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Covid-19 Pandemic

3 Months Ended

Mar. 31, 2020

11.

COVID-19 Pandemic

The COVID-19 pandemic in the United States is expected to have a complex and significant adverse impact on the economy, the banking industry and the Company in future fiscal periods, all subject to a high degree of uncertainty. The COVID-19 pandemic could adversely impact our customers, employees or vendors which may impact our operations and financial results. The COVID-19 pandemic may cause economic declines in excess of current projections, or if the pandemic lasts longer than currently projected, the Company’s provision for loan losses may remain elevated or increase in future periods. The Company expects to see higher loan delinquencies and defaults in future periods as a result of the COVID-19 pandemic and will continue to monitor our allowance for loan losses in light of changing economic conditions related to COVID-19. The COVID-19 pandemic may also impact the Company’s deposit balances and service charge income. In addition, the fair value of certain assets may be adversely impacted by the pandemic and the economic downturn, including the fair value of goodwill, mortgage servicing rights and other real estate. These declines could result in impairments in future periods. The pandemic has caused a significant decline in market interest rates which may cause our net interest margin to decline. At this time, the full impact of the COVID-19 pandemic on the Company’s financial statements is uncertain.

As of April 30, 2020, the Company had 111 COVID-19 loan modifications related to deferrals of loan payments on outstanding loan balances of $43.5 million. Consistent with regulatory guidance, the Company also entered into short-term forbearance plans or short-term repayment plans on 12 one-to-four family residential mortgage loans totaling $1.6 million as of April 30, 2020. The Company had originated 739 loans totaling $123.6 million under the Small Business Administration’s paycheck protection program as of April 30, 2020.