Pennsylvania | | 25-1424278 | | ||
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) |
| Main & Franklin Streets, P.O. Box 430, Johnstown, PA | | | 15907-0430 | |
| (Address of principal executive offices) | | | (Zip Code) | |
| Title Of Each Class | | | Trading Symbol | | | Name of Each Exchange On Which Registered | |
| Common Stock | | | ASRV | | | The NASDAQ Stock Market LLC | |
| 8.45% Beneficial Unsecured Securities, Series A (AmeriServ Financial Capital Trust I) | | | ASRVP | | | The NASDAQ Stock Market LLC | |
Large accelerated filer | | | Accelerated filer | | | Non-accelerated filer | |||||
| | Smaller reporting company | | ||||||||
| Emerging growth company | |
Class | | | Outstanding at | | |
| Common Stock, par value $0.01 | | 17,043,644 | |
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| Page No. | | |||||||
PART I. FINANCIAL INFORMATION: | | | |||||||
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PART II. OTHER INFORMATION | | | |||||||
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Item 2. | | | | | 49 | | | ||
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| | | March 31, 2020 | | | December 31, 2019 | | ||||||
ASSETS | | | | | | | | | | | | | |
Cash and due from depository institutions | | | | $ | 17,675 | | | | | $ | 15,642 | | |
Interest bearing deposits | | | | | 2,890 | | | | | | 2,755 | | |
Short-term investments in money market funds | | | | | 3,541 | | | | | | 3,771 | | |
Total cash and cash equivalents | | | | | 24,106 | | | | | | 22,168 | | |
Investment securities: | | | | | | | | | | | | | |
Available for sale, at fair value | | | | | 142,716 | | | | | | 141,749 | | |
Held to maturity (fair value $44,236 on March 31, 2020 and $41,082 on December 31, 2019) | | | | | 42,068 | | | | | | 39,936 | | |
Loans held for sale | | | | | 4,750 | | | | | | 4,868 | | |
Loans | | | | | 873,055 | | | | | | 883,090 | | |
Less: Unearned income | | | | | 406 | | | | | | 384 | | |
Allowance for loan losses | | | | | 9,334 | | | | | | 9,279 | | |
Net loans | | | | | 863,315 | | | | | | 873,427 | | |
Premises and equipment: | | | | | | | | | | | | | |
Operating lease right-of-use asset | | | | | 825 | | | | | | 846 | | |
Financing lease right-of-use asset | | | | | 3,074 | | | | | | 3,078 | | |
Other premises and equipment, net | | | | | 14,660 | | | | | | 14,643 | | |
Accrued interest income receivable | | | | | 3,759 | | | | | | 3,449 | | |
Goodwill | | | | | 11,944 | | | | | | 11,944 | | |
Bank owned life insurance | | | | | 39,041 | | | | | | 38,916 | | |
Net deferred tax asset | | | | | 3,705 | | | | | | 3,976 | | |
Federal Home Loan Bank stock | | | | | 3,988 | | | | | | 3,985 | | |
Federal Reserve Bank stock | | | | | 2,125 | | | | | | 2,125 | | |
Other assets | | | | | 8,279 | | | | | | 6,074 | | |
TOTAL ASSETS | | | | $ | 1,168,355 | | | | | $ | 1,171,184 | | |
LIABILITIES | | | | | | | | | | | | | |
Non-interest bearing deposits | | | | $ | 145,630 | | | | | $ | 136,462 | | |
Interest bearing deposits | | | | | 811,963 | | | | | | 824,051 | | |
Total deposits | | | | | 957,593 | | | | | | 960,513 | | |
Short-term borrowings | | | | | 16,354 | | | | | | 22,412 | | |
Advances from Federal Home Loan Bank | | | | | 58,218 | | | | | | 53,668 | | |
Operating lease liabilities | | | | | 842 | | | | | | 865 | | |
Financing lease liabilities | | | | | 3,177 | | | | | | 3,163 | | |
Guaranteed junior subordinated deferrable interest debentures, net | | | | | 12,959 | | | | | | 12,955 | | |
Subordinated debt, net | | | | | 7,517 | | | | | | 7,511 | | |
Total borrowed funds | | | | | 99,067 | | | | | | 100,574 | | |
Other liabilities | | | | | 10,855 | | | | | | 11,483 | | |
TOTAL LIABILITIES | | | | | 1,067,515 | | | | | | 1,072,570 | | |
SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | |
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,672,463 shares issued and 17,043,644 shares outstanding on March 31, 2020; 26,650,728 shares issued and 17,057,871 shares outstanding on December 31, 2019 | | | | | 267 | | | | | | 267 | | |
Treasury stock at cost, 9,628,819 shares on March 31, 2020 and 9,592,857 shares on December 31, 2019 | | | | | (83,280) | | | | | | (83,129) | | |
Capital surplus | | | | | 145,938 | | | | | | 145,888 | | |
Retained earnings | | | | | 52,745 | | | | | | 51,759 | | |
Accumulated other comprehensive loss, net | | | | | (14,830) | | | | | | (16,171) | | |
TOTAL SHAREHOLDERS’ EQUITY | | | | | 100,840 | | | | | | 98,614 | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | $ | 1,168,355 | | | | | $ | 1,171,184 | | |
September 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Cash and due from depository institutions | $ | 20,267 | $ | 25,107 | ||||
Interest bearing deposits | 2,718 | 3,066 | ||||||
Short-term investments in money market funds | 5,690 | 5,900 | ||||||
Total cash and cash equivalents | 28,675 | 34,073 | ||||||
Investment securities: | ||||||||
Available for sale | 129,446 | 127,077 | ||||||
Held to maturity (fair value $39,059 on September 30, 2017 and $30,420 on December 31, 2016) | 38,997 | 30,665 | ||||||
Loans held for sale | 1,780 | 3,094 | ||||||
Loans | 896,648 | 884,240 | ||||||
Less: Unearned income | 438 | 476 | ||||||
Allowance for loan losses | 10,346 | 9,932 | ||||||
Net loans | 885,864 | 873,832 | ||||||
Premises and equipment, net | 12,658 | 11,694 | ||||||
Accrued interest income receivable | 3,503 | 3,116 | ||||||
Goodwill | 11,944 | 11,944 | ||||||
Bank owned life insurance | 37,716 | 37,903 | ||||||
Net deferred tax asset | 9,255 | 10,655 | ||||||
Federal Home Loan Bank stock | 4,429 | 3,359 | ||||||
Federal Reserve Bank stock | 2,125 | 2,125 | ||||||
Other assets | 4,524 | 4,243 | ||||||
TOTAL ASSETS | $ | 1,170,916 | $ | 1,153,780 | ||||
LIABILITIES | ||||||||
Non-interest bearing deposits | $ | 182,396 | $ | 188,808 | ||||
Interest bearing deposits | 784,525 | 778,978 | ||||||
Total deposits | 966,921 | 967,786 | ||||||
Short-term borrowings | 33,593 | 12,754 | ||||||
Advances from Federal Home Loan Bank | 44,042 | 45,542 | ||||||
Guaranteed junior subordinated deferrable interest debentures, net | 12,919 | 12,908 | ||||||
Subordinated debt, net | 7,459 | 7,441 | ||||||
Total borrowed funds | 98,013 | 78,645 | ||||||
Other liabilities | 8,872 | 11,954 | ||||||
TOTAL LIABILITIES | 1,073,806 | 1,058,385 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,585,403 shares issued and 18,281,224 outstanding on September 30, 2017; 26,521,291 shares issued and 18,903,472 outstanding on December 31, 2016 | 266 | 265 | ||||||
Treasury stock at cost, 8,304,179 shares on September 30, 2017 and 7,617,819 on December 31, 2016 | (77,586 | ) | (74,829 | ) | ||||
Capital surplus | 145,704 | 145,535 | ||||||
Retained earnings | 39,450 | 36,001 | ||||||
Accumulated other comprehensive loss, net | (10,724 | ) | (11,577 | ) | ||||
TOTAL SHAREHOLDERS’ EQUITY | 97,110 | 95,395 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,170,916 | $ | 1,153,780 |
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
INTEREST INCOME | | | | | | | | | | | | | |
Interest and fees on loans | | | | $ | 10,332 | | | | | $ | 10,418 | | |
Interest bearing deposits | | | | | 4 | | | | | | 6 | | |
Short-term investments in money market funds | | | | | 72 | | | | | | 69 | | |
Investment securities: | | | | | | | | | | | | | |
Available for sale | | | | | 1,183 | | | | | | 1,319 | | |
Held to maturity | | | | | 353 | | | | | | 352 | | |
Total Interest Income | | | | | 11,944 | | | | | | 12,164 | | |
INTEREST EXPENSE | | | | | | | | | | | | | |
Deposits | | | | | 2,458 | | | | | | 2,730 | | |
Short-term borrowings | | | | | 12 | | | | | | 102 | | |
Advances from Federal Home Loan Bank | | | | | 284 | | | | | | 235 | | |
Financing lease liabilities | | | | | 29 | | | | | | 30 | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | 280 | | | | | | 280 | | |
Subordinated debt | | | | | 130 | | | | | | 130 | | |
Total Interest Expense | | | | | 3,193 | | | | | | 3,507 | | |
NET INTEREST INCOME | | | | | 8,751 | | | | | | 8,657 | | |
Provision (credit) for loan losses | | | | | 175 | | | | | | (400) | | |
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES | | | | | 8,576 | | | | | | 9,057 | | |
NON-INTEREST INCOME | | | | | | | | | | | | | |
Wealth management fees | | | | | 2,554 | | | | | | 2,396 | | |
Service charges on deposit accounts | | | | | 286 | | | | | | 310 | | |
Net gains on sale of loans | | | | | 237 | | | | | | 62 | | |
Mortgage related fees | | | | | 126 | | | | | | 44 | | |
Bank owned life insurance | | | | | 125 | | | | | | 128 | | |
Other income | | | | | 504 | | | | | | 665 | | |
Total Non-Interest Income | | | | | 3,832 | | | | | | 3,605 | | |
NON-INTEREST EXPENSE | | | | | | | | | | | | | |
Salaries and employee benefits | | | | | 6,704 | | | | | | 6,301 | | |
Net occupancy expense | | | | | 671 | | | | | | 658 | | |
Equipment expense | | | | | 395 | | | | | | 361 | | |
Professional fees | | | | | 1,154 | | | | | | 1,120 | | |
Supplies, postage and freight | | | | | 179 | | | | | | 173 | | |
Miscellaneous taxes and insurance | | | | | 275 | | | | | | 277 | | |
Federal deposit insurance expense | | | | | 26 | | | | | | 80 | | |
Other expense | | | | | 1,229 | | | | | | 1,323 | | |
Total Non-Interest Expense | | | | | 10,633 | | | | | | 10,293 | | |
PRETAX INCOME | | | | | 1,775 | | | | | | 2,369 | | |
Provision for income tax expense | | | | | 366 | | | | | | 491 | | |
NET INCOME | | | | | 1,409 | | | | | | 1,878 | | |
PER COMMON SHARE DATA: | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | |
Net income | | | | $ | 0.08 | | | | | $ | 0.11 | | |
Average number of shares outstanding | | | | | 17,043 | | | | | | 17,578 | | |
Diluted: | | | | | | | | | | | | | |
Net income | | | | $ | 0.08 | | | | | $ | 0.11 | | |
Average number of shares outstanding | | | | | 17,099 | | | | | | 17,664 | | |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
INTEREST INCOME | ||||||||||||||||
Interest and fees on loans | $ | 9,855 | $ | 9,462 | $ | 29,189 | $ | 28,336 | ||||||||
Interest bearing deposits | 3 | 2 | 8 | 11 | ||||||||||||
Short-term investments in money market funds | 42 | 31 | 93 | 54 | ||||||||||||
Investment securities: | ||||||||||||||||
Available for sale | 973 | 779 | 2,819 | 2,324 | ||||||||||||
Held to maturity | 314 | 202 | 877 | 562 | ||||||||||||
Total Interest Income | 11,187 | 10,476 | 32,986 | 31,287 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Deposits | 1,618 | 1,391 | 4,558 | 3,975 | ||||||||||||
Short-term borrowings | 44 | 2 | 130 | 49 | ||||||||||||
Advances from Federal Home Loan Bank | 178 | 166 | 511 | 484 | ||||||||||||
Guaranteed junior subordinated deferrable interest debentures | 280 | 280 | 840 | 840 | ||||||||||||
Subordinated debt | 130 | 131 | 390 | 389 | ||||||||||||
Total Interest Expense | 2,250 | 1,970 | 6,429 | 5,737 | ||||||||||||
NET INTEREST INCOME | 8,937 | 8,506 | 26,557 | 25,550 | ||||||||||||
Provision for loan losses | 200 | 300 | 750 | 3,650 | ||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 8,737 | 8,206 | 25,807 | 21,900 | ||||||||||||
NON-INTEREST INCOME | ||||||||||||||||
Trust and investment advisory fees | 2,045 | 2,035 | 6,292 | 6,234 | ||||||||||||
Service charges on deposit accounts | 409 | 433 | 1,168 | 1,252 | ||||||||||||
Net gains on sale of loans | 217 | 260 | 517 | 552 | ||||||||||||
Mortgage related fees | 69 | 132 | 227 | 293 | ||||||||||||
Net realized gains on investment securities | 56 | 60 | 115 | 177 | ||||||||||||
Bank owned life insurance | 143 | 169 | 594 | 505 | ||||||||||||
Other income | 690 | 572 | 2,033 | 1,827 | ||||||||||||
Total Non-Interest Income | 3,629 | 3,661 | 10,946 | 10,840 | ||||||||||||
NON-INTEREST EXPENSE | ||||||||||||||||
Salaries and employee benefits | 6,005 | 5,901 | 17,994 | 17,935 | ||||||||||||
Net occupancy expense | 634 | 656 | 1,947 | 2,083 | ||||||||||||
Equipment expense | 343 | 419 | 1,196 | 1,264 | ||||||||||||
Professional fees | 1,213 | 1,330 | 3,828 | 3,987 | ||||||||||||
Supplies, postage and freight | 161 | 181 | 516 | 530 | ||||||||||||
Miscellaneous taxes and insurance | 319 | 287 | 924 | 866 | ||||||||||||
Federal deposit insurance expense | 156 | 189 | 468 | 556 | ||||||||||||
Other expense | 1,283 | 1,393 | 3,643 | 3,885 | ||||||||||||
Total Non-Interest Expense | 10,114 | 10,356 | 30,516 | 31,106 | ||||||||||||
PRETAX INCOME | 2,252 | 1,511 | 6,237 | 1,634 | ||||||||||||
Provision for income tax expense | 701 | 446 | 1,949 | 474 | ||||||||||||
NET INCOME | 1,551 | 1,065 | 4,288 | 1,160 | ||||||||||||
Preferred stock dividends | — | — | — | 15 | ||||||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 1,551 | $ | 1,065 | $ | 4,288 | $ | 1,145 | ||||||||
PER COMMON SHARE DATA: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income | $ | 0.08 | $ | 0.06 | $ | 0.23 | $ | 0.06 | ||||||||
Average number of shares outstanding | 18,380 | 18,899 | 18,590 | 18,893 | ||||||||||||
Diluted: | ||||||||||||||||
Net income | $ | 0.08 | $ | 0.06 | $ | 0.23 | $ | 0.06 | ||||||||
Average number of shares outstanding | 18,481 | 18,957 | 18,689 | 18,947 | ||||||||||||
Cash dividends declared | $ | 0.015 | $ | 0.015 | $ | 0.045 | $ | 0.035 |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
COMPREHENSIVE INCOME | | | | | | | | | | | | | |
Net income | | | | $ | 1,409 | | | | | $ | 1,878 | | |
Other comprehensive income (loss), before tax: | | | | | | | | | | | | | |
Pension obligation change for defined benefit plan | | | | | 528 | | | | | | (1,835) | | |
Income tax effect | | | | | (111) | | | | | | 385 | | |
Unrealized holding gains on available for sale securities arising during period | | | | | 1,170 | | | | | | 1,763 | | |
Income tax effect | | | | | (246) | | | | | | (370) | | |
Other comprehensive income (loss) | | | | | 1,341 | | | | | | (57) | | |
Comprehensive income | | | | $ | 2,750 | | | | | $ | 1,821 | | |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
COMPREHENSIVE INCOME | ||||||||||||||||
Net income | $ | 1,551 | $ | 1,065 | $ | 4,288 | $ | 1,160 | ||||||||
Other comprehensive income, before tax: | ||||||||||||||||
Pension obligation change for defined benefit plan | 396 | 263 | 870 | 1,030 | ||||||||||||
Income tax effect | (135 | ) | (89 | ) | (297 | ) | (349 | ) | ||||||||
Unrealized holding gains (losses) on available for sale securities arising during period | 176 | (191 | ) | 538 | 1,417 | |||||||||||
Income tax effect | (60 | ) | 65 | (182 | ) | (483 | ) | |||||||||
Reclassification adjustment for gains on available for sale securities included in net income | (56 | ) | (60 | ) | (115 | ) | (177 | ) | ||||||||
Income tax effect | 19 | 20 | 39 | 60 | ||||||||||||
Other comprehensive income | 340 | 8 | 853 | 1,498 | ||||||||||||
Comprehensive income | $ | 1,891 | $ | 1,073 | $ | 5,141 | $ | 2,658 |
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
COMMON STOCK | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 267 | | | | | | 266 | | |
New common shares issued for exercise of stock options (21,735 and 33,684 shares for the three months ended March 31, 2020 and 2019, respectively) | | | | | — | | | | | | — | | |
Balance at end of period | | | | | 267 | | | | | | 266 | | |
TREASURY STOCK | | | | | | | | | | | | | |
Balance at beginning of period | | | | | (83,129) | | | | | | (80,579) | | |
Treasury stock, purchased at cost (35,962 and 112,311 shares for the three months ended March 31, 2020 and 2019, respectively) | | | | | (151) | | | | | | (476) | | |
Balance at end of period | | | | | (83,280) | | | | | | (81,055) | | |
CAPITAL SURPLUS | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 145,888 | | | | | | 145,782 | | |
New common shares issued for exercise of stock options (21,735 and 33,684 shares for the three months ended March 31, 2020 and 2019, respectively) | | | | | 49 | | | | | | 85 | | |
Stock option expense | | | | | 1 | | | | | | 3 | | |
Balance at end of period | | | | | 145,938 | | | | | | 145,870 | | |
RETAINED EARNINGS | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 51,759 | | | | | | 46,733 | | |
Net income | | | | | 1,409 | | | | | | 1,878 | | |
Cash dividend declared on common stock ($0.025 and $0.020 per share for the three months ended March 31, 2020 and 2019, respectively) | | | | | (423) | | | | | | (349) | | |
Balance at end of period | | | | | 52,745 | | | | | | 48,262 | | |
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET | | | | | | | | | | | | | |
Balance at beginning of period | | | | | (16,171) | | | | | | (14,225) | | |
Other comprehensive income (loss) | | | | | 1,341 | | | | | | (57) | | |
Balance at end of period | | | | | (14,830) | | | | | | (14,282) | | |
TOTAL STOCKHOLDERS’ EQUITY | | | | $ | 100,840 | | | | | $ | 99,061 | | |
Nine months ended September 30, | ||||||||
2017 | 2016 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 4,288 | $ | 1,160 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Provision for loan losses | 750 | 3,650 | ||||||
Depreciation expense | 1,224 | 1,306 | ||||||
Net amortization of investment securities | 346 | 342 | ||||||
Net realized gains on investment securities available for sale | (115 | ) | (177 | ) | ||||
Net gains on loans held for sale | (517 | ) | (552 | ) | ||||
Amortization of deferred loan fees | (117 | ) | (174 | ) | ||||
Origination of mortgage loans held for sale | (34,045 | ) | (42,549 | ) | ||||
Sales of mortgage loans held for sale | 35,876 | 37,327 | ||||||
(Increase) decrease in accrued interest income receivable | (387 | ) | 50 | |||||
Decrease in accrued interest payable | (18 | ) | (18 | ) | ||||
Earnings on bank owned life insurance | (427 | ) | (505 | ) | ||||
Deferred income taxes | 975 | (280 | ) | |||||
Amortization of deferred issuance costs | 29 | 29 | ||||||
Stock based compensation expense | 170 | 89 | ||||||
Other, net | (2,492 | ) | (2,000 | ) | ||||
Net cash provided by (used in) operating activities | 5,540 | (2,302 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Purchases of investment securities – available for sale | (27,581 | ) | (24,896 | ) | ||||
Purchases of investment securities – held to maturity | (9,465 | ) | (8,633 | ) | ||||
Proceeds from sales of investment securities – available for sale | 8,143 | 8,966 | ||||||
Proceeds from maturities of investment securities – available for sale | 17,341 | 18,750 | ||||||
Proceeds from maturities of investment securities – held to maturity | 1,054 | 2,166 | ||||||
Purchases of regulatory stock | (12,894 | ) | (8,833 | ) | ||||
Proceeds from redemption of regulatory stock | 11,824 | 10,106 | ||||||
Long-term loans originated | (122,029 | ) | (145,189 | ) | ||||
Principal collected on long-term loans | 112,626 | 120,875 | ||||||
Loans purchased or participated | (6,121 | ) | (4,948 | ) | ||||
Loans sold or participated | 2,800 | 18,900 | ||||||
Proceeds from sale of other real estate owned | 60 | 99 | ||||||
Proceeds from life insurance policies | 614 | — | ||||||
Purchases of premises and equipment | (2,188 | ) | (1,012 | ) | ||||
Net cash used in investing activities | (25,816 | ) | (13,649 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Net (decrease) increase in deposit balances | (865 | ) | 59,442 | |||||
Net increase (decrease) in other short-term borrowings | 20,839 | (40,847 | ) | |||||
Principal borrowings on advances from Federal Home Loan Bank | 9,500 | 7,042 | ||||||
Principal repayments on advances from Federal Home Loan Bank | (11,000 | ) | (6,000 | ) | ||||
Preferred stock redemption | — | (21,000 | ) | |||||
Purchase of treasury stock | (2,757 | ) | — | |||||
Common stock dividends | (839 | ) | (661 | ) | ||||
Preferred stock dividends | — | (15 | ) | |||||
Net cash provided by (used in) financing activities | 14,878 | (2,039 | ) | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (5,398 | ) | (17,990 | ) | ||||
CASH AND CASH EQUIVALENTS AT JANUARY 1 | 34,073 | 48,510 | ||||||
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 | $ | 28,675 | $ | 30,520 |
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
OPERATING ACTIVITIES | | | | | | | | | | | | | |
Net income | | | | $ | 1,409 | | | | | $ | 1,878 | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | | | | | | | | | |
Provision (credit) for loan losses | | | | | 175 | | | | | | (400) | | |
Depreciation and amortization expense | | | | | 492 | | | | | | 450 | | |
Net amortization of investment securities | | | | | 65 | | | | | | 66 | | |
Net gains on loans held for sale | | | | | (237) | | | | | | (62) | | |
Amortization of deferred loan fees | | | | | (26) | | | | | | (30) | | |
Origination of mortgage loans held for sale | | | | | (15,264) | | | | | | (3,866) | | |
Sales of mortgage loans held for sale | | | | | 15,619 | | | | | | 4,156 | | |
Increase in accrued interest receivable | | | | | (310) | | | | | | (443) | | |
Decrease in accrued interest payable | | | | | (150) | | | | | | (17) | | |
Earnings on bank owned life insurance | | | | | (125) | | | | | | (128) | | |
Deferred income taxes | | | | | 351 | | | | | | 532 | | |
Stock compensation expense | | | | | 1 | | | | | | 3 | | |
Net change in operating leases | | | | | (23) | | | | | | (4) | | |
Other, net | | | | | (2,603) | | | | | | (434) | | |
Net cash provided by (used in) operating activities | | | | | (626) | | | | | | 1,701 | | |
INVESTING ACTIVITIES | | | | | | | | | | | | | |
Purchase of investment securities – available for sale | | | | | (6,223) | | | | | | (9,063) | | |
Purchase of investment securities – held to maturity | | | | | (2,618) | | | | | | — | | |
Proceeds from maturities of investment securities – available for sale | | | | | 6,380 | | | | | | 3,484 | | |
Proceeds from maturities of investment securities – held to maturity | | | | | 467 | | | | | | 214 | | |
Purchase of regulatory stock | | | | | (2,010) | | | | | | (4,104) | | |
Proceeds from redemption of regulatory stock | | | | | 2,007 | | | | | | 4,589 | | |
Long-term loans originated | | | | | (42,615) | | | | | | (49,039) | | |
Principal collected on long-term loans | | | | | 52,578 | | | | | | 48,654 | | |
Proceeds from sale of other real estate owned | | | | | 21 | | | | | | 176 | | |
Purchase of premises and equipment | | | | | (421) | | | | | | (1,395) | | |
Net cash provided by (used in) investing activities | | | | | 7,566 | | | | | | (6,484) | | |
FINANCING ACTIVITIES | | | | | | | | | | | | | |
Net increase (decrease) in deposit balances | | | | | (2,920) | | | | | | 8,608 | | |
Net decrease in other short-term borrowings | | | | | (6,058) | | | | | | (10,117) | | |
Principal borrowings on advances from Federal Home Loan Bank | | | | | 11,050 | | | | | | 2,850 | | |
Principal repayments on advances from Federal Home Loan Bank | | | | | (6,500) | | | | | | (1,000) | | |
Principal payments on financing lease liabilities | | | | | (49) | | | | | | (41) | | |
Stock options exercised | | | | | 49 | | | | | | 85 | | |
Purchase of treasury stock | | | | | (151) | | | | | | (476) | | |
Common stock dividends | | | | | (423) | | | | | | (349) | | |
Net cash used in financing activities | | | | | (5,002) | | | | | | (440) | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | | | 1,938 | | | | | | (5,223) | | |
CASH AND CASH EQUIVALENTS AT JANUARY 1 | | | | | 22,168 | | | | | | 34,894 | | |
CASH AND CASH EQUIVALENTS AT MARCH 31 | | | | $ | 24,106 | | | | | $ | 29,671 | | |
In January 2016, the FASB issued ASU 2016-01,Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.
In February 2016, the FASB issued ASU 2016-02,Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and for interim periods within fiscal years beginning after December 15, 2020. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the practical measures it may elect at adoption, but does not anticipate the amendment will have a significant impact to the financial statements. Based on the Company’s preliminary analysis of its current portfolio, the Company expects to recognize a right of use asset and a lease liability for its operating leases commitments. The Company also anticipates additional disclosures to be provided at adoption.
In June 2016, the FASB issued ASU 2016-13,Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments(“ASU 2016-13”) (ASU 2016-13), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effectedaffected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted.
In January 2017, the FASB issued ASU No. 2017-03 “Accounting Changes and Error Corrections (Topic 250) and Investments — Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings.” ASU 2017-03 provides amendments that add paragraph 250-10-S99-6 which includes the text of “SEC Staff Announcement: Disclosure of the Impact That Recently Issued Accounting Standards Will Have on the Financial Statements of a Registrant When Such Standards Are Adopted in a Future Period (in accordance with Staff Accounting Bulletin (SAB) Topic 11.M). This announcement applies to ASU No. 2014-09,Revenue from Contracts with Customers (Topic 606); ASU No. 2016-02,Leases (Topic 842); and ASU 2016-03,Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments. The Company has enhanced its disclosures regarding the impact that recently issued accounting standards adopted in a future period will have on its accounting and disclosures in this footnote.
In March 2017, the FASB issued ASU 2017-07,Compensation — Retirement Benefits (Topic 715). The amendments in this Update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. This Update is not expected to have a significant impact on the Company’s financial statements.
In March 2017, the FASB issued ASU 2017-08,Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments
should
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Non-interest income: | | | | | | | | | | | | | |
In-scope of Topic 606 | | | | | | | | | | | | | |
Wealth management fees | | | | $ | 2,554 | | | | | $ | 2,396 | | |
Service charges on deposit accounts | | | | | 286 | | | | | | 310 | | |
Other | | | | | 390 | | | | | | 420 | | |
Non-interest income (in-scope of Topic 606) | | | | | 3,230 | | | | | | 3,126 | | |
Non-interest income (out-of-scope of Topic 606) | | | | | 602 | | | | | | 479 | | |
Total non-interest income | | | | $ | 3,832 | | | | | $ | 3,605 | | |
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
| | | (In thousands, except per share data) | | |||||||||
Numerator: | | | | | | | | | | | | | |
Net income | | | | $ | 1,409 | | | | | $ | 1,878 | | |
Denominator: | | | | | | | | | | | | | |
Weighted average common shares outstanding (basic) | | | | | 17,043 | | | | | | 17,578 | | |
Effect of stock options | | | | | 56 | | | | | | 86 | | |
Weighted average common shares outstanding (diluted) | | | | | 17,099 | | | | | | 17,664 | | |
Earnings per common share: | | | | | | | | | | | | | |
Basic | | | | $ | 0.08 | | | | | $ | 0.11 | | |
Diluted | | | | | 0.08 | | | | | | 0.11 | | |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 1,551 | $ | 1,065 | $ | 4,288 | $ | 1,160 | ||||||||
Preferred stock dividends | — | — | — | (15 | ) | |||||||||||
Net income available to common shareholders | $ | 1,551 | $ | 1,065 | $ | 4,288 | $ | 1,145 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding (basic) | 18,380 | 18,899 | 18,590 | 18,893 | ||||||||||||
Effect of stock options | 101 | 58 | 99 | 54 | ||||||||||||
Weighted average common shares outstanding (diluted) | 18,481 | 18,957 | 18,689 | 18,947 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.08 | $ | 0.06 | $ | 0.23 | $ | 0.06 | ||||||||
Diluted | 0.08 | 0.06 | 0.23 | 0.06 |
| | | March 31, 2020 | | |||||||||||||||||||||
| | | Cost Basis | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value | | ||||||||||||
US Agency | | | | $ | 3,895 | | | | | $ | 72 | | | | | $ | — | | | | | $ | 3,967 | | |
US Agency mortgage-backed securities | | | | | 78,862 | | | | | | 3,278 | | | | | | (56) | | | | | | 82,084 | | |
Municipal | | | | | 14,925 | | | | | | 899 | | | | | | — | | | | | | 15,824 | | |
Corporate bonds | | | | | 41,693 | | | | | | 470 | | | | | | (1,322) | | | | | | 40,841 | | |
Total | | | | $ | 139,375 | | | | | $ | 4,719 | | | | | $ | (1,378) | | | | | $ | 142,716 | | |
September 30, 2017 | ||||||||||||||||
Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
US Agency | $ | 5,435 | $ | 1 | $ | (34 | ) | $ | 5,402 | |||||||
US Agency mortgage-backed securities | 80,756 | 866 | (382 | ) | 81,240 | |||||||||||
Taxable municipal | 7,203 | 30 | (166 | ) | 7,067 | |||||||||||
Corporate bonds | 35,886 | 327 | (476 | ) | 35,737 | |||||||||||
Total | $ | 129,280 | $ | 1,224 | $ | (1,058 | ) | $ | 129,446 |
| | | March 31, 2020 | | |||||||||||||||||||||
| | | Cost Basis | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value | | ||||||||||||
US Agency mortgage-backed securities | | | | $ | 10,510 | | | | | $ | 508 | | | | | $ | — | | | | | $ | 11,018 | | |
Municipal | | | | | 25,527 | | | | | | 1,674 | | | | | | (50) | | | | | | 27,151 | | |
Corporate bonds and other securities | | | | | 6,031 | | | | | | 42 | | | | | | (6) | | | | | | 6,067 | | |
Total | | | | $ | 42,068 | | | | | $ | 2,224 | | | | | $ | (56) | | | | | $ | 44,236 | | |
September 30, 2017 | ||||||||||||||||
Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
US Agency mortgage-backed securities | $ | 10,081 | $ | 194 | $ | (23 | ) | $ | 10,252 | |||||||
Taxable municipal | 22,873 | 222 | (314 | ) | 22,781 | |||||||||||
Corporate bonds and other securities | 6,043 | 29 | (46 | ) | 6,026 | |||||||||||
Total | $ | 38,997 | $ | 445 | $ | (383 | ) | $ | 39,059 |
| | | December 31, 2019 | | |||||||||||||||||||||
| | | Cost Basis | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value | | ||||||||||||
US Agency | | | | $ | 5,084 | | | | | $ | 32 | | | | | $ | — | | | | | $ | 5,116 | | |
US Agency mortgage-backed securities | | | | | 80,046 | | | | | | 1,681 | | | | | | (94) | | | | | | 81,633 | | |
Municipal | | | | | 14,678 | | | | | | 509 | | | | | | (17) | | | | | | 15,170 | | |
Corporate bonds | | | | | 39,769 | | | | | | 342 | | | | | | (281) | | | | | | 39,830 | | |
Total | | | | $ | 139,577 | | | | | $ | 2,564 | | | | | $ | (392) | | | | | $ | 141,749 | | |
|
December 31, 2016 | ||||||||||||||||
Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
US Agency | $ | 400 | $ | — | $ | (2 | ) | $ | 398 | |||||||
US Agency mortgage-backed securities | 88,738 | 1,132 | (686 | ) | 89,184 | |||||||||||
Taxable municipal | 3,793 | 3 | (174 | ) | 3,622 | |||||||||||
Corporate bonds | 34,403 | 194 | (724 | ) | 33,873 | |||||||||||
Total | $ | 127,334 | $ | 1,329 | $ | (1,586 | ) | $ | 127,077 |
| | | December 31, 2019 | | |||||||||||||||||||||
| | | Cost Basis | | | Gross Unrealized Gains | | | Gross Unrealized Losses | | | Fair Value | | ||||||||||||
US Agency mortgage-backed securities | | | | $ | 9,466 | | | | | $ | 251 | | | | | $ | (4) | | | | | $ | 9,713 | | |
Municipal | | | | | 24,438 | | | | | | 941 | | | | | | (53) | | | | | | 25,326 | | |
Corporate bonds and other securities | | | | | 6,032 | | | | | | 58 | | | | | | (47) | | | | | | 6,043 | | |
Total | | | | $ | 39,936 | | | | | $ | 1,250 | | | | | $ | (104) | | | | | $ | 41,082 | | |
December 31, 2016 | ||||||||||||||||
Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
US Agency mortgage-backed securities | $ | 11,177 | $ | 180 | $ | (79 | ) | $ | 11,278 | |||||||
Taxable municipal | 13,441 | 70 | (348 | ) | 13,163 | |||||||||||
Corporate bonds and other securities | 6,047 | 15 | (83 | ) | 5,979 | |||||||||||
Total | $ | 30,665 | $ | 265 | $ | (510 | ) | $ | 30,420 |
Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At September 30, 2017, 57.8%March 31, 2020, 52.1% of the portfolio was rated “AAA” as compared to 63.5%53.4% at December 31, 2016.2019. Approximately 12.8%9.8% of the portfolio was either rated below “A” or unrated at September 30, 2017March 31, 2020 as compared to 10.1%9.1% at December 31, 2016.
The Company sold $937,000no AFS securities induring the thirdfirst quarter of 2017 resulting in $56,000 of gross investment security gains2020 and sold $8.1 million AFS securities in the first nine months of 2017 resulting in $115,000 of gross investment security gains. 2019.
The bookcarrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $117,364,000 at March 31, 2020 and certain Federal Home Loan Bank borrowings was $114,589,000 at September 30, 2017 and $104,953,000$117,076,000 at December 31, 2016.
2019.
| | | March 31, 2020 | | |||||||||||||||||||||||||||||||||
| | | Less than 12 months | | | 12 months or longer | | | Total | | |||||||||||||||||||||||||||
| | | Fair Value | | | Unrealized Losses | | | Fair Value | | | Unrealized Losses | | | Fair Value | | | Unrealized Losses | | ||||||||||||||||||
US Agency | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
US Agency mortgage-backed securities | | | | | 2,363 | | | | | | (19) | | | | | | 1,885 | | | | | | (37) | | | | | | 4,248 | | | | | | (56) | | |
Municipal | | | | | 144 | | | | | | (1) | | | | | | 757 | | | | | | (49) | | | | | | 901 | | | | | | (50) | | |
Corporate bonds and other securities | | | | | 12,784 | | | | | | (786) | | | | | | 6,958 | | | | | | (542) | | | | | | 19,742 | | | | | | (1,328) | | |
Total | | | | $ | 15,291 | | | | | $ | (806) | | | | | $ | 9,600 | | | | | $ | (628) | | | | | $ | 24,891 | | | | | $ | (1,434 | | |
September 30, 2017 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
US Agency | $ | 3,990 | $ | (33 | ) | $ | 399 | $ | (1 | ) | $ | 4,389 | $ | (34 | ) | |||||||||
US Agency mortgage-backed securities | 38,127 | (321 | ) | 3,239 | (84 | ) | 41,366 | (405 | ) | |||||||||||||||
Taxable municipal | 11,724 | (377 | ) | 2,172 | (103 | ) | 13,896 | (480 | ) | |||||||||||||||
Corporate bonds and other securities | 12,414 | (205 | ) | 10,265 | (317 | ) | 22,679 | (522 | ) | |||||||||||||||
Total | $ | 66,255 | $ | (936 | ) | $ | 16,075 | $ | (505 | ) | $ | 82,330 | $ | (1,441 | ) |
| | | December 31, 2019 | | |||||||||||||||||||||||||||||||||
| | | Less than 12 months | | | 12 months or longer | | | Total | | |||||||||||||||||||||||||||
| | | Fair Value | | | Unrealized Losses | | | Fair Value | | | Unrealized Losses | | | Fair Value | | | Unrealized Losses | | ||||||||||||||||||
US Agency | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
US Agency mortgage-backed securities | | | | | 7,084 | | | | | | (23) | | | | | | 8,562 | | | | | | (75) | | | | | | 15,646 | | | | | | (98) | | |
Municipal | | | | | 2,269 | | | | | | (18) | | | | | | 1,123 | | | | | | (52) | | | | | | 3,392 | | | | | | (70) | | |
Corporate bonds and other securities | | | | | 7,797 | | | | | | (85) | | | | | | 11,783 | | | | | | (243) | | | | | | 19,580 | | | | | | (328) | | |
Total | | | | $ | 17,150 | | | | | $ | (126) | | | | | $ | 21,468 | | | | | $ | (370) | | | | | $ | 38,618 | | | | | $ | (496) | | |
December 31, 2016 | ||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Total | ||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
US Agency | $ | 398 | $ | (2 | ) | $ | — | $ | — | $ | 398 | $ | (2 | ) | ||||||||||
US Agency mortgage-backed securities | 49,918 | (703 | ) | 1,576 | (62 | ) | 51,494 | (765 | ) | |||||||||||||||
Taxable municipal | 13,301 | (522 | ) | — | — | 13,301 | (522 | ) | ||||||||||||||||
Corporate bonds and other securities | 20,380 | (570 | ) | 6,762 | (237 | ) | 27,142 | (807 | ) | |||||||||||||||
Total | $ | 83,997 | $ | (1,797 | ) | $ | 8,338 | $ | (299 | ) | $ | 92,335 | $ | (2,096 | ) |
Contractual maturities of securities at September 30, 2017March 31, 2020 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The weighted average duration of the total investment securities portfolio at September 30, 2017March 31, 2020 is 44.224.7 months and is higherlower than the duration at December 31, 20162019 which was 41.236.9 months. The duration remains within our internal established guideline range of 24 to 60 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.
| | | March 31, 2020 | | |||||||||||||||||||||
| | | Available for sale | | | Held to maturity | | ||||||||||||||||||
| | | Cost Basis | | | Fair Value | | | Cost Basis | | | Fair Value | | ||||||||||||
Within 1 year | | | | $ | 3,491 | | | | | $ | 3,486 | | | | | $ | — | | | | | $ | — | | |
After 1 year but within 5 years | | | | | 23,276 | | | | | | 23,068 | | | | | | 7,530 | | | | | | 7,732 | | |
After 5 years but within 10 years | | | | | 39,693 | | | | | | 40,334 | | | | | | 20,094 | | | | | | 21,386 | | |
After 10 years but within 15 years | | | | | 21,766 | | | | | | 22,749 | | | | | | 7,707 | | | | | | 8,116 | | |
Over 15 years | | | | | 51,149 | | | | | | 53,079 | | | | | | 6,737 | | | | | | 7,002 | | |
Total | | | | $ | 139,375 | | | | | $ | 142,716 | | | | | $ | 42,068 | | | | | $ | 44,236 | | |
September 30, 2017 | ||||||||||||||||
Available for sale | Held to maturity | |||||||||||||||
Cost Basis | Fair Value | Cost Basis | Fair Value | |||||||||||||
Within 1 year | $ | 1,400 | $ | 1,399 | $ | 2,000 | $ | 1,975 | ||||||||
After 1 year but within 5 years | 11,706 | 11,718 | 1,551 | 1,533 | ||||||||||||
After 5 years but within 10 years | 45,805 | 45,999 | 14,562 | 14,639 | ||||||||||||
After 10 years but within 15 years | 27,738 | 27,609 | 14,924 | 14,824 | ||||||||||||
Over 15 years | 42,631 | 42,721 | 5,960 | 6,088 | ||||||||||||
Total | $ | 129,280 | $ | 129,446 | $ | 38,997 | $ | 39,059 |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Commercial: | | | | ||||||||||
Commercial and industrial | | | | $ | 166,911 | | | | | $ | 173,922 | | |
Commercial loans secured by owner occupied real estate | | | | | 87,310 | | | | | | 91,655 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 370,266 | | | | | | 363,635 | | |
Real estate – residential mortgage | | | | | 230,207 | | | | | | 235,239 | | |
Consumer | | | | | 17,955 | | | | | | 18,255 | | |
Loans, net of unearned income | | | | $ | 872,649 | | | | | $ | 882,706 | | |
September 30, 2017 | December 31, 2016 | |||||||
Commercial | $ | 160,918 | $ | 171,529 | ||||
Commercial loans secured by real estate | 469,348 | 446,598 | ||||||
Real estate – mortgage | 246,881 | 245,765 | ||||||
Consumer | 19,063 | 19,872 | ||||||
Loans, net of unearned income | $ | 896,210 | $ | 883,764 |
Loan balances at September 30, 2017March 31, 2020 and December 31, 20162019 are net of unearned income of $438,000$406,000 and $476,000,$384,000, respectively. Real estate-constructionestate construction loans comprised 3.6%5.4% and 4.7%4.9% of total loans, net of unearned income at September 30, 2017March 31, 2020 and December 31, 2016,2019, respectively.
| | | Commercial and industrial | | | Commercial loans secured by owner occupied real estate | | | Commercial loans secured by non-owner occupied real estate | | | Total | | ||||||||||||
1 – 4 unit residential | | | | $ | 1,603 | | | | | $ | 133 | | | | | $ | 3,439 | | | | | $ | 5,175 | | |
Multifamily/apartments/student housing | | | | | — | | | | | | 359 | | | | | | 53,065 | | | | | | 53,424 | | |
Office | | | | | 37,929 | | | | | | 10,280 | | | | | | 38,218 | | | | | | 86,427 | | |
Retail | | | | | 4,129 | | | | | | 21,333 | | | | | | 108,763 | | | | | | 134,225 | | |
Industrial/manufacturing/warehouse | | | | | 101,464 | | | | | | 17,698 | | | | | | 40,115 | | | | | | 159,277 | | |
Hotels | | | | | 419 | | | | | | — | | | | | | 45,764 | | | | | | 46,183 | | |
Eating and drinking places | | | | | 887 | | | | | | 4,434 | | | | | | 597 | | | | | | 5,918 | | |
Amusement and recreation | | | | | 210 | | | | | | 3,384 | | | | | | 57 | | | | | | 3,651 | | |
Mixed use | | | | | — | | | | | | 1,574 | | | | | | 65,631 | | | | | | 67,205 | | |
Other | | | | | 20,270 | | | | | | 28,115 | | | | | | 14,617 | | | | | | 63,002 | | |
Total | | | | $ | 166,911 | | | | | $ | 87,310 | | | | | $ | 370,266 | | | | | $ | 624,487 | | |
| | | Three months ended March 31, 2020 | | |||||||||||||||||||||||||||
| | | Balance at December 31, 2019 | | | Charge- Offs | | | Recoveries | | | Provision (Credit) | | | Balance at March 31, 2020 | | |||||||||||||||
Commercial | | | | $ | 3,951 | | | | | $ | — | | | | | $ | — | | | | | $ | (91) | | | | | $ | 3,860 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 3,119 | | | | | | — | | | | | | 14 | | | | | | 155 | | | | | | 3,288 | | |
Real estate-residential mortgage | | | | | 1,159 | | | | | | (92) | | | | | | 6 | | | | | | 68 | | | | | | 1,141 | | |
Consumer | | | | | 126 | | | | | | (62) | | | | | | 14 | | | | | | 42 | | | | | | 120 | | |
Allocation for general risk | | | | | 924 | | | | | | — | | | | | | — | | | | | | 1 | | | | | | 925 | | |
Total | | | | $ | 9,279 | | | | | $ | (154) | | | | | $ | 34 | | | | | $ | 175 | | | | | $ | 9,334 | | |
|
| | | Three months ended March 31, 2019 | | |||||||||||||||||||||||||||
| | | Balance at December 31, 2018 | | | Charge- Offs | | | Recoveries | | | Provision (Credit) | | | Balance at March 31, 2019 | | |||||||||||||||
Commercial | | | | $ | 3,057 | | | | | $ | — | | | | | $ | 5 | | | | | $ | (448) | | | | | $ | 2,614 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 3,389 | | | | | | (63) | | | | | | 11 | | | | | | 36 | | | | | | 3,373 | | |
Real estate-residential mortgage | | | | | 1,235 | | | | | | (61) | | | | | | 8 | | | | | | 31 | | | | | | 1,213 | | |
Consumer | | | | | 127 | | | | | | (82) | | | | | | 18 | | | | | | 62 | | | | | | 125 | | |
Allocation for general risk | | | | | 863 | | | | | | — | | | | | | — | | | | | | (81) | | | | | | 782 | | |
Total | | | | $ | 8,671 | | | | | $ | (206) | | | | | $ | 42 | | | | | $ | (400) | | | | | $ | 8,107 | | |
Three months ended September 30, 2017 | ||||||||||||||||||||
Balance at June 30, 2017 | Charge-Offs | Recoveries | Provision (Credit) | Balance at September 30, 2017 | ||||||||||||||||
Commercial | $ | 3,825 | $ | (228 | ) | $ | 9 | $ | 561 | $ | 4,167 | |||||||||
Commercial loans secured by real estate | 4,487 | — | 3 | (644 | ) | 3,846 | ||||||||||||||
Real estate-mortgage | 1,151 | (109 | ) | 72 | 50 | 1,164 | ||||||||||||||
Consumer | 138 | (42 | ) | 50 | (7 | ) | 139 | |||||||||||||
Allocation for general risk | 790 | — | — | 240 | 1,030 | |||||||||||||||
Total | $ | 10,391 | $ | (379 | ) | $ | 134 | $ | 200 | $ | 10,346 |
Three months ended September 30, 2016 | ||||||||||||||||||||
Balance at June 30, 2016 | Charge-Offs | Recoveries | Provision (Credit) | Balance at September 30, 2016 | ||||||||||||||||
Commercial | $ | 4,322 | $ | (295 | ) | $ | 115 | $ | 92 | $ | 4,234 | |||||||||
Commercial loans secured by real estate | 3,274 | (13 | ) | 2 | 85 | 3,348 | ||||||||||||||
Real estate-mortgage | 1,075 | (104 | ) | 24 | 77 | 1,072 | ||||||||||||||
Consumer | 135 | (57 | ) | 8 | 53 | 139 | ||||||||||||||
Allocation for general risk | 940 | — | — | (7 | ) | 933 | ||||||||||||||
Total | $ | 9,746 | $ | (469 | ) | $ | 149 | $ | 300 | $ | 9,726 |
Nine months ended September 30, 2017 | ||||||||||||||||||||
Balance at December 31, 2016 | Charge-Offs | Recoveries | Provision (Credit) | Balance at September 30, 2017 | ||||||||||||||||
Commercial | $ | 4,041 | $ | (228 | ) | $ | 22 | $ | 332 | $ | 4,167 | |||||||||
Commercial loans secured by real estate | 3,584 | (14 | ) | 8 | 268 | 3,846 | ||||||||||||||
Real estate-mortgage | 1,169 | (263 | ) | 165 | 93 | 1,164 | ||||||||||||||
Consumer | 151 | (138 | ) | 112 | 14 | 139 | ||||||||||||||
Allocation for general risk | 987 | — | — | 43 | 1,030 | |||||||||||||||
Total | $ | 9,932 | $ | (643 | ) | $ | 307 | $ | 750 | $ | 10,346 |
Nine months ended September 30, 2016 | ||||||||||||||||||||
Balance at December 31, 2015 | Charge-Offs | Recoveries | Provision (Credit) | Balance at September 30, 2016 | ||||||||||||||||
Commercial | $ | 4,244 | $ | (3,648 | ) | $ | 126 | $ | 3,512 | $ | 4,234 | |||||||||
Commercial loans secured by real estate | 3,449 | (13 | ) | 38 | (126 | ) | 3,348 | |||||||||||||
Real estate-mortgage | 1,173 | (150 | ) | 86 | (37 | ) | 1,072 | |||||||||||||
Consumer | 151 | (302 | ) | 18 | 272 | 139 | ||||||||||||||
Allocation for general risk | 904 | — | — | 29 | 933 | |||||||||||||||
Total | $ | 9,921 | $ | (4,113 | ) | $ | 268 | $ | 3,650 | $ | 9,726 |
The provision expense, charge-offs and recoveries were at more typical levels in the first nine months of 2017. The allocation amount to commercial loans secured by real estate (CRE) in the third quarter of 2017 reflects an improvement in the level of delinquency and the level of classified assets since the end of the second quarter of 2017 as one large CRE credit was upgraded and another transferred into non-accrual status (see further discussion in the loan quality section of the MD&A). The substantially higher than typical provision and net loan charge-offs in the first three months 2016 for the commercial portfolio was necessary to resolve the Company’s only meaningful direct loan exposure to the energy industry. These loans were related to a single borrower in the fracking industry who had filed for bankruptcy protection in the fourth quarter of 2015. With the bankruptcy changing from Chapter 11 (reorganization) to Chapter 7 (liquidation) late in the first quarter of 2016, the Company concluded that its previously established reserves on these non-accrual loans were not sufficient to cover the discounted collateral values that resulted from the liquidation process.
The following tables summarize the loan portfolio and allowance for loan loss by the primary segments of the loan portfolio (in thousands).
| | | At March 31, 2020 | | |||||||||||||||||||||||||||||||||
| | | Commercial | | | Commercial Loans Secured by Non-Owner Occupied Real Estate | | | Real Estate- Residential Mortgage | | | Consumer | | | Allocation for General Risk | | | Total | | ||||||||||||||||||
Loans: | | | | | | | | ||||||||||||||||||||||||||||||
Individually evaluated for impairment | | | | $ | 833 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | 841 | | |
Collectively evaluated for impairment | | | | | 253,388 | | | | | | 370,258 | | | | | | 230,207 | | | | | | 17,955 | | | | | | | | | | | | 871,808 | | |
Total loans | | | | $ | 254,221 | | | | | $ | 370,266 | | | | | $ | 230,207 | | | | | $ | 17,955 | | | | | | | | | | | $ | 872,649 | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Specific reserve allocation | | | | $ | 79 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 87 | | |
General reserve allocation | | | | | 3,781 | | | | | | 3,280 | | | | | | 1,141 | | | | | | 120 | | | | | | 925 | | | | | | 9,247 | | |
Total allowance for loan losses | | | | $ | 3,860 | | | | | $ | 3,288 | | | | | $ | 1,141 | | | | | $ | 120 | | | | | $ | 925 | | | | | $ | 9,334 | | |
|
| | | At December 31, 2019 | | | |||||||||||||||||||||||||||||||||||
| | | Commercial | | | Commercial Loans Secured by Non-Owner Occupied Real Estate | | | Real Estate- Residential Mortgage | | | Consumer | | | Allocation for General Risk | | | Total | | | ||||||||||||||||||||
Loans: | | | | | | | | | ||||||||||||||||||||||||||||||||
Individually evaluated for impairment | | | | $ | 816 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | 824 | | | | | |
Collectively evaluated for impairment | | | | | 264,761 | | | | | | 363,627 | | | | | | 235,239 | | | | | | 18,255 | | | | | | | | | | | | 881,882 | | | | | |
Total loans | | | | $ | 265,577 | | | | | $ | 363,635 | | | | | $ | 235,239 | | | | | $ | 18,255 | | | | | | | | | | | $ | 882,706 | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Specific reserve allocation | | | | $ | 84 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 92 | | | | ||
General reserve allocation | | | | | 3,867 | | | | | | 3,111 | | | | | | 1,159 | | | | | | 126 | | | | | | 924 | | | | | | 9,187 | | | | ||
Total allowance for loan losses | | | | $ | 3,951 | | | | | $ | 3,119 | | | | | $ | 1,159 | | | | | $ | 126 | | | | | $ | 924 | | | | | $ | 9,279 | | | |
At September 30, 2017 | ||||||||||||||||||||||||
Loans: | Commercial | Commercial Loans Secured by Real Estate | Real Estate- Mortgage | Consumer | Allocation for General Risk | Total | ||||||||||||||||||
Individually evaluated for impairment | $ | 1,458 | $ | 2,465 | $ | — | $ | — | $ | 3,923 | ||||||||||||||
Collectively evaluated for impairment | 159,460 | 466,883 | 246,881 | 19,063 | 892,287 | |||||||||||||||||||
Total loans | $ | 160,918 | $ | 469,348 | $ | 246,881 | $ | 19,063 | $ | 896,210 | ||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Specific reserve allocation | $ | 860 | $ | 28 | $ | — | $ | — | $ | — | $ | 888 | ||||||||||||
General reserve allocation | 3,307 | 3,818 | 1,164 | 139 | 1,030 | 9,458 | ||||||||||||||||||
Total allowance for loan losses | $ | 4,167 | $ | 3,846 | $ | 1,164 | $ | 139 | $ | 1,030 | $ | 10,346 |
At December 31, 2016 | ||||||||||||||||||||||||
Loans: | Commercial | Commercial Loans Secured by Real Estate | Real Estate- Mortgage | Consumer | Allocation for General Risk | Total | ||||||||||||||||||
Individually evaluated for impairment | $ | 496 | $ | 178 | $ | — | $ | — | $ | 674 | ||||||||||||||
Collectively evaluated for impairment | 171,033 | 446,420 | 245,765 | 19,872 | 883,090 | |||||||||||||||||||
Total loans | $ | 171,529 | $ | 446,598 | $ | 245,765 | $ | 19,872 | $ | 883,764 | ||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||
Specific reserve allocation | $ | 496 | $ | 31 | $ | — | $ | — | $ | — | $ | 527 | ||||||||||||
General reserve allocation | 3,545 | 3,553 | 1,169 | 151 | 987 | 9,405 | ||||||||||||||||||
Total allowance for loan losses | $ | 4,041 | $ | 3,584 | $ | 1,169 | $ | 151 | $ | 987 | $ | 9,932 |
The segments of the Company’s loan portfolio are disaggregated to a levelinto classes that allows management to monitor risk and performance. The loan segmentsclasses used are consistent with the internal reports evaluated by the Company’s management and Board of Directors to monitor risk and performance within various segments of its loan portfolio and therefore, no further disaggregation into classes is necessary.portfolio. The overall risk profile for the commercial loan segment is effected by non-ownerincludes both the commercial and industrial and the owner occupied commercial real estate (CRE) loans, which include loans secured by non-owner occupied nonfarm nonresidential properties,loan classes while the remaining segments are not separated into classes as a meaningful portion of the commercial portfolio is centeredmanagement monitors risk in these types of accounts.loans at the segment level. The residential mortgage loan segment is comprised of first lien amortizing residential mortgage loans and home equity loans secured by residential real estate. The consumer loan segment consists primarily of installment loans and overdraft lines of credit connected with customer deposit accounts.
| | | March 31, 2020 | | |||||||||||||||||||||||||||
| | | Impaired Loans with Specific Allowance | | | Impaired Loans with no Specific Allowance | | | Total Impaired Loans | | |||||||||||||||||||||
| | | Recorded Investment | | | Related Allowance | | | Recorded Investment | | | Recorded Investment | | | Unpaid Principal Balance | | |||||||||||||||
Commercial | | | | $ | 833 | | | | | $ | 79 | | | | | $ | — | | | | | $ | 833 | | | | | $ | 833 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 8 | | | | | | — | | | | | | 8 | | | | | | 30 | | |
Total impaired loans | | | | $ | 841 | | | | | $ | 87 | | | | | $ | — | | | | | $ | 841 | | | | | $ | 863 | | |
|
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | Impaired Loans with Specific Allowance | | | Impaired Loans with no Specific Allowance | | | Total Impaired Loans | | |||||||||||||||||||||
| | | Recorded Investment | | | Related Allowance | | | Recorded Investment | | | Recorded Investment | | | Unpaid Principal Balance | | |||||||||||||||
Commercial | | | | $ | 816 | | | | | $ | 84 | | | | | $ | — | | | | | $ | 816 | | | | | $ | 816 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 8 | | | | | | — | | | | | | 8 | | | | | | 30 | | |
Total impaired loans | | | | $ | 824 | | | | | $ | 92 | | | | | $ | — | | | | | $ | 824 | | | | | $ | 846 | | |
September 30, 2017 | ||||||||||||||||||||
Impaired Loans with Specific Allowance | Impaired Loans with no Specific Allowance | Total Impaired Loans | ||||||||||||||||||
Recorded Investment | Related Allowance | Recorded Investment | Recorded Investment | Unpaid Principal Balance | ||||||||||||||||
Commercial | $ | 1,448 | $ | 860 | $ | 10 | $ | 1,458 | $ | 1,458 | ||||||||||
Commercial loans secured by real estate | 151 | 28 | 2,314 | 2,465 | 2,499 | |||||||||||||||
Total impaired loans | $ | 1,599 | $ | 888 | $ | 2,324 | $ | 3,923 | $ | 3,957 |
December 31, 2016 | ||||||||||||||||||||
Impaired Loans with Specific Allowance | Impaired Loans with no Specific Allowance | Total Impaired Loans | ||||||||||||||||||
Recorded Investment | Related Allowance | Recorded Investment | Recorded Investment | Unpaid Principal Balance | ||||||||||||||||
Commercial | $ | 496 | $ | 496 | $ | — | $ | 496 | $ | 517 | ||||||||||
Commercial loans secured by real estate | 162 | 31 | 16 | 178 | 209 | |||||||||||||||
Total impaired loans | $ | 658 | $ | 527 | $ | 16 | $ | 674 | $ | 726 |
The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated (in thousands).
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Average loan balance: | | | | | | | | | | | | | |
Commercial | | | | $ | 825 | | | | | $ | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 11 | | |
Average investment in impaired loans | | | | $ | 833 | | | | | $ | 11 | | |
Interest income recognized: | | | | | | | | | | | | | |
Commercial | | | | $ | 12 | | | | | $ | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | — | | | | | | — | | |
Interest income recognized on a cash basis on impaired loans | | | | $ | 12 | | | | | $ | — | | |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Average loan balance: | ||||||||||||||||
Commercial | $ | 1,302 | $ | 821 | $ | 816 | $ | 992 | ||||||||
Commercial loans secured by real estate | 1,316 | 283 | 825 | 449 | ||||||||||||
Average investment in impaired loans | $ | 2,618 | $ | 1,104 | $ | 1,641 | $ | 1,441 | ||||||||
Interest income recognized: | ||||||||||||||||
Commercial | $ | 9 | $ | 1 | $ | 24 | $ | 9 | ||||||||
Commercial loans secured by real estate | — | — | 2 | 8 | ||||||||||||
Interest income recognized on a cash basis on impaired loans | $ | 9 | $ | 1 | $ | 26 | $ | 17 |
Management uses a nine pointnine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized. The first five “Pass” categories are aggregated, while the Pass-6, Special Mention, Substandard and Doubtful categories are disaggregated to
| | | March 31, 2020 | | |||||||||||||||||||||||||||
| | | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Total | | |||||||||||||||
Commercial and industrial | | | | $ | 154,456 | | | | | $ | 790 | | | | | $ | 11,665 | | | | | $ | — | | | | | $ | 166,911 | | |
Commercial loans secured by owner occupied real estate | | | | | 84,661 | | | | | | 1,345 | | | | | | 1,304 | | | | | | — | | | | | | 87,310 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 368,681 | | | | | | — | | | | | | 1,577 | | | | | | 8 | | | | | | 370,266 | | |
Total | | | | $ | 607,798 | | | | | $ | 2,135 | | | | | $ | 14,546 | | | | | $ | 8 | | | | | $ | 624,487 | | |
|
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | Pass | | | Special Mention | | | Substandard | | | Doubtful | | | Total | | |||||||||||||||
Commercial and industrial | | | | $ | 161,147 | | | | | $ | 853 | | | | | $ | 11,922 | | | | | $ | — | | | | | $ | 173,922 | | |
Commercial loans secured by owner occupied real estate | | | | | 88,942 | | | | | | 1,384 | | | | | | 1,329 | | | | | | — | | | | | | 91,655 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 362,027 | | | | | | — | | | | | | 1,600 | | | | | | 8 | | | | | | 363,635 | | |
Total | | | | $ | 612,116 | | | | | $ | 2,237 | | | | | $ | 14,851 | | | | | $ | 8 | | | | | $ | 629,212 | | |
|
September 30, 2017 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | $ | 158,169 | $ | 76 | $ | 2,423 | $ | 250 | $ | 160,918 | ||||||||||
Commercial loans secured by real estate | 448,766 | 16,524 | 4,044 | 14 | 469,348 | |||||||||||||||
Total | $ | 606,935 | $ | 16,600 | $ | 6,467 | $ | 264 | $ | 630,266 |
December 31, 2016 | ||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Total | ||||||||||||||||
Commercial | $ | 168,116 | $ | 1,087 | $ | 1,830 | $ | 496 | $ | 171,529 | ||||||||||
Commercial loans secured by real estate | 436,318 | 7,497 | 2,767 | 16 | 446,598 | |||||||||||||||
Total | $ | 604,434 | $ | 8,584 | $ | 4,597 | $ | 512 | $ | 618,127 |
| | | March 31, 2020 | | |||||||||||||||
| | | Performing | | | Non-Performing | | | Total | | |||||||||
Real estate – residential mortgage | | | | $ | 228,803 | | | | | $ | 1,404 | | | | | $ | 230,207 | | |
Consumer | | | | | 17,955 | | | | | | — | | | | | | 17,955 | | |
Total | | | | $ | 246,758 | | | | | $ | 1,404 | | | | | $ | 248,162 | | |
|
| | | December 31, 2019 | | |||||||||||||||
| | | Performing | | | Non-Performing | | | Total | | |||||||||
Real estate – residential mortgage | | | | $ | 233,760 | | | | | $ | 1,479 | | | | | $ | 235,239 | | |
Consumer | | | | | 18,255 | | | | | | — | | | | | | 18,255 | | |
Total | | | | $ | 252,015 | | | | | $ | 1,479 | | | | | $ | 253,494 | | |
September 30, 2017 | ||||||||
Performing | Non-Performing | |||||||
Real estate-mortgage | $ | 245,479 | $ | 1,402 | ||||
Consumer | 19,056 | 7 | ||||||
Total | $ | 264,535 | $ | 1,409 |
December 31, 2016 | ||||||||
Performing | Non-Performing | |||||||
Real estate-mortgage | $ | 244,836 | $ | 929 | ||||
Consumer | 19,872 | — | ||||||
Total | $ | 264,708 | $ | 929 |
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrualnon-accrual loans (in thousands).
| | | March 31, 2020 | | |||||||||||||||||||||||||||||||||||||||
| | | Current | | | 30 – 59 Days Past Due | | | 60 – 89 Days Past Due | | | 90 Days Past Due | | | Total Past Due | | | Total Loans | | | 90 Days Past Due and Still Accruing | | |||||||||||||||||||||
Commercial and industrial | | | | $ | 160,550 | | | | | $ | 6,361 | | | | | $ | — | | | | | $ | — | | | | | $ | 6,361 | | | | | $ | 166,911 | | | | | $ | — | | |
Commercial loans secured by owner occupied real estate | | | | | 87,197 | | | | | | 113 | | | | | | — | | | | | | — | | | | | | 113 | | | | | | 87,310 | | | | | | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 370,266 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 370,266 | | | | | | — | | |
Real estate – residential mortgage | | | | | 226,532 | | | | | | 1,445 | | | | | | 1,259 | | | | | | 971 | | | | | | 3,675 | | | | | | 230,207 | | | | | | — | | |
Consumer | | | | | 17,901 | | | | | | 42 | | | | | | 12 | | | | | | — | | | | | | 54 | | | | | | 17,955 | | | | | | — | | |
Total | | | | $ | 862,446 | | | | | $ | 7,961 | | | | | $ | 1,271 | | | | | $ | 971 | | | | | $ | 10,203 | | | | | $ | 872,649 | | | | | $ | — | | |
|
September 30, 2017 | ||||||||||||||||||||||||||||
Current | 30 – 59 Days Past Due | 60 – 89 Days Past Due | 90 Days Past Due | Total Past Due | Total Loans | 90 Days Past Due and Still Accruing | ||||||||||||||||||||||
Commercial | $ | 159,529 | $ | 1,228 | $ | — | $ | 161 | $ | 1,389 | $ | 160,918 | $ | — | ||||||||||||||
Commercial loans secured by real estate | 461,506 | 5,358 | — | 2,484 | 7,842 | 469,348 | — | |||||||||||||||||||||
Real estate-mortgage | 242,793 | 2,488 | 861 | 739 | 4,088 | 246,881 | — | |||||||||||||||||||||
Consumer | 18,978 | 73 | 12 | — | 85 | 19,063 | — | |||||||||||||||||||||
Total | $ | 882,806 | $ | 9,147 | $ | 873 | $ | 3,384 | $ | 13,404 | $ | 896,210 | $ | — |
December 31, 2016 | ||||||||||||||||||||||||||||
Current | 30 – 59 Days Past Due | 60 – 89 Days Past Due | 90 Days Past Due | Total Past Due | Total Loans | 90 Days Past Due and Still Accruing | ||||||||||||||||||||||
Commercial | $ | 171,292 | $ | 237 | $ | — | $ | — | $ | 237 | $ | 171,529 | $ | — | ||||||||||||||
Commercial loans secured by real estate | 446,477 | 121 | — | — | 121 | 446,598 | — | |||||||||||||||||||||
Real estate-mortgage | 241,802 | 2,856 | 610 | 497 | 3,963 | 245,765 | — | |||||||||||||||||||||
Consumer | 19,795 | 50 | 27 | — | 77 | 19,872 | — | |||||||||||||||||||||
Total | $ | 879,366 | $ | 3,264 | $ | 637 | $ | 497 | $ | 4,398 | $ | 883,764 | $ | — |
| | | December 31, 2019 | | |||||||||||||||||||||||||||||||||||||||
| | | Current | | | 30 – 59 Days Past Due | | | 60 – 89 Days Past Due | | | 90 Days Past Due | | | Total Past Due | | | Total Loans | | | 90 Days Past Due and Still Accruing | | |||||||||||||||||||||
Commercial and industrial | | | | $ | 173,922 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 173,922 | | | | | $ | — | | |
Commercial loans secured by owner occupied real estate | | | | | 91,538 | | | | | | 117 | | | | | | — | | | | | | — | | | | | | 117 | | | | | | 91,655 | | | | | | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 363,635 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 363,635 | | | | | | — | | |
Real estate – residential mortgage | | | | | 231,022 | | | | | | 2,331 | | | | | | 864 | | | | | | 1,022 | | | | | | 4,217 | | | | | | 235,239 | | | | | | — | | |
Consumer | | | | | 18,190 | | | | | | 42 | | | | | | 23 | | | | | | — | | | | | | 65 | | | | | | 18,255 | | | | | | — | | |
Total | | | | $ | 878,307 | | | | | $ | 2,490 | | | | | $ | 887 | | | | | $ | 1,022 | | | | | $ | 4,399 | | | | | $ | 882,706 | | | | | $ | — | | |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Non-accrual loans | | | | | | | | | | | | | |
Commercial and industrial | | | | $ | 25 | | | | | $ | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 8 | | |
Real estate – residential mortgage | | | | | 1,404 | | | | | | 1,479 | | |
Total | | | | | 1,437 | | | | | | 1,487 | | |
Other real estate owned | | | | | | | | | | | | | |
Real estate-residential mortgage | | | | | — | | | | | | 37 | | |
Total | | | | | — | | | | | | 37 | | |
TDR’s not in non-accrual | | | | | | | | | | | | | |
Commercial and industrial | | | | | 807 | | | | | | 815 | | |
Total | | | | | 807 | | | | | | 815 | | |
Total non-performing assets including TDR | | | | $ | 2,244 | | | | | $ | 2,339 | | |
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | | | | | 0.26% | | | | | | 0.26% | | |
September 30, 2017 | December 31, 2016 | |||||||
Non-accrual loans | ||||||||
Commercial | $ | 461 | $ | 496 | ||||
Commercial loans secured by real estate | 2,785 | 178 | ||||||
Real estate-mortgage | 1,402 | 929 | ||||||
Consumer | 7 | — | ||||||
Total | 4,655 | 1,603 | ||||||
Other real estate owned | ||||||||
Real estate-mortgage | 39 | 21 | ||||||
Total | 39 | 21 | ||||||
TDR’s not in non-accrual | 678 | — | ||||||
Total non-performing assets including TDR | $ | 5,372 | $ | 1,624 | ||||
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | 0.60 | % | 0.18 | % |
The Company had no loans past due 90 days or more for the periods presented which were accruing interest.
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Interest income due in accordance with original terms | | | | $ | 17 | | | | | $ | 15 | | |
Interest income recorded | | | | | — | | | | | | — | | |
Net reduction in interest income | | | | $ | 17 | | | | | $ | 15 | | |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Interest income due in accordance with original terms | $ | 32 | $ | 20 | $ | 65 | $ | 99 | ||||||||
Interest income recorded | — | — | — | — | ||||||||||||
Net reduction in interest income | $ | 32 | $ | 20 | $ | 65 | $ | 99 |
Consistent with accounting and regulatory guidance, the Bank recognizes a TDR when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that would not normally be considered. Regardless of the form of concession granted, the Bank’s objective in offering a TDR is to increase the probability of repayment of the borrower’s loan.
To be considered a TDR,both of the following criteria must be met:
Factors that indicate a borrower is experiencing financial difficulties include, but are not limited to:
Factors that indicate that a concession has been granted include, but are not limited to:
The determination of whether a restructured loan is a TDR requires consideration of all of the facts and circumstances surrounding the modification. No single factor is determinative of whether a restructuring is a TDR. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean that the borrower is experiencing financial difficulty. Accordingly, determination of whether a modification is a TDR involves a large degree of judgment.
The following table details theCompany had no loans modified as TDRs during the ninethree month period ended September 30, 2017 (dollars in thousands).
Loans in non-accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial loan | 2 | $ | 678 | Extension of maturity date with interest only period |
The following table details the loans modified as TDRs during the nine month period ended September 30, 2016 (dollars in thousands).
Loans in non-accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial loan | 2 | $ | 507 | Extension of maturity date with interest only period |
In all instances where loans have been modified in troubled debt restructurings the pre-periods ending March 31, 2020 and post-modified balances are the same. The specific ALL reserve for loans modified as TDR’s was $390,000 and $507,000 as of September 30, 2017 and 2016, respectively. 2019.
Once a loan is classified The specific ALL reserve for loans modified as a TDR, this classification will remain until documented improvement in the financial positionTDRs was $85,000 and $92,000 as of the borrower supports confidence that all principalMarch 31, 2020 and interest will be paid according to terms. Additionally, the customer must have re-established a track record of timely payments according to the restructured contract terms for a minimum of six consecutive months prior to consideration for removing the loan from non-accrual TDR status. However, a loan will continue to be on non-accrual status until, consistent with our policy, the borrower has made a minimum of an additional six consecutive monthly payments in accordance with the terms of the loan.
The Company had no loans that were classified as TDR’sTDRs or were subsequently modified during each 12-month period prior to the current reporting periods, which begin January 1, 20172019 and 2016 (nine month periods) and July 1, 2017 and 2016 (three month periods),2018, respectively, and that subsequently defaulted during these reporting periods.
Foreclosed assets acquired in settlement of loans carried at fair value less estimated costs to sell are included in the other assets on the Consolidated Balance Sheet. As of September 30, 2017 and December 31, 2016, a total of $39,000 and $21,000, respectively of residential real estate foreclosed assets were included in other assets. As of September 30, 2017, the Company had initiated formal foreclosure procedures on $297,000 of consumer residential mortgages.
| | | At March 31, 2020 | | ||||||||||||
Type | | | Maturing | | | Amount | | | Weighted Average Rate | | ||||||
Open Repo Plus | | | Overnight | | | | $ | 16,354 | | | | | | 0.36% | | |
Advances | | | 2020 | | | | | 12,229 | | | | | | 1.74 | | |
| | | 2021 | | | | | 9,496 | | | | | | 2.28 | | |
| | | 2022 | | | | | 20,888 | | | | | | 2.03 | | |
| | | 2023 | | | | | 13,568 | | | | | | 1.76 | | |
| | | 2024 | | | | | 2,037 | | | | | | 1.86 | | |
Total advances | | | | | | | | 58,218 | | | | | | 1.94 | | |
Total FHLB borrowings | | | | | | | $ | 74,572 | | | | | | 1.59% | | |
|
| | | At December 31, 2019 | | ||||||||||||
Type | | | Maturing | | | Amount | | | Weighted Average Rate | | ||||||
Open Repo Plus | | | Overnight | | | | $ | 22,412 | | | | | | 1.81% | | |
Advances | | | 2020 | | | | | 18,729 | | | | | | 1.75 | | |
| | | 2021 | | | | | 9,496 | | | | | | 2.28 | | |
| | | 2022 | | | | | 17,838 | | | | | | 2.21 | | |
| | | 2023 | | | | | 5,568 | | | | | | 2.48 | | |
| | | 2024 | | | | | 2,037 | | | | | | 1.86 | | |
Total advances | | | | | | | | 53,668 | | | | | | 2.08 | | |
Total FHLB borrowings | | | | | | | $ | 76,080 | | | | | | 2.00% | | |
At September 30, 2017 | ||||||||||||
Type | Maturing | Amount | Weighted Average Rate | |||||||||
Open Repo Plus | Overnight | $ | 33,593 | 0.94 | % | |||||||
Advances | 2017 | 1,000 | 0.88 | |||||||||
2018 | 12,000 | 1.48 | ||||||||||
2019 | 12,500 | 1.51 | ||||||||||
2020 | 13,542 | 1.67 | ||||||||||
2021 and over | 5,000 | 1.68 | ||||||||||
Total advances | 44,042 | 1.57 | ||||||||||
Total FHLB borrowings | $ | 77,635 | 1.30 | % |
At December 31, 2016 | ||||||||||||
Type | Maturing | Amount | Weighted Average Rate | |||||||||
Open Repo Plus | Overnight | $ | 12,754 | 0.74 | % | |||||||
Advances | 2017 | 12,000 | 1.06 | |||||||||
2018 | 12,000 | 1.48 | ||||||||||
2019 | 12,500 | 1.51 | ||||||||||
2020 | 8,042 | 1.59 | ||||||||||
2021 and over | 1,000 | 1.60 | ||||||||||
Total advances | 45,542 | 1.37 | ||||||||||
Total FHLB borrowings | $ | 58,296 | 1.23 | % |
The rate on Open Repo Plus advances can change daily, while the rates on the advances are fixed until the maturity of the advance. All FHLB stock along with an interest in certain residential mortgage, commercial real estate, and CREcommercial and industrial loans with an aggregate statutory value equal to the amount of the advances are pledged as collateral to the FHLB of Pittsburgh to support these borrowings.
On August 11, 2011, pursuant
| | | Three months ended March 31, 2020 | | | Three months ended March 31, 2019 | | ||||||
Lease cost | | | | | | | | | | | | | |
Financing lease cost: | | | | | | | | | | | | | |
Amortization of right-of-use asset | | | | $ | 67 | | | | | $ | 64 | | |
Interest expense | | | | | 29 | | | | | | 30 | | |
Operating lease cost | | | | | 29 | | | | | | 29 | | |
Total lease cost | | | | $ | 125 | | | | | $ | 123 | | |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||||||||||||||
| | | Operating | | | Financing | | | Operating | | | Financing | | ||||||||||||
Weighted-average remaining term (years) | | | | | 11.7 | | | | | | 16.7 | | | | | | 11.9 | | | | | | 17.1 | | |
Weighted-average discount rate | | | | | 3.46% | | | | | | 3.57% | | | | | | 3.46% | | | | | | 3.60% | | |
| | | March 31, 2020 | | |||||||||
| | | Operating | | | Financing | | ||||||
Undiscounted cash flows due: | | | | | | | | | | | | | |
Within 1 year | | | | $ | 118 | | | | | $ | 302 | | |
After 1 year but within 2 years | | | | | 120 | | | | | | 289 | | |
After 2 years but within 3 years | | | | | 85 | | | | | | 291 | | |
After 3 years but within 4 years | | | | | 69 | | | | | | 276 | | |
After 4 years but within 5 years | | | | | 69 | | | | | | 251 | | |
After 5 years | | | | | 573 | | | | | | 2,943 | | |
Total undiscounted cash flows | | | | | 1,034 | | | | | | 4,352 | | |
Discount on cash flows | | | | | (192) | | | | | | (1,175) | | |
Total lease liabilities | | | | $ | 842 | | | | | $ | 3,177 | | |
|
| | | December 31, 2019 | | |||||||||
| | | Operating | | | Financing | | ||||||
Undiscounted cash flows due: | | | | | | | | | | | | | |
Within 1 year | | | | $ | 118 | | | | | $ | 296 | | |
After 1 year but within 2 years | | | | | 120 | | | | | | 275 | | |
After 2 years but within 3 years | | | | | 98 | | | | | | 277 | | |
After 3 years but within 4 years | | | | | 69 | | | | | | 274 | | |
After 4 years but within 5 years | | | | | 69 | | | | | | 236 | | |
After 5 years | | | | | 589 | | | | | | 3,007 | | |
Total undiscounted cash flows | | | | | 1,063 | | | | | | 4,365 | | |
Discount on cash flows | | | | | (198) | | | | | | (1,202) | | |
Total lease liabilities | | | | $ | 865 | | | | | $ | 3,163 | | |
On January 27, 2016, the Company redeemed the Series E Preferred Stock, at a redemption price of 100% of the liquidation amount plus accrued but unpaid dividends, after receiving approval from its federal banking regulator and the US Treasury.
| | | Three months ended March 31, 2020 | | | Three months ended March 31, 2019 | | ||||||||||||||||||||||||||||||
| | | Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | | | Defined Benefit Pension Items(1) | | | Total(1) | | | Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | | | Defined Benefit Pension Items(1) | | | Total(1) | | ||||||||||||||||||
Beginning balance | | | | $ | 1,715 | | | | | $ | (17,886) | | | | | $ | (16,171) | | | | | $ | (1,409) | | | | | $ | (12,816) | | | | | $ | (14,225) | | |
Other comprehensive income (loss) before reclassifications | | | | | 924 | | | | | | (95) | | | | | | 829 | | | | | | 1,393 | | | | | | (1,739) | | | | | | (346) | | |
Amounts reclassified from accumulated other comprehensive loss | | | | | — | | | | | | 512 | | | | | | 512 | | | | | | — | | | | | | 289 | | | | | | 289 | | |
Net current period other comprehensive income (loss) | | | | | 924 | | | | | | 417 | | | | | | 1,341 | | | | | | 1,393 | | | | | | (1,450) | | | | | | (57) | | |
Ending balance | | | | $ | 2,639 | | | | | $ | (17,469) | | | | | $ | (14,830) | | | | | $ | (16) | | | | | $ | (14,266) | | | | | $ | (14,282) | | |
Three months ended September 30, 2017 | Three months ended September 30, 2016 | |||||||||||||||||||||||
Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | |||||||||||||||||||
Beginning balance | $ | 30 | $ | (11,094 | ) | $ | (11,064 | ) | $ | 1,791 | $ | (7,856 | ) | $ | (6,065 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 116 | 261 | 377 | (126 | ) | 174 | 48 | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | (37 | ) | — | (37 | ) | (40 | ) | — | (40 | ) | ||||||||||||||
Net current period other comprehensive income (loss) | 79 | 261 | 340 | (166 | ) | 174 | 8 | |||||||||||||||||
Ending balance | $ | 109 | $ | (10,833 | ) | $ | (10,724 | ) | $ | 1,625 | $ | (7,682 | ) | $ | (6,057 | ) |
Nine months ended September 30, 2017 | Nine months ended September 30, 2016 | |||||||||||||||||||||||
Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | Net Unrealized Gains and (Losses) on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | |||||||||||||||||||
Beginning balance | $ | (171 | ) | $ | (11,406 | ) | $ | (11,577 | ) | $ | 808 | $ | (8,363 | ) | $ | (7,555 | ) | |||||||
Other comprehensive income before reclassifications | 356 | 573 | 929 | 934 | 681 | 1,615 | ||||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | (76 | ) | — | (76 | ) | (117 | ) | — | (117 | ) | ||||||||||||||
Net current period other comprehensive income | 280 | 573 | 853 | 817 | 681 | 1,498 | ||||||||||||||||||
Ending balance | $ | 109 | $ | (10,833 | ) | $ | (10,724 | ) | $ | 1,625 | $ | (7,682 | ) | $ | (6,057 | ) |
The following table presents the amounts reclassified out of each component of accumulated other comprehensive loss for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (in thousands):
| | | Amount reclassified from accumulated other comprehensive loss(1) | | | | | |||||||||
Details about accumulated other comprehensive loss components | | | For the three months ended March 31, 2020 | | | For the three months ended March 31, 2019 | | | Affected line item in the consolidated statement of operations | | ||||||
Realized gains on sale of securities | | | | $ | — | | | | | $ | — | | | | Net realized (gains) losses on investment securities | |
| | | | | — | | | | | | — | | | | Provision for income tax expense | |
| | | | $ | — | | | | | $ | — | | | | Net of tax | |
Amortization of estimated defined benefit pension plan loss(2) | | | | $ | 648 | | | | | $ | 366 | | | | Other expense | |
| | | | | (136) | | | | | | (77) | | | | Provision for income tax expense | |
| | | | $ | 512 | | | | | $ | 289 | | | | Net of tax | |
Total reclassifications for the period | | | | $ | 512 | | | | | $ | 289 | | | | Net income | |
Amount reclassified from accumulated other comprehensive loss(1) | ||||||||||||
Details about accumulated other comprehensive loss components | For the three months ended September 30, 2017 | For the three months ended September 30, 2016 | Affected line item in the consolidated statement of operations | |||||||||
Realized gains on sale of securities | ||||||||||||
$ | (56 | ) | $ | (60 | ) | Net realized gains on investment securities | ||||||
19 | 20 | Provision for income tax expense | ||||||||||
$ | (37 | ) | $ | (40 | ) | Net of tax | ||||||
Total reclassifications for the period | $ | (37 | ) | $ | (40 | ) | Net income |
Amount reclassified from accumulated other comprehensive loss(1) | ||||||||||||
Details about accumulated other comprehensive loss components | For the nine months ended September 30, 2017 | For the nine months ended September 30, 2016 | Affected line item in the consolidated statement of operations | |||||||||
Realized gains on sale of securities | ||||||||||||
$ | (115 | ) | $ | (177 | ) | Net realized gains on investment securities | ||||||
39 | 60 | Provision for income tax expense | ||||||||||
$ | (76 | ) | $ | (117 | ) | Net of tax | ||||||
Total reclassifications for the period | $ | (76 | ) | $ | (117 | ) | Net income |
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
| | | At March 31, 2020 | | |||||||||||||||||||||||||||||||||
| | | COMPANY | | | BANK | | | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | | | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | | ||||||||||||||||||||||||
| | | AMOUNT | | | RATIO | | | AMOUNT | | | RATIO | | | RATIO | | | RATIO | | ||||||||||||||||||
Total Capital (To Risk Weighted Assets) | | | | $ | 133,286 | | | | | | 13.41% | | | | | $ | 120,917 | | | | | | 12.23% | | | | | | 8.00% | | | | | | 10.00% | | |
Common Equity Tier 1 (To Risk Weighted Assets) | | | | | 103,726 | | | | | | 10.44 | | | | | | 110,766 | | | | | | 11.20 | | | | | | 4.50 | | | | | | 6.50 | | |
Tier 1 Capital (To Risk Weighted Assets) | | | | | 115,618 | | | | | | 11.64 | | | | | | 110,766 | | | | | | 11.20 | | | | | | 6.00 | | | | | | 8.00 | | |
Tier 1 Capital (To Average Assets) | | | | | 115,618 | | | | | | 9.94 | | | | | | 110,766 | | | | | | 9.64 | | | | | | 4.00 | | | | | | 5.00 | | |
| | | At December 31, 2019 | | |||||||||||||||||||||||||||||||||
| | | COMPANY | | | BANK | | | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | | | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | | ||||||||||||||||||||||||
| | | AMOUNT | | | RATIO | | | AMOUNT | | | RATIO | | | RATIO | | | RATIO | | ||||||||||||||||||
Total Capital (To Risk Weighted Assets) | | | | $ | 132,544 | | | | | | 13.49% | | | | | $ | 119,477 | | | | | | 12.23% | | | | | | 8.00% | | | | | | 10.00% | | |
Common Equity Tier 1 (To Risk Weighted Assets) | | | | | 102,841 | | | | | | 10.47 | | | | | | 109,173 | | | | | | 11.17 | | | | | | 4.50 | | | | | | 6.50 | | |
Tier 1 Capital (To Risk Weighted Assets) | | | | | 114,729 | | | | | | 11.68 | | | | | | 109,173 | | | | | | 11.17 | | | | | | 6.00 | | | | | | 8.00 | | |
Tier 1 Capital (To Average Assets) | | | | | 114,729 | | | | | | 9.87 | | | | | | 109,173 | | | | | | 9.50 | | | | | | 4.00 | | | | | | 5.00 | | |
AT SEPTEMBER 30, 2017 | ||||||||||||||||||||||||
COMPANY | BANK | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | |||||||||||||||||||||
AMOUNT | RATIO | AMOUNT | RATIO | RATIO | RATIO | |||||||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | $ | 126,357 | 13.08 | % | $ | 109,915 | 11.44 | % | 8.00 | % | 10.00 | % | ||||||||||||
Tier 1 Common Equity (To Risk Weighted Assets) | 95,839 | 9.92 | 98,695 | 10.28 | 4.50 | 6.50 | ||||||||||||||||||
Tier 1 Capital (To Risk Weighted Assets) | 107,678 | 11.15 | 98,695 | 10.28 | 6.00 | 8.00 | ||||||||||||||||||
Tier 1 Capital (To Average Assets) | 107,678 | 9.32 | 98,695 | 8.68 | 4.00 | 5.00 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||||||
COMPANY | BANK | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | |||||||||||||||||||||
AMOUNT | RATIO | AMOUNT | RATIO | RATIO | RATIO | |||||||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | $ | 125,131 | 13.15 | % | $ | 107,618 | 11.35 | % | 8.00 | % | 10.00 | % | ||||||||||||
Tier 1 Common Equity (To Risk Weighted Assets) | 95,028 | 9.99 | 96,796 | 10.21 | 4.50 | 6.50 | ||||||||||||||||||
Tier 1 Capital (To Risk Weighted Assets) | 106,868 | 11.23 | 96,796 | 10.21 | 6.00 | 8.00 | ||||||||||||||||||
Tier 1 Capital (To Average Assets) | 106,868 | 9.35 | 96,796 | 8.61 | 4.00 | 5.00 |
The Company can use various interest rate contracts, such as interest rate swaps, caps, floors and swaptions to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. The Company can use derivative instruments, primarily interest rate swaps, to manage interest rate risk and match the rates on certain assets by hedging the fair value of certain fixed rate debt, which converts the debt to variable rates and by hedging the cash flow variability associated with certain variable rate debt by converting the debt to fixed rates.
Consolidated Balance Sheets. Disclosures related to the fair value of the swap transactions can be found in Note 19.
| | | At March 31, 2020 | | |||||||||||||||||||||
| | | HEDGE TYPE | | | AGGREGATE NOTIONAL AMOUNT | | | WEIGHTED AVERAGE RATE RECEIVED/(PAID) | | | REPRICING FREQUENCY | | | INCREASE (DECREASE) IN INTEREST EXPENSE | | |||||||||
SWAP ASSETS | | | FAIR VALUE | | | | $ | 33,037 | | | | | | 3.93% | | | | MONTHLY | | | | $ | (45) | | |
SWAP LIABILITIES | | | FAIR VALUE | | | | | (33,037) | | | | | | (3.93) | | | | MONTHLY | | | | | 45 | | |
NET EXPOSURE | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
| | | At March 31, 2019 | | |||||||||||||||||||||
| | | HEDGE TYPE | | | AGGREGATE NOTIONAL AMOUNT | | | WEIGHTED AVERAGE RATE RECEIVED/(PAID) | | | REPRICING FREQUENCY | | | INCREASE (DECREASE) IN INTEREST EXPENSE | | |||||||||
SWAP ASSETS | | | FAIR VALUE | | | | $ | 21,745 | | | | | | 4.79% | | | | MONTHLY | | | | $ | 9 | | |
SWAP LIABILITIES | | | FAIR VALUE | | | | | (21,745) | | | | | | (4.79) | | | | MONTHLY | | | | | (9) | | |
NET EXPOSURE | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
HEDGE TYPE | AGGREGATE NOTIONAL AMOUNT | WEAIGHTED AVERAGE RATE RECEIVED/ (PAID) | REPRICING FREQUENCY | INCREASE (DECREASE) IN INTEREST EXPENSE | ||||||||||||||||
SWAP ASSETS | FAIR VALUE | $ | 17,057,388 | 3.42 | % | MONTHLY | $ | (72,920 | ) | |||||||||||
SWAP LIABILITIES | FAIR VALUE | (17,057,388 | ) | (3.42 | ) | MONTHLY | 72,920 | |||||||||||||
NET EXPOSURE | — | — | — |
The Company monitors and controls all derivative products with a comprehensive Board of DirectorDirectors approved hedging policy.Hedging Policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps, interest rate caps/floors, and swaptions. All hedge transactions must be approved in advance by the Investment Asset/Liability Committee (ALCO) of the Board of Directors.Directors, unless otherwise approved, as per the terms, within the Board of Directors approved Hedging Policy. The Company had no caps or floors outstanding at September 30, 2017.
The contribution of the major business segments to the Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 were as follows (in thousands):
| | | Three months ended March 31, 2020 | | |||||||||
| | | Total revenue | | | Net income (loss) | | ||||||
Community banking | | | | $ | 11,448 | | | | | $ | 2,524 | | |
Wealth management | | | | | 2,568 | | | | | | 487 | | |
Investment/Parent | | | | | (1,433) | | | | | | (1,602) | | |
Total | | | | $ | 12,583 | | | | | $ | 1,409 | | |
|
| | | Three months ended March 31, 2019 | | |||||||||
| | | Total revenue | | | Net income (loss) | | ||||||
Community banking | | | | $ | 11,093 | | | | | $ | 2,948 | | |
Wealth management | | | | | 2,417 | | | | | | 444 | | |
Investment/Parent | | | | | (1,248) | | | | | | (1,514) | | |
Total | | | | $ | 12,262 | | | | | $ | 1,878 | | |
Three months ended September 30, 2017 | Nine months ended September 30, 2017 | |||||||||||||||
Total revenue | Net income (loss) | Total revenue | Net income (loss) | |||||||||||||
Retail banking | $ | 6,443 | $ | 794 | $ | 19,138 | $ | 2,159 | ||||||||
Commercial banking | 4,722 | 1,412 | 14,269 | 4,295 | ||||||||||||
Trust | 2,223 | 335 | 6,804 | 991 | ||||||||||||
Investment/Parent | (822 | ) | (990 | ) | (2,708 | ) | (3,157 | ) | ||||||||
Total | $ | 12,556 | $ | 1,551 | $ | 37,503 | $ | 4,288 |
Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||||||||||
Total revenue | Net income (loss) | Total revenue | Net income (loss) | |||||||||||||
Retail banking | $ | 6,653 | $ | 857 | $ | 19,543 | $ | 2,335 | ||||||||
Commercial banking | 4,757 | 1,352 | 14,123 | 1,884 | ||||||||||||
Trust | 2,125 | 195 | 6,504 | 740 | ||||||||||||
Investment/Parent | (1,368 | ) | (1,339 | ) | (3,780 | ) | (3,799 | ) | ||||||||
Total | $ | 12,167 | $ | 1,065 | $ | 36,390 | $ | 1,160 |
| | | Three months ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Components of net periodic benefit cost | | | | | | | | | | | | | |
Service cost | | | | $ | 441 | | | | | $ | 374 | | |
Interest cost | | | | | 319 | | | | | | 402 | | |
Expected return on plan assets | | | | | (817) | | | | | | (762) | | |
Recognized net actuarial loss | | | | | 648 | | | | | | 366 | | |
Net periodic pension cost | | | | $ | 591 | | | | | $ | 380 | | |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Components of net periodic benefit cost | ||||||||||||||||
Service cost | $ | 390 | $ | 368 | $ | 1,170 | $ | 1,104 | ||||||||
Interest cost | 326 | 344 | 978 | 1,032 | ||||||||||||
Expected return on plan assets | (631 | ) | (563 | ) | (1,893 | ) | (1,689 | ) | ||||||||
Recognized net actuarial loss | 367 | 314 | 1,101 | 942 | ||||||||||||
Net periodic pension cost | $ | 452 | $ | 463 | $ | 1,356 | $ | 1,389 |
and Financial Instruments
The following tables presenttable presents the assets and liability measured and reported on the Consolidated Balance Sheets on a recurring basis at their fair value as of September 30, 2017March 31, 2020 and December 31, 2016,2019, by level within the fair value hierarchy. Financial assetshierarchy (in thousands).
| | | Fair Value Measurements at March 31, 2020 | | |||||||||||||||||||||
| | | Total | | | (Level 1) | | | (Level 2) | | | (Level 3) | | ||||||||||||
Equity securities | | | | $ | 386 | | | | | $ | 386 | | | | | $ | — | | | | | $ | — | | |
Available for sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
US Agency | | | | | 3,967 | | | | | | — | | | | | | 3,967 | | | | | | — | | |
US Agency mortgage-backed securities | | | | | 82,084 | | | | | | — | | | | | | 82,084 | | | | | | — | | |
Municipal | | | | | 15,824 | | | | | | — | | | | | | 15,824 | | | | | | — | | |
Corporate bonds | | | | | 40,841 | | | | | | — | | | | | | 40,841 | | | | | | — | | |
Fair value swap asset | | | | | 3,520 | | | | | | — | | | | | | 3,520 | | | | | | — | | |
Fair value swap liability | | | | | (3,520) | | | | | | — | | | | | | (3,520) | | | | | | — | | |
| | | Fair Value Measurements at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | (Level 1) | | | (Level 2) | | | (Level 3) | | ||||||||||||
Equity securities | | | | $ | 366 | | | | | $ | 366 | | | | | $ | — | | | | | $ | — | | |
Available for sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
US Agency | | | | | 5,116 | | | | | | — | | | | | | 5,116 | | | | | | — | | |
US Agency mortgage-backed securities | | | | | 81,633 | | | | | | — | | | | | | 81,633 | | | | | | — | | |
Municipal | | | | | 15,170 | | | | | | — | | | | | | 15,170 | | | | | | — | | |
Corporate bonds | | | | | 39,830 | | | | | | — | | | | | | 39,830 | | | | | | — | | |
Fair value swap asset | | | | | 959 | | | | | | — | | | | | | 959 | | | | | | — | | |
Fair value swap liability | | | | | (959) | | | | | | — | | | | | | (959) | | | | | | — | | |
Assets and liability measured at fair valueRecorded on a recurring basis are summarized below (in thousands):
Fair Value Measurements at September 30, 2017 Using | ||||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
US Agency securities | $ | 5,402 | $ | — | $ | 5,402 | $ | — | ||||||||
US Agency mortgage-backed securities | 81,240 | — | 81,240 | — | ||||||||||||
Taxable municipal | 7,067 | — | 7,067 | — | ||||||||||||
Corporate bonds | 35,737 | — | 35,737 | — | ||||||||||||
Fair value swap asset | 84 | — | — | 84 | ||||||||||||
Fair value swap liability | (84 | ) | — | — | (84 | ) |
Fair Value Measurements at December 31, 2016 Using | ||||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
US Agency securities | $ | 398 | $ | — | $ | 398 | $ | — | ||||||||
US Agency mortgage-backed securities | 89,184 | — | 89,184 | — | ||||||||||||
Taxable municipal | 3,622 | — | 3,622 | — | ||||||||||||
Corporate bonds | 33,873 | — | 33,873 | — |
Assets Measured on a Non-recurring Basis
Loans considered impaired are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. As detailed in the allowance for loan loss footnote, impairedImpaired loans are reported at the fair value of the underlying collateral if the repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on observable market data which at times are discounted.discounted using unobservable inputs. At September 30, 2017,March 31, 2020, impaired loans
$255,000.
| | | Fair Value Measurements at March 31, 2020 | | |||||||||||||||||||||
| | | Total | | | (Level 1) | | | (Level 2) | | | (Level 3) | | ||||||||||||
Impaired loans | | | | $ | 258 | | | | | $ | — | | | | | $ | — | | | | | $ | 258 | | |
| | | Fair Value Measurements at December 31, 2019 | | |||||||||||||||||||||
| | | Total | | | (Level 1) | | | (Level 2) | | | (Level 3) | | ||||||||||||
Impaired loans | | | | $ | 255 | | | | | $ | — | | | | | $ | — | | | | | $ | 255 | | |
Other real estate owned | | | | | 37 | | | | | | — | | | | | | — | | | | | | 37 | | |
| | | Quantitative Information About Level 3 Fair Value Measurements | | ||||||||||||
March 31, 2020 | | | Fair Value Estimate | | | Valuation Techniques | | | Unobservable Input | | | Range(Wgtd Avg) | | |||
Impaired loans | | | | $ | 258 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) | | | 0% to 100% (3)% | |
| | | Quantitative Information About Level 3 Fair Value Measurements | | ||||||||||||
December 31, 2019 | | | Fair Value Estimate | | | Valuation Techniques | | | Unobservable Input | | | Range(Wgtd Avg) | | |||
Impaired loans | | | | $ | 255 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) | | | 0% to 100% (3%) | |
Other real estate owned | | | | | 37 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) Liquidation expenses | | | 0% to 57% (38%) 21% to 134% (30%) | |
Fair Value Measurements at September 30, 2017 Using | ||||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Impaired loans | $ | 3,035 | $ | — | $ | — | $ | 3,035 | ||||||||
Other real estate owned | 39 | — | — | 39 |
Fair Value Measurements at December 31, 2016 Using | ||||||||||||||||
Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Impaired loans | $ | 147 | $ | — | $ | — | $ | 147 | ||||||||
Other real estate owned | 21 | — | — | 21 |
September 30, 2017 | Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||||
Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Wgtd Ave) | |||||||||||||
Impaired loans | $ | 3,035 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) | 40% to 77%(42%) | |||||||||||
Other real estate owned | 39 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) Liquidation expenses | 43% to 45%(43%) 2% to 206%(64%) |
December 31, 2016 | Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||||
Fair Value Estimate | Valuation Techniques | Unobservable Input | Range (Wgtd Ave) | |||||||||||||
Impaired loans | $ | 147 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) | 40% to 99%(45%) | |||||||||||
Other real estate owned | 21 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) Liquidation expenses | 20% to 77%(42%) 3% to 199%(37%) |
Fair values have been determined by the Company using independent third party valuations that use the best available data (Level 2) and an estimation methodology (Level 3) the Company believes is suitable for each category of financial instruments. Management believes that cash and cash equivalents, bank owned life insurance, regulatory stock, accrued interest receivable and loanspayable, and deposits with floating interest ratesshort-term borrowings have estimated fair values which approximate the recorded book balances.carrying values. The estimation methodologies used, thefair value measurements for all of these financial instruments are Level 1 measurements.
| | | March 31, 2020 | | |||||||||||||||||||||||||||
| | | Carrying Value | | | Fair Value | | | (Level 1) | | | (Level 2) | | | (Level 3) | | |||||||||||||||
FINANCIAL ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities – HTM | | | | $ | 42,068 | | | | | $ | 44,236 | | | | | $ | — | | | | | $ | 41,242 | | | | | $ | 2,994 | | |
Loans held for sale | | | | | 4,750 | | | | | | 4,889 | | | | | | 4,889 | | | | | | — | | | | | | — | | |
Loans, net of allowance for loan loss and unearned income | | | | | 863,315 | | | | | | 867,308 | | | | | | — | | | | | | — | | | | | | 867,308 | | |
FINANCIAL LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits with no stated maturities | | | | $ | 646,074 | | | | | $ | 642,965 | | | | | $ | — | | | | | $ | — | | | | | $ | 642,965 | | |
Deposits with stated maturities | | | | | 311,519 | | | | | | 315,616 | | | | | | — | | | | | | — | | | | | | 315,616 | | |
All other borrowings(1) | | | | | 78,694 | | | | | | 85,321 | | | | | | — | | | | | | — | | | | | | 85,321 | | |
| | | December 31, 2019 | | |||||||||||||||||||||||||||
| | | Carrying Value | | | Fair Value | | | (Level 1) | | | (Level 2) | | | (Level 3) | | |||||||||||||||
FINANCIAL ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities – HTM | | | | $ | 39,936 | | | | | $ | 41,082 | | | | | $ | — | | | | | $ | 38,129 | | | | | $ | 2,953 | | |
Loans held for sale | | | | | 4,868 | | | | | | 4,970 | | | | | | 4,970 | | | | | | — | | | | | | — | | |
Loans, net of allowance for loan loss and unearned income | | | | | 873,427 | | | | | | 873,908 | | | | | | — | | | | | | — | | | | | | 873,908 | | |
FINANCIAL LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits with no stated maturities | | | | $ | 651,469 | | | | | $ | 631,023 | | | | | $ | — | | | | | $ | — | | | | | $ | 631,023 | | |
Deposits with stated maturities | | | | | 309,044 | | | | | | 310,734 | | | | | | — | | | | | | — | | | | | | 310,734 | | |
All other borrowings(1) | | | | | 74,134 | | | | | | 76,323 | | | | | | — | | | | | | — | | | | | | 76,323 | | |
September 30, 2017 | ||||||||||||||||||||
Carrying Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
FINANCIAL ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 28,675 | $ | 28,675 | $ | 28,675 | $ | — | $ | — | ||||||||||
Investment securities – AFS | 129,446 | 129,446 | — | 129,446 | — | |||||||||||||||
Investment securities – HTM | 38,997 | 39,059 | — | 36,105 | 2,954 | |||||||||||||||
Regulatory stock | 6,554 | 6,554 | 6,554 | — | — | |||||||||||||||
Loans held for sale | 1,780 | 1,801 | 1,801 | — | — | |||||||||||||||
Loans, net of allowance for loan loss and unearned income | 885,864 | 884,359 | — | — | 884,359 | |||||||||||||||
Accrued interest income receivable | 3,503 | 3,503 | 3,503 | — | — | |||||||||||||||
Bank owned life insurance | 37,716 | 37,716 | 37,716 | — | — | |||||||||||||||
Fair value swap asset | 84 | 84 | — | — | 84 | |||||||||||||||
FINANCIAL LIABILITIES: | �� | |||||||||||||||||||
Deposits with no stated maturities | $ | 707,566 | $ | 707,566 | $ | 707,566 | $ | — | $ | — | ||||||||||
Deposits with stated maturities | 259,355 | 260,498 | — | — | 260,498 | |||||||||||||||
Short-term borrowings | 33,593 | 33,593 | 33,593 | — | — | |||||||||||||||
All other borrowings | 64,420 | 67,962 | — | — | 67,962 | |||||||||||||||
Accrued interest payable | 1,622 | 1,622 | 1,622 | — | — | |||||||||||||||
Fair value swap liability | 84 | 84 | — | — | 84 |
December 31, 2016 | ||||||||||||||||||||
Carrying Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
FINANCIAL ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 34,073 | $ | 34,073 | $ | 34,073 | $ | — | $ | — | ||||||||||
Investment securities – AFS | 127,077 | 127,077 | — | 127,077 | — | |||||||||||||||
Investment securities – HTM | 30,665 | 30,420 | — | 27,473 | 2,947 | |||||||||||||||
Regulatory stock | 5,484 | 5,484 | 5,484 | — | — | |||||||||||||||
Loans held for sale | 3,094 | 3,158 | 3,158 | — | — | |||||||||||||||
Loans, net of allowance for loan loss and unearned income | 873,832 | 869,960 | — | — | 869,960 | |||||||||||||||
Accrued interest income receivable | 3,116 | 3,116 | 3,116 | — | — | |||||||||||||||
Bank owned life insurance | 37,903 | 37,903 | 37,903 | — | — | |||||||||||||||
FINANCIAL LIABILITIES: | ||||||||||||||||||||
Deposits with no stated maturities | $ | 708,062 | $ | 708,062 | $ | 708,062 | $ | — | $ | — | ||||||||||
Deposits with stated maturities | 259,724 | 261,446 | — | — | 261,446 | |||||||||||||||
Short-term borrowings | 12,754 | 12,754 | 12,754 | — | — | |||||||||||||||
All other borrowings | 65,891 | 69,348 | — | — | 69,348 | |||||||||||||||
Accrued interest payable | 1,640 | 1,640 | 1,640 | — | — |
The fair value of cash and cash equivalents, regulatory stock, accrued interest income receivable, short-term borrowings, and accrued interest payable are equal to the current carrying value.
The fair value of investment securities is equal to the available quoted market price for similar securities. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Level 3 securities are valued by discounted cash flows using the US Treasury rate for the remaining term of the securities.
Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment with an investor. All loans in the held for sale account conform to Fannie Mae underwriting guidelines, with the specific intent of the loan being purchased by an investor at the predetermined rate structure. Loans in the held for sale account have specific delivery dates that must be executed to protect the pricing commitment (typically a 30, 45, or 60 day lock period).
The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is based upon the treasury yield curve adjusted for non-interest operating costs, credit loss, current market prices and assumed prepayment risk.
The fair value of bank owned life insurance is based upon the cash surrender value of the underlying policies and matches the book value.
Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Deposits with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.
The fair value of all other borrowings is based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.
The fair values of the fair value swaps used forinclude advances from Federal Home Loan Bank, guaranteed junior subordinated deferrable interest rate risk management represents the amount the Company would have expected to receive or pay to terminate such agreements.
Commitments to extend creditdebentures, and standby letters of credit are financial instruments generally not subject to sale, and fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 16.
subordinated debt.
| | | Balance | | | % of Outstanding Loans | | ||||||
| | | (in thousands) | | | | | | | | |||
CRE/Commercial | | | | $ | 201,658 | | | | | | 31.2% | | |
Home Equity/Consumer | | | | | 5,551 | | | | | | 5.5 | | |
Residential Mortgage | | | | | 4,033 | | | | | | 3.1 | | |
Total | | | | $ | 211,242 | | | | | | 24.1 | | |
Type of Payment Relief | | | Number of Loans | | | Balance | | ||||||
| | | | | | | | | (in thousands) | | |||
Interest only payments | | | | | 84 | | | | | $ | 96,163 | | |
Complete payment deferrals | | | | | 304 | | | | | | 115,079 | | |
Total | | | | | 388 | | | | | $ | 211,242 | | |
The loan portfolio attained the second highest quarterly average level since the third quarter of 2016. Deposits on averagesound banking and intelligent involvement in the third quarter of 2017 were at an all-time recordprograms our government is promoting and at $981 million are almost within reach of one billion for the first time ever. However, these are static numbers measured at a point in time but revenues were not static. Revenues measure the payments by third party customers for products and services. In the third quarter of 2017, AmeriServ recorded a 5% increase in gross revenues when compared with the third quarter of 2016. At the very same time through the first nine months of 2017, AmeriServ non-interest expenses have declined by almost $600,000. This combination of increasing revenues and declining expenses enabled AmeriServ to report its best quarter since the third quarter of 2015.
The Federal Reserve has begun to increase interest rates from the virtually zero level of the last eight years. While it has been an on again, off again proposition at the Fed, national interest rates have been on the increase since a year ago. Management took advantage of these higher rates to begin to reformat the securities portfolio. This process has produced a 31% increase in the securities portfolio revenue over the third quarter of 2016, while controlling the level of risk in the portfolio.
Banking is not a static industry, for it is a reflection of the dynamics at work in the national economy, the regional economy and the local economy. Each of these economies is a reflection of the millions of individual decisions by Americans pursuing their own separate initiatives. It then becomes the responsibility of the Board and this Management team to plot a course which accommodates these complexities. There is no formula which has ever been fool proof. Rather it is the daily balancing of risk against reward that decides the winners and losers.
Given these larger forces at work, AmeriServ is and should conduct itself as a financial franchise in transition. It has grown from a weak source of loans in its markets to an active lender. AmeriServ has now completed over four consecutive years when it has loaned over 90% of its deposits to smaller and mid-sized local and regional business and consumers. This is a full 10% more than similar sized community banks in the United States. We believe lending to small businesses is our role in keeping the economy recovering from its series of negative events.
Also during those same four years of active lending, AmeriServ’s loan losses have been less than a third of the losses of similar sized community banks in the United States.
Concurrently, AmeriServ’s stand-alone Trust and Wealth Management Company has been transitioning. It now has approximately $2 billion of assets under management and administration. More than half of that $2 billion is investments in retirement savings programs. AmeriServ provides investment guidance, safekeeping and administrative support so that our friends and neighbors can devote their energies to their professions and careers. It is a very positive program and one which we are proud to watch grow.
During the first nine months of 2017, the AmeriServ Board of Directors conducted a complete review of its structure and activities. The Board confirmed its committee-oriented management structure. It defined its role as one of oversight and not of management. It is clear that the role of the Board is to represent not themselves but every AmeriServ shareholder. The full Board discussed this report of the Corporate Governance Committee and adopted it unanimously on July 15, 2017. This vote has set in motion a transition within the Board to be certain that the interest of the shareholders should be pre-eminent throughout the Company.
The economy has been continuing its slow recovery so this has been a good time to analyze the course and to structure the Company to be both relevant and rewarding in the days ahead. A new strategic plan, a reconstituted Board of Directors, and a rededication to continue the improvements in profitability have resulted. The positive impact has been demonstrated by the third quarter results. The eight cents level of earnings per share during the quarter provides a solid base for the hope of continued growth in earnings.
MARCH 31, 2019
| | | Three months ended March 31, 2020 | | | Three months ended March 31, 2019 | | ||||||
Net income | | | | $ | 1,409 | | | | | $ | 1,878 | | |
Diluted earnings per share | | | | | 0.08 | | | | | | 0.11 | | |
Return on average assets (annualized) | | | | | 0.48% | | | | | | 0.66% | | |
Return on average equity (annualized) | | | | | 5.69% | | | | | | 7.84% | | |
Three months ended September 30, 2017 | Three months ended September 30, 2016 | |||||||
Net income | $ | 1,551 | $ | 1,065 | ||||
Net income available to common shareholders | 1,551 | 1,065 | ||||||
Diluted earnings per share | 0.08 | 0.06 | ||||||
Return on average assets (annualized) | 0.53 | % | 0.37 | % | ||||
Return on average equity (annualized) | 6.37 | % | 4.27 | % |
The Company reported third quarter 2017 net income available to common shareholders of $1,551,000,$1,409,000, or $0.08 per diluted common share. This earnings performance represented an increase of $486,000,represents a $469,000, or 45.6%25.0%, decrease from the thirdfirst quarter of 2016 where2019 when net income available to common shareholders totaled $1,065,000,$1,878,000, or $0.06$0.11 per diluted common share. The improvedAmeriServ Financial, Inc. reported sound earnings in the thirdfirst quarter of 2017 resulted from a favorable combination of increased total revenue, reduced non-interest expense and a controlled loan loss provision. The balance sheet is well positioned2020 while taking the necessary actions to begin to position our Company for higher interest rates as demonstrated in the form of increased net interest income ineconomic uncertainty created by the thirdcoronavirus pandemic. We are entering the second quarter of 2017. Additionally,2020 with strong liquidity, good capital and an increased allowance for loan losses which is higher by $1.2 million from the Company benefited from several profitability improvement initiatives.
March 31, 2019 level.
| | | Three months ended March 31, 2020 | | | Three months ended March 31, 2019 | | | $ Change | | | % Change | | ||||||||||||
Interest income | | | | $ | 11,944 | | | | | $ | 12,164 | | | | | $ | (220) | | | | | | (1.8)% | | |
Interest expense | | | | | 3,193 | | | | | | 3,507 | | | | | | (314) | | | | | | (9.0) | | |
Net interest income | | | | $ | 8,751 | | | | | $ | 8,657 | | | | | $ | 94 | | | | | | 1.1 | | |
Net interest margin | | | | | 3.21% | | | | | | 3.24% | | | | | | (0.03)% | | | | | | N/M | | |
Three months ended September 30, 2017 | Three months ended September 30, 2016 | $ Change | % Change | |||||||||||||
Interest income | $ | 11,187 | $ | 10,476 | $ | 711 | 6.8 | % | ||||||||
Interest expense | 2,250 | 1,970 | 280 | 14.2 | ||||||||||||
Net interest income | $ | 8,937 | $ | 8,506 | $ | 431 | 5.1 | |||||||||
Net interest margin | 3.28 | % | 3.15 | % | 0.13 | N/M |
between years.
6.7%.
| | | 2020 | | | 2019 | | ||||||||||||||||||||||||||||||
| | | Average Balance | | | Interest Income/ Expense | | | Yield/ Rate | | | Average Balance | | | Interest Income/ Expense | | | Yield/ Rate | | ||||||||||||||||||
Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans and loans held for sale, net of unearned income | | | | $ | 877,097 | | | | | $ | 10,339 | | | | | | 4.68% | | | | | $ | 860,169 | | | | | $ | 10,424 | | | | | | 4.80% | | |
Short-term investment in money market funds and bank deposits | | | | | 18,527 | | | | | | 76 | | | | | | 1.63 | | | | | | 8,793 | | | | | | 75 | | | | | | 3.42 | | |
Investment securities – AFS | | | | | 147,656 | | | | | | 1,183 | | | | | | 3.27 | | | | | | 157,112 | | | | | | 1,319 | | | | | | 3.38 | | |
Investment securities – HTM | | | | | 41,224 | | | | | | 353 | | | | | | 3.43 | | | | | | 41,252 | | | | | | 352 | | | | | | 3.34 | | |
Total investment securities | | | | | 188,880 | | | | | | 1,536 | | | | | | 3.31 | | | | | | 198,364 | | | | | | 1,671 | | | | | | 3.37 | | |
Total interest earning assets/interest income | | | | | 1,084,504 | | | | | | 11,951 | | | | | | 4.40 | | | | | | 1,067,326 | | | | | | 12,170 | | | | | | 4.57 | | |
Non-interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | | | | 19,087 | | | | | | | | | | | | | | | | | | 21,899 | | | | | | | | | | | | | | |
Premises and equipment | | | | | 18,593 | | | | | | | | | | | | | | | | | | 18,128 | | | | | | | | | | | | | | |
Other assets | | | | | 65,146 | | | | | | | | | | | | | | | | | | 62,081 | | | | | | | | | | | | | | |
Allowance for loan losses | | | | | (9,317) | | | | | | | | | | | | | | | | | | (8,665) | | | | | | | | | | | | | | |
TOTAL ASSETS | | | | $ | 1,178,013 | | | | | | | | | | | | | | | | | $ | 1,160,769 | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing demand | | | | $ | 167,066 | | | | | $ | 242 | | | | | | 0.60% | | | | | $ | 163,893 | | | | | $ | 409 | | | | | | 1.01% | | |
Savings | | | | | 97,166 | | | | | | 41 | | | | | | 0.17 | | | | | | 97,851 | | | | | | 40 | | | | | | 0.17 | | |
Money markets | | | | | 229,838 | | | | | | 464 | | | | | | 0.81 | | | | | | 241,727 | | | | | | 674 | | | | | | 1.13 | | |
Time deposits | | | | | 341,948 | | | | | | 1,711 | | | | | | 2.01 | | | | | | 315,389 | | | | | | 1,607 | | | | | | 2.07 | | |
Total interest bearing deposits | | | | | 836,018 | | | | | | 2,458 | | | | | | 1.18 | | | | | | 818,860 | | | | | | 2,730 | | | | | | 1.35 | | |
Short-term borrowings | | | | | 2,908 | | | | | | 12 | | | | | | 1.67 | | | | | | 15,413 | | | | | | 102 | | | | | | 2.64 | | |
Advances from Federal Home Loan Bank | | | | | 55,292 | | | | | | 284 | | | | | | 2.07 | | | | | | 46,984 | | | | | | 235 | | | | | | 2.03 | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | 13,085 | | | | | | 280 | | | | | | 8.57 | | | | | | 13,085 | | | | | | 280 | | | | | | 8.57 | | |
Subordinated debt | | | | | 7,650 | | | | | | 130 | | | | | | 6.80 | | | | | | 7,650 | | | | | | 130 | | | | | | 6.80 | | |
Lease liabilities | | | | | 3,993 | | | | | | 29 | | | | | | 2.86 | | | | | | 4,224 | | | | | | 30 | | | | | | 2.83 | | |
Total interest bearing liabilities/interest expense | | | | | 918,946 | | | | | | 3,193 | | | | | | 1.40 | | | | | | 906,216 | | | | | | 3,507 | | | | | | 1.57 | | |
Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | | | 146,840 | | | | | | | | | | | | | | | | | | 150,246 | | | | | | | | | | | | | | |
Other liabilities | | | | | 12,615 | | | | | | | | | | | | | | | | | | 7,141 | | | | | | | | | | | | | | |
Shareholders’ equity | | | | | 99,612 | | | | | | | | | | | | | | | | | | 97,166 | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | $ | 1,178,013 | | | | | | | | | | | | | | | | | $ | 1,160,769 | | | | | | | | | | | | | | |
Interest rate spread | | | | | | | | | | | | | | | | | 3.00 | | | | | | | | | | | | | | | | | | 3.00 | | |
Net interest income/ Net interest margin | | | | | | | | | | | 8,758 | | | | | | 3.21% | | | | | | | | | | | | 8,663 | | | | | | 3.24% | | |
Tax-equivalent adjustment | | | | | | | | | | | (7) | | | | | | | | | | | | | | | | | | (6) | | | | | | | | |
Net Interest Income | | | | | | | | | | $ | 8,751 | | | | | | | | | | | | | | | | | $ | 8,657 | | | | | | | | |
|
2017 | 2016 | |||||||||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | |||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||
Loans and loans held for sale, net of unearned income | $ | 892,198 | $ | 9,865 | 4.35 | % | $ | 893,143 | $ | 9,469 | 4.17 | % | ||||||||||||
Interest bearing deposits | 1,026 | 3 | 1.26 | 1,065 | 2 | 0.59 | ||||||||||||||||||
Short-term investment in money market funds | 8,921 | 42 | 1.86 | 20,797 | 31 | 0.58 | ||||||||||||||||||
Investment securities – AFS | 136,084 | 973 | 2.86 | 121,567 | 779 | 2.56 | ||||||||||||||||||
Investment securities – HTM | 38,700 | 314 | 3.25 | 27,041 | 202 | 2.99 | ||||||||||||||||||
Total investment securities | 174,784 | 1,287 | 2.95 | 148,608 | 981 | 2.64 | ||||||||||||||||||
Total interest earning assets/interest income | 1,076,929 | 11,197 | 4.11 | 1,063,613 | 10,483 | 3.89 | ||||||||||||||||||
Non-interest earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 22,082 | 21,675 | ||||||||||||||||||||||
Premises and equipment | 12,467 | 11,887 | ||||||||||||||||||||||
Other assets | 67,240 | 68,660 | ||||||||||||||||||||||
Allowance for loan losses | (10,537 | ) | (9,794 | ) | ||||||||||||||||||||
TOTAL ASSETS | $ | 1,168,181 | $ | 1,156,041 | ||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||
Interest bearing deposits: | ||||||||||||||||||||||||
Interest bearing demand | $ | 131,493 | $ | 180 | 0.54 | % | $ | 111,040 | $ | 84 | 0.29 | % | ||||||||||||
Savings | 98,184 | 41 | 0.17 | 96,593 | 41 | 0.17 | ||||||||||||||||||
Money markets | 277,948 | 380 | 0.54 | 285,358 | 308 | 0.43 | ||||||||||||||||||
Time deposits | 292,054 | 1,017 | 1.38 | 302,610 | 958 | 1.26 | ||||||||||||||||||
Total interest bearing deposits | 799,679 | 1,618 | 0.80 | 795,601 | 1,391 | 0.70 | ||||||||||||||||||
Short-term borrowings | 13,179 | 44 | 1.29 | 1,309 | 2 | 0.53 | ||||||||||||||||||
Advances from Federal Home Loan Bank | 45,997 | 178 | 1.53 | 49,852 | 166 | 1.32 | ||||||||||||||||||
Guaranteed junior subordinated deferrable interest debentures | 13,085 | 280 | 8.57 | 13,085 | 280 | 8.57 | ||||||||||||||||||
Subordinated debt | 7,650 | 130 | 6.80 | 7,650 | 131 | 6.88 | ||||||||||||||||||
Total interest bearing liabilities/interest expense | 879,590 | 2,250 | 1.02 | 867,497 | 1,970 | 0.90 | ||||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 181,356 | 181,365 | ||||||||||||||||||||||
Other liabilities | 10,628 | 7,931 | ||||||||||||||||||||||
Shareholders’ equity | 96,607 | 99,248 | ||||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,168,181 | $ | 1,156,041 | ||||||||||||||||||||
Interest rate spread | 3.09 | 2.99 | ||||||||||||||||||||||
Net interest income/Net interest margin | 8,947 | 3.28 | % | 8,513 | 3.15 | % | ||||||||||||||||||
Tax-equivalent adjustment | (10 | ) | (7 | ) | ||||||||||||||||||||
Net Interest Income | $ | 8,937 | $ | 8,506 |
…PROVISION..PROVISION FOR LOAN LOSSES…..The Company recorded a $200,000$175,000 provision expense for loan losses in the thirdfirst quarter of 20172020 as compared to a $300,000$400,000 provision recovery in the first quarter of 2019, which represents a net unfavorable shift of $575,000. The 2020 provision expense reflects the loan growth experienced since last year along with management’s decision to strengthen certain qualitative factors within our allowance of loan losses calculation due to the economic uncertainty caused by the COVID-19 pandemic. While future losses are possible due to the COVID-19 pandemic, losses were not incurred as of March 31, 2020 which is why the provision for the period isn’t higher. The Company’s asset quality continues to remain strong as evidenced by low levels of loan losses in the third quarter of 2016. The provision recorded in the third quarter of 2017 supported commercial loan growth, a higher level of criticized loans and a lower level of net charge-offs than what was experienced during the third quarter of 2016. Althoughdelinquency, net loan charge-offs were higher thanand non-performing assets. The Company experienced net loan charge-offs of $120,000, or 0.06% of total loans, in the 2020 first quarter compared to net loan loss provision forcharge-offs of $164,000, or 0.08% of total loans, in the thirdfirst quarter of 2017, the provision through nine months has more than doubled the level of net charge-offs experienced during this same time period. This lower level of net charge-offs in relation to the provision through nine-months as well as a reduction in classified assets and the level of total delinquency since the end of the second quarter of this year were the contributing factors for the lower provision during the third quarter of 2017. The net result was a higher loan loss allowance in 2017 compared to last year. Overall, the Company continued to maintain strong asset quality as its nonperforming2019. Non-performing assets totaled $5.4$2.2 million, or 0.60%,only 0.26% of total loans, at September 30, 2017. Total non-performing assets did increase by $3.0 million since the end of the second quarter due primarily to the transfer of one commercial credit exposure into non-accrual status. It is believed that the Company’s loss exposure on this loan is limited because it is well secured and has a low loan to value ratio.March 31, 2020. In summary, the allowance for loan losses provided 194%416% coverage of non-performing loans,assets, and 1.15%was 1.06% of total loans, at September 30, 2017,March 31, 2020, compared to 620%397% coverage of non-performing loans,assets, and 1.12%1.05% of total loans, at December 31, 2016.
…NON-INTEREST INCOME… Non-interest income for the third quarter of 2017 totaled $3.6 million and decreased $32,000, or 0.9%, from the third quarter 2016 performance. Factors contributing to this lower level of non-interest income for the quarter included:
…NON-INTEREST EXPENSE… Non-interest expense for the third quarter of 2017 totaled $10.1 million and decreased by $242,000, or 2.3%, from the prior year’s third quarter. Factors contributing to the lower non-interest expense in the quarter included:
…PERFORMANCE OVERVIEW… The following table summarizes some of the Company’s key performance indicators (in thousands, except per share and ratios).
Nine months ended September 30, 2017 | Nine months ended September 30, 2016 | |||||||
Net income | $ | 4,288 | $ | 1,160 | ||||
Net income available to common shareholders | 4,288 | 1,145 | ||||||
Diluted earnings per share | 0.23 | 0.06 | ||||||
Return on average assets (annualized) | 0.49 | % | 0.14 | % | ||||
Return on average equity (annualized) | 5.98 | % | 1.54 | % |
The Company reported net income available to common shareholders of $4,288,000, or $0.23 per diluted common share. This represents a significant improvement of $3.1 million from the nine-month period of 2016 where net income available to common shareholders totaled $1,145,000, or $0.06 per diluted common share. The improved earnings in the first nine months of 2017 resulted from a favorable combination of total revenue growth, a reduction in non-interest expense and a controlled loan loss provision. The balance sheet is well positioned for higher interest rates as demonstrated in the form of increased net interest income in the first nine months of 2017. Additionally, the Company benefitted from several profitability improvement initiatives.
…NET INTEREST INCOME AND MARGIN… The following table compares the Company’s net interest income performance for the first nine months of 2017 to the first nine months of 2016 (in thousands, except percentages):
Nine months ended September 30, 2017 | Nine months ended September 30, 2016 | $ Change | % Change | |||||||||||||
Interest income | $ | 32,986 | $ | 31,287 | $ | 1,699 | 5.4 | % | ||||||||
Interest expense | 6,429 | 5,737 | 692 | 12.1 | ||||||||||||
Net interest income | $ | 26,557 | $ | 25,550 | $ | 1,007 | 3.9 | |||||||||
Net interest margin | 3.27 | % | 3.23 | % | 0.04 | N/M |
N/M – not meaningful
The Company’s net interest income for the first nine months of 2017 increased by $1.0 million, or 3.9%, when compared to the first nine months of 2016. The Company’s net interest margin was 3.27% for the first nine months of 2017 representing an improvement of four basis points from the first nine months of 2016. The 2017 increase in net interest income is a result of a higher level of total earning assets and a favorable balance sheet positioning which has contributed to the improved net interest margin performance. The Company continues to grow earning assets while also limiting increases in its cost of funds through disciplined deposit pricing. Specifically, the earning asset growth occurred in, both, the total investment securities and the total loan portfolios. Total loans averaged $894 million which is $6.4 million, or 0.7%, higher than the 2016 nine month average. Investment securities have averaged $172 million for the nine-month time period which is $26.8 million, or 18.5%, higher than the nine month 2016 average. The growth in the investment securities portfolio is the result of management electing to diversify the mix of the investment securities portfolio through purchases of high quality corporate and taxable municipal securities. This revised strategy for securities purchases was facilitated by the increase in national interest rates that resulted in improved opportunities to purchase additional securities and grow the portfolio. As a result, interest on investments increased in the first nine months of 2017 from the same time period in 2016 by $846,000 or 28.7%. The growth in total loans reflects the successful results of the Company’s business development efforts, with an emphasis on generating all types of commercial business loans particularly through its loan production offices. Loan interest income increased by $853,000, or 3.0%, in the first nine months of 2017 when compared to last year. The higher loan interest income results from new loans originating at higher yields due to the higher interest rates and also reflects the upward repricing of certain loans tied to LIBOR or the prime rate as both of these indices have moved up with the Federal Reserve’s decision to increase the target federal funds interest rate by 25 basis points in December of 2016, March of 2017, and again in June of
2017. The Company has also benefitted from a higher level of income from loan charges. Overall, total interest income increased by $1.7 million, or 5.4%, in the first nine months of 2017.
Total interest expense increased by $692,000, or 12.1%, in the first nine months of 2017 when compared to 2016, due to higher levels of both deposit and borrowing interest expense. The Company experienced growth in deposits which we believe reflects the loyalty of our core deposit base that provides a strong foundation upon which this growth builds. Specifically, total deposits averaged $977 million for the first nine months of 2017 which is $29.9 million, or 3.2%, higher than the $947 million average for the first nine months of 2016. Deposit interest expense through nine months in 2017 increased by $583,000, or 14.7%, due to the higher balance of deposits along with certain indexed money market accounts repricing upward after the Federal Reserve interest rate increases. As a result of the solid deposit growth, the Company’s loan to deposit ratio averaged 91.5% in the first nine months of 2017 which indicates that the Company has ample room to further grow its loan portfolio. The Company experienced a $109,000 increase in the interest cost for borrowings in the first nine months of 2017 primarily due to the immediate impact that the increases in the Federal Funds Rate had on the cost of overnight borrowed funds. In the first nine months of 2017, total average FHLB borrowed funds of $61.2 million remained relatively stable, increasing slightly by $339,000, or 0.6%.
The table that follows provides an analysis of net interest income on a tax-equivalent basis for the nine month periods ended September 30, 2017 and September 30, 2016 setting forth (i) average assets, liabilities, and stockholders’ equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) the Company’s interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) the Company’s net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of these tables, loan balances do include non-accrual loans, and interest income on loans includes loan fees or amortization of such fees which have been deferred, as well as interest recorded on certain non-accrual loans as cash is received. Additionally, a tax rate of 34% is used to compute tax-equivalent yields.
Nine months ended September 30(In thousands, except percentages)
2017 | 2016 | |||||||||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Rate | Average Balance | Interest Income/ Expense | Yield/ Rate | |||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||
Loans and loans held for sale, net of unearned income | $ | 894,088 | $ | 29,219 | 4.33 | % | $ | 887,681 | $ | 28,358 | 4.22 | % | ||||||||||||
Interest bearing deposits | 1,029 | 8 | 1.03 | 1,871 | 11 | 0.71 | ||||||||||||||||||
Short-term investment in money market funds | 8,049 | 93 | 1.52 | 12,987 | 54 | 0.55 | ||||||||||||||||||
Investment securities – AFS | 135,131 | 2,819 | 2.78 | 120,710 | 2,324 | 2.57 | ||||||||||||||||||
Investment securities – HTM | 36,854 | 877 | 3.17 | 24,482 | 562 | 3.06 | ||||||||||||||||||
Total investment securities | 171,985 | 3,696 | 2.87 | 145,192 | 2,886 | 2.65 | ||||||||||||||||||
Total interest earning assets/interest income | 1,075,151 | 33,016 | 4.08 | 1,047,731 | 31,309 | 3.96 | ||||||||||||||||||
Non-interest earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 22,214 | 19,883 | ||||||||||||||||||||||
Premises and equipment | 12,095 | 11,982 | ||||||||||||||||||||||
Other assets | 67,552 | 68,351 | ||||||||||||||||||||||
Allowance for loan losses | (10,290 | ) | (9,777 | ) | ||||||||||||||||||||
TOTAL ASSETS | $ | 1,166,722 | $ | 1,138,170 | ||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||
Interest bearing deposits: | ||||||||||||||||||||||||
Interest bearing demand | $ | 129,923 | $ | 450 | 0.46 | % | $ | 106,983 | $ | 231 | 0.29 | % | ||||||||||||
Savings | 97,852 | 122 | 0.17 | 96,149 | 119 | 0.16 | ||||||||||||||||||
Money markets | 276,958 | 1,047 | 0.51 | 275,226 | 876 | 0.42 | ||||||||||||||||||
Time deposits | 290,598 | 2,939 | 1.35 | 286,966 | 2,749 | 1.28 | ||||||||||||||||||
Total interest bearing deposits | 795,331 | 4,558 | 0.77 | 765,324 | 3,975 | 0.69 | ||||||||||||||||||
Short-term borrowings | 15,390 | 130 | 1.13 | 11,480 | 49 | 0.56 | ||||||||||||||||||
Advances from Federal Home Loan Bank | 45,785 | 511 | 1.49 | 49,356 | 484 | 1.31 | ||||||||||||||||||
Guaranteed junior subordinated deferrable interest debentures | 13,085 | 840 | 8.57 | 13,085 | 840 | 8.57 | ||||||||||||||||||
Subordinated debt | 7,650 | 390 | 6.80 | 7,650 | 389 | 6.78 | ||||||||||||||||||
Total interest bearing liabilities/interest expense | 877,241 | 6,429 | 0.98 | 846,895 | 5,737 | 0.90 | ||||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 181,924 | 182,003 | ||||||||||||||||||||||
Other liabilities | 11,630 | 8,683 | ||||||||||||||||||||||
Shareholders’ equity | 95,927 | 100,589 | ||||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,166,722 | $ | 1,138,170 | ||||||||||||||||||||
Interest rate spread | 3.10 | 3.06 | ||||||||||||||||||||||
Net interest income/Net interest margin | 26,587 | 3.27 | % | 25,572 | 3.23 | % | ||||||||||||||||||
Tax-equivalent adjustment | (30 | ) | (22 | ) | ||||||||||||||||||||
Net Interest Income | $ | 26,557 | $ | 25,550 |
…PROVISION FOR LOAN LOSSES… The Company recorded a $750,000 provision for loan losses compared to a $3,650,000 provision for loan losses in 2016 or a decrease of $2.9 million between years. Both, the loan loss provision and net charge-offs were at more typical levels this year than the substantially higher levels that were necessary early last year to resolve a troubled loan exposure to the energy industry. The provision recorded in 2017 supported commercial loan growth, a higher level of criticized loans and more than covered the low level of net loan charge-offs incurred in the first nine months of 2017. For the nine-month timeframe, the Company experienced net loan charge-offs of $336,000, or 0.05% of total loans in 2017 compared to net loan charge-offs of $3.8 million, or 0.58%, of total loans in 2016. Overall, the Company continued to maintain strong asset quality as its nonperforming assets totaled $5.4 million, or 0.60%, of total loans, at September 30, 2017.
…NON-INTEREST..NON-INTEREST INCOME….. Non-interest income for the first nine monthsquarter of 20172020 totaled $10.9$3.8 million and increased $106,000,$227,000, or 1.0%6.3%, from the first nine months 2016quarter 2019 performance. Factors contributing to this higher level of non-interest income in 2017for the quarter included:
NON-INTEREST..NON-INTEREST EXPENSE….. Non-interest expense for the first nine monthsquarter of 20172020 totaled $30.5$10.6 million and decreasedincreased by $590,000,$340,000, or 1.9%3.3%, from the prior year’s first nine months.quarter. Factors contributing to the lowerhigher level of non-interest expense in 2017for the quarter included:$242,000$403,000 increase in salaries & benefits expense due to pension expense increasing by $188,000, or 53.0% between years. This significant increase to pension expense results from the unfavorable impact that the lower interest rate environment has on the discount rates that are used to revalue the defined benefit pension obligation each year. In addition, the higher salaries & benefits expense is also due to increased health care costs, greater incentive compensation as a result of increased residential mortgage loan production, and increased salaries expense. The higher salaries expense reflects annual merit increases and the addition of several employees to address management succession planning;andresulted from the Company recognizing a corresponding $159,000 decreasereduction in professional fees were primarily due to costs associated with the resolution of a trust operations trading error in 2016. Also favorably impacting other expense during 2017 were lower costs for check card and ATM processing, software related expense, and a credit recognized to the Company’s unfunded commitment reserve and reduced costs for fraud loss. Slightly offsetting these favorable items within other expense was an increase in Pennsylvania shares tax expense;reserve;$136,000 decrease in occupancy expenses and a $68,000 decrease in equipment costs are reflective of the Company’s ongoing efforts to become more efficient by reducing and controlling non-interest expenses. Specifically, a branch consolidation and the closure on an unprofitable loan production office were the primary reasons for these decreases;
INCOME..INCOME TAX EXPENSE….. The Company recorded an income tax expense of $1.9 million,$366,000, or an effective tax rate of 31.2%20.6%, in the first nine monthsquarter of 2017.2020. This compares to thean income tax expense of $474,000,$491,000, or an effective tax rate of 29.0%20.7%, for the first nine monthsquarter of 2016.2019.
…SEGMENT RESULTS… Retail banking’snet interest margin performance. The lower loan interest income reflects the impact of the lower interest rate environment as new loans originated at lower yields and certain loans tied to LIBOR or the prime rate repriced downward as both of these indices have moved down. On the liability side of the balance sheet, management’s action to decrease pricing of several deposit products, given the declining interest rate environment, resulted in this segment experiencing deposit cost relief. This segment recognized a higher gain on the sale of residential mortgage loans in the secondary market and a corresponding greater level of mortgage related fee income, both of which resulted from the higher level of residential mortgage loan production. Finally, and also favorably impacting this segments level of net income was a credit recognized for the unfunded commitment reserve in the first quarter of 2020 as well as the lower FDIC insurance expense.
The commercial banking segment reported net income of $1.4 million in the third quarter of 2017 and $4.3 million for the first nine months of 2017 which was $60,000 and $2.4 million higher when compared to the same of 2016 results. The higher level of income for the first nine months of 2017 was due to the lower provision for loan losses. The higher loan loss provision in 2016 was necessary to resolve the troubled energy sector loan that had a significant negative impact to reported net income in 2016. Growth in commercial real estate loans over the past year also contributed to the higher level of net income for both the nine month and quarterly time periods. In addition to the growth experienced in the CRE portfolio, which contributed to the higher level of income quarter versus quarter, the commercial banking segments also benefitted from a lower level of non-interest expense due to the closure of the Harrisonburg, Virginia loan production office and additional operation efficiencies. Also, a decrease in classified assets and the level of delinquency since the second quarter of this year contributed to the lower provision expense.
The trust segment reported net income of $335,000 in the third quarter of 2017 and $991,000 for the first nine months of 2017 which was $140,000 higher than the 2016 quarter and $251,000$43,000 higher than the first ninequarter of 2019. The increase is due to wealth management fees increasing as this segment was positively impacted by management’s effective execution of managing client accounts and increased market values for assets under management which improved in the first two months of 2016. The increasesthe first quarter of 2020. As stated previously in this document, the late first quarter 2020 negative impact to total income occurred as expenses returned to athe equity market from the COVID-19 pandemic and the pandemic’s impact on the Company’s wealth management fees will be more normal level after additional costs were necessaryevident in 2016 to address a trust operations trading error. Also,this year’s second quarter financial results. Slightly offsetting the higher levelmanagement fee income were higher levels of net income results from continued effective managementprofessional fees, incentive compensation and equipment costs. Overall, the fair market value of existing customer accounts as asset market values have improved. Finally, incometrust assets under administration totaled $1.984 billion at March 31, 2020, a decrease of $246 million, or 11.0%, from the Financial Services business unit increased as wealth management continues to be an important strategic focusMarch 31, 2019 total of the Company. Additionally, and slightly offsetting the favorable items mentioned above was additional investment in talent, which contributed to higher salaries and benefits expense.
$2.230 billion.
…BALANCE..BALANCE SHEET…..The Company’s total consolidated assets were $1.171$1.17 billion at September 30, 2017,March 31, 2020, which increaseddecreased by $17.1$2.8 million, or 1.5%0.2%, from the December 31, 20162019 asset level. TheThis change was related to a decreased level of loans. Specifically, loans and loans held for sale decreased by $10.2 million, or 1.1%. This decrease was partially offset by an increase wasin cash and cash equivalents of $1.9 million, or 8.7%, total investment securities of $3.1 million, or 1.7%, and other assets of $2.2 million, or 36.3% driven by an increase in the growth in loans and investment securities. Specifically, total loans grew by $12.4 million, or 1.4%, duringfair value of the period and was complemented by an additional $10.7 million, or 6.8%, growth in investment securities.
interest rate swap assets.
Additionally, the improved value of the investment securities portfolio had a positive impact on accumulated other comprehensive loss.
March 31, 2020 and improved by 21 basis points when compared to December 31, 2019.
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Total shareholders’ equity | | | | $ | 100,840 | | | | | $ | 98,614 | | |
Less: Goodwill | | | | | 11,944 | | | | | | 11,944 | | |
Tangible equity | | | | | 88,896 | | | | | | 86,670 | | |
Total assets | | | | | 1,168,355 | | | | | | 1,171,184 | | |
Less: Goodwill | | | | | 11,944 | | | | | | 11,944 | | |
Tangible assets | | | | | 1,156,411 | | | | | | 1,159,240 | | |
Tangible common equity ratio (non-GAAP) | | | | | 7.69% | | | | | | 7.48% | | |
Total shares outstanding | | | | | 17,043,644 | | | | | | 17,057,871 | | |
Tangible book value per share (non-GAAP) | | | | $ | 5.22 | | | | | $ | 5.08 | | |
| | | March 31, 2020 | | | December 31, 2019 | | | March 31, 2019 | | |||||||||
Total accruing loan delinquency (past due 30 to 89 days) | | | | $ | 8,525 | | | | | $ | 2,956 | | | | | $ | 2,568 | | |
Total non-accrual loans | | | | | 1,437 | | | | | | 1,487 | | | | | | 1,150 | | |
Total non-performing assets including TDR* | | | | | 2,244 | | | | | | 2,339 | | | | | | 1,168 | | |
Accruing loan delinquency, as a percentage of total loans, net of unearned income | | | | | 0.97% | | | | | | 0.33% | | | | | | 0.30% | | |
Non-accrual loans, as a percentage of total loans, net of unearned income | | | | | 0.16 | | | | | | 0.17 | | | | | | 0.13 | | |
Non-performing assets, as a percentage of total loans, net of unearned income, and other real estate owned | | | | | 0.26 | | | | | | 0.26 | | | | | | 0.14 | | |
Non-performing assets as a percentage of total assets | | | | | 0.19 | | | | | | 0.20 | | | | | | 0.10 | | |
As a percent of average loans, net of unearned income: | | | | | | | | | | | | | | | | | | | |
Annualized net charge-offs | | | | | 0.06 | | | | | | 0.02 | | | | | | 0.08 | | |
Annualized provision (credit) for loan losses | | | | | 0.08 | | | | | | 0.09 | | | | | | (0.19) | | |
Total classified loans (loans rated substandard or doubtful)** | | | | $ | 15,958 | | | | | $ | 16,338 | | | | | $ | 4,219 | | |
September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||
Total accruing loan delinquency (past due 30 to 89 days) | $ | 9,052 | $ | 3,278 | $ | 3,194 | ||||||
Total non-accrual loans | 4,654 | 1,603 | 1,753 | |||||||||
Total non-performing assets including TDR* | 5,372 | 1,624 | 1,907 | |||||||||
Accruing loan delinquency, as a percentage of total loans, net of unearned income | 1.01 | % | 0.37 | % | 0.36 | % | ||||||
Non-accrual loans, as a percentage of total loans, net of unearned income | 0.52 | 0.18 | 0.20 | |||||||||
Non-performing assets, as a percentage of total loans, net of unearned income, and other real estate owned | 0.60 | 0.18 | 0.21 | |||||||||
Non-performing assets as a percentage of total assets | 0.46 | 0.14 | 0.17 | |||||||||
As a percent of average loans, net of unearned income: | ||||||||||||
Annualized net charge-offs | 0.05 | 0.44 | 0.58 | |||||||||
Annualized provision for loan losses | 0.11 | 0.44 | 0.55 | |||||||||
Total classified loans (loans rated substandard or doubtful) | $ | 8,140 | $ | 6,038 | $ | 5,203 |
the debt service on these loans. It is believed that the Company’s loss exposure to these delinquent credits is limited since the loans are secured and have low loan to value ratios.
quarter. We also continue to closely monitor the loan portfolio given the continued slow recovery in the regional economy and the number of relatively large-sized commercial and commercial real estate loans within the portfolio. As of September 30, 2017,March 31, 2020, the 25 largest credits represented 27.2%24.2% of total loans outstanding, which represents a slight increasedecrease from the thirdfirst quarter 2016of 2019 when it was 27.1%26.1%.
| | | March 31, 2020 | | | December 31, 2019 | | | March 31, 2019 | | |||||||||
Allowance for loan losses | | | | $ | 9,334 | | | | | $ | 9,279 | | | | | $ | 8,107 | | |
Allowance for loan losses as a percentage of each of the following: | | | | | | | | | | | | | | | | | | | |
total loans, net of unearned income | | | | | 1.06% | | | | | | 1.05% | | | | | | 0.94% | | |
total accruing delinquent loans (past due 30 to 89 days) | | | | | 109.49 | | | | | | 313.90 | | | | | | 315.69 | | |
total non-accrual loans | | | | | 649.55 | | | | | | 624.01 | | | | | | 704.96 | | |
total non-performing assets | | | | | 415.94 | | | | | | 396.71 | | | | | | 694.09 | | |
September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||
Allowance for loan losses | $ | 10,346 | $ | 9,932 | $ | 9,726 | ||||||
Allowance for loan losses as a percentage of each of the following total loans, net of unearned income | 1.15 | % | 1.12 | % | 1.10 | % | ||||||
total accruing delinquent loans (past due 30 to 89 days) | 114.30 | 302.99 | 304.51 | |||||||||
total non-accrual loans | 222.30 | 619.59 | 554.82 | |||||||||
total non-performing assets | 192.59 | 611.58 | 510.02 |
The Company recorded a $750,000$175,000 provision expense for loan losses in the first ninethree months of 20172020 compared to a $3.7 million$400,000 provision recovery in the first three months of 2019, which represents a net unfavorable change of $575,000 between periods. The 2020 provision reflects the loan growth experienced since last year along with our decision to strengthen certain qualitative factors within our allowance for loan losses incalculation due to the first nine monthseconomic uncertainty caused by the COVID-19 pandemic. The Company’s asset quality continues to remain strong as evidenced by low levels of 2016 or a decrease of $2.9 million between periods. The loan loss provision was at a more typical level in 2017 and supports the continuing loan growth and the previously discussed higher level of criticized loans when compared to 2016. The provision more than covered the low level ofdelinquency, net loan charge-offs incurred during the nine months.
and non-performing assets.
guideline parameters.
believe that the holding company has strong liquidity to meet its trust preferred debt service requirements, its subordinated debt interest payments, and its common stock dividends,dividend.
agreements, buying federal funds, or utilizing the facilities of the Federal Reserve or the FHLB systems. The Company utilizes a variety of these methods of liability liquidity. Additionally, the Company’s subsidiary bank is a member of the FHLB, which provides the opportunity to obtain short- to longer-term advances based upon the Company’s investment in certain residential mortgage, commercial real estate, and commercial and industrial loans. At March 31, 2020, the Company had $364 million of overnight borrowing availability at the FHLB, $30 million of short-term borrowing availability at the Federal Reserve Bank and $35 million of unsecured federal funds lines with correspondent banks. The Company believes it has ample liquidity available to fund outstanding loan commitments if they were fully drawn upon.
On January 24, 2017,March 31, 2020. While we work through the Company’s BoardCOVID-19 pandemic, our focus is on preserving capital to support customer lending and managing heightened credit risk due to the downturn in the economy. Additionally, we currently believe that we have sufficient capital and earnings power to continue to pay our common stock cash dividend at its current rate of Directors approved a new$0.025 per quarter.
On January 1, 2015, U.S. federal banking agencies implemented the new
| | | MINIMUM CAPITAL RATIO | | | MINIMUM CAPITAL RATIO PLUS CAPITAL CONSERVATION BUFFER | | ||||||
Common equity tier 1 capital to risk-weighted assets | | | | | 4.5% | | | | | | 7.0% | | |
Tier 1 capital to risk-weighted assets | | | | | 6.0 | | | | | | 8.5 | | |
Total capital to risk-weighted assets | | | | | 8.0 | | | | | | 10.5 | | |
Tier 1 capital to total average consolidated assets | | | | | 4.0 | | | | | | | | |
Interest Rate Scenario | | | Variability of Net Interest Income | | | Change in Market Value of Portfolio Equity | | ||||||
200bp increase | | | | | 8.7% | | | | | | 43.9% | | |
100bp increase | | | | | 4.8 | | | | | | 25.0 | | |
100bp decrease | | | | | (3.0) | | | | | | (29.8) | | |
Interest Rate Scenario | Variability of Net Interest Income | Change in Market Value of Portfolio Equity | ||||||
200bp increase | 2.3 | % | 21.7 | % | ||||
100bp increase | 1.6 | 12.9 | ||||||
100bp decrease | (2.0 | ) | (18.0 | ) |
The Company believes that its overall interest rate risk position is well controlled. The variability of net interest income is positive in the upward rate shocks due to the Company’s short duration investment securities portfolio, the scheduled repricing of loans tied to LIBOR or prime, and the extension of a portion ofreduction to overnight borrowed funds. Also, the Company expects that it will not havecontinue its disciplined approach to repriceprice its core deposit accounts up as quickly as interest rates rise.in a controlled but competitive manner. The variability of net interest income is negative in the 100 basis point downward rate scenario as the Company has more exposure to assets repricing downward to a greater extent than liabilities due to the absolute low level of interest rates with the fed funds rate currently at approximately 1.25%a targeted range of 0% to 0.25%. The market value of portfolio equity increases in the upward rate shocks due to the improved value of the Company’s core deposit base. Negative variability of market value of portfolio equity occurs in the downward rate shock due to a reduced value for core deposits.
Commercial and commercial real estate loans are the largest category of credits and the most sensitive to changes in assumptions and judgments underlying the determination of the allowance for loan loss.losses. Approximately $8.0$7.1 million, or 77%, of the total allowance for loan losses at September 30, 2017March 31, 2020 has been allocated to these two loan categories. This allocation also considers other relevant factors such as actual versus estimated losses, economic trends, delinquencies, levels of non-performing and TDRtroubled debt restructured (TDR) loans, concentrations of credit, trends in loan volume, experience and depth of management, examination and audit results, effects of any changes in lending policies and trends in policy, financial information and documentation exceptions. To the extent actual outcomes differ from management estimates, additional provision for loan losses may be required that would adversely impact earnings in future periods.
In relation to recording the provision for income taxes, management must estimate the future tax rates applicable to the reversal of tax differences, make certain assumptions regarding whether tax differences are permanent or temporary and the related timing of the expected reversal. Also, estimates are made as to whether taxable operating income in future periods will be sufficient to fully recognize any gross deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. Alternatively, we may make estimates about the potential usage of deferred tax assets that decrease our valuation allowances. As of September 30, 2017,March 31, 2020, we believe that all of the deferred tax assets recorded on our balance sheet will ultimately be recovered and that no valuation allowances were needed.
The challenge for the future is to improve earnings performance toward peer levels through a disciplined focus on community banking and improving the profitability of our Trust Company. In accordance with our strategic plan, the Company will maintain its focus as a community bank delivering banking and trust services to the best of our ability and focus on further growing revenues by leveraging our strong capital base and infrastructure. It is our plan to continue to build the Company into a potent banking force in this region and in this industry. Our focus encompasses the following:
Item 3.…QUANTITATIVE3…..QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK…..The Company manages market risk, which for the Company is primarily interest rate risk, through its asset liability management process and committee, see further discussion in Interest Rate Sensitivity section of the M.D. & A.
Period | | | Total number of shares purchased | | | Average price paid per share | | | Total number of shares purchased as part of publicly announced plan | | | Maximum number of shares that may yet be purchased under the plan | | ||||||||||||
January 1 – 31, 2020 | | | | | 14,500 | | | | | $ | 4.20 | | | | | | 14,500 | | | | | | 21,462 | | |
February 1 – 29, 2020 | | | | | 21,462 | | | | | | 4.20 | | | | | | 21,462 | | | | | | — | | |
March 1 – 31, 2020 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 35,962 | | | | | | | | | | | | 35,962 | | | | | | | | |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plan | Maximum number of shares that may yet be purchased under the plan | ||||||||||||
July 1 – 31, 2017 | 33,400 | $ | 4.02 | 33,400 | 445,644 | |||||||||||
August 1 – 31, 2017 | 123,631 | 4.05 | 123,631 | 322,013 | ||||||||||||
September 1 – 30, 2017 | 63,373 | 3.99 | 63,373 | 258,640 | ||||||||||||
Total | 220,404 | $ | 4.03 | 220,404 |
In first six months of 2017, the Company was able to repurchase 465,956 shares at an average price of $4.01. On a year to date basis the Board of Director approved repurchase plan had a total of 686,360 shares repurchased at an average price of $4.02. This represents approximately 73% of the authorized repurchase plan.
None
AmeriServ Financial, Inc.Registrant
| | AmeriServ Financial, Inc. Registrant | | ||
| Date: May 8, 2020 | | | /s/ Jeffrey A. Stopko Jeffrey A. Stopko President and Chief Executive Officer | |
| Date: May 8, 2020 | | | /s/ Michael D. Lynch Michael D. Lynch Senior Vice President and Chief Financial Officer | |
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