Golden Valley Bancshares : 2023 Audited Financial Report

Report of Independent Auditors and Consolidated Financial Statements

Golden Valley Bancshares, Inc.

and Subsidiary

December 31, 2023 and 2022

Report of Independent Auditors

The Board of Directors and Shareholders

Golden Valley Bancshares, Inc. and Subsidiary

Report on the Audit of the Financial Statements

Opinion

We have audited the consolidated financial statements of Golden Valley Bancshares, Inc. and Subsidiary, which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income (loss), changes in shareholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Golden Valley Bancshares, Inc. and Subsidiary as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Golden Valley Bancshares, Inc. and Subsidiary and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter - Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, as of January 1, 2023, Golden Valley Bancshares, Inc. and Subsidiary adopted the new Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses using the modified retrospective approach. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Golden Valley Bancshares, Inc. and Subsidiary's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

•  Exercise professional judgment and maintain professional skepticism throughout the audit.

•  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

•  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Golden Valley Bancshares, Inc. and Subsidiary's internal control. Accordingly, no such opinion is expressed.

•  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

•  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Golden Valley Bancshares, Inc. and Subsidiary's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Sacramento, California

March 29, 2024

Consolidated Financial Statements

Consolidated Balance Sheets

December 31, 2023 and 2022

2023

2022

ASSETS

Cash and cash equivalents:

Cash and due from banks Federal funds sold

Interest-bearing deposits in other financial institutions

Total cash and cash equivalents

Interest-bearing time deposits in other financial institutions Available-for-sale investment securities, at fair value

(amortized cost of $97,186,656 and $100,918,652 and allowance for credit losses of $0 and $0, as of December 31, 2023 and 2022, respectively) Held-to-maturity investment securities, at amortized cost, net of allowance for credit losses of $0 at

December 31, 2023 and December 31, 2022

Loans, less allowance for credit losses of $3,936,502 in 2023, and $3,955,485 in 2022

Bank premises and equipment, net Right-of-use (ROU) lease asset Bank-owned life insurance, net

Accrued interest receivable and other assets

Total assetsLiabilities:

Deposits:

Noninterest-bearing Interest-bearing

Total deposits

Subordinated debt

ROU lease liability

LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued interest payable and other liabilities

Total liabilities

Commitments and contingencies (Note 11)

Shareholders' equity:

Preferred stock - no par value; 5,000,000 shares authorized, none outstanding

Common stock - no par value; 50,000,000 shares authorized; shares issued and outstanding 2,228,611 in 2023, and 2,235,188 in 2022

Retained earnings

Accumulated other comprehensive loss

Total shareholders' equity

Total liabilities and shareholders' equity

$

7,142,073 $ 5,862,324

11,624,168 18,437,455

23,652,439 7,520,257

42,418,680 31,820,036

13,162,900 11,922,450

84,416,426 85,774,778

95,605,200 97,054,831

236,167,990 237,945,437

3,715,044 1,990,406

1,435,419

997,583

1,332,772 1,307,690

10,309,088 9,728,975

$

488,563,519

$

478,542,186

$

168,059,693 $ 172,172,678

276,985,692 270,992,229

445,045,385 443,164,907

5,842,976 5,794,660

1,522,338 1,097,034

1,525,550 1,329,654

453,936,249

451,386,255

-

-19,217,734 19,140,359

27,134,494 23,570,042

(11,724,958)

34,627,270

$

488,563,519

(15,554,470)

27,155,931

$

478,542,186

Consolidated Statements of Income

Years Ended December 31, 2023 and 2022

2023

Interest income:

Interest and fees on loans

Interest on time deposits and in other financial institutions Interest on federal funds sold

Interest on tax-exempt investment securities Interest on taxable investment securities

Total interest income

Interest expense:

Interest on deposits Interest on borrowings

Total interest expense

$

12,495,163 $

1,897,117 538,588

516,219 320,186

183,042 190,413

2022

11,682,179

4,336,638 19,428,179

3,880,045 16,611,411

4,126,650 507,684

303,332 244,175

4,429,982

751,859

Net interest income before provision (recovery of provision) for credit losses

14,998,197

15,859,552

Provision (recovery of provision) for credit losses

Net interest income after provision (recovery of

provision) for credit losses

Non-interest income:

Service charges and fees

Loss on sale of available-for-sale investment securities Loan mortgage fees

Other

Total non-interest income

Non-interest expense:

Salaries and employee benefits Occupancy and equipment Other

Total non-interest expense

8,613

(621,227)

14,989,584

16,480,779

843,140 -

656,334 (623,929)

67,256 324,286

64,564 57,690

974,960

6,176,001 834,647 3,668,444

414,381

6,104,801 799,418 3,516,985

10,679,092 10,421,204

Net income before provision for income taxes

5,285,452 6,473,956

Provision for income taxes

Net income

Basic income per common share

Diluted income per common share

1,535,000 1,894,000

$ $ $

3,750,452

1.68 1.66

$ $ $

4,579,956

2.04 1.99

Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, 2023 and 2022

2023

2022

Net income

Other comprehensive income:

Unrealized holding gain (losses) arising during the year on available-for-sale investment securities Less reclassification adjustment for loss included in net income

Unrealized holding losses on investment securities transferred to held-to-maturity

Less reclassification adjustment for amortization of unrealized securities transferred to held-to-maturity

$

• 3,750,452 $

2,373,645

Tax effect

4,579,956

(16,680,778)

- - 892,176 563,691

623,929

(5,116,854)

343,061 4,630,000

Total other comprehensive income (loss)

3,829,512 (16,200,642)

Total comprehensive income (loss)

$

7,579,964

$ (11,620,686)

Golden Valley Bancshares, Inc. and Subsidiary

Consolidated Statements of Changes in Shareholders' Equity

Years Ended December 31, 2023 and 2022

Common StockShares

AmountRetained Earnings

Balance, December 31, 2021

2,240,688

$

19,024,928

$

• 18,990,086 $

646,172

$ 38,661,186

Net income

Other comprehensive loss

Share-based compensation

Exercise of stock options

- - - 1,568

- -

4,579,956

- 4,579,956

-

(16,200,642)

(16,200,642)

220,141 - - 220,141

15,675 - - 15,675

Repurchase of common stock

Balance, December 31, 2022

(7,068)

(120,385)

- 23,570,042

-

2,235,188

19,140,359

(15,554,470)

(120,385)

27,155,931

Cumulative change from adoption of ASU 2016-13, net of tax

Net income

Other comprehensive income

Share-based compensation

Repurchase of common stock

- - - -

(6,577)

- - - 174,610

(97,235)

(186,000)

-

(186,000)

3,750,452 - 3,750,452

- - -

3,829,512 3,829,512

- -174,610

(97,235)

Balance, December 31, 2023

2,228,611

$

19,217,734

$

27,134,494

$

(11,724,958)

$

34,627,270

Consolidated Statements of Cash Flows

Years Ended December 31, 2023 and 2022

2023

2022

Cash flows from operating activities:

Net income

Adjustment to reconcile net income to net cash provided by operating activities:

Provision (recovery of provision) for credit losses Depreciation and amortization

Amortization of ROU lease asset Change in lease liability

Changes in deferred loan origination fees, net

Loss on sale of available-for-sale investment securities Change in deferred income taxes

Investment securities amortization Share-based compensation expense

Increase in cash surrender value of bank-owned life insurance, net

Change in accrued interest receivable and other assets Change in accrued interest payable and other liabilities

$

3,750,452

8,613

340,859 299,152

333,996 323,489

(346,528) (340,646)

(22,752) (471,044)

- 623,929

115,067 125,724

383,148 606,460

174,610 220,141

(25,082) (25,124)

(309,063) (759,055)

645,917

$

4,579,956

(621,227)

475,358

Net cash provided by operating activities

Cash flows from investing activities:

Change in interest-bearing time deposits in banks Purchase of available-for-sale investment securities Proceeds from sales and calls of available-for-sale investment securities

Proceeds from principal payments on available-for-sale investment securities

Purchase of held-to-maturity investment securities Proceeds from principal payments on held-to-maturity investment securities

Net change in loans

Purchase of Federal Home Loan Bank stock Purchase of premises and equipment, net

5,049,237

5,037,113

(1,240,450) (6,945,450)

(1,574,949) (4,750,000)

1,133,271 9,633,459

3,885,826 11,390,733

- 2,239,509 1,605,586

(43,296,625)

1,047,026 (2,249,631)

(271,900) (196,900)

(2,010,729) (343,095)

Net cash provided by (used in) investing activities

Cash flows from financing activities:

(Decrease) increase in demand, interest bearing and savings deposits, net

Increase in time deposits, net Repayment of FHLB advances Proceeds from subordinated debt

3,766,164

(35,710,483)

(4,112,985) 1,789,202

5,993,463 8,575,829

- -(233,625) 6,000,000

Net costs to issue subordinated debt - (205,340)Net cash paid in stock repurchases

(97,235) (104,710)

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

1,783,243

10,598,644 31,820,036

$

42,418,680

15,821,356

(14,852,014)

46,672,050

$

31,820,036

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Golden Valley Bank published this content on 29 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2024 15:37:00 UTC.