8-K

UNITED STATES

SECURITIES ANDEXCHANGE COMMISSION

Washington, D.C.20549

FORM 8-K

CURRENT REPORT

Pursuant to Section13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 3,2023

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item2.02.    Results of Operations and Financial Condition

On February 3, 2023, New Peoples Bankshares, Inc. (the “Company”) issued a press release announcing its earnings for the quarter and year ending December 31, 2022. A copy of the press release is attached as Exhibit 99.1.

Item 9.01.    Financial Statements and Exhibits.

(d)       Exhibits

Exhibit No. Description

99.1       Press release dated February 3, 2023 announcing earnings for the fourth quarter and year-to-date 2022

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

NEWSRELEASE

| FOR<br> IMMEDIATE RELEASE: | FOR MORE INFORMATION,<br> CONTACT: || --- | --- || February 3, 2023 | C. Todd Asbury || | (276) 873-7000 |

NEWPEOPLES BANKSHARES ANNOUNCES RECORD ANNUAL EARNINGSHonaker,Virginia – February 3, 2023Highlights| · | Net<br> income for the year ended December 31, 2022 was $8.1 million, or $0.34 per diluted share,<br> which was the highest in the history of the Company; || --- | --- || · | Net<br> income for the fourth quarter of 2022 was $2.3 million, or $0.09 per diluted share, the eighth<br> consecutive quarter of increased earnings; || --- | --- || · | Net<br> interest margin improved to 3.86% for the fourth quarter of 2022 compared to 3.55% for the<br> third quarter of 2022 and 3.53% for the comparable period of 2021; || --- | --- || · | Total<br> loans declined $9.1 million, or 1.5%, during 2022. During the fourth quarter of 2022, loans<br> grew $4.7 million, or 3.2% annualized; || --- | --- || · | Total<br> deposits declined $14.8 million, or 2.1%, during 2022. Most of the decline occurred during<br> the fourth quarter as competition for funding intensified; || --- | --- || · | New<br> Peoples Bank remains well-capitalized. Leverage ratio improved to 10.40%. || --- | --- |Today,New Peoples Bankshares, Inc. (the “Company”) (OTCBB: NWPP), the holding company for New Peoples Bank, Inc. (the “Bank”),reported fourth quarter 2022 net income of $2.3 million, or $0.09 per share, as compared to $1.9 million, or $0.08 per share, for thefourth quarter of 2021, an improvement of $335,000, or 17.4%. For the year ended December 31, 2022, net income was $8.1 million, or $0.34per share, compared to $7.0 million, or $0.29 per share, for 2021.C.Todd Asbury, President and CEO of the Company, stated, “We are very pleased to report our eighth consecutive quarter of increasedearnings and the highest annual net income in the history of our Company. These results reflect years of hard work and focus from theboard, management team and our outstanding employees. As we look ahead to 2023, deposit competition in the short run will pressure someof the improvements made in the net interest margin during the last half of 2022. We will continue to work to improve our operationalefficiencies and cost structure, increase revenues by providing exceptional products and services to our customers, drive value for ourshareholders, and continuously improve our risk management framework.”RevenueNetInterest Income/Net Interest MarginNetinterest income for the quarter ended December 31, 2022 was $7.6 million compared to $6.7 million for the quarter ended December 31,2021. The increase was primarily due to improvement in the net interest margin to 3.86% for the fourth quarter of 2022 compared to 3.53%for the fourth quarter of 2021 due to the increase in asset yields outpacing increases in funding costs in the rising interest rate environmentthroughout 2022.Netinterest income for full year 2022 was $28.3 million compared to $27.2 million for 2021. The $1.1 million improvement in net interestincome was primarily attributable to a $35.9 million increase in average earning assets and rising market interest rates in 2022, partiallyoffset by loan fee recognition in 2021 as Paycheck Protection Program loans were forgiven and the rising costs of the variable rate trustpreferred securities in 2022. The net interest margin for 2022 was 3.61% compared to 3.64% for 2021. Non-interestIncomeNon-interestincome decreased $170,000 to $2.3 million for the quarter ended December 31, 2022 from $2.5 million for the comparable quarter of 2021.The primary drivers of the decline were a $58,000 write-down of bank owned life insurance (BOLI) in the fourth quarter of 2022, a period-to-perioddecrease in gains and commissions on mortgage loan originations of $46,000, and a period-to-period decline in service charges and feeson loans. The BOLI charge resulted from a decrease in the market value of the underlying investments supporting the policy due to increasedinterest rates. The increased interest rate environment also contributed to the reduced mortgage revenue as mortgage originations andrefinancing activities have slowed.Forthe year ended December 31, 2022, non-interest income was $9.2 million compared to $10.0 million for 2021. The $741,000 decrease wasattributable to $322,000 of gains on the sales of investment securities in 2021 that did not recur in 2022, $190,000 of gains on thesales of three former branch locations in 2021, a $158,000 write-down on BOLI over the last half of 2022 due to declines in the marketvalue of the underlying investments supporting the policy due to increased interest rates, and a $162,000 decrease in gains and commissionson mortgage loan originations due to rising rates on mortgage loans.Non-InterestExpenseNon-interestexpense was $6.8 million for the quarter ended December 31, 2022 compared to $6.7 million for the quarter ended December 31, 2021. The$96,000 increase was impacted by increases in bonus accruals in the fourth quarter of 2022 based on Company performance, a $70,000 expenserelated to the decision to exit a contract in 2022, and general expense increases related to contractual Consumer Price Index adjustments,inflation and salary adjustments to retain and attract employees. The increases were partially offset by a $273,000 decline in occupancycosts due to a $87,000 reduction in depreciation expense in the fourth quarter of 2022 attributable to fully-depreciated assets not beingreplaced, strategic closures and sales of branch locations over the past couple of years, and a $182,000 decline in losses on disposalsof fixed assets in the quarter ended December 31, 2022 from the comparable quarter of 2021.Non-interestexpense for the year of 2022 was $26.5 million compared to $27.9 million in 2021. The $1.3 million decrease was largely due to $1.1 millionof valuation adjustments in 2021 on former branch locations prior to being transferred to other real estate owned, and a $207,000 declinein net losses and write-downs on the sales and valuation adjustments on other real estate owned. The expense declines were partiallyoffset by a $703,000 increase in salaries and benefits expense attributable to higher bonus accruals based on Company performance, annualperformance raises, and adjustments to minimum starting salaries to reflect rising costs to attract and retain talent.BalanceSheetTotalassets at December 31, 2022 were $775.4 million, a $19.3 million, or 2.4%, decline from $794.6 million at December 31, 2021. Loans decreased$9.1 million, or 1.5%, during 2022, partly attributable to several large borrowers selling their businesses or collateral and payingoff the related loans. Loan pricing remains very competitive in the Company’s markets and also impacted loan originations. Investmentsecurities decreased $11.0 million during the year with almost all of the decrease due to a $16.6 million decline in the market valueof the investment portfolio due to rapidly rising interest rates during 2022 which impacted the carrying value of investment portfoliosdesignated as available-for-sale and the book values of most banks. All of the Company’s investments are designated as available-for-sale.Depositswere $692.7 million at December 31, 2022 compared to $707.5 million a year earlier. The majority of the $14.8 million, or 2.1%, declineoccurred during the last quarter of 2022 as the competition for funds for lending and other needs intensified among banks and non-banksin the Company’s markets.CapitalSinceDecember 31, 2021, total capital decreased $6.4 million, as the net unrealized loss on available-for-sale investment securities due tothe rapid rise in market interest rates increased $13.1 million, which more than offset year-to-date earnings of $8.1 million. In addition,a cash dividend payment of $1.2 million and the repurchase of common stock totaling $171,000 further reduced capital. Consequently, bookvalue per share has decreased to $2.40at December 31, 2022 compared to $2.66 at December 31, 2021. Excluding the impact of the unrealized loss on available-for-sale securities,equity capital increased $6.7 million. The Bank remains well capitalized per regulatory guidance. Aspreviously reported, the Board authorized the repurchase of up to 500,000 shares of the Company’s common stock through March 31,2023. As of December 31, 2022, the Company had repurchased 73,595 shares.AssetQualityTheallowance for loan losses as a percentage of total loans was 1.15% at December 31, 2022 and 1.13% at December 31, 2021.Annualizednet charge-offs, as a percentage of average loans, was 0.06% during the fourth quarter of 2022, compared to a net recovery of 0.05% inthe fourth quarter of 2021. For the year ended December 31, 2022, net charge-offs represent 0.11% of average loans as compared to 0.14%for 2021.Theprovision for loan losses charged to the income statement for the quarters ended December 31, 2022 and 2021 were $225,000 and $0, respectively.For the year ended December 31, 2022, the provision for loan losses was $625,000 compared to $372,000 for 2021.Nonperformingassets, which include nonaccrual loans and other real estate owned, totaled $3.7 million at December 31, 2022, a decline of $629,000,or 14.6%, since year-end 2021. Nonperforming assets as a percentage of total assets were 0.47% at December 31, 2022, and 0.54% at December31, 2021.Aswe continue working to reduce nonearning assets, other real estate owned is down to $261,000 as of December 31, 2022, compared to $1.4million as of December 31, 2021. Expenses associated with other real estate owned were $176,000 for 2022 and are down by $330,000 comparedto 2021, due largely to $466,000 of write-downs recorded during 2021.AboutNew Peoples Bankshares, Inc.NewPeoples Bankshares, Inc. is a one-bank financial holding company headquartered in Honaker, Virginia. Its wholly-owned subsidiary providesbanking products and services through its 18 locations throughout southwest Virginia, eastern Tennessee, western North Carolina and southernWest Virginia. The Company’s common stock is traded over the counter under the trading symbol “NWPP”. Additional investorinformation can be found on the Company’s website at www.npbankshares.com.*Thisnews release contains statements concerning the Company’s expectations, plans, objectives, future financial performance and otherstatements that are not historical facts. These statements may constitute “forward-looking statements” as defined by federalsecurities laws. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties,and actual results could differ materially from historical results or those anticipated by such statements. Important factors that maycause actual results to differ from projections include:(i)the success or failure of efforts to implement the Company’s business plan; (ii) any required increase in the Company’regulatory capital ratios; (iii) satisfying other regulatory requirements that may arise from examinations, changes in the law andother similar factors; (iv) deterioration of asset quality; (v) changes in the level of the Company’s nonperforming assets andcharge-offs; (vi) fluctuations of real estate values in the Company’s markets; (vii) the Company’s ability to attractand retain talent; (viii) demographical changes in the Company’s markets which negatively impact the local economy; (ix) theuncertain outcome of enacted legislation to stabilize the United States financial system; (x) the successful management of interestrate risk; (xi) the successful management of liquidity; (xii) changes in general economic and business conditions in theCompany’s market area and the United States in general; (xiii) credit risks inherent in making loans such as changes in aborrower’s ability to repay and the Company’s management of such risks; (xiv) competition with other banks and financialinstitutions, and companies outside of the banking industry, including online lenders and those companies that have substantiallygreater access to capital and other resources; (xv) demand, developmentand acceptance of new products and services the Company has offered or may offer; (xvi) the effects of, and changes in, trade, monetaryand fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interestrate, market and monetary fluctuations; (xvii) the occurrence of significant natural disasters, including severe weather conditions,floods, health related issues and other catastrophic events; (xviii) technology utilized by the Company; (xix) the Company’s abilityto successfully manage cyber security; (xx) the Company’s reliance on third-party vendors and correspondent banks; (xxi) changesin generally accepted accounting principles; (xxii) changes in governmental regulations, tax rates and similar matters; and (xxiii) otherrisks which may be described in future filings the Company makes with the Securities and Exchange Commission. The Company expresslydisclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events orotherwise, except as required by law.* NEWPEOPLES BANKSHARES, INC.CONSOLIDATEDBALANCE SHEET HIGHLIGHTSQUARTERSENDED DECEMBER 31, 2022 THROUGH DECEMBER 31, 2021(INTHOUSANDS EXCEPT SHARE AND PER SHARE DATA)(UNAUDITED)| Dollars in thousands | December<br> 31,<br><br> <br>2022 | September<br> 30,<br><br> <br>2022 | June<br> 30,<br><br> <br>2022 | March<br> 31,<br><br> <br>2022 | December<br> 31,<br><br> <br>2021 || --- | --- | --- | --- | --- | --- || Total<br> cash and cash equivalents | $<br>    61,686 | $   114,918 | $   124,051 | $<br>   78,864 | $<br>   60,946 || Investment<br> securities available-for-sale | 96,326 | 98,845 | 100,616 | 106,820 | 107,358 || Loans<br> receivable, net of allowance for loan losses | 577,886 | 573,281 | 578,815 | 595,132 | 587,009 || Total<br> assets | 775,358 | 828,565 | 847,028 | 813,536 | 794,647 || Total<br> deposits | 692,707 | 723,914 | 707,064 | 730,968 | 707,513 || Total<br> liabilities | 718,140 | 773,335 | 790,864 | 754,624 | 731,016 || Total<br> shareholders’ equity | 57,218 | 55,230 | 56,164 | 58,912 | 63,631 |NEWPEOPLES BANKSHARES, INC.CONSOLIDATEDSTATEMENTS OF INCOME HIGHLIGHTSFORTHE THREE MONTHS ENDED DECEMBER 31, 2022 THROUGH DECEMBER 31, 2021(INTHOUSANDS EXCEPT SHARE AND PER SHARE DATA)(UNAUDITED)| Dollars in thousands, except per share | December<br> 31,<br><br> <br>2022 | September<br> 30,<br><br> <br>2022 | June<br> 30,<br><br> <br>2022 | March<br> 31,<br><br> <br>2022 | December<br> 31,<br><br> <br>2021 || --- | --- | --- | --- | --- | --- || Interest<br> income on loans, including fees | $<br> 7,263 | $<br> 7,010 | $<br> 6,792 | $<br> 6,674 | $<br> 6,840 || Interest<br> income on investment securities<br><br> <br><br><br> <br>Interest<br> income and dividends on other | 561<br><br> <br><br><br> <br>839 | 505<br><br> <br><br><br> <br>595 | 482<br><br> <br><br><br> <br>186 | 435<br><br> <br><br><br> <br>48 | 408<br><br> <br><br><br> <br>53 || Total<br> interest and dividend income | 8,663 | 8,110 | 7,460 | 7,157 | 7,301 || Interest<br> expense on deposits | 623 | 418 | 404 | 430 | 468 || Total<br> interest expense | 1,042 | 910 | 616 | 536 | 572 || Net<br> interest income | 7,621 | 7,200 | 6,844 | 6,621 | 6,729 || Provision<br> for loan losses | 225 | 225 | 75 | 100 | - || Net<br> interest income after provision for loan losses | 7,396 | 6,975 | 6,769 | 6,521 | 6,729 || Total<br> non-interest income | 2,333 | 2,189 | 2,348 | 2,369 | 2,503 || Total<br> non-interest expenses | 6,823 | 6,599 | 6,658 | 6,439 | 6,727 || Income<br> tax expense | 654 | 579 | 536 | 530 | 588 || Net<br> income | $<br> 2,252 | $<br> 1,986 | $<br> 1,923 | $<br> 1,921 | $<br> 1,917 || Basic<br> and diluted income per share | $   0.09 | $   0.08 | $   0.08 | $   0.08 | $   0.08 | NEWPEOPLES BANKSHARES, INC.CONSOLIDATEDSTATEMENTS OF INCOME HIGHLIGHTSFORTHE YEARS ENDED DECEMBER 31, 2022 AND 2021(INTHOUSANDS EXCEPT SHARE AND PER SHARE DATA)(UNAUDITED)| Dollars in thousands, except per share | December<br> 31, 2022 | December<br> 31, 2021 || --- | --- | --- || Interest<br> income on loans, including fees | $<br> 27,739 | $<br> 28,323 || Interest<br> income on investment securities<br><br> <br><br><br> <br>Interest<br> income and dividends on all other | 1,983<br><br> <br><br><br> <br>1,668 | 1,377<br><br> <br><br><br> <br>212 || Total<br> interest and dividend income | 31,390 | 29,912 || Interest<br> expense on deposits | 1,875 | 2,248 || Total<br> interest expense | 3,104 | 2,701 || Net<br> interest income | 28,286 | 27,211 || Provision<br> for loan losses | 625 | 372 || Net<br> interest income after provision for loan losses | 27,661 | 26,839 || Total<br> non-interest income | 9,239 | 9,980 || Total<br> non-interest expenses | 26,519 | 27,867 || Income<br> tax expense | 2,299 | 1,942 || Net<br> income | 8,082 | 7,010 || Basic<br> and diluted income per share | $<br> 0.34 | $   0.29 || Return<br> on average shareholders’ equity | 13.89% | 11.52% || Return<br> on average assets | 0.99% | 0.88% | | NEW<br> PEOPLES BANKSHARES, INC. | | | | | || --- | --- | --- | --- | --- | --- || KEY<br> PERFORMANCE AND CAPITAL RATIOS<br><br> <br>(UNAUDITED) | | | | | || | For<br> the three-months ended, | | | | || | December<br> 31, 2022 | September<br> 30,<br><br> <br>2022 | June<br> 30,<br><br> <br>2022 | March<br> 31, 2022 | December<br> 31,<br><br> <br>2021 || Key<br> Performance Ratios | | | | | || Earning<br> assets yield | 4.39% | 3.99% | 3.82% | 3.82% | 3.83% || Cost<br> of interest-bearing liabilities | 0.84% | 0.70% | 0.51% | 0.46% | 0.48% || Cost<br> of funds | 0.55% | 0.46% | 0.33% | 0.30% | 0.31% || Net<br> interest margin | 3.86% | 3.55% | 3.50% | 3.53% | 3.53% || Return<br> on average shareholder’s equity | 16.25% | 13.70% | 13.45% | 12.35% | 12.14% || Return<br> on average assets | 1.10% | 0.94% | 0.94% | 0.97% | 0.95% || Efficiency<br> ratio* | 68.51% | 70.25% | 72.40% | 71.59% | 72.84% || Loan<br> to deposit ratio | 84.40% | 80.10% | 82.83% | 81.42% | 83.92% || Asset<br> Quality | | | | | || Allowance<br> for loan loss to total loans | 1.15% | 1.14% | 1.16% | 1.14% | 1.13% || Net<br> charge-offs (recoveries) to average loans, annualized | 0.06% | 0.30% | 0.01% | 0.05% | (0.05%) || Nonaccrual<br> loans to total loans | 0.58% | 0.64% | 0.62% | 0.44% | 0.50% || Nonperforming<br> assets to total assets | 0.47% | 0.49% | 0.47% | 0.42% | 0.54% || Capital<br> Ratios (Bank Only) | | | | | || Tier<br> 1 leverage | 10.40% | 9.86% | 9.88% | 9.95% | 9.86% || Tier<br> 1 risk-based capital | 15.31% | 15.16% | 14.97% | 14.66% | 14.98% || Total<br> risk-based capital | 16.50% | 16.35% | 16.21% | 15.90% | 16.23% || Total<br> common equity tier 1 capital | 15.31% | 15.16% | 14.97% | 14.66% | 14.98% |*Theefficiency ratio is computed as a percentage of noninterest expense divided by the sum of net interest income and noninterest income.This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency.Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions thatsuch information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies maynot be possible because other companies may calculate it differently.**