RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2023

Restatement of Previously Issued Consolidated Financial Statements

Restatement of Previously Issued Consolidated Financial Statements

27. Restatement of Previously Issued Consolidated Financial Statements

In connection with the preparation of the Company's unaudited condensed consolidated financial statements for the three months ended March 31, 2024, the Company identified an error related to the Company’s capitalization of costs, which should have been expensed in the period incurred, and identified a disclosure error related to the reported amount for the minimum requirement for capital adequacy purposes.  

Because the correction of the capitalized expenditures misstatement is material to the Previously Issued Consolidated Financial Statements, the Company has restated its Consolidated Statements of Financial Condition, Consolidated Statements of Stockholders' Equity, Consolidated Statements of Cash Flows and Notes 13, 14 and 26 as of and for the years ended December 31, 2023 and 2022. The Company restated its Consolidated Statements of Income, Consolidated Statements of Comprehensive Loss and Note 15 for the year ended December 31, 2022, and the Consolidated Statements of Financial Condition and Consolidated Statements of Stockholders’ Equity as of and for the periods ended September 30, 2023, June 30, 2023 and March 31, 2023.  

The impact of the correction of the misstatements is summarized in the tables below.

Corrected Consolidated Statements of Financial Condition

(Dollars in thousands)	Year ended December 31, 2023						Year ended December 31, 2022
	As Previously						As Previously
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated
Deferred tax asset	$	11,319	$	—	$	11,319	$	11,838	$	130	$	11,968
Accrued interest receivable and other assets		6,444		(1,256)		5,188		5,576		(1,386)		4,190
Total assets		871,811		(1,256)		870,555		830,875		(1,256)		829,619
Retained earnings		52,553		(1,256)		51,297		51,217		(1,256)		49,961
Total stockholders' equity		41,393		(1,256)		40,137		36,949		(1,256)		35,693
Total liabilities and stockholders' equity		871,811		(1,256)		870,555		830,875		(1,256)		829,619

Corrected Consolidated Statements of Income

(Dollars in thousands, except share data)	Year ended December 31, 2022
	As Previously
	Reported		Adjustment		As Restated
Professional fees	$	800	$	1,590	$	2,390
Total non-interest expense		19,941		1,590		21,531
Income before income taxes		8,962		(1,590)		7,372
Income tax provision		642		(334)		308
Net Income		8,320		(1,256)		7,064
Earnings per share, basic		1.66		(0.25)		1.41
Earnings per share, diluted		1.66		(0.25)		1.41

Corrected Consolidated Statements of Comprehensive Loss

(Dollars in thousands)	Year ended December 31, 2022
	As Previously
	Reported		Adjustment		As Restated
Net income	$	8,320	$	(1,256)	$	7,064
Total comprehensive loss		(30,182)		(1,256)		(31,438)

Corrected Consolidated Statements of Stockholders' Equity

(Dollars in thousands)	Year ended December 31, 2023
	As Previously
	Reported		Adjustment		As Restated
Balance, January 1, 2023	$	36,949	$	(1,256)	$	35,693
Cumulative effect of change in accounting principle		(854)		—		(854)
Net income		6,596		—		6,596
Other comprehensive income		3,227		—		3,227
Cash dividends at $0.88 per share		(4,406)		—		(4,406)
Stock-based compensation		143		—		143
Purchase of treasury stock		(324)		—		(324)
Treasury stock issued for stock plans		62		—		62
Balance, December 31, 2023	$	41,393	$	(1,256)	$	40,137

Corrected Consolidated Statements of Stockholders' Equity (continued)

(Dollars in thousands)	Year ended December 31, 2022
	As Previously
	Reported		Adjustment		As Restated
Balance, January 1, 2022	$	71,290	$	—	$	71,290
Net income		8,320		(1,256)		7,064
Other comprehensive loss		(38,502)		—		(38,502)
Cash dividends at $0.88 per share		(4,401)		—		(4,401)
Stock-based compensation		176		—		176
Purchase of treasury stock		(3)		—		(3)
Treasury stock issued for stock plans		69		—		69
Balance, December 31, 2022	$	36,949	$	(1,256)	$	35,693

Corrected Consolidated Statements of Cash Flows

(Dollars in thousands)	Year ended December 31, 2023						Year ended December 31, 2022
	As Previously						As Previously
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated
Net income	$	6,596	$	—	$	6,596	$	8,320	$	(1,256)	$	7,064
Deferred income tax (benefit) expense		(161)		130		(31)		129		(130)		(1)
Increase in accrued interest receivable and other assets		(1,098)		(130)		(1,228)		(1,753)		1,386		(367)

Corrected Income Tax Footnote, Note 13

(Dollars in thousands)	Year ended December 31, 2023									Year ended December 31, 2022
	As Previously									As Previously
	Reported			Adjustment			As Restated			Reported			Adjustment			As Restated
Tax credit carryforward	$	—		$	—		$	—		$	—		$	130		$	130
Total deferred tax assets		12,713			—			12,713			13,261			130			13,391
Net deferred tax asset		11,319			—			11,319			11,838			130			11,968
Current tax expense		1,131			(130)			1,001			513			(204)			309
Deferred tax (benefit) expense		(161)			130			(31)			129			(130)			(1)
Income before income taxes		7,566			—			7,566			8,962			(1,590)			7,372
Federal tax at statutory rate		1,589			—			1,589			1,882			(334)			1,548
Total tax provision		970			—			970			642			(334)			308
Effective tax rate		12.8	%		—	%		12.8	%		7.2	%		(3.0)	%		4.2	%

Corrected Capital Ratios, Note 14

(Dollars in thousands)	Actual Amount						Actual Ratio
	As Previously						As Previously
Year ended December 31, 2023	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated
Total Capital (to Risk Weighted Assets)	$	74,982	$	(1,256)	$	73,726	12.68	%	(0.18)	%	12.50	%
Tier 1 Capital (to Risk Weighted Assets)		69,305		(1,256)		68,049	11.72	%	(0.19)	%	11.53	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		69,305		(1,256)		68,049	11.72	%	(0.19)	%	11.53	%
Tier 1 Capital (to Average Assets) Leverage		69,305		(1,256)		68,049	8.17	%	(0.13)	%	8.04	%
Year ended December 31, 2022
Total Capital (to Risk Weighted Assets)	$	73,143	$	(1,256)	$	71,887	13.01	%	(0.20)	%	12.81	%
Tier 1 Capital (to Risk Weighted Assets)		69,116		(1,256)		67,860	12.29	%	(0.19)	%	12.10	%
Common Equity Tier 1 Capital (to Risk Weighted Assets)		69,116		(1,256)		67,860	12.29	%	(0.19)	%	12.10	%
Tier 1 Capital (to Average Assets) Leverage		69,116		(1,256)		67,860	8.48	%	(0.15)	%	8.33	%

							Minimum Regulatory
							Requirements Amount to be
	Minimum Amount Required for						Minimum Amount Required for
(Dollars in thousands)	Capital Adequacy Purposes						Capital Adequacy Purposes
	As Previously						As Previously
Year ended December 31, 2023	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated
Total Capital (to Risk Weighted Assets)	$	47,297	$	(101)	$	47,196	$	59,121	$	(126)	$	58,995
Tier 1 Capital (to Risk Weighted Assets)		35,473		(76)		35,397		47,297		(101)		47,196
Common Equity Tier 1 Capital (to Risk Weighted Assets)		26,604		(56)		26,548		38,429		(82)		38,347
Tier 1 Capital (to Average Assets) Leverage		33,926		(50)		33,876		42,408		(63)		42,345
Year ended December 31, 2022
Total Capital (to Risk Weighted Assets) (1)	$	59,040	$	(14,158)	$	44,882	$	56,229	$	(126)	$	56,103
Tier 1 Capital (to Risk Weighted Assets) (1)		47,794		(14,132)		33,662		44,983		(101)		44,882
Common Equity Tier 1 Capital (to Risk Weighted Assets) (1)		39,360		(14,114)		25,246		36,549		(82)		36,467

(1) Includes an adjustment for Total Capital, Tier 1 Capital and Common Equity Tier 1 Capital of $101, $76 and $56, respectively, related to the restatement of Retained Earnings and an adjustment of $14,057, $14,056 and $14,058, respectively, related to the elimination of the capital conservation buffer from the Minimum Amount Required for Capital Adequacy Purposes ratio.

Corrected Parent Company Statements, Note 26

Corrected Parent Company Only Consolidated Balance Sheets

(Dollars in thousands)	Year ended December 31, 2023						Year ended December 31, 2022
	As Previously						As Previously
	Reported		Adjustment		As Restated		Reported		Adjustment		As Restated
Investment in bank subsidiary	$	40,368	$	(1,256)	$	39,112	$	35,961	$	(1,256)	$	34,705
Total assets		41,436		(1,256)		40,180		36,977		(1,256)		35,721
Stockholders' equity		41,393		(1,256)		40,137		36,949		(1,256)		35,693
Total liabilities and stockholders' equity		41,436		(1,256)		40,180		36,977		(1,256)		35,721

Corrected Parent Company Only Condensed Statements of Income and Comprehensive Loss

(Dollars in thousands)	Year ended December 31, 2022
	As Previously
	Reported		Adjustment		As Restated
Undistributed net income of subsidiary	$	4,022	$	(1,256)	$	2,766
Net income		8,320		(1,256)		7,064
Total comprehensive loss		(30,182)		(1,256)		(31,438)

Corrected Parent Company Only Condensed Statements of Cash Flows

(Dollars in thousands)	Year ended December 31, 2022
	As Previously
	Reported		Adjustment		As Restated
Net income	$	8,320	$	(1,256)	$	7,064
Undistributed net income of subsidiary		(4,022)		1,256		(2,766)

All referenced amounts for prior periods in these financial statements and the notes herein reflect the balances and amounts on a restated basis.

Restatement of Interim Financial Information (Unaudited)

The Company has restated its unaudited Consolidated Statements of Financial Condition and Consolidated Statements of Stockholders’ Equity as of March 31, 2023, June 30, 2023 and September 30, 2023. The restated impact of the correction of the misstatements is summarized below.

Corrected Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except share data)	March 31, 2023
ASSETS	As Reported		Adjustments		Restated
Cash and due from banks	$	11,681	$	—	$	11,681
Interest bearing deposits with banks		222		—		222
Cash and cash equivalents		11,903		—		11,903
Equity securities		1,033		—		1,033
Debt securities available for sale		72,485		—		72,485
Debt securities held to maturity (fair value $209,376)		207,637		—		207,637
Restricted investment in bank stock		3,318		—		3,318
Total loans		488,497		—		488,497
Less: Allowance for credit losses		(5,374)		—		(5,374)
Total loans, net of allowance for credit losses		483,123		—		483,123
Premises and equipment, net		8,092		—		8,092
Bank owned life insurance and annuities		15,259		—		15,259
Investment in low income housing partnerships		1,395		—		1,395
Core deposit and other intangible assets		110		—		110
Goodwill		9,047		—		9,047
Mortgage servicing rights		90		—		90
Deferred tax asset		12,122		—		12,122
Accrued interest receivable and other assets		6,023		(1,256)		4,767
Total assets	$	831,637	$	(1,256)	$	830,381
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	200,044	$	—	$	200,044
Interest bearing		524,214		—		524,214
Total deposits		724,258		—		724,258
Short-term borrowings and repurchase agreements		42,822		—		42,822
Long-term debt		20,000		—		20,000
Other interest bearing liabilities		986		—		986
Accrued interest payable and other liabilities		6,042		—		6,042
Total liabilities		794,108		—		794,108
Commitments and contingent liabilities
Stockholders’ Equity:
Preferred stock, no par value: Authorized - 500,000 shares, none issued		—		—		—
Common stock, par value $1.00 per share: Authorized 20,000,000 shares; Issued - 5,151,279 shares at March 31, 2023; Outstanding - 5,013,899 shares at March 31, 2023		5,151		—		5,151
Surplus		24,823		—		24,823
Retained earnings		50,995		(1,256)		49,739
Accumulated other comprehensive loss		(41,088)		—		(41,088)
Cost of common stock in Treasury: 137,380 shares at March 31, 2023		(2,352)		—		(2,352)
Total stockholders’ equity		37,529		(1,256)		36,273
Total liabilities and stockholders’ equity	$	831,637	$	(1,256)	$	830,381

Corrected Consolidated Statements of Financial Condition (Unaudited) (continued)

(Dollars in thousands, except share data)	June 30, 2023
ASSETS	As Reported		Adjustments		Restated
Cash and due from banks	$	14,383	$	—	$	14,383
Interest bearing deposits with banks		190		—		190
Cash and cash equivalents		14,573		—		14,573
Equity securities		992		—		992
Debt securities available for sale		69,098		—		69,098
Debt securities held to maturity (fair value $202,266)		205,208		—		205,208
Restricted investment in bank stock		2,483		—		2,483
Total loans		505,184		—		505,184
Less: Allowance for credit losses		(5,442)		—		(5,442)
Total loans, net of allowance for credit losses		499,742		—		499,742
Premises and equipment, net		8,211		—		8,211
Bank owned life insurance and annuities		14,712		—		14,712
Investment in low income housing partnerships		1,315		—		1,315
Core deposit and other intangible assets		393		—		393
Goodwill		9,871		—		9,871
Mortgage servicing rights		87		—		87
Deferred tax asset		12,112		—		12,112
Accrued interest receivable and other assets		6,664		(1,256)		5,408
Total assets	$	845,461	$	(1,256)	$	844,205
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	195,300	$	—	$	195,300
Interest bearing		544,677		—		544,677
Total deposits		739,977		—		739,977
Short-term borrowings and repurchase agreements		41,827		—		41,827
Long-term debt		20,000		—		20,000
Other interest bearing liabilities		1,006		—		1,006
Accrued interest payable and other liabilities		5,650		—		5,650
Total liabilities		808,460		—		808,460
Commitments and contingent liabilities
Stockholders’ Equity:
Preferred stock, no par value: Authorized - 500,000 shares, none issued		—		—		—
Common stock, par value $1.00 per share: Authorized 20,000,000 shares; Issued - 5,151,279 shares at June 30, 2023; Outstanding - 5,018,129 shares at June 30, 2023		5,151		—		5,151
Surplus		24,852		—		24,852
Retained earnings		51,291		(1,256)		50,035
Accumulated other comprehensive loss		(42,013)		—		(42,013)
Cost of common stock in Treasury: 133,150 shares at June 30, 2023		(2,280)		—		(2,280)
Total stockholders’ equity		37,001		(1,256)		35,745
Total liabilities and stockholders’ equity	$	845,461	$	(1,256)	$	844,205

Corrected Consolidated Statements of Financial Condition (Unaudited) (continued)

(Dollars in thousands, except share data)	September 30, 2023
ASSETS	As Reported		Adjustments		Restated
Cash and due from banks	$	27,377	$	—	$	27,377
Interest bearing deposits with banks		390		—		390
Cash and cash equivalents		27,767		—		27,767
Equity securities		978		—		978
Debt securities available for sale		66,527		—		66,527
Debt securities held to maturity (fair value $189,221)		202,646		—		202,646
Restricted investment in bank stock		2,476		—		2,476
Total loans		514,132		—		514,132
Less: Allowance for credit losses		(5,586)		—		(5,586)
Total loans, net of allowance for credit losses		508,546		—		508,546
Premises and equipment, net		8,131		—		8,131
Other real estate owned		39		—		39
Bank owned life insurance and annuities		14,783		—		14,783
Investment in low income housing partnerships		1,234		—		1,234
Core deposit and other intangible assets		368		—		368
Goodwill		9,812		—		9,812
Mortgage servicing rights		84		—		84
Deferred tax asset		12,099		—		12,099
Accrued interest receivable and other assets		7,178		(1,256)		5,922
Total assets	$	862,668	$	(1,256)	$	861,412
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	200,619	$	—	$	200,619
Interest bearing		556,823		—		556,823
Total deposits		757,442		—		757,442
Short-term borrowings and repurchase agreements		39,638		—		39,638
Long-term debt		20,000		—		20,000
Other interest bearing liabilities		941		—		941
Accrued interest payable and other liabilities		6,512		—		6,512
Total liabilities		824,533		—		824,533
Commitments and contingent liabilities
Stockholders’ Equity:
Preferred stock, no par value: Authorized - 500,000 shares, none issued		—		—		—
Common stock, par value $1.00 per share: Authorized 20,000,000 shares; Issued - 5,151,279 shares at September 30, 2023; Outstanding - 5,018,129 shares at September 30, 2023		5,151		—		5,151
Surplus		24,887		—		24,887
Retained earnings		51,978		(1,256)		50,722
Accumulated other comprehensive loss		(41,601)		—		(41,601)
Cost of common stock in Treasury: 133,150 shares at September 30, 2023		(2,280)		—		(2,280)
Total stockholders’ equity		38,135		(1,256)		36,879
Total liabilities and stockholders’ equity	$	862,668	$	(1,256)	$	861,412

Corrected Consolidated Statements of Stockholders’ Equity (Unaudited) (As Reported)

	Nine months ended September 30, 2023
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income (Loss)		Stock		Equity
Balance, January 1, 2023 (As Reported)	5,003,059	$	5,151	$	24,986	$	51,217	$	(41,867)	$	(2,538)		36,949
Cumulative change in accounting principle (Note 2)							(854)						(854)
Net income							1,733						1,733
Other comprehensive income									779				779
Cash dividends at $0.22 per share							(1,101)						(1,101)
Stock-based compensation					32								32
Purchase of treasury stock	(569)										(9)		(9)
Treasury stock issued for stock plans	11,409				(195)						195		—
Balance, March 31, 2023 (As Reported)	5,013,899	$	5,151	$	24,823	$	50,995	$	(41,088)	$	(2,352)	$	37,529
Net income							1,398						1,398
Other comprehensive loss									(925)				(925)
Cash dividends at $0.22 per share							(1,102)						(1,102)
Stock-based compensation					39								39
Purchase of treasury stock													—
Treasury stock issued for stock plans	4,230				(10)						72		62
Balance, June 30, 2023 (As Reported)	5,018,129	$	5,151	$	24,852	$	51,291	$	(42,013)	$	(2,280)	$	37,001
Net income							1,791						1,791
Other comprehensive income									412				412
Cash dividends at $0.22 per share							(1,104)						(1,104)
Stock-based compensation					35								35
Purchase of treasury stock													—
Treasury stock issued for stock plans													—
Balance, September 30, 2023 (As Reported)	5,018,129	$	5,151	$	24,887	$	51,978	$	(41,601)	$	(2,280)	$	38,135

Corrected Consolidated Statements of Stockholders’ Equity (Unaudited) (Adjustments)

	Nine months ended September 30, 2023
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income (Loss)		Stock		Equity
Balance, January 1, 2023 (Adjustment)	—	$	—	$	—	$	(1,256)	$	—	$	—	$	(1,256)
Balance, March 31, 2023 (Adjustment)	—	$	—	$	—	$	(1,256)	$	—	$	—	$	(1,256)
Balance, June 30, 2023 (Adjustment)	—	$	—	$	—	$	(1,256)	$	—	$	—	$	(1,256)
Balance, September 30, 2023 (Adjustment)	—	$	—	$	—	$	(1,256)	$	—	$	—	$	(1,256)

Corrected Consolidated Statements of Stockholders’ Equity (Unaudited) (As Restated)

	Nine months ended September 30, 2023
								Accumulated
(Dollars in thousands, except share data)	Number							Other				Total
	of Shares	Common				Retained		Comprehensive		Treasury		Stockholders’
	Outstanding	Stock		Surplus		Earnings		Income (Loss)		Stock		Equity
Balance, January 1, 2023 (As Restated)	5,003,059	$	5,151	$	24,986	$	49,961	$	(41,867)	$	(2,538)		35,693
Cumulative change in accounting principle (Note 2)							(854)						(854)
Net income							1,733						1,733
Other comprehensive income									779				779
Cash dividends at $0.22 per share							(1,101)						(1,101)
Stock-based compensation					32								32
Purchase of treasury stock	(569)										(9)		(9)
Treasury stock issued for stock plans	11,409				(195)						195		—
Balance, March 31, 2023 (As Restated)	5,013,899	$	5,151	$	24,823	$	49,739	$	(41,088)	$	(2,352)	$	36,273
Net income							1,398						1,398
Other comprehensive loss									(925)				(925)
Cash dividends at $0.22 per share							(1,102)						(1,102)
Stock-based compensation					39								39
Purchase of treasury stock													—
Treasury stock issued for stock plans	4,230				(10)						72		62
Balance, June 30, 2023 (As Restated)	5,018,129	$	5,151	$	24,852	$	50,035	$	(42,013)	$	(2,280)	$	35,745
Net income							1,791						1,791
Other comprehensive income									412				412
Cash dividends at $0.22 per share							(1,104)						(1,104)
Stock-based compensation					35								35
Purchase of treasury stock													—
Treasury stock issued for stock plans													—
Balance, September 30, 2023 (As Restated)	5,018,129	$	5,151	$	24,887	$	50,722	$	(41,601)	$	(2,280)	$	36,879