home Equity –open end 44,247 - 44,247 Commercial & Industrial – Non-Real Estate 44,224 - 44,224 Consumer 8,036 5 8,031 Dealer Finance 107,346 107 107,239 Credit Cards 3,000 - 3,000 Gross Loans 662,698 21,608 641,090 Less: Deferred loan fees, net of costs (277 ) - (277 ) Total $ 662,421 $ 21,608 $ 640,813 |
Schedule of loan portfolio by internal loan grade | December 31, 2022 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 4 $ 11,112 $ 42,684 $ 13,116 $ 1,213 $ 542 $ - $ 68,671 Farmland 155 269 11,373 38,051 22,069 947 1,458 - 74,322 Real Estate - 553 27,003 86,269 28,560 6,950 3,946 - 153,281 Multi-Family - - 963 5,116 3,430 113 - - 9,622 Commercial Real Estate - 3,097 55,662 72,779 41,749 13,878 7,998 - 195,163 Home Equity – closed end - 48 1,065 2,560 639 382 13 - 4,707 Home Equity – open end 27 1,272 18,671 23,207 2,091 1,611 49 - 46,928 Commercial & Industrial - Non-Real Estate 10 516 12,934 26,310 15,613 911 331 - 56,625 Consumer (excluding dealer) 33 286 2,965 3,105 68 16 15 - 6,488 Gross loans $ 225 $ 6,045 $ 141,748 $ 300,081 $ 127,335 $ 26,021 $ 14,352 $ - $ 615,807 Less: Deferred loan fees, net of costs (570 ) Total $ 615,237 Credit Cards Dealer Finance Performing $ 3,240 $ 124,910 Nonperforming 2 215 Total $ 3,242 $ 125,125 December 31, 2021 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 6 $ 9,952 $ 43,861 $ 19,457 $ 1,658 $ 302 $ - $ 75,236 Farmland 56 291 6,804 42,615 13,620 1,638 1,320 - 66,344 Real Estate - 1,128 30,268 61,940 28,895 12,462 4,859 - 139,552 Multi-Family - - 1,021 2,586 1,154 126 - - 4,887 Commercial Real Estate - 2,124 36,308 72,414 35,444 4,428 12,846 - 163,564 Home Equity – closed end - 61 1,268 3,103 762 1,068 - - 6,262 Home Equity – open end - 1,293 17,333 21,296 2,477 1,632 216 - 44,247 Commercial & Industrial - Non-Real Estate - 1,001 7,562 21,527 13,538 533 63 - 44,224 Consumer (excluding dealer) 10 522 2,919 3,526 980 79 - - 8,036 Gross loans $ 66 $ 6,426 $ 113,435 $ 272,868 $ 116,327 $ 23,624 $ 19,606 $ - $ 552,352 Less: Deferred loan fees, net of costs (277 ) Total $ 552,075 Credit Cards Dealer Finance Performing $ 3,000 $ 107,330 Nonperforming - 16 Total $ 3,000 $ 107,346 |
TROUBLED DEBT RESTRUCTURING (Ta
TROUBLED DEBT RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
TROUBLED DEBT RESTRUCTURING | |
Troubled debt restructurings | December 31, 2022 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Extended maturity 3 $ 44 $ 44 Change in terms 1 $ 162 $ 162 Total 4 $ 206 $ 206 December 31, 2021 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Change in terms 3 $ 1,080 $ 1,080 Total 3 $ 1,080 $ 1,080 |
BANK PREMISES AND EQUIPMENT (Ta
BANK PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BANK PREMISES AND EQUIPMENT | |
Bank premises and equipment | 2022 2021 Land $ 4,115 $ 4,115 Buildings and improvements 16,040 15,956 Furniture and equipment 13,483 10,052 33,638 30,123 Less ‑ accumulated depreciation (14,051 ) (13,060 ) Net $ 19,587 $ 17,063 |
OTHER REAL ESTATE OWNED (Tables
OTHER REAL ESTATE OWNED (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER REAL ESTATE OWNED | |
Other real estate owned activity | 2022 Balance as of January 1 $ - Loans transferred to OREO 197 Sale of OREO (138 ) Write down of OREO and losses on sale (59 ) Balance as of December 31 $ - |
Other real estate owned valuation activity | Activity in the valuation allowance was as follows: 2022 Balance as of January 1 $ - Provision charged to expense - Reductions from sales of real estate owned - Balance as of December 31 $ - |
(Income) expenses related to foreclosed assets | 2022 Net loss on sales $ 59 (Income) expenses related to foreclosed assets $ 59 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEPOSITS | |
Maturity of deposits | 2023 $ 67,295 2024 31,265 2025 12,979 2026 4,755 2027 2,898 Thereafter - Total $ 119,192 |
SHORT-TERM DEBT (Tables)
SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHORT-TERM DEBT | |
Short-term debt | Highest Month- End Balance Outstanding at Year End Average Balance Weighted Average Rate 2022 Federal funds purchased $ 1,989 $ - $ 883 2.99 % FHLB short-term 70,000 70,000 25,241 2.81 % Totals $ 70,000 $ 26,124 2.82 % |
INCOME TAX EXPENSE (Tables)
INCOME TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAX EXPENSE | |
Components of the income tax expense | 2022 2021 Current expense $ 571 $ 847 Deferred expense (benefit) (91 ) 476 Total Income Tax Expense $ 480 $ 1,323 |
Components of the deferred taxes | 2022 2021 Deferred Tax Assets: Allowance for loan losses $ 1,667 $ 1,627 Split Dollar Life Insurance 3 3 Nonqualified deferred compensation 580 757 Low-income housing partnerships losses 375 326 Core deposit amortization 29 29 SBA fees - 47 Lease Liability 170 172 Unfunded pension benefit obligation - 875 VST income - 2 Assets available for sale - 32 Prepaid pension 45 - Unvested restricted stock 19 - Net unrealized loss on securities available for sale 10,753 479 Total Assets $ 13,641 $ 4,349 2022 2021 Deferred Tax Liabilities: Unearned low-income housing credits $ 34 $ 63 Depreciation 506 567 Prepaid pension - 114 Unfunded pension benefit obligation 117 - Goodwill tax amortization 583 576 Right of Use Asset 165 149 Total Liabilities 1,405 1,469 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 12,236 $ 2,880 |
Differences in actual income tax expense and the amounts computed using the federal statutory tax rates | 2022 2021 Tax expense at federal statutory rates $ 1,848 $ 2,533 Increases (decreases) in taxes resulting from: Tax-exempt income (228 ) (172 ) LIH and historic credits (868 ) (913 ) Other (272 ) (125 ) Total Income Tax Expense $ 480 $ 1,323 |
EMPLOYEE BENEFITS (Tables)
EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFITS | |
Reconciliation of the changes in the benefit obligations and fair value of plan assets | 2022 2021 Change in Benefit Obligation Benefit obligation, beginning $ 15,557 $ 15,456 Service cost 759 862 Interest cost 415 379 Actuarial loss (5,421 ) - Benefits paid (1,145 ) (1,140 ) Decrease in Obligation due to Curtailment (2,154 ) - Benefit obligation, ending $ 8,011 $ 15,557 Change in Plan Assets Fair value of plan assets, beginning $ 11,235 $ 11,201 Actual return on plan assets (2,303 ) 1,174 Benefits paid (1,145 ) (1,140 ) Fair value of plan assets, ending $ 7,787 $ 11,235 Funded status at the end of the year $ (224 ) $ (4,322 ) |
Pension plan's asset allocation | 2022 2021 Amount recognized in the Consolidated Balance Sheet (Accrued) prepaid benefit cost $ (780 ) $ (156 ) Over funded (unfunded) pension benefit obligation under ASC 325-960 556 (4,166 ) Deferred taxes (995 ) 875 Amount recognized in accumulated other comprehensive income (loss) Net income (loss) $ 556 $ (4,166 ) Prior service cost - - Amount recognized 556 (4,166 ) Deferred taxes (117 ) 875 Amount recognized in accumulated comprehensive (loss) $ (439 ) $ (3,291 ) Accrued benefit detail Benefit obligation $ (8,011 ) $ (15,557 ) Fair value of assets 7,787 11,235 Unrecognized net actuarial (income) loss (556 ) 4,166 Accrued benefits $ (780 ) $ (156 ) Components of net periodic benefit cost Service cost $ 758 $ 862 Interest cost 415 379 Expected return on plan assets (781 ) (791 ) Recognized net actuarial loss 232 289 Net periodic benefit cost $ 624 $ 739 Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss Net gain $ (4,722 ) $ (671 ) Amortization of prior service cost - - Total recognized in other comprehensive income $ (4,722 ) $ (671 ) Total recognized in net periodic benefit cost and other Comprehensive (loss) income $ (4,098 ) $ 67 Additional disclosure information Accumulated benefit obligation $ 8,011 $ 11,473 Vested benefit obligation $ 8,011 $ 11,473 Discount rate used for net pension cost 2.75 % 2.50 % Discount rate used for disclosure 5.00 % 2.75 % Expected return on plan assets 7.25 % 7.25 % Rate of compensation increase 3.00 % 3.00 % Average remaining service (years) 10.89 11.26 |
Estimated future benefit payments | 2023 $ 1,252 2024 48 2025 548 2026 998 2027 1,223 2028-2032 2,587 $ 6,656 |
Schedule of nonvested awards | Shares Weighted-Average Grant Date Fair Value Per Share Nonvested at December 31, 2021 15,869 $ 26.78 Granted 18,908 30.85 Vested (5,265 ) 27.72 Forfeited (3,056 ) 29.05 Nonvested at December 31, 2022 26,456 29.24 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and contingencies | |
Commitments outstanding | 2022 2021 Commitments to extend credit $ 265,976 $ 257,229 Standby letters of credit 2,696 2,818 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Forward option contracts | 2022 2021 Notional amount $ - $ 7 Fair value of contracts, included in other assets - 3 |
TRANSACTIONS WITH RELATED PAR_2
TRANSACTIONS WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
TRANSACTIONS WITH RELATED PARTIES | |
Loan transactions with related parties | 2022 2021 Total loans, beginning of year $ 23,379 $ 22,685 New loans 5,073 6,506 Relationship changes (75 ) (98 ) Repayments (5,950 ) (5,714 ) Total loans, end of year $ 22,427 $ 23,379 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
Fair value on a recurring basis | December 31, 2022 Total Level 1 Level 2 Level 3 Assets: Loans held for sale, F&M Mortgage $ 1,373 $ - $ 1,373 $ - U. S. Treasury securities 36,643 - 36,643 - U.S. Government sponsored enterprises 129,748 - 129,748 - Securities issued by States and political subdivisions of the US 42,198 - 42,198 - Mortgage-backed obligations of federal agencies 156,875 - 156,875 - Corporate debt securities 26,631 - 26,631 - Forward sales commitments 186 - 186 - Assets at Fair Value $ 393,654 $ - $ 393,654 $ - Liabilities: IRLC $ 92 $ - $ 92 $ - Liabilities at Fair Value $ 92 $ - $ 92 $ - December 31, 2021 Total Level 1 Level 2 Level 3 Assets: Loans held for sale, F&M Mortgage $ 4,887 $ - $ 4,887 $ - IRLC 258 - 258 - U. S. Treasury securities 29,482 - 29,482 - U.S. Government sponsored enterprises 133,714 - 133,714 - Securities issued by States and political subdivisions of the US 34,337 - 34,337 - Mortgage-backed obligations of federal agencies 183,647 - 183,647 - Corporate debt securities 22,702 - 22,702 - Forward sales commitments 112 - 112 - Assets at Fair Value $ 409,139 $ - $ 409,139 $ - Liabilities: Derivatives – ICD $ 3 $ - $ 3 $ - Liabilities at Fair Value $ 3 $ - $ 3 $ - |
Financial assets measured at fair value on nonrecurring basis | December 31, 2022 Total Level 1 Level 2 Level 3 Construction/Land Development $ 293 $ - $ - $ 293 Real Estate 1,286 - - 1,286 Commercial Real Estate 969 - - 969 Dealer Finance 42 - - 42 Impaired loans $ 2,590 $ - $ - $ 2,590 Bank premises held for sale $ - $ - $ - $ - December 31, 2021 Total Level 1 Level 2 Level 3 Real Estate $ 1,053 $ - $ - $ 1,053 Commercial Real Estate 5,401 - - 5,401 Dealer Finance 81 - - 81 Impaired loans $ 6,535 $ - $ - $ 6,535 Bank premises held for sale $ 300 $ - $ - $ 300 |
Fair value measurements | Fair Value at December 31, 2022 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 2,590 thousand Discounted appraised value Discount for selling costs and marketability 10.00%-33.00% (Average 19.00%) Fair Value at December 31, 2021 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 6,535 thousand Discounted appraised value Discount for selling costs and marketability 11.76%-28.00% (Average 17.31%) |
Carrying value and estimated fair value for financial instruments | Fair Value Measurements at December 31, 2022 Using Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2022 Assets: Cash and cash equivalents $ 34,953 $ 34,953 $ - $ - $ 34,953 Securities 392,220 - 392,220 - 392,220 Loans held for sale 1,373 - 1,373 - 1,373 Loans held for investment, net 743,604 - - 720,806 720,806 Interest receivable 3,995 - 3,995 - 3,995 Bank owned life insurance 23,554 - 23,554 - 23,554 Forward sales commitments 186 - 186 - 186 Total $ 1,199,885 $ 34,953 $ 421,328 $ 720,806 $ 1,177,087 Liabilities: Deposits $ 1,083,377 $ - $ 1,080,909 $ - $ 1,080,909 Short-term debt 70,000 - - 70,000 70,000 Long-term debt 6,890 - - 6,778 6,778 IRLC 92 - 92 - 92 Interest payable 295 - 295 - 295 Total $ 1,160,654 $ - $ 1,081,296 $ 76,778 $ 1,158,074 Fair Value Measurements at December 31, 2021 Using Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2021 Assets: Cash and cash equivalents $ 88,121 $ 88,121 $ - $ - $ 88,121 Securities 404,007 - 404,007 - 404,007 Loans held for sale 4,887 - 4,887 - 4,887 IRLC 258 - 258 - 258 Loans held for investment, net 662,421 - - 652,096 652,096 Interest receivable 3,117 - 3,117 - 3,117 Bank owned life insurance 22,878 - 22,878 - 22,878 Forward sales commitments 112 - 112 - 112 Total $ 1,185,801 $ 88,121 $ 435,259 $ 652,096 $ 1,175,476 Liabilities: Deposits $ 1,080,295 $ - $ 968,604 $ 123,718 $ 1,092,322 Long-term debt 21,772 - - 22,443 22,443 Interest payable 491 - 491 - 491 Total $ 1,102,558 $ - $ 969,095 $ 146,161 $ 1,115,256 |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY MATTERS | |
Actual capital ratios for the bank | Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2022 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 114,455 13.64 % $ 67,124 8.00 % $ 83,905 10.00 % Tier 1 risk-based ratio 106,519 12.70 % 50,343 6.00 % 67,124 8.00 % Common equity tier 1 106,519 12.70 % 37,757 4.50 % 54,538 6.50 % Tier 1 leverage ratio 106,519 8.22 % 51,842 4.00 % 64,802 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2021 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 111,389 15.00 % $ 59,425 8.00 % $ 74,282 10.00 % Tier 1 risk-based ratio 103,641 13.95 % 44,569 6.00 % 59,425 8.00 % Common equity tier 1 103,641 13.95 % 33,427 4.50 % 48,283 6.50 % Tier 1 leverage ratio 103,641 8.62 % 48,100 4.00 % 60,125 5.00 % |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS SEGMENTS | |
Schedule of business segments | December 31, 2022 F&M Bank F&M Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 42,066 $ 106 $ 34 $ - $ 46 $ (68 ) $ 42,184 Service charges on deposits 1,062 - - - - - 1,062 Investment services and insurance income - - 894 - - (11 ) 883 Mortgage banking income, net - 2,595 - - - (761 ) 1,834 Title insurance income - - - 1,578 - - 1,578 Net investment securities losses (2,852 ) (2,852 ) Gain on sale of limited partnership investment - - 3,785 - - - 3,785 Other operating income 3,343 1 - - - - 3,344 Total income (loss) 43,619 2,702 4,713 1,578 46 (840 ) 51,818 Expenses: Interest Expense 6,567 35 - - 711 (68 ) 7,245 Provision for loan losses 866 - - - - - 866 Salary and benefit expense 15,897 2,430 456 1,249 - - 20,032 Other operating expenses 14,375 884 66 326 (2 ) (772 ) 14,877 Total expense 37,705 3,349 522 1,575 709 (840 ) 43,020 Net income (loss) before taxes 5,914 (647 ) 4,191 3 (663 ) - 8,798 Income tax expense (benefit) (229 ) - 881 - (172 ) - 480 Net Income (Loss) $ 6,143 $ (647 ) $ 3,310 $ 3 $ (491 ) $ - $ 8,318 Total Assets $ 1,250,185 $ 9,878 $ 3,897 $ 3,298 $ 77,994 $ (99,350 ) $ 1,245,902 Goodwill $ 2,868 $ - $ - $ 3 $ 211 $ - $ 3,082 December 31, 2021 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 35,414 $ 198 $ 107 $ - $ 1 $ (144 ) $ 35,576 Service charges on deposits 1,133 - - - - - 1,133 Investment services and insurance income - - 953 - - (9 ) 944 Mortgage banking income, net - 4,646 - - - - 4,646 Title insurance income - - - 2,074 - - 2,074 Other operating income 2,499 134 - - (124 ) - 2,509 Total income 39,046 4,978 1,060 2,074 (123 ) (153 ) 46,882 Expenses: Interest Expense 3,591 123 - - 732 (144 ) 4,302 (Recovery of) Provision for loan losses (2,800 ) - (21 ) - - - (2,821 ) Salaries and benefits 14,392 2,501 369 1,225 - - 18,487 Other operating expenses 13,510 893 51 327 81 (9 ) 14,853 Total expense 28,693 3,517 399 1,552 813 (153 ) 34,821 Income before income taxes 10,353 1,461 661 522 (936 ) - 12,061 Income tax expense (benefit) 1,266 - 134 - (77 ) - 1,323 Net Income attributable to F & M Bank Corp. $ 9,087 $ 1,461 $ 527 $ 522 $ (859 ) $ - $ 10,738 Total Assets $ 1,227,059 $ 10,334 $ 8,803 $ 3,135 $ 112,586 $ (142,575 ) $ 1,219,342 Goodwill $ 2,868 $ 47 $ - $ 3 $ 164 $ - $ 3,082 |
PARENT CORPORATION ONLY FINANCI
PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Tables) | |
Schedule of Balance Sheets | 2022 2021 Assets Cash and cash equivalents $ 6,747 $ 8,824 Investment in subsidiaries 71,093 102,808 Other investments 355 135 Income tax receivable (including due from subsidiary) - 463 Goodwill and intangibles 258 190 Receivable from subsidiary bank - 149 Total Assets $ 78,453 $ 112,569 Liabilities Deferred income taxes 24 47 Income taxes payable 54 - Payable to subsidiary bank 515 - Accrued interest 178 294 Long-term liability 6,890 11,772 Total Liabilities $ 7,661 $ 12,113 Stockholders’ Equity Common stock 17,149 17,071 Additional paid in capital 10,577 10,127 Retained earnings 83,078 78,350 Accumulated other comprehensive loss (40,012 ) (5,092 ) Total Stockholders' Equity 70,792 100,456 Total Liabilities and Stockholders' Equity $ 78,453 $ 112,569 |
Schedule of Statements of Income | 2022 2021 Income Dividends from affiliate $ 6,000 $ 2,232 Other income 49 1 Total Income 6,049 2,233 Expenses Total expenses 711 812 Net income before income tax expense and undistributed subsidiary net income 5,338 1,421 Income tax benefit (172 ) (77 ) Income before undistributed subsidiary net income 5,510 1,498 Undistributed subsidiary net income 2,808 9,240 Net Income F&M Bank Corp. $ 8,318 $ 10,738 |
Statements of Cash Flows | 2022 2021 Cash Flows from Operating Activities Net income $ 8,318 $ 10,738 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (2,808 ) (9,240 ) Deferred tax benefit (420 ) (35 ) Decrease (increase) in other assets 544 (409 ) Increase in other liabilities 453 19 Long-term debt fee amortization 118 32 Share based compensation expense 193 86 Net Cash Provided by Operating Activities 6,398 1,191 Cash Flows from Investing Activities Purchase limited liability interest (220 ) - Net Cash Used in Investing Activities (220 ) - Cash Flows from Financing Activities Repayments of long-term debt (5,000 ) - Repurchase of preferred stock - (627 ) Proceeds from the sale of common stock 279 263 Proceeds from issuance of common stock 56 35 Dividends paid in cash (3,590 ) (3,593 ) Net Cash Used in Financing Activities (8,255 ) (3,922 ) Net decrease in Cash and Cash Equivalents (2,077 ) (2,731 ) Cash and Cash Equivalents, Beginning of Year 8,824 11,555 Cash and Cash Equivalents, End of Year $ 6,747 $ 8,824 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
Accumulated other comprehensive loss | Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December, 31, 2020 $ 804 $ (3,821 ) $ (3,017 ) Change in unrealized securities gains (losses), net of tax benefit of $803 (3,020 ) - (3,020 ) Change in unfunded pension liability, net of tax of $141 - 530 530 Reclassification for previously unrealized net losses realized in income, net of tax benefit of $110 415 - 415 Balance at December, 31, 2021 $ (1,801 ) $ (3,291 ) $ (5,092 ) Change in unrealized securities gains (losses), net of tax benefit of $10,873 (40,903 ) - (40,903 ) Change in unfunded pension liability, net of tax of $992 - 3,730 3,730 Reclassification for previously unrealized net losses realized in income, net of tax benefit of $599 2,253 - 2,253 Balance at December, 31, 2022 $ (40,451 ) $ 439 $ (40,012 ) |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUE RECOGNITION | |
Summary of noninterest income, segregated by revenue streams | Twelve Months Ended December 31, 2022 2021 Noninterest Income In-scope of Topic 606: Service Charges on Deposits $ 1,062 $ 1,133 Investment Services and Insurance Income 883 944 Title Insurance Income 1,578 2,074 ATM and check card fees 2,462 2,311 Other 814 807 Noninterest Income (in-scope of Topic 606) 6,799 7,269 Noninterest Income (out-of-scope of Topic 606) 2,835 4,037 Total $ 9,634 $ 11,306 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Summary of Lease | December 31, 2022 December 31, 2021 Lease Liabilities (included in other liabilities) $ 886 $ 957 Right-of-use assets (included in other assets) $ 861 $ 937 Weighted average remaining lease term 2.54 years 3.37 years Weighted average discount rate 3.22 % 3.01 % 2022 2021 Lease cost Operating lease cost $ 151 $ 121 Total lease cost $ 151 $ 121 Cash paid for amounts included in the measurement of lease liabilities $ 177 $ 145 |
Maturity of lease liability | Lease payments due As of December 31, 2022 Twelve months ending December 31, 2023 $ 162 Twelve months ending December 31, 2024 177 Twelve months ending December 31, 2025 121 Twelve months ending December 31, 2026 70 Twelve months ending December 31, 2027 56 Thereafter 463 Total undiscounted cash flows $ 1,049 Discount (163 ) Lease liabilities $ 886 |
NATURE OF BANKING ACTIVITIES _4
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | ||
Net income | $ 8,318 | $ 10,738 |
Preferred stock dividends | 0 | 196 |
Net Income Available to Common Stockholders | $ 8,318 | $ 10,542 |
NATURE OF BANKING ACTIVITIES _5
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES | ||
Basic EPS, income | $ 8,318 | $ 10,542 |
Effect of dilutive securities convertible preferred stock, income | 0 | 196 |
Diluted EPS, income | $ 8,318 | $ 10,738 |
Basic EPS, shares | 3,449,343 | 3,245,086 |
Effect of dilutive securities convertible preferred stock, shares | 0 | 197,087 |
Diluted EPS, share | 3,449,343 | 3,442,173 |
Basic EPS, per shares | $ 2.41 | $ 3.25 |
Effect of dilutive securities convertible preferred stock, per shares | 0 | (0.13) |
Diluted EPS, per shares | $ 2.41 | $ 3.12 |
NATURE OF BANKING ACTIVITIES _6
NATURE OF BANKING ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
Incometax description | the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely to be realized upon settlement with the applicable taxing authority |
Building [Member] | Minimum [Member] | |
Estimated useful life | 10 years |
Building [Member] | Maximum [Member] | |
Estimated useful life | 39 years |
Furniture And Equipment [Member] | Minimum [Member] | |
Estimated useful life | 5 years |
Furniture And Equipment [Member] | Maximum [Member] | |
Estimated useful life | 10 years |
Payroll Protection Program [Member] | |
Fixed Interest rate | 1% |
Guaranteed of loan by SBA | 100% |
SECURITIES (Details)
SECURITIES (Details) - Treasury and agency obligations - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Amortized Cost | $ 125,000 | $ 125,000 |
Unrealized gains | 0 | 0 |
Unrealized losses | 13 | 0 |
Fair value | $ 112,000 | $ 125,000 |
SECURITIES (Details 1)
SECURITIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair value | $ 392,095,000 | $ 403,882,000 |
Amortized Cost | 443,300,000 | 406,162,000 |
Gross Unrealized gains | 104,000 | 1,300,000 |
Gross Unrealized losses | 51,309,000 | 3,580,000 |
U S Treasuries [Member] | ||
Fair value | 36,643,000 | 29,482,000 |
Amortized Cost | 39,902,000 | 29,847,000 |
Gross Unrealized gains | 0 | 0 |
Gross Unrealized losses | 3,259,000 | 365,000 |
U. S. Government Sponsored Enterprises [Member] | ||
Fair value | 129,748,000 | 133,714,000 |
Amortized Cost | 143,473,000 | 134,466,000 |
Gross Unrealized gains | 0 | 0 |
Gross Unrealized losses | 13,725 | 752,000 |
Securities issued by States and political subdivisions in the U.S. [Member] | ||
Fair value | 42,198,000 | 34,337,000 |
Amortized Cost | 46,331,000 | 34,078,000 |
Gross Unrealized gains | 27,000 | 406,000 |
Gross Unrealized losses | 4,160 | 147,000 |
Mortgage-backed obligations of federal agencies [Member] | ||
Fair value | 156,875,000 | 183,647,000 |
Amortized Cost | 183,044,000 | 185,216,000 |
Gross Unrealized gains | 77,000 | 522,000 |
Gross Unrealized losses | 26,246,000 | 2,091,000 |
Corporate debt security [Member] | ||
Fair value | 26,631,000 | 22,702,000 |
Amortized Cost | 30,550,000 | 22,555,000 |
Gross Unrealized gains | 0 | 372,000 |
Gross Unrealized losses | $ 3,919,000 | $ 225,000 |
SECURITIES (Details 2)
SECURITIES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Total, amortized cost | $ 125,000 | $ 125,000 |
Securities Held to Maturity [Member] | ||
Due in one year or less, amortized cost | 125,000 | |
Due in one year or less, fair value | 112,000 | |
Due after one year through five years, amortized cost | 0 | |
Due after one year through five years, fair value | 0 | |
Due after five years through ten years, amortized cost | 0 | |
Due after five years through ten years, fair value | 0 | |
Due after ten years, amortized cost | 0 | |
Due after ten years, fair value | 0 | |
Total, amortized cost | 125,000 | |
Total fair value | 112,000 | |
Securities Available for Sale [Member] | ||
Due in one year or less, amortized cost | 19,823,000 | |
Due in one year or less, fair value | 19,203,000 | |
Due after one year through five years, amortized cost | 164,328,000 | |
Due after one year through five years, fair value | 151,279,000 | |
Due after five years through ten years, amortized cost | 101,571,000 | |
Due after five years through ten years, fair value | 87,643,000 | |
Due after ten years, amortized cost | 157,578,000 | |
Due after ten years, fair value | 133,970,000 | |
Total, amortized cost | 443,300,000 | |
Total fair value | $ 392,095,000 |
SECURITIES (Details 3)
SECURITIES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SECURITIES | ||
Gross realized losses | $ (2,852) | $ (525,000) |
Net realized (losses) | (2,852) | (525,000) |
Proceeds from sale of securities | $ 40,847 | $ 25,917,000 |
SECURITIES (Details 4)
SECURITIES (Details 4) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair value less than 12 months | $ 94,451,000 | $ 271,829,000 |
Unrealized losses less than 12 months | 7,498,000 | 3,360,000 |
Fair value more than 12 months | 291,803 | 10,074 |
Unrealized losses more than 12 months | 43,811 | 220 |
Fair value total | 386,254,000 | 281,903,000 |
Unrealized losses total | 51,309,000 | 3,580,000 |
U S Treasuries [Member] | ||
Fair value less than 12 months | 9,657,000 | 29,481,000 |
Unrealized losses less than 12 months | 362,000 | 365,000 |
Fair value more than 12 months | 26,987 | 0 |
Unrealized losses more than 12 months | 2,897 | 0 |
Fair value total | 36,644,000 | 29,481,000 |
Unrealized losses total | 3,259,000 | 365,000 |
U. S. Government Sponsored Enterprises [Member] | ||
Fair value less than 12 months | 13,914,000 | 93,714,000 |
Unrealized losses less than 12 months | 1,083,000 | 752,000 |
Fair value more than 12 months | 115,835 | 0 |
Unrealized losses more than 12 months | 12,642 | 0 |
Fair value total | 129,749,000 | 93,714,000 |
Unrealized losses total | 13,725 | 752 |
Securities issued by States and political subdivisions in the U.S. [Member] | ||
Fair value less than 12 months | 21,805,000 | 13,308,000 |
Unrealized losses less than 12 months | 1,426,000 | 147,000 |
Fair value more than 12 months | 18,710 | 0 |
Unrealized losses more than 12 months | 2,734 | 0 |
Fair value total | 40,515,000 | 13,308,000 |
Unrealized losses total | 4,160,000 | 147,000 |
Mortgage-backed obligations of federal agencies [Member] | ||
Fair value less than 12 months | 32,823,000 | 126,501,000 |
Unrealized losses less than 12 months | 2,429,000 | 1,871,000 |
Fair value more than 12 months | 119,892 | 10,074,000 |
Unrealized losses more than 12 months | 23,817 | 220,000 |
Fair value total | 152,715,000 | 136,575,000 |
Unrealized losses total | 26,246,000 | 2,091,000 |
Corporate debt security [Member] | ||
Fair value less than 12 months | 16,252,000 | 8,825,000 |
Unrealized losses less than 12 months | 2,198,000 | 225,000 |
Fair value more than 12 months | 10,379 | 0 |
Unrealized losses more than 12 months | 1,721 | 0 |
Fair value total | 26,631,000 | 8,825,000 |
Unrealized losses total | $ 3,919,000 | $ 225,000 |
SECURITIES (Details Narrative)
SECURITIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Available for sale securities fair value more than 12 months | $ 291,800 | $ 10,000 |
Aggregate Unrealised losses more than 12 months | 43,800 | 220 |
Other investments | 11,317 | $ 9,210 |
Federal Home Loan Bank [Member] | ||
Other investments | 3,600 | |
Twelve Low Income Housing [Member] | ||
Other investments | 5,900 | |
Three Low Income Housing [Member] | ||
Other investments | $ 796 |
Loans (Details)
Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Gross loans | $ 744,174 | $ 662,698 |
Less: Deferred loan fess, net of costs | (570) | (277) |
Loans outstanding | 743,604 | 662,421 |
Commercial Real Estate [Member] | ||
Loans outstanding | 195,163 | 163,564 |
Multi-Family [Member] | ||
Loans outstanding | 9,622 | 4,887 |
Real Estate [Member] | ||
Loans outstanding | 153,281 | 139,552 |
Credit Cards [Member] | ||
Loans outstanding | 3,242 | 3,000 |
Construction/Land Development [Member] | ||
Loans outstanding | 68,671 | 75,236 |
Farmland [Member] | ||
Loans outstanding | 74,322 | 66,344 |
Home Equity - Closed End [Member] | ||
Loans outstanding | 4,707 | 6,262 |
Home Equity - Open End [Member] | ||
Loans outstanding | 46,928 | 44,247 |
Commercial & Industrial - Non- Real Estate [Member] | ||
Loans outstanding | 56,625 | 44,224 |
Consumer [Member] | ||
Loans outstanding | 6,488 | 8,036 |
Dealers Finance [Member] | ||
Loans outstanding | $ 125,125 | $ 107,346 |
Loans (Details 1)
Loans (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | $ 675,000 | $ 582,000 |
Average recorded investment | 13,580,000 | 16,975,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 12,431,000 | 14,337,000 |
Recorded investment | 12,887,000 | 14,688,000 |
Impaired loans without a valuation allowance [Member] | Commercial Real Estate [Member] | ||
Interest income recognized | 393,000 | 253,000 |
Average recorded investment | 8,851,000 | 9,225,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 8,131,000 | 8,494,000 |
Recorded investment | 8,131,000 | 8,511,000 |
Impaired loans without a valuation allowance [Member] | Multi-Family [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Impaired loans without a valuation allowance [Member] | Real Estate [Member] | ||
Interest income recognized | 101,000 | 155,000 |
Average recorded investment | 2,107,000 | 4,575,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 1,882,000 | 2,748,000 |
Recorded investment | 1,882,000 | 2,748,000 |
Impaired loans without a valuation allowance [Member] | Credit Cards [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 148,000 | 226,000 |
Average recorded investment | 3,724,000 | 8,132,000 |
Related Allowance | 344,000 | 736,000 |
Unpaid principal balance | 2,934,000 | 7,271,000 |
Recorded investment | 2,934,000 | 7,271,000 |
Impaired loans With a valuation allowance [Member] | Commercial Real Estate [Member] | ||
Interest income recognized | 47,000 | 172,000 |
Average recorded investment | 1,935,000 | 6,201,000 |
Related Allowance | 11,000 | 603,000 |
Unpaid principal balance | 980,000 | 6,004,000 |
Recorded investment | 980,000 | 6,004,000 |
Impaired loans With a valuation allowance [Member] | Multi-Family [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Impaired loans With a valuation allowance [Member] | Real Estate [Member] | ||
Interest income recognized | 71,000 | 45,000 |
Average recorded investment | 1,466,000 | 1,399,000 |
Related Allowance | 92,000 | 119,000 |
Unpaid principal balance | 1,378,000 | 1,172,000 |
Recorded investment | 1,378,000 | 1,172,000 |
Impaired loans With a valuation allowance [Member] | Credit Cards [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Construction/Land Development [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 19,000 | 29,000 |
Average recorded investment | 474,000 | 984,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 332,000 | 645,000 |
Recorded investment | 332,000 | 645,000 |
Construction/Land Development [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 24 | 0 |
Average recorded investment | 261,000 | 0 |
Related Allowance | 228,000 | 0 |
Unpaid principal balance | 521,000 | 0 |
Recorded investment | 521,000 | 0 |
Farmland [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 161 | 126,000 |
Average recorded investment | 2,137 | 1,760,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 2,079,000 | 2,286,000 |
Recorded investment | 2,535,000 | 2,619,000 |
Home Equity - Close End [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 0 | 18,000 |
Average recorded investment | 0 | 414,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 147,000 |
Recorded investment | 0 | 148,000 |
Home Equity - Close End [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Home Equity Open End [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Home Equity Open End [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Commercial & Industrial (Non-Real Estate) | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 2,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Dealers Finance [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 1,000 | 1,000 |
Average recorded investment | 11,000 | 14,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 7,000 | 12,000 |
Recorded investment | 7,000 | 12,000 |
Dealers Finance [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 6,000 | 9,000 |
Average recorded investment | 62,000 | 112,000 |
Related Allowance | 13,000 | 14,000 |
Unpaid principal balance | 55,000 | 95,000 |
Recorded investment | 55,000 | 95,000 |
Consumer [Member] | Impaired loans without a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 1,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 5,000 |
Recorded investment | 0 | 5,000 |
Farmland [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 420,000 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Commercial & Industrial - Non- Real Estate [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Consumer [Member] | Impaired loans With a valuation allowance [Member] | ||
Interest income recognized | 0 | 0 |
Average recorded investment | 0 | 0 |
Related Allowance | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Recorded investment | 0 | 0 |
Total impaired loans [Member] | ||
Interest income recognized | 823,000 | 808,000 |
Unpaid principal balance | 15,365,000 | 21,608,000 |
Recorded investment | 15,821,000 | 21,959,000 |
Related allowance | 344,000 | 736,000 |
Average recorded investment | $ 17,304,000 | $ 25,107,000 |
Loans (Details 2)
Loans (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Less: Deferred aoan fees, net of costs, 30-59 days past due | $ 0 | $ 0 |
Less: Deferred aoan fees, net of costs, 60-89 days past due | 0 | 0 |
Less: Deferred aoan fees, net of costs, greater than 90 days | 0 | 0 |
Less: Deferred aoan fees, net of costs, total past due | 0 | 0 |
Less: Deferred aoan fees, net of costs, non accruel loans | 0 | 0 |
Less: Deferred aoan fees, net of costs, recorded investment greater than 90 days and accruing | 0 | 0 |
Less: Deferred aoan fees, net of costs, current | 570,000 | 277,000 |
Less: Deferred loan fees, net of costs, total loan receivable | 570,000 | 277,000 |
Total Past Due | 720,806,000 | 652,096,000 |
Total [Member] | ||
30-59 Days Past due | 4,292,000 | 2,892,000 |
60-89 Days Past due | 1,346,000 | 505,000 |
Greater than 90 Days | 427,000 | 600,000 |
Total Past Due | 6,065,000 | 3,997,000 |
Current | 737,539,000 | 658,424,000 |
Total Loan Receivable | 743,604,000 | 662,421,000 |
Non-Accrual Loans | 2,224,000 | 5,465,000 |
Recorded Investment >90 days & accruing | 38 | 43,000 |
Commercial Real Estate [Member] | ||
Total Past Due | 316,000 | 108,000 |
Current | 195,163,000 | 163,564,000 |
Non-Accrual Loans | 0 | 2,975,000 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 234,000 | 0 |
60-89 Days Past Due | 82 | 0 |
Greater than 90 Days | 0 | 108,000 |
Current | 194,847,000 | 163,456,000 |
Multi-Family [Member] | ||
Total Past Due | 0 | 0 |
Current | 9,622,000 | 4,887,000 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 0 | 0 |
60-89 Days Past Due | 0 | 0 |
Greater than 90 Days | 0 | 0 |
Current | 9,622,000 | 4,887,000 |
Real Estate [Member] | ||
Total Past Due | 2,193,000 | 1,738,000 |
Current | 153,281,000 | 139,552,000 |
Non-Accrual Loans | 419,000 | 827,000 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 1,825,000 | 1,254,000 |
60-89 Days Past Due | 282,000 | 89,000 |
Greater than 90 Days | 86,000 | 395,000 |
Current | 151,088,000 | 137,814,000 |
Credit Cards [Member] | ||
Total Past Due | 62,000 | 16,000 |
Current | 3,242,000 | 3,000,000 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment >90 days & accruing | 2 | 0 |
30-59 Days Past Due | 51,000 | 16,000 |
60-89 Days Past Due | 9 | 0 |
Greater than 90 Days | 2 | 0 |
Current | 3,180,000 | 2,984,000 |
Construction/Land Development [Member] | ||
Total Past Due | 1,037,000 | 439,000 |
Current | 68,671,000 | 75,236,000 |
Non-Accrual Loans | 21,000 | 302,000 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 477,000 | 360,000 |
60-89 Days Past Due | 539 | 41,000 |
Greater than 90 Days | 21 | 38,000 |
Current | 67,634,000 | 74,797,000 |
Farmland [Member] | ||
Total Past Due | 103 | 0 |
Current | 74,322,000 | 66,344,000 |
Non-Accrual Loans | 1,458,000 | 1,320,000 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 85 | 0 |
60-89 Days Past Due | 18 | 0 |
Greater than 90 Days | 0 | 0 |
Current | 74,219,000 | 66,344,000 |
Commercial & Industrial - Non- Real Estate [Member] | ||
Total Past Due | 208,000 | 79,000 |
Current | 56,625,000 | 44,224,000 |
Non-Accrual Loans | 101,000 | 0 |
Recorded Investment >90 days & accruing | 31 | 43,000 |
30-59 Days Past Due | 104,000 | 35,000 |
60-89 Days Past Due | 0 | 1,000 |
Greater than 90 Days | 104 | 43,000 |
Current | 56,417,000 | 44,145,000 |
Consumer [Member] | ||
Total Past Due | 37,000 | 76,000 |
Current | 6,488,000 | 8,036,000 |
Non-Accrual Loans | 15 | 1,000 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 11,000 | 9,000 |
60-89 Days Past Due | 11 | 67,000 |
Greater than 90 Days | 15 | 0 |
Current | 6,451,000 | 7,960,000 |
Dealers Finance [Member] | ||
Total Past Due | 1,544,000 | 801,000 |
Current | 125,125,000 | 107,346,000 |
Non-Accrual Loans | 210,000 | 40,000 |
Recorded Investment >90 days & accruing | 5 | 0 |
30-59 Days Past Due | 1,117,000 | 694,000 |
60-89 Days Past Due | 228,000 | 91,000 |
Greater than 90 Days | 199 | 16,000 |
Current | 123,581,000 | 106,545,000 |
Home Equity - Close End [Member] | ||
Total Past Due | 3,000 | 53,000 |
Current | 4,707,000 | 6,262,000 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 3,000 | 53,000 |
60-89 Days Past Due | 0 | 0 |
Greater than 90 Days | 0 | 0 |
Current | 4,704,000 | 6,209,000 |
Home Equity Open End [Member] | ||
Total Past Due | 562,000 | 687,000 |
Current | 46,928,000 | 44,247,000 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment >90 days & accruing | 0 | 0 |
30-59 Days Past Due | 385,000 | 471,000 |
60-89 Days Past Due | 177 | 216,000 |
Greater than 90 Days | 0 | 0 |
Current | $ 46,366,000 | $ 43,560,000 |
Loans (Details Narrative)
Loans (Details Narrative) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
LOANS | ||
Loans held for sale | $ 1.4 | $ 4.9 |
Pledged loans | $ 209.8 | $ 163.3 |
ALLOWANCE FOR LOAN LOSSES (Deta
ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Beginning Balance | $ 7,748,000 | $ 10,475,000 |
Charge-offs | 1,646,000 | 1,165 |
Recoveries | 968 | 1,259,000 |
Provision for Loan Losses | 866,000 | (2,821,000) |
Ending Balance | 7,936,000 | 7,748,000 |
Individually Evaluated for Impairment | 344 | 736 |
Collectively Evaluated for Impairment | 7,592,000 | 7,012,000 |
Commercial Real Estate [Member] | ||
Beginning Balance | 2,205,000 | 3,662,000 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 19,000 |
Provision for Loan Losses | (190,000) | (1,476,000) |
Ending Balance | 2,015,000 | 2,205,000 |
Individually Evaluated for Impairment | 11,000 | 603,000 |
Collectively Evaluated for Impairment | 2,004,000 | 1,602,000 |
Multi-Family [Member] | ||
Beginning Balance | 29,000 | 54,000 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for Loan Losses | 42,000 | (25,000) |
Ending Balance | 71,000 | 29,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 71,000 | 29,000 |
Real Estate [Member] | ||
Beginning Balance | 1,162,000 | 1,624,000 |
Charge-offs | 17,000 | 0 |
Recoveries | 0 | 76,000 |
Provision for Loan Losses | 243,000 | (538,000) |
Ending Balance | 1,388,000 | 1,162,000 |
Individually Evaluated for Impairment | 92,000 | 119,000 |
Collectively Evaluated for Impairment | 1,296,000 | 1,043,000 |
Credit Cards [Member] | ||
Beginning Balance | 70,000 | 79,000 |
Charge-offs | 66,000 | 54,000 |
Recoveries | 14,000 | 29,000 |
Provision for Loan Losses | 50,000 | 16,000 |
Ending Balance | 68,000 | 70,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 68,000 | 70,000 |
Construction/Land Development [Member] | ||
Beginning Balance | 977,000 | 1,249,000 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 307,000 |
Provision for Loan Losses | 41,000 | (579,000) |
Ending Balance | 1,018,000 | 977,000 |
Individually Evaluated for Impairment | 228 | 0 |
Collectively Evaluated for Impairment | 790,000 | 977,000 |
Farmland [Member] | ||
Beginning Balance | 448,000 | 731,000 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for Loan Losses | 122,000 | (283,000) |
Ending Balance | 570,000 | 448,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 570,000 | 448,000 |
Consumer [Member] | ||
Beginning Balance | 520,000 | 521,000 |
Charge-offs | 153,000 | 33,000 |
Recoveries | 84,000 | 24,000 |
Provision for Loan Losses | (370,000) | 8,000 |
Ending Balance | 81,000 | 520,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 81,000 | 520,000 |
Dealers Finance [Member] | ||
Beginning Balance | 1,601,000 | 1,674,000 |
Charge-offs | 1,280,000 | 1,038,000 |
Recoveries | 691,000 | 754,000 |
Provision for Loan Losses | 780,000 | 211,000 |
Ending Balance | 1,792,000 | 1,601,000 |
Individually Evaluated for Impairment | 13,000 | 14,000 |
Collectively Evaluated for Impairment | 1,779,000 | 1,587,000 |
Home Equity - Close End [Member] | ||
Beginning Balance | 41,000 | 55,000 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for Loan Losses | (3,000) | (14,000) |
Ending Balance | 38,000 | 41,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 38,000 | 41,000 |
Home Equity Open End [Member] | ||
Beginning Balance | 407,000 | 463,000 |
Charge-offs | 84,000 | 0 |
Recoveries | 130,000 | 13,000 |
Provision for Loan Losses | (8,000) | (69,000) |
Ending Balance | 445,000 | 407,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 445,000 | 407,000 |
Commercial & Industrial (Non-Real Estate) | ||
Beginning Balance | 288,000 | 363,000 |
Charge-offs | 46,000 | 40,000 |
Recoveries | 49,000 | 37,000 |
Provision for Loan Losses | 159,000 | (72,000) |
Ending Balance | 450,000 | 288,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | $ 450,000 | $ 288,000 |
ALLOWANCE FOR LOAN LOSSES (De_2
ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Commercial Real Estate [Member] | ||
Loan Receivable | $ 195,163,000 | $ 163,564,000 |
Loan Receivable | (195,163,000) | (163,564,000) |
Loan Individually Evaluated For Impairment | 9,111,000 | 14,498,000 |
Collectively Evaluated for Impairment | 186,052,000 | 149,066,000 |
Collectively Evaluated for Impairment | (186,052,000) | (149,066,000) |
Multi-Family [Member] | ||
Loan Receivable | 9,622,000 | 4,887,000 |
Loan Receivable | (9,622,000) | (4,887,000) |
Loan Individually Evaluated For Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 9,622,000 | 4,887,000 |
Collectively Evaluated for Impairment | (9,622,000) | (4,887,000) |
Real Estate [Member] | ||
Loan Receivable | 153,281,000 | 139,552,000 |
Loan Receivable | (153,281,000) | (139,552,000) |
Loan Individually Evaluated For Impairment | 3,260,000 | 3,920,000 |
Collectively Evaluated for Impairment | 150,021,000 | 135,632,000 |
Collectively Evaluated for Impairment | (150,021,000) | (135,632,000) |
Credit Cards [Member] | ||
Loan Receivable | 3,242,000 | 3,000,000 |
Loan Receivable | (3,242,000) | (3,000,000) |
Loan Individually Evaluated For Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 3,242,000 | 3,000,000 |
Collectively Evaluated for Impairment | (3,242,000) | (3,000,000) |
Construction/Land Development [Member] | ||
Loan Receivable | 68,671,000 | 75,236,000 |
Loan Receivable | (68,671,000) | (75,236,000) |
Loan Individually Evaluated For Impairment | 853,000 | 645,000 |
Collectively Evaluated for Impairment | 67,818,000 | 74,591,000 |
Collectively Evaluated for Impairment | (67,818,000) | (74,591,000) |
Farmland [Member] | ||
Loan Receivable | 74,322,000 | 66,344,000 |
Loan Receivable | (74,322,000) | (66,344,000) |
Loan Individually Evaluated For Impairment | 2,079,000 | 2,286,000 |
Collectively Evaluated for Impairment | 72,243,000 | 64,058,000 |
Collectively Evaluated for Impairment | (72,243,000) | (64,058,000) |
Consumer [Member] | ||
Loan Receivable | 6,488,000 | 8,036,000 |
Loan Receivable | (6,488,000) | (8,036,000) |
Loan Individually Evaluated For Impairment | 0 | 5,000 |
Collectively Evaluated for Impairment | 6,488,000 | 8,031,000 |
Collectively Evaluated for Impairment | (6,488,000) | (8,031,000) |
Dealers Finance [Member] | ||
Loan Receivable | 125,125,000 | 107,346,000 |
Loan Receivable | (125,125,000) | (107,346,000) |
Loan Individually Evaluated For Impairment | 62,000 | 107,000 |
Collectively Evaluated for Impairment | 125,063,000 | 107,239,000 |
Collectively Evaluated for Impairment | (125,063,000) | (107,239,000) |
Home Equity - Close End [Member] | ||
Loan Receivable | 4,707,000 | 6,262,000 |
Loan Receivable | (4,707,000) | (6,262,000) |
Loan Individually Evaluated For Impairment | 0 | 147,000 |
Collectively Evaluated for Impairment | 4,707,000 | 6,115,000 |
Collectively Evaluated for Impairment | (4,707,000) | (6,115,000) |
Home Equity Open End [Member] | ||
Loan Receivable | 46,928,000 | 44,247,000 |
Loan Receivable | (46,928,000) | (44,247,000) |
Loan Individually Evaluated For Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 46,928,000 | 44,247,000 |
Collectively Evaluated for Impairment | (46,928,000) | (44,247,000) |
Commercial & Industrial (Non-Real Estate) | ||
Loan Receivable | 56,625,000 | 44,224,000 |
Loan Receivable | (56,625,000) | (44,224,000) |
Loan Individually Evaluated For Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 56,625,000 | 44,224,000 |
Collectively Evaluated for Impairment | (56,625,000) | (44,224,000) |
Total Loan [Member] | ||
Loan Receivable | 743,604,000 | 662,421,000 |
Loan Receivable | (743,604,000) | (662,421,000) |
Loan Individually Evaluated For Impairment | 15,365 | 21,608 |
Collectively Evaluated for Impairment | 728,239,000 | 640,813,000 |
Collectively Evaluated for Impairment | (728,239,000) | (640,813,000) |
Gross Loan [Member] | ||
Loan Receivable | 744,174,000 | 662,698,000 |
Loan Receivable | (744,174,000) | (662,698,000) |
Loan Individually Evaluated For Impairment | 15,365 | 21,608 |
Collectively Evaluated for Impairment | 728,809,000 | 641,090,000 |
Collectively Evaluated for Impairment | (728,809,000) | (641,090,000) |
Less: Deferred Loan Fees Net Of Costs [Member] | ||
Loan Receivable | 570,000 | 277,000 |
Loan Receivable | (570,000) | (277,000) |
Loan Individually Evaluated For Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 570,000 | 277,000 |
Collectively Evaluated for Impairment | $ (570,000) | $ (277,000) |
ALLOWANCE FOR LOAN LOSSES (De_3
ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Commercial Real Estate [Member] | ||
Grade 1 Minimal Risk | $ 0 | $ 0 |
Grade 1 Minimal Risk | 0 | 0 |
Grade 2 Modest Risk | 3,097,000 | 2,124,000 |
Grade 3 Average Risk | 55,662,000 | 36,308,000 |
Grade 4 Acceptable Risk | 72,779,000 | 72,414,000 |
Grade 5 Marginally Acceptable | 41,749,000 | 35,444,000 |
Grade 6 Watch | 13,878,000 | 4,428,000 |
Grade 7 Substandard | 7,998,000 | 12,846,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 195,163,000 | 163,564,000 |
Multi-Family [Member] | ||
Grade 1 Minimal Risk | 0 | 0 |
Grade 1 Minimal Risk | 0 | 0 |
Grade 2 Modest Risk | 0 | 0 |
Grade 3 Average Risk | 963,000 | 1,021,000 |
Grade 4 Acceptable Risk | 5,116,000 | 2,586,000 |
Grade 5 Marginally Acceptable | 3,430,000 | 1,154,000 |
Grade 6 Watch | 113 | 126,000 |
Grade 7 Substandard | 0 | 0 |
Grade 8 Doubtful | 0 | 0 |
Total | 9,622,000 | 4,887,000 |
Real Estate [Member] | ||
Grade 1 Minimal Risk | 0 | 0 |
Grade 1 Minimal Risk | 0 | 0 |
Grade 2 Modest Risk | 553,000 | 1,128,000 |
Grade 3 Average Risk | 27,003,000 | 30,268,000 |
Grade 4 Acceptable Risk | 86,269,000 | 61,940,000 |
Grade 5 Marginally Acceptable | 28,560,000 | 28,895,000 |
Grade 6 Watch | 6,950,000 | 12,462,000 |
Grade 7 Substandard | 3,946,000 | 4,859,000 |
Total | 153,281,000 | 139,552,000 |
Grade 8 Doubtful | 0 | 0 |
Credit Cards [Member] | ||
Total | 3,242,000 | 3,000,000 |
Non-performing | 2 | 0 |
Performing | 3,240,000 | 3,000,000 |
Construction/Land Development [Member] | ||
Grade 1 Minimal Risk | 0 | 0 |
Grade 1 Minimal Risk | 0 | 0 |
Grade 2 Modest Risk | 4,000 | 6,000 |
Grade 3 Average Risk | 11,112,000 | 9,952,000 |
Grade 4 Acceptable Risk | 42,684,000 | 43,861,000 |
Grade 5 Marginally Acceptable | 13,116,000 | 19,457,000 |
Grade 6 Watch | 1,213,000 | 1,658,000 |
Grade 7 Substandard | 542,000 | 302,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 68,671,000 | 75,236,000 |
Farmland [Member] | ||
Grade 1 Minimal Risk | (155,000) | (56,000) |
Grade 1 Minimal Risk | 155,000 | 56,000 |
Grade 2 Modest Risk | 269,000 | 291,000 |
Grade 3 Average Risk | 11,373,000 | 6,804,000 |
Grade 4 Acceptable Risk | 38,051,000 | 42,615,000 |
Grade 5 Marginally Acceptable | 22,069,000 | 13,620,000 |
Grade 6 Watch | 947,000 | 1,638,000 |
Grade 7 Substandard | 1,458,000 | 1,320,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 74,322,000 | 66,344,000 |
Consumer [Member] | ||
Grade 1 Minimal Risk | (33) | (10,000) |
Grade 1 Minimal Risk | 33 | 10,000 |
Grade 2 Modest Risk | 286,000 | 522,000 |
Grade 3 Average Risk | 2,965,000 | 2,919,000 |
Grade 4 Acceptable Risk | 3,105,000 | 3,526,000 |
Grade 5 Marginally Acceptable | 68,000 | 980,000 |
Grade 6 Watch | 16,000 | 79,000 |
Grade 7 Substandard | 15 | 0 |
Grade 8 Doubtful | 0 | 0 |
Total | 6,488,000 | 8,036,000 |
Dealers Finance [Member] | ||
Total | 125,125,000 | 107,346,000 |
Non-performing | 215,000 | 16,000 |
Performing | 124,910,000 | 107,330,000 |
Home Equity - Close End [Member] | ||
Grade 1 Minimal Risk | 0 | 0 |
Grade 1 Minimal Risk | 0 | 0 |
Grade 2 Modest Risk | 48,000 | 61,000 |
Grade 3 Average Risk | 1,065,000 | 1,268,000 |
Grade 4 Acceptable Risk | 2,560,000 | 3,103,000 |
Grade 5 Marginally Acceptable | 639,000 | 762,000 |
Grade 6 Watch | 382,000 | 1,068,000 |
Grade 7 Substandard | 13,000 | 0 |
Grade 8 Doubtful | 0 | 0 |
Total | 4,707,000 | 6,262,000 |
Home Equity Open End [Member] | ||
Grade 1 Minimal Risk | (27) | 0 |
Grade 1 Minimal Risk | 27 | 0 |
Grade 2 Modest Risk | 1,272,000 | 1,293,000 |
Grade 3 Average Risk | 18,671,000 | 17,333,000 |
Grade 4 Acceptable Risk | 23,207,000 | 21,296,000 |
Grade 5 Marginally Acceptable | 2,091,000 | 2,477,000 |
Grade 6 Watch | 1,611,000 | 1,632,000 |
Grade 7 Substandard | 49,000 | 216,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 46,928,000 | 44,247,000 |
Commercial & Industrial (Non-Real Estate) | ||
Grade 1 Minimal Risk | (10,000) | 0 |
Grade 1 Minimal Risk | 10,000 | 0 |
Grade 2 Modest Risk | 516,000 | 1,001,000 |
Grade 3 Average Risk | 12,934,000 | 7,562,000 |
Grade 4 Acceptable Risk | 26,310,000 | 21,527,000 |
Grade 5 Marginally Acceptable | 15,613,000 | 13,538,000 |
Grade 6 Watch | 911,000 | 533,000 |
Grade 7 Substandard | 331,000 | 63,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 56,625,000 | 44,224,000 |
Gross Loan [Member] | ||
Grade 1 Minimal Risk | (225,000) | (66,000) |
Grade 1 Minimal Risk | 225,000 | 66,000 |
Grade 2 Modest Risk | 6,045,000 | 6,426,000 |
Grade 3 Average Risk | 141,748,000 | 113,435,000 |
Grade 4 Acceptable Risk | 300,081,000 | 272,868,000 |
Grade 5 Marginally Acceptable | 127,335,000 | 116,327,000 |
Grade 6 Watch | 26,021,000 | 23,624,000 |
Grade 7 Substandard | 14,352,000 | 19,606,000 |
Grade 8 Doubtful | 0 | 0 |
Total | 615,807,000 | 552,352,000 |
Less: Deferred Loan Fees Net Of Costs [Member] | ||
Grade 1 Minimal Risk | (570,000) | (277,000) |
Grade 1 Minimal Risk | 570,000 | 277,000 |
Total | $ 615,237,000 | $ 552,075,000 |
Troubled Debt Restructuring (De
Troubled Debt Restructuring (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) integer | Dec. 31, 2021 USD ($) integer | |
Total [Member] | ||
Number Of Contracts | integer | 4 | 3 |
Pre-modification Outstanding Recorded Investment | $ 206 | $ 1,080 |
Post-modification Outstanding Recorded Investment | $ 206 | $ 1,080 |
Extended maturity [Member] | ||
Number Of Contracts | integer | 3 | |
Pre-modification Outstanding Recorded Investment | $ 44 | |
Post-modification Outstanding Recorded Investment | $ 44 | |
Change in terms [Member] | ||
Number Of Contracts | integer | 1 | 3 |
Pre-modification Outstanding Recorded Investment | $ 162 | $ 1,080 |
Post-modification Outstanding Recorded Investment | $ 162 | $ 1,080 |
BANK PREMISES AND EQUIPMENT (De
BANK PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
BANK PREMISES AND EQUIPMENT | ||
Land | $ 4,115 | $ 4,115 |
Buildings and improvements | 16,040 | 15,956 |
Furniture and equipment | 13,483 | 10,052 |
Gross | 33,638 | 30,123 |
Less - accumulated depreciation | (14,051) | (13,060) |
Net | $ 19,587 | $ 17,063 |
BANK PREMISES AND EQUIPMENT (_2
BANK PREMISES AND EQUIPMENT (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
BANK PREMISES AND EQUIPMENT | ||
Provisions for depreciation | $ 1.1 | $ 1.2 |
OTHER REAL ESTATE OWNED (Detail
OTHER REAL ESTATE OWNED (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
OTHER REAL ESTATE OWNED | |
Beginning balance | $ 0 |
Loans transferred to OREO | 197 |
Sale of OREO | (138) |
Write down of OREO or losses on sale | (59) |
Ending balance | $ 0 |
OTHER REAL ESTATE OWNED (Deta_2
OTHER REAL ESTATE OWNED (Details 1) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
OTHER REAL ESTATE OWNED | |
Beginning balance | $ 0 |
Provision charged to expense | 0 |
Reductions from sales of real estate owned | 0 |
Ending balance | $ 0 |
OTHER REAL ESTATE OWNED (Deta_3
OTHER REAL ESTATE OWNED (Details 2) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
OTHER REAL ESTATE OWNED | |
Net loss (gain) on sales | $ 59 |
(Income) expenses related to foreclosed assets | $ 59 |
OTHER REAL ESTATE OWNED (Deta_4
OTHER REAL ESTATE OWNED (Details Narrative) $ in Thousands | Dec. 31, 2022 USD ($) |
OTHER REAL ESTATE OWNED | |
Foreclosed residential real estate properties | $ 82 |
DEPOSITS (Details)
DEPOSITS (Details) | Dec. 31, 2022 USD ($) |
DEPOSITS | |
2027 | $ 2,898,000 |
2023 | 67,295,000 |
2024 | 31,265,000 |
2025 | 12,979,000 |
2026 | 4,755,000 |
Thereafter | 0 |
Total | $ 119,192,000 |
DEPOSITS (Details Narrative)
DEPOSITS (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
DEPOSITS | ||
Insurance limit | $ 250,000 | $ 250,000 |
Time deposits | $ 12,700,000 | $ 12,400,000 |
SHORTTERM DEBT (Details)
SHORTTERM DEBT (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Outstanding at year end | $ 70,000 |
Average balance outstanding | $ 26,124 |
Year end interest rate | 2.82% |
Federal funds purchased | |
Highest month end balance | $ 1,989 |
Outstanding at year end | 0 |
Average balance outstanding | $ 883 |
Year end interest rate | 2.99% |
FHLB short term | |
Highest month end balance | $ 70,000 |
Outstanding at year end | 70,000 |
Average balance outstanding | $ 25,241 |
Year end interest rate | 2.81% |
SHORTTERM DEBT (Details Narrati
SHORTTERM DEBT (Details Narrative) $ in Millions | Dec. 31, 2022 USD ($) |
SHORT-TERM DEBT | |
Lines of credit with correspondent banks | $ 90 |
Debt | $ 70 |
LONGTERM DEBT (Details Narrativ
LONGTERM DEBT (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | ||
Jul. 29, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Balance of obligations | $ 0 | $ 10 | |
Subordinated notes, net of issuance costs | 6.9 | $ 11.8 | |
Weighted average cost | 0.81% | ||
letter of credit | $ 15 | ||
2027 Notes [Member] | Accredited Investor [Member] | |||
Principal amount | $ 5 | ||
Interest rate description | The 2027 Notes bear interest at 5.75% per annum, payable semi-annually in arrears | ||
Maturity date | Jul. 31, 2027 | ||
Interest rate | 5.75% | ||
2030 Notes [Member] | Accredited Investor [Member] | |||
Principal amount | $ 7 | ||
Interest rate description | The 2030 Notes bear interest at 6.00% per annum, beginning July 29, 2020 to but excluding July 31, 2025, payable semi-annually in arrears. From and including July 31, 2025 through July 30, 2030, or up to an early redemption date, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 593 basis points, payable quarterly in arrears. Beginning on July 31, 2025 through maturity, the 2030 Notes may be redeemed, at the Company’s option, on any scheduled interest payment date | ||
Maturity date | Jul. 31, 2030 | ||
Interest rate | 6% |
INCOME TAX EXPENSE (Details)
INCOME TAX EXPENSE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAX EXPENSE | ||
Current expense | $ 571 | $ 847 |
Deferred expense (benefit) | (91) | 476 |
Total income tax expense | $ 480 | $ 1,323 |
INCOME TAX EXPENSE (Details 1)
INCOME TAX EXPENSE (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets: | ||
Allowance for loan losses | $ 1,667,000 | $ 1,627,000 |
Split dollar life insurance | 3,000 | 3,000 |
Nonqualified deferred compensation | 580,000 | 757,000 |
Low income housing partnerships losses | 375,000 | 326,000 |
Core deposit amortization | 29,000 | 29,000 |
SBA fees | 0 | 47 |
Lease Liability | 170,000 | 172,000 |
Unfunded pension benefit obligation | 0 | 875,000 |
VSTitle income | 0 | 2 |
Assets available for sale | 0 | 32 |
Prepaid pension | 45 | 0 |
Unvested restricted stock | 19 | 0 |
Net unrealized loss on securities available for sale | 10,753 | 479,000 |
Total Assets | 13,641,000 | 4,349 |
Deferred Tax Liabilities: | ||
Unearned low income housing credits | 34,000 | 63,000 |
Depreciation | 506,000 | 567,000 |
Prepaid pension | 0 | 114,000 |
Unfunded pension benefit obligations | 117,000 | 0 |
Goodwill tax amortization | 583,000 | 576,000 |
Right of Use Asset | 165,000 | 149,000 |
Total liabilities | 1,405,000 | 1,469,000 |
Net deferred tax asset (included in other assets on Balance Sheet) | $ 12,236,000 | $ 2,880,000 |
INCOME TAX EXPENSE (Details 2)
INCOME TAX EXPENSE (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAX EXPENSE | ||
Tax expense at federal statutory rates | $ 1,848 | $ 2,533 |
Increases (decreases) in taxes resulting from: | ||
Tax-exempt income | (228) | (172) |
LIH and historic credits | (868) | (913) |
Other | (272) | (125) |
Total Income Tax Expense (Benefit) | $ 480 | $ 1,323 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Change in Benefit Obligation | ||
Benefit obligation, beginning | $ 15,557,000 | $ 15,456,000 |
Service cost | 759,000 | 862,000 |
Interest cost | 415,000 | 379,000 |
Actuarial loss | (5,421) | 0 |
Benefits paid | (1,145,000) | (1,140,000) |
Decrease in Obligation due to Curtailment | (2,154) | 0 |
Benefit obligation, ending | 8,011,000 | 15,557,000 |
Change in Plan Assets | ||
Fair value of plan assets, beginning | 11,235 | 11,201 |
Actual return on plan assets | (2,303,000) | 1,174,000 |
Benefits paid | (1,145,000) | (1,140,000) |
Fair value of plan assets, ending | 7,787 | 11,235 |
Funded status at the end of the year | $ (224,000) | $ (4,322,000) |
EMPLOYEE BENEFITS (Details 1)
EMPLOYEE BENEFITS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Amount recognized in the Consolidated Balance Sheet | ||
Prepaid benefit cost | $ (780,000) | $ (156,000) |
Over funded (unfunded) pension benefit obligation under ASC 325-960 | 556,000 | (4,166,000) |
Deferred taxes | (995,000) | 875,000 |
Amount recognized in accumulated other comprehensive income (loss) | ||
Net income (loss) | 556,000 | (4,166,000) |
Prior service cost | 0 | 0 |
Amount recognized | 556,000 | (4,166,000) |
Deferred taxes | (117,000) | 875,000 |
Amount recognized in accumulated comprehensive (loss) | (439,000) | (3,291,000) |
Accrued benefit detail | ||
Benefit obligation | (8,011,000) | (15,557,000) |
Fair value of assets | 7,787,000 | 11,235,000 |
Unrecognized net actuarial loss | (556,000) | 4,166,000 |
Accrued benefits | (780,000) | (156,000) |
Components of net periodic benefit cost Comprehensive income (loss) | ||
Service cost | 758,000 | 862,000 |
Interest cost | 415,000 | 379,000 |
Expected return on plan assets | (781,000) | (791,000) |
Recognized net actuarial loss | 232,000 | 289,000 |
Net periodic benefit cost | 624,000 | 739,000 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) | ||
Net gain | (4,722,000) | (671,000) |
Amortization of prior service cost | 0 | 0 |
Total recognized in other comprehensive income | (4,722,000) | (671,000) |
Total recognized in net periodic benefit cost and other | (4,098,000) | 67,000 |
Additional disclosure information | ||
Accumulated benefit obligation | 8,011,000 | 11,473,000 |
Vested benefit obligation | $ 8,011,000 | $ 11,473,000 |
Discount rate used for net pension cost | 2.75% | 2.50% |
Discount rate used for disclosure | 5% | 2.75% |
Expected return on plan assets | 7.25% | 7.25% |
Rate of compensation increase | 3% | 3% |
Average remaining service (years) | 10 years 10 months 20 days | 11 years 3 months 3 days |
EMPLOYEE BENEFITS (Details 2)
EMPLOYEE BENEFITS (Details 2) | Dec. 31, 2022 USD ($) |
EMPLOYEE BENEFITS | |
2023 | $ 1,252,000 |
2024 | 48 |
2025 | 548,000 |
2026 | 998,000 |
2027 | 1,223,000 |
2028-2032 | 2,587,000 |
Total | $ 6,656,000 |
EMPLOYEE BENEFITS (Details 3)
EMPLOYEE BENEFITS (Details 3) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
EMPLOYEE BENEFITS | |
Nonvested at December 31, 2021 | shares | 15,869 |
Granted | shares | 18,908 |
Vested | shares | (5,265) |
Forfeited | shares | (3,056) |
Nonvested at December 31, 2021 | shares | 26,456 |
Date Fair Value Per Share, Nonvested at December 31, 2020 | $ / shares | $ 26.78 |
Date Fair Value Per Share, Granted | $ / shares | 30.85 |
Date Fair Value Per Share, Vested | $ / shares | 27.72 |
Date Fair Value Per Share, Forfeited | $ / shares | 29.05 |
Date Fair Value Per Share, Nonvested at December 31, 2022 | $ / shares | $ 29.24 |
EMPLOYEE BENEFITS (Details Narr
EMPLOYEE BENEFITS (Details Narrative) - USD ($) shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contributions under employee benefit plan - 401K Plan | $ 475,000 | $ 444,000 |
Accrued liability | $ 3,400,000 | $ 3,900,000 |
Common stock shares authorized | 200,000 | |
Fair value shares, amount | $ 526,000 | |
Net periodic pension cost | $ 150,000 | |
Stock shares | 23,556 | |
Allocation pension plan, percentage equity | 39% | 61% |
Allocation pension plan, percentage fixed | 38% | 62% |
Shares held by ESOP | 170,905 | 158,905 |
Shares awarded to directors | $ 1,309 | |
Fair value | $ 29,000 | |
Description of employee benefit plan - 401(K) Plan | The Company sponsors a 401(k) savings plan under which eligible employees may choose to save up to 20 percent of their salary on a pretax basis, subject to certain IRS limits. Under the Federal Safe Harbor rules employees are automatically enrolled at 3% (this increases by 1% per year up to 6%) of their salary unless elected otherwise. The Company matches one hundred percent of the first 1% contributed by the employee and fifty percent from 2% to 6% of employee contributions. Vesting in the contributions made by the Company is 100% after two years of service | |
ESOP contributions | $ 400,000 | $ 472,000 |
Unrecognized compensation cost | $ 193,000 | 86,000 |
Restricted Stock [Member] | ||
Allocation pension plan, percentage equity | 25% | |
Unrecognized compensation cost | $ 580,000 | 338,000 |
Deferred Compensation Plan | ||
Contributions to employee benefit plan - deferred compensation plan | 187,000 | 125,000 |
BOLI [Member] | ||
Accrued liability | $ 729,000 | $ 669,000 |
CONCENTRATIONS OF CREDIT (Detai
CONCENTRATIONS OF CREDIT (Details Narrative) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
CONCENTRATIONS OF CREDIT | ||
Cash, FDIC Insured Amount | $ 4.6 | $ 3.9 |
COMMITMENTS (Details)
COMMITMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and contingencies | ||
Commitments to extend credit | $ 265,976 | $ 257,229 |
Standby letters of credit | $ 2,696 | $ 2,818 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | ||
Notional amount | $ 0 | $ 7 |
Fair market value of contracts | $ 0 | $ 3 |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Mortgage loan | $ 1,400 | |
Notional amount | 0 | $ 7 |
Interest Rate Lock Commitments [Member] | ||
Fair value of these derivative instruments | $ 186 | |
No. of positions | 43 | |
Notional amount | $ 13,600 | 23,700 |
Other Assets [Member] | ||
Fair value of IRLC | $ 258 | |
Fair value of these derivative instruments | $ 92 | |
No. of positions | 38 | 70 |
Notional amount | $ 12,200 | $ 18,800 |
Other Assets [Member] | Forward Sales Commitments [Member] | ||
Fair value of these derivative instruments | $ 112 | |
No. of positions | 91 |
TRANSACTIONS WITH RELATED PAR_3
TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
TRANSACTIONS WITH RELATED PARTIES | ||
Total loans, beginning of year | $ 23,379 | $ 22,685 |
New loans | 5,073 | 6,506 |
Relationship change | (75) | (98) |
Repayments | (5,950) | (5,714) |
Total loans, end of year | $ 22,427 | $ 23,379 |
TRANSACTIONS WITH RELATED PAR_4
TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
TRANSACTIONS WITH RELATED PARTIES | ||
Deposits of executive officers, directors and their affiliates | $ 9.2 | $ 8.8 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Loans held for sale | $ 1,373 | $ 4,887 |
IRLC | 92 | 258 |
U.S Treasury securities | 36,643 | 29,482 |
U. S. Government sponsored enterprises | 129,748 | 133,714 |
Securities issued by States and political subdivisions in the U. S. | 42,198 | 34,337 |
Mortgage-backed obligations of federal agencies | 156,875 | 183,647 |
Corporate debt securities | 26,631 | 22,702 |
Forward sales commitments | 186 | 112 |
Assets at Fair Value | 393,654 | 409,139 |
Derivatives ICD | 3 | |
Total fair value of liabilities | 92 | 3 |
Fair Value Inputs Level 2 | ||
Loans held for sale | 1,373 | 4,887 |
IRLC | 92 | 258 |
U.S Treasury securities | 36,643 | 29,482 |
U. S. Government sponsored enterprises | 129,748 | 133,714 |
Securities issued by States and political subdivisions in the U. S. | 42,198 | 34,337 |
Mortgage-backed obligations of federal agencies | 156,875 | 183,647 |
Corporate debt securities | 26,631 | 22,702 |
Forward sales commitments | 186 | 112 |
Assets at Fair Value | 393,654 | 409,139 |
Derivatives ICD | 3 | |
Total fair value of liabilities | 92 | 3 |
Fair Value Inputs Level 1 | ||
Loans held for sale | 0 | 0 |
IRLC | 0 | 0 |
U.S Treasury securities | 0 | 0 |
U. S. Government sponsored enterprises | 0 | 0 |
Securities issued by States and political subdivisions in the U. S. | 0 | 0 |
Mortgage-backed obligations of federal agencies | 0 | 0 |
Corporate debt securities | 0 | 0 |
Forward sales commitments | 0 | 0 |
Assets at Fair Value | 0 | 0 |
Derivatives ICD | 0 | |
Total fair value of liabilities | 0 | 0 |
Fair Value Inputs Level 3 | ||
Loans held for sale | 0 | 0 |
IRLC | 0 | 0 |
U.S Treasury securities | 0 | 0 |
U. S. Government sponsored enterprises | 0 | 0 |
Securities issued by States and political subdivisions in the U. S. | 0 | 0 |
Mortgage-backed obligations of federal agencies | 0 | 0 |
Corporate debt securities | 0 | 0 |
Forward sales commitments | 0 | 0 |
Assets at Fair Value | 0 | 0 |
Derivatives ICD | 0 | |
Total fair value of liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value Inputs Level 2 | ||
Impaired loans | $ 0 | $ 0 |
Fair Value Inputs Level 1 | ||
Impaired loans | 0 | 0 |
Fair Value Inputs Level 3 | ||
Impaired loans | 2,590,000 | 6,535,000 |
Impaired loans08 | 6,535,000 | |
Commercial Real Estate [Member] | ||
Impaired loans | 969,000 | 5,401,000 |
Commercial Real Estate [Member] | Fair Value Inputs Level 2 | ||
Impaired loans | 0 | 0 |
Commercial Real Estate [Member] | Fair Value Inputs Level 1 | ||
Impaired loans | 0 | 0 |
Commercial Real Estate [Member] | Fair Value Inputs Level 3 | ||
Impaired loans | 969,000 | 5,401,000 |
Real Estate [Member] | ||
Impaired loans | 1,286,000 | 1,053,000 |
Real Estate [Member] | Fair Value Inputs Level 2 | ||
Impaired loans | 0 | 0 |
Real Estate [Member] | Fair Value Inputs Level 1 | ||
Impaired loans | 0 | 0 |
Real Estate [Member] | Fair Value Inputs Level 3 | ||
Impaired loans | 1,286,000 | 1,053,000 |
Impaired loans | ||
Impaired loans | 2,590,000 | 6,535,000 |
Construction/Land Development [Member] | ||
Impaired loans | 293,000 | |
Construction/Land Development [Member] | Fair Value Inputs Level 2 | ||
Impaired loans | 0 | |
Construction/Land Development [Member] | Fair Value Inputs Level 1 | ||
Impaired loans | 0 | |
Construction/Land Development [Member] | Fair Value Inputs Level 3 | ||
Impaired loans | 293,000 | |
Dealers Finance [Member] | ||
Impaired loans | 42,000 | 81,000 |
Dealers Finance [Member] | Fair Value Inputs Level 2 | ||
Impaired loans | 0 | 0 |
Dealers Finance [Member] | Fair Value Inputs Level 1 | ||
Impaired loans | 0 | 0 |
Dealers Finance [Member] | Fair Value Inputs Level 3 | ||
Impaired loans | 42,000 | 81,000 |
Bank Premises Held For Sale [Member] | ||
Impaired loans | 0 | 300,000 |
Bank Premises Held For Sale [Member] | Fair Value Inputs Level 2 | ||
Impaired loans | 0 | 0 |
Bank Premises Held For Sale [Member] | Fair Value Inputs Level 1 | ||
Impaired loans | 0 | 0 |
Bank Premises Held For Sale [Member] | Fair Value Inputs Level 3 | ||
Impaired loans | $ 0 | $ 300,000 |
FAIR VALUE MEASUREMENTS (Deta_3
FAIR VALUE MEASUREMENTS (Details 2) - Fair Value Inputs Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Valuation technique other real estate owned | Discounted appraised value | Discounted appraised value |
Significant unobservable inputs lmpaired loans | Discount for selling costs and marketability | Discount for selling costs and marketability |
Average impaired loans | 19% | 17.31% |
Impaired loans | $ 2,590 | $ 6,535 |
Minimum [Member] | ||
Range impaired loans | 10% | 11.76% |
Maximum [Member] | ||
Range impaired loans | 33% | 28% |
FAIR VALUE MEASUREMENTS (Deta_4
FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Cash and cash equivalents | $ 34,953 | $ 88,121 |
Securities | 392,220 | 404,007 |
Loans held for sale | 1,373 | 4,887 |
IRLC | 92 | 258 |
Loans held for investment, net | 720,806 | 652,096 |
Interest receivable | 3,995 | 3,117 |
Bank owned life insurance | 23,554 | 22,878 |
Forward sales commitments | 186 | 112 |
Total Assets | 1,177,087 | 1,175,476 |
Deposits | 1,080,909 | 1,092,322 |
Short-term debt | 70,000 | |
Long-term debt | 6,778 | 22,443 |
Interest payable | 295 | 491 |
Total liabilities | 1,158,074 | 1,115,256 |
Carrying Amount [Member] | ||
Cash and cash equivalents | 34,953 | 88,121 |
Securities | 392,220 | 404,007 |
Loans held for sale | 1,373 | 4,887 |
IRLC | 92 | 258 |
Loans held for investment, net | 743,604 | 662,421 |
Interest receivable | 3,995 | 3,117 |
Bank owned life insurance | 23,554 | 22,878 |
Forward sales commitments | 186 | 112 |
Total Assets | 1,199,885 | 1,185,801 |
Deposits | 1,083,377 | 1,080,295 |
Short-term debt | 70,000 | |
Long-term debt | 6,890 | 21,772 |
Interest payable | 295 | 491 |
Total liabilities | 1,160,654 | 1,102,558 |
Fair Value Inputs Level 2 | ||
Cash and cash equivalents | 0 | 0 |
Securities | 392,220 | 404,007 |
Loans held for sale | 1,373 | 4,887 |
IRLC | 92 | 258 |
Loans held for investment, net | 0 | 0 |
Interest receivable | 3,995 | 3,117 |
Bank owned life insurance | 23,554 | 22,878 |
Forward sales commitments | 186 | 112 |
Total Assets | 421,328 | 435,259 |
Deposits | 1,080,909 | 968,604 |
Short-term debt | 0 | |
Long-term debt | 0 | 0 |
Interest payable | 295 | 491 |
Total liabilities | 1,081,296 | 969,095 |
Fair Value Inputs Level 1 | ||
Cash and cash equivalents | 34,953 | 88,121 |
Securities | 0 | 0 |
Loans held for sale | 0 | 0 |
IRLC | 0 | 0 |
Loans held for investment, net | 0 | 0 |
Interest receivable | 0 | 0 |
Bank owned life insurance | 0 | 0 |
Forward sales commitments | 0 | 0 |
Total Assets | 34,953 | 88,121 |
Deposits | 0 | 0 |
Short-term debt | 0 | |
Long-term debt | 0 | 0 |
Interest payable | 0 | 0 |
Total liabilities | 0 | 0 |
Fair Value Inputs Level 3 | ||
Cash and cash equivalents | 0 | 0 |
Securities | 0 | 0 |
Loans held for sale | 0 | 0 |
IRLC | 0 | 0 |
Loans held for investment, net | 720,806 | 652,096 |
Interest receivable | 0 | 0 |
Bank owned life insurance | 0 | 0 |
Forward sales commitments | 0 | 0 |
Total Assets | 720,806 | 652,096 |
Deposits | 0 | 123,718 |
Short-term debt | 70,000 | |
Long-term debt | 6,778 | 22,443 |
Interest payable | 0 | 0 |
Total liabilities | $ 76,778 | $ 146,161 |
DIVIDEND LIMITATIONS ON SUBSI_2
DIVIDEND LIMITATIONS ON SUBSIDIARY BANK (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Dividends paid | $ 6 | $ 2.2 |
January One Two Thousand Twenty Two [Member] | ||
Available for dividend distribution | $ 18.9 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total risk-based ratio | ||
Bank actual capital amount | $ 114,455 | $ 111,389 |
Bank actual capital ratio | 13.64% | 15% |
Minimum capital requirement amount | $ 67,124 | $ 59,425 |
Minimum capital requirement ratio | 8% | 8% |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 83,905 | $ 74,282 |
Minimum to be well capitalized under prompt corrective action provisions ratio | 10% | 10% |
Tier 1 risk-based ratio | ||
Bank actual capital amount | $ 106,519 | $ 103,641 |
Bank actual capital ratio | 12.70% | 13.95% |
Minimum capital requirement amount | $ 50,343 | $ 44,569 |
Minimum capital requirement ratio | 6% | 6% |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 67,124 | $ 59,425 |
Minimum to be well capitalized under prompt corrective action provisions ratio | 8% | 8% |
Common equity tier 1 | ||
Bank actual capital amount | $ 106,519 | $ 103,641 |
Bank actual capital ratio | 12.70% | 13.95% |
Minimum capital requirement amount | $ 37,757 | $ 33,427 |
Minimum capital requirement ratio | 4.50% | 4.50% |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 54,538 | $ 48,283 |
Minimum to be well capitalized under prompt corrective action provisions ratio | 6.50% | 6.50% |
Tier 1 leverage ratio | ||
Bank actual capital amount | $ 106,519 | $ 103,641 |
Bank actual capital ratio | 8.22% | 8.62% |
Minimum capital requirement amount | $ 51,842 | $ 48,100 |
Minimum capital requirement ratio | 4% | 4% |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 64,802 | $ 60,125 |
Minimum to be well capitalized under prompt corrective action provisions ratio | 5% | 5% |
REGULATORY MATTERS (Details Nar
REGULATORY MATTERS (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
REGULATORY MATTERS | |
Description of conservation buffers | Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer requirement is 2.50%. The Company’s capital conservation buffer for 2022 was 5.64% and for 2021 was 7.00% |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Interest Income | $ 34,939 | $ 31,274 |
Service charges on deposits | 1,062 | 1,133 |
Mortgage banking income, net | 1,834 | 4,646 |
Title insurance income | 1,578 | 2,074 |
Interest Expense | 7,245 | 4,302 |
Interest Expense | (7,245) | (4,302) |
Salaries and benefits | 15,439 | 14,102 |
Income tax expense (benefit) | 480 | 1,323 |
Net income | 8,318 | 10,738 |
Net Income attributable to F & M Bank Corp. | 8,318 | 10,738 |
Total assets | 1,245,902 | 1,219,342 |
Goodwill | 3,082 | 3,082 |
F&M Bank | ||
Interest Income | 42,066 | 35,414 |
Service charges on deposits | 1,062 | 1,133 |
Investment services and insurance income | 0 | 0 |
Mortgage banking income, net | 0 | 0 |
Title insurance income | 0 | 0 |
Net investment securities losses | (2,852) | |
Gain on sale of limited partnership investment | 0 | |
Other operating income | 3,343 | 2,499 |
Total income | 43,619 | 39,046 |
Interest Expense | 6,567 | 3,591 |
Interest Expense | (6,567) | (3,591) |
Provision for loan losses | 866 | (2,800) |
Salaries and benefits | 15,897 | 14,392 |
Other operating expenses | 14,375 | 13,510 |
Total expense | 37,705 | 28,693 |
Income before income taxes | 5,914 | 10,353 |
Income tax expense (benefit) | (229) | 1,266 |
Net income | 6,143 | |
Net Income attributable to F & M Bank Corp. | 9,087 | |
Total assets | 1,250,185 | 1,227,059 |
Goodwill | 2,868 | 2,868 |
F&M Mortgage | ||
Interest Income | 106 | 198 |
Service charges on deposits | 0 | 0 |
Investment services and insurance income | 0 | 0 |
Mortgage banking income, net | 2,595 | 4,646 |
Title insurance income | 0 | 0 |
Gain on sale of limited partnership investment | 0 | |
Other operating income | 1 | 134 |
Total income | 2,702 | 4,978 |
Interest Expense | 35 | 123 |
Interest Expense | (35) | (123) |
Provision for loan losses | 0 | 0 |
Salaries and benefits | 2,430 | 2,501 |
Other operating expenses | 884 | 893 |
Total expense | 3,349 | 3,517 |
Income before income taxes | (647) | 1,461 |
Income tax expense (benefit) | 0 | 0 |
Net income | (647) | |
Net Income attributable to F & M Bank Corp. | 1,461 | |
Total assets | 9,878 | 10,334 |
Goodwill | 0 | 47 |
TEB Life/FMFS | ||
Interest Income | 34 | 107 |
Service charges on deposits | 0 | 0 |
Investment services and insurance income | 894 | 953 |
Mortgage banking income, net | 0 | 0 |
Title insurance income | 0 | 0 |
Gain on sale of limited partnership investment | 3,785 | |
Other operating income | 0 | 0 |
Total income | 4,713 | 1,060 |
Interest Expense | 0 | 0 |
Interest Expense | 0 | 0 |
Provision for loan losses | 0 | (21) |
Salaries and benefits | 456 | 369 |
Other operating expenses | 66 | 51 |
Total expense | 522 | 399 |
Income before income taxes | 4,191 | 661 |
Income tax expense (benefit) | 881 | 134 |
Net income | 3,310 | |
Net Income attributable to F & M Bank Corp. | 527 | |
Total assets | 3,897 | 8,803 |
Goodwill | 0 | 0 |
VS Title | ||
Interest Income | 0 | 0 |
Service charges on deposits | 0 | 0 |
Investment services and insurance income | 0 | 0 |
Mortgage banking income, net | 0 | 0 |
Title insurance income | 1,578 | 2,074 |
Gain on sale of limited partnership investment | 0 | |
Other operating income | 0 | 0 |
Total income | 1,578 | 2,074 |
Interest Expense | 0 | 0 |
Interest Expense | 0 | 0 |
Provision for loan losses | 0 | 0 |
Salaries and benefits | 1,249 | 1,225 |
Other operating expenses | 326 | 327 |
Total expense | 1,575 | 1,552 |
Income before income taxes | 3 | 522 |
Income tax expense (benefit) | 0 | 0 |
Net income | 3 | |
Net Income attributable to F & M Bank Corp. | 522 | |
Total assets | 3,298 | 3,135 |
Goodwill | 3 | 3 |
Parent Only [Member] | ||
Interest Income | 46 | 1 |
Service charges on deposits | 0 | 0 |
Investment services and insurance income | 0 | 0 |
Mortgage banking income, net | 0 | 0 |
Title insurance income | 0 | 0 |
Gain on sale of limited partnership investment | 0 | |
Other operating income | 0 | 124 |
Total income | 46 | (123) |
Interest Expense | 711 | 732 |
Interest Expense | (711) | (732) |
Provision for loan losses | 0 | 0 |
Salaries and benefits | 0 | 0 |
Other operating expenses | (2) | 81 |
Total expense | 709 | 813 |
Income before income taxes | (663) | (936) |
Income tax expense (benefit) | (172) | (77) |
Net income | (491) | |
Net Income attributable to F & M Bank Corp. | (859) | |
Total assets | 77,994 | 112,586 |
Goodwill | 211 | 164 |
Eliminations | ||
Interest Income | (68) | (144) |
Service charges on deposits | 0 | 0 |
Investment services and insurance income | (11) | (9) |
Mortgage banking income, net | (761) | 0 |
Title insurance income | 0 | 0 |
Gain on sale of limited partnership investment | 0 | |
Other operating income | 0 | 0 |
Total income | (840) | (153) |
Interest Expense | 68 | 144 |
Interest Expense | (68) | (144) |
Provision for loan losses | 0 | 0 |
Salaries and benefits | 0 | 0 |
Other operating expenses | (772) | (9) |
Total expense | (840) | (153) |
Income before income taxes | 0 | 0 |
Income tax expense (benefit) | 0 | 0 |
Net income | 0 | |
Net Income attributable to F & M Bank Corp. | 0 | |
Total assets | 99,350 | 142,575 |
Goodwill | 0 | 0 |
F&M Bank Corp Consolidated | ||
Interest Income | 42,184 | 35,576 |
Service charges on deposits | 1,062 | 1,133 |
Investment services and insurance income | 883 | 944 |
Mortgage banking income, net | 1,834 | 4,646 |
Title insurance income | 1,578 | 2,074 |
Net investment securities losses | (2,852) | |
Gain on sale of limited partnership investment | 3,785 | |
Other operating income | 3,344 | 2,509 |
Total income | 51,818 | 46,882 |
Interest Expense | 7,245 | 4,302 |
Interest Expense | (7,245) | (4,302) |
Provision for loan losses | 866 | (2,821) |
Salaries and benefits | 20,032 | 18,487 |
Other operating expenses | 14,877 | 14,853 |
Total expense | 43,020 | 34,821 |
Income before income taxes | 8,798 | 12,061 |
Income tax expense (benefit) | 480 | 1,323 |
Net income | 8,318 | |
Net Income attributable to F & M Bank Corp. | 10,738 | |
Total assets | 1,245,902 | 1,219,342 |
Goodwill | $ 3,082 | $ 3,082 |
PARENT COMPANY ONLY FINANCIAL_2
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Cash and cash equivalents | $ 34,953,000 | $ 88,121,000 | |
Income tax receivable (including due from subsidiary) | 0 | 2 | |
Total Assets | 1,245,902,000 | 1,219,342,000 | |
Total liabilities | 1,175,110,000 | 1,118,886,000 | |
Common stock | 17,149,000 | 17,071,000 | |
Retained earnings | 83,078,000 | 78,350,000 | |
Accumulated other comprehensive loss | (40,012,000) | (5,092,000) | |
Total Stockholders' Equity | 70,792,000 | 100,456,000 | $ 95,629,000 |
Total Liabilities and Stockholders' Equity | 1,245,902,000 | 1,219,342,000 | |
Parent Company Only [Member] | |||
Other investments | 355,000 | 135,000 | |
Cash and cash equivalents | 6,747,000 | 8,824,000 | |
Investment in subsidiaries | 71,093,000 | 102,808,000 | |
Income tax receivable (including due from subsidiary) | 0 | 463,000 | |
Goodwill and intangibles | 258,000 | 190,000 | |
Receivable from subsidiary bank | 0 | 149 | |
Total Assets | 78,453,000 | 112,569,000 | |
Deferred income taxes | 24,000 | 47,000 | |
Accrued interest | 178,000 | 294,000 | |
Income taxes payable | 54 | 0 | |
Long-term liability | 6,890,000 | 11,772,000 | |
Payable to subsidiary bank | 515 | 0 | |
Total liabilities | 7,661,000 | 12,113,000 | |
Common stock | 17,149,000 | 17,071,000 | |
Additional paid in capital | 10,577,000 | 10,127,000 | |
Retained earnings | 83,078,000 | 78,350,000 | |
Accumulated other comprehensive loss | (40,012,000) | (5,092,000) | |
Total Stockholders' Equity | 70,792,000 | 100,456,000 | |
Total Liabilities and Stockholders' Equity | $ 78,453,000 | $ 112,569,000 |
PARENT COMPANY ONLY FINANCIAL_3
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax (Benefit) Expense | $ 480,000 | $ 1,323,000 |
Net income | 8,318,000 | 10,738,000 |
Parent Only [Member] | ||
Dividends from affiliate | 6,000,000 | 2,232,000 |
Other income | 49 | 1,000 |
Total income | 6,049,000 | 2,233,000 |
Total expenses | 711,000 | 812,000 |
Net income before income tax expense and undistributed subsidiary net income | 5,338,000 | 1,421,000 |
Income Tax (Benefit) Expense | (172,000) | (77,000) |
Income before undistributed subsidiary Net income | 5,510,000 | 1,498,000 |
Net income attributable to non-controlling interest | (2,808,000) | (9,240,000) |
Net income | $ 8,318,000 | $ 10,738,000 |
PARENT COMPANY ONLY FINANCIAL_4
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net income | $ 8,318,000 | $ 10,738,000 |
Share based compensation expense | 193,000 | 86,000 |
Net cash provided by operating activities | 39,888,000 | 21,281,000 |
Net Cash Used in Investing Activities | (147,883,000) | (243,700,000) |
Repurchase of preferred stock | 0 | (627,000) |
Proceeds from issuance of common stock | 279,000 | 263,000 |
Net Cash Provided by (Used in) Financing Activities | 54,827,000 | 232,132,000 |
Cash and Cash Equivalents, Beginning of Year | 88,121,000 | |
Cash and Cash Equivalents, End of Year | 34,953,000 | 88,121,000 |
Parent Only [Member] | ||
Net income | 8,318,000 | 10,738,000 |
Undistributed (distributed) subsidiary income (loss) | (2,808,000) | (9,240,000) |
Deferred tax expense (benefit) | (420,000) | (35,000) |
Increase (decrease) in other assets | 544,000 | (409,000) |
Increase in other liabilities | 453,000 | 19,000 |
Long-term debt fee amortization | 118,000 | 32,000 |
Share based compensation expense | 193 | 86 |
Net cash provided by operating activities | 6,398,000 | 1,191,000 |
Purchase of minority interest | (220) | 0 |
Net Cash Used in Investing Activities | (220) | 0 |
Proceeds from long-term debt | (5,000) | 0 |
Repurchase of preferred stock | 0 | (627) |
Proceeds from the sale of common stock | 279 | 263 |
Proceeds from issuance of common stock | 56,000 | 35 |
Dividends paid in cash | (3,590,000) | (3,593,000) |
Net Cash Provided by (Used in) Financing Activities | (8,255,000) | (3,922,000) |
Net increase (decrease) in Cash and Cash Equivalents | (2,077,000) | (2,731,000) |
Cash and Cash Equivalents, Beginning of Year | 8,824,000 | 11,555 |
Cash and Cash Equivalents, End of Year | $ 6,747,000 | $ 8,824,000 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Unrealized Securities Gains Losses [Member] | ||
Beginning balance | $ (1,801) | $ 804 |
Change in unrealized securities gains (losses), net of tax benefit of $803 | (40,903) | (3,020) |
Change in unfunded pension liability, net of tax of $141 | 0 | 0 |
Reclassification for previously unrealized net losses realized in income, net of tax benefit of $110 | 2,253 | 415 |
Ending balance | (40,451) | (1,801) |
Adjustments Related to Pension Plan | ||
Beginning balance | (3,291) | (3,821) |
Change in unrealized securities gains (losses), net of tax benefit of $803 | 0 | 0 |
Change in unfunded pension liability, net of tax of $141 | 3,730 | 530 |
Reclassification for previously unrealized net losses realized in income, net of tax benefit of $110 | 0 | 0 |
Ending balance | 439 | (3,291) |
Accumulated Other comprehensive Income (Loss) | ||
Beginning balance | (5,092) | (3,017) |
Change in unrealized securities gains (losses), net of tax | (40,903) | (3,020) |
Change in unfunded pension liability, net of tax of $141 | 3,730 | 530 |
Reclassification for previously unrealized net losses realized in income, net of tax benefit of $110 | 2,253 | 415 |
Ending balance | $ (40,012) | $ (5,092) |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Total noninterest income | $ 9,634 | $ 11,306 |
Service Charges on Deposits | ||
Total noninterest income | 1,062 | 1,133 |
Investment Services and Insurance Income | ||
Total noninterest income | 883 | 944 |
Title Insurance Income | ||
Total noninterest income | 1,578 | 2,074 |
ATM and check card fees | ||
Total noninterest income | 2,462 | 2,311 |
Other | ||
Total noninterest income | 814 | 807 |
Noninterest Income (in-scope of Topic 606) | ||
Total noninterest income | 2,835 | 4,037 |
Noninterest Income (out-of-scope of Topic 606) | ||
Total noninterest income | $ 6,799 | $ 7,269 |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | |
Lease liabilities | $ 886 | ||
Long-Term Lease Agreements [Member] | |||
Lease liabilities | 886,000 | $ 957,000 | |
Right-of-use assets | $ 861,000 | $ 937,000 | |
Weighted average discount rate | 3.22% | 3.01% | |
Weighted average remaining lease term | 2 years 6 months 14 days | 3 years 4 months 13 days | |
Operating lease cost | $ 151,000 | $ 121,000 | |
Total lease cost | 151,000 | 121,000 | |
Cash paid for amounts included in the measurement of lease liabilities | $ 177,000 | $ 145,000 |
LEASES (Details 1)
LEASES (Details 1) | Dec. 31, 2022 USD ($) |
LEASES | |
Twelve months ending December 31, 2027 | $ 56,000 |
Twelve months ending December 31, 2023 | 162,000 |
Twelve months ending December 31, 2024 | 177,000 |
Twelve months ending December 31, 2025 | 121,000 |
Twelve months ending December 31, 2026 | 70,000 |
Thereafter | 463,000 |
Total undiscounted cash flows | 1,049,000 |
Discount | (163,000) |
Lease Liabilites | $ 886 |