Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 30, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | KENTUCKY BANCSHARES INC /KY/ | |
Entity Central Index Key | 1,000,232 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,972,763 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and due from banks | $ 36,135 | $ 42,052 |
Federal funds sold | 1,113 | 1,198 |
Cash and cash equivalents | 37,248 | 43,250 |
Interest bearing time deposits | 4,659 | 5,029 |
Securities available for sale | 301,927 | 273,770 |
Trading Assets | 5,644 | 5,592 |
Loans held for sale | 1,189 | 724 |
Loans | 657,566 | 656,007 |
Allowance for loan losses | (7,876) | (7,541) |
Net loans | 649,690 | 648,466 |
Federal Home Loan Bank stock | 7,034 | 7,034 |
Real estate owned, net | 1,373 | 1,824 |
Assets held for sale | 969 | |
Bank premises and equipment, net | 15,004 | 14,781 |
Interest receivable | 3,649 | 3,715 |
Mortgage servicing rights | 1,405 | 1,321 |
Goodwill | 14,001 | 14,001 |
Other intangible assets | 485 | 529 |
Other assets | 6,460 | 7,442 |
Total assets | 1,049,768 | 1,028,447 |
Deposits | ||
Non-interest bearing | 218,379 | 219,556 |
Time deposits, $250,000 and over | 84,353 | 74,302 |
Other interest bearing | 521,613 | 509,123 |
Total deposits | 824,345 | 802,981 |
Repurchase agreements | 21,811 | 20,873 |
Long-term Federal Home Loan Bank advances | 90,612 | 92,500 |
Note payable | 3,983 | 4,090 |
Subordinated debentures | 7,217 | 7,217 |
Interest payable | 667 | 692 |
Other liabilities | 5,309 | 7,122 |
Total liabilities | 953,944 | 935,475 |
Stockholders' equity | ||
Preferred stock, 300,000 shares authorized and unissued | ||
Common stock, no par value; 10,000,000 shares authorized; 2,972,763 and 2,973,232 shares issued and outstanding at March 31, 2017 and December 31, 2016 | 20,808 | 20,767 |
Retained earnings | 75,236 | 73,161 |
Accumulated other comprehensive loss | (220) | (956) |
Total stockholders' equity | 95,824 | 92,972 |
Total liabilities and stockholders’ equity | $ 1,049,768 | $ 1,028,447 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, shares authorized | 300,000 | 300,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 2,972,763 | 2,973,232 |
Common stock, shares outstanding | 2,972,763 | 2,973,232 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
INTEREST INCOME: | ||
Loans, including fees | $ 7,494 | $ 7,379 |
Securities | ||
Taxable | 1,062 | 907 |
Tax exempt | 608 | 657 |
Trading Assets | 34 | 42 |
Other | 178 | 113 |
Total interest income | 9,376 | 9,098 |
INTEREST EXPENSE: | ||
Deposits | 645 | 557 |
Repurchase agreements | 26 | 26 |
Federal Home Loan Bank advances | 397 | 384 |
Note payable | 50 | 61 |
Subordinated debentures | 80 | 61 |
Total interest expense | 1,198 | 1,089 |
Net interest income | 8,178 | 8,009 |
Provision for loan losses | 350 | 375 |
Net interest income after provision | 7,828 | 7,634 |
NON-INTEREST INCOME: | ||
Service charges | 1,223 | 1,117 |
Loan service fee income, net | 114 | 51 |
Trust department income | 288 | 263 |
Gain on sale of available for sale securities, net | 126 | |
Gain (loss) on trading assets | 17 | 40 |
Gain on sale of loans | 550 | 299 |
Brokerage income | 193 | 184 |
Debit card interchange income | 731 | 644 |
Gain on bank premises | 1,194 | |
Other | 40 | 23 |
Total other income | 4,350 | 2,747 |
NON-INTEREST EXPENSE: | ||
Salaries and employee benefits | 4,445 | 4,370 |
Occupancy expenses | 965 | 918 |
Repossession expenses, net | 79 | 112 |
FDIC insurance | 94 | 174 |
Legal and professional fees | 283 | 378 |
Data processing | 406 | 426 |
Debit card expenses | 375 | 319 |
Amortization expense of intangible assets, excluding mortgage servicing right | 43 | 79 |
Advertising and marketing | 212 | 225 |
Taxes other than payroll, property and income | 300 | 275 |
Telephone | 122 | 91 |
Postage | 93 | 89 |
Loan fees | 63 | 45 |
Other | 706 | 827 |
Total other expenses | 8,186 | 8,328 |
Income before taxes | 3,992 | 2,053 |
income taxes | 855 | 216 |
Net income | 3,137 | 1,837 |
Other Comprehensive Income, net of tax: | ||
Change in Unrealized Gains on Securities | 736 | 2,387 |
Comprehensive income | $ 3,873 | $ 4,224 |
Earnings per share: | ||
Basic (in dollars per share) | $ 1.06 | $ 0.61 |
Diluted (in dollars per share) | 1.06 | 0.61 |
Dividends per share (in dollars per share) | $ 0.29 | $ 0.27 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Beginning Balance at Dec. 31, 2015 | $ 359 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income | $ 1,837 | |||
Ending Balance at Mar. 31, 2016 | 2,746 | |||
Beginning Balance at Dec. 31, 2016 | $ 20,767 | $ 73,161 | (956) | 92,972 |
Balances (in shares) at Dec. 31, 2016 | 2,973,232 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Common stock issued | $ 64 | 64 | ||
Common stock issued (in shares) | 8,561 | |||
Stock compensation expense | $ 40 | 40 | ||
Common stock purchased and retired | $ (63) | (200) | (263) | |
Common stock purchased and retired (in shares) | (9,030) | |||
Other comprehensive income | 736 | 736 | ||
Net income | 3,137 | 3,137 | ||
Dividends declared | (862) | (862) | ||
Ending Balance at Mar. 31, 2017 | $ 20,808 | $ 75,236 | $ (220) | $ 95,824 |
Balances (in shares) at Mar. 31, 2017 | 2,972,763 |
CONSOLIDATED STATEMENTS OF CHA6
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | |
Common stock issued - employee stock grants (in shares) | 6,575 |
Common stock issued - director stock awards (in shares) | 1,386 |
Common stock issued - director stock options exercised (in shares) | $ | $ 600 |
Dividends per share (in dollars per share) | $ / shares | $ 0.29 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash Flows From Operating Activities | ||
Net income | $ 3,137 | $ 1,837 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 154 | 365 |
Securities amortization (accretion), net | 231 | 241 |
Stock based compensation expense | 40 | 39 |
Provision for loan losses | 350 | 375 |
Securities available for sale gains, net | (126) | |
Net change in trading assets | (52) | (81) |
Originations of loans held for sale | (12,296) | (7,302) |
Proceeds from sale of loans | 12,381 | 6,591 |
Gains on sale of bank premises and equipment | (1,194) | |
Gains on other real estate | (46) | |
Gain on sale of loans | (550) | (299) |
Write-downs of other real estate, net | 85 | |
Changes in: | ||
Interest receivable | 66 | (21) |
Other assets | 312 | 124 |
Interest payable | (25) | 49 |
Deferred taxes | 320 | 644 |
Other liabilities | (1,813) | (1,734) |
Net cash from operating activities | 1,015 | 787 |
Cash Flows From Investing Activities | ||
Net change in interest bearing time deposits | 370 | 245 |
Purchases of securities, available for sale | (37,701) | (23,679) |
Proceeds from sales of securities | 0 | 9,250 |
Proceeds from principal payments, maturities and calls of securities | 10,399 | 11,764 |
Net change in loans | (1,593) | (11,483) |
Purchases of bank premises and equipment | (454) | (237) |
Proceeds from sale of bank premises and equipment | 2,093 | |
Proceeds from sale of other real estate | 623 | |
Net cash from investing activities | (26,263) | (14,140) |
Cash Flows From Financing Activities: | ||
Net change in deposits | 21,364 | 6,961 |
Net change in repurchase agreements | 938 | 7,782 |
Repayment of long-term Federal Home Loan Bank advances | (1,888) | (1,601) |
Repayment of note payable | (107) | |
Proceeds from issuance of common stock | 64 | 49 |
Purchase of common stock | (263) | (23) |
Dividends paid | (862) | (809) |
Net cash from financing activities | 19,246 | 12,359 |
Net change in cash and cash equivalents | (6,002) | (994) |
Cash and cash equivalents at beginning of period | 43,250 | 28,048 |
Cash and cash equivalents at end of period | 37,248 | 27,054 |
Supplemental disclosures of cash flow information Cash paid during the year for: | ||
Interest expense | 1,223 | 1,040 |
Supplemental disclosures of non-cash investing activities | ||
Real estate acquired through foreclosure | $ 126 | $ 163 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial information presented as of any date other than December 31 has been prepared from the Company’s books and records without audit. The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but is not required for interim reporting purposes, has been condensed or omitted. There have been no significant changes to the Company’s accounting and reporting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such financial statements, have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation. Nature of Operations : As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance. Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements. Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income. Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity. Adoption of New Accounting Standards ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Issued in August 2016, ASU 2016-15 provides guidance to reduce the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of ASU 2016-15 provide guidance on eight specific cash flow: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon bonds; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. The amendments of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Management has evaluated the amendments of ASU 2016-15 and does not believe that adoption of this ASU will impact Kentucky Bancshares existing presentation of the applicable cash receipts and cash payments on its consolidated statements of cash flows. ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 will add FASB ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a writedown. The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-13 during the first quarter of 2020. Kentucky Bancshares has established a steering committee which includes the appropriate members of Management to evaluate the impact this ASU will have on the Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments. ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions. The amendments of ASU 2016-09 include: (i) requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement; (ii) requiring excess tax benefits to be classified along with other income tax cash flows as an operating activity on the statement of cash flow; (iii) allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that expect to vest or account for forfeitures when they occur; (iv) change the threshold to qualify for equity classification to permit withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) requiring that cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The amendments of ASU 2016-09 became effective for Kentucky Bancshares on January 1, 2017 and did not have a material impact on Kentucky Bancshares consolidated financial statements. The Company has made an entity-wide accounting policy election to account for forfeitures of stock awards as they occur. Changes to Kentucky Bancshares consolidated statement of cash flows required by the amendments of ASU 2016-09 are incorporated into the presentation in the Quarterly Report on Form 10-Q for the three month period ending March 31, 2017. ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 was issued by the FASB to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The amendments of ASU 2016-02 are effective for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-02 beginning in the first quarter of 2019. At adoption, Kentucky Bancshares will recognize a lease asset and a corresponding lease liability on its consolidated balance sheet for its total lease obligation measured on a discounted basis. As of March 31, 2017, all leases in which Kentucky Bancshares was the lessee were classified as operating leases. Kentucky Bancshares does not anticipant any material impact to its consolidated statements of income as a result of the adoption of this ASU. The Company has an immaterial amount of leases in which it is the lessor. Based on Management’s evaluation to date, the Company does not expect the amendments of ASU 2016-02 to have any material impact to these leases or the related income. Management will continue to evaluate the impact this ASU will have on the Company’s consolidated financial statements; however, the adoption of ASU 2016-02 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the FASB Accounting Standards Codification).” Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) eliminating the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) requiring the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requiring an entity that has elected the fair value option to measure the fair value of a liability to present separately in other comprehensive income the portion of the change in the fair value resulting from a change in the instrument-specific credit risk; (vi) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017. Kentucky Bancshares plans to adopt the amendments of ASU 2016-01 during the first quarter of 2018. Management has evaluated the impact this ASU will have on the Company’s consolidated financial statements. Through this evaluation, Management has determined that the principal areas impacted by the amendments of ASU 2016-01 will be Kentucky Bancshares investment in member bank stock, which are equity securities that do not have readily determinable fair values, and various fair value related disclosures. See Note 1 – Significant Accounting Policies, “Federal Home Loan Bank (FHLB): for information regarding Kentucky Bancshares investment in member bank stock. The adoption of ASU 2016-01 is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 will add FASB ASC Topic 606, “Revenue from Contracts with Customers,” and will supersede revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” as well as certain cost guidance in FASB ASC Topic 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts.” ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services are transferred to the customer. ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application of (1) the amount by which each financial statement line item is affected in the current reporting period, as compared to the guidance that was in effect before the change, and (2) an explanation of the reasons for significant changes. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year. ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017. All subsequently issued ASUs which provide additional guidance and clarifications to various aspects of FASB ASC Topic 606 will become effective when the amendments of ASU 2014-09 become effective. Kentucky Bancshares plans to adopt these amendments during the first quarter of 2018. Management is continuing to evaluate the impact ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements as well as the most appropriate transition method of application. Based on this evaluation to date, Management has determined that the majority of the revenues earned by Kentucky Bancshares are not within the scope of ASU 2014-09. Management also believes that for most revenue streams within the scope of ASU 2014-09, the amendments will not change the timing of when the revenue is recognized. Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements, focusing on noninterest income sources within the scope of ASU 2014-09 as well as new disclosures required by these amendments; however, the adoption of ASU 2014-09 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements. ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities : In March 2017, the FASB issued ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This ASU amends the amortization period for certain purchased callable debt securities held at a premium. It shortens the amortization period for the premium to the earliest call date. Under current U.S. GAAP, premiums on callable debt securities generally are amortized to the maturity date. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a cons ensus of the FASB Emerging Issues Task Force): Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Update 2017-01 - Busi ness Combinations (Topic 805): Clarifying the Definition of a Business: The amendments in this ASU are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. |
SECURITIES
SECURITIES | 3 Months Ended |
Mar. 31, 2017 | |
SECURITIES | |
SECURITIES | 2. SECURITIES AVAILABLE FOR SALE Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale March 31, 2017 U. S. government agencies $ 46,077 $ 386 $ (265) $ 46,198 States and political subdivisions 91,389 1,928 (381) 92,936 Mortgage-backed - residential 164,475 149 (2,171) 162,453 Equity securities 320 20 — 340 Total $ 302,261 $ 2,483 $ (2,817) $ 301,927 December 31, 2016 U. S. government agencies $ 36,454 $ 373 $ (299) $ 36,528 States and political subdivisions 90,117 1,731 (716) 91,132 Mortgage-backed - residential 148,327 120 (2,677) 145,770 Equity securities 320 20 — 340 Total $ 275,218 $ 2,244 $ (3,692) $ 273,770 The amortized cost and fair value of securities at March 31, 2017 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately. Further discussion concerning Fair Value Measurements can be found in Note 9. Amortized Fair Cost Value Due in one year or less $ 300 $ 301 Due after one year through five years 34,432 34,951 Due after five years through ten years 49,420 49,811 Due after ten years 53,314 54,071 137,466 139,134 Mortgage-backed - residential 164,475 162,453 Equity 320 340 Total $ 302,261 $ 301,927 Proceeds from sales of securities during the first three months of 2017 and 2016 were $0 and $9.3 million. Gross gains of $0 and $126 thousand and gross losses of $0 and $0 were realized on those sales, respectively. The tax provision related to these realized net gains was $0 and $43 thousand, respectively. Securities with unrealized losses March 31, 2017 and at December 31, 2016 not recognized in income are as follows: March 31, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 24,754 $ (265) $ — $ — $ 24,754 $ (265) States and municipals 21,189 (381) — — 21,189 (381) Mortgage-backed - residential 125,783 (1,600) 13,366 (571) 139,149 (2,171) Total temporarily impaired $ 171,726 $ (2,246) $ 13,366 $ (571) $ 185,092 $ (2,817) December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 28,202 $ (299) $ — $ — $ 28,202 $ (299) States and municipals 27,834 (716) — — 27,834 (716) Mortgage-backed - residential 119,802 (1,938) 13,652 (739) 133,454 (2,677) Total temporarily impaired $ 175,838 $ (2,953) $ 13,652 $ (739) $ 189,490 $ (3,692) The Company evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. In analyzing an issuer’s financial condition, we may consider many factors including, (1) whether the securities are issued by the federal government or its agencies, (2) whether downgrades by bond rating agencies have occurred, (3) the results of reviews of the issuer’s financial condition and near-term prospects, (4) the length of time and the extent to which the fair value has been less than cost, and (5) whether we intend to sell the investment security or more likely than not will be required to sell the investment security before its anticipated recovery. Unrealized losses on securities included in the tables above have not been recognized into income because (1) all rated securities are investment grade and are of high credit quality, (2) management does not intend to sell and it is more likely than not that management would not be required to sell the securities prior to their anticipated recovery, (3) management believes the decline in fair value is largely due to changes in interest rates and (4) management believes the declines in fair value are temporary. The Company believes the fair value will recover as the securities approach maturity. TRADING ASSETS The trading assets, which totaled $5.6 million at March 31, 2017 and $5.6 million at December 31, 2016, are primarily comprised of cash and cash equivalents and municipal securities which are generally held for 60 days or less. |
LOANS
LOANS | 3 Months Ended |
Mar. 31, 2017 | |
LOANS | |
LOANS | 3. Loans at period-end are as follows: (in thousands) 3/31/2017 12/31/2016 Commercial $ 76,040 $ 77,436 Real estate construction 28,257 29,169 Real estate mortgage: 1-4 family residential 248,132 244,638 Multi-family residential 44,330 47,199 Non-farm & non-residential 182,417 176,024 Agricultural 61,035 62,491 Consumer 17,239 18,867 Other 116 183 Total $ 657,566 $ 656,007 On July 24, 2015, the Company acquired Madison Financial Corporation and its wholly-owned subsidiary, Madison Bank. The above loan balances include loans purchased in the Madison Financial Corporation acquisition. Loan balances acquired in the Madison Financial Corporation acquisition have no allocated allowance for loan losses. The composition of loans acquired as of March 31, 2017 is as follows: 3/31/2017 12/31/2016 Commercial $ 1,078 $ 1,113 Real estate construction 394 398 Real estate mortgage: 1-4 family residential 10,618 11,462 Multi-family residential 3,463 5,043 Non-farm & non-residential 11,591 13,024 Agricultural 1,239 1,940 Consumer 80 107 Total $ 28,463 $ 33,087 Activity in the allowance for loan losses for the three month periods indicated was as follows: Three Months Ended March 31, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 789 $ (2) $ 8 $ 76 $ 871 Real estate Construction 564 — — (19) 545 Real estate mortgage: 1-4 family residential 2,301 (11) 1 84 2,375 Multi-family residential 581 — 3 82 666 Non-farm & non-residential 1,203 — — 108 1,311 Agricultural 856 — 10 (4) 862 Consumer 547 (37) 4 20 534 Other 60 (225) 234 (9) 60 Unallocated 640 — — 12 652 $ 7,541 $ (275) $ 260 $ 350 $ 7,876 Three Months Ended March 31, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 486 $ — $ 31 $ (9) $ 508 Real estate Construction 411 — 6 459 876 Real estate mortgage: — 1-4 family residential 2,081 (12) 5 102 2,176 Multi-family residential 458 — 3 11 472 Non-farm & non-residential 1,213 — 266 (298) 1,181 Agricultural 678 — 11 38 727 Consumer 525 (110) 57 59 531 Other 60 (303) 297 6 60 Unallocated 609 — — 7 616 $ 6,521 $ (425) $ 676 $ 375 $ 7,147 Purchased Credit Impaired Loans: The Company has purchased loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows: 3/31/2017 12/31/2016 Real estate mortgage: 1-4 family residential $ 850 $ 1,028 Multi-family 534 562 Non-farm & non-residential 135 145 Agricultural 169 178 $ 1,688 $ 1,913 There was no associated allowance for loan losses as of March 31, 2017 or December 31, 2016 for purchased credit impaired loans. The contractual principal balance of these loans was $2.4 million at March 31, 2017 and $2.6 million at December 31, 2016. Accretable yield, or income expected to be collected, is as follows. There was no accretion recorded in income related to purchased credit impaired loans for the three months ended March 31, 2017 or March 31, 2016. Three Months Ended 3/31/2017 3/31/2016 Balance, beginning of period $ 240 $ 408 New loans purchased — — Accretion of income 46 69 Balance, end of period $ 194 $ 339 The following tables present the balance in the allowance for loan losses and the recorded investment (excluding accrued interest receivable amounting to $2.3 million as of March 31, 2017 and $2.4 million at December 31, 2016) in loans by portfolio segment and based on impairment method as of March 31, 2017 and December 31, 2016: Individually Collectively Purchased As of March 31, 2017 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 871 $ — $ 871 Real estate construction — 545 — 545 Real estate mortgage: 1-4 family residential 75 2,300 — 2,375 Multi-family residential — 666 — 666 Non-farm & non-residential 8 1,303 — 1,311 Agricultural 396 466 — 862 Consumer — 534 — 534 Other — 60 — 60 Unallocated — 652 — 652 $ 479 $ 7,397 $ — $ 7,876 Loans: Commercial $ — $ 76,040 $ — $ 76,040 Real estate construction — 28,257 — 28,257 Real estate mortgage: 1-4 family residential 637 246,467 850 248,132 Multi-family residential — 43,768 534 44,330 Non-farm & non-residential 2,609 179,663 135 182,417 Agricultural 3,142 57,715 169 61,035 Consumer — 17,239 — 17,239 Other — 116 — 116 $ 6,388 $ 649,265 $ 1,688 $ 657,566 Individually Collectively Purchased As of December 31, 2016 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 789 $ — $ 789 Real estate construction — 564 — 564 Real estate mortgage: 1-4 family residential 99 2,202 — 2,301 Multi-family residential — 581 — 581 Non-farm & non-residential 15 1,188 — 1,203 Agricultural 427 429 — 856 Consumer — 547 — 547 Other — 60 — 60 Unallocated — 640 — 640 $ 541 $ 7,000 $ — $ 7,541 Loans: Commercial $ 97 $ 77,339 $ — 77,436 Real estate construction 153 29,016 — 29,169 Real estate mortgage: 1-4 family residential 2,704 240,906 1,028 244,638 Multi-family residential — 46,637 562 47,199 Non-farm & non-residential 1,725 174,154 145 176,024 Agricultural 3,315 58,998 178 62,491 Consumer — 18,867 — 18,867 Other — 183 — 183 Total $ 7,994 $ 646,100 $ 1,913 $ 656,007 The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended March 31, 2017 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commerical $ — $ — $ — $ 49 $ $ Real estate mortgage: Construction — — — 77 11 1-4 family residential 307 307 — 457 5 Agricultural 898 898 — 776 — — With an allowance recorded: Real estate mortgage: 1-4 family residential 330 330 75 1,214 23 23 Non-farm & non-residential 1,711 1,711 8 1,718 23 23 Agricultural 3,142 3,142 396 2,902 3 3 Total $ 6,388 $ 6,388 $ 479 $ 7,193 $ 77 $ 77 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the three months ended March 31,2016: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ 370 $ 2 $ 2 Agricultural 346 3 3 With an allowance recorded: Real estate mortgage: Construction 1-4 family residential 1,077 5 5 Non-farm & non-residential 2,441 18 18 Agricultural 3,420 — — Total $ 8,851 $ 60 $ 60 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commercial $ 97 $ 97 $ — $ 48 $ $ Real estate construction — Real estate mortgage: 1-4 family residential 606 606 — 488 — — Agricultural 654 654 — 561 — — With an allowance recorded: Real estate mortgage 1-4 family residential 2,098 2,098 99 1,590 56 56 Non-farm & non-residential 1,725 1,725 15 2,303 71 71 Agricultural 2,661 2,661 427 3,309 25 25 Total $ 7,994 $ 7,994 $ 541 $ 8,793 $ 191 $ 191 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present the recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans as of March 31, 2017 and December 31, 2016: Loans Past Due Over 90 Days As of March 31, 2017 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 12 $ 34 $ — Real estate construction — — — Real estate mortgage: 1-4 family residential 2,285 249 — Multi-family residential — — — Non-farm & non-residential 272 61 1,711 Agricultural 940 405 — Consumer 13 8 — Total $ 3,522 $ 757 $ 1,711 Loans included in totals above acquired from Madison Financial Corporation $ 635 $ 22 $ — Loans Past Due Over 90 Days As of December 31, 2016 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 3 $ 11 $ — Real estate construction — 153 — Real estate mortgage: 1-4 family residential 2,725 31 338 Multi-family residential 25 — — Non-farm & non-residential 272 — 1,725 Agricultural 1,541 724 — Consumer — 8 — Other — — — Total $ 4,566 $ 927 $ 2,063 Loans included in totals above acquired from Madison Financial Corporation $ 578 $ 22 $ — Nonaccrual loans secured by real estate make up 99.3% of the total nonaccrual loan balances at March 31, 2017. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected as scheduled in the loan agreement. Nonaccrual loans are loans for which payments in full of principal or interest is not expected or which principal or interest has been in default for a period of 90 days or more unless the asset is both well secured and in the process of collection. Other impaired loans may be loans showing signs of weakness or interruptions in cash flow, but ultimately are current or less than 90 days past due with respect to principal and interest and for which we anticipate full payment of principal and interest but not in accordance with contractual terms. Additional factors considered by management in determining impairment and non-accrual status include payment status, collateral value, availability of current financial information, and the probability of collecting all contractual principal and interest payments. The following tables present the aging of the recorded investment in past due and non-accrual loans as of March 31, 2017 and December 31, 2016 by class of loans: 30–59 60–89 Greater than Total As of March 31, 2017 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 25 $ 235 $ 34 $ 12 $ 306 $ 75,734 Real estate construction 1,172 — — — 1,172 27,085 Real estate mortgage: 1-4 family residential 2,767 128 249 2,285 5,429 242,703 Multi-family residential — — — — 44,330 Non-farm & non-residential 223 64 61 272 620 181,797 Agricultural 256 156 405 940 1,757 59,278 Consumer 65 85 8 13 171 17,068 Other — — — — — 116 Total $ 4,508 $ 668 $ 757 $ 3,522 $ 9,455 $ 648,111 Loans included in totals above acquired from Madison Financial Corp. $ 125 $ — $ — $ 635 $ 760 $ 27,703 30–59 60–89 Greater than Total As of December 31, 2016 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 54 $ 45 $ 11 $ 3 $ 113 $ 77,323 Real estate construction — — 153 — 153 29,016 Real estate mortgage: 1-4 family residential 2,310 228 31 2,725 5,294 239,344 Multi-family residential 391 3 — 25 419 46,780 Non-farm & non-residential 159 61 — 272 492 175,532 Agricultural 647 61 724 1,541 2,973 59,518 Consumer 97 37 8 — 142 18,725 Other — — — — — 183 Total $ 3,658 $ 435 $ 927 $ 4,566 $ 9,586 $ 646,421 Loans included in totals above acquired from Madison Financial Corp. $ 155 $ — $ 22 $ 578 $ 755 $ 32,332 Troubled Debt Restructurings: The Company has allocated $8 thousand in specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2017. The Company allocated $40 thousand for specific reserves to customers whose loan terms had been modified in troubled debt restructuring as of December 31, 2016. The Company has not committed to lend additional amounts as of March 31, 2017 and December 31, 2016 to customers with outstanding loans that are classified as troubled debt restructurings. No loans were modified as troubled debt restructurings during the first three months ended of 2017 or 2016. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: Special Mention. Loans classified as special mention have one or more potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined and documented weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: As of March 31, 2017 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 74,976 $ 1,002 $ 62 $ — Real estate construction 28,257 — — — Real estate mortgage: 1-4 family residential 237,512 3,752 6,856 12 Multi-family residential 40,970 2,600 760 — Non-farm & non-residential 172,511 8,142 1,764 — Agricultural 57,646 1,748 1,641 — Total $ 611,872 $ 17,244 $ 11,083 $ 12 Loans included in totals above acquired from Madison Financial Corporation $ 25,992 $ 438 $ 2,033 $ — As of December 31, 2016 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 76,346 $ 1,078 $ 12 $ — Real estate construction 28,577 — 592 — Real estate mortgage: 1-4 family residential 232,969 4,031 7,627 11 Multi-family residential 43,681 2,617 901 — Non-farm & non-residential 167,451 8,185 388 — Agricultural 58,155 1,367 2,969 — Total $ 607,179 $ 17,278 $ 12,489 $ 11 Loans included in totals above acquired from Madison Financial Corporation $ 30,359 $ 480 $ 2,248 $ — For consumer loans, the Company evaluates the credit quality based on the aging of the recorded investment in loans, which was previously presented. Non-performing consumer loans are loans which are greater than 90 days past due or on non-accrual status, and total $21 thousand at March 31, 2017 and $8 thousand at December 31, 2016. |
REAL ESTATE OWNED
REAL ESTATE OWNED | 3 Months Ended |
Mar. 31, 2017 | |
REAL ESTATE OWNED | |
REAL ESTATE OWNED | 4. Activity in real estate owned, net was as follows: Three Months Ended March 31, 2017 2016 Beginning of year $ 1,824 $ 2,347 Additions 126 121 Sales (577) — (Additions) subtractions to valuation allowance, net — (85) End of period $ 1,373 $ 2,383 Activity in the valuation allowance was as follows: 2017 2016 Beginning of year $ 803 $ 616 Write-downs of other real estate, net — 85 Reductions from sale — — End of Period $ 803 $ 701 Expenses related to foreclosed assets include: Three Months Ended March 31, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ (46) $ — Additions to valuation allowance, net — 85 Operating expenses, net of rental income 79 27 Repossession expenses, net 79 112 Net expense, net of gain or loss on sales, for the period $ 33 $ 112 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 5. Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based compensation agreements. The factors used in the earnings per share computation follow: Three Months Ended March 31, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 3,137 $ 1,837 Weighted average common shares outstanding 2,954 2,977 Basic earnings per share $ 1.06 $ 0.61 Diluted Earnings Per Share Net Income $ 3,137 $ 1,837 Weighted average common shares outstanding 2,954 2,977 Weighted average common and dilutive potential common shares outstanding 2,954 2,977 Diluted earnings per share $ 1.06 $ 0.61 Stock options for 600 shares of common stock for three months ended March 31, 2017 and 1,200 shares of common stock for the three months ended March 31, 2016 were excluded from diluted earnings per share because their impact was antidilutive. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2017 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | 6. We have four stock based compensation plans as described below. Two Stock Option Plans Under its expired 1999 Employee Stock Option Plan, the Company has granted certain officers and key employees stock option awards which vest and become fully exercisable at the end of five years and provided for issuance of up to 100,000 options. Under the expired 1993 Non-Employee Directors Stock Ownership Incentive Plan, the Company also granted certain directors stock option awards which vest and become fully exercisable immediately and provided for issuance of up to 20,000 options. For each Stock Option Plan, the exercise price of each option which has a ten year life, was equal to the market price of the Company’s stock on the date of grant. Summary of activity in the stock option plan for the first three months of 2017 follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value (1) Outstanding, beginning of year 1,200 $ 31.00 Granted — — Forfeited or expired — — Exercised (600) 31.00 Outstanding, end of period 600 $ 31.00 11 months $ 4 Vested and expected to vest 600 $ 31.00 11 months $ 4 Exercisable, end of period 600 $ 31.00 11 months $ 4 (1) Aggregate intrinsic value in thousands As of March 31, 2017, there was $0 of total unrecognized compensation cost related to nonvested stock options granted under the Plan. Since both stock option plans have expired, neither plan allows for additional options to be issued. 2005 Restricted Stock Grant Plan On May 10, 2005, the Company’s stockholders approved a restricted stock grant plan. Total shares issuable under the plan were 50,000. There were no shares issued during the first three months of 2017 or 2016. The plan is now expired and no additional shares will be issued from the 2005 plan. There were no shares forfeited during the first three months of 2017 or 2016. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 10,636 $ 254 $ 23.84 Granted — — — Vested (4,192) (76) 18.18 Forfeited — — — Nonvested at March 31, 2017 6,444 $ 178 $ 27.52 (1) Grant date fair value in thousands As of March 31, 2017, there was $141 thousand of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 2.2 years. As March 31, 2017, no additional shares are available for issuance under the restricted stock grant plan. 2009 Stock Award Plan On May 13, 2009, the Company’s stockholders approved a stock award plan that provides for the granting of both incentive and nonqualified stock options and other share based awards. Total shares issuable under the plan are 150,000. There were 6,575 shares issued during the first three months of 2017 and 6,170 shares were issued during the first three months of 2016. There were no shares forfeited during the first three months of 2017 and no shares forfeited during the first three months of 2016. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value (1) Per Share Nonvested at January 1, 2017 7,297 $ 214 $ 29.31 Granted 6,575 214 32.50 Vested (1,414) (41) 28.77 Forfeited — — — Nonvested at March 31, 2017 12,458 $ 387 $ 31.05 (1) Grant date fair value in thousands As of March 31, 2017, there was $364 thousand of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 4.2 years. As of March 31, 2017, 132,417 shares are still available for issuance. |
REPURCHASE AGREEMENTS
REPURCHASE AGREEMENTS | 3 Months Ended |
Mar. 31, 2017 | |
REPURCHASE AGREEMENTS. | |
REPURCHASE AGREEMENTS AND OTHER BORROWINGS | 7. Repurchase agreements totaled $21.8 million at March 31, 2017. Of this, $15.8 million were overnight obligations and $6.0 million had terms extending through May 2020 and a weighted remaining average life of 1.5 years. The Company pledged agencies and mortgage-backed securities with a carrying amount of $28.5 million to secure repurchase agreements as of March 31, 2017. |
OTHER BORROWINGS
OTHER BORROWINGS | 3 Months Ended |
Mar. 31, 2017 | |
OTHER BORROWINGS | |
OTHER BORROWINGS | 8. On July 20, 2015, the Company borrowed $5 million which had an outstanding balance of $4.0 million at March 31, 2017. The term loan has a fixed interest rate of 5.02%, requires quarterly principal and interest payments, matures July 20, 2025 and is collateralized by Kentucky Bank stock. The maturity schedule for the term loan as of March 31, 2017 is as follows (in thousands): 2017 $ 288 2018 401 2019 421 2020 442 2021 465 Thereafter 1,966 $ 3,983 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE MEASUREMENTS. | |
FAIR VALUE MEASUREMENTS | 9. ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and sets forth disclosures about fair value measurements. ASC Topic 825, “Financial Instruments”, allows entities to choose to measure certain financial assets and liabilities at fair value. The Company has not elected the fair value option for any financial assets or liabilities. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This Topic describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate the fair value: Investment Securities and Trading Assets : The fair values for available for sale investment securities and trading assets are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Impaired Loans : The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent third party real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. No adjustments were made for the first three months of 2017 or 2016 and resulted in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy. Other Real Estate Owned : Assets acquired through or instead of loan foreclosure and classified as other real estate owned (OREO) are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach with data from comparable properties. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments were $0 for the three months ended March 31, 2017 and $85 thousand for the three months ended March 31, 2016 and resulted in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Mortgage Servicing Rights : Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Assets and Liabilities Measured on a Recurring Basis : Available for sale investment securities and trading assets are the Company’s only balance sheet items that meet the disclosure requirements for instruments measured at fair value on a recurring basis. Disclosures are as follows in the tables below. Fair Value Measurements at March 31, 2017 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 46,198 $ — $ 46,198 $ — States and municipals 92,936 — 92,936 — Mortgage-backed - residential 162,453 — 162,453 — Equity securities 340 340 — — Trading Assets 5,644 2,384 3,260 — Total $ 307,571 $ 2,724 $ 304,847 $ — Fair Value Measurements at December 31, 2016 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 36,528 $ — $ 36,528 $ — States and municipals 91,132 — 91,132 — Mortgage-backed - residential 145,770 — 145,770 — Equity securities 340 340 — — Trading Assets 5,592 1,608 3,984 — Total $ 279,362 $ 1,948 $ 277,414 $ — There were no transfers between level 1 and level 2 during 2017 or 2016. Assets measured at fair value on a non-recurring basis are summarized below (in thousands): Fair Value Measurements at March 31, 2017 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family Residential 255 — — 255 Agricultural 2,746 — — 2,746 Other real estate owned, net: Residential 956 956 Commercial 57 — — 57 Loan servicing rights 1,152 — — 1,152 Fair Value Measurements at December 31, 2016 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family residential 1,685 — — $ 1,685 Agricultural 2,234 — — 2,234 Other real estate owned, net: Residential 956 — — 956 Commercial 272 — 272 Loan servicing rights 1,083 — — 1,083 Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $3.0 million, which includes a valuation allowance of $471 thousand at March 31, 2017. No new loans became impaired during the three month period ended March 31, 2017 which resulted in no additional provision for loan losses for impaired loans. Other real estate owned, which is measured at fair value less costs to sell, had a net carrying amount of $1.0 million, which is made up of the outstanding balance of 1.8 million, net of a valuation allowance of $803 thousand at March 31, 2017. The Company recorded $0 in write-downs of other real estate owned properties for the three months ended March 31, 2017. The Company recorded $85 thousand in net write-downs of other real estate owned properties during the three months ended March 31, 2016. Impaired loan servicing rights, which are carried at the lower of cost or fair value, were carried at their fair value of $1.15 million, which is made up of the outstanding balance of $1.24 million, net of a valuation allowance of $86 thousand at March 31, 2017. For the first three months of 2017, the Company recorded a net recovery of prior write-downs of $39 thousand and a net recovery of prior write-downs of $3 thousand for the three months ended March 31, 2016. At December 31, 2016, impaired loan servicing rights were carried at their fair value of $1.1 million, which is made up of the outstanding balance of $1.2 million, net of a valuation allowance of $125 thousand. The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2017 and December 31, 2016: Range March 31, 2017 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales 0%-12% (6)% Agricultural sales comparison adjustment for differences between the comparable sales 8%-64% (33)% Other real estate owned: Residential sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial income approach capitalization rate 10%-10% (10)% Loan Servicing Rights discounted cash flow constant prepayment rates 8%-50% (11)% Range December 31, 2016 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential 1,685 sales comparison adjustment for differences between the comparable sales 0%-21% (10)% Agricultural 2,234 sales comparison adjustment for differences between the comparable sales 2%-75% (9)% Other real estate owned: Residential 956 sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial 272 income approach capitalization rate 10%-10% (10)% Loan Servicing Rights discounted cash flow constant prepayment rates 8%-45% (13)% Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments, at March 31, 2017 and December 31, 2016 are as follows: March 31, 2017: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 37,248 $ 37,248 $ — $ — $ 37,248 Interest bearing deposits 4,659 4,659 — — 4,659 Securities 301,927 340 301,587 — 301,927 Trading assets 5,644 2,384 3,260 — 5,644 Loans held for sale 1,189 — 1,229 — 1,229 Loans, net 649,690 — — 647,847 647,847 FHLB Stock 7,034 — — — N/A Interest receivable 3,649 — 1,355 2,294 3,649 Financial liabilities Deposits $ 824,345 $ 613,975 $ 209,399 $ — $ 823,374 Securities sold under agreements to repurchase 21,811 — 21,916 — 21,916 Long-term Federal Home Loan Bank advances 90,612 — 86,023 — 86,023 Note payable 3,983 — 4,438 — 4,438 Subordinated debentures 7,217 — — 7,211 7,211 Interest payable 667 — 605 62 667 December 31, 2016: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 43,250 $ 43,250 $ — $ — $ 43,250 Interest bearing deposits 5,029 5,029 — — 5,029 Securities 273,770 340 273,430 — 273,770 Trading assets 5,592 1,608 3,984 — 5,592 Mortgage loans held for sale 724 — 750 — 750 Loans, net 648,466 — — 648,234 648,234 FHLB Stock 7,034 — — — N/A Interest receivable 3,715 — 1,334 2,381 3,715 Financial liabilities Deposits $ 802,981 $ 607,617 $ 195,528 $ — $ 803,145 Securities sold under agreements to repurchase 20,873 — 21,006 — 21,006 FHLB advances 92,500 — 91,015 — 91,015 Note payable 4,090 — 4,564 — 4,564 Subordinated debentures 7,217 — — 7,210 7,210 Interest payable 692 — 639 53 692 The methods and assumptions, not previously presented, used to estimate fair values are described as follows: Cash and Cash Equivalents - The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1. Interest Bearing Deposits - The carrying amounts of interest bearing deposits approximate fair values and are classified as Level 1. FHLB Stock - It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. Loans - Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods used to estimate the fair value of loans do not necessarily represent an exit price. The fair value of mortgage loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification. Deposits - The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. Securities Sold Under Agreements to Repurchase and Other Borrowings - The carrying amounts of borrowings under repurchase agreements approximate their fair values resulting in a Level 2 classification. The carrying amount of the Company’s variable rate borrowings approximate their fair values resulting in a Level 2 classification. Federal Funds Purchased - The carrying amounts of federal funds purchased approximate fair values and are classified as Level 1. FHLB Advances, Borrowings and Subordinated Debentures - The fair values of the Company’s FHLB advances and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. Accrued Interest Receivable/Payable - The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the related asset/liability. Off-balance Sheet Instruments - Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of off-balance sheet instruments is not material. |
CHANGES IN ACCUMULATED OTHER CO
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (LOSS) | 3 Months Ended |
Mar. 31, 2017 | |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT | |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT | 10. Changes in Accumulated Other Comprehensive Income by Component (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ended March 31, 2017 2016 Beginning Balance $ (956) $ 359 Unrealized holding gains (losses) for the period, net of tax 736 2,470 Reclassification adjustment for: Securities gains realized in income — 126 Income taxes — (43) — 83 Net current period other comprehensive income 736 2,387 Ending balance $ (220) $ 2,746 The following is significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016: March 31, 2017 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ — Gain on sale of available for sale securities, net — Income taxes — Net income March 31, 2016 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 126 Gain on sale of available for sale securities, net 43 Income taxes 83 Net income |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation. |
Nature of Operations | Nature of Operations : As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance. |
Estimates in the Financial Statements | Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements. |
Trading Assets | Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income. |
Loss Contingencies | Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. |
Reclassifications | Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Issued in August 2016, ASU 2016-15 provides guidance to reduce the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of ASU 2016-15 provide guidance on eight specific cash flow: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon bonds; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. The amendments of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Management has evaluated the amendments of ASU 2016-15 and does not believe that adoption of this ASU will impact Kentucky Bancshares existing presentation of the applicable cash receipts and cash payments on its consolidated statements of cash flows. ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 will add FASB ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a writedown. The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-13 during the first quarter of 2020. Kentucky Bancshares has established a steering committee which includes the appropriate members of Management to evaluate the impact this ASU will have on the Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments. ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions. The amendments of ASU 2016-09 include: (i) requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement; (ii) requiring excess tax benefits to be classified along with other income tax cash flows as an operating activity on the statement of cash flow; (iii) allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that expect to vest or account for forfeitures when they occur; (iv) change the threshold to qualify for equity classification to permit withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) requiring that cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The amendments of ASU 2016-09 became effective for Kentucky Bancshares on January 1, 2017 and did not have a material impact on Kentucky Bancshares consolidated financial statements. The Company has made an entity-wide accounting policy election to account for forfeitures of stock awards as they occur. Changes to Kentucky Bancshares consolidated statement of cash flows required by the amendments of ASU 2016-09 are incorporated into the presentation in the Quarterly Report on Form 10-Q for the three month period ending March 31, 2017. ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 was issued by the FASB to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The amendments of ASU 2016-02 are effective for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-02 beginning in the first quarter of 2019. At adoption, Kentucky Bancshares will recognize a lease asset and a corresponding lease liability on its consolidated balance sheet for its total lease obligation measured on a discounted basis. As of March 31, 2017, all leases in which Kentucky Bancshares was the lessee were classified as operating leases. Kentucky Bancshares does not anticipant any material impact to its consolidated statements of income as a result of the adoption of this ASU. The Company has an immaterial amount of leases in which it is the lessor. Based on Management’s evaluation to date, the Company does not expect the amendments of ASU 2016-02 to have any material impact to these leases or the related income. Management will continue to evaluate the impact this ASU will have on the Company’s consolidated financial statements; however, the adoption of ASU 2016-02 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the FASB Accounting Standards Codification).” Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) eliminating the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) requiring the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requiring an entity that has elected the fair value option to measure the fair value of a liability to present separately in other comprehensive income the portion of the change in the fair value resulting from a change in the instrument-specific credit risk; (vi) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017. Kentucky Bancshares plans to adopt the amendments of ASU 2016-01 during the first quarter of 2018. Management has evaluated the impact this ASU will have on the Company’s consolidated financial statements. Through this evaluation, Management has determined that the principal areas impacted by the amendments of ASU 2016-01 will be Kentucky Bancshares investment in member bank stock, which are equity securities that do not have readily determinable fair values, and various fair value related disclosures. See Note 1 – Significant Accounting Policies, “Federal Home Loan Bank (FHLB): for information regarding Kentucky Bancshares investment in member bank stock. The adoption of ASU 2016-01 is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 will add FASB ASC Topic 606, “Revenue from Contracts with Customers,” and will supersede revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” as well as certain cost guidance in FASB ASC Topic 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts.” ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services are transferred to the customer. ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application of (1) the amount by which each financial statement line item is affected in the current reporting period, as compared to the guidance that was in effect before the change, and (2) an explanation of the reasons for significant changes. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year. ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017. All subsequently issued ASUs which provide additional guidance and clarifications to various aspects of FASB ASC Topic 606 will become effective when the amendments of ASU 2014-09 become effective. Kentucky Bancshares plans to adopt these amendments during the first quarter of 2018. Management is continuing to evaluate the impact ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements as well as the most appropriate transition method of application. Based on this evaluation to date, Management has determined that the majority of the revenues earned by Kentucky Bancshares are not within the scope of ASU 2014-09. Management also believes that for most revenue streams within the scope of ASU 2014-09, the amendments will not change the timing of when the revenue is recognized. Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements, focusing on noninterest income sources within the scope of ASU 2014-09 as well as new disclosures required by these amendments; however, the adoption of ASU 2014-09 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements. ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities : In March 2017, the FASB issued ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This ASU amends the amortization period for certain purchased callable debt securities held at a premium. It shortens the amortization period for the premium to the earliest call date. Under current U.S. GAAP, premiums on callable debt securities generally are amortized to the maturity date. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a cons ensus of the FASB Emerging Issues Task Force): Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Update 2017-01 - Busi ness Combinations (Topic 805): Clarifying the Definition of a Business: The amendments in this ASU are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. |
SECURITIES (Tables)
SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
SECURITIES | |
Schedule of securities available for sale | Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale March 31, 2017 U. S. government agencies $ 46,077 $ 386 $ (265) $ 46,198 States and political subdivisions 91,389 1,928 (381) 92,936 Mortgage-backed - residential 164,475 149 (2,171) 162,453 Equity securities 320 20 — 340 Total $ 302,261 $ 2,483 $ (2,817) $ 301,927 December 31, 2016 U. S. government agencies $ 36,454 $ 373 $ (299) $ 36,528 States and political subdivisions 90,117 1,731 (716) 91,132 Mortgage-backed - residential 148,327 120 (2,677) 145,770 Equity securities 320 20 — 340 Total $ 275,218 $ 2,244 $ (3,692) $ 273,770 |
Schedule of amortized cost and fair value of securities by contractual maturity | Amortized Fair Cost Value Due in one year or less $ 300 $ 301 Due after one year through five years 34,432 34,951 Due after five years through ten years 49,420 49,811 Due after ten years 53,314 54,071 137,466 139,134 Mortgage-backed - residential 164,475 162,453 Equity 320 340 Total $ 302,261 $ 301,927 |
Schedule of securities with unrealized losses not recognized in income | March 31, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 24,754 $ (265) $ — $ — $ 24,754 $ (265) States and municipals 21,189 (381) — — 21,189 (381) Mortgage-backed - residential 125,783 (1,600) 13,366 (571) 139,149 (2,171) Total temporarily impaired $ 171,726 $ (2,246) $ 13,366 $ (571) $ 185,092 $ (2,817) December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 28,202 $ (299) $ — $ — $ 28,202 $ (299) States and municipals 27,834 (716) — — 27,834 (716) Mortgage-backed - residential 119,802 (1,938) 13,652 (739) 133,454 (2,677) Total temporarily impaired $ 175,838 $ (2,953) $ 13,652 $ (739) $ 189,490 $ (3,692) |
LOANS (Tables)
LOANS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
LOANS | |
Schedule of loans | (in thousands) 3/31/2017 12/31/2016 Commercial $ 76,040 $ 77,436 Real estate construction 28,257 29,169 Real estate mortgage: 1-4 family residential 248,132 244,638 Multi-family residential 44,330 47,199 Non-farm & non-residential 182,417 176,024 Agricultural 61,035 62,491 Consumer 17,239 18,867 Other 116 183 Total $ 657,566 $ 656,007 |
Schedule of activity in the allowance for loan losses | Three Months Ended March 31, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 789 $ (2) $ 8 $ 76 $ 871 Real estate Construction 564 — — (19) 545 Real estate mortgage: 1-4 family residential 2,301 (11) 1 84 2,375 Multi-family residential 581 — 3 82 666 Non-farm & non-residential 1,203 — — 108 1,311 Agricultural 856 — 10 (4) 862 Consumer 547 (37) 4 20 534 Other 60 (225) 234 (9) 60 Unallocated 640 — — 12 652 $ 7,541 $ (275) $ 260 $ 350 $ 7,876 Three Months Ended March 31, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 486 $ — $ 31 $ (9) $ 508 Real estate Construction 411 — 6 459 876 Real estate mortgage: — 1-4 family residential 2,081 (12) 5 102 2,176 Multi-family residential 458 — 3 11 472 Non-farm & non-residential 1,213 — 266 (298) 1,181 Agricultural 678 — 11 38 727 Consumer 525 (110) 57 59 531 Other 60 (303) 297 6 60 Unallocated 609 — — 7 616 $ 6,521 $ (425) $ 676 $ 375 $ 7,147 |
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method | Individually Collectively Purchased As of March 31, 2017 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 871 $ — $ 871 Real estate construction — 545 — 545 Real estate mortgage: 1-4 family residential 75 2,300 — 2,375 Multi-family residential — 666 — 666 Non-farm & non-residential 8 1,303 — 1,311 Agricultural 396 466 — 862 Consumer — 534 — 534 Other — 60 — 60 Unallocated — 652 — 652 $ 479 $ 7,397 $ — $ 7,876 Loans: Commercial $ — $ 76,040 $ — $ 76,040 Real estate construction — 28,257 — 28,257 Real estate mortgage: 1-4 family residential 637 246,467 850 248,132 Multi-family residential — 43,768 534 44,330 Non-farm & non-residential 2,609 179,663 135 182,417 Agricultural 3,142 57,715 169 61,035 Consumer — 17,239 — 17,239 Other — 116 — 116 $ 6,388 $ 649,265 $ 1,688 $ 657,566 Individually Collectively Purchased As of December 31, 2016 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 789 $ — $ 789 Real estate construction — 564 — 564 Real estate mortgage: 1-4 family residential 99 2,202 — 2,301 Multi-family residential — 581 — 581 Non-farm & non-residential 15 1,188 — 1,203 Agricultural 427 429 — 856 Consumer — 547 — 547 Other — 60 — 60 Unallocated — 640 — 640 $ 541 $ 7,000 $ — $ 7,541 Loans: Commercial $ 97 $ 77,339 $ — 77,436 Real estate construction 153 29,016 — 29,169 Real estate mortgage: 1-4 family residential 2,704 240,906 1,028 244,638 Multi-family residential — 46,637 562 47,199 Non-farm & non-residential 1,725 174,154 145 176,024 Agricultural 3,315 58,998 178 62,491 Consumer — 18,867 — 18,867 Other — 183 — 183 Total $ 7,994 $ 646,100 $ 1,913 $ 656,007 |
Schedule of loans individually evaluated for impairment by class of loans | The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended March 31, 2017 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commerical $ — $ — $ — $ 49 $ $ Real estate mortgage: Construction — — — 77 11 1-4 family residential 307 307 — 457 5 Agricultural 898 898 — 776 — — With an allowance recorded: Real estate mortgage: 1-4 family residential 330 330 75 1,214 23 23 Non-farm & non-residential 1,711 1,711 8 1,718 23 23 Agricultural 3,142 3,142 396 2,902 3 3 Total $ 6,388 $ 6,388 $ 479 $ 7,193 $ 77 $ 77 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the three months ended March 31,2016: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: 1-4 family residential $ 370 $ 2 $ 2 Agricultural 346 3 3 With an allowance recorded: Real estate mortgage: Construction 1-4 family residential 1,077 5 5 Non-farm & non-residential 2,441 18 18 Agricultural 3,420 — — Total $ 8,851 $ 60 $ 60 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commercial $ 97 $ 97 $ — $ 48 $ $ Real estate construction — Real estate mortgage: 1-4 family residential 606 606 — 488 — — Agricultural 654 654 — 561 — — With an allowance recorded: Real estate mortgage 1-4 family residential 2,098 2,098 99 1,590 56 56 Non-farm & non-residential 1,725 1,725 15 2,303 71 71 Agricultural 2,661 2,661 427 3,309 25 25 Total $ 7,994 $ 7,994 $ 541 $ 8,793 $ 191 $ 191 |
Schedule of recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans | Loans Past Due Over 90 Days As of March 31, 2017 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 12 $ 34 $ — Real estate construction — — — Real estate mortgage: 1-4 family residential 2,285 249 — Multi-family residential — — — Non-farm & non-residential 272 61 1,711 Agricultural 940 405 — Consumer 13 8 — Total $ 3,522 $ 757 $ 1,711 Loans included in totals above acquired from Madison Financial Corporation $ 635 $ 22 $ — Loans Past Due Over 90 Days As of December 31, 2016 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 3 $ 11 $ — Real estate construction — 153 — Real estate mortgage: 1-4 family residential 2,725 31 338 Multi-family residential 25 — — Non-farm & non-residential 272 — 1,725 Agricultural 1,541 724 — Consumer — 8 — Other — — — Total $ 4,566 $ 927 $ 2,063 Loans included in totals above acquired from Madison Financial Corporation $ 578 $ 22 $ — |
Schedule of aging of the recorded investment in past due and non-accrual loans | 30–59 60–89 Greater than Total As of March 31, 2017 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 25 $ 235 $ 34 $ 12 $ 306 $ 75,734 Real estate construction 1,172 — — — 1,172 27,085 Real estate mortgage: 1-4 family residential 2,767 128 249 2,285 5,429 242,703 Multi-family residential — — — — 44,330 Non-farm & non-residential 223 64 61 272 620 181,797 Agricultural 256 156 405 940 1,757 59,278 Consumer 65 85 8 13 171 17,068 Other — — — — — 116 Total $ 4,508 $ 668 $ 757 $ 3,522 $ 9,455 $ 648,111 Loans included in totals above acquired from Madison Financial Corp. $ 125 $ — $ — $ 635 $ 760 $ 27,703 30–59 60–89 Greater than Total As of December 31, 2016 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 54 $ 45 $ 11 $ 3 $ 113 $ 77,323 Real estate construction — — 153 — 153 29,016 Real estate mortgage: 1-4 family residential 2,310 228 31 2,725 5,294 239,344 Multi-family residential 391 3 — 25 419 46,780 Non-farm & non-residential 159 61 — 272 492 175,532 Agricultural 647 61 724 1,541 2,973 59,518 Consumer 97 37 8 — 142 18,725 Other — — — — — 183 Total $ 3,658 $ 435 $ 927 $ 4,566 $ 9,586 $ 646,421 Loans included in totals above acquired from Madison Financial Corp. $ 155 $ — $ 22 $ 578 $ 755 $ 32,332 |
Schedule of risk category of loans by class of loans | As of March 31, 2017 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 74,976 $ 1,002 $ 62 $ — Real estate construction 28,257 — — — Real estate mortgage: 1-4 family residential 237,512 3,752 6,856 12 Multi-family residential 40,970 2,600 760 — Non-farm & non-residential 172,511 8,142 1,764 — Agricultural 57,646 1,748 1,641 — Total $ 611,872 $ 17,244 $ 11,083 $ 12 Loans included in totals above acquired from Madison Financial Corporation $ 25,992 $ 438 $ 2,033 $ — As of December 31, 2016 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 76,346 $ 1,078 $ 12 $ — Real estate construction 28,577 — 592 — Real estate mortgage: 1-4 family residential 232,969 4,031 7,627 11 Multi-family residential 43,681 2,617 901 — Non-farm & non-residential 167,451 8,185 388 — Agricultural 58,155 1,367 2,969 — Total $ 607,179 $ 17,278 $ 12,489 $ 11 Loans included in totals above acquired from Madison Financial Corporation $ 30,359 $ 480 $ 2,248 $ — |
Madison Financial Corp | |
LOANS | |
Schedule of loans | 3/31/2017 12/31/2016 Commercial $ 1,078 $ 1,113 Real estate construction 394 398 Real estate mortgage: 1-4 family residential 10,618 11,462 Multi-family residential 3,463 5,043 Non-farm & non-residential 11,591 13,024 Agricultural 1,239 1,940 Consumer 80 107 Total $ 28,463 $ 33,087 |
Schedule of carrying amount of purchased credit impaired loans | 3/31/2017 12/31/2016 Real estate mortgage: 1-4 family residential $ 850 $ 1,028 Multi-family 534 562 Non-farm & non-residential 135 145 Agricultural 169 178 $ 1,688 $ 1,913 |
Schedule of accretable yield or income expected to be collected | Three Months Ended 3/31/2017 3/31/2016 Balance, beginning of period $ 240 $ 408 New loans purchased — — Accretion of income 46 69 Balance, end of period $ 194 $ 339 |
REAL ESTATE OWNED (Tables)
REAL ESTATE OWNED (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
REAL ESTATE OWNED | |
Schedule of activity in real estate owned | Three Months Ended March 31, 2017 2016 Beginning of year $ 1,824 $ 2,347 Additions 126 121 Sales (577) — (Additions) subtractions to valuation allowance, net — (85) End of period $ 1,373 $ 2,383 |
Schedule of activity in the valuation allowance | 2017 2016 Beginning of year $ 803 $ 616 Write-downs of other real estate, net — 85 Reductions from sale — — End of Period $ 803 $ 701 |
Schedule of expenses related to foreclosed assets | Three Months Ended March 31, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ (46) $ — Additions to valuation allowance, net — 85 Operating expenses, net of rental income 79 27 Repossession expenses, net 79 112 Net expense, net of gain or loss on sales, for the period $ 33 $ 112 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
EARNINGS PER SHARE | |
Schedule of factors used in the earnings per share computation | Three Months Ended March 31, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 3,137 $ 1,837 Weighted average common shares outstanding 2,954 2,977 Basic earnings per share $ 1.06 $ 0.61 Diluted Earnings Per Share Net Income $ 3,137 $ 1,837 Weighted average common shares outstanding 2,954 2,977 Weighted average common and dilutive potential common shares outstanding 2,954 2,977 Diluted earnings per share $ 1.06 $ 0.61 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Stock Based Compensation | |
Summary of activity for the Stock Option Plans | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value (1) Outstanding, beginning of year 1,200 $ 31.00 Granted — — Forfeited or expired — — Exercised (600) 31.00 Outstanding, end of period 600 $ 31.00 11 months $ 4 Vested and expected to vest 600 $ 31.00 11 months $ 4 Exercisable, end of period 600 $ 31.00 11 months $ 4 (1) Aggregate intrinsic value in thousands |
2005 Restricted Stock Grant Plan | |
Stock Based Compensation | |
Summary of changes in nonvested shares of restricted stock | Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 10,636 $ 254 $ 23.84 Granted — — — Vested (4,192) (76) 18.18 Forfeited — — — Nonvested at March 31, 2017 6,444 $ 178 $ 27.52 (1) Grant date fair value in thousands |
2009 Stock Award Plan | |
Stock Based Compensation | |
Summary of changes in nonvested shares of restricted stock | Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value (1) Per Share Nonvested at January 1, 2017 7,297 $ 214 $ 29.31 Granted 6,575 214 32.50 Vested (1,414) (41) 28.77 Forfeited — — — Nonvested at March 31, 2017 12,458 $ 387 $ 31.05 (1) Grant date fair value in thousands |
OTHER BORROWINGS (Tables)
OTHER BORROWINGS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
OTHER BORROWINGS | |
Maturity schedule for the term loan | 2017 $ 288 2018 401 2019 421 2020 442 2021 465 Thereafter 1,966 $ 3,983 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
FAIR VALUE MEASUREMENTS. | |
Schedule of assets measured at fair value on a recurring basis | Fair Value Measurements at March 31, 2017 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 46,198 $ — $ 46,198 $ — States and municipals 92,936 — 92,936 — Mortgage-backed - residential 162,453 — 162,453 — Equity securities 340 340 — — Trading Assets 5,644 2,384 3,260 — Total $ 307,571 $ 2,724 $ 304,847 $ — Fair Value Measurements at December 31, 2016 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 36,528 $ — $ 36,528 $ — States and municipals 91,132 — 91,132 — Mortgage-backed - residential 145,770 — 145,770 — Equity securities 340 340 — — Trading Assets 5,592 1,608 3,984 — Total $ 279,362 $ 1,948 $ 277,414 $ — |
Schedule of assets measured at fair value on a non-recurring basis | Fair Value Measurements at March 31, 2017 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family Residential 255 — — 255 Agricultural 2,746 — — 2,746 Other real estate owned, net: Residential 956 956 Commercial 57 — — 57 Loan servicing rights 1,152 — — 1,152 Fair Value Measurements at December 31, 2016 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family residential 1,685 — — $ 1,685 Agricultural 2,234 — — 2,234 Other real estate owned, net: Residential 956 — — 956 Commercial 272 — 272 Loan servicing rights 1,083 — — 1,083 |
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis | Range March 31, 2017 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales 0%-12% (6)% Agricultural sales comparison adjustment for differences between the comparable sales 8%-64% (33)% Other real estate owned: Residential sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial income approach capitalization rate 10%-10% (10)% Loan Servicing Rights discounted cash flow constant prepayment rates 8%-50% (11)% Range December 31, 2016 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential 1,685 sales comparison adjustment for differences between the comparable sales 0%-21% (10)% Agricultural 2,234 sales comparison adjustment for differences between the comparable sales 2%-75% (9)% Other real estate owned: Residential 956 sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial 272 income approach capitalization rate 10%-10% (10)% Loan Servicing Rights discounted cash flow constant prepayment rates 8%-45% (13)% |
Schedule of carrying amounts and estimated fair values of financial instruments | March 31, 2017: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 37,248 $ 37,248 $ — $ — $ 37,248 Interest bearing deposits 4,659 4,659 — — 4,659 Securities 301,927 340 301,587 — 301,927 Trading assets 5,644 2,384 3,260 — 5,644 Loans held for sale 1,189 — 1,229 — 1,229 Loans, net 649,690 — — 647,847 647,847 FHLB Stock 7,034 — — — N/A Interest receivable 3,649 — 1,355 2,294 3,649 Financial liabilities Deposits $ 824,345 $ 613,975 $ 209,399 $ — $ 823,374 Securities sold under agreements to repurchase 21,811 — 21,916 — 21,916 Long-term Federal Home Loan Bank advances 90,612 — 86,023 — 86,023 Note payable 3,983 — 4,438 — 4,438 Subordinated debentures 7,217 — — 7,211 7,211 Interest payable 667 — 605 62 667 December 31, 2016: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 43,250 $ 43,250 $ — $ — $ 43,250 Interest bearing deposits 5,029 5,029 — — 5,029 Securities 273,770 340 273,430 — 273,770 Trading assets 5,592 1,608 3,984 — 5,592 Mortgage loans held for sale 724 — 750 — 750 Loans, net 648,466 — — 648,234 648,234 FHLB Stock 7,034 — — — N/A Interest receivable 3,715 — 1,334 2,381 3,715 Financial liabilities Deposits $ 802,981 $ 607,617 $ 195,528 $ — $ 803,145 Securities sold under agreements to repurchase 20,873 — 21,006 — 21,006 FHLB advances 92,500 — 91,015 — 91,015 Note payable 4,090 — 4,564 — 4,564 Subordinated debentures 7,217 — — 7,210 7,210 Interest payable 692 — 639 53 692 |
CHANGES IN ACCUMULATED OTHER 26
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT | |
Schedule of changes in Accumulated Other Comprehensive Income (Loss) by Component | Changes in Accumulated Other Comprehensive Income by Component (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ended March 31, 2017 2016 Beginning Balance $ (956) $ 359 Unrealized holding gains (losses) for the period, net of tax 736 2,470 Reclassification adjustment for: Securities gains realized in income — 126 Income taxes — (43) — 83 Net current period other comprehensive income 736 2,387 Ending balance $ (220) $ 2,746 |
Significant amounts reclassified out of each component of AOCI | March 31, 2017 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ — Gain on sale of available for sale securities, net — Income taxes — Net income March 31, 2016 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 126 Gain on sale of available for sale securities, net 43 Income taxes 83 Net income |
SECURITIES (Details)
SECURITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Securities Available for Sale | ||
Amortized Cost | $ 302,261 | $ 275,218 |
Gross Unrealized Gains | 2,483 | 2,244 |
Gross Unrealized Losses | (2,817) | (3,692) |
Fair Value | 301,927 | 273,770 |
U.S. government agencies | ||
Securities Available for Sale | ||
Amortized Cost | 46,077 | 36,454 |
Gross Unrealized Gains | 386 | 373 |
Gross Unrealized Losses | (265) | (299) |
Fair Value | 46,198 | 36,528 |
States and municipals | ||
Securities Available for Sale | ||
Amortized Cost | 91,389 | 90,117 |
Gross Unrealized Gains | 1,928 | 1,731 |
Gross Unrealized Losses | (381) | (716) |
Fair Value | 92,936 | 91,132 |
Mortgage-backed - residential | ||
Securities Available for Sale | ||
Amortized Cost | 164,475 | 148,327 |
Gross Unrealized Gains | 149 | 120 |
Gross Unrealized Losses | (2,171) | (2,677) |
Fair Value | 162,453 | 145,770 |
Equity securities | ||
Securities Available for Sale | ||
Amortized Cost | 320 | 320 |
Gross Unrealized Gains | 20 | 20 |
Fair Value | $ 340 | $ 340 |
SECURITIES - AMORTIZED COST AND
SECURITIES - AMORTIZED COST AND FAIR VALUE BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Amortized Cost | |||
Due in one year or less | $ 300 | ||
Due after one year through five years | 34,432 | ||
Due after five years through ten years | 49,420 | ||
Due after ten years | 53,314 | ||
Securities due at a single maturity date | 137,466 | ||
Amortized Cost | 302,261 | $ 275,218 | |
Fair Value | |||
Due in one year or less | 301 | ||
Due after one year through five years | 34,951 | ||
Due after five years through ten years | 49,811 | ||
Due after ten years | 54,071 | ||
Securities due at a single maturity date | 139,134 | ||
Fair Value | 301,927 | 273,770 | |
Sales of securities | |||
Proceeds from sales of securities | 0 | $ 9,250 | |
Gross gains realized on sales of securities | 0 | 126 | |
Gross losses realized on sales of securities | 0 | 0 | |
Tax provision related to realized gains | 0 | $ 43 | |
Mortgage-backed - residential | |||
Amortized Cost | |||
Amortized Cost | 164,475 | 148,327 | |
Fair Value | |||
Fair Value | 162,453 | 145,770 | |
Equity securities | |||
Amortized Cost | |||
Amortized Cost | 320 | 320 | |
Fair Value | |||
Fair Value | $ 340 | $ 340 |
SECURITIES - UNREALIZED LOSSES
SECURITIES - UNREALIZED LOSSES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | $ 171,726 | $ 175,838 |
Less than 12 Months, Unrealized Loss | (2,246) | (2,953) |
12 Months or More, Fair Value | 13,366 | 13,652 |
12 Months or More, Unrealized Loss | (571) | (739) |
Total, Fair Value | 185,092 | 189,490 |
Total, Unrealized Loss | (2,817) | (3,692) |
Trading Assets | ||
Trading Assets | 5,644 | 5,592 |
U.S. government agencies | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 24,754 | 28,202 |
Less than 12 Months, Unrealized Loss | (265) | (299) |
Total, Fair Value | 24,754 | 28,202 |
Total, Unrealized Loss | (265) | (299) |
States and municipals | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 21,189 | 27,834 |
Less than 12 Months, Unrealized Loss | (381) | (716) |
Total, Fair Value | 21,189 | 27,834 |
Total, Unrealized Loss | (381) | (716) |
Mortgage-backed - residential | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 125,783 | 119,802 |
Less than 12 Months, Unrealized Loss | (1,600) | (1,938) |
12 Months or More, Fair Value | 13,366 | 13,652 |
12 Months or More, Unrealized Loss | (571) | (739) |
Total, Fair Value | 139,149 | 133,454 |
Total, Unrealized Loss | $ (2,171) | $ (2,677) |
LOANS (Details)
LOANS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Loans | ||
Loans | $ 657,566 | $ 656,007 |
Allowance for loan losses | 0 | 0 |
Madison Financial Corp | ||
Loans | ||
Loans | 28,463 | 33,087 |
Allowance for loan losses | 0 | |
Commercial | ||
Loans | ||
Loans | 76,040 | 77,436 |
Commercial | Madison Financial Corp | ||
Loans | ||
Loans | 1,078 | 1,113 |
Real estate construction | ||
Loans | ||
Loans | 28,257 | 29,169 |
Real estate construction | Madison Financial Corp | ||
Loans | ||
Loans | 394 | 398 |
1-4 family residential | ||
Loans | ||
Loans | 248,132 | 244,638 |
1-4 family residential | Madison Financial Corp | ||
Loans | ||
Loans | 10,618 | 11,462 |
Multi-family residential | ||
Loans | ||
Loans | 44,330 | 47,199 |
Multi-family residential | Madison Financial Corp | ||
Loans | ||
Loans | 3,463 | 5,043 |
Non-farm & non-residential | ||
Loans | ||
Loans | 182,417 | 176,024 |
Non-farm & non-residential | Madison Financial Corp | ||
Loans | ||
Loans | 11,591 | 13,024 |
Agricultural | ||
Loans | ||
Loans | 61,035 | 62,491 |
Agricultural | Madison Financial Corp | ||
Loans | ||
Loans | 1,239 | 1,940 |
Consumer | ||
Loans | ||
Loans | 17,239 | 18,867 |
Consumer | Madison Financial Corp | ||
Loans | ||
Loans | 80 | 107 |
Other | ||
Loans | ||
Loans | $ 116 | $ 183 |
LOANS - ACTIVITY IN ALLOWANCE (
LOANS - ACTIVITY IN ALLOWANCE (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Activity in allowance for loan losses | |||
Beginning Balance | $ 7,541 | $ 6,521 | |
Charge-offs | (275) | (425) | |
Recoveries | 260 | 676 | |
Provision | 350 | 375 | |
Ending Balance | 7,876 | 7,147 | |
Allowance for loan losses | 0 | $ 0 | |
Contractual fair value of purchased credit impaired loans | 2,400 | 2,600 | |
Accretable yield, or income expected to be collected | |||
Balance, beginning of period | 240 | 408 | |
Accretion of income | 46 | 69 | |
Balance, end of period | 194 | 339 | |
Commercial | |||
Activity in allowance for loan losses | |||
Beginning Balance | 789 | 486 | |
Charge-offs | (2) | ||
Recoveries | 8 | 31 | |
Provision | 76 | (9) | |
Ending Balance | 871 | 508 | |
Real estate construction | |||
Activity in allowance for loan losses | |||
Beginning Balance | 564 | 411 | |
Recoveries | 6 | ||
Provision | (19) | 459 | |
Ending Balance | 545 | 876 | |
1-4 family residential | |||
Activity in allowance for loan losses | |||
Beginning Balance | 2,301 | 2,081 | |
Charge-offs | (11) | (12) | |
Recoveries | 1 | 5 | |
Provision | 84 | 102 | |
Ending Balance | 2,375 | 2,176 | |
Multi-family residential | |||
Activity in allowance for loan losses | |||
Beginning Balance | 581 | 458 | |
Recoveries | 3 | 3 | |
Provision | 82 | 11 | |
Ending Balance | 666 | 472 | |
Non-farm & non-residential | |||
Activity in allowance for loan losses | |||
Beginning Balance | 1,203 | 1,213 | |
Recoveries | 266 | ||
Provision | 108 | (298) | |
Ending Balance | 1,311 | 1,181 | |
Agricultural | |||
Activity in allowance for loan losses | |||
Beginning Balance | 856 | 678 | |
Recoveries | 10 | 11 | |
Provision | (4) | 38 | |
Ending Balance | 862 | 727 | |
Consumer | |||
Activity in allowance for loan losses | |||
Beginning Balance | 547 | 525 | |
Charge-offs | (37) | (110) | |
Recoveries | 4 | 57 | |
Provision | 20 | 59 | |
Ending Balance | 534 | 531 | |
Other | |||
Activity in allowance for loan losses | |||
Beginning Balance | 60 | 60 | |
Charge-offs | (225) | (303) | |
Recoveries | 234 | 297 | |
Provision | (9) | 6 | |
Ending Balance | 60 | 60 | |
Unallocated | |||
Activity in allowance for loan losses | |||
Beginning Balance | 640 | 609 | |
Provision | 12 | 7 | |
Ending Balance | 652 | 616 | |
Madison Financial Corp | |||
Activity in allowance for loan losses | |||
Allowance for loan losses | 0 | ||
Receivables Acquired with Deteriorated Credit Quality | |||
Activity in allowance for loan losses | |||
Carrying amount | 1,688 | 1,913 | |
Accretable yield, or income expected to be collected | |||
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Acquired During Period, Not Accounted for Using Income Recognition Model, at Acquisition | 0 | 0 | |
Accretion recorded in income | 0 | $ 0 | |
Receivables Acquired with Deteriorated Credit Quality | 1-4 family residential | |||
Activity in allowance for loan losses | |||
Carrying amount | 850 | 1,028 | |
Receivables Acquired with Deteriorated Credit Quality | Multi-family residential | |||
Activity in allowance for loan losses | |||
Carrying amount | 534 | 562 | |
Receivables Acquired with Deteriorated Credit Quality | Non-farm & non-residential | |||
Activity in allowance for loan losses | |||
Carrying amount | 135 | 145 | |
Receivables Acquired with Deteriorated Credit Quality | Agricultural | |||
Activity in allowance for loan losses | |||
Carrying amount | $ 169 | $ 178 |
LOANS - ALLOWANCE FOR LOAN LOSS
LOANS - ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Loans | ||||
Accrued interest receivable | $ 2,300 | $ 2,400 | ||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 479 | 541 | ||
Collectively Evaluated for Impairment | 7,397 | 7,000 | ||
Total | 7,876 | 7,541 | $ 7,147 | $ 6,521 |
Loans: | ||||
Individually Evaluated for Impairment | 6,388 | 7,994 | ||
Collectively Evaluated for Impairment | 649,265 | 646,100 | ||
Total | 657,566 | 656,007 | ||
Commercial | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 871 | 789 | ||
Total | 871 | 789 | 508 | 486 |
Loans: | ||||
Individually Evaluated for Impairment | 97 | |||
Collectively Evaluated for Impairment | 76,040 | 77,339 | ||
Total | 76,040 | 77,436 | ||
Real estate construction | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 545 | 564 | ||
Total | 545 | 564 | 876 | 411 |
Loans: | ||||
Individually Evaluated for Impairment | 153 | |||
Collectively Evaluated for Impairment | 28,257 | 29,016 | ||
Total | 28,257 | 29,169 | ||
1-4 family residential | ||||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 75 | 99 | ||
Collectively Evaluated for Impairment | 2,300 | 2,202 | ||
Total | 2,375 | 2,301 | 2,176 | 2,081 |
Loans: | ||||
Individually Evaluated for Impairment | 637 | 2,704 | ||
Collectively Evaluated for Impairment | 246,467 | 240,906 | ||
Total | 248,132 | 244,638 | ||
Multi-family residential | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 666 | 581 | ||
Total | 666 | 581 | 472 | 458 |
Loans: | ||||
Collectively Evaluated for Impairment | 43,768 | 46,637 | ||
Total | 44,330 | 47,199 | ||
Non-farm & non-residential | ||||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 8 | 15 | ||
Collectively Evaluated for Impairment | 1,303 | 1,188 | ||
Total | 1,311 | 1,203 | 1,181 | 1,213 |
Loans: | ||||
Individually Evaluated for Impairment | 2,609 | 1,725 | ||
Collectively Evaluated for Impairment | 179,663 | 174,154 | ||
Total | 182,417 | 176,024 | ||
Agricultural | ||||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 396 | 427 | ||
Collectively Evaluated for Impairment | 466 | 429 | ||
Total | 862 | 856 | 727 | 678 |
Loans: | ||||
Individually Evaluated for Impairment | 3,142 | 3,315 | ||
Collectively Evaluated for Impairment | 57,715 | 58,998 | ||
Total | 61,035 | 62,491 | ||
Consumer | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 534 | 547 | ||
Total | 534 | 547 | 531 | 525 |
Loans: | ||||
Collectively Evaluated for Impairment | 17,239 | 18,867 | ||
Total | 17,239 | 18,867 | ||
Other | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 60 | 60 | ||
Total | 60 | 60 | 60 | 60 |
Loans: | ||||
Collectively Evaluated for Impairment | 116 | 183 | ||
Total | 116 | 183 | ||
Unallocated | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 652 | 640 | ||
Total | 652 | 640 | $ 616 | $ 609 |
Receivables Acquired with Deteriorated Credit Quality | ||||
Loans: | ||||
Purchased Credit Impairment | 1,688 | 1,913 | ||
Receivables Acquired with Deteriorated Credit Quality | 1-4 family residential | ||||
Loans: | ||||
Purchased Credit Impairment | 850 | 1,028 | ||
Receivables Acquired with Deteriorated Credit Quality | Multi-family residential | ||||
Loans: | ||||
Purchased Credit Impairment | 534 | 562 | ||
Receivables Acquired with Deteriorated Credit Quality | Non-farm & non-residential | ||||
Loans: | ||||
Purchased Credit Impairment | 135 | 145 | ||
Receivables Acquired with Deteriorated Credit Quality | Agricultural | ||||
Loans: | ||||
Purchased Credit Impairment | $ 169 | $ 178 |
LOANS - INDIVIDUALLY EVALUATED
LOANS - INDIVIDUALLY EVALUATED FOR IMPAIRMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Unpaid Principal Balance | |||
Total | $ 6,388 | $ 7,994 | |
Recorded Investment | |||
Total | 6,388 | 7,994 | |
Allowance for Loan Losses Allocated. | 479 | 541 | |
Average Recorded Investment | |||
Total | 7,193 | $ 8,851 | 8,793 |
Interest Income Recognized | |||
Total | 77 | 60 | 191 |
Cash Basis Interest Recognized | |||
Total | 77 | 60 | 191 |
Commercial | |||
Unpaid Principal Balance | |||
With no related allowance recorded | 97 | ||
Recorded Investment | |||
With no related allowance recorded | 97 | ||
Average Recorded Investment | |||
With no related allowance recorded | 49 | 48 | |
Interest Income Recognized | |||
With no related allowance recorded | 12 | 30 | |
Cash Basis Interest Recognized | |||
With no related allowance recorded | 12 | 30 | |
Real estate construction | |||
Unpaid Principal Balance | |||
With no related allowance recorded | 153 | ||
Recorded Investment | |||
With no related allowance recorded | 153 | ||
Average Recorded Investment | |||
With no related allowance recorded | 494 | ||
Interest Income Recognized | |||
With no related allowance recorded | 9 | ||
Cash Basis Interest Recognized | |||
With no related allowance recorded | 9 | ||
1-4 family residential | |||
Unpaid Principal Balance | |||
With no related allowance recorded | 307 | 606 | |
With an allowance recorded | 330 | 2,098 | |
Recorded Investment | |||
With no related allowance recorded | 307 | 606 | |
With an allowance recorded | 330 | 2,098 | |
Allowance for Loan Losses Allocated. | 75 | 99 | |
Average Recorded Investment | |||
With no related allowance recorded | 457 | 370 | 488 |
With an allowance recorded | 1,214 | 1,077 | 1,590 |
Interest Income Recognized | |||
With no related allowance recorded | 5 | 2 | |
With an allowance recorded | 23 | 5 | 56 |
Cash Basis Interest Recognized | |||
With no related allowance recorded | 5 | 2 | |
With an allowance recorded | 23 | 5 | 56 |
Agricultural | |||
Unpaid Principal Balance | |||
With no related allowance recorded | 898 | 654 | |
With an allowance recorded | 3,142 | 2,661 | |
Recorded Investment | |||
With no related allowance recorded | 898 | 654 | |
With an allowance recorded | 3,142 | 2,661 | |
Allowance for Loan Losses Allocated. | 396 | 427 | |
Average Recorded Investment | |||
With no related allowance recorded | 776 | 346 | 561 |
With an allowance recorded | 2,902 | 3,420 | 3,309 |
Interest Income Recognized | |||
With no related allowance recorded | 3 | ||
With an allowance recorded | 3 | 25 | |
Cash Basis Interest Recognized | |||
With no related allowance recorded | 3 | ||
With an allowance recorded | 3 | 25 | |
Non-farm & non-residential | |||
Unpaid Principal Balance | |||
With an allowance recorded | 1,711 | 1,725 | |
Recorded Investment | |||
With an allowance recorded | 1,711 | 1,725 | |
Allowance for Loan Losses Allocated. | 8 | 15 | |
Average Recorded Investment | |||
With an allowance recorded | 1,718 | 2,441 | 2,303 |
Interest Income Recognized | |||
With an allowance recorded | 23 | 18 | 71 |
Cash Basis Interest Recognized | |||
With an allowance recorded | 23 | 18 | $ 71 |
Construction | |||
Average Recorded Investment | |||
With no related allowance recorded | 77 | ||
With an allowance recorded | 1,197 | ||
Interest Income Recognized | |||
With no related allowance recorded | 11 | ||
With an allowance recorded | 32 | ||
Cash Basis Interest Recognized | |||
With no related allowance recorded | $ 11 | ||
With an allowance recorded | $ 32 |
LOANS - NONACCRUAL, LOANS PAST
LOANS - NONACCRUAL, LOANS PAST DUE OVER 90 DAYS STILL ACCRUING AND TDR (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Loans | ||
Nonaccrual | $ 3,522 | $ 4,566 |
Loans Past Due Over 90 Days Still Accruing | 757 | 927 |
Troubled Debt Restructurings | $ 1,711 | 2,063 |
Percentage of nonaccrual loans secured by real estate | 99.30% | |
Minimum period for which principal or interest is in default for loans to be considered as nonaccrual | 90 days | |
Maximum period past due for loans to be considered as impaired | 90 days | |
Madison Financial Corp | ||
Loans | ||
Nonaccrual | $ 635 | 578 |
Loans Past Due Over 90 Days Still Accruing | 22 | 22 |
Commercial | ||
Loans | ||
Nonaccrual | 12 | 3 |
Loans Past Due Over 90 Days Still Accruing | 34 | 11 |
Real estate construction | ||
Loans | ||
Loans Past Due Over 90 Days Still Accruing | 153 | |
1-4 family residential | ||
Loans | ||
Nonaccrual | 2,285 | 2,725 |
Loans Past Due Over 90 Days Still Accruing | 249 | 31 |
Troubled Debt Restructurings | 338 | |
Multi-family residential | ||
Loans | ||
Nonaccrual | 25 | |
Non-farm & non-residential | ||
Loans | ||
Nonaccrual | 272 | 272 |
Loans Past Due Over 90 Days Still Accruing | 61 | |
Troubled Debt Restructurings | 1,711 | 1,725 |
Agricultural | ||
Loans | ||
Nonaccrual | 940 | 1,541 |
Loans Past Due Over 90 Days Still Accruing | 405 | 724 |
Consumer | ||
Loans | ||
Nonaccrual | 13 | |
Loans Past Due Over 90 Days Still Accruing | $ 8 | $ 8 |
LOANS - AGING OF RECORDED INVES
LOANS - AGING OF RECORDED INVESTMENT IN PAST DUE AND NON-ACCRUAL LOANS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | $ 757 | $ 927 |
Non-accrual | 3,522 | 4,566 |
Total Past Due and Non-accrual | 9,455 | 9,586 |
Loans Not Past Due | 648,111 | 646,421 |
30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 4,508 | 3,658 |
60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 668 | 435 |
Madison Financial Corp | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 22 | 22 |
Non-accrual | 635 | 578 |
Total Past Due and Non-accrual | 760 | 755 |
Loans Not Past Due | 27,703 | 32,332 |
Madison Financial Corp | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 125 | 155 |
Commercial | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 34 | 11 |
Non-accrual | 12 | 3 |
Total Past Due and Non-accrual | 306 | 113 |
Loans Not Past Due | 75,734 | 77,323 |
Commercial | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 25 | 54 |
Commercial | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 235 | 45 |
Real estate construction | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 153 | |
Total Past Due and Non-accrual | 1,172 | 153 |
Loans Not Past Due | 27,085 | 29,016 |
Real estate construction | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 1,172 | |
1-4 family residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 249 | 31 |
Non-accrual | 2,285 | 2,725 |
Total Past Due and Non-accrual | 5,429 | 5,294 |
Loans Not Past Due | 242,703 | 239,344 |
1-4 family residential | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 2,767 | 2,310 |
1-4 family residential | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 128 | 228 |
Multi-family residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Non-accrual | 25 | |
Total Past Due and Non-accrual | 419 | |
Loans Not Past Due | 44,330 | 46,780 |
Multi-family residential | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 391 | |
Multi-family residential | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 3 | |
Non-farm & non-residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 61 | |
Non-accrual | 272 | 272 |
Total Past Due and Non-accrual | 620 | 492 |
Loans Not Past Due | 181,797 | 175,532 |
Non-farm & non-residential | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 223 | 159 |
Non-farm & non-residential | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 64 | 61 |
Agricultural | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 405 | 724 |
Non-accrual | 940 | 1,541 |
Total Past Due and Non-accrual | 1,757 | 2,973 |
Loans Not Past Due | 59,278 | 59,518 |
Agricultural | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 256 | 647 |
Agricultural | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 156 | 61 |
Consumer | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 90 Days Past Due | 8 | 8 |
Non-accrual | 13 | |
Total Past Due and Non-accrual | 171 | 142 |
Loans Not Past Due | 17,068 | 18,725 |
Consumer | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 65 | 97 |
Consumer | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 85 | 37 |
Other | ||
Aging of recorded investment in past due and non-accrual loans | ||
Loans Not Past Due | $ 116 | $ 183 |
LOANS - TROUBLED DEBT RESTRUCTU
LOANS - TROUBLED DEBT RESTRUCTURINGS (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)loan | Mar. 31, 2016loan | Dec. 31, 2016USD ($) | |
LOANS | |||
Reserves to customers whose loan terms have been modified in troubled debt restructurings | $ | $ 8 | $ 40 | |
Number of loans that met the definition of troubled debt restructurings | loan | 0 | 0 |
LOANS - RISK CATEGORY OF LOANS
LOANS - RISK CATEGORY OF LOANS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Credit Quality Indicators | ||
Loans | $ 657,566 | $ 656,007 |
Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 28,463 | 33,087 |
Pass | ||
Credit Quality Indicators | ||
Loans | 611,872 | 607,179 |
Pass | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 25,992 | 30,359 |
Special Mention | ||
Credit Quality Indicators | ||
Loans | 17,244 | 17,278 |
Special Mention | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 438 | 480 |
Substandard | ||
Credit Quality Indicators | ||
Loans | 11,083 | 12,489 |
Substandard | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 2,033 | 2,248 |
Doubtful | ||
Credit Quality Indicators | ||
Loans | 12 | 11 |
Commercial | ||
Credit Quality Indicators | ||
Loans | 76,040 | 77,436 |
Commercial | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 1,078 | 1,113 |
Commercial | Pass | ||
Credit Quality Indicators | ||
Loans | 74,976 | 76,346 |
Commercial | Special Mention | ||
Credit Quality Indicators | ||
Loans | 1,002 | 1,078 |
Commercial | Substandard | ||
Credit Quality Indicators | ||
Loans | 62 | 12 |
Real estate construction | ||
Credit Quality Indicators | ||
Loans | 28,257 | 29,169 |
Real estate construction | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 394 | 398 |
Real estate construction | Pass | ||
Credit Quality Indicators | ||
Loans | 28,257 | 28,577 |
Real estate construction | Substandard | ||
Credit Quality Indicators | ||
Loans | 592 | |
1-4 family residential | ||
Credit Quality Indicators | ||
Loans | 248,132 | 244,638 |
1-4 family residential | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 10,618 | 11,462 |
1-4 family residential | Pass | ||
Credit Quality Indicators | ||
Loans | 237,512 | 232,969 |
1-4 family residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 3,752 | 4,031 |
1-4 family residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 6,856 | 7,627 |
1-4 family residential | Doubtful | ||
Credit Quality Indicators | ||
Loans | 12 | 11 |
Multi-family residential | ||
Credit Quality Indicators | ||
Loans | 44,330 | 47,199 |
Multi-family residential | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 3,463 | 5,043 |
Multi-family residential | Pass | ||
Credit Quality Indicators | ||
Loans | 40,970 | 43,681 |
Multi-family residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 2,600 | 2,617 |
Multi-family residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 760 | 901 |
Non-farm & non-residential | ||
Credit Quality Indicators | ||
Loans | 182,417 | 176,024 |
Non-farm & non-residential | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 11,591 | 13,024 |
Non-farm & non-residential | Pass | ||
Credit Quality Indicators | ||
Loans | 172,511 | 167,451 |
Non-farm & non-residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 8,142 | 8,185 |
Non-farm & non-residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 1,764 | 388 |
Agricultural | ||
Credit Quality Indicators | ||
Loans | 61,035 | 62,491 |
Agricultural | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 1,239 | 1,940 |
Agricultural | Pass | ||
Credit Quality Indicators | ||
Loans | 57,646 | 58,155 |
Agricultural | Special Mention | ||
Credit Quality Indicators | ||
Loans | 1,748 | 1,367 |
Agricultural | Substandard | ||
Credit Quality Indicators | ||
Loans | 1,641 | 2,969 |
Consumer | ||
Credit Quality Indicators | ||
Loans | 17,239 | 18,867 |
Consumer | Madison Financial Corp | ||
Credit Quality Indicators | ||
Loans | 80 | 107 |
Consumer | Non-performing | ||
Credit Quality Indicators | ||
Loans | $ 21 | $ 8 |
Minimum period past due for loans to be considered as non-performing | 90 days |
REAL ESTATE OWNED (Details)
REAL ESTATE OWNED (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in real estate owned | ||||
Beginning of year, net | $ 1,824 | $ 2,347 | $ 2,347 | |
Additions | 126 | 121 | ||
Sales | (577) | |||
(Additions) subtractions to valuation allowance, net | (85) | |||
End of period, net | 1,373 | 2,383 | 1,824 | $ 2,347 |
Activity in the valuation allowance | ||||
Beginning of year | 803 | 616 | 616 | |
Write-downs of other real estate, net | 85 | |||
End of period | 803 | 701 | 803 | $ 616 |
Expenses related to foreclosed assets | ||||
Net (gain) loss on sales, included in other income on income statement | (46) | |||
Additions to valuation allowance, net | 85 | |||
Operating expenses, net of rental income | 79 | 27 | ||
Repossession expenses, net | 79 | $ 112 | 112 | |
Net expense, net of gain or loss on sales, for the period | $ 33 | $ 112 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic Earnings Per Share | ||
Net income | $ 3,137 | $ 1,837 |
Weighted average common shares outstanding | 2,954 | 2,977 |
Basic earnings per share (in dollars per share) | $ 1.06 | $ 0.61 |
Diluted Earnings Per Share | ||
Weighted average common shares outstanding | 2,954 | 2,977 |
Weighted average common and dilutive potential common shares outstanding | 2,954 | 2,977 |
Diluted earnings per share (in dollars per share) | $ 1.06 | $ 0.61 |
EARNINGS PER SHARE - ANTIDILUTI
EARNINGS PER SHARE - ANTIDILUTIVE SECURITIES (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock options | ||
Antidilutive securities | ||
Antidilutive shares excluded from computation of diluted earnings per share | 600 | 1,200 |
STOCK BASED COMPENSATION - VEST
STOCK BASED COMPENSATION - VESTING PERIOD (Details) | 3 Months Ended |
Mar. 31, 2017planshares | |
Stock Based Compensation | |
Number of stock based compensation plans | plan | 4 |
Stock options | |
Stock Based Compensation | |
Number of stock based compensation plans | plan | 2 |
Stock Option Plans | Stock options | |
Stock Based Compensation | |
Life of awards | 10 years |
1999 Plan | Stock options | |
Stock Based Compensation | |
Vesting period | 5 years |
Number of shares authorized for issuance | shares | 100,000 |
1993 Non-Employee Directors Stock Ownership Incentive Plan | Stock options | |
Stock Based Compensation | |
Number of shares authorized for issuance | shares | 20,000 |
STOCK BASED COMPENSATION - ACTI
STOCK BASED COMPENSATION - ACTIVITY (Details) - Stock Option Plans $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Shares | |
Outstanding, beginning of year (in shares) | shares | 1,200 |
Exercised (in shares) | shares | (600) |
Outstanding, end of year (in shares) | shares | 600 |
Vested and expected to vest (in shares) | shares | 600 |
Exercisable, end of period (in shares) | shares | 600 |
Weighted Average Exercise Price | |
Outstanding, beginning of year (in dollars per share) | $ / shares | $ 31 |
Exercised (in dollars per share) | $ / shares | 31 |
Outstanding, end of year (in dollars per share) | $ / shares | 31 |
Vested and expected to vest (in dollars per share) | $ / shares | 31 |
Exercisable, end of period (in dollars per share) | $ / shares | $ 31 |
Weighted Average Remaining Contractual Term | |
Outstanding, end of period | 11 months |
Vested and expected to vest | 11 months |
Exercisable, end of period | 11 months |
Additional disclosures | |
Total unrecognized compensation cost related to nonvested stock options granted | $ | $ 0 |
Aggregate Intrinsic Value | |
Outstanding, end of period | $ | 4 |
Vested and expected to vest | $ | 4 |
Exercisable, end of period | $ | $ 4 |
STOCK BASED COMPENSATION - NONV
STOCK BASED COMPENSATION - NONVESTED SHARES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
2005 Restricted Stock Grant Plan | Restricted stock | ||
Stock Based Compensation | ||
Number of shares authorized for issuance | 50,000 | |
Shares available for issuance | 0 | |
Shares | ||
Nonvested at the beginning of the period (in shares) | 10,636 | |
Vested (in shares) | (4,192) | |
Nonvested at the end of the period (in shares) | 6,444 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested shares, balance at the beginning of the period (in dollars) | $ 254 | |
Vested (in dollars) | (76) | |
Nonvested shares, balance at the end of the period (in dollars) | $ 178 | |
Fair Value Per Share | ||
Nonvested shares, balance at the beginning of the period (in dollars per share) | $ 23.84 | |
Vested (in dollars per share) | 18.18 | |
Nonvested shares, balance at the end of the period (in dollars per share) | $ 27.52 | |
Additional disclosures | ||
Total unrecognized compensation cost related to nonvested shares granted | $ 141,000 | |
Period over which cost is expected to be recognized | 2 years 2 months 12 days | |
2009 Stock Award Plan | ||
Stock Based Compensation | ||
Number of shares authorized for issuance | 150,000 | |
Shares available for issuance | 132,417 | |
Shares | ||
Nonvested at the beginning of the period (in shares) | 7,297 | |
Granted (in shares) | 6,575 | 6,170 |
Vested (in shares) | (1,414) | |
Nonvested at the end of the period (in shares) | 12,458 | |
Weighted-Average Grant-Date Fair Value | ||
Nonvested shares, balance at the beginning of the period (in dollars) | $ 214 | |
Granted (in dollars) | 214 | |
Vested (in dollars) | (41) | |
Nonvested shares, balance at the end of the period (in dollars) | $ 387 | |
Fair Value Per Share | ||
Nonvested shares, balance at the beginning of the period (in dollars per share) | $ 29.31 | |
Granted (in dollars per share) | 32.50 | |
Vested (in dollars per share) | 28.77 | |
Nonvested shares, balance at the end of the period (in dollars per share) | $ 31.05 | |
Additional disclosures | ||
Total unrecognized compensation cost related to nonvested shares granted | $ 364,000 | |
2009 Stock Award Plan | Restricted stock | ||
Additional disclosures | ||
Period over which cost is expected to be recognized | 4 years 2 months 12 days |
REPURCHASE AGREEMENTS (Details)
REPURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
REPURCHASE AGREEMENTS | ||
Repurchase agreements | $ 21,811 | $ 20,873 |
Carrying amount of agency-backed securities pledged to secure repurchase agreements | 28,500 | |
Overnight obligations | ||
REPURCHASE AGREEMENTS | ||
Repurchase agreements | 15,800 | |
Maturity terms extending | ||
REPURCHASE AGREEMENTS | ||
Repurchase agreements | $ 6,000 | |
Average weighted remaining life | 1 year 6 months |
OTHER BORROWINGS (Details)
OTHER BORROWINGS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Jul. 20, 2015 |
OTHER BORROWINGS | |||
Amount outstanding | $ 3,983 | $ 4,090 | |
Term loan | |||
OTHER BORROWINGS | |||
Debt instrument, face amount | $ 5,000 | ||
Amount outstanding | 4,000 | ||
Fixed interest rate | 5.02% | ||
Maturity schedule of term loan | |||
2,017 | 288 | ||
2,018 | 401 | ||
2,019 | 421 | ||
2,020 | 442 | ||
2,021 | 465 | ||
Thereafter | 1,966 | ||
Total term loan maturities | $ 3,983 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Fair value on instruments on recurring basis | |||
Securities available for sale | $ 301,927 | $ 273,770 | |
Transfers from Level 1 to Level 2 | 0 | 0 | |
Transfers from Level 2 to Level 1 | 0 | 0 | |
Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 301,927 | 273,770 | |
Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 307,571 | 279,362 | |
Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 2,724 | 1,948 | |
Recurring | Significant Other Observable Inputs (Level 2) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 304,847 | 277,414 | |
Impaired Loans | |||
Fair value on instruments on recurring basis | |||
Adjustments for differences between the comparable sales and income data available | 0 | ||
Other Real Estate Owned | Significant Unobservable Inputs (Level 3) | |||
Fair value on instruments on recurring basis | |||
Adjustments for differences between the comparable sales and income data available | 0 | $ 85 | |
U.S. government agencies | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 46,198 | 36,528 | |
U.S. government agencies | Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 46,198 | 36,528 | |
U.S. government agencies | Recurring | Significant Other Observable Inputs (Level 2) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 46,198 | 36,528 | |
States and municipals | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 92,936 | 91,132 | |
States and municipals | Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 92,936 | 91,132 | |
States and municipals | Recurring | Significant Other Observable Inputs (Level 2) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 92,936 | 91,132 | |
Mortgage-backed - residential | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 162,453 | 145,770 | |
Mortgage-backed - residential | Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 162,453 | 145,770 | |
Mortgage-backed - residential | Recurring | Significant Other Observable Inputs (Level 2) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 162,453 | 145,770 | |
Equity securities | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 340 | 340 | |
Equity securities | Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 340 | 340 | |
Equity securities | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 340 | 340 | |
Trading Assets | Recurring | Carrying Value | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 5,644 | 5,592 | |
Trading Assets | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | 2,384 | 1,608 | |
Trading Assets | Recurring | Significant Other Observable Inputs (Level 2) | |||
Fair value on instruments on recurring basis | |||
Securities available for sale | $ 3,260 | $ 3,984 |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE ON NON-RECURRING (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017USD ($)loan | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Impaired Loans | ||||
Valuation allowance of impaired loans | $ 479 | $ 541 | ||
Loan loss provision expense for impaired loans | 0 | |||
Other real estate owned, net: | ||||
Outstanding balance of other real estate owned | 1,373 | $ 2,383 | 1,824 | $ 2,347 |
Valuation allowance of other real estate owned | 803 | 701 | 803 | $ 616 |
Loan servicing rights | ||||
Mortgage servicing rights | 1,405 | 1,321 | ||
Non-recurring | ||||
Impaired Loans | ||||
Impaired loans, at fair value | 3,000 | |||
Valuation allowance of impaired loans | $ 471 | |||
Number of impaired loans. | loan | 0 | |||
Other real estate owned, net: | ||||
Other real estate owned | $ 1,000 | |||
Outstanding balance of other real estate owned | 1,800 | |||
Valuation allowance of other real estate owned | 803 | |||
Write downs of other real estate owned | 0 | 85 | ||
Loan servicing rights | ||||
Mortgage servicing rights | 1,150 | 1,100 | ||
Balance of loan servicing rights | 1,240 | 1,200 | ||
Valuation allowance of loan servicing rights | 86 | 125 | ||
Write-downs of loan servicing rights | $ 39 | |||
Recovery of prior write-downs | 3 | |||
Non-recurring | Carrying Value | ||||
Loan servicing rights | ||||
Mortgage servicing rights | 1,152 | 1,083 | ||
Non-recurring | Significant Unobservable Inputs (Level 3) | ||||
Loan servicing rights | ||||
Mortgage servicing rights | 1,152 | 1,083 | ||
Non-recurring | 1-4 family residential | Carrying Value | ||||
Impaired Loans | ||||
Impaired loans, at fair value | 255 | 1,685 | ||
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3) | ||||
Impaired Loans | ||||
Impaired loans, at fair value | 255 | 1,685 | ||
Non-recurring | Agricultural | Carrying Value | ||||
Impaired Loans | ||||
Impaired loans, at fair value | 2,746 | 2,234 | ||
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3) | ||||
Impaired Loans | ||||
Impaired loans, at fair value | 2,746 | 2,234 | ||
Non-recurring | Residential | Carrying Value | ||||
Other real estate owned, net: | ||||
Other real estate owned | 956 | 956 | ||
Non-recurring | Residential | Significant Unobservable Inputs (Level 3) | ||||
Other real estate owned, net: | ||||
Other real estate owned | 956 | 956 | ||
Non-recurring | Commercial | Carrying Value | ||||
Other real estate owned, net: | ||||
Other real estate owned | 57 | 272 | ||
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3) | ||||
Other real estate owned, net: | ||||
Other real estate owned | $ 57 | $ 272 |
FAIR VALUE MEASUREMENTS - QUANT
FAIR VALUE MEASUREMENTS - QUANTITATIVE INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Fair Value Measurements | ||
Loan servicing rights | $ 1,405 | $ 1,321 |
Non-recurring | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 3,000 | |
Other real estate owned | 1,000 | |
Loan servicing rights | 1,150 | 1,100 |
Non-recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Loan servicing rights | 1,152 | 1,083 |
Non-recurring | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Loan servicing rights | 1,152 | 1,083 |
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 255 | 1,685 |
Non-recurring | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 255 | 1,685 |
Non-recurring | Non-farm & non-residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 2,234 | |
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 2,746 | 2,234 |
Non-recurring | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 2,746 | |
Non-recurring | Residential | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 956 | 956 |
Non-recurring | Residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 956 | 956 |
Non-recurring | Residential | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 57 | |
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | $ 57 | 272 |
Non-recurring | Commercial | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Loan servicing rights | $ 272 | |
Non-recurring | Minimum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Discount rate | 8.00% | 8.00% |
Non-recurring | Minimum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 0.00% | 0.00% |
Non-recurring | Minimum | Non-farm & non-residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 2.00% | |
Non-recurring | Minimum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 8.00% | |
Non-recurring | Minimum | Residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 1.00% | 1.00% |
Non-recurring | Minimum | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Capitalization rate (as a percent) | 10.00% | |
Non-recurring | Minimum | Commercial | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Capitalization rate (as a percent) | 10.00% | |
Non-recurring | Maximum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Discount rate | 50.00% | 45.00% |
Non-recurring | Maximum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 12.00% | 21.00% |
Non-recurring | Maximum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 64.00% | 75.00% |
Non-recurring | Maximum | Residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 16.00% | 16.00% |
Non-recurring | Maximum | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Capitalization rate (as a percent) | 10.00% | 10.00% |
Non-recurring | Weighted average | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Discount rate | 11.00% | 13.00% |
Non-recurring | Weighted average | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 6.00% | 10.00% |
Non-recurring | Weighted average | Non-farm & non-residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 9.00% | |
Non-recurring | Weighted average | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | (33.00%) | |
Non-recurring | Weighted average | Residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Adjustment for differences between the comparable sales (as a percent) | 9.00% | 9.00% |
Non-recurring | Weighted average | Residential | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Capitalization rate (as a percent) | 10.00% | 10.00% |
FAIR VALUE MEASUREMENTS - FAI49
FAIR VALUE MEASUREMENTS - FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Financial assets | ||
Interest bearing time deposits | $ 4,659 | $ 5,029 |
Securities | 301,927 | 273,770 |
Trading assets | 5,644 | 5,592 |
Loans held for sale | 1,189 | 724 |
Interest receivable | 3,649 | 3,715 |
Financial liabilities | ||
Long-term Federal Home Loan Bank advances | 90,612 | 92,500 |
Interest payable | 667 | 692 |
Carrying Value | ||
Financial assets | ||
Cash and cash equivalents | 37,248 | 43,250 |
Interest bearing time deposits | 4,659 | 5,029 |
Securities | 301,927 | 273,770 |
Trading assets | 5,644 | 5,592 |
Loans held for sale | 1,189 | |
Mortgage loans held for sale | 724 | |
Loans, net | 649,690 | 648,466 |
FHLB stock | 7,034 | 7,034 |
Interest receivable | 3,649 | 3,715 |
Financial liabilities | ||
Deposits | 824,345 | 802,981 |
Securities sold under agreements to repurchase and other borrowings | 21,811 | 20,873 |
Long-term Federal Home Loan Bank advances | 90,612 | |
Federal Home Loan Bank advances | 92,500 | |
Note payable | 3,983 | 4,090 |
Subordinated debentures | 7,217 | 7,217 |
Interest payable | 667 | 692 |
Fair Value | ||
Financial assets | ||
Cash and cash equivalents | 37,248 | 43,250 |
Interest bearing time deposits | 4,659 | 5,029 |
Securities | 301,927 | 273,770 |
Trading assets | 5,644 | 5,592 |
Loans held for sale | 1,229 | |
Mortgage loans held for sale | 750 | |
Loans, net | 647,847 | 648,234 |
Interest receivable | 3,649 | 3,715 |
Financial liabilities | ||
Deposits | 823,374 | 803,145 |
Securities sold under agreements to repurchase and other borrowings | 21,916 | 21,006 |
Long-term Federal Home Loan Bank advances | 86,023 | |
Federal Home Loan Bank advances | 91,015 | |
Note payable | 4,438 | 4,564 |
Subordinated debentures | 7,211 | 7,210 |
Interest payable | 667 | 692 |
Quoted Prices In Active Markets for Identical Assets (Level 1) | Fair Value | ||
Financial assets | ||
Cash and cash equivalents | 37,248 | 43,250 |
Interest bearing time deposits | 4,659 | 5,029 |
Securities | 340 | 340 |
Trading assets | 2,384 | 1,608 |
Financial liabilities | ||
Deposits | 613,975 | 607,617 |
Significant Other Observable Inputs (Level 2) | Fair Value | ||
Financial assets | ||
Securities | 301,587 | 273,430 |
Trading assets | 3,260 | 3,984 |
Loans held for sale | 1,229 | |
Mortgage loans held for sale | 750 | |
Interest receivable | 1,355 | 1,334 |
Financial liabilities | ||
Deposits | 209,399 | 195,528 |
Securities sold under agreements to repurchase and other borrowings | 21,916 | 21,006 |
Long-term Federal Home Loan Bank advances | 86,023 | |
Federal Home Loan Bank advances | 91,015 | |
Note payable | 4,438 | 4,564 |
Interest payable | 605 | 639 |
Significant Unobservable Inputs (Level 3) | Fair Value | ||
Financial assets | ||
Loans, net | 647,847 | 648,234 |
Interest receivable | 2,294 | 2,381 |
Financial liabilities | ||
Subordinated debentures | 7,211 | 7,210 |
Interest payable | $ 62 | $ 53 |
CHANGES IN ACCUMULATED OTHER 50
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning Balance | $ 92,972 | |
Less reclassification adjustment for: | ||
Net current period other comprehensive income (loss) | 736 | $ 2,387 |
Ending Balance | 95,824 | |
Accumulated Other Comprehensive Income | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Beginning Balance | (956) | 359 |
Less reclassification adjustment for: | ||
Ending Balance | (220) | 2,746 |
Unrealized Gains and Losses on Available for Sale Securities | ||
Changes in accumulated other comprehensive income (loss) by component | ||
Unrealized holding gains (losses) for the period, net of tax | 736 | 2,470 |
Less reclassification adjustment for: | ||
Securities gains realized in income | 126 | |
Income taxes | (43) | |
Reclassification, net of tax | 83 | |
Net current period other comprehensive income (loss) | $ 736 | $ 2,387 |
CHANGES IN ACCUMULATED OTHER 51
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT - RECLASSIFIED (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Reclassifications out of AOCI by component | ||
Gain on sale of available for sale securities, net | $ 126 | |
income taxes | $ 855 | 216 |
Net income | $ 3,137 | 1,837 |
Unrealized Gains and Losses on Available for Sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income | ||
Reclassifications out of AOCI by component | ||
Gain on sale of available for sale securities, net | 126 | |
income taxes | 43 | |
Net income | $ 83 |