Common use of Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc Clause in Contracts

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNC’s Allowance shown on the balance sheets of FXNC included in the most recent FXNC Financial Statements dated prior to the date of this Agreement was believed to be, and the Allowance shown on the balance sheets of FXNC included in the FXNC Financial Statements as of dates subsequent to the execution of this Agreement are expected to be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Entities as of the dates thereof. The FXNC Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Entity is lessor) reflected on the FXNC Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (i) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (ii) evidenced by genuine notes, agreements, or other evidences of indebtedness, and (iii) to the extent secured, have been secured, to the Knowledge of FXNC, by valid Liens and security interests which have been perfected. (c) All securities held by FXNC or First Bank, as reflected in the consolidated balance sheets of FXNC included in the FXNC Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNC’s own account, or for the account of First Bank or its customers, were entered into (i) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws and regulatory policies, and (ii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC or First Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC nor First Bank, nor to FXNC’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCThe Seller’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC Seller included in the most recent FXNC Seller Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Seller included in the FXNC Seller Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Seller Entities as of the dates thereof. The FXNC Seller Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Seller Entity is lessor) reflected on the FXNC Seller’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, indebtedness and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCSeller, by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts and financing leases as of June 30, 2013 and on a monthly basis thereafter, and of the investment portfolios of each Seller Entity as of such date, have been and will be made available to Buyer concurrently with the Seller Disclosure Memorandum. Except as specifically set forth in Section 4.9(b) of the Seller Disclosure Memorandum, neither Seller nor the Bank is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) to Seller’s Knowledge, otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Seller or by any applicable Regulatory Authority or Reserve, (iv) an obligation of any director, executive officer or 10% shareholder of any Seller Entity who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC Seller or First Bank, as reflected in the consolidated balance sheets of FXNC Seller included in the FXNC Seller Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – — Debt and Equity Securities. Except as disclosed in Section 4.9(c) of the Seller Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to the Seller’s Knowledge, none of the securities reflected in the Seller Financial Statements as of December 31, 2012, and none of the securities since acquired by Seller or Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Seller or Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCSeller’s own account, or for the account of First Bank or its customerscustomers (all of which were disclosed in Section 4.9(d) of the Seller Disclosure Memorandum), were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Seller or First Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Seller nor First Bank, nor to FXNCthe Seller’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCCornerstone’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC Cornerstone included in the most recent FXNC Cornerstone Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Cornerstone included in the FXNC Cornerstone Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Cornerstone Entities as of the dates thereof. The FXNC Cornerstone Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Cornerstone Entity is lessor) reflected on the FXNC Cornerstone’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCCornerstone, by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts and financing leases as of December 31, 2016 and on a monthly basis thereafter, and of the investment portfolios of each Cornerstone Entity as of such date, have been and will be made available to Parent concurrently with the Cornerstone Disclosure Memorandum. Except as specifically set forth in Section 4.9(b) of the Cornerstone Disclosure Memorandum, neither Cornerstone nor Cornerstone Bank is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) to Cornerstone’s Knowledge, otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Cornerstone or by any applicable Regulatory Authority or Reserve, (iv) an obligation of any director, executive officer or 10% shareholder of any Cornerstone Entity who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC Cornerstone or First Cornerstone Bank, as reflected in the consolidated balance sheets of FXNC Cornerstone included in the FXNC Cornerstone Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except as disclosed in Section 4.9(c) of the Cornerstone Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to Cornerstone’s Knowledge, none of the securities reflected in the Cornerstone Financial Statements as of December 31, 2016, and none of the securities since acquired by Cornerstone or Cornerstone Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Cornerstone or Cornerstone Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCCornerstone’s own account, or for the account of First Cornerstone Bank or its customerscustomers (all of which were disclosed in Section 4.9(d) of the Cornerstone Disclosure Memorandum), were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Cornerstone or First Cornerstone Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Cornerstone nor First Cornerstone Bank, nor to FXNCCornerstone’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCBFTL’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC BFTL included in the most recent FXNC BFTL Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC BFTL included in the FXNC BFTL Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC BFTL Entities as of the dates thereof. The FXNC BFTL Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC BFTL Entity is lessor) reflected on the FXNC BFTL’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCBFTL, by valid Liens and security interests which have been perfected. Accurate lists of all loans, discounts and financing leases as of December 31, 2019 and on a monthly basis thereafter, and of the investment portfolios of each BFTL Entity as of such date, have been and will be made available to Parent concurrently with the BFTL Disclosure Memorandum. Except as specifically set forth in Section 4.9(b) of the BFTL Disclosure Memorandum, BFTL is not a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) otherwise in material Default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by BFTL or by any applicable Regulatory Authority, (iv) an obligation of any director, executive officer or 10% shareholder of any BFTL Entity who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215; 12 C.F.R. Part 337.3), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC or First BankBFTL, as reflected in the consolidated balance sheets of FXNC BFTL included in the FXNC BFTL Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except as disclosed in Section 4.9(c) of the BFTL Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, none of the securities reflected in the BFTL Financial Statements as of December 31, 2019, and none of the securities since acquired by BFTL is subject to any restriction, whether contractual or statutory, which impairs the ability of BFTL to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCBFTL’s own account, or for the account of First Bank or its customerscustomers (all of which were disclosed in Section 4.9(d) of the BFTL Disclosure Memorandum), were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC or First BankBFTL, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC nor First BankBFTL, nor to FXNCBFTL’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCTouchstone’s Allowance allowance for credit losses on loans, leases, securities and unfunded commitments (the “Allowance”) shown on the balance sheets of FXNC Touchstone included in the most recent FXNC Touchstone Financial Statements dated prior to the date of this Agreement was believed to be, and the Allowance shown on the balance sheets of FXNC Touchstone included in the FXNC Touchstone Financial Statements as of dates subsequent to the execution of this Agreement are expected to be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Touchstone Entities as of the dates thereof. The FXNC Touchstone Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Touchstone Entity is lessor) reflected on the FXNC Touchstone Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (i) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (ii) evidenced by genuine notes, agreements, or other evidences of indebtedness, and (iii) to the extent secured, have been secured, to the Knowledge of FXNCTouchstone, by valid Liens and security interests which have been perfected. Except as specifically set forth in Section 4.9(b) of the Touchstone Disclosure Memorandum, Touchstone is not a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) otherwise in material Default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Touchstone or by any applicable Regulatory Authority, (iv) an obligation of any director, executive officer or 10% shareholder of any Touchstone Entity who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215; 12 C.F.R. Part 337.3), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in material violation of any Law. (c) All securities held by FXNC Touchstone or First Touchstone Bank, as reflected in the consolidated balance sheets of FXNC Touchstone included in the FXNC Touchstone Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except as disclosed in Section 4.9(c) of the Touchstone Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to Touchstone’s Knowledge, none of the securities reflected in the Touchstone Financial Statements as of December 31, 2022, and none of the securities since acquired by Touchstone or Touchstone Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Touchstone or Touchstone Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with Laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCTouchstone’s own account, or for the account of First Touchstone Bank or its customerscustomers (all of which are disclosed in Section 4.9(d) of the Touchstone Disclosure Memorandum), were entered into (i) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws and regulatory policies, and (ii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Touchstone or First Touchstone Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Touchstone nor First Touchstone Bank, nor to FXNCTouchstone’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCThe Seller’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC Seller included in the most recent FXNC Seller Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Seller included in the FXNC Seller Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Seller Entities as of the dates thereof. The FXNC Seller Financial Statements fairly present the values of all loans, leases, securities, other real estate owned, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Seller Entity is lessor) reflected on the FXNC Seller’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, indebtedness and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCSeller, have been secured by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts, other real estate owned and financing leases as of November 30, 2015 and on a monthly basis thereafter, and of the investment portfolios of each Seller Entity as of such date, have been and will be made available to Buyer concurrently with the Seller Disclosure Memorandum. Except as specifically set forth in Section 4.9(b) of the Seller Disclosure Memorandum, neither Seller nor Congaree State Bank is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) to Seller’s Knowledge, otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Seller or by any applicable Regulatory Authority or Reserve, (iv) an obligation of any director, executive officer or 10% shareholder of any Seller Entity who is subject to Regulation O of the Federal Reserve (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC Seller or First Bank, as reflected in the consolidated balance sheets of FXNC Seller included in the FXNC Seller Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to the Seller’s Knowledge, none of the securities reflected in the Seller Financial Statements as of December 31, 2014, and none of the securities since acquired by Seller or Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Seller or Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCSeller’s own account, or for the account of First Bank or its customers, customers were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Seller or First Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Seller nor First Bank, nor to FXNCthe Seller’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCThe Seller’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC Seller included in the most recent FXNC Seller Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Seller included in the FXNC Seller Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Seller Entities as of the dates thereof. The FXNC Seller Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Seller Entity is lessor) reflected on the FXNC Seller’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and to the Knowledge of Seller are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, indebtedness and (iiic) to the extent secured, to the Knowledge of Seller, have been secured, to the Knowledge of FXNC, by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts and financing leases as of March 31, 2014 and on a monthly basis thereafter, and of the investment portfolios of each Seller Entity as of such date, have been and will be made available to Buyer concurrently with the Seller Disclosure Memorandum. Except as specifically set forth in Section 3.9(b) of the Seller Disclosure Memorandum, no Seller Entity is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) to Seller’s Knowledge, otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Seller or by any applicable Regulatory Authority or Reserve, (iv) an obligation of any director, executive officer or 10% shareholder of any Seller Entity who is subject to Regulation O of the Federal Reserve (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) to Seller’s Knowledge, in violation of any Law. (c) All securities held by FXNC or First Bankthe Seller Entities, as reflected in the consolidated balance sheets of FXNC Seller included in the FXNC Seller Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except as disclosed in Section 3.9(c) of the Seller Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to the Seller’s Knowledge, none of the securities reflected in the Seller Financial Statements as of December 31, 2013, and none of the securities since acquired by the Seller Entities is subject to any restriction, whether contractual or statutory, which impairs the ability of the Seller Entities to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCSeller’s own account, or for the account of First Bank any Seller Entity or its customerstheir customers (all of which were disclosed in Section 3.9(d) of the Seller Disclosure Memorandum), were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC or First Bankthe Seller Entities, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC nor First BankNo Seller Entity, nor to FXNCthe Seller’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCThe Seller’s allowance for possible loan or lease losses (the “Allowance”) is, and has been since January 1, 2015, in material compliance with Seller’s methodology for determining the adequacy of its allowance for loan losses as well as the standards established by applicable Governmental Authorities and the Financial Accounting Standards Board in all material respects. The Allowance shown on the balance sheets of FXNC Seller included in the most recent FXNC Seller Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Seller included in the FXNC Seller Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, loan and lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Seller Entities as of the dates thereof. The FXNC Seller Financial Statements fairly present present, as of the date thereof, the values of all loans, leases, securities, other real estate owned, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Seller Entity is lessor) reflected on the FXNC Seller’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, indebtedness and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCSeller, have been secured by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts, other real estate owned and financing leases as of October 31, 2016 and on a monthly basis thereafter, and of the investment portfolios of each Seller Entity as of such date, have been and will be made available to Buyer concurrently with the Seller Disclosure Memorandum. Except as disclosed on Section 4.9(b) of the Seller Disclosure Memorandum, neither Seller nor Xxxxx State Bank is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Seller or under the standards of any applicable Regulatory Authority, (iv) an obligation of any director, executive officer or 10% shareholder of any Seller Entity who is subject to Regulation O of the Federal Reserve (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC Seller or First Xxxxx State Bank, as reflected in the consolidated balance sheets of FXNC Seller included in the FXNC Seller Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except for pledges to secure public and trust deposits and Federal Home Loan Bank advances or otherwise disclosed in Section 4.9(c) of the Seller Disclosure Memorandum, none of the securities reflected in the Seller Financial Statements as of December 31, 2015, and none of the securities since acquired by Seller or Xxxxx State Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Seller or Xxxxx State Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCSeller’s own account, or for the account of First Xxxxx State Bank or its customers, customers were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Seller or First Xxxxx State Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Seller nor First Xxxxx State Bank, nor to FXNCthe Seller’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.

Allowance for Possible Loan Losses; Loan and Investment Portfolios, etc. (a) FXNCIndependence’s Allowance allowance for possible loan, lease, securities, or credit losses (the “Allowance”) shown on the balance sheets of FXNC Independence included in the most recent FXNC Independence Financial Statements dated prior to the date of this Agreement was believed to bewas, and the Allowance shown on the balance sheets of FXNC Independence included in the FXNC Independence Financial Statements as of dates subsequent to the execution of this Agreement are expected to will be, as of the dates thereof, adequate (within the meaning of GAAP and applicable regulatory requirements or guidelines) to provide for all known or reasonably expected anticipated losses relating to or inherent in the loan, lease and securities portfolios (including accrued interest receivables, letters of credit, and commitments to make loans or extend credit), by the FXNC Independence Entities as of the dates thereof. The FXNC Independence Financial Statements fairly present the values of all loans, leases, securities, tangible and intangible assets and liabilities, and any impairments thereof on the bases set forth therein. (b) As of the date hereof, all loans, discounts and leases (in which any FXNC Independence Entity is lessor) reflected on the FXNC Independence’s Financial Statements were, and with respect to the consolidated balance sheets delivered as of the dates subsequent to the execution of this Agreement will be as of the dates thereof, (ia) at the time and under the circumstances in which made, made for good, valuable and adequate consideration in the ordinary course of business and are the legal and binding obligations of the obligors thereof, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles, (iib) evidenced by genuine notes, agreements, or other evidences of indebtedness, and (iiic) to the extent secured, have been secured, to the Knowledge of FXNCIndependence, by valid Liens liens and security interests which have been perfected. Accurate lists of all loans, discounts and financing leases as of December 31, 2016 and on a monthly basis thereafter, and of the investment portfolios of each Independence Entity as of such date, have been and will be made available to Parent concurrently with the Independence Disclosure Memorandum. Except as specifically set forth in Section 4.9(b) of the Independence Disclosure Memorandum, neither Independence nor Independence Bank is a party to any written or oral loan agreement, note, or borrowing arrangement, including any loan guaranty, that was, as of the most recent month-end (i) delinquent by more than 30 days in the payment of principal or interest, (ii) to Independence’s Knowledge, otherwise in material default for more than 30 days, (iii) classified as “substandard,” “doubtful,” “loss,” “other assets especially mentioned” or any comparable classification by Independence or by any applicable Regulatory Authority or Reserve, (iv) an obligation of any director, executive officer or 10% shareholder of any Independence Entity who is subject to Regulation O of the Federal Reserve Board (12 C.F.R. Part 215), or any person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing, or (v) in violation of any Law. (c) All securities held by FXNC Independence or First Independence Bank, as reflected in the consolidated balance sheets of FXNC Independence included in the FXNC Independence Financial Statements, are carried in accordance with GAAP, specifically including Accounting Standards Codification Topic 320, Investments – Debt and Equity Securities. Except as disclosed in Section 4.9(c) of the Independence Disclosure Memorandum and except for pledges to secure public and trust deposits and Federal Home Loan Bank advances, to Independence’s Knowledge, none of the securities reflected in the Independence Financial Statements as of December 31, 2016, and none of the securities since acquired by Independence or Independence Bank is subject to any restriction, whether contractual or statutory, which impairs the ability of Independence or Independence Bank to freely dispose of such security at any time, other than those restrictions imposed on securities held to maturity under GAAP, pursuant to a clearing agreement or in accordance with Laws. (d) All interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for FXNCIndependence’s own account, or for the account of First Independence Bank or its customerscustomers (all of which were disclosed in Section 4.9(d) of the Independence Disclosure Memorandum), were entered into (ia) in the ordinary and usual course of business consistent with past practice and in compliance with all applicable Laws laws, rules, regulations and regulatory policies, and (iib) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of FXNC Independence or First Independence Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither FXNC Independence nor First Independence Bank, nor to FXNCIndependence’s Knowledge, any other party thereto, is in breach of any material obligation under any such agreement or arrangement.