Note 15 — Subsequent Events

On March 13, 2020, the President of the United States declared a National Emergency over the outbreak of the novel coronavirus, also known as COVID-19.  Several governors of the states in which we do business issued their own orders for individuals to shelter-in place and restricted business activities.  As a result, the operations and business results of the Company could be materially adversely affected.  The extent to which the COVID-19 crisis may impact business activity or investment results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions required to contain the coronavirus or treat its impact, among others. Significant estimates include the allowance for credit losses, the allowance for credit losses related to off-balance sheet items, and the valuation of intangible assets including deferred tax assets, goodwill, and servicing assets.

The CARES Act (the Coronavirus Aid, Relief, and Economic Security Act) was passed by Congress and signed into law by President Trump on March 27, 2020.  Amongst other benefits, the CARES Act allows financial institutions to assist customers in dealing with financial hardship by (a) providing federal funding so that financial institutions can originate SBA loans to borrowers at a low interest rate under the Payment Protection Program (PPP loans) with eventual debt forgiveness should the borrower continue to meet certain criteria after the COVID-19 crisis has abated; and (b) allowing financial institutions to temporarily modify loan terms by deferring loan payments, loan fees, etc. on a short-term basis without considering them Troubled Debt Restructures.

The Bank immediately moved to assist consumers during this time of crisis by rolling out its PPP loan process and by April 30, 2020 had received over 3,000 inquiries and disbursed approximately $157 million for the SBA’s Paycheck Protection Program.  In late March 2020, the Bank started receiving borrower requests for loan modifications of scheduled payments under the CARES Act and by April 30, 2020 had approved nearly 1,200 requests approximating 16 percent of the portfolio.