Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | KENTUCKY BANCSHARES INC /KY/ | |
Entity Central Index Key | 0001000232 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,946,998 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 37,474 | $ 21,922 |
Federal funds sold | 292 | 260 |
Cash and cash equivalents | 37,766 | 22,182 |
Interest bearing time deposits | 2,375 | 2,375 |
Securities available for sale | 247,187 | 265,330 |
Loans held for sale | 4,990 | 2,144 |
Loans | 778,327 | 744,313 |
Allowance for loan losses | (9,916) | (8,460) |
Net loans | 768,411 | 735,853 |
Federal Home Loan Bank stock | 7,034 | 7,034 |
Real estate owned, net | 2,110 | 2,148 |
Bank premises and equipment, net | 19,999 | 19,429 |
Interest receivable | 4,010 | 4,166 |
Mortgage servicing rights | 1,504 | 1,573 |
Goodwill | 14,001 | 14,001 |
Other intangible assets | 114 | 136 |
Bank owned life insurance | 18,308 | 18,165 |
Operating lease right of use asset | 8,022 | 8,195 |
Other assets | 7,547 | 8,059 |
Total assets | 1,143,378 | 1,110,790 |
Deposits | ||
Non-interest bearing | 243,073 | 235,268 |
Time deposits, $250,000 and over | 45,741 | 43,345 |
Other interest bearing | 564,403 | 564,040 |
Total deposits | 853,217 | 842,653 |
Repurchase agreements | 5,410 | 5,994 |
Short-term Federal Home Loan Bank advances | 54,000 | 25,000 |
Long-term Federal Home Loan Bank advances | 84,925 | 91,418 |
Subordinated debentures | 7,217 | 7,217 |
Interest payable | 1,217 | 1,170 |
Operating lease liability | 8,210 | 8,350 |
Other liabilities | 11,395 | 9,725 |
Total liabilities | 1,025,591 | 991,527 |
Stockholders’ equity | ||
Preferred stock, 300,000 shares authorized and unissued | ||
Common stock, no par value; 20,000,000 shares authorized; 5,946,998 and 5,913,922 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 21,771 | 21,447 |
Retained earnings | 97,584 | 96,903 |
Accumulated other comprehensive income (loss) | (1,568) | 913 |
Total stockholders’ equity | 117,787 | 119,263 |
Total liabilities and stockholders’ equity | $ 1,143,378 | $ 1,110,790 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
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 | 20,000,000 | 20,000,000 |
Common stock, shares issued | 5,946,998 | 5,913,922 |
Common stock, shares outstanding | 5,946,998 | 5,913,922 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
INTEREST INCOME: | ||
Loans, including fees | $ 9,380 | $ 8,800 |
Securities | ||
Taxable | 1,469 | 1,829 |
Tax exempt | 176 | 333 |
Other | 110 | 217 |
Total interest income | 11,135 | 11,179 |
INTEREST EXPENSE: | ||
Deposits | 1,468 | 1,537 |
Repurchase agreements and federal funds purchased | 8 | 24 |
Federal Home Loan Bank advances | 582 | 543 |
Note payable | 34 | |
Subordinated debentures | 85 | 102 |
Total interest expense | 2,143 | 2,240 |
Net interest income | 8,992 | 8,939 |
Provision for loan losses | 1,625 | 125 |
Net interest income after provision for loan losses | 7,367 | 8,814 |
NON-INTEREST INCOME: | ||
Service charges | 1,289 | 1,194 |
Loan service fee income (loss), net | (83) | 73 |
Trust department income | 370 | 328 |
Gain (loss) on sale of available for sale securities, net | 112 | 94 |
Gain on sale of loans | 683 | 207 |
Brokerage income | 127 | 136 |
Debit card interchange income | 812 | 790 |
Other | 252 | 178 |
Total other income | 3,562 | 3,000 |
NON-INTEREST EXPENSE: | ||
Salaries and employee benefits | 4,965 | 4,690 |
Occupancy expenses | 1,094 | 981 |
Legal and professional fees | 245 | 216 |
Data processing | 579 | 601 |
Debit card expenses | 507 | 530 |
Advertising and marketing | 267 | 234 |
Taxes other than payroll, property and income | 337 | 324 |
Loss on limited partnership | 293 | 159 |
Other | 943 | 1,030 |
Total other expenses | 9,230 | 8,765 |
Income before income taxes | 1,699 | 3,049 |
Provision for income taxes | (52) | 238 |
Net income | $ 1,751 | $ 2,811 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.30 | $ 0.47 |
Diluted (in dollars per share) | $ 0.30 | $ 0.47 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LOSS | ||
Net income | $ 1,751 | $ 2,811 |
Other comprehensive income (loss) | ||
Unrealized gains on securities arising during the period | 354 | 3,599 |
Reclassification of realized amount | (112) | (94) |
Net change in unrealized gain (loss) on securities | 242 | 3,505 |
Less: Tax impact | (52) | (736) |
Net of tax | 190 | 2,769 |
Unrealized gains (losses) on cashflow hedges - Unrealized holding loss | (2,671) | |
Total other comprehensive income (loss) | (2,481) | 2,769 |
Comprehensive income (loss) | $ (730) | $ 5,580 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning Balance at Dec. 31, 2018 | $ 21,170 | $ 89,101 | $ (3,478) | $ 106,793 |
Balances (in shares) at Dec. 31, 2018 | 5,955,242 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Common stock issued - stock grants | $ 295 | 295 | ||
Common stock issued - stock grants (in shares) | 26,084 | |||
Stock compensation expense | $ 56 | 56 | ||
Other comprehensive Income (loss) | 2,769 | 2,769 | ||
Net income | 2,811 | 2,811 | ||
Dividends declared | (1,015) | (1,015) | ||
Ending Balance at Mar. 31, 2019 | $ 21,521 | 90,897 | (709) | 111,709 |
Balances (in shares) at Mar. 31, 2019 | 5,981,326 | |||
Beginning Balance at Dec. 31, 2019 | $ 21,447 | 96,903 | 913 | 119,263 |
Balances (in shares) at Dec. 31, 2019 | 5,913,922 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Common stock issued - stock grants | $ 263 | 263 | ||
Common stock issued - stock grants (in shares) | 33,076 | |||
Stock compensation expense | $ 61 | 61 | ||
Other comprehensive Income (loss) | (2,481) | (2,481) | ||
Net income | 1,751 | 1,751 | ||
Dividends declared | (1,070) | (1,070) | ||
Ending Balance at Mar. 31, 2020 | $ 21,771 | $ 97,584 | $ (1,568) | $ 117,787 |
Balances (in shares) at Mar. 31, 2020 | 5,946,998 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Common stock issued for stock grants- Gross (in shares) | 29,242 | 23,260 |
Common stock, forfeited (in shares) | 120 | |
Common stock, settlement for income taxes (in shares) | 788 | |
Dividends per share (in dollars per share) | $ 0.18 | $ 0.17 |
Director | ||
Common stock issued for stock grants- Gross (in shares) | 3,834 | 2,824 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows From Operating Activities | ||
Net income | $ 1,751 | $ 2,811 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 334 | 300 |
Amortization (accretion), net | 91 | (31) |
Securities amortization (accretion), net | 247 | 174 |
Stock based compensation expense | 61 | 56 |
Provision for loan losses | 1,625 | 125 |
Securities losses (gains) available for sale gains, net | (112) | (94) |
Net increase in cash surrender value of bank-owned life insurance | (143) | (84) |
Originations of loans held for sale | (23,496) | (8,435) |
Proceeds from sale of loans | 21,333 | 8,563 |
Gain on sale of loans | (683) | (207) |
Write-downs of other real estate, net | 38 | 38 |
Changes in: | ||
Interest receivable | 156 | (27) |
Other assets | 1,017 | 664 |
Interest payable | 47 | 9 |
Deferred taxes | (523) | 5 |
Other liabilities | (1,296) | (3,618) |
Net cash from operating activities | 447 | 249 |
Cash Flows From Investing Activities | ||
Purchases of securities, available for sale | (448) | (8,022) |
Proceeds from sales of securities, available for sale | 2,094 | 16,318 |
Proceeds from principal payments, maturities and calls securities available for sale | 16,898 | 12,529 |
Net change in loans | (34,183) | (1,670) |
Purchases of bank premises and equipment | (904) | (283) |
Proceeds from the sale of other real estate | 12 | |
Net cash from (used in) investing activities | (16,543) | 18,884 |
Cash Flows From Financing Activities | ||
Net change in deposits | 10,564 | (6,304) |
Net change in repurchase agreements | (584) | (1,473) |
Net change in short-term Federal Home Loan Bank advances | 29,000 | (200) |
Proceeds from long-term Federal Home Loan Bank advances | 5,000 | |
Repayment of long-term Federal Home Loan Bank advances | (6,493) | (3,505) |
Repayment of note payable | (126) | |
Proceeds from issuance of common stock | 263 | 295 |
Dividends paid | (1,070) | (1,015) |
Net cash used in financing activities | 31,680 | (7,328) |
Net change in cash and cash equivalents | 15,584 | 11,805 |
Cash and cash equivalents at beginning of period | 22,182 | 26,101 |
Cash and cash equivalents at end of period | 37,766 | 37,906 |
Supplemental disclosures of cash flow information Cash paid during the year for: | ||
Interest expense | 2,096 | 2,231 |
Supplemental disclosures of non-cash investing activities | ||
Securities transactions in process, payable | $ 294 | |
Real estate acquired through foreclosure | $ 72 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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, 2019. 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, 2019. Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the Company), its wholly-owned subsidiaries, Kentucky Bank (the Bank) and KBI Insurance Company, Inc., a captive insurance subsidiary, and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation. Nature of Operations : The Bank operates under a state bank charter and provides full banking services, including trust services, to customers located in Bourbon, Clark, Elliot, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and adjoining counties in Kentucky. 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., a captive insurance subsidiary, 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. In December 2019, a novel strain of coronavirus, COVID-19, was reported in Wuhan, China. The COVID-19 virus continues to aggressively spread globally and has spread to over 185 countries, including all 50 states in the United States. A prolonged COVID-19 outbreak, or any other epidemic that harms the global economy, U.S. economy, or the economies in which we operate could adversely affect our operations. While the spread of the COVID-19 virus has minimally impacted our operations as of March 31, 2020, it has caused significant economic disruption throughout the United States as state and local governments issued “shelter at home” orders along with the closing of non-essential businesses. The potential financial impact is unknown at this time. However, if these actions are sustained, it may adversely impact several industries within our geographic footprint and impair the ability of our customers to fulfill their contractual obligations to the Company. This could cause Kentucky Bancshares to experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on Kentucky Bancshares’s intangible assets, investments, loans, loan servicing rights, deferred tax assets, or counter-party risk derivatives. Cash Flows : For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold, and certain short-term investments with maturities of less than three months. Generally, federal funds are sold for one-day periods. Net cash flows are reported for loan, deposit and short-term borrowing transactions. Interest Bearing Time Deposits : Interest bearing time deposits in other financial institutions have original maturities between one and three years and are carried at cost. Securities : The Company is required to classify its securities portfolio into one of three categories: trading securities, securities available for sale and securities held to maturity. Fair value adjustments are made to the securities based on their classification with the exception of the held to maturity category. The Company has no investments classified as trading securities or held to maturity. Securities available for sale are carried at fair value. Unrealized holding gains and losses for securities which are classified as available for sale are reported in other comprehensive income, net of deferred tax. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Premiums on purchased callable debt securities are amortized to the earliest call date. Gains and losses on sales are recorded on the settlement date and determined using the specific identification method. Equity investments are included in other assets with changes in fair value recorded in other income. Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. Loans Held for Sale : Loans held for sale are carried at the lower of cost or fair value as determined by outstanding commitments from investors or current secondary market prices, calculated on the aggregate loan basis. The Company also provides for any losses on uncovered commitments to lend or sell. The Company sells loans with servicing rights retained. Loans : Loans that management has the intent and ability to hold for the foreseeable future or until maturity are stated at the amount of unpaid principal, net of deferred loan origination fees and costs and acquired purchase premiums and discounts, reduced by an allowance for loan losses. Interest income on loans is recognized on the accrual basis except for those loans on a nonaccrual status. Interest income on real estate mortgage (1-4 family residential and multi-family residential) and consumer loans is discontinued at the time the loan is 90 days delinquent, and interest income on real estate construction, non-farm and non-residential mortgage, agricultural and commercial loans is discontinued at the time the loan is 120 days delinquent, unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. 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. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield on the related loan. Recorded investment is the outstanding loan balance, excluding accrued interest receivable. When interest accrual is discontinued, interest income received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Typically, the Company seeks to establish a payment history of at least six consecutive payments made on a timely basis before returning a loan to accrual status. Consumer and credit card loans are typically charged off no later than 120 days past due. Loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Concentration of Credit Risk : Most of the Company’s business activity is with customers located within Bourbon, Clark, Elliott, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and surrounding counties located in Kentucky. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in these counties. Allowance for Loan Losses : The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Adjustments are made to the historical loss experience ratios based on the qualitative factors as outlined in the regulatory Interagency Policy Statement on the Allowance for Loan and Lease Losses. These qualitative factors include the nature and volume of portfolio, economic and business conditions, classification, past due and non-accrual trends. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance for loan losses is evaluated at the portfolio segment level using the same methodology for each segment. The recent historical actual net losses is the basis for the general reserve for each segment which is then adjusted for qualitative factors as outlined above (i.e., nature and volume of portfolio, economic and business conditions, classification, past due and non-accrual trends) specifically evaluated at individual segment levels. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors for non-classified loans and a migration analysis for classified loans. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties and has been granted a concession, are considered troubled debt restructurings and classified as impaired. Loans are charged off when available information confirms that loans, or portions thereof, are uncollectible. While management considers the number of days a loan is past due in its evaluation process, we also consider a variety of other factors. Factors considered by management in evaluating the charge-off decision include collateral value, availability of current financial information for both borrower and guarantor (if any), and the probability of collecting contractual principal and interest payments. These considerations may result in loans being charged off before they are 90 days or more past due. This evaluation framework for determining charge-offs is consistently applied to each segment. From time to time, the Company will charge-off a portion of impaired and non-performing loans. Loans that meet the criteria under ASC 310 are evaluated individually for impairment. Management considers payment status, collateral value, availability of current financial information for the borrower and guarantor, actual and expected cash flows, and probability of collecting amounts due. If a loan’s collection status is deemed to be collateral dependent or foreclosure is imminent, the loan is charged down to the fair value of the collateral, less selling costs. In circumstances where the loan is not deemed to be collateral dependent, but we believe, after completing our evaluation process, that probable loss has been incurred, we will provide a specific allocation on that loan. The impact of recording partial charge-offs is a reduction of gross loans and a reduction of the loan loss reserve. The net loan balance is unchanged in instances where the loan had a specific allocation as a component of the allowance for loan losses. The allowance as a percentage of total loans may be lower as the allowance no longer needs to include a component for the loss, which has now been recorded, and net charge-off amounts are increased as partial charge-offs are recorded. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Commercial and real estate construction and real estate mortgage loans (multi-family residential, and non-farm and non-residential mortgage) over $200 thousand are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and 1-4 family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses. The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 5 years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. A “portfolio segment” is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for loan losses. The Company has identified the following portfolio segments: commercial, real estate construction, real estate mortgage, agricultural, consumer (credit cards and other consumer) and other (overdrafts). Commercial : These loans to businesses do not have real estate as the underlying collateral. Instead of real estate, collateral could be business assets such as equipment or accounts receivable or the personal guarantee of one or more guarantors. These loans generally present a higher level of risk than loans secured by commercial real estate because in the event of default by the borrower, the business assets must be liquidated and/or guarantors pursued for deficit funds. Business assets are worth more while they are in use to produce income for the business and worth significantly less if the business is no longer in operation. Within the commercial portfolio, risk analysis is performed primarily based on the individual loan type. Real estate construction : Real estate construction consists of loans secured by real estate for additions or alterations to existing structures, as well as constructing new structures. They include fixed and floating rate loans. Real estate construction loans generally present a higher level of risk than loans secured by 1-4 family residential real estate primarily because of the length of the construction period, potential change in prices of construction, the incomplete status of the collateral and economic cycles. Because of these factors, real estate construction loans generally have higher qualitative adjustments. Real Estate Mortgage : 1-4 family residential : Loans secured by 1-4 family residential real estate represent the lowest risk of loans for the Company. They include fixed and floating rate loans as well as loans for commercial purposes or consumer purposes. The Company generally does not hold subprime residential mortgages. Borrowers with loans in this category, whether for commercial or consumer purposes, tend to make their payments timely as they do not want to risk foreclosure and loss of property. Multifamily residential : Loans secured by multifamily residential real estate consist primarily of loans secured by apartment buildings and can be either fixed or floating rate loans. Multi-family residential real estate loans generally present a higher level of risk than loans secured by 1-4 family residential real estate because the borrower’s repayment ability typically comes from rents from tenants. Local economic and employment fluctuations impact rent rolls and potentially the borrower’s repayment ability. Non-farm & non-residential : Loans secured by non-farm non-residential real estate consist of loans secured by commercial real estate that is not owner occupied. These loans generally consist of loans collateralized by property whereby rents received from commercial tenants of the borrower are the source of repayment. These loans generally present a higher level of risk than loans secured by owner occupied commercial real estate because repayment risk is expanded to be dependent on the success of multiple businesses which are paying rent to the borrower. If multiple businesses fail due to deteriorating economic conditions or poor business management skills, the borrower may not have enough rents to cover their monthly payment. Repayment risk is also increased depending on the level of surplus available commercial lease space in the local market area. Agricultural : These loans to agricultural businesses do not have real estate as the underlying collateral. Instead of real estate, collateral could be assets such as equipment or accounts receivable or the personal guarantee of one or more guarantors. These loans generally present a higher level of risk than loans secured by real estate because in the event of default by the borrower, the assets must be liquidated and/or guarantors pursued for deficit funds. Farm assets are worth more while they are in use to produce income and worth significantly less if the farm is no longer in operation. Consumer : Consumer loans are generally loans to borrowers for non-business purposes. They can be either secured or unsecured. Consumer loans are generally small in the individual amount of principal outstanding and are repaid from the borrower’s private funds earned from employment. Consumer lending risk is very susceptible to local economic trends. If there is a consumer loan default, any collateral that may be repossessed is generally not well maintained and has a diminished value. For this reason, consumer loans tend to have higher overall interest rates to cover the higher cost of repossession and charge-offs. However, due to their smaller average balance per borrower, consumer loans are collectively evaluated for impairment in determining the appropriate allowance for loan losses. Other : All other loan types are aggregated together for credit risk evaluation due to the varying nature but small number of the remaining types of loans in the Company’s loan portfolio. Loans in this segment include but are not limited to overdrafts. Due to their smaller balance, other loans are collectively evaluated for impairment in determining the appropriate allowance for loan losses. Due to the overall high level of real estate mortgage loans within the loan portfolio as a whole, as compared to other portfolio segments, for risk assessment and allowance purposes this segment was segregated into more granular pools by collateral property type. The non-farm non-residential and the multi-family real estate mortgage loan portfolio segments had the next highest level of qualitative adjustments due to the effects of local markets and economies on the underlying collateral property values, as well as for industry concentrations and risks related to the this type of property. Derivatives : At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair value changes. For a cashflow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged. The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking both fair value hedges and cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings. Mortgage Banking Derivatives : Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment before the loan is funded. In order to hedge the change in interest rates resulting from its commitments to fund the loans, the Company enters into forward commitments for the future delivery of the mortgage loans when interest rate locks are entered into. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes in the fair values of these derivatives are included in net gains on the sales of loans. Mortgage Servicing Rights : The Bank has sold certain residential mortgage loans to the Federal Home Loan Mortgage Corporation (FHLMC) while retaining the servicing rights. Servicing rights are recognized separately when they are acquired through sales of loans. When mortgage loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gain on sale of mortgage loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into loan service fee income, net, included in non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Servicing fee income, which is reported on the income statement as loan service income, net, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights and valuation allowance are netted against loan servicing fee income. Servicing fees totaled $145 thousand for the three months ended March 31, 2020 compared to $134 thousand for the three months ended March 31, 2019 and are included in loan service fee income, net in the income statement. Late fees and ancillary fees related to loan servicing are not material. Federal Home Loan Bank (FHLB) Stock : The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. Bank-Owned Life Insurance : The Company has purchased life insurance policies on certain key employees. Bank- owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Bank Premises and Equipment : Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. Real Estate Owned : Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. Real estate acquired through foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. The value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for loan losses, if necessary. Any subsequent write-downs are charged to operating expenses. Operating expenses of such properties, net of related income, and gains and losses on their disposition are included in other expenses . Investments in Limited Partnerships : Investments in limited partnerships represent the Company’s investments in affordable housing projects for the primary purpose of available tax benefits. The Company is a limited partner in these investments and as such, the Company is not involved in the management or operation of such investments. These investments are amortized over the period that the Company expects to receive the tax benefits. These investments are evaluated for impairment when events indicate the carrying amount may not be recoverable. The investment recorded at March 31, 2020 was $3.9 million a |
SECURITIES
SECURITIES | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 U.S. treasury notes $ 9,142 $ 194 $ — $ 9,336 U.S. government agencies 17,732 202 (14) 17,920 States and political subdivisions 28,286 602 (12) 28,876 Mortgage-backed - residential 106,857 3,133 — 109,990 Mortgage-backed - commercial 48,436 320 (513) 48,243 Asset-backed 35,396 37 (2,611) 32,822 Total $ 245,849 $ 4,488 $ (3,150) $ 247,187 December 31, 2019 U.S. treasury notes $ 9,165 $ 3 $ — $ 9,168 U.S. government agencies 23,716 60 (41) 23,735 States and political subdivisions 31,950 661 (22) 32,589 Mortgage-backed - residential 113,629 634 (272) 113,991 Mortgage-backed - commercial 50,092 406 (147) 50,351 Asset-backed 35,682 55 (241) 35,496 Total $ 264,234 $ 1,819 $ (723) $ 265,330 The amortized cost and fair value of securities as of March 31, 2020 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 7. Amortized Fair Cost Value Due in one year or less $ 8,314 $ 8,391 Due after one year through five years 17,129 17,389 Due after five years through ten years 14,040 14,298 Due after ten years 15,677 16,054 55,160 56,132 Mortgage-backed - residential 106,857 109,990 Mortgage-backed - commercial 48,436 48,243 Asset-backed 35,396 32,822 Total $ 245,849 $ 247,187 Proceeds from the sale of available for sale securities for the first three months of 2020 and 2019 were $2.1 million and $16.3 million. Gross gains of $118 thousand and $109 thousand and gross losses of $6 thousand and $15 were realized on those sales, respectively. The tax provision related to these realized net gains was $23 thousand and $20 thousand, respectively. Securities with unrealized losses at March 31, 2020 and at December 31, 2019 not recognized in income are as follows: March 31, 2020 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 $ — $ — $ 1,295 $ (14) $ 1,295 $ (14) States and political subdivisions 1,208 (12) — — 1,208 (12) Mortgage-backed - commercial 23,420 (463) 6,237 (50) 29,657 (513) Asset-backed 23,785 (1,895) 6,336 (716) 30,121 (2,611) Total temporarily impaired $ 48,413 $ (2,370) $ 13,868 $ (780) $ 62,281 $ (3,150) December 31, 2019 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 $ 6,171 $ (18) $ 4,396 $ (23) $ 10,567 $ (41) States and political subdivisions 859 (3) 1,199 (19) 2,058 (22) Mortgage-backed - residential 32,718 (129) 14,583 (143) 47,301 (272) Mortgage-backed - commercial 5,760 (25) 10,625 (122) 16,385 (147) Asset-backed 21,786 (150) 6,962 (91) 28,748 (241) Total temporarily impaired $ 67,294 $ (325) $ 37,765 $ (398) $ 105,059 $ (723) 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. |
LOANS
LOANS | 3 Months Ended |
Mar. 31, 2020 | |
LOANS | |
LOANS | 3. Loans at period-end are as follows: (in thousands) 3/31/2020 12/31/2019 Commercial $ 82,793 $ 86,552 Real estate construction 34,180 32,219 Real estate mortgage: 1-4 family residential 299,873 291,419 Multi-family residential 55,511 48,622 Non-farm & non-residential 223,208 204,908 Agricultural 60,013 57,166 Consumer 22,598 23,122 Other 151 305 Total $ 778,327 $ 744,313 Activity in the allowance for loan losses for the three month period indicated was as follows: Three Months Ended March 31, 2020 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 920 $ (25) $ 6 $ 102 $ 1,003 Real estate Construction 551 — — 80 631 Real estate mortgage: 1-4 family residential 2,901 (35) 15 540 3,421 Multi-family residential 807 — — 217 1,024 Non-farm & non-residential 1,643 — — 461 2,104 Agricultural 389 — 2 72 463 Consumer 506 (110) 9 128 533 Other 43 (237) 206 19 31 Unallocated 700 — — 6 706 $ 8,460 $ (407) $ 238 $ 1,625 $ 9,916 Three Months Ended March 31, 2019 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 1,159 $ (191) $ 7 $ (32) $ 943 Real estate Construction 414 — — (63) 351 Real estate mortgage: 1-4 family residential 2,605 (99) 8 146 2,660 Multi-family residential 733 — — (10) 723 Non-farm & non-residential 1,649 (17) — (23) 1,609 Agricultural 420 — 1 (15) 406 Consumer 410 (61) 14 26 389 Other 58 (241) 209 44 70 Unallocated 679 — — 52 731 $ 8,127 $ (609) $ 239 $ 125 $ 7,882 Individually Collectively As of March 31, 2020 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ 1,003 $ 1,003 Real estate construction — 631 631 Real estate mortgage: 1-4 family residential — 3,421 3,421 Multi-family residential 75 949 1,024 Non-farm & non-residential — 2,104 2,104 Agricultural — 463 463 Consumer — 533 533 Other — 31 31 Unallocated — 706 706 $ 75 $ 9,841 $ 9,916 Loans: Commercial $ — $ 82,793 $ 82,793 Real estate construction 374 33,806 34,180 Real estate mortgage: 1-4 family residential 519 299,354 299,873 Multi-family residential 1,292 54,219 55,511 Non-farm & non-residential 1,799 221,409 223,208 Agricultural 1,532 58,481 60,013 Consumer — 22,598 22,598 Other — 151 151 Total $ 5,516 $ 772,811 $ 778,327 Individually Collectively As of December 31, 2019 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ 920 $ 920 Real estate construction — 551 551 Real estate mortgage: 1-4 family residential 2 2,899 2,901 Multi-family residential 50 757 807 Non-farm & non-residential — 1,643 1,643 Agricultural — 389 389 Consumer — 506 506 Other — 43 43 Unallocated — 700 700 $ 52 $ 8,408 $ 8,460 Loans: Commercial $ — $ 86,552 $ 86,552 Real estate construction 374 31,845 32,219 Real estate mortgage: 1-4 family residential 202 291,217 291,419 Multi-family residential 1,292 47,330 48,622 Non-farm & non-residential 1,799 203,109 204,908 Agricultural 842 56,324 57,166 Consumer — 23,122 23,122 Other — 305 305 Total $ 4,509 $ 739,804 $ 744,313 The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended March 31, 2020 (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: Real estate construction $ 374 $ 374 $ - $ 374 $ - $ - Real estate mortgage: 1-4 family residential 519 519 - 361 6 6 Non-farm and non-residential 1,799 1,799 - 1,799 - - Agricultural 1,532 1,532 - 1,187 11 11 With an allowance recorded: Real estate mortgage: Multi-family residential $ 1,292 $ 1,292 $ 75 $ 1,292 $ - $ - Total $ 5,516 $ 5,516 $ 75 $ 5,013 $ 17 $ 17 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, 2019 (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: Real-estate construction $ 374 $ 374 $ — $ 374 $ — $ — Real-estate mortgage: Non-farm & non-residential 1,799 1,799 — 1,013 17 17 Agricultural 842 842 — 1,003 18 18 With an allowance recorded: Real estate mortgage 1-4 family residential $ 202 $ 202 $ 2 $ 603 $ 35 $ 35 Multi-family residential 1,292 1,292 50 646 54 54 Total $ 4,509 $ 4,509 $ 52 $ 3,639 $ 124 $ 124 The following tables present the recorded investment in nonaccrual, loans past due over 89 days still on accrual and accruing troubled debt restructurings by class of loans as of March 31, 2020 and December 31, 2019: Loans Past Due Over 89 Days As of March 31, 2020 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ — $ 267 $ — Real estate construction 374 — — Real estate mortgage: 1-4 family residential 744 126 — Multi-family residential 1,292 — — Non-farm & non-residential 1,799 — — Agricultural — 75 — Consumer 27 6 — Total $ 4,236 $ 474 $ — Loans Past Due Over 89 Days As of December 31, 2019 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Real estate construction $ 374 $ — $ — Real estate mortgage: 1-4 family residential 845 47 — Multi-family residential — 1,292 — Non-farm & non-residential 1,799 121 — Agricultural — 7 — Consumer 63 32 — Total $ 3,081 $ 1,499 $ — Nonaccrual loans secured by real estate make up 98.0% of the total nonaccrual loan balances at March 31, 2020. Nonaccrual loans and loans past due over 89 days and still accruing 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 March 31, 2020 and December 31, 2019 by class of loans: 30–59 60–89 Greater than Total As of March 31, 2020 Days Days 89 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 655 $ 260 $ 267 $ — $ 1,182 $ 81,611 Real estate construction 31 — — 374 405 33,775 Real estate mortgage: 1-4 family residential 1,374 346 126 744 2,590 297,283 Multi-family residential — — — 1,292 1,292 54,219 Non-farm & non-residential 1,380 — — 1,799 3,179 220,029 Agricultural 52 82 75 — 209 59,804 Consumer 170 112 6 27 315 22,283 Other — — — — — 151 Total $ 3,662 $ 800 $ 474 $ 4,236 $ 9,172 $ 769,155 30–59 60–89 Greater than Total As of December 31, 2019 Days Days 89 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 326 $ 25 $ — $ — $ 351 $ 86,201 Real estate construction — — — 374 374 31,845 Real estate mortgage: 1-4 family residential 2,734 274 47 845 3,900 287,519 Multi-family residential — — 1,292 — 1,292 47,330 Non-farm & non-residential 302 19 121 1,799 2,241 202,667 Agricultural 704 — 7 — 711 56,455 Consumer 158 17 32 63 270 22,852 Other — — — — — 305 Total $ 4,224 $ 335 $ 1,499 $ 3,081 $ 9,139 $ 735,174 Troubled Debt Restructurings: Management periodically reviews renewals and modifications of previously identified troubled debt restructurings (TDR), for which there was no principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate based upon current underwriting, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower will continue to comply with the terms of the loan after the date of the renewal/modification. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms considered to be at market for loans with comparable risk and management expects the borrower will continue to perform under the re-modified terms based on the borrower's past history of performance. On March 22, 2020, federal banking regulators issued an interagency statement, which was subsequently clarified and revised by an interagency statement issued on April 7, 2020, that included guidance on their approach for the accounting of loan modifications in light of the economic impact of the Coronavirus Disease 2019 (COVID-19) pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. The majority of these modifications will involve three to six month forbearance payments which will be added to the end of the note. As of April 30, 2020 we had approved modifications on $105.4 million of loans. The Company had no loans classified as troubled debt restructurings as of March 31, 2020 or December 31, 2019. 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, 2020 and December 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: As of March 31, 2020 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 79,839 $ 2,860 $ 94 $ — Real estate construction 32,285 1,501 394 — Real estate mortgage: 1-4 family residential 291,414 3,037 5,422 — Multi-family residential 53,605 614 1,292 — Non-farm & non-residential 214,304 7,086 1,818 — Agricultural 54,213 3,774 2,026 — Total $ 725,660 $ 18,872 $ 11,046 $ — As of December 31, 2019 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 83,515 $ 2,785 $ 252 $ — Real estate construction 30,462 1,363 394 — Real estate mortgage: 1-4 family residential 283,048 3,435 4,932 4 Multi-family residential 43,193 4,137 1,292 — Non-farm & non-residential 195,800 7,169 1,939 — Agricultural 51,352 4,459 1,355 — Total $ 687,370 $ 23,348 $ 10,164 $ 4 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 89 days past due or on non-accrual status, and total $33 thousand at March 31, 2020 and $95 thousand at December 31, 2019. Non-consumer loans with an outstanding balance less than $200 thousand are evaluated similarly to consumer loans. Loan performance is evaluated based on delinquency status. Both are reviewed at least quarterly and credit quality grades are updated as needed. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 4. 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, 2020 2019 (in thousands) Basic and Diluted Earnings Per Share Net Income $ 1,751 $ 2,811 Weighted average common shares outstanding 5,880 5,929 Basic and diluted earnings per share $ 0.30 $ 0.47 Restricted stock grants were excluded in shares outstanding for purposes of computing basic and diluted earnings per share for the both the three months ended March 31, 2020 and March 31, 2019. |
STOCK COMPENSATION
STOCK COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
STOCK COMPENSATION | |
STOCK COMPENSATION | 5. We have three stock based compensation plans as described below. 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 100,000. There were no shares issued during 2020 or 2019. The plan is now expired and no additional shares will be issued from the 2005 plan. There were 0 shares forfeited during the three months ended March 31, 2020 and 12 shares were forfeited during the three months ended March 31, 2019. A summary of changes in the Company’s nonvested shares for the year follows (in thousands, except per share data): Grant-Date Shares Fair Value Nonvested at January 1, 2020 1,580 $ 13.67 Vested (1,580) 13.67 Nonvested at March 31, 2020 — $ — As of March 31, 2020, there was no unrecognized compensation cost related to nonvested shares granted under the 2005 Restricted Stock Grant due to their being no nonvested shares outstanding. 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 were 300,000. There were 0 shares issued during the three months ended March 31, 2020 and 23,380 shares were issued during the three months ended March 31, 2019. The plan is now expired and no additional shares will be issued from the 2009 plan. There were 0 shares forfeited during the three months ended March 31, 2020 and 108 shares were forfeited during the three months ended March 31, 2019. A summary of changes in the Company’s nonvested shares for the year follows (in thousands, except per share data): Weighted-Average Grant-Date Shares Fair Value Nonvested at January 1, 2020 38,482 $ 21.46 Vested (12,855) 20.98 Nonvested at March 31, 2020 25,627 $ 21.70 2019 Stock Award Plan On May 21, 2019, 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 300,000. There were 30,030 shares issued during the three months ended March 31, 2020 and 0 shares were issued during the three months ended March 31, 2019. There were 0 shares forfeited during both the three months ended March 31, 2020 and March 31, 2019. Weighted-Average Grant-Date Nonvested Shares Shares Fair Value Nonvested at January 1, 2020 — $ — Granted 30,030 23.11 Nonvested at March 31, 2020 30,030 $ 23.11 |
REPURCHASE AGREEMENTS
REPURCHASE AGREEMENTS | 3 Months Ended |
Mar. 31, 2020 | |
REPURCHASE AGREEMENTS | |
REPURCHASE AGREEMENTS AND OTHER BORROWINGS | 6. REPURCHASE AGREEMENTS Repurchase agreements totaled $5.4 million as of March 31, 2020. Of this, $3.4 million of balances were overnight obligations and $2.0 million of balances had terms extending through May 2021 with a weighted remaining average life of 0.6 years. The Company pledged both U.S. treasury securities and U.S. government agency securities with a combined total carrying amount of $11.9 million to secure repurchase agreements as of March 31, 2020. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 7. 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 : The fair values for available for sale investment securities 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. Net adjustments totaled $23 thousand the first three months of 2020 and $(182) thousand for the first three months of 2019 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. 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. Derivatives and Financial Instruments: The fair values of derivative financial instruments are based on derivative valuation models using market data inputs as of the valuation date (Level 2). Assets and Liabilities Measured on a Recurring Basis : Available for sale investment securities, derivatives and other financial instrument assets and equity securities included in other 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, 2020 (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) Financial Assets U.S. treasury notes $ 9,336 $ — $ 9,336 $ — U. S. government agencies 17,920 — 17,920 — States and political subdivisions 28,876 — 28,876 — Mortgage-backed - residential 109,990 — 109,990 — Mortgage-backed-commercial 48,243 — 48,243 — Asset-backed 32,822 — 32,822 — Derivatives and financial instrument assets 237 — 237 — Other Assets 296 296 — — Total $ 247,720 $ 296 $ 247,424 $ — Financial Liabilities Derivatives and financial instrument liabilities $ 3,525 $ — $ 3,525 $ — Fair Value Measurements at December 31, 2019 (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. treasury notes $ 9,168 $ — $ 9,168 $ — U. S. government agencies 23,735 — 23,735 — States and political subdivisions 32,589 — 32,589 — Mortgage-backed - residential 113,991 — 113,991 — Mortgage-backed - commercial 50,351 — 50,351 — Asset-backed 35,496 — 35,496 — Derivatives and financial instrument assets 94 94 Other Assets 292 292 — — Total $ 265,716 $ 292 $ 265,424 $ — Financial Liabilities Derivatives and financial instrument liabilities $ 212 $ — $ 212 $ — There were no transfers between level 1 and level 2 during 2020 or 2019. Assets measured at fair value on a non-recurring basis are summarized below (in thousands): Fair Value Measurements at March 31, 2020 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: Multi-family residential $ $ — $ — $ Other real estate owned, net: Real estate mortgage: 1-4 family residential — — Commercial — — Agricultural — — Mortgage servicing rights — — Fair Value Measurements at December 31, 2019 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 $ $ — $ — $ Multi-family residential — — Other real estate owned, net: Real Estate Mortgage: 1-4 family residential — — Commercial — — Agriculturual — — Mortgage servicing rights — — Impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had a net carrying amount of $1.2 million, which includes a valuation allowance of $75 thousand as of March 31, 2020. Impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had a net carrying amount of $1.4 million, with a valuation allowance of $52 thousand at December 31, 2019. No additional loans were impaired at March 31, 2020 when compared to December 31, 2019. One loan relationship which was impaired at December 31, 2019 required additional provision for loan loss expense of $25 thousand for the three months ended March 31, 2020. Other real estate owned measured at fair value less costs to sell had a net carrying amount of $611 thousand, which is made up of the outstanding balance of $1.1 million, net of a valuation allowance of $500 thousand as of March 31, 2020. Other real estate owned which was measured at fair value less costs to sell, had a net carrying amount of $519 thousand, which was made up of the outstanding balance of $980 thousand, net of a valuation allowance of $461 thousand at December 31, 2019. The Company recorded $38 thousand in write-downs of other real estate owned properties for the three months ended both March 31, 2020 and March 31, 2019. Impaired mortgage servicing rights are carried at the lower of cost or fair value. At March 31 2020, impaired mortgage servicing rights totaled $1.3 million, less a valuation allowance of $252 thousand, resulting in a net carrying value of $1.0 million. At December 31, 2019, impaired mortgage servicing rights totaled $1.2 million, less a valuation allowance of $110 thousand, resulting in a carrying value of $1.1 million. For the three months ended March 31, 2020, the Company recorded net writedowns of $142 thousand. For the three months ended March 31,019, the Company recorded net write-downs of $6 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 as of March 31, 2020 and December 31, 2019: Range March 31, 2020 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: Multi-family residential $ income approach capitalization rate 7% - 7% (7)% Other real estate owned: Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales (23)% - (28)% (30)% Commercial income approach capitalization rate (6)% - 8% (62)% Agricultural sales comparison adjustment for differences between the comparable sales (0)% - 26% (14)% Mortgage servicing rights discounted cash flow constant prepayment rates (8)% - (23)% (13)% Range December 31, 2018 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 (1)% - 21% (1)% Multi-family residential income approach capitalization rate 7% - 7% (7)% Other real estate owned: 1-4 family residential sales comparison adjustment for differences between the comparable sales (4%) - 11% Commercial sales comparison capitalization rate (6%) - 8% (62)% Agriculturual sales comparison adjustment for differences between the comparable sales 0% - 26% (14)% Mortgage servicing rights discounted cash flow constant prepayment rates 9% - 20% (12)% Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments, as of March 31, 2020 and December 31, 2019 are as follows: March 31, 2020 Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 37,766 $ 37,766 $ — $ — $ 37,766 Interest bearing time deposits 2,375 2,375 — — 2,375 Securities available for sale 247,187 — 247,187 — 247,187 Loans held for sale 4,990 — 5,065 — 5,065 Net Loans 768,411 — — 742,213 742,213 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 4,010 — 894 3,116 4,010 Derivative and financial instruments 237 — 237 — 237 Other assets 296 296 — — 296 Financial liabilities Total deposits $ 853,217 $ 637,199 $ 217,638 $ — $ 854,837 Repurchase agreements 5,410 — 5,410 — 5,410 Short-term Federal Home Loan Bank advances 54,000 — 54,000 — 54,000 Long-term Federal Home Loan Bank advances 84,925 — 87,678 — 87,678 Subordinated debentures 7,217 — — 6,785 6,785 Interest payable 1,217 — 1,205 12 1,217 Derivative and financial instruments 3,525 — 3,525 — 3,525 December 31, 2019 Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 22,182 $ 22,182 $ — $ — $ 22,182 Interest bearing time deposits 2,375 2,375 — — 2,375 Securities available for sale 265,330 — 265,330 — 265,330 Loans held for sale 2,144 — 2,171 — 2,171 Net Loans 735,853 — — 735,060 735,060 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 4,166 — 1,035 3,131 4,166 Derivatives and financial instruments 94 — 94 — 94 Other assets 292 292 — — 292 Financial liabilities Total deposits $ 842,653 $ 630,948 $ 210,892 $ — $ 841,840 Repurchase agreements 5,994 — 5,993 — 5,993 Short-term Federal Home Loan Bank advances 25,000 — 25,000 — 25,000 Long-term Federal Home Loan Bank advances 91,418 — 91,397 — 91,397 Subordinated debentures 7,217 — — 7,213 7,213 Interest payable 1,170 — 1,156 14 1,170 Derivatives and financial instruments 212 — 212 — 212 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2020 | |
LEASES | |
LEASES | 8. Statement of Financial Condition Location 3/31/2020 12/31/2019 (in thousands) Operating Lease Right of Use Asset: Gross Carrying Amount $ 8,824 $ 8,857 Accumulated Amortization (802) (662) Net Book Value Operating lease right of use asset $ 8,022 $ 8,195 Operating Lease Liabilities Right of use lease obligations Operating lease liability $ 8,210 $ 8,350 As of March 31, 2020, the weighted-average remaining lease term for operating leases was 35.2 years and the weighted- average discount rate used in the measurement of operating lease liabilities was 4.13%. The Company utilized the FHLB fixed rate advance rate as of December 31, 2018 for the term most closely aligning with the remaining lease term for lease obligations in existence as of December 31, 2018. The Company utilized the FHLB fixed rate advance rate as of April 30, 2019 as a basis for determining the discount rate for one contract which was entered into during April 2019. Three Months Ended 3/31/2020 3/31/2019 (in thousands) Lease Cost: Operating lease cost $ $ 111 Total lease cost $ $ 111 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ $ 130 Maturity analysis of liabilities under operating leases with terms longer than 12 months, are as follows at March 31, 2020: As of March 31, 2020 (in thousands) Twelve months ended March 31, 2020 $ 2021 2022 2023 2024 Thereafter 18,847 Total undiscounted lease payments $ 21,504 Amounts representing interest Lease liability $ 8,210 |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2020 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS. | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company’s revenue from contracts with customers in the scope of Topic 606 is recognized within noninterest income. The consolidated statements of income include all categories of noninterest income. There are no significant individual items included in other non-interest income within the scope of Topic 606. The following table reflects only the categories of noninterest income that are within the scope of Topic 606: Three Months Ended 3/31/2020 3/31/2019 Service charges $ $ Trust department income Brokerage income Debit card interchange income Total $ $ Trust department income : We earn wealth management fees based upon asset custody, investment management, trust, and estate services provided to customers. Most of these customers receive monthly billings for services rendered based upon the market value of assets and/or income generated. Fees that are transaction based are recognized at the point in time that the transaction is executed Service charges : We earn fees from our deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees and overdraft fees are recognized at a point in time, since the customer generally has a right to cancel the depository arrangement at any time. The arrangement is considered a day-to-day contract with ongoing renewals and optional purchases, so the duration of the contract does not extend beyond the services already performed. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month representing the period over which we satisfy our performance obligation. Debit card interchange income : As with the transaction-based fees on deposit accounts, debit card interchange income is recognized at the point in time that we fulfill the customer’s request. We earn interchange fees from cardholder transactions processed through card association networks. Interchange rates are generally set by the card associations based upon purchase volumes and other factors. Interchange fees represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder Brokerage income : Brokerage income fees are the commissions and fees received from a registered broker/dealer and investment adviser that provide those services to our customers. We act as an agent in arranging the relationship between the customer and the third-party service provider. These fees are recognized monthly from the third-party broker based upon services already performed. |
DERIVATIVES AND FINANCIAL INSTR
DERIVATIVES AND FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2020 | |
DERIVATIVES AND FINANCIAL INSTRUMENTS | |
DERIVATIVES AND FINANCIAL INSTRUMENTS | NOTE 10 – DERIVATIVES AND FINANCIAL INSTRUMENTS As part of our overall interest rate risk management, the Company uses derivative instruments, including interest rate swaps. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Cash Flow Hedges: Interest rate swaps with notional amounts totaling $23 million and $10 million as of March 31, 2020 and December 31, 2019, were designated as cash flow hedges of certain rolling three month term FHLB advances and were determined to be effective during all periods presented. The Company expects the hedges to remain effective during the remaining terms of the swaps. The carrying value of the cash flow hedge was a liability of $2.6 million as of March 31, 2020 and an asset of $46 thousand as of December 31, 2019. Fair Value Hedges: Interest rate swaps with notional amounts totaling $7 million and $7 million as of March 31, 2020 and December 31, 2019 were designated as fair value last of layer hedges of certain fixed rate prepayable loans. The hedges were determined to be effective during all periods presented. The Company expects the hedges to remain effective during the remaining terms of the swaps. The carrying value of the fair value hedge liability was $664 thousand and $164 thousand as of March 31, 2020 and December 31, 2019 and was included in other liabilities on the Company’s balance sheet. Derivatives Not Designated as Hedges: The Company also enters into interest rates swaps with its loan customers. The notional amounts of interest rate swaps with its loan customer as of March 31, 2020 and December 31, 2019 were $26.7 million and $7.4 million. The Company enters into corresponding offsetting derivatives with third parties. While these derivatives represent economic hedges, they do not qualify as hedges for accounting purposes. The carrying value of the fair value asset and liability was $237 thousand and $48 thousand as of March 31, 2020 and December 31, 2019 and was included in other assets and other liabilities on the Company’s balance sheet. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (the Company), its wholly-owned subsidiaries, Kentucky Bank (the Bank) and KBI Insurance Company, Inc., a captive insurance subsidiary, 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 : The Bank operates under a state bank charter and provides full banking services, including trust services, to customers located in Bourbon, Clark, Elliot, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and adjoining counties in Kentucky. 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., a captive insurance subsidiary, 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. In December 2019, a novel strain of coronavirus, COVID-19, was reported in Wuhan, China. The COVID-19 virus continues to aggressively spread globally and has spread to over 185 countries, including all 50 states in the United States. A prolonged COVID-19 outbreak, or any other epidemic that harms the global economy, U.S. economy, or the economies in which we operate could adversely affect our operations. While the spread of the COVID-19 virus has minimally impacted our operations as of March 31, 2020, it has caused significant economic disruption throughout the United States as state and local governments issued “shelter at home” orders along with the closing of non-essential businesses. The potential financial impact is unknown at this time. However, if these actions are sustained, it may adversely impact several industries within our geographic footprint and impair the ability of our customers to fulfill their contractual obligations to the Company. This could cause Kentucky Bancshares to experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on Kentucky Bancshares’s intangible assets, investments, loans, loan servicing rights, deferred tax assets, or counter-party risk derivatives. |
Cash Flows | Cash Flows : For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold, and certain short-term investments with maturities of less than three months. Generally, federal funds are sold for one-day periods. Net cash flows are reported for loan, deposit and short-term borrowing transactions. |
Interest Bearing Time Deposits | Interest Bearing Time Deposits : Interest bearing time deposits in other financial institutions have original maturities between one and three years and are carried at cost. |
Securities | Securities : The Company is required to classify its securities portfolio into one of three categories: trading securities, securities available for sale and securities held to maturity. Fair value adjustments are made to the securities based on their classification with the exception of the held to maturity category. The Company has no investments classified as trading securities or held to maturity. Securities available for sale are carried at fair value. Unrealized holding gains and losses for securities which are classified as available for sale are reported in other comprehensive income, net of deferred tax. Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Premiums on purchased callable debt securities are amortized to the earliest call date. Gains and losses on sales are recorded on the settlement date and determined using the specific identification method. Equity investments are included in other assets with changes in fair value recorded in other income. Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. |
Loans Held for Sale | Loans Held for Sale : Loans held for sale are carried at the lower of cost or fair value as determined by outstanding commitments from investors or current secondary market prices, calculated on the aggregate loan basis. The Company also provides for any losses on uncovered commitments to lend or sell. The Company sells loans with servicing rights retained. |
Loans | Loans : Loans that management has the intent and ability to hold for the foreseeable future or until maturity are stated at the amount of unpaid principal, net of deferred loan origination fees and costs and acquired purchase premiums and discounts, reduced by an allowance for loan losses. Interest income on loans is recognized on the accrual basis except for those loans on a nonaccrual status. Interest income on real estate mortgage (1-4 family residential and multi-family residential) and consumer loans is discontinued at the time the loan is 90 days delinquent, and interest income on real estate construction, non-farm and non-residential mortgage, agricultural and commercial loans is discontinued at the time the loan is 120 days delinquent, unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. 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. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield on the related loan. Recorded investment is the outstanding loan balance, excluding accrued interest receivable. When interest accrual is discontinued, interest income received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Typically, the Company seeks to establish a payment history of at least six consecutive payments made on a timely basis before returning a loan to accrual status. Consumer and credit card loans are typically charged off no later than 120 days past due. Loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. |
Concentration of Credit Risk | Concentration of Credit Risk : Most of the Company’s business activity is with customers located within Bourbon, Clark, Elliott, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford and surrounding counties located in Kentucky. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy in these counties. |
Allowance for Loan Losses | Allowance for Loan Losses : The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Adjustments are made to the historical loss experience ratios based on the qualitative factors as outlined in the regulatory Interagency Policy Statement on the Allowance for Loan and Lease Losses. These qualitative factors include the nature and volume of portfolio, economic and business conditions, classification, past due and non-accrual trends. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. The allowance for loan losses is evaluated at the portfolio segment level using the same methodology for each segment. The recent historical actual net losses is the basis for the general reserve for each segment which is then adjusted for qualitative factors as outlined above (i.e., nature and volume of portfolio, economic and business conditions, classification, past due and non-accrual trends) specifically evaluated at individual segment levels. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors for non-classified loans and a migration analysis for classified loans. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial difficulties and has been granted a concession, are considered troubled debt restructurings and classified as impaired. Loans are charged off when available information confirms that loans, or portions thereof, are uncollectible. While management considers the number of days a loan is past due in its evaluation process, we also consider a variety of other factors. Factors considered by management in evaluating the charge-off decision include collateral value, availability of current financial information for both borrower and guarantor (if any), and the probability of collecting contractual principal and interest payments. These considerations may result in loans being charged off before they are 90 days or more past due. This evaluation framework for determining charge-offs is consistently applied to each segment. From time to time, the Company will charge-off a portion of impaired and non-performing loans. Loans that meet the criteria under ASC 310 are evaluated individually for impairment. Management considers payment status, collateral value, availability of current financial information for the borrower and guarantor, actual and expected cash flows, and probability of collecting amounts due. If a loan’s collection status is deemed to be collateral dependent or foreclosure is imminent, the loan is charged down to the fair value of the collateral, less selling costs. In circumstances where the loan is not deemed to be collateral dependent, but we believe, after completing our evaluation process, that probable loss has been incurred, we will provide a specific allocation on that loan. The impact of recording partial charge-offs is a reduction of gross loans and a reduction of the loan loss reserve. The net loan balance is unchanged in instances where the loan had a specific allocation as a component of the allowance for loan losses. The allowance as a percentage of total loans may be lower as the allowance no longer needs to include a component for the loss, which has now been recorded, and net charge-off amounts are increased as partial charge-offs are recorded. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Commercial and real estate construction and real estate mortgage loans (multi-family residential, and non-farm and non-residential mortgage) over $200 thousand are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and 1-4 family residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses. The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 5 years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. A “portfolio segment” is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for loan losses. The Company has identified the following portfolio segments: commercial, real estate construction, real estate mortgage, agricultural, consumer (credit cards and other consumer) and other (overdrafts). Commercial : These loans to businesses do not have real estate as the underlying collateral. Instead of real estate, collateral could be business assets such as equipment or accounts receivable or the personal guarantee of one or more guarantors. These loans generally present a higher level of risk than loans secured by commercial real estate because in the event of default by the borrower, the business assets must be liquidated and/or guarantors pursued for deficit funds. Business assets are worth more while they are in use to produce income for the business and worth significantly less if the business is no longer in operation. Within the commercial portfolio, risk analysis is performed primarily based on the individual loan type. Real estate construction : Real estate construction consists of loans secured by real estate for additions or alterations to existing structures, as well as constructing new structures. They include fixed and floating rate loans. Real estate construction loans generally present a higher level of risk than loans secured by 1-4 family residential real estate primarily because of the length of the construction period, potential change in prices of construction, the incomplete status of the collateral and economic cycles. Because of these factors, real estate construction loans generally have higher qualitative adjustments. Real Estate Mortgage : 1-4 family residential : Loans secured by 1-4 family residential real estate represent the lowest risk of loans for the Company. They include fixed and floating rate loans as well as loans for commercial purposes or consumer purposes. The Company generally does not hold subprime residential mortgages. Borrowers with loans in this category, whether for commercial or consumer purposes, tend to make their payments timely as they do not want to risk foreclosure and loss of property. Multifamily residential : Loans secured by multifamily residential real estate consist primarily of loans secured by apartment buildings and can be either fixed or floating rate loans. Multi-family residential real estate loans generally present a higher level of risk than loans secured by 1-4 family residential real estate because the borrower’s repayment ability typically comes from rents from tenants. Local economic and employment fluctuations impact rent rolls and potentially the borrower’s repayment ability. Non-farm & non-residential : Loans secured by non-farm non-residential real estate consist of loans secured by commercial real estate that is not owner occupied. These loans generally consist of loans collateralized by property whereby rents received from commercial tenants of the borrower are the source of repayment. These loans generally present a higher level of risk than loans secured by owner occupied commercial real estate because repayment risk is expanded to be dependent on the success of multiple businesses which are paying rent to the borrower. If multiple businesses fail due to deteriorating economic conditions or poor business management skills, the borrower may not have enough rents to cover their monthly payment. Repayment risk is also increased depending on the level of surplus available commercial lease space in the local market area. Agricultural : These loans to agricultural businesses do not have real estate as the underlying collateral. Instead of real estate, collateral could be assets such as equipment or accounts receivable or the personal guarantee of one or more guarantors. These loans generally present a higher level of risk than loans secured by real estate because in the event of default by the borrower, the assets must be liquidated and/or guarantors pursued for deficit funds. Farm assets are worth more while they are in use to produce income and worth significantly less if the farm is no longer in operation. Consumer : Consumer loans are generally loans to borrowers for non-business purposes. They can be either secured or unsecured. Consumer loans are generally small in the individual amount of principal outstanding and are repaid from the borrower’s private funds earned from employment. Consumer lending risk is very susceptible to local economic trends. If there is a consumer loan default, any collateral that may be repossessed is generally not well maintained and has a diminished value. For this reason, consumer loans tend to have higher overall interest rates to cover the higher cost of repossession and charge-offs. However, due to their smaller average balance per borrower, consumer loans are collectively evaluated for impairment in determining the appropriate allowance for loan losses. Other : All other loan types are aggregated together for credit risk evaluation due to the varying nature but small number of the remaining types of loans in the Company’s loan portfolio. Loans in this segment include but are not limited to overdrafts. Due to their smaller balance, other loans are collectively evaluated for impairment in determining the appropriate allowance for loan losses. Due to the overall high level of real estate mortgage loans within the loan portfolio as a whole, as compared to other portfolio segments, for risk assessment and allowance purposes this segment was segregated into more granular pools by collateral property type. The non-farm non-residential and the multi-family real estate mortgage loan portfolio segments had the next highest level of qualitative adjustments due to the effects of local markets and economies on the underlying collateral property values, as well as for industry concentrations and risks related to the this type of property. |
Derivatives | Derivatives : At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair value changes. For a cashflow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged. The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking both fair value hedges and cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings. |
Mortgage Banking Derivatives | Mortgage Banking Derivatives : Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. The fair value of the interest rate lock is recorded at the time the commitment to fund the mortgage loan is executed and is adjusted for the expected exercise of the commitment before the loan is funded. In order to hedge the change in interest rates resulting from its commitments to fund the loans, the Company enters into forward commitments for the future delivery of the mortgage loans when interest rate locks are entered into. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. Changes in the fair values of these derivatives are included in net gains on the sales of loans. |
Mortgage Servicing Rights | Mortgage Servicing Rights : The Bank has sold certain residential mortgage loans to the Federal Home Loan Mortgage Corporation (FHLMC) while retaining the servicing rights. Servicing rights are recognized separately when they are acquired through sales of loans. When mortgage loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gain on sale of mortgage loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into loan service fee income, net, included in non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Servicing fee income, which is reported on the income statement as loan service income, net, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights and valuation allowance are netted against loan servicing fee income. Servicing fees totaled $145 thousand for the three months ended March 31, 2020 compared to $134 thousand for the three months ended March 31, 2019 and are included in loan service fee income, net in the income statement. Late fees and ancillary fees related to loan servicing are not material. |
Federal Home Loan Bank (FHLB) Stock | Federal Home Loan Bank (FHLB) Stock : The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. |
Bank-Owned Life Insurance | Bank-Owned Life Insurance : The Company has purchased life insurance policies on certain key employees. Bank- owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Bank Premises and Equipment | Bank Premises and Equipment : Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 40 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years. |
Real Estate Owned | Real Estate Owned : Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or similar legal agreement. Real estate acquired through foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. The value of the underlying loan is written down to the fair value of the real estate to be acquired by a charge to the allowance for loan losses, if necessary. Any subsequent write-downs are charged to operating expenses. Operating expenses of such properties, net of related income, and gains and losses on their disposition are included in other expenses . |
Investments in Limited Partnerships | Investments in Limited Partnerships : Investments in limited partnerships represent the Company’s investments in affordable housing projects for the primary purpose of available tax benefits. The Company is a limited partner in these investments and as such, the Company is not involved in the management or operation of such investments. These investments are amortized over the period that the Company expects to receive the tax benefits. These investments are evaluated for impairment when events indicate the carrying amount may not be recoverable. The investment recorded at March 31, 2020 was $3.9 million and $4.0 million at March 31, 2019, respectively, and is included with other assets in the balance sheet. During the quarters ended March 31, 2020 and 2019, the Company recognized amortization expense of $293 thousand and $159 thousand, respectively, which was included within other noninterest expense on the consolidated statements of income. |
Leases | Leases : Lessees are required to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. The Company recorded an operating lease right of use asset of $8.0 million and an operating lease liability of $8.2 million, as of March 31, 2020, as a result of recording operating lease contracts where the Company is lessee. |
Repurchase Agreements | Repurchase Agreements : Substantially all repurchase agreement liabilities represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by federal deposit insurance. |
Stock-Based Compensation | Stock-Based Compensation : Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. |
Revenue Recognition | Revenue Recognition : The Company’s services that fall within the scope of ASC 606 are presented within Non-Interest Income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include trust department income, service charges, debit card interchange income and brokerage income. |
Income Taxes | Income Taxes : Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest related to income tax matters as interest expense and penalties related to income tax matters as other expense. |
Retirement Plans | Retirement Plans : Employee 401(k) and profit sharing plan expense is the amount of matching contributions. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets : Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. Management believes no impairment exists to Goodwill as of March 31, 2020 due to the recent economic downturn associated with the COVID-19 pandemic. Intangible assets consist of core deposit intangible assets arising from whole bank and branch acquisitions. They are initially measured at fair value and then are amortized on either an accelerated or straight-line basis, over ten or fifteen years. |
Loan Commitments and Related Financial Instruments | Loan Commitments and Related Financial Instruments : Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. |
Earnings Per Common Share | Earnings Per Common Share: 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 include the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share have been adjusted in all periods presented to give effect to all stock splits and dividends through the date of issuance of the financial statements. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) : Comprehensive income consists of net income and other comprehensive income. Other comprehensive income (loss) includes unrealized gains and losses on securities available for sale, and unrealized gains and losses on cash flow hedges, which are also recognized as a separate component of equity. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments : Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. |
Operating Segments | Operating Segments : While the Company’s chief decision makers monitor the revenue streams of the various Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated into one reportable operating segment: banking. |
Reclassifications | Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or stockholders’ equity. |
Accounting Standards Issued But Not Yet Adopted | Adoption of New Accounting Standards FASB ASC 326, 815, and 825 – In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments related to Topic 326 address accrued interest, transfers between classifications or categories for loans and debt securities, recoveries, vintage disclosures, and contractual extensions and renewal options and became effective for annual periods and interim periods within those annual periods beginning after December 15, 2019. The improvements and clarifications related to Topic 815 address partial-term fair value hedges of interest-rate risk, amortization, and disclosure of fair value hedge basis adjustments and consideration of hedged contractually specified interest rate under the hypothetical method and became effective for the annual reporting period beginning January 1, 2020. The amendments related to Topic 825 contain various improvements to ASU 2016-01, including scope; held-to-maturity debt securities fair value disclosures; and remeasurement of equity securities at historical exchange rates and became effective for fiscal years and interim periods beginning after December 15, 2019. The amendments in this update did not have a material impact on the financial statements FASB ASC 350 – In January 2017, the FASB issued ASU No. 2017-04, Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment . To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition. The amendments in this update became effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and did not have a material impact on the financial statements. FASB ASC 820 – In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement . The updated guidance improves the disclosure requirements on fair value measurements. The ASU removes certain disclosures required by Topic 820 related to transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation processes for Level 3 fair value measurements; and for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. The ASU modifies certain disclosures required by Topic 820 related to disclosure of transfers into and out of Level 3 of the fair value hierarchy and purchases and issues of Level 3 assets and liabilities for nonpublic entities; the requirement to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly for investments in certain entities that calculate net asset value; and clarification that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The ASU adds certain disclosure requirements related to changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update became effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019 and did not have a material impact on the financial statements. On March 22, 2020, the federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”. This guidance encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID-19. The guidance goes on to explain that in consultation with the FASB staff that the federal banking agencies conclude that short-term modifications (e.g. six months) made on a good faith basis to borrowers who were current as of the implementation date of a relief program are not Troubled Debt Restructurings (“TDRs”). The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was passed by Congress on March 27, 2020. Section 4013 of the CARES Act also addressed COVID-19 related modifications and specified that COVID-19 related modifications on loans that were current as of December 31, 2019 are not TDRs. Modifications are likely to be executed in the second quarter of 2020. The majority of these modifications will involve three to six month forbearance payments which will be added to the end of the note. As of April 30, 2020, we had approved modifications on $105.4 million of loans. Accounting Standards Issued But Not Yet Adopted ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 added Financial Accounting Standards Board “FASB” ASC Topic 326, “Financial Instruments-Credit Losses” and finalized 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 amendment requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to enhance their credit loss estimates. The amendment requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. As previously disclosed, the Company formed a steering committee to oversee the adoption of the ASU at the effective date. Appropriate members of Senior Management have developed a plan focused on understanding the ASU, researching issues, identifying data needs for modeling inputs, technology requirements, and modeling considerations. The Company is focused on the completion of its model, refining assumptions, and continued review of the model. Concurrent with this, the Company is also focused on researching and resolving interpretive accounting issues in the ASU, contemplating various related accounting policies, developing processes and related controls, and considering various reporting disclosures. As of the beginning of the first reporting period in which the new standard is effective, the Company expects to recognize a one-time cumulative effect adjustment increasing the allowance for loan losses, if any, since the ASU covers credit losses over the expected life of a loan as well as considering future changes in macroeconomic conditions. The magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements cannot yet be reasonably estimated, however, we expect to run multiple parallel models before finalizing the adjustment amount by December 31, 2022. In December 2018, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ implementation of CECL. The final rule provides banking organizations the option to phase in over a three-year period the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. In 2019, the Financial Accounting Standards Board approved a delay for the implementation of the current expected credit loss standard until January 2023 for certain companies. The delay would apply to smaller reporting companies (as defined by the SEC), non-SEC public companies and private companies. The delayed implementation date of January 2023 will apply to Kentucky Bancshares and the Company does not intend to early adopt. |
SECURITIES (Tables)
SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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, 2020 U.S. treasury notes $ 9,142 $ 194 $ — $ 9,336 U.S. government agencies 17,732 202 (14) 17,920 States and political subdivisions 28,286 602 (12) 28,876 Mortgage-backed - residential 106,857 3,133 — 109,990 Mortgage-backed - commercial 48,436 320 (513) 48,243 Asset-backed 35,396 37 (2,611) 32,822 Total $ 245,849 $ 4,488 $ (3,150) $ 247,187 December 31, 2019 U.S. treasury notes $ 9,165 $ 3 $ — $ 9,168 U.S. government agencies 23,716 60 (41) 23,735 States and political subdivisions 31,950 661 (22) 32,589 Mortgage-backed - residential 113,629 634 (272) 113,991 Mortgage-backed - commercial 50,092 406 (147) 50,351 Asset-backed 35,682 55 (241) 35,496 Total $ 264,234 $ 1,819 $ (723) $ 265,330 |
Schedule of amortized cost and fair value of securities by contractual maturity | Amortized Fair Cost Value Due in one year or less $ 8,314 $ 8,391 Due after one year through five years 17,129 17,389 Due after five years through ten years 14,040 14,298 Due after ten years 15,677 16,054 55,160 56,132 Mortgage-backed - residential 106,857 109,990 Mortgage-backed - commercial 48,436 48,243 Asset-backed 35,396 32,822 Total $ 245,849 $ 247,187 |
Schedule of securities with unrealized losses not recognized in income | March 31, 2020 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 $ — $ — $ 1,295 $ (14) $ 1,295 $ (14) States and political subdivisions 1,208 (12) — — 1,208 (12) Mortgage-backed - commercial 23,420 (463) 6,237 (50) 29,657 (513) Asset-backed 23,785 (1,895) 6,336 (716) 30,121 (2,611) Total temporarily impaired $ 48,413 $ (2,370) $ 13,868 $ (780) $ 62,281 $ (3,150) December 31, 2019 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 $ 6,171 $ (18) $ 4,396 $ (23) $ 10,567 $ (41) States and political subdivisions 859 (3) 1,199 (19) 2,058 (22) Mortgage-backed - residential 32,718 (129) 14,583 (143) 47,301 (272) Mortgage-backed - commercial 5,760 (25) 10,625 (122) 16,385 (147) Asset-backed 21,786 (150) 6,962 (91) 28,748 (241) Total temporarily impaired $ 67,294 $ (325) $ 37,765 $ (398) $ 105,059 $ (723) |
LOANS (Tables)
LOANS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
LOANS | |
Schedule of loans | Loans at period-end are as follows: (in thousands) 3/31/2020 12/31/2019 Commercial $ 82,793 $ 86,552 Real estate construction 34,180 32,219 Real estate mortgage: 1-4 family residential 299,873 291,419 Multi-family residential 55,511 48,622 Non-farm & non-residential 223,208 204,908 Agricultural 60,013 57,166 Consumer 22,598 23,122 Other 151 305 Total $ 778,327 $ 744,313 |
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method | Three Months Ended March 31, 2020 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 920 $ (25) $ 6 $ 102 $ 1,003 Real estate Construction 551 — — 80 631 Real estate mortgage: 1-4 family residential 2,901 (35) 15 540 3,421 Multi-family residential 807 — — 217 1,024 Non-farm & non-residential 1,643 — — 461 2,104 Agricultural 389 — 2 72 463 Consumer 506 (110) 9 128 533 Other 43 (237) 206 19 31 Unallocated 700 — — 6 706 $ 8,460 $ (407) $ 238 $ 1,625 $ 9,916 Three Months Ended March 31, 2019 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 1,159 $ (191) $ 7 $ (32) $ 943 Real estate Construction 414 — — (63) 351 Real estate mortgage: 1-4 family residential 2,605 (99) 8 146 2,660 Multi-family residential 733 — — (10) 723 Non-farm & non-residential 1,649 (17) — (23) 1,609 Agricultural 420 — 1 (15) 406 Consumer 410 (61) 14 26 389 Other 58 (241) 209 44 70 Unallocated 679 — — 52 731 $ 8,127 $ (609) $ 239 $ 125 $ 7,882 Individually Collectively As of March 31, 2020 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ 1,003 $ 1,003 Real estate construction — 631 631 Real estate mortgage: 1-4 family residential — 3,421 3,421 Multi-family residential 75 949 1,024 Non-farm & non-residential — 2,104 2,104 Agricultural — 463 463 Consumer — 533 533 Other — 31 31 Unallocated — 706 706 $ 75 $ 9,841 $ 9,916 Loans: Commercial $ — $ 82,793 $ 82,793 Real estate construction 374 33,806 34,180 Real estate mortgage: 1-4 family residential 519 299,354 299,873 Multi-family residential 1,292 54,219 55,511 Non-farm & non-residential 1,799 221,409 223,208 Agricultural 1,532 58,481 60,013 Consumer — 22,598 22,598 Other — 151 151 Total $ 5,516 $ 772,811 $ 778,327 Individually Collectively As of December 31, 2019 Evaluated for Evaluated for (in thousands) Impairment Impairment Total Allowance for Loan Losses: Commercial $ — $ 920 $ 920 Real estate construction — 551 551 Real estate mortgage: 1-4 family residential 2 2,899 2,901 Multi-family residential 50 757 807 Non-farm & non-residential — 1,643 1,643 Agricultural — 389 389 Consumer — 506 506 Other — 43 43 Unallocated — 700 700 $ 52 $ 8,408 $ 8,460 Loans: Commercial $ — $ 86,552 $ 86,552 Real estate construction 374 31,845 32,219 Real estate mortgage: 1-4 family residential 202 291,217 291,419 Multi-family residential 1,292 47,330 48,622 Non-farm & non-residential 1,799 203,109 204,908 Agricultural 842 56,324 57,166 Consumer — 23,122 23,122 Other — 305 305 Total $ 4,509 $ 739,804 $ 744,313 |
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, 2020 (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: Real estate construction $ 374 $ 374 $ - $ 374 $ - $ - Real estate mortgage: 1-4 family residential 519 519 - 361 6 6 Non-farm and non-residential 1,799 1,799 - 1,799 - - Agricultural 1,532 1,532 - 1,187 11 11 With an allowance recorded: Real estate mortgage: Multi-family residential $ 1,292 $ 1,292 $ 75 $ 1,292 $ - $ - Total $ 5,516 $ 5,516 $ 75 $ 5,013 $ 17 $ 17 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, 2019 (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: Real-estate construction $ 374 $ 374 $ — $ 374 $ — $ — Real-estate mortgage: Non-farm & non-residential 1,799 1,799 — 1,013 17 17 Agricultural 842 842 — 1,003 18 18 With an allowance recorded: Real estate mortgage 1-4 family residential $ 202 $ 202 $ 2 $ 603 $ 35 $ 35 Multi-family residential 1,292 1,292 50 646 54 54 Total $ 4,509 $ 4,509 $ 52 $ 3,639 $ 124 $ 124 |
Schedule of recorded investment in nonaccrual, loans past due over 89 days still on accrual and accruing troubled debt restructurings by class of loans | Loans Past Due Over 89 Days As of March 31, 2020 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ — $ 267 $ — Real estate construction 374 — — Real estate mortgage: 1-4 family residential 744 126 — Multi-family residential 1,292 — — Non-farm & non-residential 1,799 — — Agricultural — 75 — Consumer 27 6 — Total $ 4,236 $ 474 $ — Loans Past Due Over 89 Days As of December 31, 2019 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Real estate construction $ 374 $ — $ — Real estate mortgage: 1-4 family residential 845 47 — Multi-family residential — 1,292 — Non-farm & non-residential 1,799 121 — Agricultural — 7 — Consumer 63 32 — Total $ 3,081 $ 1,499 $ — |
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, 2020 Days Days 89 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 655 $ 260 $ 267 $ — $ 1,182 $ 81,611 Real estate construction 31 — — 374 405 33,775 Real estate mortgage: 1-4 family residential 1,374 346 126 744 2,590 297,283 Multi-family residential — — — 1,292 1,292 54,219 Non-farm & non-residential 1,380 — — 1,799 3,179 220,029 Agricultural 52 82 75 — 209 59,804 Consumer 170 112 6 27 315 22,283 Other — — — — — 151 Total $ 3,662 $ 800 $ 474 $ 4,236 $ 9,172 $ 769,155 30–59 60–89 Greater than Total As of December 31, 2019 Days Days 89 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 326 $ 25 $ — $ — $ 351 $ 86,201 Real estate construction — — — 374 374 31,845 Real estate mortgage: 1-4 family residential 2,734 274 47 845 3,900 287,519 Multi-family residential — — 1,292 — 1,292 47,330 Non-farm & non-residential 302 19 121 1,799 2,241 202,667 Agricultural 704 — 7 — 711 56,455 Consumer 158 17 32 63 270 22,852 Other — — — — — 305 Total $ 4,224 $ 335 $ 1,499 $ 3,081 $ 9,139 $ 735,174 |
Schedule of risk category of loans by class of loans | As of March 31, 2020 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 79,839 $ 2,860 $ 94 $ — Real estate construction 32,285 1,501 394 — Real estate mortgage: 1-4 family residential 291,414 3,037 5,422 — Multi-family residential 53,605 614 1,292 — Non-farm & non-residential 214,304 7,086 1,818 — Agricultural 54,213 3,774 2,026 — Total $ 725,660 $ 18,872 $ 11,046 $ — As of December 31, 2019 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 83,515 $ 2,785 $ 252 $ — Real estate construction 30,462 1,363 394 — Real estate mortgage: 1-4 family residential 283,048 3,435 4,932 4 Multi-family residential 43,193 4,137 1,292 — Non-farm & non-residential 195,800 7,169 1,939 — Agricultural 51,352 4,459 1,355 — Total $ 687,370 $ 23,348 $ 10,164 $ 4 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS PER SHARE | |
Schedule of factors used in the earnings per share computation | Three Months Ended March 31, 2020 2019 (in thousands) Basic and Diluted Earnings Per Share Net Income $ 1,751 $ 2,811 Weighted average common shares outstanding 5,880 5,929 Basic and diluted earnings per share $ 0.30 $ 0.47 |
STOCK COMPENSATION (Tables)
STOCK COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock Based Compensation | |
Summary of changes in nonvested shares of stock award plan | Weighted-Average Grant-Date Nonvested Shares Shares Fair Value Nonvested at January 1, 2020 — $ — Granted 30,030 23.11 Nonvested at March 31, 2020 30,030 $ 23.11 |
2005 Restricted Stock Grant Plan | |
Stock Based Compensation | |
Summary of changes in nonvested shares of restricted stock | A summary of changes in the Company’s nonvested shares for the year follows (in thousands, except per share data): Grant-Date Shares Fair Value Nonvested at January 1, 2020 1,580 $ 13.67 Vested (1,580) 13.67 Nonvested at March 31, 2020 — $ — |
2009 Stock Award Plan | |
Stock Based Compensation | |
Summary of changes in nonvested shares of restricted stock | A summary of changes in the Company’s nonvested shares for the year follows (in thousands, except per share data): Weighted-Average Grant-Date Shares Fair Value Nonvested at January 1, 2020 38,482 $ 21.46 Vested (12,855) 20.98 Nonvested at March 31, 2020 25,627 $ 21.70 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of assets measured at fair value on a recurring basis | Fair Value Measurements at March 31, 2020 (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) Financial Assets U.S. treasury notes $ 9,336 $ — $ 9,336 $ — U. S. government agencies 17,920 — 17,920 — States and political subdivisions 28,876 — 28,876 — Mortgage-backed - residential 109,990 — 109,990 — Mortgage-backed-commercial 48,243 — 48,243 — Asset-backed 32,822 — 32,822 — Derivatives and financial instrument assets 237 — 237 — Other Assets 296 296 — — Total $ 247,720 $ 296 $ 247,424 $ — Financial Liabilities Derivatives and financial instrument liabilities $ 3,525 $ — $ 3,525 $ — Fair Value Measurements at December 31, 2019 (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. treasury notes $ 9,168 $ — $ 9,168 $ — U. S. government agencies 23,735 — 23,735 — States and political subdivisions 32,589 — 32,589 — Mortgage-backed - residential 113,991 — 113,991 — Mortgage-backed - commercial 50,351 — 50,351 — Asset-backed 35,496 — 35,496 — Derivatives and financial instrument assets 94 94 Other Assets 292 292 — — Total $ 265,716 $ 292 $ 265,424 $ — Financial Liabilities Derivatives and financial instrument liabilities $ 212 $ — $ 212 $ — |
Schedule of assets measured at fair value on a non-recurring basis | Fair Value Measurements at March 31, 2020 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: Multi-family residential $ $ — $ — $ Other real estate owned, net: Real estate mortgage: 1-4 family residential — — Commercial — — Agricultural — — Mortgage servicing rights — — Fair Value Measurements at December 31, 2019 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 $ $ — $ — $ Multi-family residential — — Other real estate owned, net: Real Estate Mortgage: 1-4 family residential — — Commercial — — Agriculturual — — Mortgage servicing rights — — |
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, 2020 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: Multi-family residential $ income approach capitalization rate 7% - 7% (7)% Other real estate owned: Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales (23)% - (28)% (30)% Commercial income approach capitalization rate (6)% - 8% (62)% Agricultural sales comparison adjustment for differences between the comparable sales (0)% - 26% (14)% Mortgage servicing rights discounted cash flow constant prepayment rates (8)% - (23)% (13)% Range December 31, 2018 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 (1)% - 21% (1)% Multi-family residential income approach capitalization rate 7% - 7% (7)% Other real estate owned: 1-4 family residential sales comparison adjustment for differences between the comparable sales (4%) - 11% Commercial sales comparison capitalization rate (6%) - 8% (62)% Agriculturual sales comparison adjustment for differences between the comparable sales 0% - 26% (14)% Mortgage servicing rights discounted cash flow constant prepayment rates 9% - 20% (12)% |
Schedule of carrying amounts and estimated fair values of financial instruments | March 31, 2020 Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 37,766 $ 37,766 $ — $ — $ 37,766 Interest bearing time deposits 2,375 2,375 — — 2,375 Securities available for sale 247,187 — 247,187 — 247,187 Loans held for sale 4,990 — 5,065 — 5,065 Net Loans 768,411 — — 742,213 742,213 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 4,010 — 894 3,116 4,010 Derivative and financial instruments 237 — 237 — 237 Other assets 296 296 — — 296 Financial liabilities Total deposits $ 853,217 $ 637,199 $ 217,638 $ — $ 854,837 Repurchase agreements 5,410 — 5,410 — 5,410 Short-term Federal Home Loan Bank advances 54,000 — 54,000 — 54,000 Long-term Federal Home Loan Bank advances 84,925 — 87,678 — 87,678 Subordinated debentures 7,217 — — 6,785 6,785 Interest payable 1,217 — 1,205 12 1,217 Derivative and financial instruments 3,525 — 3,525 — 3,525 December 31, 2019 Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 22,182 $ 22,182 $ — $ — $ 22,182 Interest bearing time deposits 2,375 2,375 — — 2,375 Securities available for sale 265,330 — 265,330 — 265,330 Loans held for sale 2,144 — 2,171 — 2,171 Net Loans 735,853 — — 735,060 735,060 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 4,166 — 1,035 3,131 4,166 Derivatives and financial instruments 94 — 94 — 94 Other assets 292 292 — — 292 Financial liabilities Total deposits $ 842,653 $ 630,948 $ 210,892 $ — $ 841,840 Repurchase agreements 5,994 — 5,993 — 5,993 Short-term Federal Home Loan Bank advances 25,000 — 25,000 — 25,000 Long-term Federal Home Loan Bank advances 91,418 — 91,397 — 91,397 Subordinated debentures 7,217 — — 7,213 7,213 Interest payable 1,170 — 1,156 14 1,170 Derivatives and financial instruments 212 — 212 — 212 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
LEASES | |
Schedule of balance sheet location | Statement of Financial Condition Location 3/31/2020 12/31/2019 (in thousands) Operating Lease Right of Use Asset: Gross Carrying Amount $ 8,824 $ 8,857 Accumulated Amortization (802) (662) Net Book Value Operating lease right of use asset $ 8,022 $ 8,195 Operating Lease Liabilities Right of use lease obligations Operating lease liability $ 8,210 $ 8,350 |
Schedule of lease cost and other information | Three Months Ended 3/31/2020 3/31/2019 (in thousands) Lease Cost: Operating lease cost $ $ 111 Total lease cost $ $ 111 Other information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ $ 130 |
Schedule of future minimum payments under operating leases | As of March 31, 2020 (in thousands) Twelve months ended March 31, 2020 $ 2021 2022 2023 2024 Thereafter 18,847 Total undiscounted lease payments $ 21,504 Amounts representing interest Lease liability $ 8,210 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS. | |
Schedule of noninterest income | Three Months Ended 3/31/2020 3/31/2019 Service charges $ $ Trust department income Brokerage income Debit card interchange income Total $ $ |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | Apr. 30, 2020USD ($) | Mar. 31, 2020USD ($)payment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Loans | ||||
Period for which federal funds are sold generally | 1 day | |||
Minimum number of consecutive payments made on a timely basis before returning a loan to accrual status | payment | 6 | |||
Activity in allowance for loan losses | ||||
Purchased Credit Impairment | $ 252 | $ 110 | ||
Mortgage Servicing Rights | ||||
Servicing fees | $ 145 | $ 134 | ||
Period of historical loss experience used to determine general components of allowance for loan losses | 5 years | |||
Subsequent Event [Member] | ||||
Loans | ||||
Financing receivable approved modifications due to The Coronavirus Aid, Relief and Economic Security (“CARES”) Act | $ 105,400 | |||
1-4 family residential | ||||
Loans | ||||
Number of days delinquent for discontinuation of interest income on loans | 90 days | |||
Consumer | ||||
Loans | ||||
Number of days delinquent for discontinuation of interest income on loans | 120 days | |||
Commercial | ||||
Loans | ||||
Maximum number of days past due for loans to be charged off | 120 days | |||
Maximum number of days past due for loans to be charged off due to considerations other than past due | 90 days | |||
Activity in allowance for loan losses | ||||
Outstanding balance over which loans are individually evaluated for impairment | $ 200 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INVESTMENT, TANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Investments in Limited Partnerships | ||
Investment | $ 3,900 | $ 4,000 |
Amortization expense | $ 293 | $ 159 |
Buildings and related components | Minimum | ||
Bank Premises and Equipment | ||
Useful lives | 5 years | |
Buildings and related components | Maximum | ||
Bank Premises and Equipment | ||
Useful lives | 40 years | |
Furniture, fixtures and equipment | Minimum | ||
Bank Premises and Equipment | ||
Useful lives | 3 years | |
Furniture, fixtures and equipment | Maximum | ||
Bank Premises and Equipment | ||
Useful lives | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - LEASES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Operating lease assets | $ 8,022 | $ 8,195 |
Operating lease liability | $ 8,210 | $ 8,350 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - INCOME TAXES, INTANGIBLE ASSETS AND SEGMENTS (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment$ / shares | Dec. 31, 2019$ / shares | Mar. 31, 2019$ / shares | |
Income Taxes | |||
Tax benefit | $ | $ 0 | ||
Stock Split | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0 | $ 0 | $ 0 |
Operating Segments | |||
Number of reportable operating segments | segment | 1 | ||
Minimum | |||
Income Taxes | |||
Useful life of core deposit intangible assets | 10 years | ||
Maximum | |||
Income Taxes | |||
Useful life of core deposit intangible assets | 15 years |
SECURITIES (Details)
SECURITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Gross Unrealized Losses | $ (3,150) | $ (723) |
Total, Amortized cost | 245,849 | 264,234 |
Total, unrealized gains | 4,488 | 1,819 |
Total, Fair value | 247,187 | 265,330 |
U.S. treasury notes | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 9,142 | 9,165 |
Gross Unrealized Gains | 194 | 3 |
Securities available for sale | 9,336 | 9,168 |
U.S. government agencies | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 17,732 | 23,716 |
Gross Unrealized Gains | 202 | 60 |
Gross Unrealized Losses | (14) | (41) |
Securities available for sale | 17,920 | 23,735 |
States and political subdivisions | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 28,286 | 31,950 |
Gross Unrealized Gains | 602 | 661 |
Gross Unrealized Losses | (12) | (22) |
Securities available for sale | 28,876 | 32,589 |
Mortgage-backed - residential | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 106,857 | 113,629 |
Gross Unrealized Gains | 3,133 | 634 |
Gross Unrealized Losses | (272) | |
Securities available for sale | 109,990 | 113,991 |
Mortgage-backed - commercial | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 48,436 | 50,092 |
Gross Unrealized Gains | 320 | 406 |
Gross Unrealized Losses | (513) | (147) |
Securities available for sale | 48,243 | 50,351 |
Asset-backed | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 35,396 | 35,682 |
Gross Unrealized Gains | 37 | 55 |
Gross Unrealized Losses | (2,611) | (241) |
Securities available for sale | $ 32,822 | $ 35,496 |
SECURITIES - AMORTIZED COST AND
SECURITIES - AMORTIZED COST AND FAIR VALUE BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Amortized Cost | |||
Due in one year or less | $ 8,314 | ||
Due after one year through five years | 17,129 | ||
Due after five years through ten years | 14,040 | ||
Due after ten years | 15,677 | ||
Securities due at a single maturity date | 55,160 | ||
Total, Amortized cost | 245,849 | $ 264,234 | |
Fair Value | |||
Due in one year or less | 8,391 | ||
Due after one year through five years | 17,389 | ||
Due after five years through ten years | 14,298 | ||
Due after ten years | 16,054 | ||
Securities due at a single maturity date | 56,132 | ||
Total, Fair value | 247,187 | 265,330 | |
Sales of securities | |||
Proceeds from sales of securities, available for sale | 2,094 | $ 16,318 | |
Gain (loss) on sale of available for sale securities, net | 112 | 94 | |
Gross gains realized on sales of securities | 118 | 109 | |
Gross losses realized on sales of securities | 6 | 15 | |
Tax provision related to realized net gains or losses | 23 | $ 20 | |
Mortgage-backed - residential | |||
Amortized Cost | |||
Available-for-sale debt securities, Amortized Cost | 106,857 | 113,629 | |
Fair Value | |||
Available-for-sale debt securities, fair value | 109,990 | 113,991 | |
Mortgage-backed - commercial | |||
Amortized Cost | |||
Available-for-sale debt securities, Amortized Cost | 48,436 | 50,092 | |
Fair Value | |||
Available-for-sale debt securities, fair value | 48,243 | 50,351 | |
Asset-backed | |||
Amortized Cost | |||
Available-for-sale debt securities, Amortized Cost | 35,396 | 35,682 | |
Fair Value | |||
Available-for-sale debt securities, fair value | $ 32,822 | $ 35,496 |
SECURITIES - UNREALIZED LOSSES
SECURITIES - UNREALIZED LOSSES (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | $ 48,413 | $ 67,294 |
Less than 12 Months, Unrealized Loss | (2,370) | (325) |
12 Months or More, Fair Value | 13,868 | 37,765 |
12 Months or More, Unrealized Loss | (780) | (398) |
Total, Fair Value | 62,281 | 105,059 |
Total, Unrealized Loss | (3,150) | (723) |
U.S. government agencies | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 6,171 | |
Less than 12 Months, Unrealized Loss | (18) | |
12 Months or More, Fair Value | 1,295 | 4,396 |
12 Months or More, Unrealized Loss | (14) | (23) |
Total, Fair Value | 1,295 | 10,567 |
Total, Unrealized Loss | (14) | (41) |
States and political subdivisions | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 1,208 | 859 |
Less than 12 Months, Unrealized Loss | (12) | (3) |
12 Months or More, Fair Value | 1,199 | |
12 Months or More, Unrealized Loss | (19) | |
Total, Fair Value | 1,208 | 2,058 |
Total, Unrealized Loss | (12) | (22) |
Mortgage-backed - residential | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 32,718 | |
Less than 12 Months, Unrealized Loss | (129) | |
12 Months or More, Fair Value | 14,583 | |
12 Months or More, Unrealized Loss | (143) | |
Total, Fair Value | 47,301 | |
Total, Unrealized Loss | (272) | |
Mortgage-backed - commercial | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 23,420 | 5,760 |
Less than 12 Months, Unrealized Loss | (463) | (25) |
12 Months or More, Fair Value | 6,237 | 10,625 |
12 Months or More, Unrealized Loss | (50) | (122) |
Total, Fair Value | 29,657 | 16,385 |
Total, Unrealized Loss | (513) | (147) |
Asset-backed | ||
Securities with unrealized losses | ||
Less than 12 Months, Fair Value | 23,785 | 21,786 |
Less than 12 Months, Unrealized Loss | (1,895) | (150) |
12 Months or More, Fair Value | 6,336 | 6,962 |
12 Months or More, Unrealized Loss | (716) | (91) |
Total, Fair Value | 30,121 | 28,748 |
Total, Unrealized Loss | $ (2,611) | $ (241) |
LOANS (Details)
LOANS (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loans | ||
Loans | $ 778,327 | $ 744,313 |
Commercial | ||
Loans | ||
Loans | 82,793 | 86,552 |
Real estate Construction | ||
Loans | ||
Loans | 34,180 | 32,219 |
1-4 family residential | ||
Loans | ||
Loans | 299,873 | 291,419 |
Multi-family residential | ||
Loans | ||
Loans | 55,511 | 48,622 |
Non-farm & non-residential | ||
Loans | ||
Loans | 223,208 | 204,908 |
Agricultural | ||
Loans | ||
Loans | 60,013 | 57,166 |
Consumer | ||
Loans | ||
Loans | 22,598 | 23,122 |
Other | ||
Loans | ||
Loans | $ 151 | $ 305 |
LOANS - ACTIVITY IN ALLOWANCE (
LOANS - ACTIVITY IN ALLOWANCE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Activity in allowance for loan losses | ||
Beginning Balance | $ 8,460 | $ 8,127 |
Charge-offs | (407) | (609) |
Recoveries | 238 | 239 |
Provision | 1,625 | 125 |
Ending Balance | 9,916 | 7,882 |
Commercial | ||
Activity in allowance for loan losses | ||
Beginning Balance | 920 | 1,159 |
Charge-offs | (25) | (191) |
Recoveries | 6 | 7 |
Provision | 102 | (32) |
Ending Balance | 1,003 | 943 |
Real estate Construction | ||
Activity in allowance for loan losses | ||
Beginning Balance | 551 | 414 |
Provision | 80 | (63) |
Ending Balance | 631 | 351 |
1-4 family residential | ||
Activity in allowance for loan losses | ||
Beginning Balance | 2,901 | 2,605 |
Charge-offs | (35) | (99) |
Recoveries | 15 | 8 |
Provision | 540 | 146 |
Ending Balance | 3,421 | 2,660 |
Multi-family residential | ||
Activity in allowance for loan losses | ||
Beginning Balance | 807 | 733 |
Provision | 217 | (10) |
Ending Balance | 1,024 | 723 |
Non-farm & non-residential | ||
Activity in allowance for loan losses | ||
Beginning Balance | 1,643 | 1,649 |
Charge-offs | (17) | |
Provision | 461 | (23) |
Ending Balance | 2,104 | 1,609 |
Agricultural | ||
Activity in allowance for loan losses | ||
Beginning Balance | 389 | 420 |
Recoveries | 2 | 1 |
Provision | 72 | (15) |
Ending Balance | 463 | 406 |
Consumer | ||
Activity in allowance for loan losses | ||
Beginning Balance | 506 | 410 |
Charge-offs | (110) | (61) |
Recoveries | 9 | 14 |
Provision | 128 | 26 |
Ending Balance | 533 | 389 |
Other | ||
Activity in allowance for loan losses | ||
Beginning Balance | 43 | 58 |
Charge-offs | (237) | (241) |
Recoveries | 206 | 209 |
Provision | 19 | 44 |
Ending Balance | 31 | 70 |
Unallocated | ||
Activity in allowance for loan losses | ||
Beginning Balance | 700 | 679 |
Provision | 6 | 52 |
Ending Balance | $ 706 | $ 731 |
LOANS - ALLOWANCE FOR LOAN LOSS
LOANS - ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | $ 75 | $ 52 | ||
Collectively Evaluated for Impairment | 9,841 | 8,408 | ||
Total | 9,916 | 8,460 | $ 7,882 | $ 8,127 |
Loans: | ||||
Individually Evaluated for Impairment | 5,516 | 4,509 | ||
Collectively Evaluated for Impairment | 772,811 | 739,804 | ||
Total | 778,327 | 744,313 | ||
Commercial | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 1,003 | 920 | ||
Total | 1,003 | 920 | 943 | 1,159 |
Loans: | ||||
Collectively Evaluated for Impairment | 82,793 | 86,552 | ||
Total | 82,793 | 86,552 | ||
Real estate Construction | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 631 | 551 | ||
Total | 631 | 551 | 351 | 414 |
Loans: | ||||
Individually Evaluated for Impairment | 374 | 374 | ||
Collectively Evaluated for Impairment | 33,806 | 31,845 | ||
Total | 34,180 | 32,219 | ||
1-4 family residential | ||||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 2 | |||
Collectively Evaluated for Impairment | 3,421 | 2,899 | ||
Total | 3,421 | 2,901 | 2,660 | 2,605 |
Loans: | ||||
Individually Evaluated for Impairment | 519 | 202 | ||
Collectively Evaluated for Impairment | 299,354 | 291,217 | ||
Total | 299,873 | 291,419 | ||
Multi-family residential | ||||
Allowance for Loan Losses: | ||||
Individually Evaluated for Impairment | 75 | 50 | ||
Collectively Evaluated for Impairment | 949 | 757 | ||
Total | 1,024 | 807 | 723 | 733 |
Loans: | ||||
Individually Evaluated for Impairment | 1,292 | 1,292 | ||
Collectively Evaluated for Impairment | 54,219 | 47,330 | ||
Total | 55,511 | 48,622 | ||
Non-farm & non-residential | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 2,104 | 1,643 | ||
Total | 2,104 | 1,643 | 1,609 | 1,649 |
Loans: | ||||
Individually Evaluated for Impairment | 1,799 | 1,799 | ||
Collectively Evaluated for Impairment | 221,409 | 203,109 | ||
Total | 223,208 | 204,908 | ||
Agricultural | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 463 | 389 | ||
Total | 463 | 389 | 406 | 420 |
Loans: | ||||
Individually Evaluated for Impairment | 1,532 | 842 | ||
Collectively Evaluated for Impairment | 58,481 | 56,324 | ||
Total | 60,013 | 57,166 | ||
Consumer | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 533 | 506 | ||
Total | 533 | 506 | 389 | 410 |
Loans: | ||||
Collectively Evaluated for Impairment | 22,598 | 23,122 | ||
Total | 22,598 | 23,122 | ||
Other | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 31 | 43 | ||
Total | 31 | 43 | 70 | 58 |
Loans: | ||||
Collectively Evaluated for Impairment | 151 | 305 | ||
Total | 151 | 305 | ||
Unallocated | ||||
Allowance for Loan Losses: | ||||
Collectively Evaluated for Impairment | 706 | 700 | ||
Total | $ 706 | $ 700 | $ 731 | $ 679 |
LOANS - INDIVIDUALLY EVALUATED
LOANS - INDIVIDUALLY EVALUATED FOR IMPAIRMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Unpaid Principal Balance | ||
Total | $ 5,516 | $ 4,509 |
Recorded Investment | ||
Total | 5,516 | 4,509 |
Allowance for Loan Losses Allocated. | 75 | 52 |
Average Recorded Investment | ||
Total | 5,013 | 3,639 |
Interest Income Recognized | ||
Total | 17 | 124 |
Cash Basis Interest Recognized | ||
Total | 17 | 124 |
Real estate Construction | ||
Unpaid Principal Balance | ||
With no related allowance recorded | 374 | 374 |
Recorded Investment | ||
With no related allowance recorded | 374 | 374 |
Average Recorded Investment | ||
With no related allowance recorded | 374 | 374 |
1-4 family residential | ||
Unpaid Principal Balance | ||
With no related allowance recorded | 519 | |
With an allowance recorded | 1,292 | 202 |
Recorded Investment | ||
With no related allowance recorded | 519 | |
With an allowance recorded | 1,292 | 202 |
Allowance for Loan Losses Allocated. | 75 | 2 |
Average Recorded Investment | ||
With no related allowance recorded | 361 | |
With an allowance recorded | 1,292 | 603 |
Interest Income Recognized | ||
With no related allowance recorded | 6 | |
With an allowance recorded | 35 | |
Cash Basis Interest Recognized | ||
With no related allowance recorded | 6 | |
With an allowance recorded | 35 | |
Multi-family residential | ||
Unpaid Principal Balance | ||
With an allowance recorded | 1,292 | |
Recorded Investment | ||
With an allowance recorded | 1,292 | |
Allowance for Loan Losses Allocated. | 50 | |
Average Recorded Investment | ||
With an allowance recorded | 646 | |
Interest Income Recognized | ||
With an allowance recorded | 54 | |
Cash Basis Interest Recognized | ||
With an allowance recorded | 54 | |
Non-farm & non-residential | ||
Unpaid Principal Balance | ||
With no related allowance recorded | 1,799 | 1,799 |
Recorded Investment | ||
With no related allowance recorded | 1,799 | 1,799 |
Average Recorded Investment | ||
With no related allowance recorded | 1,799 | 1,013 |
Interest Income Recognized | ||
With no related allowance recorded | 17 | |
Cash Basis Interest Recognized | ||
With no related allowance recorded | 17 | |
Agricultural | ||
Unpaid Principal Balance | ||
With no related allowance recorded | 1,532 | 842 |
Recorded Investment | ||
With no related allowance recorded | 1,532 | 842 |
Average Recorded Investment | ||
With no related allowance recorded | 1,187 | 1,003 |
Interest Income Recognized | ||
With no related allowance recorded | 11 | 18 |
Cash Basis Interest Recognized | ||
With no related allowance recorded | $ 11 | $ 18 |
LOANS - NONACCRUAL, LOANS PAST
LOANS - NONACCRUAL, LOANS PAST DUE OVER 89 DAYS STILL ACCRUING AND TDR (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Loans | ||
Nonaccrual | $ 4,236 | $ 3,081 |
Loans Past Due Over 89 Days Still Accruing | $ 474 | 1,499 |
Percentage of nonaccrual loans secured by real estate | 98.00% | |
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 | 89 days | |
Commercial | ||
Loans | ||
Loans Past Due Over 89 Days Still Accruing | $ 267 | |
Real estate Construction | ||
Loans | ||
Nonaccrual | 374 | 374 |
1-4 family residential | ||
Loans | ||
Nonaccrual | 744 | 845 |
Loans Past Due Over 89 Days Still Accruing | 126 | 47 |
Multi-family residential | ||
Loans | ||
Nonaccrual | 1,292 | |
Loans Past Due Over 89 Days Still Accruing | 1,292 | |
Non-farm & non-residential | ||
Loans | ||
Nonaccrual | 1,799 | 1,799 |
Loans Past Due Over 89 Days Still Accruing | 121 | |
Agricultural | ||
Loans | ||
Loans Past Due Over 89 Days Still Accruing | 75 | 7 |
Consumer | ||
Loans | ||
Nonaccrual | 27 | 63 |
Loans Past Due Over 89 Days Still Accruing | $ 6 | $ 32 |
LOANS - AGING OF RECORDED INVES
LOANS - AGING OF RECORDED INVESTMENT IN PAST DUE AND NON-ACCRUAL LOANS (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | $ 474 | $ 1,499 |
Non-accrual | 4,236 | 3,081 |
Total Past Due and Non-accrual | 9,172 | 9,139 |
Loans Not Past Due | 769,155 | 735,174 |
30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 3,662 | 4,224 |
60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 800 | 335 |
Commercial | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 267 | |
Total Past Due and Non-accrual | 1,182 | 351 |
Loans Not Past Due | 81,611 | 86,201 |
Commercial | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 655 | 326 |
Commercial | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 260 | 25 |
Real estate Construction | ||
Aging of recorded investment in past due and non-accrual loans | ||
Non-accrual | 374 | 374 |
Total Past Due and Non-accrual | 405 | 374 |
Loans Not Past Due | 33,775 | 31,845 |
Real estate Construction | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 31 | |
1-4 family residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 126 | 47 |
Non-accrual | 744 | 845 |
Total Past Due and Non-accrual | 2,590 | 3,900 |
Loans Not Past Due | 297,283 | 287,519 |
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 | 1,374 | 2,734 |
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 | 346 | 274 |
Multi-family residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 1,292 | |
Non-accrual | 1,292 | |
Total Past Due and Non-accrual | 1,292 | 1,292 |
Loans Not Past Due | 54,219 | 47,330 |
Non-farm & non-residential | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 121 | |
Non-accrual | 1,799 | 1,799 |
Total Past Due and Non-accrual | 3,179 | 2,241 |
Loans Not Past Due | 220,029 | 202,667 |
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 | 1,380 | 302 |
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 | 19 | |
Agricultural | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 75 | 7 |
Total Past Due and Non-accrual | 209 | 711 |
Loans Not Past Due | 59,804 | 56,455 |
Agricultural | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 52 | 704 |
Agricultural | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 82 | |
Consumer | ||
Aging of recorded investment in past due and non-accrual loans | ||
Greater than 89 Days Past Due | 6 | 32 |
Non-accrual | 27 | 63 |
Total Past Due and Non-accrual | 315 | 270 |
Loans Not Past Due | 22,283 | 22,852 |
Consumer | 30 to 59 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 170 | 158 |
Consumer | 60 to 89 Days Past Due | ||
Aging of recorded investment in past due and non-accrual loans | ||
Recorded Investment Past Due | 112 | 17 |
Other | ||
Aging of recorded investment in past due and non-accrual loans | ||
Loans Not Past Due | $ 151 | $ 305 |
LOANS - TROUBLED DEBT RESTRUCTU
LOANS - TROUBLED DEBT RESTRUCTURINGS (Details) $ in Millions | Apr. 30, 2020USD ($) | Mar. 31, 2020loan | Dec. 31, 2019loan |
Troubled debt restructurings | |||
Number of loans that met the definition of troubled debt restructurings | loan | 0 | 0 | |
Subsequent Event [Member] | |||
Troubled debt restructurings | |||
Financing receivable approved modifications due to The Coronavirus Aid, Relief and Economic Security (“CARES”) Act | $ | $ 105.4 |
LOANS - RISK CATEGORY OF LOANS
LOANS - RISK CATEGORY OF LOANS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Credit Quality Indicators | ||
Loans | $ 778,327 | $ 744,313 |
Maximum outstanding balance of non-consumer loans evaluated similar to consumer loans | 200 | |
Pass | ||
Credit Quality Indicators | ||
Loans | 725,660 | 687,370 |
Special Mention | ||
Credit Quality Indicators | ||
Loans | 18,872 | 23,348 |
Substandard | ||
Credit Quality Indicators | ||
Loans | 11,046 | 10,164 |
Doubtful | ||
Credit Quality Indicators | ||
Loans | 4 | |
Commercial | ||
Credit Quality Indicators | ||
Outstanding balance over which loans are individually evaluated for impairment | 200 | |
Loans | 82,793 | 86,552 |
Commercial | Pass | ||
Credit Quality Indicators | ||
Loans | 79,839 | 83,515 |
Commercial | Special Mention | ||
Credit Quality Indicators | ||
Loans | 2,860 | 2,785 |
Commercial | Substandard | ||
Credit Quality Indicators | ||
Loans | 94 | 252 |
Real estate Construction | ||
Credit Quality Indicators | ||
Loans | 34,180 | 32,219 |
Real estate Construction | Pass | ||
Credit Quality Indicators | ||
Loans | 32,285 | 30,462 |
Real estate Construction | Special Mention | ||
Credit Quality Indicators | ||
Loans | 1,501 | 1,363 |
Real estate Construction | Substandard | ||
Credit Quality Indicators | ||
Loans | 394 | 394 |
1-4 family residential | ||
Credit Quality Indicators | ||
Loans | 299,873 | 291,419 |
1-4 family residential | Pass | ||
Credit Quality Indicators | ||
Loans | 291,414 | 283,048 |
1-4 family residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 3,037 | 3,435 |
1-4 family residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 5,422 | 4,932 |
1-4 family residential | Doubtful | ||
Credit Quality Indicators | ||
Loans | 4 | |
Multi-family residential | ||
Credit Quality Indicators | ||
Loans | 55,511 | 48,622 |
Multi-family residential | Pass | ||
Credit Quality Indicators | ||
Loans | 53,605 | 43,193 |
Multi-family residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 614 | 4,137 |
Multi-family residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 1,292 | 1,292 |
Non-farm & non-residential | ||
Credit Quality Indicators | ||
Loans | 223,208 | 204,908 |
Non-farm & non-residential | Pass | ||
Credit Quality Indicators | ||
Loans | 214,304 | 195,800 |
Non-farm & non-residential | Special Mention | ||
Credit Quality Indicators | ||
Loans | 7,086 | 7,169 |
Non-farm & non-residential | Substandard | ||
Credit Quality Indicators | ||
Loans | 1,818 | 1,939 |
Agricultural | ||
Credit Quality Indicators | ||
Loans | 60,013 | 57,166 |
Agricultural | Pass | ||
Credit Quality Indicators | ||
Loans | 54,213 | 51,352 |
Agricultural | Special Mention | ||
Credit Quality Indicators | ||
Loans | 3,774 | 4,459 |
Agricultural | Substandard | ||
Credit Quality Indicators | ||
Loans | 2,026 | 1,355 |
Consumer | ||
Credit Quality Indicators | ||
Loans | 22,598 | 23,122 |
Consumer | Non-performing | ||
Credit Quality Indicators | ||
Loans | $ 33 | $ 95 |
Minimum period past due for loans to be considered as non-performing | 89 days |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic and Diluted Earnings Per Share | ||
Net income | $ 1,751 | $ 2,811 |
Weighted average common shares outstanding | 5,880 | 5,929 |
Basic and diluted earnings per share | $ 0.30 | $ 0.47 |
STOCK COMPENSATION - NONVESTED
STOCK COMPENSATION - NONVESTED SHARES (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)plan$ / sharesshares | Mar. 31, 2019shares | Dec. 31, 2019$ / sharesshares | |
Stock Based Compensation | |||
Number of share based compensation plans | plan | 3 | ||
2005 Restricted Stock Grant Plan | Restricted stock | |||
Stock Based Compensation | |||
Number of shares authorized for issuance | 100,000 | ||
Shares available for issuance | 0 | ||
Shares | |||
Nonvested at the beginning of the period (in shares) | 1,580 | ||
Granted (in shares) | 0 | 0 | |
Vested (in shares) | (1,580) | ||
Forfeited (in shares) | 0 | (12) | |
Nonvested at the end of the period (in shares) | 1,580 | ||
Weighted-Average Grant-Date | |||
Nonvested shares, balance at the beginning of the period | $ / shares | $ 13.67 | ||
Vested | $ / shares | $ (13.67) | ||
Nonvested shares, balance at the end of the period | $ / shares | $ 13.67 | ||
Additional disclosures | |||
Unrecognized compensation cost related to nonvested shares granted | $ | $ 0 | ||
2009 Stock Award Plan | |||
Stock Based Compensation | |||
Number of shares authorized for issuance | 300,000 | ||
Shares available for issuance | 0 | ||
Shares | |||
Nonvested at the beginning of the period (in shares) | 38,482 | ||
Granted (in shares) | 0 | 23,380 | |
Vested (in shares) | (12,855) | ||
Forfeited (in shares) | 0 | (108) | |
Nonvested at the end of the period (in shares) | 25,627 | 38,482 | |
Weighted-Average Grant-Date | |||
Nonvested shares, balance at the beginning of the period | $ / shares | $ 21.46 | ||
Vested | $ / shares | 20.98 | ||
Nonvested shares, balance at the end of the period | $ / shares | $ 21.70 | $ 21.46 | |
2019 Stock Award Plan | |||
Stock Based Compensation | |||
Number of shares authorized for issuance | 300,000 | ||
Shares | |||
Granted (in shares) | 30,030 | 0 | |
Forfeited (in shares) | 0 | 0 | |
Nonvested at the end of the period (in shares) | 30,030 | ||
Weighted-Average Grant-Date | |||
Vested | $ / shares | $ 23.11 | ||
Nonvested shares, balance at the end of the period | $ / shares | $ 23.11 |
REPURCHASE AGREEMENTS (Details)
REPURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
REPURCHASE AGREEMENTS | ||
Repurchase agreements | $ 5,410 | $ 5,994 |
Average weighted remaining life | 7 months 6 days | |
Carrying amount of agency-backed securities pledged to secure repurchase agreements | $ 11,900 | |
Overnight obligations | ||
REPURCHASE AGREEMENTS | ||
Repurchase agreements | 3,400 | |
Maturity terms extending | ||
REPURCHASE AGREEMENTS | ||
Repurchase agreements | $ 2,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Financial Assets | |||
Total, Fair value | $ 247,187 | $ 265,330 | |
Financial Liabilities | |||
Transfers from Level 1 to Level 2 | 0 | 0 | |
Transfers from Level 2 to Level 1 | 0 | 0 | |
Carrying Value | |||
Financial Assets | |||
Derivative and financial instruments | 237 | 94 | |
Other Assets | 296 | 292 | |
Financial Liabilities | |||
Derivatives and financial instrument liabilities | 3,525 | 212 | |
Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Financial Assets | |||
Other Assets | 296 | 292 | |
Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Derivative and financial instruments | 237 | 94 | |
Financial Liabilities | |||
Derivatives and financial instrument liabilities | 3,525 | 212 | |
Recurring | Carrying Value | |||
Financial Assets | |||
Asset-backed | 32,822 | 35,496 | |
Derivative and financial instruments | 237 | 94 | |
Other Assets | 296 | 292 | |
Total, Fair value | 247,720 | 265,716 | |
Financial Liabilities | |||
Derivatives and financial instrument liabilities | 3,525 | 212 | |
Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Financial Assets | |||
Other Assets | 296 | 292 | |
Total, Fair value | 296 | 292 | |
Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Asset-backed | 32,822 | 35,496 | |
Derivative and financial instruments | 237 | 94 | |
Total, Fair value | 247,424 | 265,424 | |
Financial Liabilities | |||
Derivatives and financial instrument liabilities | 3,525 | 212 | |
Impaired Loans | |||
Fair value on instruments on recurring basis | |||
Net adjustments for differences between the comparable sales and income data available | 23 | $ (182) | |
U.S. treasury notes | Recurring | Carrying Value | |||
Financial Assets | |||
Investments | 9,336 | 9,168 | |
U.S. treasury notes | Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Investments | 9,336 | 9,168 | |
U.S. government agencies | Recurring | Carrying Value | |||
Financial Assets | |||
Investments | 17,920 | 23,735 | |
U.S. government agencies | Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Investments | 17,920 | 23,735 | |
States and political subdivisions | Recurring | Carrying Value | |||
Financial Assets | |||
Investments | 28,876 | 32,589 | |
States and political subdivisions | Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Investments | 28,876 | 32,589 | |
Mortgage-backed - residential | Recurring | Carrying Value | |||
Financial Assets | |||
Mortgage-backed | 109,990 | 113,991 | |
Mortgage-backed - residential | Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Mortgage-backed | 109,990 | 113,991 | |
Mortgage-backed - commercial | Recurring | Carrying Value | |||
Financial Assets | |||
Mortgage-backed | 48,243 | 50,351 | |
Mortgage-backed - commercial | Recurring | Significant Other Observable Inputs (Level 2) | |||
Financial Assets | |||
Mortgage-backed | $ 48,243 | $ 50,351 |
FAIR VALUE MEASUREMENTS - FAIR
FAIR VALUE MEASUREMENTS - FAIR VALUE ON NON-RECURRING (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)loan | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)loan | |
Impaired Loans | |||
Valuation allowance of impaired loans | $ 75 | $ 52 | |
Provision for loan loss expense | 1,625 | $ 125 | |
Other real estate owned, net: | |||
Outstanding balance of other real estate owned | 2,110 | 2,148 | |
Loan servicing rights | |||
Mortgage servicing rights | 1,504 | 1,573 | |
Impaired mortgage servicing rights | 1,300 | 1,200 | |
Valuation allowance | 252 | 110 | |
Carrying value | 1 | 1,100 | |
Non-recurring | |||
Impaired Loans | |||
Impaired loans, at fair value | 1,200 | 1,400 | |
Valuation allowance of impaired loans | $ 75 | $ 52 | |
Number of impaired loans. | loan | 0 | 1 | |
Provision for loan loss expense | $ 25 | ||
Other real estate owned, net: | |||
Other real estate owned | 611 | $ 519 | |
Outstanding balance of other real estate owned | 1,100 | 980 | |
Valuation allowance of other real estate owned | 500 | 461 | |
Write downs of other real estate owned | 38,000 | ||
Loan servicing rights | |||
Recovery of prior write-downs | 142 | $ 6 | |
Non-recurring | Carrying Value | |||
Other real estate owned, net: | |||
Other real estate owned | 1,023 | ||
Loan servicing rights | |||
Mortgage servicing rights | 1,107 | ||
Non-recurring | Significant Unobservable Inputs (Level 3) | |||
Other real estate owned, net: | |||
Other real estate owned | 1,023 | ||
Loan servicing rights | |||
Mortgage servicing rights | 1,107 | ||
Non-recurring | 1-4 family residential | Carrying Value | |||
Impaired Loans | |||
Impaired loans, at fair value | 200 | ||
Other real estate owned, net: | |||
Other real estate owned | 132 | 40 | |
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3) | |||
Impaired Loans | |||
Impaired loans, at fair value | 200 | ||
Other real estate owned, net: | |||
Other real estate owned | 132 | 40 | |
Non-recurring | Multi-family residential | Carrying Value | |||
Impaired Loans | |||
Impaired loans, at fair value | 1,217 | 1,242 | |
Non-recurring | Multi-family residential | Significant Unobservable Inputs (Level 3) | |||
Impaired Loans | |||
Impaired loans, at fair value | 1,217 | 1,242 | |
Non-recurring | Agricultural | Carrying Value | |||
Other real estate owned, net: | |||
Other real estate owned | 233 | 233 | |
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3) | |||
Other real estate owned, net: | |||
Other real estate owned | 233 | 233 | |
Non-recurring | Commercial | Carrying Value | |||
Other real estate owned, net: | |||
Other real estate owned | 246 | 246 | |
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3) | |||
Other real estate owned, net: | |||
Other real estate owned | $ 246 | $ 246 |
FAIR VALUE MEASUREMENTS - QUANT
FAIR VALUE MEASUREMENTS - QUANTITATIVE INFORMATION (Details) $ in Thousands | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($)item |
Fair Value Measurements | ||
Mortgage servicing rights | $ 1,504 | $ 1,573 |
Non-recurring | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 1,200 | 1,400 |
Other real estate owned | 611 | 519 |
Non-recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 1,023 | |
Mortgage servicing rights | 1,107 | |
Non-recurring | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Mortgage servicing rights | 1,023 | 1,107 |
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 200 | |
Other real estate owned | 132 | 40 |
Non-recurring | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 200 | |
Other real estate owned | 132 | 40 |
Non-recurring | Multi-family residential | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 1,217 | 1,242 |
Non-recurring | Multi-family residential | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Impaired loans, at fair value | 1,217 | 1,242 |
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 246 | 246 |
Non-recurring | Commercial | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 246 | |
Non-recurring | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 246 | |
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | 233 | $ 233 |
Non-recurring | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Other real estate owned | $ 233 | |
Other real estate owned, measurement input | 233 | |
Non-recurring | Minimum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Servicing asset, measurement input | 9 | |
Non-recurring | Minimum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | Measurement Input, Constant Prepayment Rate [Member] | ||
Fair Value Measurements | ||
Servicing asset, measurement input | (8) | |
Non-recurring | Minimum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | (1) | |
Other real estate owned, measurement input | (23) | (4) |
Non-recurring | Minimum | Multi-family residential | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | 7 | 7 |
Non-recurring | Minimum | Commercial | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | (6) | |
Non-recurring | Minimum | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | (6) | |
Non-recurring | Minimum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | 0 | |
Non-recurring | Minimum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | 0 | |
Non-recurring | Maximum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | ||
Fair Value Measurements | ||
Servicing asset, measurement input | 20 | |
Non-recurring | Maximum | Discounted cash flow | Significant Unobservable Inputs (Level 3) | Measurement Input, Constant Prepayment Rate [Member] | ||
Fair Value Measurements | ||
Servicing asset, measurement input | (23) | |
Non-recurring | Maximum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | 21 | |
Other real estate owned, measurement input | (28) | 11 |
Non-recurring | Maximum | Multi-family residential | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | 7 | 7 |
Non-recurring | Maximum | Commercial | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | item | 8 | |
Non-recurring | Maximum | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | 8 | |
Non-recurring | Maximum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | 26 | |
Non-recurring | Maximum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | 26 | |
Non-recurring | Weighted average | Discounted cash flow | Significant Unobservable Inputs (Level 3) | Measurement Input, Constant Prepayment Rate [Member] | ||
Fair Value Measurements | ||
Servicing asset, measurement input | (13) | (12) |
Non-recurring | Weighted average | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | (1) | |
Other real estate owned, measurement input | (30) | (29) |
Non-recurring | Weighted average | Multi-family residential | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Impaired loans - measurement input | (7) | (7) |
Non-recurring | Weighted average | Commercial | Income approach | Significant Unobservable Inputs (Level 3) | Measurement Input, Cap Rate [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | (62) | (62) |
Non-recurring | Weighted average | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3) | Measurement Input, Comparability Adjustment [Member] | ||
Fair Value Measurements | ||
Other real estate owned, measurement input | (14) | (14) |
FAIR VALUE MEASUREMENTS - FAI_2
FAIR VALUE MEASUREMENTS - FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets | ||
Interest bearing time deposits | $ 2,375 | $ 2,375 |
Loans held for sale | 4,990 | 2,144 |
Interest receivable | 4,010 | 4,166 |
Financial liabilities | ||
Short-term Federal Home Loan Bank advances | 54,000 | 25,000 |
Long-term Federal Home Loan Bank advances | 84,925 | 91,418 |
Interest payable | 1,217 | 1,170 |
Carrying Value | ||
Financial assets | ||
Cash and cash equivalents | 37,766 | 22,182 |
Interest bearing time deposits | 2,375 | 2,375 |
Securities available for sale | 247,187 | 265,330 |
Loans held for sale | 4,990 | 2,144 |
Net Loans | 768,411 | 735,853 |
Federal Home Loan Bank stock | 7,034 | 7,034 |
Interest receivable | 4,010 | 4,166 |
Derivative and financial instruments | 237 | 94 |
Other Assets | 296 | 292 |
Financial liabilities | ||
Total deposits | 853,217 | 842,653 |
Repurchase agreements | 5,410 | 5,994 |
Short-term Federal Home Loan Bank advances | 54,000 | 25,000 |
Long-term Federal Home Loan Bank advances | 84,925 | 91,418 |
Subordinated debentures | 7,217 | 7,217 |
Interest payable | 1,217 | 1,170 |
Derivative and financial instruments | 3,525 | 212 |
Fair Value | ||
Financial assets | ||
Cash and cash equivalents | 37,766 | 22,182 |
Interest bearing time deposits | 2,375 | 2,375 |
Securities available for sale | 247,187 | 265,330 |
Loans held for sale | 5,065 | 2,171 |
Net Loans | 742,213 | 735,060 |
Interest receivable | 4,010 | 4,166 |
Derivative and financial instruments | 237 | 94 |
Other Assets | 296 | 292 |
Financial liabilities | ||
Total deposits | 854,837 | 841,840 |
Repurchase agreements | 5,410 | 5,993 |
Short-term Federal Home Loan Bank advances | 54,000 | 25,000 |
Long-term Federal Home Loan Bank advances | 87,678 | 91,397 |
Subordinated debentures | 6,785 | 7,213 |
Interest payable | 1,217 | 1,170 |
Derivative and financial instruments | 3,525 | 212 |
Quoted Prices In Active Markets for Identical Assets (Level 1) | ||
Financial assets | ||
Cash and cash equivalents | 37,766 | 22,182 |
Interest bearing time deposits | 2,375 | 2,375 |
Other Assets | 296 | 292 |
Financial liabilities | ||
Total deposits | 637,199 | 630,948 |
Significant Other Observable Inputs (Level 2) | ||
Financial assets | ||
Securities available for sale | 247,187 | 265,330 |
Loans held for sale | 5,065 | 2,171 |
Interest receivable | 894 | 1,035 |
Derivative and financial instruments | 237 | 94 |
Financial liabilities | ||
Total deposits | 217,638 | 210,892 |
Repurchase agreements | 5,410 | 5,993 |
Short-term Federal Home Loan Bank advances | 54,000 | 25,000 |
Long-term Federal Home Loan Bank advances | 87,678 | 91,397 |
Interest payable | 1,205 | 1,156 |
Derivative and financial instruments | 3,525 | 212 |
Significant Unobservable Inputs (Level 3) | ||
Financial assets | ||
Net Loans | 742,213 | 735,060 |
Interest receivable | 3,116 | 3,131 |
Financial liabilities | ||
Subordinated debentures | 6,785 | 7,213 |
Interest payable | $ 12 | $ 14 |
LEASES - Balance Sheets (Detail
LEASES - Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Balance Sheets | ||
Gross Carrying Amount | $ 8,824 | $ 8,857 |
Accumulated Amortization | (802) | (662) |
Net Book Value | $ 8,022 | 8,195 |
Financial position | us-gaap:OperatingLeaseRightOfUseAsset | |
Right of use lease obligations | $ 8,210 | $ 8,350 |
Financial position | us-gaap:OperatingLeaseLiability |
LEASES - Other (Details)
LEASES - Other (Details) | Mar. 31, 2020 |
LEASES | |
Weighted-average remaining lease term for operating leases | 35 years 2 months 12 days |
Weighted-average discount rate for operating leases | 4.13% |
LEASES - Lease Cost and Other i
LEASES - Lease Cost and Other information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
LEASES | ||
Operating lease cost | $ 140 | $ 111 |
Total lease cost | 140 | 111 |
Operating cash flows from operating leases | $ 102 | $ 130 |
LEASES - Future minimum payment
LEASES - Future minimum payments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Future minimum payments | ||
2020 | $ 533 | |
2021 | 521 | |
2022 | 527 | |
2023 | 531 | |
2024 | 545 | |
Thereafter | 18,847 | |
Total undiscounted lease payments | 21,504 | |
Amounts representing interest | (13,294) | |
Operating lease liability | $ 8,210 | $ 8,350 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
NON-INTEREST INCOME: | ||
Service charges | $ 1,289 | $ 1,194 |
Trust department income | 370 | 328 |
Brokerage income | 127 | 136 |
Debit card interchange income | 812 | 790 |
Total other income | 3,562 | 3,000 |
ASU 2014-09 | ||
NON-INTEREST INCOME: | ||
Service charges | 1,289 | 1,194 |
Trust department income | 370 | 328 |
Brokerage income | 127 | 136 |
Debit card interchange income | 812 | 790 |
Total other income | $ 2,598 | $ 2,448 |
DERIVATIVES AND FINANCIAL INS_2
DERIVATIVES AND FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Value | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset | $ 237 | $ 94 |
Interest rate swap | Fair value hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Notional Amount | 7,000 | 7,000 |
Interest rate swap | Cash flow hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Notional Amount | 23,000 | 10,000 |
Interest rate swap | Not designated as hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Liability, Notional Amount | 26,700 | 7,400 |
Interest rate swap | Federal Home Loan Bank Advances | Cash flow hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset | 46 | |
Interest rate swap | Federal Home Loan Bank Advances | Carrying Value | Fair value hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative liability | 664 | 164 |
Interest rate swap | Federal Home Loan Bank Advances | Carrying Value | Cash flow hedge | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative liability | 2,600 | |
Interest rate swap | Federal Home Loan Bank Advances | Not designated as hedge | Carrying Value | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Asset | $ 237 | |
Derivative liability | $ 48 |