Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 28, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | HCSB FINANCIAL CORP | ||
Entity Central Index Key | 1,091,491 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | true | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 540,084 | ||
Entity Common Stock, Shares Outstanding | 3,846,340 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Amendment Description | HCSB Financial Corporation is filing this Amendment No. 1 (this Amendment No. 1) to our Annual Report on Form 10-K for the year ended December 31, 2015 (the Form 10-K), originally filed with the Securities and Exchange Commission on March 30, 2016, for the sole purpose of furnishing the Interactive Data File with detailed note tagging as Exhibit 101 to the Form 10-K in accordance with Rule 405 of Regulation S-T. Exhibit 101 provides the financial statements and related notes in the Form 10-K formatted in XBRL (eXtensible Business Reporting Language). No other changes have been made to the Form 10-K. This Amendment No. 1 does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way the disclosures made in the original Form 10-K filed on March 30, 2016. |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Cash and cash equivalents: | |||
Cash and due from banks | $ 22,137 | $ 28,527 | $ 28,081 |
Investment securities: | |||
Securities available-for-sale | 89,701 | 106,674 | 94,602 |
Nonmarketable equity securities | 1,330 | 1,342 | 1,743 |
Total investment securities | 91,031 | 108,016 | 96,345 |
Loans receivable | 209,367 | 235,543 | 256,424 |
Less allowance for loan losses | (4,601) | (5,787) | (9,443) |
Loans, net | 204,766 | 229,756 | 246,981 |
Premises, furniture and equipment, net | 15,917 | 20,292 | 20,802 |
Accrued interest receivable | 1,745 | 1,973 | 2,197 |
Cash value of life insurance | 11,319 | 11,002 | 11,002 |
Other real estate owned | 13,624 | 19,501 | 24,972 |
Other assets | 994 | 2,504 | 4,206 |
Total assets | 361,533 | 421,571 | 434,586 |
Deposits: | |||
Noninterest-bearing transaction accounts | 40,182 | 40,172 | 33,081 |
Interest-bearing transaction accounts | 40,478 | 44,283 | 42,723 |
Money market savings accounts | 65,806 | 75,811 | 78,829 |
Other savings accounts | 10,394 | 10,272 | 8,872 |
Time deposits $250 and over | 3,735 | 6,786 | 10,107 |
Other time deposits | 170,236 | 214,013 | 232,432 |
Total deposits | 330,831 | 391,337 | 406,044 |
Repurchase Agreements | 1,716 | 1,612 | 1,337 |
Advances from the Federal Home Loan Bank | 17,000 | 17,000 | 22,000 |
Subordinated debentures | 11,062 | 11,062 | 11,062 |
Junior subordinated debentures | 6,186 | 6,186 | 6,186 |
Accrued interest payable | 5,958 | 4,583 | 3,305 |
Other liabilities | 1,030 | 1,038 | 1,094 |
Total liabilities | $ 373,783 | $ 432,818 | $ 451,028 |
Commitments and contingencies (Notes 5, 13, & 14) | |||
Shareholders' Equity | |||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 12,895 shares issued and outstanding | $ 12,895 | $ 12,895 | $ 12,838 |
Common stock, $0.01 par value; 500,000,000 shares authorized; 3,846,340, 3,816,340 and 3,738,337 issued and outstanding at December 31, 2015, 2014 and 2013, respectively | 38 | 38 | 37 |
Capital surplus | 30,220 | 30,214 | 30,157 |
Common stock warrants | 1,012 | 1,012 | 1,012 |
Retained deficit | (54,807) | (54,561) | (54,213) |
Accumulated other comprehensive loss | (1,608) | (845) | (6,273) |
Total shareholders' deficit | (12,250) | (11,247) | (16,442) |
Total liabilities and shareholders' deficit | $ 361,533 | $ 421,571 | $ 434,586 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 12,895 | 12,895 | 12,895 |
Preferred stock, shares outstanding | 12,895 | 12,895 | 12,895 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 3,846,340 | 3,816,340 | 3,738,337 |
Common stock, shares outstanding | 3,846,340 | 3,816,340 | 3,738,337 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Interest income: | |||
Loans, including fees | $ 11,628 | $ 13,417 | $ 14,693 |
Investment securities: | |||
Taxable | $ 1,980 | 2,542 | 2,212 |
Tax-exempt | 14 | 45 | |
Nonmarketable equity securities | $ 51 | 60 | 44 |
Other interest income | 67 | 62 | 77 |
Total | 13,726 | 16,095 | 17,071 |
Interest expense: | |||
Deposits | 2,432 | 2,995 | 3,273 |
Borrowings | 2,022 | 2,059 | 2,028 |
Total | 4,454 | 5,054 | 5,301 |
Net interest income | $ 9,272 | 11,041 | 11,770 |
Provision for loan losses | 1,061 | (1,497) | |
Net interest income after provision for loan losses | $ 9,272 | 9,980 | 13,267 |
Noninterest income: | |||
Service charges on deposit accounts | 744 | 880 | 927 |
Gain on sale of securities available-for-sale | 232 | 201 | 298 |
Gains on sales of residential mortgage loans | 181 | 229 | 254 |
Other fees and commissions | 404 | 438 | 472 |
Brokerage commissions | 85 | 79 | 165 |
Income from cash value life insurance | 431 | 440 | 448 |
Net gains (losses) on sales of assets | $ 717 | $ 6 | (10) |
Forgiveness of debt | $ 1,000 | ||
Proceeds from bank owned life insurance | $ 940 | ||
Other operating income | $ 341 | 343 | $ 402 |
Total | 3,135 | 3,556 | 3,956 |
Noninterest expense: | |||
Salaries and employee benefits | 5,383 | 5,606 | 5,985 |
Net occupancy expense | 1,122 | 1,220 | 1,200 |
Furniture and equipment | 1,011 | 1,023 | 1,026 |
Net cost of operations of other real estate owned | 632 | 1,411 | 1,373 |
FDIC insurance premiums | 1,391 | 1,574 | 1,564 |
Other operating expenses | 3,087 | 2,915 | 4,312 |
Total | 12,626 | 13,749 | 15,460 |
Net income (loss) before income taxes | (219) | (213) | $ 1,763 |
Income tax expense | 27 | 78 | |
Net income (loss) | $ (246) | (291) | $ 1,763 |
Accretion of preferred stock to redemption value | (57) | (199) | |
Preferred dividends | $ (1,512) | (1,055) | (653) |
Net income (loss) available to common shareholders | $ (1,758) | $ (1,403) | $ 911 |
Net income (loss) per common share, basic | $ (.46) | $ (0.37) | $ .24 |
Net income (loss) per common share, diluted | $ (0.46) | $ (0.37) | $ 0.24 |
Weighted average common shares outstanding | |||
Basic and diluted (in shares) | 3,823,244 | 3,770,355 | 3,738,337 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (246) | $ (291) | $ 1,763 |
Unrealized gains (losses) on securities available-for-sale: | |||
Unrealized holding gains (losses) arising during the period | $ (531) | $ 5,629 | $ (6,145) |
Tax expense | |||
Reclassification to realized gains | $ (232) | $ (201) | $ (298) |
Tax expense | |||
Other comprehensive income (loss) | $ (763) | $ 5,428 | $ (6,443) |
Comprehensive income (loss) | $ (1,009) | $ 5,137 | $ (4,680) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Common Stock Warrant [Member] | Preferred Stock [Member] | Capital Surplus [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Beginning Balance at Dec. 31, 2012 | $ 37 | $ 1,012 | $ 12,639 | $ 30,157 | $ (55,777) | $ 170 | $ (11,762) |
Beginning Balance, shares at Dec. 31, 2012 | 3,738,337 | 12,895 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income ( loss) | 1,763 | 1,763 | |||||
Other comprehensive income ( loss) | (6,443) | (6,443) | |||||
Accretion of preferred stock to redemption value | $ 199 | (199) | |||||
Ending Balance at Dec. 31, 2013 | $ 37 | 1,012 | $ 12,838 | 30,157 | (54,213) | (6,273) | (16,442) |
Ending Balance, shares at Dec. 31, 2013 | 3,738,337 | 12,895 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income ( loss) | (291) | (291) | |||||
Other comprehensive income ( loss) | 5,428 | 5,428 | |||||
Sale of common stock | $ 1 | 57 | 58 | ||||
Sale of common stock,shares | 78,003 | ||||||
Accretion of preferred stock to redemption value | $ 57 | (57) | |||||
Ending Balance at Dec. 31, 2014 | $ 38 | 1,012 | $ 12,895 | 30,214 | (54,561) | (845) | (11,247) |
Ending Balance, shares at Dec. 31, 2014 | 3,816,340 | 12,895 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income ( loss) | (246) | (246) | |||||
Other comprehensive income ( loss) | (763) | (763) | |||||
Sale of common stock | 6 | 6 | |||||
Sale of common stock,shares | 30,000 | ||||||
Ending Balance at Dec. 31, 2015 | $ 38 | $ 1,012 | $ 12,895 | $ 30,220 | $ (54,807) | $ (1,608) | $ (12,250) |
Ending Balance, shares at Dec. 31, 2015 | 3,846,340 | 12,895 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (246) | $ (291) | $ 1,763 |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Provision for loan losses | 1,061 | (1,497) | |
Depreciation expense | $ 742 | $ 789 | 824 |
Forgiveness of debt | (1,000) | ||
Amortization net of accretion on investments | $ 153 | $ 266 | 151 |
Gains on sales of securities available-for-sale | (232) | (201) | (298) |
(Gains) losses on sales of other real estate owned | (333) | 26 | (721) |
Writedowns of other real estate owned | 226 | $ 317 | $ 768 |
Net gain on sale of branches | (736) | ||
Gain (loss) on sale of other assets | 19 | $ (6) | $ 10 |
Decrease in accrued interest receivable | 228 | 224 | 173 |
Increase in accrued interest payable | 1,383 | 1,278 | 1,098 |
(Increase) decrease in other assets | 1,491 | $ 1,708 | (3,390) |
Income (net of mortality costs) on cash value of life insurance | (317) | (347) | |
Decrease in other liabilities | 22 | $ (56) | (45) |
Net cash provided by (used by) operating activities | 2,400 | 5,115 | (2,511) |
Cash flows from investing activities: | |||
Purchases of securities available-for-sale | (22,879) | (59,354) | (62,559) |
Maturities and paydowns of securities available-for-sale | 15,842 | 19,822 | 13,095 |
Proceeds from sales of securities available-for-sale | 23,326 | 32,823 | 25,886 |
Net decrease in loans to customers | 15,204 | 13,981 | 24,941 |
Net sales (purchases) of premises, furniture and equipment | (244) | (279) | 68 |
Proceeds from sales of other real estate owned | 10,042 | 7,311 | 12,104 |
Redemptions of nonmarketable equity securities | 12 | $ 401 | $ 240 |
Net cash paid in branch sale | (23,933) | ||
Net cash provided by investing activities | 17,370 | $ 14,705 | $ 13,775 |
Cash flows from financing activities: | |||
Net increase (decrease) in demand deposits,interest-bearing transaction and savings accounts | 7,188 | 7,033 | (5,327) |
Net decrease in time deposits | $ (33,458) | (21,740) | $ (24,490) |
Net decrease in FHLB borrowings | (5,000) | ||
Net increase (decrease) in repurchase agreements | $ 104 | 275 | $ 34 |
Sale of common stock | 6 | 58 | |
Net cash used by financing activities | (26,160) | (19,374) | $ (29,783) |
Net increase (decrease) in cash and cash equivalents | (6,390) | 446 | (18,519) |
Cash and cash equivalents, beginning of year | 28,527 | 28,081 | 46,600 |
Cash and cash equivalents, end of year | 22,137 | 28,527 | 28,081 |
Supplemental information: | |||
Cash paid for interest | 3,079 | 3,776 | $ 4,203 |
Cash paid for income taxes | 16 | 78 | |
Supplemental noncash investing and financing activities: | |||
Transfers of loans to other real estate owned | $ 4,058 | $ 2,183 | $ 17,659 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation On December 21, 2004, the Trust issued and sold a total of 6,000 trust preferred securities, with $1,000 liquidation amount per capital security, to institutional buyers in a pooled trust preferred issue. The trust preferred securities, which are reported on the consolidated balance sheet as junior subordinated debentures, generated proceeds of $6.0 million. As required by the Federal Reserve Bank of Richmond, beginning in March 2011, we began exercising our right to defer all quarterly distributions on our trust preferred securities. We may defer these interest payments for up to 20 consecutive quarterly periods, although interest will continue to accrue on the trust preferred securities and interest on such deferred interest will also accrue and compound quarterly from the date such deferred interest would have been payable were it not for the extension period. At December 31, 2015, total accrued interest equaled $901 thousand. All of the deferred interest, including interest accrued on such deferred interest, is due and payable at the end of the applicable deferral period, which is in March 2016. On February 29, 2015, the Company entered into a securities purchase agreement with the holder of the trust preferred securities, Alesco Preferred Funding VI LTD (Alesco), pursuant to which the Company intends to repurchase the trust preferred securities for $600,000, plus up to $25,000 in reimbursement of Alescos attorneys fees and other expenses. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction (described below). Refer to Note 11 to our Financial Statements for additional information on the outstanding trust preferred securities. On March 6, 2009, as part of the Troubled Asset Relief Program Capital Purchase Program (the CPP) established by the U.S. Department of the Treasury (the U.S. Treasury) under the Emergency Economic Stabilization Act of 2009, the Company issued and sold to the U.S. Treasury (i) 12,895 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series T, having a liquidation preference of $1,000 per share (the Series T Preferred Stock), and (ii) a ten-year warrant to purchase up to 91,714 shares of its common stock at an initial exercise price of $21.09 per share (the CPP Warrant), for an aggregate purchase price of $12.9 million in cash. As of February 2011, the Federal Reserve Bank of Richmond has required the Company to defer dividend payments on the Series T Preferred Stock. As of December 31, 2015, the Company had $4.7 million of deferred dividend payments due on the Series T Preferred Stock. Because the Company has deferred these 20 payments, the Company is prohibited from paying any dividends on its common stock until all deferred payments have been made in full. On February 29, 2016, the Company entered into a securities purchase agreement with the U.S. Treasury, pursuant to which the Company intends to repurchase all 12,895 shares of the Series T Preferred Stock for $128,950, plus up to $25,000 in reimbursement of the U.S. Treasurys attorneys fees and other expenses. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. Refer to Note 15 to our financial statements for additional information on the outstanding Series T Preferred Stock. On July 31, 2010, the Company completed a private placement of subordinated promissory notes that totaled $12.1 million. The notes currently bear interest at a rate equal to the current Prime Rate in effect, as published by the Wall Street Journal, plus 3%; provided, that the rate of interest shall not be less than 8% per annum or more than 12% per annum. The Federal Reserve Bank of Richmond has prohibited the Company from paying interest due on the subordinated notes since October 2011 and, as a result, the Company has deferred interest payments in the amount of approximately $4.9 million as of December 31, 2015. Effective as of September 16, 2015, the Company, the Bank, James R. Clarkson, Glenn Raymond Bullard, Ron Lee Paige, Sr., and Edward Lewis Loehr, Jr., the President and Chief Executive Officer, Senior Executive Vice President, Executive Vice President, and Chief Financial Officer of the Company and the Bank, respectively, entered into a class action settlement agreement in potential settlement of a putative class action lawsuit initiated by Jan W. Snyder, Acey H. Livingston, and Mark Josephs, on behalf of themselves and as representatives of a class of similarly situated purchasers of the Companys subordinated debt notes. The class action lawsuit is seeking an unspecified amount of damages resulting from alleged wrongful conduct associated with purchases of the Companys subordinated debt notes. On March 2, 2016, the Court of Common Pleas for the Fifteenth Judicial District, State of South Carolina, County of Horry entered a final order of approval approving the class action settlement agreement, pursuant to which the Company will establish a settlement fund of approximately $2.4 million, which represents 20% of the principal of subordinated debt notes issued by the Company, and class members will be entitled to receive 20% of their notes, which will be paid from the settlement fund, in exchange for a full and complete release of all claims that were asserted or could have been asserted in the class action lawsuit . On August 7, 2015, the Bank consummated the sale of its Socastee, Windy Hill, and Carolina Forest branches, with total deposits of approximately $34.2 million and approximately $5.7 million in loans, to Sandhills Bank, North Myrtle Beach, South Carolina. The transaction included a deposit premium of 2.5% resulting in a net gain of approximately $736 thousand to the Company, after closing costs. On March 2, 2016, the Company entered into a stock purchase agreement with Castle Creek Capital Partners VI, L.P. (Castle Creek) and certain other institutional and accredited investors (collectively, the Investors), pursuant to which the Company expects to raise a total of $45 million in a private placement transaction and to issue shares of the Companys common stock, par value $0.01 per share, at a purchase price of $0.10 per share, and shares of a new series of convertible perpetual non-voting preferred stock, Series A, par value $0.01 per share, at a purchase price of $10.00 per share (the Series A Preferred Stock). The stock purchase agreement is subject to customary closing conditions, including receipt of necessary regulatory approvals or nonobjections for the repurchase or redemption of the Series T Preferred Stock, trust preferred securities, and subordinated promissory notes in each of the transactions described above. The Company intends to use the net proceeds of the private placement transaction to repurchase or redeem these senior securities and to recapitalize the Bank to support its operations and increase its capital ratios to meet the higher minimum capital ratios required under the terms of the Consent Order (as defined below). Effective as of February 26, 2016, W. Jack McElveen, Jr. was appointed as chief credit officer of the Bank, to replace Glenn R. Bullard, who retired from his position as the Companys and the Banks Senior Executive Vice President and Chief Credit Officer. In connection with the comprehensive recapitalization of the Company and the Bank, on March 3, 2016, the board of directors of the Company announced that it has agreed to appoint Jan H. Hollar as the chief executive officer and a director of the Company and the Bank, effective as of the closing of the private placement transaction. On February 29, 2016, the Company and the Bank entered into an employment agreement, which will become effective upon the closing of the private placement transaction, pursuant to which Ms. Hollar will assume this role. On March 16, 2016, the Company received a notice of default from The Bank of New York Mellon Trust Company, N.A., in its capacity as trustee, relating to the trust preferred securities. The notice of default relates specifically to the Indenture dated December 21, 2004 (the Indenture), by and among the Company and The Bank of New York Mellon Trust Company, N.A., successor-in-interest to JP Morgan Chase Bank, National Association, under which the Company issued the trust preferred securities. As permitted by the Indenture, the Company previously exercised its right to defer interest payments on the trust preferred securities for 20 consecutive quarterly payment periods. The Companys right to defer such interest payments expired on March 15, 2016, at which time all deferred payments of interest became due and payable. The Company did not pay such deferred interest at the end of the permitted deferral period, constituting an event of default under the Indenture, and therefore pursuant to the Indenture, the trustee provided this notice of default. Receipt of this notice of default from the trustee does not affect the Companys plans to repurchase the trust preferred securities under the securities purchase agreement. Under the Indenture, the principal amount of the trust preferred securities, together with any premium and unpaid accrued interest, only becomes due upon such an event of default after the trustee, or Alesco, as the holder of not less than 25% of the trust preferred securities outstanding, declares such amounts due and payable by written notice to the Company. To date, the Company has not received such written notice from the trustee or Alesco. As of March 16, 2016, the total principal amount outstanding on the trust preferred securities plus accrued and unpaid interest was $7.1 million. Managements Estimates Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, including valuation allowances for impaired loans, and the carrying amount of real estate acquired in connection with foreclosures or in satisfaction of loans. Management must also make estimates in determining the estimated useful lives and methods for depreciating premises and equipment. While management uses available information to recognize losses on loans and foreclosed real estate, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Companys allowances for losses on loans and foreclosed real estate. Such agencies may require the Company to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowances for losses on loans and foreclosed real estate may change materially in the near term. Investment Securities Nonmarketable Equity Securities At December 31, 2015, 2014 and 2013, the investment in FHLB stock was $1.1 million, $1.2 million and $1.6 million, respectively. Also included in nonmarketable equities is investment in the Trust, which totaled $186 thousand at December 31, 2015, 2014 and 2013. Loans Receivable Loan origination and commitment fees and certain direct loan origination costs (principally salaries and employee benefits) are deferred and amortized to income over the contractual life of the related loans or commitments, adjusted for prepayments, using the straight-line method. Loans are impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans are subject to these criteria except for smaller balance homogeneous loans that are collectively evaluated for impairment and loans measured at fair value or at the lower of cost or fair value. The Company considers its consumer installment portfolio and home equity lines as such exceptions. Therefore, loans within the real estate and commercial loan portfolios are reviewed individually. Impairment of a loan is measured based on the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the collateral, if the loan is collateral dependent. When management determines that a loan is impaired, the difference between the Companys investment in the related loan and the present value of the expected future cash flows, or the fair value of the collateral, is charged off with a corresponding entry to the allowance for loan losses or a specific reserve is set aside within the allowance for loan losses. The accrual of interest is discontinued on an impaired loan when management determines the borrower may be unable to meet payments as they become due. Concentrations of Credit Risk The Company makes loans to individuals and small businesses for various personal and commercial purposes primarily throughout Horry County in South Carolina and Columbus and Brunswick counties of North Carolina. The Companys loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions except for loans secured by residential and commercial real estate and commercial and industrial non-real estate loans. These concentrations of residential and commercial real estate loans and commercial and industrial non-real estate loans totaled $176.4 million and $27.9 million, respectively, at December 31, 2015, representing 84.24% and 13.32%, respectively, of gross loans receivable for the Company at December 31, 2015. In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk from concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.), and loans with high loan-to-value ratios. Management has determined that there is no concentration of credit risk associated with its lending policies or practices. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loans life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. Therefore, management believes that these particular practices do not subject the Company to unusual credit risk. The Companys investment portfolio consists principally of obligations of the United States, its agencies or its corporations and general obligation municipal securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The Company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant. Allowance for Loan Losses The allowance is subject to examination by regulatory agencies, which may consider such factors as the methodology used to determine adequacy and the size of the allowance relative to that of peer institutions, and other adequacy tests. In addition, such regulatory agencies could require the Company to adjust its allowance based on information available to them at the time of their examination. The methodology used to determine the reserve for unfunded lending commitments, which is included in other liabilities, is inherently similar to that used to determine the allowance for loan losses adjusted for factors specific to binding commitments, including the probability of funding and historical loss ratio. Premises, Furniture and Equipment Maintenance and repairs are charged to current expense as incurred, and the costs of major renewals and improvements are capitalized. Other Real Estate Owned Any write-downs at the dates of acquisition are charged to the allowance for loan losses. Expenses to maintain such assets, subsequent write-downs, and gains and losses on disposal are included in net cost of operations of other real estate owned. Income and Expense Recognition Income Taxes Deferred income taxes are determined using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax impacts of the differences between the book and tax bases of assets and liabilities and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to the Companys judgment that realization is more likely than not. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest and penalties, if any, are recognized as a component of income tax expense. The Company reviews the deferred tax assets for recoverability based on history of earnings, expectations for future earnings and expected timing of reversals of temporary differences. Realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income available under tax law, including future reversals of existing temporary differences, future taxable income exclusive of reversing differences, taxable income in prior carryback years, projections of future operating results, cumulative tax losses over the past three years, tax loss deductibility limitations, and available tax planning strategies. If, based on available information, it is more likely than not that the deferred income tax asset will not be realized, a valuation allowance against the deferred tax asset must be established with a corresponding charge to income tax expense. The deferred tax assets and valuation allowance are evaluated each quarter, and a portion of the valuation allowance may be reversed in future periods. The determination of how much of the valuation allowance that may be reversed and the timing is based on future results of operation and the amount and timing of actual loan charge-offs and asset write-downs. At December 31, 2015, 2014 and 2013, the Companys deferred tax asset was offset in its entirety by a valuation allowance. The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate any adjustments that will result in a material adverse impact on the Companys financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded. The private placement transaction discussed throughout this document has been structured to avoid being deemed a change in ownership under the IRS rules and the Company is continuing to work with its legal and accounting advisors to evaluate methods to preserve its deferred tax assets. Advertising Expense Net Income (Loss) Per Common Share Comprehensive Income Statements of Cash Flows Off-Balance Sheet Financial Instruments Recently Issued Accounting Pronouncements In January 2014, the Financial Accounting Standards Board (the FASB) amended the Receivables topic of the Accounting Standards Codification (the ASC). The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments were effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2014 with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. These amendments did not have a material effect on the Companys financial statements. In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments were effective for the Company during the first quarter of 2015 and did not have a material effect on its financial statements. In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both unusual in nature and infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In June 2015, the FASB issued amendments to clarify the ASC, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. In August 2015, the FASB issued amendments to the Interest topic of the ASC to clarify the SEC staffs position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases which will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessees rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Companys consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Companys financial position, results of operations or cash flows. Risks and Uncertainties The Company is subject to the regulations of various governmental agencies. These regulations can and do change significantly from period to period. The Company also undergoes periodic examinations by the regulatory agencies, which may subject it to further changes with respect to asset valuations, amounts of required loss allowances and operating restrictions from the regulators judgments based on information available to them at the time of their examination. Risks and Uncertainties (continued) In February 2005, the Bank purchased a $500 thousand 15-year renewable and convertible term life insurance policy through Banner Life Insurance Company on the life of James R. Clarkson, President and CEO. The Bank is both the owner and the beneficiary of this key person policy. The purpose of securing this policy was to provide the Bank with financial protection in the event of the unexpected death of Mr. Clarkson and better enable the Bank to attract a qualified replacement for Mr. Clarkson in such a situation. The Bank anticipates transferring this policy to Mr. Clarkson following his retirement, and he will assume payment obligations relating thereto. Legislation that has been adopted after we closed on our sale of Series T Preferred Stock and the CPP Warrant to the U.S. Treasury for $12.9 million pursuant to the CPP on March 6, 2009, or any legislation or regulations that may be implemented in the future, may have a material impact on the terms of our CPP transaction with the U.S. Treasury. Reclassifications |
REGULATORY MATTERS AND FUTURE O
REGULATORY MATTERS AND FUTURE OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Matters And Going Concern Considerations [Abstract] | |
REGULATORY MATTERS AND FUTURE OPERATIONS | NOTE 2 REGULATORY MATTERS, GOING CONCERN CONSIDERATIONS AND RECENT DEVELOPMENTS Consent Order with the Federal Deposit Insurance Corporation and South Carolina Board of Financial Institutions On February 10, 2011, the Bank entered into a Consent Order with the FDIC and the State Board. The Consent Order conveys specific actions needed to address the Banks current financial condition, primarily related to capital planning, liquidity/funds management, policy and planning issues, management oversight, loan concentrations and classifications, and non-performing loans. A summary of the requirements of the Consent Order and the Banks status on complying with the Consent Order is as follows: Requirements of the Consent Order Banks Compliance Status Achieve and maintain, by July 10, 2011, Total Risk Based capital at least equal to 10% of risk-weighted assets and Tier 1 capital at least equal to 8% of total assets. The Bank did not meet the capital ratios as specified in the Consent Order and, as a result, submitted a revised capital restoration plan to the FDIC on July 15, 2011. The revised capital restoration plan was determined by the FDIC to be insufficient and, as a result, we submitted a further revised capital restoration plan to the FDIC on September 30, 2011. We received the FDICs non-objection to the further revised capital restoration plan on December 6, 2011. The Banks previously disclosed sale of its Socastee, Windy Hill, and Carolina Forest branches on August 7, 2015 resulted in a net gain of approximately $736 thousand on the transaction and a slight increase in the Banks capital ratios. Assuming completion of the private placement transaction, the Company will contribute approximately $38 million in additional capital to the Bank, which will satisfy the minimum capital ratios required under the Consent Order. Submit, by April 11, 2011, a written capital plan to the supervisory authorities. We believe we have complied with this provision of the Consent Order. Establish, by March 12, 2011, a plan to monitor compliance with the Consent Order, which shall be monitored by the Banks Directors Committee. We believe we have complied with this provision of the Consent Order. The Directors Committee meets monthly and each meeting includes reviews and discussions of all areas required in the Consent Order. Develop, by May 11, 2011, a written analysis and assessment of the Banks management and staffing needs. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to perform an assessment of the Banks staffing needs to ensure the Bank has an appropriate organizational structure with qualified management in place. The Board of Directors has reviewed all recommendations regarding the Banks organizational structure. Notify the supervisory authorities in writing of the resignation or termination of any of the Banks directors or senior executive officers. We believe we have complied with this provision of the Consent Order. Eliminate, by March 12, 2011, by charge-off or collection, all assets or portions of assets classified Loss and 50% of those assets classified Doubtful. We believe we have complied with this provision of the Consent Order. Review and update, by April 11, 2011, its policy to ensure the adequacy of the Banks allowance for loan and lease losses, which must provide for a review of the Banks allowance for loan and lease losses at least once each calendar quarter. We believe we have complied with this provision of the Consent Order. Submit, by April 11, 2011, a written plan to the supervisory authorities to reduce classified assets, which shall include, among other things, a reduction of the Banks risk exposure in relationships with assets in excess of $750,000 which are criticized as Substandard or Doubtful. In accordance with the approved plan, reduce assets classified in the June 30, 2010 Report of Examination by 65% by August 11, 2012 and by 75% by February 9, 2013. We believe we have complied with this provision of the Consent Order. The written plan was submitted and approved and assets classified in the June 30, 2010 Report of Examination have been reduced by 79.9% as of December 31, 2015. Revise, by April 11, 2011, its policies and procedures for managing the Banks Adversely Classified Other Real Estate Owned. We believe we have complied with this provision of the Consent Order. Not extend any additional credit to any borrower who has a loan or other extension of credit from the Bank that has been charged-off or classified, in whole or in part, Loss or Doubtful and is uncollected. In addition, the Bank may not extend any additional credit to any borrower who has a loan or other extension of credit from the Bank that has been criticized, in whole or in part, Substandard and is uncollected, unless the Banks board of directors determines that failure to extend further credit to a particular borrower would be detrimental to the best interests of the Bank. We believe we have complied with this provision of the Consent Order. In the second quarter of 2010, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. An independent review of the Banks credit portfolio was most recently completed in the second quarter of 2014. Perform, by April 11, 2011, a risk segmentation analysis with respect to the Banks Concentrations of Credit and develop a written plan to systematically reduce any segment of the portfolio that is an undue concentration of credit. We believe we have complied with this provision of the Consent Order. Review, by April 11, 2011 and annually thereafter, the Banks loan policies and procedures for adequacy and, based upon this review, make all appropriate revisions to the policies and procedures necessary to enhance the Banks lending functions and ensure their implementation. We believe we have complied with this provision of the Consent Order. As noted above, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. Adopt, by May 11, 2011, an effective internal loan review and grading system to provide for the periodic review of the Banks loan portfolio in order to identify and categorize the Banks loans, and other extensions of credit which are carried on the Banks books as loans, on the basis of credit quality. We believe we have complied with this provision of the Consent Order. As noted above, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. Review and update, by May 11, 2011, its written profit plan to ensure the Bank has a realistic, comprehensive budget for all categories of income and expense, which must address, at minimum, goals and strategies for improving and sustaining the earnings of the Bank, the major areas in and means by which the Bank will seek to improve the Banks operating performance, realistic and comprehensive budgets, a budget review process to monitor income and expenses of the Bank to compare actual results with budgetary projections, assess that operating assumptions that form the basis for budget projections and adequately support major projected income and expense components of the plan, and coordination of the Banks loan, investment, and operating policies and budget and profit planning with the funds management policy. We believe we have complied with this provision of the Consent Order. The Bank engaged an independent third party to assist management with a strategic plan to help restructure its balance sheet, increase capital ratios, return to profitability and maintain adequate liquidity. Review and update, by May 11, 2011, its written plan addressing liquidity, contingent funding, and asset liability management. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to assist management in its development of a strategic plan that achieves all requirements of the Consent Order. The strategic plan reflects the Banks plans to restructure its balance sheet, increase capital ratios, return to profitability, and maintain adequate liquidity. The Board of Directors has reviewed and adopted the Banks strategic plan. Eliminate, by March 12, 2011, all violations of law and regulation or contraventions of policy set forth in the FDICs safety and soundness examination of the Bank in November 2009. We believe we have complied with this provision of the Consent Order. Not accept, renew, or rollover any brokered deposits unless it is in compliance with the requirements of 12 C.F.R. § 337.6(b). We believe we have complied with this provision of the Constant Order. Since entering into the Consent Order, the Bank has not accepted, renewed, or rolled-over any brokered deposits. Limit asset growth to 5% per annum. We believe we have complied with this provision of the Consent Order. Not declare or pay any dividends or bonuses or make any distributions of interest, principal, or other sums on subordinated debentures without the prior approval of the supervisory authorities. We believe we have complied with this provision of the Consent Order. The Bank shall comply with the restrictions on the effective yields on deposits as described in 12 C.F.R. § 337.6. We believe we have complied with this provision of the Consent Order. Furnish, by March 12, 2011 and within 30 days of the end of each quarter thereafter, written progress reports to the supervisory authorities detailing the form and manner of any actions taken to secure compliance with the Consent Order. We believe we have complied with this provision of the Consent Order, and we have submitted the required progress reports to the supervisory authorities. Submit, by March 12, 2011, a written plan to the supervisory authorities for eliminating its reliance on brokered deposits. We believe we have complied with this provision of the Consent Order. Adopt, by April 11, 2011, an employee compensation plan after undertaking an independent review of compensation paid to all of the Banks senior executive officers. We believe we have complied with this provision of the Consent Order. Prepare and submit, by May 11, 2011, its written strategic plan to the supervisory authorities. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to assist management in its development of a strategic plan that achieves all requirements of the Consent Order. The Board of Directors has reviewed and adopted the Banks strategic plan. Since 2011, the Company has attempted to raise capital in order to satisfy the Consent Order and has also sought other alternative options to improve the Banks financial condition, which has included significantly reducing expenses, shrinking the size of the Bank, selling assets, and exploring potential merger partners. We believe that we are currently in substantial compliance with the Consent Order except for the requirement to increase the Banks capital ratios to the levels noted above and that, upon the closing of the private placement transaction and the downstreaming of the approximately $38 million in additional capital to the Bank, we will be in substantial compliance with all of the terms of the Consent Order. Nevertheless, the determination of the Banks compliance will be made by the FDIC and the State Board, and we do not expect to be released from the Consent Order until completion of a full examination cycle following the closing of the private placement transaction, which may take 12 to 18 months. There can be no assurances that this will happen or that the Consent Order will be lifted in a timely manner if we do satisfy its requirements upon the closing of this private placement transaction. Until the Consent Order is lifted, we will be subject to limits on our growth and on hiring additional personnel, among other restrictions. In addition, the supervisory authorities may amend the Consent Order based on the results of their ongoing examinations. Should we fail to comply with the capital requirements in the Consent Order, or suffer a continued deterioration in our financial condition, the Bank may be placed into a federal conservatorship or receivership by the FDIC, with the FDIC appointed as conservator or receiver. Written Agreement On May 9, 2011, the Company entered into a Written Agreement with the Federal Reserve Bank of Richmond. The Written Agreement is designed to enhance the Companys ability to act as a source of strength to the Bank. The Written Agreement contains provisions similar to those in the Banks Consent Order. Specifically, pursuant to the Written Agreement, the Company agreed, among other things, to seek the prior written approval of the Federal Reserve Bank of Richmond before undertaking any of the following activities: ● declaring or paying any dividends, ● directly or indirectly taking dividends or any other form of payment representing a reduction in capital from the Bank, ● making any distributions of interest, principal or other sums on subordinated debentures or trust preferred securities, ● directly or indirectly, incurring, increasing or guarantying any debt, and ● directly or indirectly, purchasing or redeeming any shares of its stock. The Company also agreed to comply with certain notice provisions set forth in the Federal Deposit Insurance Act and regulations of the Board of Governors of the Federal Reserve System (the Federal Reserve) in appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position. The Company is also required to comply with certain restrictions on indemnification and severance payments pursuant to the Federal Deposit Insurance Act and FDIC regulations. We believe we are currently in substantial compliance with the Written Agreement. On August 18, 2014, the Federal Reserve Bank of Richmond informed the Company that it is required to repay two notes to the Bank as soon as the Company has the funds available to do so for repayment of loans deemed made from the Bank to the Company. The Bank is a general unsecured creditor of the Company with respect to these loans. The first note was originated on May 23, 2013 in the amount of $435,461 and accrued interest at prime. The second note originated on December 31, 2013 in the amount of $1,209,699 and also accrued interest at prime. The Company anticipates making a payment of approximately $1.8 million to the Bank shortly following the closing of the recapitalization. Going Concern Considerations The going concern assumption is a fundamental principle in the preparation of financial statements. It is the responsibility of management to assess the Companys ability to continue as a going concern. In assessing this assumption, the Company has taken into account all available information about the future, which is at least, but is not limited to, twelve months from the balance sheet date of December 31, 2015. The Company had a history of profitable operations and sufficient sources of liquidity to meet its short-term and long-term funding needs. However, the Banks financial condition has suffered as a result of the economic downturn. The effects of the current economic environment are being felt across many industries, with financial services and residential real estate being particularly hard hit. The Bank, with a loan portfolio consisting of a concentration in commercial real estate loans, has seen a decline in the value of the collateral securing its portfolio as well as rapid deterioration in its borrowers cash flow and ability to repay their outstanding loans to the Bank. As a result, the Banks level of nonperforming assets increased substantially during 2010 and 2011, resulting in significant loan-related charge-offs and significantly deteriorating the Company and Bank capital positions. However, since 2012, the Banks nonperforming assets have begun to stabilize. The Banks nonperforming assets at December 31, 2015 were $22.4 million compared to $31.3 million at December 31, 2014 and $35.6 million at December 31, 2013. As a percentage of total assets, nonperforming assets were 6.19%, 7.43% and 8.19% as of December 31, 2015, 2014 and 2013, respectively. As a percentage of total loans, nonperforming loans were 4.18%, 5.02%, and 4.15% as of December 31, 2015, 2014 and 2013, respectively. The Company and the Bank operate in a highly regulated industry and must plan for the liquidity needs of each entity separately. A variety of sources of liquidity have historically been available to the Bank to meet its short-term and long-term funding needs. Although a number of these sources have been limited following execution of the Consent Order, management has prepared forecasts of these sources of funds and the Banks projected uses of funds during 2016 in an effort to ensure that the sources available are sufficient to meet the Banks projected liquidity needs for this period. Prior to the recent economic downturn, the Company, if needed, would have relied on dividends from the Bank as its primary source of liquidity. Currently, however, the Company has no available sources of liquidity. The Company is a legal entity separate and distinct from the Bank. Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company to meet its obligations, including paying dividends. In addition, the terms of the Consent Order described above further limits the Banks ability to pay dividends to the Company to satisfy its funding needs. Unless the Company is able to raise capital, it will have no means of satisfying its funding needs. Management believes the Banks liquidity sources are adequate to meet its needs for at least the next 12 months, but if the Bank is unable to meet its liquidity needs, then the Bank may be placed into a federal conservatorship or receivership by the FDIC, with the FDIC appointed conservator or receiver. The Company will also need to raise substantial additional capital to increase the Banks capital levels to meet the standards set forth by the FDIC. Receivership by the FDIC is based on the Banks capital ratios rather than those of the Company. As of December 31, 2015, the Bank is categorized as significantly undercapitalized. The Bank would need $17.5 million to meet the definition of well-capitalized. There can be no assurances that the Company or the Bank will be able to raise additional capital. An equity financing transaction by the Company would result in substantial dilution to the Companys current shareholders and could adversely affect the market price of the Companys common stock. Likewise, an equity financing transaction by the Bank would result in substantial dilution to the Companys ownership interest in the Bank. It is difficult to predict if these efforts will be successful, either on a short-term or long-term basis. Should these efforts be unsuccessful, the Company would be unable to realize its assets and discharge its liabilities in the normal course of business. The Company has been deferring interest payments on its trust preferred securities since March 2011 and has deferred interest payments for 20 consecutive quarters. The Company is allowed to defer payments for up to 20 consecutive quarterly periods, although interest will also accrue and compound quarterly from the date such deferred interest would have been payable were it not for the extension period. All of the deferred interest, including interest accrued on such deferred interest, is due and payable at the end of the applicable deferral period, which was March 15, 2016. A notice of default was received from the trustee on March 16, 2016, on which the total principal amount outstanding on the trust preferred securities plus accrued and unpaid interest was $7.1 million. If we are not able to raise a sufficient amount of additional capital, the Company will not be able to pay this interest when it becomes due and the Bank may be unable to remain in compliance with the Consent Order. In addition, the Company must first make interest payments under the subordinated notes, which are senior to the trust preferred securities. Even if the Company succeeds in raising capital, it will have to be released from the Written Agreement or obtain approval from the Federal Reserve Bank of Richmond to pay interest on the trust preferred securities. On February 29, 2015, the Company entered into a securities purchase agreement with the holder of the trust preferred securities, Alesco Preferred Funding VI LTD (Alesco), pursuant to which the Company intends to repurchase the trust preferred securities for $600,000, plus up to $25,000 in reimbursement of Alescos attorneys fees and other expenses. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. As a result of managements assessment of the Companys ability to continue as a going concern, the accompanying consolidated financial statements for the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future, and does not include any adjustments to reflect the possible future effects on the recoverability or classification of assets. There is substantial doubt about the Companys ability to continue as a going concern. Recent Developments On August 7, 2015, the Bank consummated the previously disclosed sale of its Socastee, Windy Hill, and Carolina Forest branches, which included deposits of $34.2 million and $5.7 million in loans, to Sandhills Bank, North Myrtle Beach, South Carolina. The transaction included a deposit premium of 2.5% resulting in a net gain of $736 thousand to the Bank, after $167 thousand in expenses related to data processing and sales analysis. The sale consisted of the following ( in thousands Assets Cash $ 23,933 Loans receivable 5,728 Premises and equipment 3,877 Reduction to assets 33,538 Liabilities Transaction and savings deposits 20,866 Time deposits 13,370 Accrued interest payable 8 Other accrued liabilities 30 Reduction to liabilities 34,274 Net gain on sale of branches $ 736 The gain is included in net gains (losses) on sales of assets in the consolidated financial statements. |
CASH AND DUE FROM BANKS
CASH AND DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2015 | |
Cash and Due from Banks [Abstract] | |
CASH AND DUE FROM BANKS | NOTE 3 - CASH AND DUE FROM BANKS The Bank is required by regulation to maintain an average cash reserve balance based on a percentage of deposits. At December 31, 2015, 2014 and 2013, the requirements were satisfied by amounts on deposit with the Federal Reserve Bank and cash on hand. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENT SECURITIES | NOTE 4 - INVESTMENT SECURITIES Securities available-for-sale consisted of the following: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value (Dollars in thousands) December 31, 2015 Government-sponsored enterprises $ 36,720 $ $ (688 ) $ 36,032 Mortgage-backed securities 53,368 54 (977 ) 52,445 Obligations of state and local governments 1,221 5 (2 ) 1,224 Total $ 91,309 $ 59 $ (1,667 ) $ 89,701 December 31, 2014 Government-sponsored enterprises $ 40,952 $ 7 $ (877 ) $ 40,082 Mortgage-backed securities 65,328 447 (427 ) 65,348 Obligations of state and local governments 1,239 10 (5 ) 1,244 Total $ 107,519 $ 464 $ (1,309 ) $ 106,674 December 31, 2013 Government-sponsored enterprises $ 60,628 $ $ (5,553 ) $ 55,075 Mortgage-backed securities 37,731 167 (864 ) 37,034 Obligations of state and local governments 2,516 113 (136 ) 2,493 Total $ 100,875 $ 280 $ (6,553 ) $ 94,602 The following is a summary of maturities of securities available-for-sale as of December 31, 2015. The amortized cost is based on the contractual maturity dates. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty. Amortized Cost Due Due After One After Five Within Through Through After Ten Market December 31, 2015 One Year Five Years Ten Years Years Total Value Government sponsored enterprises $ $ 396 $ 7,024 $ 29,300 $ 36,720 $ 36,032 Mortgage-backed securities 5,641 47,727 53,368 52,445 Obligations of state and local governments 619 602 1,221 1,224 Total $ $ 396 $ 13,284 $ 77,629 $ 91,309 $ 89,701 The following table shows gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position, at: December 31, 2015 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ 31,489 $ (558 ) $ 4,543 $ (130 ) $ 36,032 $ (688 ) Mortgage-backed securities 28,024 (354 ) 17,008 (623 ) 45,032 (977 ) Obligations of state and local governments 617 (2 ) 617 (2 ) Total $ 60,130 $ (914 ) $ 21,551 $ (753 ) $ 81,681 $ (1,667 ) December 31, 2014 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ $ $ 38,076 $ (877 ) $ 38,076 $ (877 ) Mortgage-backed securities 22,024 (244 ) 7,458 (183 ) 29,482 (427 ) Obligations of state and local governments 623 (5 ) 623 (5 ) Total $ 22,024 $ (244 ) $ 46,157 $ (1,065 ) $ 68,181 $ (1,309 ) December 31, 2013 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ 47,311 $ (4,433 ) $ 7,764 $ (1,120 ) $ 55,075 $ (5,553 ) Mortgage-backed securities 17,826 (471 ) 7,373 (393 ) 25,199 (864 ) Obligations of state and local governments 552 (67 ) 568 (69 ) 1,120 (136 ) Total $ 65,689 $ (4,971 ) $ 15,705 $ (1,582 ) $ 81,394 $ (6,553 ) Management evaluates its investment portfolio periodically to identify any impairment that is other than temporary. At December 31, 2015, the Company had three government-sponsored enterprise securities and sixteen mortgage-backed securities that have been in an unrealized loss position for more than twelve months. Management believes these losses are temporary and are a result of the current interest rate environment. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. At December 31, 2015, 2014 and 2013, investment securities with a book value of $36.7 million, $42.8 million, and $40.1 million, respectively, and a market value of $36.1 million, $42.2 million and $36.8 million, respectively, were pledged to secure deposits and for other banking purposes as required or permitted by law. Proceeds from sales of available-for-sale securities were $23.3 million, $32.8 million and $25.9 million for the years ended December 31, 2015, 2014, and 2013 respectively. Gross realized gains and losses on sales of available for sale securities for the years ended were as follows: Years ended (Dollars in thousands) December 31, 2015 2014 2013 Gross realized gains $ 232 $ 269 298 Gross realized losses (68 ) Net gain $ 232 $ 201 $ 298 |
LOAN PORTFOLIO
LOAN PORTFOLIO | 12 Months Ended |
Dec. 31, 2015 | |
Loans and Leases Receivable Disclosure [Abstract] | |
LOAN PORTFOLIO | NOTE 5 LOAN PORTFOLIO Loans consisted of the following: December 31, (Dollars in thousands) 2015 2014 2013 Residential $ 75,081 $ 84,568 $ 84,335 Commercial Real Estate 101,291 113,852 130,450 Commercial 27,881 30,894 33,711 Consumer 5,114 6,229 7,928 Total gross loans $ 209,367 $ 235,543 $ 256,424 Certain parties (principally certain directors and officers of the Company, their immediate families, and business interests) were loan customers and had other transactions in the normal course of business with the Company. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lender and do not involve more than normal risk of collectibility. Related party loans consisted of the following: For the Year ended December 31, (Dollars in thousands) 2015 2014 2013 Beginning balance $ 3,857 $ 3,088 $ 2,867 New loans and advances 397 1,785 1,195 Repayments (1,032 ) (1,016 ) (974 ) Ending balance $ 3,222 $ 3,857 $ 3,088 Provision and Allowance for Loan Losses An allowance for loan losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent losses in the loan portfolio. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. In evaluating the adequacy of the Companys loan loss reserves, management identifies loans believed to be impaired. Impaired loans are those not likely to be repaid as to principal and interest in accordance with the terms of the loan agreement. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, or liquidation value and discounted cash flows. Reserves are maintained for each loan in which the principal balance of the loan exceeds the net present value of cash flows. In addition to the specific allowance for individually reviewed loans, a general allowance for potential loan losses is established based on managements review of the composition of the loan portfolio with the purpose of identifying any concentrations of risk, and an analysis of historical loan charge-offs and recoveries. The final component of the allowance for loan losses incorporates managements evaluation of current economic conditions and other risk factors which may impact the inherent losses in the loan portfolio. These evaluations are highly subjective and require that a great degree of judgmental assumptions be made by management. This component of the allowance for loan losses includes additional estimated reserves for internal factors such as changes in lending staff, loan policy and underwriting guidelines, and loan seasoning and quality, and external factors such as national and local economic trends and conditions. The following tables detail the activity within our allowance for loan losses as of and for the years ended December 31, 2015, 2014 and 2013, by portfolio segment: December 31, 2015 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 597 $ 3,591 $ 185 $ 1,414 $ 5,787 Charge-offs (539 ) (1,212 ) (81 ) (501 ) (2,333 ) Recoveries 200 727 37 183 1,147 Provision 694 (563 ) (61 ) (70 ) Ending balance $ 952 $ 2,543 $ 80 $ 1,026 $ 4,601 Ending balances : Individually evaluated for impairment $ 137 $ 396 $ 10 $ 560 $ 1,103 Collectively evaluated for impairment $ 815 $ 2,147 $ 70 $ 466 $ 3,498 Loans receivable: Ending balance, total $ 27,881 $ 101,291 $ 5,114 $ 75,081 $ 209,367 Ending balances: Individually evaluated for impairment $ 2,727 $ 21,582 $ 134 $ 9,418 $ 33,861 Collectively evaluated for impairment $ 25,154 $ 79,709 $ 4,980 $ 65,663 $ 175,506 December 31, 2014 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 1,020 $ 5,312 $ 144 $ 2,967 $ 9,443 Charge-offs (1,068 ) (4,646 ) (343 ) (974 ) (7,031 ) Recoveries 549 1,117 38 610 2,314 Provision 96 1,808 346 (1,189 ) 1,061 Ending balance $ 597 $ 3,591 $ 185 $ 1,414 $ 5,787 Ending balances : Individually evaluated for impairment $ 151 $ 1,008 $ 11 $ 737 $ 1,907 Collectively evaluated for impairment $ 446 $ 2,583 $ 174 $ 677 $ 3,880 Loans receivable: Ending balance, total $ 30,894 $ 113,852 $ 6,229 $ 84,568 $ 235,543 Ending balances: Individually evaluated for impairment $ 3,644 $ 25,146 $ 175 $ 12,418 $ 41,383 Collectively evaluated for impairment $ 27,250 $ 88,706 $ 6,054 $ 72,150 $ 194,160 December 31, 2013 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 1,982 $ 7,587 $ 124 $ 4,457 $ 14,150 Charge-offs (1,691 ) (3,927 ) (217 ) (1,641 ) (7,476 ) Recoveries 724 2,230 48 1,264 4,266 Provision 5 (578 ) 189 (1,113 ) (1,497 ) Ending balance $ 1,020 $ 5,312 $ 144 $ 2,967 $ 9,443 Ending balances: Individually evaluated for impairment $ 218 $ 2,455 $ 18 $ 1,105 $ 3,796 Collectively evaluated for impairment $ 802 $ 2,857 $ 126 $ 1,862 $ 5,647 Loans receivable: Ending balance, total $ 33,711 $ 130,450 $ 7,928 $ 84,335 $ 256,424 Ending balances: Individually evaluated for impairment $ 3,946 $ 29,540 $ 223 $ 11,970 $ 45,679 Collectively evaluated for impairment $ 29,765 $ 100,910 $ 7,705 $ 72,365 $ 210,745 Loan Performance and Asset Quality Generally, a loan will be placed on nonaccrual status when it becomes 90 days past due as to principal or interest, or when management believes, after considering economic and business conditions and collection efforts, that the borrowers financial condition is such that collection of the loan is doubtful. When a loan is placed in nonaccrual status, interest accruals are discontinued and income earned but not collected is reversed. Cash receipts on nonaccrual loans are not recorded as interest income, but are used to reduce principal. The following chart summarizes delinquencies and nonaccruals, by portfolio class, as of December 31, 2015, 2014 and 2013. December 31, 2015 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 321 $ 110 $ 1 $ 432 $ 27,449 $ 27,881 $ 139 Commercial real estate: Construction 25 3,186 3,211 27,321 30,532 3,384 Other 973 3,046 4,019 66,740 70,759 3,895 Real Estate: Residential 2,887 142 948 3,977 71,104 75,081 1,314 Consumer: Other 108 18 10 136 4,395 4,531 10 Revolving credit 4 4 579 583 Total $ 4,318 $ 270 $ 7,191 $ 11,779 $ 197,588 $ 209,367 $ 8,742 December 31, 2014 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 282 $ 27 $ $ 309 $ 30,585 $ 30,894 $ 633 Commercial real estate: Construction 199 364 563 30,907 31,470 4,464 Other 493 283 2,023 2,799 79,583 82,382 2,643 Real Estate: Residential 2,576 372 2,810 5,758 78,810 84,568 3,917 Consumer: Other 101 2 103 5,449 5,552 Revolving credit 4 4 1 9 668 677 4 Total $ 3,655 $ 688 $ 5,198 $ 9,541 $ 226,002 $ 235,543 $ 11,661 December 31, 2013 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 771 $ 146 $ 407 $ 1,324 $ 32,387 $ 33,711 $ 430 Commercial real estate: Construction 215 33 2,243 2,491 36,408 38,899 4,208 Other 1,156 3,414 4,570 86,981 91,551 4,017 Real Estate: Residential 2,188 830 1,381 4,399 79,936 84,335 1,936 Consumer: Other 191 219 35 445 6,710 7,155 40 Revolving credit 18 3 21 752 773 Total $ 4,539 $ 1,231 $ 7,480 $ 13,250 $ 243,174 $ 256,424 $ 10,631 At December 31, 2014, one residential real estate loan in the amount of $170 thousand was past due more than 90 days and still accruing interest. There were no loans outstanding 90 days or more and still accruing interest at December 31, 2015 or 2013. The following tables summarize managements internal credit risk grades, by portfolio class, as of December 31: December 31, 2015 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 975 $ $ 434 $ $ 1,409 Grade 2 Modest 561 1,024 37 277 1,899 Grade 3 Average 4,934 5,620 218 4,716 15,488 Grade 4 Satisfactory 14,693 58,549 4,031 53,187 130,460 Grade 5 Watch 2,445 9,654 152 2,988 15,239 Grade 6 Special Mention 992 6,321 98 3,544 10,955 Grade 7 Substandard 3,281 20,123 144 10,369 33,917 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 27,881 $ 101,291 $ 5,114 $ 75,081 $ 209,367 December 31, 2014 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 1,093 $ $ 531 $ $ 1,624 Grade 2 Modest 1,164 679 93 1,216 3,152 Grade 3 Average 3,868 5,618 156 4,688 14,330 Grade 4 Satisfactory 16,367 59,536 4,928 56,758 137,589 Grade 5 Watch 2,905 16,091 178 4,695 23,869 Grade 6 Special Mention 1,191 4,249 132 3,747 9,319 Grade 7 Substandard 4,306 27,679 211 13,464 45,660 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 30,894 $ 113,852 $ 6,229 $ 84,568 $ 235,543 December 31, 2013 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 1,364 $ $ 775 $ $ 2,139 Grade 2 Modest 314 1,066 98 1,835 3,313 Grade 3 Average 4,782 6,412 914 3,437 15,545 Grade 4 Satisfactory 17,092 67,453 5,045 53,868 143,458 Grade 5 Watch 3,204 17,288 221 6,933 27,646 Grade 6 Special Mention 1,788 10,028 133 5,127 17,076 Grade 7 Substandard 5,167 28,203 742 13,135 47,247 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 33,711 $ 130,450 $ 7,928 $ 84,335 $ 256,424 Loans graded one through four are considered pass credits. As of December 31, 2015, $149.3 million, or 71.3% of the loan portfolio had a credit grade of minimal, modest, average or satisfactory. For loans to qualify for this grade, they must be performing relatively close to expectations, with no significant departures from the intended source and timing of repayment. Loans with a credit grade of watch and special mention are not considered classified; however, they are categorized as a watch list credit and are considered potential problem loans. This classification is utilized by us when there is an initial concern about the financial health of a borrower and to monitor continued performance of upgraded previously classified credits. These loans are designated as such in order to be monitored more closely than other credits in the portfolio. Loans on the watch list are not considered problem loans until they are determined by management to be classified as substandard. As of December 31, 2015, loans with a credit grade of watch and special mention totaled $26.2 million. Watch list loans are considered potential problem loans and are monitored as they may develop into problem loans in the future. Loans graded substandard, doubtful, and loss are considered classified credits. At December 31, 2015, classified loans totaled $33.9 million, with $30.5 million being collateralized by real estate. This amount included $29.1 million in TDRs, of which $23.6 million were considered to be performing at December 31, 2015. Classified credits are evaluated for impairment on a quarterly basis. The Company identifies impaired loans through its normal internal loan review process. A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due, according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan-by-loan basis by calculating either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral, less selling costs, if the loan is collateral dependent. If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net of deferred loan fees or costs), an impairment is recognized by establishing or adjusting an existing allocation of the allowance, or by recording a partial charge-off of the loan to its fair value. When an impaired loan is ultimately charged-off, the charge-off is taken against the specific reserve, if any. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Impaired consumer and residential loans are identified for impairment disclosures, however, it is policy to individually evaluate for impairment all loans with a credit grade of substandard, doubtful, and loss that have an outstanding balance of $50 thousand or greater, and all loans with a credit grade of special mention that have outstanding principal balance of $100 thousand or greater. Impaired loans are valued on a nonrecurring basis at the lower of cost or market value of the underlying collateral, less any selling costs, or based on the net present value of cash flows. For loans valued based on collateral, market values were obtained using independent appraisals, updated every 18 to 24 months, in accordance with our reappraisal policy, or other market data such as recent offers to the borrower. At December 31, 2015, the recorded investment in impaired loans was $33.9 million, compared to $41.4 million and $45.7 million at December 31, 2014 and 2013, respectively. The following chart details our impaired loans, which includes (TDRs) totaling $29.1 million, $33.2 million and $31.5 million, by category as of December 31, 2015, 2014 and 2013, respectively: December 31, 2015 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,070 $ 1,339 $ - $ 1,319 $ 72 Commercial real estate 17,180 22,037 - 18,989 722 Residential 4,016 4,338 - 4,936 137 Consumer 68 68 - 84 7 Total: $ 22,334 $ 27,782 $ - $ 25,328 $ 938 With an allowance recorded: Commercial 1,657 1,657 137 1,729 79 Commercial real estate 4,402 4,402 396 4,461 207 Residential 5,402 5,443 560 5,445 215 Consumer 66 66 10 66 3 Total: $ 11,527 $ 11,568 $ 1,103 $ 11,701 $ 504 Total: Commercial 2,727 2,996 137 3,048 151 Commercial real estate 21,582 26,439 396 23,450 929 Residential 9,418 9,781 560 10,381 352 Consumer 134 134 10 150 10 Total: $ 33,861 $ 39,350 $ 1,103 $ 37,029 $ 1,442 December 31, 2014 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,852 $ 2,678 $ $ 2,649 $ 79 Commercial real estate 19,156 24,441 22,377 1,083 Residential 5,950 6,528 6,249 268 Consumer 32 32 34 3 Total: $ 26,990 $ 33,679 $ $ 31,309 $ 1,433 With an allowance recorded: Commercial 1,792 1,792 151 1,892 81 Commercial real estate 5,990 6,194 1,008 6,143 282 Residential 6,468 6,468 737 6,506 271 Consumer 143 143 11 150 8 Total: $ 14,393 $ 14,597 $ 1,907 $ 14,691 $ 642 Total: Commercial 3,644 4,470 151 4,541 160 Commercial real estate 25,146 30,635 1,008 28,520 1,365 Residential 12,418 12,996 737 12,755 539 Consumer 175 175 11 184 11 Total: $ 41,383 $ 48,276 $ 1,907 $ 46,000 $ 2,075 December 31, 2013 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,464 $ 1,657 $ $ 1,621 $ 50 Commercial real estate 14,120 17,052 14,275 606 Residential 3,729 4,366 3,901 206 Consumer 55 79 60 7 Total: $ 19,368 $ 23,154 $ $ 19,857 $ 869 With an allowance recorded: Commercial 2,482 2,482 218 2,556 106 Commercial real estate 15,420 15,747 2,455 15,674 469 Residential 8,241 8,454 1,105 8,381 384 Consumer 168 168 18 163 8 Total: $ 26,311 $ 26,851 $ 3,796 $ 26,774 $ 967 Total: Commercial 3,946 4,139 218 4,177 156 Commercial real estate 29,540 32,799 2,455 29,949 1,075 Residential 11,970 12,820 1,105 12,282 590 Consumer 223 247 18 223 15 Total: $ 45,679 $ 50,005 $ 3,796 $ 46,631 $ 1,836 TDRs are loans which have been restructured from their original contractual terms and include concessions that would not otherwise have been granted outside of the financial difficulty of the borrower. We generally only restructure loans for borrowers in financial difficulty that have designed a viable business plan to fully pay off all obligations, including outstanding debt, interest and fees, either by generating additional income from the business or through liquidation of assets. Generally, these loans are restructured to provide the borrower additional time to execute upon their plans. With respect to restructured loans, we grant concessions by (1) reduction of the stated interest rate for the remaining original life of the debt, or (2) extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk. We do not generally grant concessions through forgiveness of principal or accrued interest. Restructured loans where a concession has been granted through extension of the maturity date generally include extension of payments in an interest only period, extension of payments with capitalized interest and extension of payments through a forbearance agreement. These extended payment terms are also combined with a reduction of the stated interest rate in certain cases. Success in restructuring loans has been mixed but it has proven to be a useful tool in certain situations to protect collateral values and allow certain borrowers additional time to execute upon defined business plans. In situations where a TDR is unsuccessful and the borrower is unable to follow through with terms of the restricted agreement, the loan is placed on nonaccrual status and continues to be written down to the underlying collateral value. Our policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance. That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is likely. If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status. We will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms. If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status. Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms before that loan can be placed back on accrual status. Further, the borrower must show capacity to continue performing into the future prior to restoration of accrual status. We believe that all of our modified loans meet the definition of a TDR. The following is a summary of information pertaining to our TDRs: December 31, (Dollars in thousands) 2015 2014 2013 Nonperforming TDRs $ 5,449 $ 5,013 $ 6,443 Performing TDRs: Commercial 2,565 2,942 3,496 Commercial real estate 13,883 17,499 14,673 Residential 7,059 7,537 6,690 Consumer 106 175 151 Total performing TDRs 23,613 28,153 25,010 Total TDRs $ 29,062 $ 33,166 $ 31,453 The following table summarizes how loans that were considered TDRs were modified during the years indicated: For the Year Ended December 31, 2015 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 6 $ 475 $ 475 $ $ Residential 8 755 714 2 412 372 Commercial 3 272 191 Consumer 3 13 13 Total 20 $ 1,515 $ 1,393 2 $ 412 $ 372 For the Year Ended December 31, 2014 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 25 $ 6,016 $ 5,837 1 $ 36 $ 36 Residential 19 3,171 2,992 3 518 518 Commercial 5 455 455 Consumer 2 31 31 Total 51 $ 9,673 $ 9,315 4 $ 554 $ 554 For the Year Ended December 31, 2013 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 4 $ 1,309 $ 1,309 $ $ Residential 6 1,401 1,401 Commercial 12 636 636 Consumer 5 84 84 Total 27 $ 3,430 $ 3,430 $ $ (1) Loans past due 90 days or more are considered to be in default. Portions of the allowance for loan losses may be allocated for specific loans or portfolio segments. However, the entire allowance for loan losses is available for any loan that, in managements judgment, should be charged-off. While management utilizes the best judgment and information available to it, the ultimate adequacy of the allowance for loan losses depends on a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates, and the view of the regulatory authorities toward loan classifications. If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which would adversely affect our results of operations and financial condition. There can be no assurance that charge-offs of loans in future periods will not exceed the allowance for loan losses as estimated at any point in time or that provisions for loan losses will not be significant to a particular accounting period. The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The fair value of standby letters of credit is insignificant. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customers creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counter-party. Collateral held for commitments to extend credit and standby letters of credit varies but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties. The following table summarizes the Companys off-balance sheet financial instruments whose contract amounts represent credit risk: December 31, (Dollars in thousands) 2015 2014 2013 Commitments to extend credit $ 21,318 $ 27,017 $ 29,836 Standby letters of credit 257 247 361 |
PREMISES, FURNITURE AND EQUIPME
PREMISES, FURNITURE AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PREMISES, FURNITURE AND EQUIPMENT | NOTE 6 - PREMISES, FURNITURE AND EQUIPMENT Premises, furniture and equipment consisted of the following: December 31, (Dollars in thousands) 2015 2014 2013 Land $ 4,464 $ 7,099 $ 7,099 Buildings and land improvements 14,301 16,082 16,134 Furniture and equipment 7,557 7,874 7,608 Leasehold improvements 40 65 65 26,362 31,120 30,906 Less accumulated depreciation (10,445 ) (10,828 ) (10,104 ) Premises, furniture and equipment, net $ 15,917 $ 20,292 $ 20,802 Depreciation expense for the years ended December 31, 2015, 2014 and 2013 was $742 thousand, $789 thousand, and $824 thousand, respectively. As discussed in Note 2, in August 2015, the Bank sold three branches which reduced land and buildings and land improvements by approximately $3.9 million. |
OTHER REAL ESTATE OWNED
OTHER REAL ESTATE OWNED | 12 Months Ended |
Dec. 31, 2015 | |
Other Real Estate [Abstract] | |
OTHER REAL ESTATE OWNED | NOTE 7 OTHER REAL ESTATE OWNED Transactions in other real estate owned for the years ended December 31: (Dollars in thousands) 2015 2014 2013 Balance, beginning of year $ 19,501 $ 24,972 $ 19,464 Additions 4,058 2,183 17,659 Sales (9,709 ) (7,337 ) (11,383 ) Write-downs (226 ) (317 ) (768 ) Balance, end of period $ 13,624 $ 19,501 $ 24,972 |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | NOTE 8 - OTHER ASSETS Other assets consisted of the following at December 31: (Dollars in thousands) 2015 2014 2013 Prepaid expenses and insurance $ 406 $ 736 $ 471 Unamortized software 55 52 29 Receivable from sale of other real estate owned 3,348 Proceeds due from life insurance 1,208 Other 533 508 358 Total $ 994 $ 2,504 $ 4,206 |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
Deposits: | |
DEPOSITS | NOTE 9 - DEPOSITS At December 31, 2015, the scheduled maturities of time deposits were as follows (in thousands) Maturing in: Amount Less than one year $ 85,676 One to three years 81,307 Three to ten years 6,988 Beyond ten years $ 173,971 Time deposits in excess of the FDIC insurance limit of $250 thousand were $3.7 million, $6.8 million, $10.1 million as of December 31, 2015, 2014, and 2013, respectively. Overdrawn transaction accounts in the amount of $24 thousand, $17 thousand and $41 thousand were classified as loans as of December 31, 2015, 2014 and 2013, respectively. Brokered deposits were $14.1 million and $18.6 million as of December 31, 2014 and 2013, respectively. The Bank did not have any brokered deposits at December 31, 2015. Related party deposits by directors including their affiliates and executive officers totaled approximately $552 thousand, $1.4 million and $589 thousand at December 31, 2015, 2014 and 2013, respectively. |
ADVANCES FROM THE FEDERAL HOME
ADVANCES FROM THE FEDERAL HOME LOAN BANK | 12 Months Ended |
Dec. 31, 2015 | |
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures [Abstract] | |
ADVANCES FROM THE FEDERAL HOME LOAN BANK | NOTE 10 - ADVANCES FROM THE FEDERAL HOME LOAN BANK Advances from the Federal Home Loan Bank consisted of the following at December 31, 2015: (Dollars in thousands) Advance Advance Advance Maturing Type Amount Rate On Convertible Advance $ 2,000 3.60% 9/4/18 Convertible Advance 5,000 3.45% 9/10/18 Convertible Advance 5,000 2.95% 9/18/18 Fixed Rate 5,000 3.86% 8/20/19 $ 17,000 As of December 31, 2015 we had advances totaling $17.0 million with various interest rates and maturity dates. Interest on all advances is at a fixed rate and payable quarterly. Convertible advances are callable by the FHLB on their respective call dates. The Company has the option to either repay any advance that has been called or to refinance the advance as a convertible advance. At December 31, 2015, the Company had pledged as collateral for FHLB advances approximately $4.6 million of one-to-four family first mortgage loans, $3.4 million of commercial real estate loans, $9.4 million in home equity lines of credit, and $16.1 million of agency and private issue mortgage-backed securities. The Company has an investment in Federal Home Loan Bank stock of $1.1 million. The Company has $8.5 million in excess borrowing capacity with the Federal Home Loan Bank that is available if liquidity needs should arise. As a result of negative financial performance indicators, there is also a risk that the Banks ability to borrow from the FHLB could be curtailed or eliminated, although to date the Bank has not been denied advances from the FHLB or had to pledge additional collateral for its borrowings. As of December 31, 2015, scheduled principal reductions include $12.0 million in 2018, and $5.0 million in 2019. |
JUNIOR SUBORDINATED DEBENTURES
JUNIOR SUBORDINATED DEBENTURES | 12 Months Ended |
Dec. 31, 2015 | |
Junior Subordinated Notes [Abstract] | |
JUNIOR SUBORDINATED DEBENTURES | NOTE 11 JUNIOR SUBORDINATED DEBENTURES On December 21, 2004, the Trust issued $6.0 million floating rate trust preferred securities with a maturity of December 31, 2034. In accordance with current accounting standards, the trust has not been consolidated in these financial statements. The Company received from the Trust the $6.0 million proceeds from the issuance of the securities and the $186 thousand initial proceeds from the capital investment in the Trust and, accordingly, has shown the funds due to the trust as a $6.2 million junior subordinated debenture. The current regulatory rules allow certain amounts of junior subordinated debentures to be included in the calculation of regulatory capital. The Federal Reserve Bank of Richmond has prohibited the Company from paying interest due on the trust preferred securities since February 2011 and as a result, the Company has deferred interest payments in the amount of approximately $901 thousand as of December 31, 2015. All of the deferred interest, including interest accrued on such deferred interest, was due and payable at the end of the applicable deferral period, which was March 15, 2016. On February 29, 2016, the Company entered into a securities purchase agreement with Alesco Preferred Funding VI LTD (Alesco), pursuant to which the Company will repurchase all of its floating rate trust preferred securities issued through its subsidiary, HCSB Financial Trust I, for an aggregate cash payment of $600,000, plus reimbursement of attorneys fees and other expenses incurred by Alesco not to exceed $25,000. Alesco also agreed to forgive any and all unpaid interest on the trust preferred securities. The securities purchase agreement is subject to closing conditions, including regulatory approval of the transaction. Alesco has the right, but not the obligation, to terminate the securities purchase agreement in the event that any closing condition is not satisfied within 45 days of the date of the securities purchase agreement. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. However, if we are unable to close the repurchase in a timely manner, because the Company is in default under the terms of the Indenture related to the trust preferred securities, the trustee or Alesco, by providing written notice to the Company, may declare the entire principal and unpaid interest amounts of the trust preferred securities immediately due and payable. As of March 16, 2016, the total principal amount outstanding on the trust preferred securities plus accrued and unpaid interest was $7.1 million. The trust preferred securities are junior to the subordinated notes, so even if the entire principal and unpaid interest amounts of the trust preferred securities immediately is declared due and payable, the trust preferred securities cannot be repaid prior to repayment of the subordinated promissory notes. However, if the trustee or Alesco declares the entire principal and unpaid interest amounts of the trust preferred securities immediately due and payable, we could be forced into involuntary bankruptcy. On March 16, 2016, the Company received a notice of default from The Bank of New York Mellon Trust Company, N.A., in its capacity as trustee, relating to the trust preferred securities. The notice of default relates specifically to the Indenture dated December 21, 2004, by and among the Company and The Bank of New York Mellon Trust Company, N.A., successor-in-interest to JP Morgan Chase Bank, National Association, under which the Company issued the trust preferred securities. As permitted by the Indenture, the Company previously exercised its right to defer interest payments on the trust preferred securities for 20 consecutive quarterly payment periods. The Companys right to defer such interest payments expired on March 15, 2016, at which time all deferred payments of interest became due and payable. The Company did not pay such deferred interest at the end of the permitted deferral period, constituting an event of default under the Indenture, and therefore pursuant to the Indenture, the trustee provided this notice of default. Receipt of this notice of default from the trustee does not affect the Companys plans to repurchase the trust preferred securities under the securities purchase agreement. Under the Indenture, the principal amount of the trust preferred securities, together with any premium and unpaid accrued interest, only becomes due upon such an event of default after the trustee, or Alesco, as the holder of not less than 25% of the trust preferred securities outstanding, declares such amounts due and payable by written notice to the Company. To date, the Company has not received such written notice from the trustee or Alesco. As of March 16, 2016, the total principal amount outstanding on the trust preferred securities plus accrued and unpaid interest was $7.1 million. |
SUBORDINATED DEBENTURES
SUBORDINATED DEBENTURES | 12 Months Ended |
Dec. 31, 2015 | |
Subordinated Borrowings [Abstract] | |
SUBORDINATED DEBENTURES | NOTE 12 - SUBORDINATED DEBENTURES On July 31, 2010, the Company completed a private placement of subordinated promissory notes that totaled $12.1 million. The notes currently bear interest at a rate equal to the current Prime Rate in effect, as published by the Wall Street Journal, plus 3%; provided, that the rate of interest shall not be less than 8% per annum or more than 12% per annum. The subordinated notes have been structured to fully count as Tier 2 regulatory capital on a consolidated basis. During 2013, $1.0 million of the subordinated notes were cancelled by the holder as part of a settlement of litigation between the holder, the Bank, and the Company. The Company is obligated to contribute capital in this amount to the Bank when it is able to do so. The forgiveness of this debt was recognized in 2013 as noninterest income in the consolidated statements of operations. The Federal Reserve Bank of Richmond has prohibited the Company from paying interest due on the subordinated notes since October 2011 and, as a result, the Company has deferred interest payments in the amount of approximately $4.9 million as of December 31, 2015. Effective as of September 16, 2015, the Company, the Bank, and certain other defendants entered into a class action settlement agreement in potential settlement of the putative class action lawsuit initiated by three holders of the Companys subordinated promissory notes, on behalf of themselves and as representatives of a class of similarly situated purchasers of the Companys subordinated promissory notes, with respect to alleged wrongful conduct associated with purchases of the subordinated promissory notes, including fraud, violation of state securities statutes, and negligence. On March 2, 2016, the Court of Common Pleas for the Fifteenth Judicial District, State of South Carolina, County of Horry entered a final order of approval approving the class action settlement agreement. The Company will establish a settlement fund of approximately $2.4 million, which represents 20% of the principal of subordinated debt notes issued by the Company, and class members will be entitled to receive 20% of their notes, in exchange for a full and complete release of all claims that were asserted or could have been asserted in the class action lawsuit. The Company will also separately pay the approved attorneys fees, costs, and expenses of class counsel up to an aggregate of $250,000. The Company must receive the necessary regulatory approvals or nonobjections before any payments may be made from the settlement fund. Assuming these regulatory approvals or nonobjections are received, the Company anticipates that it will fund the settlement fund promptly following the closing of the private placement transaction. |
LEASE COMMITMENTS
LEASE COMMITMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
LEASE COMMITMENTS | NOTE 13 - LEASE COMMITMENTS On January 1, 2013, the Company renewed a lease agreement for land on which to operate its Tabor City branch. The lease has a five-year term that expires December 31, 2017. The Company has an option for eight additional five-year renewal periods thereafter. The lease has a rental amount of $1,047 per month. The lease gives the Company the first right of refusal to purchase the property at an unimproved value if the owners decide to sell. The Company also pays applicable property taxes on the property. Future minimum lease payments are expected to be approximately $12,564 per year for the next two years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 - COMMITMENTS AND CONTINGENCIES In the ordinary course of business, the Company may, from time to time, become a party to legal claims and disputes. At December 31, 2015, the Company is being investigated related to the sale of senior subordinated debentures in 2010 and has received subpoenas from the United States Attorney for the District of South Carolina, the South Carolina Attorney General and the Securities and Exchange Commission. The Company has fully responded to all of the subpoenas and provided testimony. The Company is also involved in litigation by certain subordinated debenture holders alleging misuse of the funds and wrongful conduct among other allegations in the issuance of the subordinated debentures. In 2012, certain investors, seeking class action treatment, filed suit against the Company alleging sale of its common stock without disclosure of material financial information. The Bank is also involved in another legal matter related to unauthorized charges on a customer account. The Company and the Bank believe that all claims or legal proceedings are without merit and will not have a material adverse effect on the financial condition or operation of the Company. Management was not aware of any other pending or threatened litigation or unassisted claims that could result in losses, if any, that would be material to the financial statements. The Federal Reserve Bank of Richmond informed the Company that it is required to repay two notes to the Bank as soon as the Company has the funds available to do so for repayment of loans deemed made from the Bank to the Company. The Bank is a general unsecured creditor of the Company with respect to these loans. The first note was originated on May 23, 2013 in the amount of $435,461 and accrued interest at prime. The second note originated on December 31, 2013 in the amount of $1,209,699 and also accrued interest at prime. The Company anticipates making a payment of approximately $1.8 million to the Bank shortly following the closing of the recapitalization. The details of the above cases are included in Legal Proceedings under Part I, Item 3 of the Annual Report on Form 10-K. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 15 - SHAREHOLDERS EQUITY Preferred Stock In connection with the sale of the Series T Preferred Stock, the Company also issued to the U.S. Treasury the CPP Warrant to purchase up to 91,714 shares of the Companys common stock at an initial exercise price of $21.09 per share. As required under the CPP, dividend payments on and repurchases of the Companys common stock are subject to certain restrictions. For as long as the Series T Preferred Stock is outstanding, no dividends may be declared or paid on the Companys common stock until all accrued and unpaid dividends on the Series T Preferred Stock are fully paid. In addition, the U.S. Treasurys consent is required for any increase in dividends on common stock before the third anniversary of issuance of the Series T Preferred Stock and for any repurchase of any common stock except for repurchases of common shares in connection with benefit plans. The Series T Preferred Stock and the CPP Warrant were sold to the U.S. Treasury for an aggregate purchase price of $12.9 million in cash. The purchase price was allocated between the Series T Preferred Stock and the CPP Warrant based upon the relative fair values of each to arrive at the amounts recorded by the Company. This resulted in the Series T Preferred Stock being issued at a discount which is being amortized on a level yield basis as a charge to retained earnings over an assumed life of five years. As of February 2011, the Federal Reserve Bank of Richmond, the Companys primary federal regulator, has required the Company to defer dividend payments on the 12,895 shares of the Series T Preferred Stock. Therefore, for each quarterly period beginning in February 2011, the Company notified the U.S. Treasury of its deferral of quarterly dividend payments on the Series T Preferred Stock. The amount of each of the Companys quarterly interest payments was approximately $161 thousand through March 2014 and then increased to $290 thousand. As of December 31, 2015, the Company had $4.7 million of deferred dividend payments due on the Series T Preferred Stock. Because the Company has deferred these 20 payments, the Company is prohibited from paying any dividends on its common stock until all deferred payments have been made in full. In addition, whenever dividends payable on the shares of the Series T Preferred Stock have been deferred for an aggregate of six or more quarterly dividend periods, the holders of the preferred stock have the right to elect two directors to fill newly created directorships at the Companys next annual meeting of the shareholders. As a result of the Companys deferral of dividend payments on the Series T Preferred Stock, the U.S. Treasury, the current holder of all 12,895 shares of the Series T Preferred Stock, requested the Companys non-objection to appoint a representative to observe monthly meetings of the Companys Board of Directors. The Company granted the U.S. Treasurys request and a representative of the U.S. Treasury has attended the Companys monthly board meetings since June 2012. As of the date of this report, the U.S. Treasury has not notified the Company whether it intends to elect two directors to fill newly created directorships at the Companys 2016 annual meeting of the shareholders. The Company has never paid a cash dividend, but as a result of the Companys financial condition and these restrictions on the Company, including the restrictions on the Banks ability to pay dividends to the Company, the Company has not been permitted to pay a dividend on its common stock since 2009. On February 29, 2016, the Company entered into a securities purchase agreement with the U.S. Treasury, pursuant to which the Company will repurchase all 12,895 shares of the Series T Preferred Stock for $128,950, plus reimbursement of attorneys fees and other expenses incurred by the U.S. Treasury not to exceed $25,000. The U.S. Treasury also agreed to waive any and all unpaid dividends on the Series T Preferred Stock and to cancel the CPP Warrant. The securities purchase agreement contains customary representations and warranties of the Company and is subject to closing conditions, including the closing of the private placement transaction and regulatory approval of the transaction. The securities purchase agreement may be terminated by mutual agreement of the Company and the U.S. Treasury and may also be terminated by either party in the event that the transaction does not close on or before April 15, 2016. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. Restrictions on Dividends |
CAPITAL REQUIREMENTS
CAPITAL REQUIREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Capital Requirements [Abstract] | |
CAPITAL REQUIREMENTS | NOTE 16 - CAPITAL REQUIREMENTS Regulatory Capital Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum ratios of Tier 1 and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 1250%. Tier 1 capital consists of common shareholders equity, excluding the unrealized gain or loss on securities available-for-sale, minus certain intangible assets. Tier 2 capital consists of the allowance for loan losses subject to certain limitations. Total capital for purposes of computing the capital ratios consists of the sum of Tier 1 and Tier 2 capital. The Company and the Bank are also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio. In July 2013, the federal bank regulatory agencies issued a final rule that has revised their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with certain standards that were developed by the Basel Committee on Banking Supervision (Basel III) and certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The final rule applies to all depository institutions, such as the Bank, top-tier bank holding companies with total consolidated assets of $500 million or more, and top-tier savings and loan holding companies, which we refer to below as covered banking organizations. Bank holding companies with less than $500 million in total consolidated assets, such as the Company, are not subject to the final rule. Effective March 31, 2015, the Bank was required to implement the new Basel III capital standards (subject to the phase in for certain parts of the new rules). The approved rule includes a new minimum ratio of common equity Tier 1 capital to risk-weighted assets (CET1) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which when fully phased-in, effectively results in a minimum CET1 ratio of 7.0%. Basel III also raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% (which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5% when fully phased-in), effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer fully phased-in), and requires a minimum leverage ratio of 4.0%. Basel III also makes changes to the risk weights for certain assets and off-balance sheet exposures. Finally, CET1 includes accumulated other comprehensive income (which includes all unrealized gains and losses on available-for-sale debt and equity securities), subject to a transition period and a one-time opt-out election. The Bank elected to opt-out of this provision. As such, accumulated comprehensive income is not included in the Banks Tier 1 capital. To be considered well-capitalized, the Bank must maintain total risk-based capital of at least 10%, Tier 1 capital of at least 8%, and a leverage ratio of at least 5%. To be considered adequately capitalized under these capital guidelines, the Bank must maintain a minimum total risk-based capital of 8%, with at least 4% being Tier 1 capital. In addition, the Bank must maintain a minimum Tier 1 leverage ratio of at least 4%. Further, pursuant to the terms of the Consent Order with the FDIC and the State Board, the Bank must achieve and maintain Tier 1 capital at least equal to 8% and total risk-based capital at least equal to 10% by July 10, 2011. At December 31, 2015, the Company was categorized as critically undercapitalized and the Bank was categorized as significantly undercapitalized. Our losses over the past few years have adversely impacted our capital. As a result, over the last several years, we have been pursuing a plan to increase our capital ratios in order to strengthen our balance sheet and satisfy the commitments required under the Consent Order, which requires us to achieve and maintain Total Risk Based capital at least equal to 10% of risk-weighted assets and Tier 1 capital at least equal to 8% of total assets, while also searching for additional capital or a potential merger partner. On March 2, 2016, the Company entered into a stock purchase agreement with Castle Creek and certain other investors, pursuant to which the Company expects to raise a total of $45 million in a private placement transaction and to issue shares of the Companys common stock and shares of newly-created Series A Preferred Stock. We intend to downstream approximately $38.0 million of the proceeds from the private placement transaction to the Bank as additional capital, which would satisfy the minimum capital levels required under the Consent Order and otherwise return the Bank to well capitalized under regulatory guidelines on a pro forma basis as of December 31, 2015. Proceeds from the private placement transaction will also be used to repurchase or redeem the outstanding Series T Preferred Stock, trust preferred securities, and the subordinated promissory notes. As noted above, we have entered into securities purchase agreements with respect to the Series T Preferred Stock and trust preferred securities and the class action settlement agreement with the respect to the subordinated promissory notes has received final court approval. Closing of the private placement transaction is subject to the receipt of the necessary regulatory approvals or nonobjections for each of the repurchases or redemptions. We currently anticipate that the private placement transaction will close in April 2016. There are no assurances that we will receive the necessary regulatory approvals or nonobjections or otherwise be able to close the private placement transaction. If we cannot close the private placement transaction, or otherwise find a merger partner or raise additional capital to meet the minimum capital requirements set forth under the Consent Order, or if we suffer a continued deterioration in our financial condition, we may be placed into a federal conservatorship or receivership by the FDIC. If this were to occur, then our shareholders, our subordinated debt holders, and our other securities holders will lose their investments in the Company. Our auditors have noted that the uncertainty of our ability to obtain sufficient capital raises substantial doubt about our ability to continue as a going concern. The following table summarizes the capital ratios and the regulatory minimum requirements for the Company and the Bank. Actual Minimum Capital Requirement Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2015 The Company Total Capital (to Risk-Weighted Assets) $ (10,642 ) (4.15 )% $ 20,537 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,642 ) (4.15 )% $ 10,269 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,642 ) (2.87 )% $ 14,831 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 15,402 5.92 % $ 20,802 8.00 % $ 26,002 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 12,135 4.67 % $ 15,601 6.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 12,135 3.28 % $ 14,819 4.00 % $ 29,639 8.00 % Common Equity Tier 1 Capital (to Risk-Weighted Assets) $ 12,135 4.67 % $ 11,701 4.50 % $ N/A N/A December 31, 2014 The Company Total Capital (to Risk-Weighted Assets) $ (10,402 ) (3.61 )% $ 23,031 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,402 ) (3.61 )% $ 11,516 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,402 ) (2.36 )% $ 17,614 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 14,533 5.05 % $ 23,008 8.00 % $ 28,760 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 10,911 3.79 % $ 11,504 4.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 10,911 2.53 % $ 17,255 4.00 % $ 34,510 8.00 % December 31, 2013 The Company Total Capital (to Risk-Weighted Assets) $ (10,169 ) (3.19 )% $ 25,512 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,169 ) (3.19 )% $ 12,756 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,169 ) (2.23 ) % $ 18,242 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 13,842 4.34 % $ 25,505 8.00 % $ 31,881 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 9,789 3.07 % $ 12,753 4.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 9,789 2.17 % $ 18,067 4.00 % $ 36,135 8.00 % (1) Minimum capital amounts and ratios presented are amounts to be well-capitalized under the various regulatory capital requirements administered by the FDIC. On February 10, 2011, the Bank became subject to a regulatory Consent Order with the FDIC. Minimum capital amounts and ratios presented for the Bank are the minimum levels set forth in the Consent Order. No minimum Tier 1 capital to risk-weighted assets ratio was specified in the Consent Order. Regardless of the Banks capital ratios, it is unable to be classified as well-capitalized while it is operating under the Consent Order with the FDIC. |
RETIREMENT AND BENEFITS
RETIREMENT AND BENEFITS | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
RETIREMENT AND BENEFITS | NOTE 17 - RETIREMENT AND BENEFITS Trustee Retirement Savings Plan Directors Deferred Compensation Plan |
INCOME (LOSS) PER SHARE
INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
INCOME (LOSS) PER SHARE | NOTE 18 INCOME (LOSS) PER SHARE (Dollars in thousands, except per share amounts) Years ended December 31, 2015 2014 2013 Basic income (loss) per common share: Net income (loss) available to common shareholders $ (1,758 ) $ (1,403 ) $ 911 Weighted average common shares outstanding - basic 3,823,244 3,770,355 3,738,337 Basic income (loss) per common share $ (0.46 ) $ (0.37 ) $ 0.24 Diluted income (loss) per common share: Net income (loss) available to common shareholders $ (1,758 ) $ (1,403 ) $ 911 Weighted average common shares outstanding - basic 3,823,244 3,770,355 3,738,337 Incremental shares Average common shares outstanding - diluted 3,823,244 3,770,355 3,738,337 Diluted income (loss) per common share $ (0.46 ) $ (0.37 ) $ 0.24 For the years ended December 31, 2015, 2014 and 2013, there were 91,714 common stock equivalents outstanding associated with the CPP Warrant. These common stock equivalents were not included in the diluted income per share computation for 2013 because their exercise price exceeded the market value of the Companys stock. For the years ended December 31, 2015 and 2014, the common stock equivalents were not included in the diluted loss per share computation because their effect would have been anti-dilutive. |
STOCK COMPENSATION PLAN
STOCK COMPENSATION PLAN | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK COMPENSATION PLAN | NOTE 19 - STOCK COMPENSATION PLAN In 2004, upon shareholder approval, the Company adopted an Omnibus Stock Ownership and Long Term Incentive Plan (the Stock Plan). The Stock Plan authorizes the grant of options and awards of restricted stock to certain of our employees for up to 400,000 shares of the Companys common stock from time to time during the term of the Stock Plan, subject to adjustments upon change in capitalization. The Stock Plan is administered by the Compensation Committee of the Board of Directors of the Company. There were no stock options outstanding as of December 31, 2015, 2014 or 2013. Restricted stock awards included in the Stock Plan vest after the first three consecutive periods during which the Banks return on average assets (ROAA) averages 1.15%. There were no awards outstanding as of December 31, 2015, 2014 or 2013. Following the closing of the private placement transaction, the board of directors anticipates adopting an appropriate equity incentive plan in which the Companys and the Banks employees will be eligible to participate. While the specific terms of this equity plan have yet to be finalized, we anticipate that the plan will allow for issuance of stock options, restricted stock and restricted stock units in an amount not to exceed 30,000,000 shares, or approximately 6.6% of the number of shares anticipated to be issued in the private placement transaction (on an as-converted basis). The board plans to submit the plan to shareholders for approval at the upcoming 2016 annual shareholders meeting. |
OTHER EXPENSES
OTHER EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
Other Income and Expenses [Abstract] | |
OTHER EXPENSES | NOTE 20 - OTHER EXPENSES Other expenses are summarized as follows: Years Ended December 31, (Dollars in thousands) 2015 2014 2013 Stationery, printing, and postage $ 290 $ 275 $ 318 Dues and subscriptions 69 59 72 Telephone 186 202 204 Director and officer insurance 196 212 486 ATM services 11 27 115 Appraisal fee expense 84 123 140 Accountant fees 267 277 84 Legal fees 853 697 1,875 Marketing 60 16 19 Consulting fees 314 112 186 Courier services 55 51 58 Other 702 864 755 Total $ 3,087 $ 2,915 $ 4,312 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 21 - INCOME TAXES Income tax expense is summarized as follows: Years Ended December 31, (Dollars in thousands) 2015 2014 2013 Currently payable: Federal $ $ $ State 27 78 Total current 27 78 Deferred income taxes Income tax expense $ 27 $ 78 $ The components of the net deferred tax asset are as follows: December 31, (Dollars in thousands) 2015 2014 2013 Deferred tax assets: Allowance for loan losses $ 1,564 $ 1,968 $ 3,211 Net unrealized losses on securities available-for-sale 595 313 2,321 Net capitalized loan costs 24 23 25 Net operating loss 20,253 19,572 16,751 Deferred compensation 8 13 17 Nonaccruing interest 332 232 241 Tax credits 241 259 276 Other real estate owned 265 655 638 Loss on equity securities 1 1 43 Other 12 8 5 Total deferred tax assets 23,295 23,044 23,528 Valuation Allowance (22,474 ) (21,971 ) (22,361 ) Total net deferred tax assets 821 1,073 1,167 Deferred tax liabilities: Accumulated depreciation (817 ) (965 ) (1,046 ) Gain on sale of real estate (73 ) Prepaid expenses (4 ) (108 ) (48 ) Total deferred tax liabilities (821 ) (1,073 ) (1,167 ) Net deferred tax asset $ $ $ Deferred tax assets represent the future tax benefit of deductible items. The Company, under the current Internal Revenue Code, is allowed up to a two-year carryback and a twenty year carryforward of these timing items. A valuation allowance is established if it is more likely than not that the tax asset will not be realized. The valuation allowance reduces the recorded deferred tax assets to the net realizable value. As of December 31, 2015, 2014 and 2013, management had established a full valuation allowance of $22.5 million, $22.0 million and $22.4 million, respectively, to reflect the portion of the deferred income tax asset that was not able to be offset against net operating loss carrybacks and reversals of net future taxable temporary differences. When the Company generates future taxable income, it will be able to reevaluate the amount of the valuation allowance. The Company has federal net operating loss carryforwards of $58.7 million, $56.8 million and $48.6 million for income tax purposes as of December 31, 2015, 2014 and 2013, respectively. These net operating losses will begin to expire in the year 2030. HCSB Financial Corporation has South Carolina net operating loss carryforwards of $9.4 million, $7.9 million and $6.5 million for income tax purposes as of December 31, 2015, 2014 and 2013, respectively. These net operating losses cannot offset Bank income and will begin to expire in the year 2019. The Company has analyzed the tax position taken or expected to be taken on its tax returns and concluded it has no liability related to uncertain tax positions. Tax returns for 2012 and subsequent years are subject to examination by taxing authorities. A reconciliation between the income tax expense and the amount computed by applying the Federal statutory rates of 34% to income before income taxes follows: Years ended December 31, (Dollars in thousands) 2015 2014 2013 Tax benefit at statutory rate $ (74 ) $ (73 ) $ 599 State income tax, net of federal income tax benefit 18 52 Tax-exempt interest income (5 ) (16 ) Bank owned life insurance (108 ) (113 ) Life insurance proceeds (315 ) Valuation allowance 220 542 (473 ) Other (29 ) (10 ) (110 ) Income tax expense $ 27 $ 78 $ |
UNUSED LINES OF CREDIT
UNUSED LINES OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Line of Credit Facility [Abstract] | |
UNUSED LINES OF CREDIT | NOTE 22 - UNUSED LINES OF CREDIT As of December 31, 2015, the Company had no available lines of credit, however the Company may utilize its unpledged securities, if liquidity needs should arise. At December 31, 2015, investment securities with a book value of $54.6 million and a market value of $53.6 million were not pledged. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | NOTE 23 - FAIR VALUE Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value estimates are made at a specific point in time based on relevant market and other information about the financial instruments. Because no market exists for a significant portion of the Companys financial instruments, fair value estimates are based on current economic conditions, risk characteristics of various financial instruments, and such other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Accounting principles establish 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. There are three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasuries and money market funds. Level 2 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 for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, mortgage-backed securities, municipal bonds, corporate debt securities, and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative contracts and impaired loans. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly-structured or long-term derivative contracts. Financial Instruments The following methods and assumptions were used to estimate the fair value of significant financial instruments: Cash and Cash Equivalents Securities Available-for-Sale Nonmarketable Equity Securities Loans Receivable Deposits Repurchase Agreements Advances from the Federal Home Loan Bank Subordinated Debentures Junior Subordinated Debentures Off-Balance Sheet Financial Instruments The carrying values and estimated fair values of the Companys financial instruments were as follows: December 31, 2015 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 22,137 $ 22,137 $ 22,137 $ $ Securities available-for-sale 89,701 89,701 89,701 Nonmarketable equity securities 1,330 1,330 1,330 Loans, net 204,766 204,975 204,975 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 156,860 156,860 156,860 Certificates of deposit 173,971 174,964 174,964 Repurchase agreements 1,716 1,716 1,716 Advances from the Federal Home Loan Bank 17,000 17,108 17,108 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 21,318 n/a Standby letters of credit 257 n/a * The Company is unable to determine this value. December 31, 2014 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 28,527 $ 28,527 $ 28,527 $ $ Securities available-for-sale 106,674 106,674 106,674 Nonmarketable equity securities 1,342 1,342 1,342 Loans, net 229,756 230,038 230,038 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 170,538 170,538 170,538 Certificates of deposit 220,799 222,789 222,789 Repurchase agreements 1,612 1,612 1,612 Advances from the Federal Home Loan Bank 17,000 17,136 17,136 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 27,017 n/a Standby letters of credit 247 n/a * The Company is unable to determine this value. December 31, 2013 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 28,081 $ 28,081 $ 28,081 $ $ Securities available-for-sale 94,602 94,602 94,602 Nonmarketable equity securities 1,743 1,743 1,743 Loans, net 246,981 248,633 248,633 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 163,505 163,505 163,505 Certificates of deposit 242,539 244,463 244,463 Repurchase agreements 1,337 1,337 1,337 Advances from the Federal Home Loan Bank 22,000 25,055 25,055 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 29,836 n/a Standby letters of credit 361 n/a * The Company is unable to determine this value. Fair Value Measurements Following is a description of valuation methodologies used for assets and liabilities recorded at fair value. Securities Available-for-Sale Loans Other Real Estate Owned Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present the balances of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Quoted prices in Significant active markets Other Significant for identical Observable Unobservable (Dollars in thousands) assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) December 31, 2015 Assets: Government sponsored enterprises $ 36,032 $ $ 36,032 $ Mortgage-backed securities 52,445 52,445 Obligations of state and local governments 1,224 1,224 Total $ 89,701 $ $ 89,701 $ December 31, 2014 Assets: Government sponsored enterprises $ 40,082 $ $ 40,082 $ Mortgage-backed securities 65,348 65,348 Obligations of state and local governments 1,244 1,244 Total $ 106,674 $ $ 106,674 $ December 31, 2013 Assets: Government sponsored enterprises $ 55,075 $ $ 55,075 $ Mortgage-backed securities 37,034 37,034 Obligations of state and local governments 2,493 2,493 Total $ 94,602 $ $ 94,602 $ The Company has no liabilities measured at fair value on a recurring basis. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following tables present the assets and liabilities carried on the balance sheet by caption and by level within the valuation hierarchy described above for which a nonrecurring change in fair value has been recorded. Quoted prices in Significant active markets Other Significant (Dollars in thousands) for identical Observable Unobservable assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) December 31, 2015 Assets: Impaired loans, net of valuation allowance $ 32,758 $ $ $ 32,758 Other real estate owned 13,624 13,624 Total $ 46,382 $ $ $ 46,382 December 31, 2014 Assets: Impaired loans, net of valuation allowance $ 39,476 $ $ $ 39,476 Other real estate owned 19,501 19,501 Total $ 58,977 $ $ $ 58,977 December 31, 2013 Assets: Impaired loans, net of valuation allowance $ 41,883 $ $ $ 41,883 Other real estate owned 24,972 24,972 Total $ 66,855 $ $ $ 66,855 The Company has no liabilities measured at fair value on a nonrecurring basis. Level 3 Valuation Methodologies The fair value of impaired loans is estimated using one of several methods, including collateral value and discounted cash flows and, in rare cases, the market value of the note. Those impaired loans not requiring an allowance represent loans for which the net present value of the expected cash flows or fair value of the collateral less costs to sell exceed the recorded investments in such loans. When the fair value of the collateral is based on an executed sales contract with an independent third party, the Company records the impaired loans as nonrecurring Level 1. If the collateral is based on another observable market price or a current appraised value, the Company records the impaired loans as nonrecurring Level 2. When an appraised value is not available or the Company determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. Impaired loans can be evaluated for impairment using the present value of expected future cash flows discounted at the loans effective interest rate. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly. Foreclosed real estate is carried at fair value less estimated selling costs. Fair value is generally based upon current appraisals, comparable sales, and other estimates of value obtained principally from independent sources, adjusted for selling costs. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the asset as nonrecurring Level 2. However, the Company also considers other factors or recent developments which could result in adjustments to the collateral value estimates indicated in the appraisals such as changes in absorption rates or market conditions from the time of valuation. In situations where management adjustments are significant to the fair value measurements in its entirety, such measurements are classified as Level 3 within the valuation hierarchy. The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2015 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 2,590 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (8.77% ) Commercial real estate 21,186 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-32.33% Flows Independent quotes (10.23% ) Residential 8,858 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (9.90% ) Consumer 124 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) Other real estate owned 13,624 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2014 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 3,493 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-68.05% Flows Independent quotes (25.71% ) Commercial real estate 24,138 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.80% ) Residential 11,681 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-47.31% Flows Independent quotes (7.31% ) Consumer 164 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) Other real estate owned 19,501 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2013. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2013 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 3,728 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (3.84% ) Commercial real estate 27,085 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-52.00% Flows Independent quotes (14.93% ) Residential 10,865 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-47.31% Flows Independent quotes (10.45% ) Consumer 205 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-7.00% Flows Independent quotes (4.50% ) Other real estate owned 24,972 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) |
HCSB FINANCIAL CORPORATION (PAR
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) | 12 Months Ended |
Dec. 31, 2015 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) | NOTE 24 - HCSB FINANCIAL CORPORATION ( PARENT COMPANY ONLY Presented below are the condensed financial statements for HCSB Financial Corporation (Parent Company Only). Condensed Balance Sheets December 31, (Dollars in thousands) 2015 2014 2013 Assets Cash $ 5 $ 26 $ 59 Investment in banking subsidiary 10,527 10,066 3,516 Investment in trust 186 186 186 Other assets 111 123 136 Total assets $ 10,829 $ 10,401 $ 3,897 Liabilities and shareholders equity Accrued interest payable-subordinated debentures $ 4,925 $ 3,685 $ 2,553 Accrued interest payable-junior subordinated debentures 901 714 536 Subordinated debentures 11,062 11,062 11,062 Junior subordinated debentures 6,186 6,186 6,186 Other liabilities 5 1 2 Total liabilities 23,079 21,648 20,339 Shareholders deficit (12,250 ) (11,247 ) (16,442 ) Total liabilities and shareholders deficit $ 10,829 $ 10,401 $ 3,897 Condensed Statements of Operations Years ended December 31, (Dollars in thousands) 2015 2014 2013 Income Forgiveness of debt $ $ $ 1,000 Expenses Interest expense on subordinated debentures 1,240 1,132 1,081 Interest expense on junior subordinated debentures 186 178 186 Other expenses 44 104 39 1,470 1,414 1,306 Loss before income taxes, and equity in undistributed gains of banking subsidiary (1,470 ) (1,414 ) (306 ) Income tax expense Equity in undistributed gains of banking subsidiary 1,224 1,123 2,069 Net income (loss) $ (246 ) $ (291 ) $ 1,763 Condensed Statements of Cash Flows Years ended December 31, (Dollars in thousands) 2015 2014 2013 Cash flows from operating activities: Net income (loss) $ (246 ) $ (291 ) $ 1,763 Adjustments to reconcile net income (loss) to net cash used by operating activities: Forgiveness of debt (1,000 ) Equity in undistributed gains of banking subsidiary (1,224 ) (1,123 ) (2,069 ) Decrease in other assets 12 13 13 Increase in accrued interest payable and other liabilities 1,431 1,310 1,266 Net cash used by operating activities (27 ) (91 ) (27 ) Cash flows from financing activities: Sale of common stock 6 58 Net cash provided by financing activities 6 58 Net decrease in cash (21 ) (33 ) (27 ) Cash and cash equivalents, beginning of year 26 59 86 Cash and cash equivalents, end of year $ 5 $ 26 $ 59 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 25 SUBSEQUENT EVENTS Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date the financial statements were issued, and the following subsequent events occurred requiring accruals or disclosures that are not otherwise disclosed herein. On February 29, 2016, the Company entered into a securities purchase agreement with the U.S. Treasury, pursuant to which the Company will repurchase all 12,895 shares of the Series T Preferred Stock for $128,950, plus reimbursement of attorneys fees and other expenses incurred by the U.S. Treasury not to exceed $25,000. The U.S. Treasury also agreed to waive any and all unpaid dividends on the Series T Preferred Stock and to cancel the CPP Warrant. The securities purchase agreement contains customary representations and warranties of the Company and is subject to closing conditions, including the closing of the private placement transaction and regulatory approval of the transaction. The securities purchase agreement may be terminated by mutual agreement of the Company and the U.S. Treasury and may also be terminated by either party in the event that the transaction does not close on or before April 15, 2016. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. On March 2, 2016, the Company entered into a stock purchase agreement with Castle Creek and certain other investors, pursuant to which the Company expects to raise a total of $45 million in a private placement transaction and to issue shares of the Companys common stock and shares of newly-created Series A Preferred Stock. We intend to downstream approximately $38.0 million of the proceeds from the private placement transaction to the Bank as additional capital, which would satisfy the minimum capital levels required under the Consent Order and otherwise return the Bank to well capitalized under regulatory guidelines on a pro forma basis as of December 31, 2015. Proceeds from the private placement transaction will also be used to repurchase or redeem the outstanding Series T Preferred Stock, trust preferred securities, and the subordinated promissory notes. As noted above, we have entered into securities purchase agreements with respect to the Series T Preferred Stock and trust preferred securities and the class action settlement agreement with the respect to the subordinated promissory notes has received final court approval. Closing of the private placement transaction is subject to the receipt of the necessary regulatory approvals or nonobjections for each of the repurchases or redemptions. We currently anticipate that the private placement transaction will close in April 2016. There are no assurances that we will receive the necessary regulatory approvals or nonobjections or otherwise be able to close the private placement transaction. |
ORGANIZATION AND SIGNIFICANT 33
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation On December 21, 2004, the Trust issued and sold a total of 6,000 trust preferred securities, with $1,000 liquidation amount per capital security, to institutional buyers in a pooled trust preferred issue. The trust preferred securities, which are reported on the consolidated balance sheet as junior subordinated debentures, generated proceeds of $6.0 million. As required by the Federal Reserve Bank of Richmond, beginning in March 2011, we began exercising our right to defer all quarterly distributions on our trust preferred securities. We may defer these interest payments for up to 20 consecutive quarterly periods, although interest will continue to accrue on the trust preferred securities and interest on such deferred interest will also accrue and compound quarterly from the date such deferred interest would have been payable were it not for the extension period. At December 31, 2015, total accrued interest equaled $901 thousand. All of the deferred interest, including interest accrued on such deferred interest, is due and payable at the end of the applicable deferral period, which is in March 2016. On February 29, 2015, the Company entered into a securities purchase agreement with the holder of the trust preferred securities, Alesco Preferred Funding VI LTD (Alesco), pursuant to which the Company intends to repurchase the trust preferred securities for $600,000, plus up to $25,000 in reimbursement of Alescos attorneys fees and other expenses. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction (described below). Refer to Note 11 to our Financial Statements for additional information on the outstanding trust preferred securities. On March 6, 2009, as part of the Troubled Asset Relief Program Capital Purchase Program (the CPP) established by the U.S. Department of the Treasury (the U.S. Treasury) under the Emergency Economic Stabilization Act of 2009, the Company issued and sold to the U.S. Treasury (i) 12,895 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series T, having a liquidation preference of $1,000 per share (the Series T Preferred Stock), and (ii) a ten-year warrant to purchase up to 91,714 shares of its common stock at an initial exercise price of $21.09 per share (the CPP Warrant), for an aggregate purchase price of $12.9 million in cash. As of February 2011, the Federal Reserve Bank of Richmond has required the Company to defer dividend payments on the Series T Preferred Stock. As of December 31, 2015, the Company had $4.7 million of deferred dividend payments due on the Series T Preferred Stock. Because the Company has deferred these 20 payments, the Company is prohibited from paying any dividends on its common stock until all deferred payments have been made in full. On February 29, 2016, the Company entered into a securities purchase agreement with the U.S. Treasury, pursuant to which the Company intends to repurchase all 12,895 shares of the Series T Preferred Stock for $128,950, plus up to $25,000 in reimbursement of the U.S. Treasurys attorneys fees and other expenses. The Company anticipates that the closing of this repurchase will occur immediately following the closing of the private placement transaction. Refer to Note 15 to our financial statements for additional information on the outstanding Series T Preferred Stock. On July 31, 2010, the Company completed a private placement of subordinated promissory notes that totaled $12.1 million. The notes currently bear interest at a rate equal to the current Prime Rate in effect, as published by the Wall Street Journal, plus 3%; provided, that the rate of interest shall not be less than 8% per annum or more than 12% per annum. The Federal Reserve Bank of Richmond has prohibited the Company from paying interest due on the subordinated notes since October 2011 and, as a result, the Company has deferred interest payments in the amount of approximately $4.9 million as of December 31, 2015. Effective as of September 16, 2015, the Company, the Bank, James R. Clarkson, Glenn Raymond Bullard, Ron Lee Paige, Sr., and Edward Lewis Loehr, Jr., the President and Chief Executive Officer, Senior Executive Vice President, Executive Vice President, and Chief Financial Officer of the Company and the Bank, respectively, entered into a class action settlement agreement in potential settlement of a putative class action lawsuit initiated by Jan W. Snyder, Acey H. Livingston, and Mark Josephs, on behalf of themselves and as representatives of a class of similarly situated purchasers of the Companys subordinated debt notes. The class action lawsuit is seeking an unspecified amount of damages resulting from alleged wrongful conduct associated with purchases of the Companys subordinated debt notes. On March 2, 2016, the Court of Common Pleas for the Fifteenth Judicial District, State of South Carolina, County of Horry entered a final order of approval approving the class action settlement agreement, pursuant to which the Company will establish a settlement fund of approximately $2.4 million, which represents 20% of the principal of subordinated debt notes issued by the Company, and class members will be entitled to receive 20% of their notes, which will be paid from the settlement fund, in exchange for a full and complete release of all claims that were asserted or could have been asserted in the class action lawsuit . On August 7, 2015, the Bank consummated the sale of its Socastee, Windy Hill, and Carolina Forest branches, with total deposits of approximately $34.2 million and approximately $5.7 million in loans, to Sandhills Bank, North Myrtle Beach, South Carolina. The transaction included a deposit premium of 2.5% resulting in a net gain of approximately $736 thousand to the Company, after closing costs. On March 2, 2016, the Company entered into a stock purchase agreement with Castle Creek Capital Partners VI, L.P. (Castle Creek) and certain other institutional and accredited investors (collectively, the Investors), pursuant to which the Company expects to raise a total of $45 million in a private placement transaction and to issue shares of the Companys common stock, par value $0.01 per share, at a purchase price of $0.10 per share, and shares of a new series of convertible perpetual non-voting preferred stock, Series A, par value $0.01 per share, at a purchase price of $10.00 per share (the Series A Preferred Stock). The stock purchase agreement is subject to customary closing conditions, including receipt of necessary regulatory approvals or nonobjections for the repurchase or redemption of the Series T Preferred Stock, trust preferred securities, and subordinated promissory notes in each of the transactions described above. The Company intends to use the net proceeds of the private placement transaction to repurchase or redeem these senior securities and to recapitalize the Bank to support its operations and increase its capital ratios to meet the higher minimum capital ratios required under the terms of the Consent Order (as defined below). Effective as of February 26, 2016, W. Jack McElveen, Jr. was appointed as chief credit officer of the Bank, to replace Glenn R. Bullard, who retired from his position as the Companys and the Banks Senior Executive Vice President and Chief Credit Officer. In connection with the comprehensive recapitalization of the Company and the Bank, on March 3, 2016, the board of directors of the Company announced that it has agreed to appoint Jan H. Hollar as the chief executive officer and a director of the Company and the Bank, effective as of the closing of the private placement transaction. On February 29, 2016, the Company and the Bank entered into an employment agreement, which will become effective upon the closing of the private placement transaction, pursuant to which Ms. Hollar will assume this role. On March 16, 2016, the Company received a notice of default from The Bank of New York Mellon Trust Company, N.A., in its capacity as trustee, relating to the trust preferred securities. The notice of default relates specifically to the Indenture dated December 21, 2004 (the Indenture), by and among the Company and The Bank of New York Mellon Trust Company, N.A., successor-in-interest to JP Morgan Chase Bank, National Association, under which the Company issued the trust preferred securities. As permitted by the Indenture, the Company previously exercised its right to defer interest payments on the trust preferred securities for 20 consecutive quarterly payment periods. The Companys right to defer such interest payments expired on March 15, 2016, at which time all deferred payments of interest became due and payable. The Company did not pay such deferred interest at the end of the permitted deferral period, constituting an event of default under the Indenture, and therefore pursuant to the Indenture, the trustee provided this notice of default. Receipt of this notice of default from the trustee does not affect the Companys plans to repurchase the trust preferred securities under the securities purchase agreement. Under the Indenture, the principal amount of the trust preferred securities, together with any premium and unpaid accrued interest, only becomes due upon such an event of default after the trustee, or Alesco, as the holder of not less than 25% of the trust preferred securities outstanding, declares such amounts due and payable by written notice to the Company. To date, the Company has not received such written notice from the trustee or Alesco. As of March 16, 2016, the total principal amount outstanding on the trust preferred securities plus accrued and unpaid interest was $7.1 million. |
Management's Estimates | Managements Estimates Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, including valuation allowances for impaired loans, and the carrying amount of real estate acquired in connection with foreclosures or in satisfaction of loans. Management must also make estimates in determining the estimated useful lives and methods for depreciating premises and equipment. While management uses available information to recognize losses on loans and foreclosed real estate, future additions to the allowance may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Companys allowances for losses on loans and foreclosed real estate. Such agencies may require the Company to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowances for losses on loans and foreclosed real estate may change materially in the near term. |
Investment Securities | Investment Securities |
Nonmarketable Equity Securities | Nonmarketable Equity Securities At December 31, 2015, 2014 and 2013, the investment in FHLB stock was $1.1 million, $1.2 million and $1.6 million, respectively. Also included in nonmarketable equities is investment in the Trust, which totaled $186 thousand at December 31, 2015, 2014 and 2013. |
Loans Receivable | Loans Receivable Loan origination and commitment fees and certain direct loan origination costs (principally salaries and employee benefits) are deferred and amortized to income over the contractual life of the related loans or commitments, adjusted for prepayments, using the straight-line method. Loans are impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans are subject to these criteria except for smaller balance homogeneous loans that are collectively evaluated for impairment and loans measured at fair value or at the lower of cost or fair value. The Company considers its consumer installment portfolio and home equity lines as such exceptions. Therefore, loans within the real estate and commercial loan portfolios are reviewed individually. Impairment of a loan is measured based on the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the collateral, if the loan is collateral dependent. When management determines that a loan is impaired, the difference between the Companys investment in the related loan and the present value of the expected future cash flows, or the fair value of the collateral, is charged off with a corresponding entry to the allowance for loan losses or a specific reserve is set aside within the allowance for loan losses. The accrual of interest is discontinued on an impaired loan when management determines the borrower may be unable to meet payments as they become due. |
Concentrations Of Credit Risk | Concentrations of Credit Risk The Company makes loans to individuals and small businesses for various personal and commercial purposes primarily throughout Horry County in South Carolina and Columbus and Brunswick counties of North Carolina. The Companys loan portfolio is not concentrated in loans to any single borrower or a relatively small number of borrowers. Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions except for loans secured by residential and commercial real estate and commercial and industrial non-real estate loans. These concentrations of residential and commercial real estate loans and commercial and industrial non-real estate loans totaled $176.4 million and $27.9 million, respectively, at December 31, 2015, representing 84.24% and 13.32%, respectively, of gross loans receivable for the Company at December 31, 2015. In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk from concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.), and loans with high loan-to-value ratios. Management has determined that there is no concentration of credit risk associated with its lending policies or practices. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loans life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. Therefore, management believes that these particular practices do not subject the Company to unusual credit risk. The Companys investment portfolio consists principally of obligations of the United States, its agencies or its corporations and general obligation municipal securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The Company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant. |
Allowance For Loan Losses | Allowance for Loan Losses The allowance is subject to examination by regulatory agencies, which may consider such factors as the methodology used to determine adequacy and the size of the allowance relative to that of peer institutions, and other adequacy tests. In addition, such regulatory agencies could require the Company to adjust its allowance based on information available to them at the time of their examination. The methodology used to determine the reserve for unfunded lending commitments, which is included in other liabilities, is inherently similar to that used to determine the allowance for loan losses adjusted for factors specific to binding commitments, including the probability of funding and historical loss ratio. |
Premises, Furniture And Equipment | Premises, Furniture and Equipment Maintenance and repairs are charged to current expense as incurred, and the costs of major renewals and improvements are capitalized. |
Other Real Estate Owned | Other Real Estate Owned Any write-downs at the dates of acquisition are charged to the allowance for loan losses. Expenses to maintain such assets, subsequent write-downs, and gains and losses on disposal are included in net cost of operations of other real estate owned. |
Income And Expense Recognition | Income and Expense Recognition |
Income Taxes | Income Taxes Deferred income taxes are determined using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax impacts of the differences between the book and tax bases of assets and liabilities and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to the Companys judgment that realization is more likely than not. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest and penalties, if any, are recognized as a component of income tax expense. The Company reviews the deferred tax assets for recoverability based on history of earnings, expectations for future earnings and expected timing of reversals of temporary differences. Realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income available under tax law, including future reversals of existing temporary differences, future taxable income exclusive of reversing differences, taxable income in prior carryback years, projections of future operating results, cumulative tax losses over the past three years, tax loss deductibility limitations, and available tax planning strategies. If, based on available information, it is more likely than not that the deferred income tax asset will not be realized, a valuation allowance against the deferred tax asset must be established with a corresponding charge to income tax expense. The deferred tax assets and valuation allowance are evaluated each quarter, and a portion of the valuation allowance may be reversed in future periods. The determination of how much of the valuation allowance that may be reversed and the timing is based on future results of operation and the amount and timing of actual loan charge-offs and asset write-downs. At December 31, 2015, 2014 and 2013, the Companys deferred tax asset was offset in its entirety by a valuation allowance. The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate any adjustments that will result in a material adverse impact on the Companys financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded. The private placement transaction discussed throughout this document has been structured to avoid being deemed a change in ownership under the IRS rules and the Company is continuing to work with its legal and accounting advisors to evaluate methods to preserve its deferred tax assets. |
Advertising Expense | Advertising Expense |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share |
Comprehensive Income | Comprehensive Income |
Statements of Cash Flows | Statements of Cash Flows |
Off-Balance-Sheet Financial Instruments | Off-Balance Sheet Financial Instruments |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2014, the Financial Accounting Standards Board (the FASB) amended the Receivables topic of the Accounting Standards Codification (the ASC). The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (OREO). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments were effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2014 with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. These amendments did not have a material effect on the Companys financial statements. In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments were effective for the Company during the first quarter of 2015 and did not have a material effect on its financial statements. In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both unusual in nature and infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In June 2015, the FASB issued amendments to clarify the ASC, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. In August 2015, the FASB issued amendments to the Interest topic of the ASC to clarify the SEC staffs position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases which will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessees rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Companys consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Companys financial position, results of operations or cash flows. |
Risks And Uncertainties | Risks and Uncertainties The Company is subject to the regulations of various governmental agencies. These regulations can and do change significantly from period to period. The Company also undergoes periodic examinations by the regulatory agencies, which may subject it to further changes with respect to asset valuations, amounts of required loss allowances and operating restrictions from the regulators judgments based on information available to them at the time of their examination. Additionally, the Company is subject to certain regulations due to our participation in the CPP. Pursuant to the terms of the CPP Purchase Agreement between us and the U.S. Treasury, we adopted certain standards for executive compensation and corporate governance for the period during which the U.S. Treasury holds the equity issued pursuant to the CPP Purchase Agreement, including the common stock which may be issued pursuant to the CPP Warrant. These standards generally apply to our named executive officers. The standards include (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) requiring clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate; (3) prohibition on making golden parachute payments to senior executives; (4) prohibition on providing tax gross-up provisions; and (5) agreement not to deduct for tax purposes executive compensation in excess of $500 thousand for each senior executive. In particular, the change to the deductibility limit on executive compensation will likely increase the overall cost of our compensation programs in future periods and may make it more difficult to attract suitable candidates to serve as executive officers. In February 2005, the Bank purchased a $500 thousand 15-year renewable and convertible term life insurance policy through Banner Life Insurance Company on the life of James R. Clarkson, President and CEO. The Bank is both the owner and the beneficiary of this key person policy. The purpose of securing this policy was to provide the Bank with financial protection in the event of the unexpected death of Mr. Clarkson and better enable the Bank to attract a qualified replacement for Mr. Clarkson in such a situation. The Bank anticipates transferring this policy to Mr. Clarkson following his retirement, and he will assume payment obligations relating thereto. Legislation that has been adopted after we closed on our sale of Series T Preferred Stock and the CPP Warrant to the U.S. Treasury for $12.9 million pursuant to the CPP on March 6, 2009, or any legislation or regulations that may be implemented in the future, may have a material impact on the terms of our CPP transaction with the U.S. Treasury. |
Reclassifications | Reclassifications |
REGULATORY MATTERS AND FUTURE34
REGULATORY MATTERS AND FUTURE OPERATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Matters And Future Operations Tables | |
Schedule Of Compliance With Consent Order | The Consent Order conveys specific actions needed to address the Banks current financial condition, primarily related to capital planning, liquidity/funds management, policy and planning issues, management oversight, loan concentrations and classifications, and non-performing loans. A summary of the requirements of the Consent Order and the Banks status on complying with the Consent Order is as follows: Requirements of the Consent Order Banks Compliance Status Achieve and maintain, by July 10, 2011, Total Risk Based capital at least equal to 10% of risk-weighted assets and Tier 1 capital at least equal to 8% of total assets. The Bank did not meet the capital ratios as specified in the Consent Order and, as a result, submitted a revised capital restoration plan to the FDIC on July 15, 2011. The revised capital restoration plan was determined by the FDIC to be insufficient and, as a result, we submitted a further revised capital restoration plan to the FDIC on September 30, 2011. We received the FDICs non-objection to the further revised capital restoration plan on December 6, 2011. The Banks previously disclosed sale of its Socastee, Windy Hill, and Carolina Forest branches on August 7, 2015 resulted in a net gain of approximately $736 thousand on the transaction and a slight increase in the Banks capital ratios. Assuming completion of the private placement transaction, the Company will contribute approximately $38 million in additional capital to the Bank, which will satisfy the minimum capital ratios required under the Consent Order. Submit, by April 11, 2011, a written capital plan to the supervisory authorities. We believe we have complied with this provision of the Consent Order. Establish, by March 12, 2011, a plan to monitor compliance with the Consent Order, which shall be monitored by the Banks Directors Committee. We believe we have complied with this provision of the Consent Order. The Directors Committee meets monthly and each meeting includes reviews and discussions of all areas required in the Consent Order. Develop, by May 11, 2011, a written analysis and assessment of the Banks management and staffing needs. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to perform an assessment of the Banks staffing needs to ensure the Bank has an appropriate organizational structure with qualified management in place. The Board of Directors has reviewed all recommendations regarding the Banks organizational structure. Notify the supervisory authorities in writing of the resignation or termination of any of the Banks directors or senior executive officers. We believe we have complied with this provision of the Consent Order. Eliminate, by March 12, 2011, by charge-off or collection, all assets or portions of assets classified Loss and 50% of those assets classified Doubtful. We believe we have complied with this provision of the Consent Order. Review and update, by April 11, 2011, its policy to ensure the adequacy of the Banks allowance for loan and lease losses, which must provide for a review of the Banks allowance for loan and lease losses at least once each calendar quarter. We believe we have complied with this provision of the Consent Order. Submit, by April 11, 2011, a written plan to the supervisory authorities to reduce classified assets, which shall include, among other things, a reduction of the Banks risk exposure in relationships with assets in excess of $750,000 which are criticized as Substandard or Doubtful. In accordance with the approved plan, reduce assets classified in the June 30, 2010 Report of Examination by 65% by August 11, 2012 and by 75% by February 9, 2013. We believe we have complied with this provision of the Consent Order. The written plan was submitted and approved and assets classified in the June 30, 2010 Report of Examination have been reduced by 79.9% as of December 31, 2015. Revise, by April 11, 2011, its policies and procedures for managing the Banks Adversely Classified Other Real Estate Owned. We believe we have complied with this provision of the Consent Order. Not extend any additional credit to any borrower who has a loan or other extension of credit from the Bank that has been charged-off or classified, in whole or in part, Loss or Doubtful and is uncollected. In addition, the Bank may not extend any additional credit to any borrower who has a loan or other extension of credit from the Bank that has been criticized, in whole or in part, Substandard and is uncollected, unless the Banks board of directors determines that failure to extend further credit to a particular borrower would be detrimental to the best interests of the Bank. We believe we have complied with this provision of the Consent Order. In the second quarter of 2010, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. An independent review of the Banks credit portfolio was most recently completed in the second quarter of 2014. Perform, by April 11, 2011, a risk segmentation analysis with respect to the Banks Concentrations of Credit and develop a written plan to systematically reduce any segment of the portfolio that is an undue concentration of credit. We believe we have complied with this provision of the Consent Order. Review, by April 11, 2011 and annually thereafter, the Banks loan policies and procedures for adequacy and, based upon this review, make all appropriate revisions to the policies and procedures necessary to enhance the Banks lending functions and ensure their implementation. We believe we have complied with this provision of the Consent Order. As noted above, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. Adopt, by May 11, 2011, an effective internal loan review and grading system to provide for the periodic review of the Banks loan portfolio in order to identify and categorize the Banks loans, and other extensions of credit which are carried on the Banks books as loans, on the basis of credit quality. We believe we have complied with this provision of the Consent Order. As noted above, the Bank engaged the services of an independent firm to perform an extensive review of the Banks credit portfolio and help management implement a more comprehensive lending and collection policy and more enhanced loan review. Review and update, by May 11, 2011, its written profit plan to ensure the Bank has a realistic, comprehensive budget for all categories of income and expense, which must address, at minimum, goals and strategies for improving and sustaining the earnings of the Bank, the major areas in and means by which the Bank will seek to improve the Banks operating performance, realistic and comprehensive budgets, a budget review process to monitor income and expenses of the Bank to compare actual results with budgetary projections, assess that operating assumptions that form the basis for budget projections and adequately support major projected income and expense components of the plan, and coordination of the Banks loan, investment, and operating policies and budget and profit planning with the funds management policy. We believe we have complied with this provision of the Consent Order. The Bank engaged an independent third party to assist management with a strategic plan to help restructure its balance sheet, increase capital ratios, return to profitability and maintain adequate liquidity. Review and update, by May 11, 2011, its written plan addressing liquidity, contingent funding, and asset liability management. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to assist management in its development of a strategic plan that achieves all requirements of the Consent Order. The strategic plan reflects the Banks plans to restructure its balance sheet, increase capital ratios, return to profitability, and maintain adequate liquidity. The Board of Directors has reviewed and adopted the Banks strategic plan. Eliminate, by March 12, 2011, all violations of law and regulation or contraventions of policy set forth in the FDICs safety and soundness examination of the Bank in November 2009. We believe we have complied with this provision of the Consent Order. Not accept, renew, or rollover any brokered deposits unless it is in compliance with the requirements of 12 C.F.R. § 337.6(b). We believe we have complied with this provision of the Constant Order. Since entering into the Consent Order, the Bank has not accepted, renewed, or rolled-over any brokered deposits. Limit asset growth to 5% per annum. We believe we have complied with this provision of the Consent Order. Not declare or pay any dividends or bonuses or make any distributions of interest, principal, or other sums on subordinated debentures without the prior approval of the supervisory authorities. We believe we have complied with this provision of the Consent Order. The Bank shall comply with the restrictions on the effective yields on deposits as described in 12 C.F.R. § 337.6. We believe we have complied with this provision of the Consent Order. Furnish, by March 12, 2011 and within 30 days of the end of each quarter thereafter, written progress reports to the supervisory authorities detailing the form and manner of any actions taken to secure compliance with the Consent Order. We believe we have complied with this provision of the Consent Order, and we have submitted the required progress reports to the supervisory authorities. Submit, by March 12, 2011, a written plan to the supervisory authorities for eliminating its reliance on brokered deposits. We believe we have complied with this provision of the Consent Order. Adopt, by April 11, 2011, an employee compensation plan after undertaking an independent review of compensation paid to all of the Banks senior executive officers. We believe we have complied with this provision of the Consent Order. Prepare and submit, by May 11, 2011, its written strategic plan to the supervisory authorities. We believe we have complied with this provision of the Consent Order. In 2011, the Bank engaged an independent third party to assist management in its development of a strategic plan that achieves all requirements of the Consent Order. The Board of Directors has reviewed and adopted the Banks strategic plan. |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule Of Securities Available-For-Sale | Securities available-for-sale consisted of the following: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value (Dollars in thousands) December 31, 2015 Government-sponsored enterprises $ 36,720 $ $ (688 ) $ 36,032 Mortgage-backed securities 53,368 54 (977 ) 52,445 Obligations of state and local governments 1,221 5 (2 ) 1,224 Total $ 91,309 $ 59 $ (1,667 ) $ 89,701 December 31, 2014 Government-sponsored enterprises $ 40,952 $ 7 $ (877 ) $ 40,082 Mortgage-backed securities 65,328 447 (427 ) 65,348 Obligations of state and local governments 1,239 10 (5 ) 1,244 Total $ 107,519 $ 464 $ (1,309 ) $ 106,674 December 31, 2013 Government-sponsored enterprises $ 60,628 $ $ (5,553 ) $ 55,075 Mortgage-backed securities 37,731 167 (864 ) 37,034 Obligations of state and local governments 2,516 113 (136 ) 2,493 Total $ 100,875 $ 280 $ (6,553 ) $ 94,602 |
Summary Of Maturities Of Securities Available-For-Sale | The following is a summary of maturities of securities available-for-sale as of December 31, 2015. The amortized cost is based on the contractual maturity dates. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty. Amortized Cost Due Due After One After Five Within Through Through After Ten Market December 31, 2015 One Year Five Years Ten Years Years Total Value Government sponsored enterprises $ $ 396 $ 7,024 $ 29,300 $ 36,720 $ 36,032 Mortgage-backed securities 5,641 47,727 53,368 52,445 Obligations of state and local governments 619 602 1,221 1,224 Total $ $ 396 $ 13,284 $ 77,629 $ 91,309 $ 89,701 |
Schedule Of Gross Unrealized Losses And Fair Value Of Securities Available-For-Sale | The following table shows gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position, at: December 31, 2015 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ 31,489 $ (558 ) $ 4,543 $ (130 ) $ 36,032 $ (688 ) Mortgage-backed securities 28,024 (354 ) 17,008 (623 ) 45,032 (977 ) Obligations of state and local governments 617 (2 ) 617 (2 ) Total $ 60,130 $ (914 ) $ 21,551 $ (753 ) $ 81,681 $ (1,667 ) December 31, 2014 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ $ $ 38,076 $ (877 ) $ 38,076 $ (877 ) Mortgage-backed securities 22,024 (244 ) 7,458 (183 ) 29,482 (427 ) Obligations of state and local governments 623 (5 ) 623 (5 ) Total $ 22,024 $ (244 ) $ 46,157 $ (1,065 ) $ 68,181 $ (1,309 ) December 31, 2013 Less than twelve months Twelve months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (Dollars in thousands) Value Losses Value Losses Value Losses Government-sponsored enterprises $ 47,311 $ (4,433 ) $ 7,764 $ (1,120 ) $ 55,075 $ (5,553 ) Mortgage-backed securities 17,826 (471 ) 7,373 (393 ) 25,199 (864 ) Obligations of state and local governments 552 (67 ) 568 (69 ) 1,120 (136 ) Total $ 65,689 $ (4,971 ) $ 15,705 $ (1,582 ) $ 81,394 $ (6,553 ) |
Schedule Of Gross Realized Gains And Losses On Sales Of Available-For-Sale Secutities | Gross realized gains and losses on sales of available for sale securities for the years ended were as follows: Years ended (Dollars in thousands) December 31, 2015 2014 2013 Gross realized gains $ 232 $ 269 298 Gross realized losses (68 ) Net gain $ 232 $ 201 $ 298 |
LOAN PORTFOLIO (Tables)
LOAN PORTFOLIO (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Components Of Loan Portfolio By Category | Loans consisted of the following: December 31, (Dollars in thousands) 2015 2014 2013 Residential $ 75,081 $ 84,568 $ 84,335 Commercial Real Estate 101,291 113,852 130,450 Commercial 27,881 30,894 33,711 Consumer 5,114 6,229 7,928 Total gross loans $ 209,367 $ 235,543 $ 256,424 |
Schedule of Related Party Loans | Certain parties (principally certain directors and officers of the Company, their immediate families, and business interests) were loan customers and had other transactions in the normal course of business with the Company. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lender and do not involve more than normal risk of collectibility. Related party loans consisted of the following: For the Year ended December 31, (Dollars in thousands) 2015 2014 2013 Beginning balance $ 3,857 $ 3,088 $ 2,867 New loans and advances 397 1,785 1,195 Repayments (1,032 ) (1,016 ) (974 ) Ending balance $ 3,222 $ 3,857 $ 3,088 |
Schedule Of Allowance For Loan Losses | The following tables detail the activity within our allowance for loan losses as of and for the years ended December 31, 2015, 2014 and 2013, by portfolio segment: December 31, 2015 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 597 $ 3,591 $ 185 $ 1,414 $ 5,787 Charge-offs (539 ) (1,212 ) (81 ) (501 ) (2,333 ) Recoveries 200 727 37 183 1,147 Provision 694 (563 ) (61 ) (70 ) Ending balance $ 952 $ 2,543 $ 80 $ 1,026 $ 4,601 Ending balances : Individually evaluated for impairment $ 137 $ 396 $ 10 $ 560 $ 1,103 Collectively evaluated for impairment $ 815 $ 2,147 $ 70 $ 466 $ 3,498 Loans receivable: Ending balance, total $ 27,881 $ 101,291 $ 5,114 $ 75,081 $ 209,367 Ending balances: Individually evaluated for impairment $ 2,727 $ 21,582 $ 134 $ 9,418 $ 33,861 Collectively evaluated for impairment $ 25,154 $ 79,709 $ 4,980 $ 65,663 $ 175,506 December 31, 2014 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 1,020 $ 5,312 $ 144 $ 2,967 $ 9,443 Charge-offs (1,068 ) (4,646 ) (343 ) (974 ) (7,031 ) Recoveries 549 1,117 38 610 2,314 Provision 96 1,808 346 (1,189 ) 1,061 Ending balance $ 597 $ 3,591 $ 185 $ 1,414 $ 5,787 Ending balances : Individually evaluated for impairment $ 151 $ 1,008 $ 11 $ 737 $ 1,907 Collectively evaluated for impairment $ 446 $ 2,583 $ 174 $ 677 $ 3,880 Loans receivable: Ending balance, total $ 30,894 $ 113,852 $ 6,229 $ 84,568 $ 235,543 Ending balances: Individually evaluated for impairment $ 3,644 $ 25,146 $ 175 $ 12,418 $ 41,383 Collectively evaluated for impairment $ 27,250 $ 88,706 $ 6,054 $ 72,150 $ 194,160 December 31, 2013 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Allowance for loan losses: Beginning balance $ 1,982 $ 7,587 $ 124 $ 4,457 $ 14,150 Charge-offs (1,691 ) (3,927 ) (217 ) (1,641 ) (7,476 ) Recoveries 724 2,230 48 1,264 4,266 Provision 5 (578 ) 189 (1,113 ) (1,497 ) Ending balance $ 1,020 $ 5,312 $ 144 $ 2,967 $ 9,443 Ending balances: Individually evaluated for impairment $ 218 $ 2,455 $ 18 $ 1,105 $ 3,796 Collectively evaluated for impairment $ 802 $ 2,857 $ 126 $ 1,862 $ 5,647 Loans receivable: Ending balance, total $ 33,711 $ 130,450 $ 7,928 $ 84,335 $ 256,424 Ending balances: Individually evaluated for impairment $ 3,946 $ 29,540 $ 223 $ 11,970 $ 45,679 Collectively evaluated for impairment $ 29,765 $ 100,910 $ 7,705 $ 72,365 $ 210,745 |
Summary Of Delinquencies And Nonaccruals, By Portfolio Class | The following chart summarizes delinquencies and nonaccruals, by portfolio class, as of December 31, 2015, 2014 and 2013. December 31, 2015 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 321 $ 110 $ 1 $ 432 $ 27,449 $ 27,881 $ 139 Commercial real estate: Construction 25 3,186 3,211 27,321 30,532 3,384 Other 973 3,046 4,019 66,740 70,759 3,895 Real Estate: Residential 2,887 142 948 3,977 71,104 75,081 1,314 Consumer: Other 108 18 10 136 4,395 4,531 10 Revolving credit 4 4 579 583 Total $ 4,318 $ 270 $ 7,191 $ 11,779 $ 197,588 $ 209,367 $ 8,742 December 31, 2014 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 282 $ 27 $ $ 309 $ 30,585 $ 30,894 $ 633 Commercial real estate: Construction 199 364 563 30,907 31,470 4,464 Other 493 283 2,023 2,799 79,583 82,382 2,643 Real Estate: Residential 2,576 372 2,810 5,758 78,810 84,568 3,917 Consumer: Other 101 2 103 5,449 5,552 Revolving credit 4 4 1 9 668 677 4 Total $ 3,655 $ 688 $ 5,198 $ 9,541 $ 226,002 $ 235,543 $ 11,661 December 31, 2013 (Dollars in thousands) 30-59 Days 60-89 Days 90+ Days Total Total Loans Non- Past Due Past Due Past Due Past Due Current Receivable accrual Commercial $ 771 $ 146 $ 407 $ 1,324 $ 32,387 $ 33,711 $ 430 Commercial real estate: Construction 215 33 2,243 2,491 36,408 38,899 4,208 Other 1,156 3,414 4,570 86,981 91,551 4,017 Real Estate: Residential 2,188 830 1,381 4,399 79,936 84,335 1,936 Consumer: Other 191 219 35 445 6,710 7,155 40 Revolving credit 18 3 21 752 773 Total $ 4,539 $ 1,231 $ 7,480 $ 13,250 $ 243,174 $ 256,424 $ 10,631 |
Summary Of Internal Credit Risk Grades, By Portfolio Class | The following tables summarize managements internal credit risk grades, by portfolio class, as of December 31: December 31, 2015 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 975 $ $ 434 $ $ 1,409 Grade 2 Modest 561 1,024 37 277 1,899 Grade 3 Average 4,934 5,620 218 4,716 15,488 Grade 4 Satisfactory 14,693 58,549 4,031 53,187 130,460 Grade 5 Watch 2,445 9,654 152 2,988 15,239 Grade 6 Special Mention 992 6,321 98 3,544 10,955 Grade 7 Substandard 3,281 20,123 144 10,369 33,917 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 27,881 $ 101,291 $ 5,114 $ 75,081 $ 209,367 December 31, 2014 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 1,093 $ $ 531 $ $ 1,624 Grade 2 Modest 1,164 679 93 1,216 3,152 Grade 3 Average 3,868 5,618 156 4,688 14,330 Grade 4 Satisfactory 16,367 59,536 4,928 56,758 137,589 Grade 5 Watch 2,905 16,091 178 4,695 23,869 Grade 6 Special Mention 1,191 4,249 132 3,747 9,319 Grade 7 Substandard 4,306 27,679 211 13,464 45,660 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 30,894 $ 113,852 $ 6,229 $ 84,568 $ 235,543 December 31, 2013 ( Dollars in thousands Commercial Commercial Real Estate Consumer Residential Total Grade 1 - Minimal $ 1,364 $ $ 775 $ $ 2,139 Grade 2 Modest 314 1,066 98 1,835 3,313 Grade 3 Average 4,782 6,412 914 3,437 15,545 Grade 4 Satisfactory 17,092 67,453 5,045 53,868 143,458 Grade 5 Watch 3,204 17,288 221 6,933 27,646 Grade 6 Special Mention 1,788 10,028 133 5,127 17,076 Grade 7 Substandard 5,167 28,203 742 13,135 47,247 Grade 8 Doubtful Grade 9 Loss Total loans receivable $ 33,711 $ 130,450 $ 7,928 $ 84,335 $ 256,424 |
Schedule Of Impaired Loans | The following chart details our impaired loans, which includes (TDRs) totaling $29.1 million, $33.2 million and $31.5 million, by category as of December 31, 2015, 2014 and 2013, respectively: December 31, 2015 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,070 $ 1,339 $ - $ 1,319 $ 72 Commercial real estate 17,180 22,037 - 18,989 722 Residential 4,016 4,338 - 4,936 137 Consumer 68 68 - 84 7 Total: $ 22,334 $ 27,782 $ - $ 25,328 $ 938 With an allowance recorded: Commercial 1,657 1,657 137 1,729 79 Commercial real estate 4,402 4,402 396 4,461 207 Residential 5,402 5,443 560 5,445 215 Consumer 66 66 10 66 3 Total: $ 11,527 $ 11,568 $ 1,103 $ 11,701 $ 504 Total: Commercial 2,727 2,996 137 3,048 151 Commercial real estate 21,582 26,439 396 23,450 929 Residential 9,418 9,781 560 10,381 352 Consumer 134 134 10 150 10 Total: $ 33,861 $ 39,350 $ 1,103 $ 37,029 $ 1,442 December 31, 2014 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,852 $ 2,678 $ $ 2,649 $ 79 Commercial real estate 19,156 24,441 22,377 1,083 Residential 5,950 6,528 6,249 268 Consumer 32 32 34 3 Total: $ 26,990 $ 33,679 $ $ 31,309 $ 1,433 With an allowance recorded: Commercial 1,792 1,792 151 1,892 81 Commercial real estate 5,990 6,194 1,008 6,143 282 Residential 6,468 6,468 737 6,506 271 Consumer 143 143 11 150 8 Total: $ 14,393 $ 14,597 $ 1,907 $ 14,691 $ 642 Total: Commercial 3,644 4,470 151 4,541 160 Commercial real estate 25,146 30,635 1,008 28,520 1,365 Residential 12,418 12,996 737 12,755 539 Consumer 175 175 11 184 11 Total: $ 41,383 $ 48,276 $ 1,907 $ 46,000 $ 2,075 December 31, 2013 ( Dollars in thousands Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized With no related allowance recorded: Commercial $ 1,464 $ 1,657 $ $ 1,621 $ 50 Commercial real estate 14,120 17,052 14,275 606 Residential 3,729 4,366 3,901 206 Consumer 55 79 60 7 Total: $ 19,368 $ 23,154 $ $ 19,857 $ 869 With an allowance recorded: Commercial 2,482 2,482 218 2,556 106 Commercial real estate 15,420 15,747 2,455 15,674 469 Residential 8,241 8,454 1,105 8,381 384 Consumer 168 168 18 163 8 Total: $ 26,311 $ 26,851 $ 3,796 $ 26,774 $ 967 Total: Commercial 3,946 4,139 218 4,177 156 Commercial real estate 29,540 32,799 2,455 29,949 1,075 Residential 11,970 12,820 1,105 12,282 590 Consumer 223 247 18 223 15 Total: $ 45,679 $ 50,005 $ 3,796 $ 46,631 $ 1,836 |
Summary Of Troubled Debt Restructurings | The following is a summary of information pertaining to our TDRs: December 31, (Dollars in thousands) 2015 2014 2013 Nonperforming TDRs $ 5,449 $ 5,013 $ 6,443 Performing TDRs: Commercial 2,565 2,942 3,496 Commercial real estate 13,883 17,499 14,673 Residential 7,059 7,537 6,690 Consumer 106 175 151 Total performing TDRs 23,613 28,153 25,010 Total TDRs $ 29,062 $ 33,166 $ 31,453 |
Summary Of Loan Modifications | The following table summarizes how loans that were considered TDRs were modified during the years indicated: For the Year Ended December 31, 2015 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 6 $ 475 $ 475 $ $ Residential 8 755 714 2 412 372 Commercial 3 272 191 Consumer 3 13 13 Total 20 $ 1,515 $ 1,393 2 $ 412 $ 372 For the Year Ended December 31, 2014 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 25 $ 6,016 $ 5,837 1 $ 36 $ 36 Residential 19 3,171 2,992 3 518 518 Commercial 5 455 455 Consumer 2 31 31 Total 51 $ 9,673 $ 9,315 4 $ 554 $ 554 For the Year Ended December 31, 2013 (Dollars in thousands) TDRs identified during the current year TDRs that subsequently defaulted (1) Number of contracts Pre- modification outstanding recorded investment Post modification outstanding recorded investment Number of contracts Pre- modification outstanding recorded investment Post- modification outstanding recorded investment Commercial real estate 4 $ 1,309 $ 1,309 $ $ Residential 6 1,401 1,401 Commercial 12 636 636 Consumer 5 84 84 Total 27 $ 3,430 $ 3,430 $ $ (1) Loans past due 90 days or more are considered to be in default. |
Schedule Of Off-balance Sheet Financial Instruments | Collateral held for commitments to extend credit and standby letters of credit varies but may include accounts receivable, inventory, property, plant, equipment, and income-producing commercial properties. The following table summarizes the Companys off-balance sheet financial instruments whose contract amounts represent credit risk: December 31, (Dollars in thousands) 2015 2014 2013 Commitments to extend credit $ 21,318 $ 27,017 $ 29,836 Standby letters of credit 257 247 361 |
PREMISES, FURNITURE AND EQUIP37
PREMISES, FURNITURE AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of composition of premises, furniture and equipment | Premises, furniture and equipment consisted of the following: December 31, (Dollars in thousands) 2015 2014 2013 Land $ 4,464 $ 7,099 $ 7,099 Buildings and land improvements 14,301 16,082 16,134 Furniture and equipment 7,557 7,874 7,608 Leasehold improvements 40 65 65 26,362 31,120 30,906 Less accumulated depreciation (10,445 ) (10,828 ) (10,104 ) Premises, furniture and equipment, net $ 15,917 $ 20,292 $ 20,802 |
OTHER REAL ESTATE OWNED (Tables
OTHER REAL ESTATE OWNED (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Real Estate [Abstract] | |
Schedule Of Transactions In Other Real Estate Owned | Transactions in other real estate owned for the years ended December 31: (Dollars in thousands) 2015 2014 2013 Balance, beginning of year $ 19,501 $ 24,972 $ 19,464 Additions 4,058 2,183 17,659 Sales (9,709 ) (7,337 ) (11,383 ) Write-downs (226 ) (317 ) (768 ) Balance, end of period $ 13,624 $ 19,501 $ 24,972 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Assets Tables | |
Schedule of Other assets | Other assets consisted of the following at December 31: (Dollars in thousands) 2015 2014 2013 Prepaid expenses and insurance $ 406 $ 736 $ 471 Unamortized software 55 52 29 Receivable from sale of other real estate owned 3,348 Proceeds due from life insurance 1,208 Other 533 508 358 Total $ 994 $ 2,504 $ 4,206 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Deposits: | |
Schedule Of Deposits | At December 31, 2015, the scheduled maturities of time deposits were as follows (in thousands) Maturing in: Amount Less than one year $ 85,676 One to three years 81,307 Three to ten years 6,988 Beyond ten years $ 173,971 |
ADVANCES FROM THE FEDERAL HOM41
ADVANCES FROM THE FEDERAL HOME LOAN BANK (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures [Abstract] | |
Schedule Of Advances From Federal Home Loan Bank | Advances from the Federal Home Loan Bank consisted of the following at December 31, 2015: (Dollars in thousands) Advance Advance Advance Maturing Type Amount Rate On Convertible Advance $ 2,000 3.60% 9/4/18 Convertible Advance 5,000 3.45% 9/10/18 Convertible Advance 5,000 2.95% 9/18/18 Fixed Rate 5,000 3.86% 8/20/19 $ 17,000 |
CAPITAL REQUIREMENTS (Tables)
CAPITAL REQUIREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |
Schedule of capital ratios and regulatory minimum requirements | The following table summarizes the capital ratios and the regulatory minimum requirements for the Company and the Bank. Actual Minimum Capital Requirement Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2015 The Company Total Capital (to Risk-Weighted Assets) $ (10,642 ) (4.15 )% $ 20,537 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,642 ) (4.15 )% $ 10,269 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,642 ) (2.87 )% $ 14,831 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 15,402 5.92 % $ 20,802 8.00 % $ 26,002 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 12,135 4.67 % $ 15,601 6.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 12,135 3.28 % $ 14,819 4.00 % $ 29,639 8.00 % Common Equity Tier 1 Capital (to Risk-Weighted Assets) $ 12,135 4.67 % $ 11,701 4.50 % $ N/A N/A December 31, 2014 The Company Total Capital (to Risk-Weighted Assets) $ (10,402 ) (3.61 )% $ 23,031 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,402 ) (3.61 )% $ 11,516 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,402 ) (2.36 )% $ 17,614 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 14,533 5.05 % $ 23,008 8.00 % $ 28,760 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 10,911 3.79 % $ 11,504 4.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 10,911 2.53 % $ 17,255 4.00 % $ 34,510 8.00 % December 31, 2013 The Company Total Capital (to Risk-Weighted Assets) $ (10,169 ) (3.19 )% $ 25,512 8.00 % N/A N/A Tier I Capital (to Risk-Weighted Assets) $ (10,169 ) (3.19 )% $ 12,756 4.00 % N/A N/A Tier I Capital (to Average Assets) $ (10,169 ) (2.23 ) % $ 18,242 4.00 % N/A N/A The Bank Total Capital (to Risk-Weighted Assets) $ 13,842 4.34 % $ 25,505 8.00 % $ 31,881 10.00 % Tier I Capital (to Risk-Weighted Assets) $ 9,789 3.07 % $ 12,753 4.00 % (1 ) (1 ) Tier I Capital (to Average Assets) $ 9,789 2.17 % $ 18,067 4.00 % $ 36,135 8.00 % (1) Minimum capital amounts and ratios presented are amounts to be well-capitalized under the various regulatory capital requirements administered by the FDIC. On February 10, 2011, the Bank became subject to a regulatory Consent Order with the FDIC. Minimum capital amounts and ratios presented for the Bank are the minimum levels set forth in the Consent Order. No minimum Tier 1 capital to risk-weighted assets ratio was specified in the Consent Order. Regardless of the Banks capital ratios, it is unable to be classified as well-capitalized while it is operating under the Consent Order with the FDIC. |
INCOME (LOSS) PER SHARE (Tables
INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Reconciliation Of Numerators And Denominators Used To Calculate Basic And Diluted Earnings (Losses) Per Share | (Dollars in thousands, except per share amounts) Years ended December 31, 2015 2014 2013 Basic income (loss) per common share: Net income (loss) available to common shareholders $ (1,758 ) $ (1,403 ) $ 911 Weighted average common shares outstanding - basic 3,823,244 3,770,355 3,738,337 Basic income (loss) per common share $ (0.46 ) $ (0.37 ) $ 0.24 Diluted income (loss) per common share: Net income (loss) available to common shareholders $ (1,758 ) $ (1,403 ) $ 911 Weighted average common shares outstanding - basic 3,823,244 3,770,355 3,738,337 Incremental shares Average common shares outstanding - diluted 3,823,244 3,770,355 3,738,337 Diluted income (loss) per common share $ (0.46 ) $ (0.37 ) $ 0.24 |
OTHER EXPENSES (Tables)
OTHER EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Expenses Tables | |
OTHER EXPENSES | Other expenses are summarized as follows: Years Ended December 31, (Dollars in thousands) 2015 2014 2013 Stationery, printing, and postage $ 290 $ 275 $ 318 Dues and subscriptions 69 59 72 Telephone 186 202 204 Director and officer insurance 196 212 486 ATM services 11 27 115 Appraisal fee expense 84 123 140 Accountant fees 267 277 84 Legal fees 853 697 1,875 Marketing 60 16 19 Consulting fees 314 112 186 Courier services 55 51 58 Other 702 864 755 Total $ 3,087 $ 2,915 $ 4,312 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Schedule of provision for income taxes | Income tax expense is summarized as follows: Years Ended December 31, (Dollars in thousands) 2015 2014 2013 Currently payable: Federal $ $ $ State 27 78 Total current 27 78 Deferred income taxes Income tax expense $ 27 $ 78 $ |
Schedule of deferred income tax liabilities and assets | The components of the net deferred tax asset are as follows: December 31, (Dollars in thousands) 2015 2014 2013 Deferred tax assets: Allowance for loan losses $ 1,564 $ 1,968 $ 3,211 Net unrealized losses on securities available-for-sale 595 313 2,321 Net capitalized loan costs 24 23 25 Net operating loss 20,253 19,572 16,751 Deferred compensation 8 13 17 Nonaccruing interest 332 232 241 Tax credits 241 259 276 Other real estate owned 265 655 638 Loss on equity securities 1 1 43 Other 12 8 5 Total deferred tax assets 23,295 23,044 23,528 Valuation Allowance (22,474 ) (21,971 ) (22,361 ) Total net deferred tax assets 821 1,073 1,167 Deferred tax liabilities: Accumulated depreciation (817 ) (965 ) (1,046 ) Gain on sale of real estate (73 ) Prepaid expenses (4 ) (108 ) (48 ) Total deferred tax liabilities (821 ) (1,073 ) (1,167 ) Net deferred tax asset $ $ $ |
Schedule of reconciliation of the income tax provision and the amount computed by applying the federal statutory rate to income before income taxes | A reconciliation between the income tax expense and the amount computed by applying the Federal statutory rates of 34% to income before income taxes follows: Years ended December 31, (Dollars in thousands) 2015 2014 2013 Tax benefit at statutory rate $ (74 ) $ (73 ) $ 599 State income tax, net of federal income tax benefit 18 52 Tax-exempt interest income (5 ) (16 ) Bank owned life insurance (108 ) (113 ) Life insurance proceeds (315 ) Valuation allowance 220 542 (473 ) Other (29 ) (10 ) (110 ) Income tax expense $ 27 $ 78 $ |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule Of Carrying Values And Estimated Fair Values Of Financial Instruments | The carrying values and estimated fair values of the Companys financial instruments were as follows: December 31, 2015 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 22,137 $ 22,137 $ 22,137 $ $ Securities available-for-sale 89,701 89,701 89,701 Nonmarketable equity securities 1,330 1,330 1,330 Loans, net 204,766 204,975 204,975 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 156,860 156,860 156,860 Certificates of deposit 173,971 174,964 174,964 Repurchase agreements 1,716 1,716 1,716 Advances from the Federal Home Loan Bank 17,000 17,108 17,108 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * * The Company is unable to determine this value. December 31, 2014 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 28,527 $ 28,527 $ 28,527 $ $ Securities available-for-sale 106,674 106,674 106,674 Nonmarketable equity securities 1,342 1,342 1,342 Loans, net 229,756 230,038 230,038 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 170,538 170,538 170,538 Certificates of deposit 220,799 222,789 222,789 Repurchase agreements 1,612 1,612 1,612 Advances from the Federal Home Loan Bank 17,000 17,136 17,136 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * * The Company is unable to determine this value. December 31, 2013 Fair Value Measurements (Dollars in thousands) Carrying Amount Estimated Fair Value Quoted market price in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Cash and cash equivalents $ 28,081 $ 28,081 $ 28,081 $ $ Securities available-for-sale 94,602 94,602 94,602 Nonmarketable equity securities 1,743 1,743 1,743 Loans, net 246,981 248,633 248,633 Financial Liabilities: Demand deposit, interest-bearing transaction, and savings accounts 163,505 163,505 163,505 Certificates of deposit 242,539 244,463 244,463 Repurchase agreements 1,337 1,337 1,337 Advances from the Federal Home Loan Bank 22,000 25,055 25,055 Subordinated debentures 11,062 * Junior subordinated debentures 6,186 * * The Company is unable to determine this value. |
Schedule Of Carrying Values And Estimated Fair Values Of Off-Balance Sheet Financial Instruments | The carrying values and estimated fair values of the Companys financial instruments were as follows: December 31, 2015 (Dollars in thousands) Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 21,318 n/a Standby letters of credit 257 n/a * The Company is unable to determine this value. December 31, 2014 (Dollars in thousands) Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 27,017 n/a Standby letters of credit 247 n/a * The Company is unable to determine this value. December 31, 2013 (Dollars in thousands) Notional Estimated Amount Fair Value Off-Balance Sheet Financial Instruments: Commitments to extend credit $ 29,836 n/a Standby letters of credit 361 n/a * The Company is unable to determine this value. |
Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis | The tables below present the balances of assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Quoted prices in Significant active markets Other Significant for identical Observable Unobservable (Dollars in thousands) assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) December 31, 2015 Assets: Government sponsored enterprises $ 36,032 $ $ 36,032 $ Mortgage-backed securities 52,445 52,445 Obligations of state and local governments 1,224 1,224 Total $ 89,701 $ $ 89,701 $ December 31, 2014 Assets: Government sponsored enterprises $ 40,082 $ $ 40,082 $ Mortgage-backed securities 65,348 65,348 Obligations of state and local governments 1,244 1,244 Total $ 106,674 $ $ 106,674 $ December 31, 2013 Assets: Government sponsored enterprises $ 55,075 $ $ 55,075 $ Mortgage-backed securities 37,034 37,034 Obligations of state and local governments 2,493 2,493 Total $ 94,602 $ $ 94,602 $ |
Schedule Of Assets And Liabilities Recorded At Fair Value On A Non-Recurring Basis | The following tables present the assets and liabilities carried on the balance sheet by caption and by level within the valuation hierarchy described above for which a nonrecurring change in fair value has been recorded. Quoted prices in Significant active markets Other Significant (Dollars in thousands) for identical Observable Unobservable assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) December 31, 2015 Assets: Impaired loans, net of valuation allowance $ 32,758 $ $ $ 32,758 Other real estate owned 13,624 13,624 Total $ 46,382 $ $ $ 46,382 December 31, 2014 Assets: Impaired loans, net of valuation allowance $ 39,476 $ $ $ 39,476 Other real estate owned 19,501 19,501 Total $ 58,977 $ $ $ 58,977 December 31, 2013 Assets: Impaired loans, net of valuation allowance $ 41,883 $ $ $ 41,883 Other real estate owned 24,972 24,972 Total $ 66,855 $ $ $ 66,855 |
Schedule Of Quantitative Information About Level 3 Fair Value Measurements On A Non-Recurring Basis | The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2015. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2015 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 2,590 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (8.77% ) Commercial real estate 21,186 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-32.33% Flows Independent quotes (10.23% ) Residential 8,858 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (9.90% ) Consumer 124 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) Other real estate owned 13,624 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2014 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 3,493 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-68.05% Flows Independent quotes (25.71% ) Commercial real estate 24,138 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.80% ) Residential 11,681 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-47.31% Flows Independent quotes (7.31% ) Consumer 164 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) Other real estate owned 19,501 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2013. Management believes the weighted average range of adjustments to be appropriate. As discussed previously, depressed real estate values in the areas we serve may cause larger adjustments from time to time. (Dollars in thousands) December 31, Valuation Unobservable Range 2013 Techniques Inputs (Weighted Avg) Impaired loans: Commercial $ 3,728 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (3.84% ) Commercial real estate 27,085 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-52.00% Flows Independent quotes (14.93% ) Residential 10,865 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-47.31% Flows Independent quotes (10.45% ) Consumer 205 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-7.00% Flows Independent quotes (4.50% ) Other real estate owned 24,972 Appraised Value/ Appraisals and/or sales Discounted Cash of comparable properties/ 0.00%-10.00% Flows Independent quotes (10.00% ) |
HCSB FINANCIAL CORPORATION (P47
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Hcsb Financial Corporation Parent Company Only Tables | |
Schedule of condensed Balace Sheet of the parent company | Presented below are the condensed financial statements for HCSB Financial Corporation (Parent Company Only). Condensed Balance Sheets December 31, (Dollars in thousands) 2015 2014 2013 Assets Cash $ 5 $ 26 $ 59 Investment in banking subsidiary 10,527 10,066 3,516 Investment in trust 186 186 186 Other assets 111 123 136 Total assets $ 10,829 $ 10,401 $ 3,897 Liabilities and shareholders equity Accrued interest payable-subordinated debentures $ 4,925 $ 3,685 $ 2,553 Accrued interest payable-junior subordinated debentures 901 714 536 Subordinated debentures 11,062 11,062 11,062 Junior subordinated debentures 6,186 6,186 6,186 Other liabilities 5 1 2 Total liabilities 23,079 21,648 20,339 Shareholders deficit (12,250 ) (11,247 ) (16,442 ) Total liabilities and shareholders deficit $ 10,829 $ 10,401 $ 3,897 |
Schedule of Condensed Statements of Operations | Condensed Statements of Operations Years ended December 31, (Dollars in thousands) 2015 2014 2013 Income Forgiveness of debt $ $ $ 1,000 Expenses Interest expense on subordinated debentures 1,240 1,132 1,081 Interest expense on junior subordinated debentures 186 178 186 Other expenses 44 104 39 1,470 1,414 1,306 Loss before income taxes, and equity in undistributed gains of banking subsidiary (1,470 ) (1,414 ) (306 ) Income tax expense Equity in undistributed gains of banking subsidiary 1,224 1,123 2,069 Net income (loss) $ (246 ) $ (291 ) $ 1,763 |
Schedule of cash flows for the parent company | Condensed Statements of Cash Flows Years ended December 31, (Dollars in thousands) 2015 2014 2013 Cash flows from operating activities: Net income (loss) $ (246 ) $ (291 ) $ 1,763 Adjustments to reconcile net income (loss) to net cash used by operating activities: Forgiveness of debt (1,000 ) Equity in undistributed gains of banking subsidiary (1,224 ) (1,123 ) (2,069 ) Decrease in other assets 12 13 13 Increase in accrued interest payable and other liabilities 1,431 1,310 1,266 Net cash used by operating activities (27 ) (91 ) (27 ) Cash flows from financing activities: Sale of common stock 6 58 Net cash provided by financing activities 6 58 Net decrease in cash (21 ) (33 ) (27 ) Cash and cash equivalents, beginning of year 26 59 86 Cash and cash equivalents, end of year $ 5 $ 26 $ 59 |
ORGANIZATION AND SIGNIFICANT 48
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 06, 2009 | |
Federal Home Loan Bank Stock | $ 1,100 | $ 1,200 | $ 1,600 | |
Investment in Trust | 186 | 186 | 186 | |
Total Loans | 204,766 | 229,756 | 246,981 | |
Advertising Expense | $ 60 | $ 16 | $ 19 | |
Preferred Stock [Member] | ||||
Aggregate purchase price of Fixed Rate Cumulative Perpetual Preferred Stock, Series T | $ 12,900 | |||
Building [Member] | ||||
Estimated Useful Life of asset (in years) | 40 years | |||
Furniture and Fixtures [Member] | Minimum [Member] | ||||
Estimated Useful Life of asset (in years) | 3 years | |||
Furniture and Fixtures [Member] | Maximum [Member] | ||||
Estimated Useful Life of asset (in years) | 10 years | |||
Credit Concentration Risk [Member] | Residential And Commercial Real Estate Loans [Member] | ||||
Total Loans | $ 176,400 | |||
Concentration Risk (as a percentage) | 84.24% | |||
Credit Concentration Risk [Member] | Commercial and Industrial Non-Real Estate loans [Member] | ||||
Total Loans | $ 27,900 | |||
Concentration Risk (as a percentage) | 13.32% |
REGULATORY MATTERS AND FUTURE49
REGULATORY MATTERS AND FUTURE OPERATIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Feb. 09, 2013 | Aug. 11, 2012 | Jul. 10, 2011 | Mar. 12, 2011 | |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||||||
Nonperforming assets | $ 22,400 | $ 31,300 | $ 35,600 | ||||
Percentage of nonperforming assets | 6.19% | 7.43% | 8.19% | ||||
Net loan charge-offs | $ 1,200 | $ 4,700 | $ 3,200 | ||||
Consent Order Requirements [Member] | |||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||||||
Charge-off or collect assets classified as "Doubtful" | 50.00% | ||||||
Percentage of Reduce assets classified in accordance with the approved plan | 75.00% | 65.00% | |||||
Percentage of assets reduced after approval plan | 79.90% | ||||||
Consent Order Requirements [Member] | Minimum [Member] | |||||||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||||||
Total risk based capital of risk-weighted assets (as a percentage) | 10.00% | ||||||
Tier 1 capital of total assets (as a percentage) | 8.00% |
REGULATORY MATTERS AND FUTURE50
REGULATORY MATTERS AND FUTURE OPERATIONS (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Feb. 28, 2011 | Dec. 31, 2015 | |
Aggregate principal amount | $ 6,000 | |
Trust Preferred Securities [Mermber] | ||
Description of deferring interest payments | Deferring interest payments on its trust preferred securities since March 2011 and has deferred interest payments for 20 consecutive quarters. The Company is allowed to defer payments for up to 20 consecutive quarterly periods, although interest will also accrue and compound quarterly from the date such deferred interest would have been payable were it not for the extension period. All of the deferred interest, including interest accrued on such deferred interest, is due and payable at the end of the applicable deferral period, which was March 15, 2016. | |
Accrued interest | $ 714 | |
Aggregate principal amount | $ 6,000 |
REGULATORY MATTERS AND FUTURE51
REGULATORY MATTERS AND FUTURE OPERATIONS (Details 2) - Sale of Socastee, Windy Hill, and Carolina Forest Branches $ in Thousands | Aug. 07, 2015USD ($) |
Assets | |
Cash | $ 23,933 |
Loans receivable | 5,728 |
Premises and equipment | 3,877 |
Reduction to assets | 33,538 |
Liabilities | |
Transaction and savings deposits | 20,866 |
Time deposits | 13,370 |
Accrued interest payable | 8 |
Other accrued liabilities | 30 |
Reduction to liabilities | 34,274 |
Net gain on sale of branches | $ 736 |
INVESTMENT SECURITIES (Details)
INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $ 91,309 | $ 107,519 | $ 100,875 |
Gross Unrealized Gains | 59 | 464 | 280 |
Gross Unrealized Losses | (1,667) | (1,309) | (6,553) |
Estimated Fair Value | 89,701 | 106,674 | 94,602 |
Government Sponsored Enterprises Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | $ 36,720 | 40,952 | $ 60,628 |
Gross Unrealized Gains | 7 | ||
Gross Unrealized Losses | $ (688) | (877) | $ (5,553) |
Estimated Fair Value | 36,032 | 40,082 | 55,075 |
Mortgage Backed Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 53,368 | 65,328 | 37,731 |
Gross Unrealized Gains | 54 | 447 | 167 |
Gross Unrealized Losses | (977) | (427) | (864) |
Estimated Fair Value | 52,445 | 65,348 | 37,034 |
Obligations Of State And Local Governments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Amortized Cost | 1,221 | 1,239 | 2,516 |
Gross Unrealized Gains | 5 | 10 | 113 |
Gross Unrealized Losses | (2) | (5) | (136) |
Estimated Fair Value | $ 1,224 | $ 1,244 | $ 2,493 |
INVESTMENT SECURITIES (Details
INVESTMENT SECURITIES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Securities Available-For-Sale Amortized Cost [Abstract] | |||
Due within one year | |||
Due after one year but within five years | $ 396 | ||
Due after five years but within ten years | 13,284 | ||
Due after ten years | 77,629 | ||
Amortized Cost | 91,309 | $ 107,519 | $ 100,875 |
Estimated Fair Value | $ 89,701 | 106,674 | 94,602 |
Mortgage Backed Securities [Member] | |||
Securities Available-For-Sale Amortized Cost [Abstract] | |||
Due within one year | |||
Due after one year but within five years | |||
Due after five years but within ten years | $ 5,641 | ||
Due after ten years | 47,727 | ||
Amortized Cost | 53,368 | ||
Estimated Fair Value | $ 52,445 | ||
Government Sponsored Enterprises Debt Securities [Member] | |||
Securities Available-For-Sale Amortized Cost [Abstract] | |||
Due within one year | |||
Due after one year but within five years | $ 396 | ||
Due after five years but within ten years | 7,024 | ||
Due after ten years | 29,300 | ||
Amortized Cost | 36,720 | 40,952 | 60,628 |
Estimated Fair Value | $ 36,032 | 40,082 | 55,075 |
Obligations Of State And Local Governments [Member] | |||
Securities Available-For-Sale Amortized Cost [Abstract] | |||
Due within one year | |||
Due after one year but within five years | |||
Due after five years but within ten years | $ 619 | ||
Due after ten years | 602 | ||
Amortized Cost | 1,221 | 1,239 | 2,516 |
Estimated Fair Value | $ 1,224 | $ 1,244 | $ 2,493 |
INVESTMENT SECURITIES (Detail54
INVESTMENT SECURITIES (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Securities Available-for-Sale, Less than twelve months, Fair Value | $ 60,130 | $ 22,024 | $ 65,689 |
Securities Available-for-Sale, Less than twelve months, Unrealized losses | (914) | (244) | (4,971) |
Securities Available-for-Sale, Twelve months or more, Fair value | 21,551 | 46,157 | 15,705 |
Securities Available-for-Sale, Twelve months or more, Unrealized losses | (753) | (1,065) | (1,582) |
Securities Available-for-Sale, Total, Fair Value | 81,681 | 68,181 | 81,394 |
Securities Available-for-Sale, Total, Unrealized losses | (1,667) | $ (1,309) | (6,553) |
Government Sponsored Enterprises Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Securities Available-for-Sale, Less than twelve months, Fair Value | 31,489 | 47,311 | |
Securities Available-for-Sale, Less than twelve months, Unrealized losses | (558) | (4,433) | |
Securities Available-for-Sale, Twelve months or more, Fair value | 4,543 | $ 38,076 | 7,764 |
Securities Available-for-Sale, Twelve months or more, Unrealized losses | (130) | (877) | (1,120) |
Securities Available-for-Sale, Total, Fair Value | 36,032 | 38,076 | 55,075 |
Securities Available-for-Sale, Total, Unrealized losses | (688) | (877) | (5,553) |
Mortgage Backed Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Securities Available-for-Sale, Less than twelve months, Fair Value | 28,024 | 22,024 | 17,826 |
Securities Available-for-Sale, Less than twelve months, Unrealized losses | (354) | (244) | (471) |
Securities Available-for-Sale, Twelve months or more, Fair value | 17,008 | 7,458 | 7,373 |
Securities Available-for-Sale, Twelve months or more, Unrealized losses | (623) | (183) | (393) |
Securities Available-for-Sale, Total, Fair Value | 45,032 | 29,482 | 25,199 |
Securities Available-for-Sale, Total, Unrealized losses | (977) | $ (427) | (864) |
Obligations Of State And Local Governments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Securities Available-for-Sale, Less than twelve months, Fair Value | 617 | 552 | |
Securities Available-for-Sale, Less than twelve months, Unrealized losses | $ (2) | (67) | |
Securities Available-for-Sale, Twelve months or more, Fair value | $ 623 | 568 | |
Securities Available-for-Sale, Twelve months or more, Unrealized losses | (5) | (69) | |
Securities Available-for-Sale, Total, Fair Value | $ 617 | 623 | 1,120 |
Securities Available-for-Sale, Total, Unrealized losses | $ (2) | $ (5) | $ (136) |
INVESTMENT SECURITIES (Detail55
INVESTMENT SECURITIES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Investments, Debt and Equity Securities [Abstract] | |||
Gross realized gains | $ 232 | $ 269 | $ 298 |
Gross realized losses | (68) | ||
Net gain | $ 232 | $ 201 | $ 298 |
INVESTMENT SECURITIES (Detail56
INVESTMENT SECURITIES (Details Narrative) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($)Number | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Book value of investment securities pledged to secure deposits | $ 36,700 | $ 42,800 | $ 40,100 |
Market value of investment securities pledged to secure deposits | 36,100 | 42,200 | 36,800 |
Proceeds from sales of securities available-for-sale | $ 23,326 | $ 32,823 | $ 25,886 |
Government Sponsored Enterprises Debt Securities [Member] | |||
Number of individual securities in an unrealized loss position for more than twelve months | Number | 3 | ||
Mortgage Backed Securities [Member] | |||
Number of individual securities in an unrealized loss position for more than twelve months | Number | 16 |
LOAN PORTFOLIO (Details)
LOAN PORTFOLIO (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Total Loans Receivable | $ 209,367 | $ 235,543 | $ 256,424 |
Residential Portfolio Segment [Member] | |||
Total Loans Receivable | 75,081 | 84,568 | 84,335 |
Commercial Real Estate Portfolio Segment [Member] | |||
Total Loans Receivable | 101,291 | 113,852 | 130,450 |
Commercial Loan [Member] | |||
Total Loans Receivable | 27,881 | 30,894 | 33,711 |
Consumer Loan [Member] | |||
Total Loans Receivable | $ 5,114 | $ 6,229 | $ 7,928 |
LOAN PORTFOLIO (Details 2)
LOAN PORTFOLIO (Details 2) - New Directors/Executive Officers [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Loan transactions with related parties | |||
Beginning balance | $ 3,857 | $ 3,088 | $ 2,867 |
New loans and advances | 397 | 1,785 | 1,195 |
Loan Payments | (1,032) | (1,016) | (974) |
Ending balance | $ 3,222 | $ 3,857 | $ 3,088 |
LOAN PORTFOLIO (Details 3)
LOAN PORTFOLIO (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Allowances for loan losses, Beginning balance | $ 5,787 | $ 9,443 | $ 14,150 |
Allowances for loan losses, Charge-offs | (2,333) | (7,031) | (7,476) |
Allowances for loan losses, Recoveries | $ 1,147 | 2,314 | 4,266 |
Allowances for loan losses, Provisions | 1,061 | (1,497) | |
Allowances for loan losses, Ending balance | $ 4,601 | 5,787 | 9,443 |
Allowances for loan losses, Individually evaluated for impairment, Ending Balances | 1,103 | 1,907 | 3,796 |
Allowances for loan losses, Collectively evaluated for impairment, Ending Balances | 3,498 | 3,880 | 5,647 |
Loans receivable | 209,367 | 235,543 | 256,424 |
Loans receivable, Individually evaluated for impairment | 33,861 | 41,383 | 45,679 |
Loans receivable, Collectively evaluated for impairment | 175,506 | 194,160 | 210,745 |
Commercial Loan [Member] | |||
Allowances for loan losses, Beginning balance | 597 | 1,020 | 1,982 |
Allowances for loan losses, Charge-offs | (539) | (1,068) | (1,691) |
Allowances for loan losses, Recoveries | 200 | 549 | 724 |
Allowances for loan losses, Provisions | 694 | 96 | 5 |
Allowances for loan losses, Ending balance | 952 | 597 | 1,020 |
Allowances for loan losses, Individually evaluated for impairment, Ending Balances | 137 | 151 | 218 |
Allowances for loan losses, Collectively evaluated for impairment, Ending Balances | 815 | 446 | 802 |
Loans receivable | 27,881 | 30,894 | 33,711 |
Loans receivable, Individually evaluated for impairment | 2,727 | 3,644 | 3,946 |
Loans receivable, Collectively evaluated for impairment | 25,154 | 27,250 | 29,765 |
Commercial Real Estate Portfolio Segment [Member] | |||
Allowances for loan losses, Beginning balance | 3,591 | 5,312 | 7,587 |
Allowances for loan losses, Charge-offs | (1,212) | (4,646) | (3,927) |
Allowances for loan losses, Recoveries | 727 | 1,117 | 2,230 |
Allowances for loan losses, Provisions | (563) | 1,808 | (578) |
Allowances for loan losses, Ending balance | 2,543 | 3,591 | 5,312 |
Allowances for loan losses, Individually evaluated for impairment, Ending Balances | 396 | 1,008 | 2,455 |
Allowances for loan losses, Collectively evaluated for impairment, Ending Balances | 2,147 | 2,583 | 2,857 |
Loans receivable | 101,291 | 113,852 | 130,450 |
Loans receivable, Individually evaluated for impairment | 21,582 | 25,146 | 29,540 |
Loans receivable, Collectively evaluated for impairment | 79,709 | 88,706 | 100,910 |
Consumer Loan [Member] | |||
Allowances for loan losses, Beginning balance | 185 | 144 | 124 |
Allowances for loan losses, Charge-offs | (81) | (343) | (217) |
Allowances for loan losses, Recoveries | 37 | 38 | 48 |
Allowances for loan losses, Provisions | (61) | 346 | 189 |
Allowances for loan losses, Ending balance | 80 | 185 | 144 |
Allowances for loan losses, Individually evaluated for impairment, Ending Balances | 10 | 11 | 18 |
Allowances for loan losses, Collectively evaluated for impairment, Ending Balances | 70 | 174 | 126 |
Loans receivable | 5,114 | 6,229 | 7,928 |
Loans receivable, Individually evaluated for impairment | 134 | 175 | 223 |
Loans receivable, Collectively evaluated for impairment | 4,980 | 6,054 | 7,705 |
Residential Portfolio Segment [Member] | |||
Allowances for loan losses, Beginning balance | 1,414 | 2,967 | 4,457 |
Allowances for loan losses, Charge-offs | (501) | (974) | (1,641) |
Allowances for loan losses, Recoveries | 183 | 610 | 1,264 |
Allowances for loan losses, Provisions | (70) | (1,189) | (1,113) |
Allowances for loan losses, Ending balance | 1,026 | 1,414 | 2,967 |
Allowances for loan losses, Individually evaluated for impairment, Ending Balances | 560 | 737 | 1,105 |
Allowances for loan losses, Collectively evaluated for impairment, Ending Balances | 466 | 677 | 1,862 |
Loans receivable | 75,081 | 84,568 | 84,335 |
Loans receivable, Individually evaluated for impairment | 9,418 | 12,418 | 11,970 |
Loans receivable, Collectively evaluated for impairment | $ 65,663 | $ 72,150 | $ 72,365 |
LOAN PORTFOLIO (Details 4)
LOAN PORTFOLIO (Details 4) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 11,779 | $ 9,541 | $ 13,250 |
Current | 197,588 | 226,002 | 243,174 |
Total Loans Receivable | 209,367 | 235,543 | 256,424 |
Nonaccrual Loans | 8,742 | 11,661 | 10,631 |
Commercial Loan [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 432 | 309 | 1,324 |
Current | 27,449 | 30,585 | 32,387 |
Total Loans Receivable | 27,881 | 30,894 | 33,711 |
Nonaccrual Loans | 139 | 633 | 430 |
Commercial Real Estate Construction Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 3,211 | 563 | 2,491 |
Current | 27,321 | 30,907 | 36,408 |
Total Loans Receivable | 30,532 | 31,470 | 38,899 |
Nonaccrual Loans | 3,384 | 4,464 | 4,208 |
Commercial Real Estate Other Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 4,019 | 2,799 | 4,570 |
Current | 66,740 | 79,583 | 86,981 |
Total Loans Receivable | 70,759 | 82,382 | 91,551 |
Nonaccrual Loans | 3,895 | 2,643 | 4,017 |
Residential Portfolio Segment [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 3,977 | 5,758 | 4,399 |
Current | 71,104 | 78,810 | 79,936 |
Total Loans Receivable | 75,081 | 84,568 | 84,335 |
Nonaccrual Loans | 1,314 | 3,917 | 1,936 |
Consumer Other Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 136 | 103 | 445 |
Current | 4,395 | 5,449 | 6,710 |
Total Loans Receivable | 4,531 | $ 5,552 | 7,155 |
Nonaccrual Loans | 10 | 40 | |
Revolving Credit Facilities [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 4 | $ 9 | 21 |
Current | 579 | 668 | 752 |
Total Loans Receivable | $ 583 | 677 | $ 773 |
Nonaccrual Loans | 4 | ||
30-59 Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 4,318 | 3,655 | $ 4,539 |
30-59 Days Past Due | Commercial Loan [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 321 | 282 | 771 |
30-59 Days Past Due | Commercial Real Estate Construction Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 25 | 199 | 215 |
30-59 Days Past Due | Commercial Real Estate Other Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 973 | 493 | 1,156 |
30-59 Days Past Due | Residential Portfolio Segment [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 2,887 | 2,576 | 2,188 |
30-59 Days Past Due | Consumer Other Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 108 | 101 | 191 |
30-59 Days Past Due | Revolving Credit Facilities [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 4 | 4 | 18 |
60-89 Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 270 | 688 | 1,231 |
60-89 Days Past Due | Commercial Loan [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 110 | $ 27 | 146 |
60-89 Days Past Due | Commercial Real Estate Construction Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 33 | ||
60-89 Days Past Due | Commercial Real Estate Other Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 283 | ||
60-89 Days Past Due | Residential Portfolio Segment [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 142 | 372 | $ 830 |
60-89 Days Past Due | Consumer Other Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 18 | 2 | 219 |
60-89 Days Past Due | Revolving Credit Facilities [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 4 | 3 | |
90 + Days Past Due | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 7,191 | $ 5,198 | 7,480 |
90 + Days Past Due | Commercial Loan [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 1 | 407 | |
90 + Days Past Due | Commercial Real Estate Construction Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 3,186 | $ 364 | 2,243 |
90 + Days Past Due | Commercial Real Estate Other Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 3,046 | 2,023 | 3,414 |
90 + Days Past Due | Residential Portfolio Segment [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | 948 | $ 2,810 | 1,381 |
90 + Days Past Due | Consumer Other Financing Receivable [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 10 | $ 35 | |
90 + Days Past Due | Revolving Credit Facilities [Member] | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Total Past Due | $ 1 |
LOAN PORTFOLIO (Details 5)
LOAN PORTFOLIO (Details 5) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Total loans | $ 209,367 | $ 235,543 | $ 256,424 |
Grade 1 - Minimal [Member] | |||
Total loans | 1,409 | 1,624 | 2,139 |
Grade 2 - Modest [Member] | |||
Total loans | 1,899 | 3,152 | 3,313 |
Grade 3 - Average [Member] | |||
Total loans | 15,488 | 14,330 | 15,545 |
Grade 4 - Satisfactory [Member] | |||
Total loans | 130,460 | 137,589 | 143,458 |
Grade 5 - Watch [Member] | |||
Total loans | 15,239 | 23,869 | 27,646 |
Grade 6 - Special Mention [Member] | |||
Total loans | 10,955 | 9,319 | 17,076 |
Grade 7 - Substandard [Member] | |||
Total loans | $ 33,917 | $ 45,660 | $ 47,247 |
Grade 8 - Doubtful [Member] | |||
Total loans | |||
Grade 9 - Loss [Member] | |||
Total loans | |||
Commercial Loan [Member] | |||
Total loans | $ 27,881 | $ 30,894 | $ 33,711 |
Commercial Loan [Member] | Grade 1 - Minimal [Member] | |||
Total loans | 975 | 1,093 | 1,364 |
Commercial Loan [Member] | Grade 2 - Modest [Member] | |||
Total loans | 561 | 1,164 | 314 |
Commercial Loan [Member] | Grade 3 - Average [Member] | |||
Total loans | 4,934 | 3,868 | 4,782 |
Commercial Loan [Member] | Grade 4 - Satisfactory [Member] | |||
Total loans | 14,693 | 16,367 | 17,092 |
Commercial Loan [Member] | Grade 5 - Watch [Member] | |||
Total loans | 2,445 | 2,905 | 3,204 |
Commercial Loan [Member] | Grade 6 - Special Mention [Member] | |||
Total loans | 992 | 1,191 | 1,788 |
Commercial Loan [Member] | Grade 7 - Substandard [Member] | |||
Total loans | $ 3,281 | $ 4,306 | $ 5,167 |
Commercial Loan [Member] | Grade 8 - Doubtful [Member] | |||
Total loans | |||
Commercial Loan [Member] | Grade 9 - Loss [Member] | |||
Total loans | |||
Commercial Real Estate Portfolio Segment [Member] | |||
Total loans | $ 101,291 | $ 113,852 | $ 130,450 |
Commercial Real Estate Portfolio Segment [Member] | Grade 1 - Minimal [Member] | |||
Total loans | |||
Commercial Real Estate Portfolio Segment [Member] | Grade 2 - Modest [Member] | |||
Total loans | $ 1,024 | $ 679 | $ 1,066 |
Commercial Real Estate Portfolio Segment [Member] | Grade 3 - Average [Member] | |||
Total loans | 5,620 | 5,618 | 6,412 |
Commercial Real Estate Portfolio Segment [Member] | Grade 4 - Satisfactory [Member] | |||
Total loans | 58,549 | 59,536 | 67,453 |
Commercial Real Estate Portfolio Segment [Member] | Grade 5 - Watch [Member] | |||
Total loans | 9,654 | 16,091 | 17,288 |
Commercial Real Estate Portfolio Segment [Member] | Grade 6 - Special Mention [Member] | |||
Total loans | 6,321 | 4,249 | 10,028 |
Commercial Real Estate Portfolio Segment [Member] | Grade 7 - Substandard [Member] | |||
Total loans | $ 20,123 | $ 27,679 | $ 28,203 |
Commercial Real Estate Portfolio Segment [Member] | Grade 8 - Doubtful [Member] | |||
Total loans | |||
Commercial Real Estate Portfolio Segment [Member] | Grade 9 - Loss [Member] | |||
Total loans | |||
Consumer Loan [Member] | |||
Total loans | $ 5,114 | $ 6,229 | $ 7,928 |
Consumer Loan [Member] | Grade 1 - Minimal [Member] | |||
Total loans | 434 | 531 | 775 |
Consumer Loan [Member] | Grade 2 - Modest [Member] | |||
Total loans | 37 | 93 | 98 |
Consumer Loan [Member] | Grade 3 - Average [Member] | |||
Total loans | 218 | 156 | 914 |
Consumer Loan [Member] | Grade 4 - Satisfactory [Member] | |||
Total loans | 4,031 | 4,928 | 5,045 |
Consumer Loan [Member] | Grade 5 - Watch [Member] | |||
Total loans | 152 | 178 | 221 |
Consumer Loan [Member] | Grade 6 - Special Mention [Member] | |||
Total loans | 98 | 132 | 133 |
Consumer Loan [Member] | Grade 7 - Substandard [Member] | |||
Total loans | $ 144 | $ 211 | $ 742 |
Consumer Loan [Member] | Grade 8 - Doubtful [Member] | |||
Total loans | |||
Consumer Loan [Member] | Grade 9 - Loss [Member] | |||
Total loans | |||
Residential Portfolio Segment [Member] | |||
Total loans | $ 75,081 | $ 84,568 | $ 84,335 |
Residential Portfolio Segment [Member] | Grade 1 - Minimal [Member] | |||
Total loans | |||
Residential Portfolio Segment [Member] | Grade 2 - Modest [Member] | |||
Total loans | $ 277 | $ 1,216 | $ 1,835 |
Residential Portfolio Segment [Member] | Grade 3 - Average [Member] | |||
Total loans | 4,716 | 4,688 | 3,437 |
Residential Portfolio Segment [Member] | Grade 4 - Satisfactory [Member] | |||
Total loans | 53,187 | 56,758 | 53,868 |
Residential Portfolio Segment [Member] | Grade 5 - Watch [Member] | |||
Total loans | 2,988 | 4,695 | 6,933 |
Residential Portfolio Segment [Member] | Grade 6 - Special Mention [Member] | |||
Total loans | 3,544 | 3,747 | 5,127 |
Residential Portfolio Segment [Member] | Grade 7 - Substandard [Member] | |||
Total loans | $ 10,369 | $ 13,464 | $ 13,135 |
Residential Portfolio Segment [Member] | Grade 8 - Doubtful [Member] | |||
Total loans | |||
Residential Portfolio Segment [Member] | Grade 9 - Loss [Member] | |||
Total loans |
LOAN PORTFOLIO (Details Narrati
LOAN PORTFOLIO (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Total loans | $ 209,367 | $ 235,543 | $ 256,424 |
Classified loans | 33,900 | ||
Classified loans collateralized by real estate | 30,500 | ||
Recorded investment in impaired loans | 33,861 | 41,383 | 45,679 |
TDR impaired loans | 29,062 | $ 33,166 | $ 31,453 |
Pass [Member] | |||
Total loans | $ 149,300 | ||
Pass [Member] | Concentration of Loan Portfolio [Member] | |||
Concentration of Loan (as a percentage) | 71.30% | ||
Watch And Special Mention [Member] | |||
Total loans | $ 26,200 |
LOAN PORTFOLIO (Details 6)
LOAN PORTFOLIO (Details 6) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Recorded-Investment | $ 22,334 | $ 26,990 | $ 19,368 |
Unpaid Principal Balance | 27,782 | 33,679 | 23,154 |
Average Recorded Investment | 25,328 | 31,309 | 19,857 |
Interest Income Recognized | 938 | 1,433 | 869 |
Recorded-Investment | 11,527 | 14,393 | 26,311 |
Unpaid Principal Balance | 11,568 | 14,597 | 26,851 |
Related Allowance | 1,103 | 1,907 | 3,796 |
Average Recorded Investment | 11,701 | 14,691 | 26,774 |
Interest Income Recognized | 504 | 642 | 967 |
Recorded-Investment | 33,861 | 41,383 | 45,679 |
Unpaid Principal Balance | 39,350 | 48,276 | 50,005 |
Average Recorded Investment | 37,029 | 46,000 | 46,631 |
Interest Income Recognized | 1,442 | 2,075 | 1,836 |
Commercial Loan [Member] | |||
Recorded-Investment | 1,070 | 1,852 | 1,464 |
Unpaid Principal Balance | 1,339 | 2,678 | 1,657 |
Average Recorded Investment | 1,319 | 2,649 | 1,621 |
Interest Income Recognized | 72 | 79 | 50 |
Recorded-Investment | 1,657 | 1,792 | 2,482 |
Unpaid Principal Balance | 1,657 | 1,792 | 2,482 |
Related Allowance | 137 | 151 | 218 |
Average Recorded Investment | 1,729 | 1,892 | 2,556 |
Interest Income Recognized | 79 | 81 | 106 |
Recorded-Investment | 2,727 | 3,644 | 3,946 |
Unpaid Principal Balance | 2,996 | 4,470 | 4,139 |
Average Recorded Investment | 3,048 | 4,541 | 4,177 |
Interest Income Recognized | 151 | 160 | 156 |
Commercial Real Estate Portfolio Segment [Member] | |||
Recorded-Investment | 17,180 | 19,156 | 14,120 |
Unpaid Principal Balance | 22,037 | 24,441 | 17,052 |
Average Recorded Investment | 18,989 | 22,377 | 14,275 |
Interest Income Recognized | 722 | 1,083 | 606 |
Recorded-Investment | 4,402 | 5,990 | 15,420 |
Unpaid Principal Balance | 4,402 | 6,194 | 15,747 |
Related Allowance | 396 | 1,008 | 2,455 |
Average Recorded Investment | 4,461 | 6,143 | 15,674 |
Interest Income Recognized | 207 | 282 | 469 |
Recorded-Investment | 21,582 | 25,146 | 29,540 |
Unpaid Principal Balance | 26,439 | 30,635 | 32,799 |
Average Recorded Investment | 23,450 | 28,520 | 29,949 |
Interest Income Recognized | 929 | 1,365 | 1,075 |
Residential Portfolio Segment [Member] | |||
Recorded-Investment | 4,016 | 5,950 | 3,729 |
Unpaid Principal Balance | 4,338 | 6,528 | 4,366 |
Average Recorded Investment | 4,936 | 6,249 | 3,901 |
Interest Income Recognized | 137 | 268 | 206 |
Recorded-Investment | 5,402 | 6,468 | 8,241 |
Unpaid Principal Balance | 5,443 | 6,468 | 8,454 |
Related Allowance | 560 | 737 | 1,105 |
Average Recorded Investment | 5,445 | 6,506 | 8,381 |
Interest Income Recognized | 215 | 271 | 384 |
Recorded-Investment | 9,418 | 12,418 | 11,970 |
Unpaid Principal Balance | 9,781 | 12,996 | 12,820 |
Average Recorded Investment | 10,381 | 12,755 | 12,282 |
Interest Income Recognized | 352 | 539 | 590 |
Consumer Loan [Member] | |||
Recorded-Investment | 68 | 32 | 55 |
Unpaid Principal Balance | 68 | 32 | 79 |
Average Recorded Investment | 84 | 34 | 60 |
Interest Income Recognized | 7 | 3 | 7 |
Recorded-Investment | 66 | 143 | 168 |
Unpaid Principal Balance | 66 | 143 | 168 |
Related Allowance | 10 | 11 | 18 |
Average Recorded Investment | 66 | 150 | 163 |
Interest Income Recognized | 3 | 8 | 8 |
Recorded-Investment | 134 | 175 | 223 |
Unpaid Principal Balance | 134 | 175 | 247 |
Average Recorded Investment | 150 | 184 | 223 |
Interest Income Recognized | $ 10 | $ 11 | $ 15 |
LOAN PORTFOLIO (Details 7)
LOAN PORTFOLIO (Details 7) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | $ 29,062 | $ 33,166 | $ 31,453 |
Financial Receivable Modifications Nonperforming [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | 5,449 | 5,013 | 6,443 |
Financial Receivable Modifications Performing [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | 23,613 | 28,153 | 25,010 |
Financial Receivable Modifications Performing [Member] | Commercial Loan [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | 2,565 | 2,942 | 3,496 |
Financial Receivable Modifications Performing [Member] | Commercial Real Estate [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | 13,883 | 17,499 | 14,673 |
Financial Receivable Modifications Performing [Member] | Residential Portfolio Segment [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | 7,059 | 7,537 | 6,690 |
Financial Receivable Modifications Performing [Member] | Consumer Loan [Member] | |||
Financing Receivable, Modifications [Line Items] | |||
Restructured debt balances | $ 106 | $ 175 | $ 151 |
LOAN PORTFOLIO (Details 8)
LOAN PORTFOLIO (Details 8) - Troubled Debt Restructuring [Member] $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($)Number | Dec. 31, 2014USD ($)Number | Dec. 31, 2013USD ($)Number | ||
Tdrs That Are In Compliance With Terms Of Agreement [Member] | ||||
Number of contracts | Number | 20 | 51 | 27 | |
Pre- Modification Outstanding Recorded Investment | $ 1,515 | $ 9,673 | $ 3,430 | |
Post-Modification Outstanding Recorded Investment | $ 1,393 | $ 9,315 | $ 3,430 | |
Tdrs That Are In Compliance With Terms Of Agreement [Member] | Commercial Real Estate [Member] | ||||
Number of contracts | Number | 6 | 25 | 4 | |
Pre- Modification Outstanding Recorded Investment | $ 475 | $ 6,016 | $ 1,309 | |
Post-Modification Outstanding Recorded Investment | $ 475 | $ 5,837 | $ 1,309 | |
Tdrs That Are In Compliance With Terms Of Agreement [Member] | Residential Portfolio Segment [Member] | ||||
Number of contracts | Number | 8 | 19 | 6 | |
Pre- Modification Outstanding Recorded Investment | $ 755 | $ 3,171 | $ 1,401 | |
Post-Modification Outstanding Recorded Investment | $ 714 | $ 2,992 | $ 1,401 | |
Tdrs That Are In Compliance With Terms Of Agreement [Member] | Commercial Loan [Member] | ||||
Number of contracts | Number | 3 | 5 | 12 | |
Pre- Modification Outstanding Recorded Investment | $ 272 | $ 455 | $ 636 | |
Post-Modification Outstanding Recorded Investment | $ 191 | $ 455 | $ 636 | |
Tdrs That Are In Compliance With Terms Of Agreement [Member] | Consumer Loan [Member] | ||||
Number of contracts | Number | 3 | 2 | 5 | |
Pre- Modification Outstanding Recorded Investment | $ 13 | $ 31 | $ 84 | |
Post-Modification Outstanding Recorded Investment | $ 13 | $ 31 | $ 84 | |
Tdrs That Are Subsequently Defaulted [Member] | ||||
Number of contracts | Number | [1] | 2 | 4 | |
Pre- Modification Outstanding Recorded Investment | [1] | $ 412 | $ 554 | |
Post-Modification Outstanding Recorded Investment | [1] | $ 372 | $ 544 | |
Tdrs That Are Subsequently Defaulted [Member] | Commercial Real Estate [Member] | ||||
Number of contracts | Number | [1] | 1 | ||
Pre- Modification Outstanding Recorded Investment | [1] | $ 36 | ||
Post-Modification Outstanding Recorded Investment | [1] | $ 36 | ||
Tdrs That Are Subsequently Defaulted [Member] | Residential Portfolio Segment [Member] | ||||
Number of contracts | Number | [1] | 2 | 3 | |
Pre- Modification Outstanding Recorded Investment | [1] | $ 412 | $ 518 | |
Post-Modification Outstanding Recorded Investment | [1] | $ 372 | $ 518 | |
[1] | Loans past due 90 days or more are considered to be in default. |
LOAN PORTFOLIO (Details 9)
LOAN PORTFOLIO (Details 9) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Commitments To Extend Credit [Member] | |||
Off-Balance Sheet Financial Instruments: | |||
Notional Amount | $ 21,318 | $ 27,017 | $ 29,836 |
Standby Letters Of Credit [Member] | |||
Off-Balance Sheet Financial Instruments: | |||
Notional Amount | $ 257 | $ 247 | $ 361 |
PREMISES, FURNITURE AND EQUIP67
PREMISES, FURNITURE AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Premises Furniture And Equipment Details | |||
Land | $ 4,464 | $ 7,099 | $ 7,099 |
Buildings and land improvements | 14,301 | 16,082 | 16,134 |
Furniture and equipment | 7,557 | 7,874 | 7,608 |
Leasehold improvements | 40 | 65 | 65 |
Property, Plant and Equipment, Gross | 26,362 | 31,120 | 30,906 |
Less accumulated depreciation | (10,445) | (10,828) | (10,104) |
Premises, furniture and equipment, net | 15,917 | 20,292 | 20,802 |
Depreciation expense | $ 742 | $ 789 | $ 824 |
OTHER REAL ESTATE OWNED (Detail
OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other Real Estate [Abstract] | |||
Balance, beginning of year | $ 19,501 | $ 24,972 | $ 19,464 |
Additions | 4,058 | 2,183 | 17,659 |
Sales | (9,709) | (7,337) | (11,383) |
Write-downs | (226) | (317) | (768) |
Balance, end of period | $ 13,624 | $ 19,501 | $ 24,972 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Other Assets Details | |||
Prepaid expenses and insurance | $ 406 | $ 736 | $ 471 |
Unamortized software | $ 55 | $ 52 | 29 |
Receivable from sale of other real estate owned | $ 3,348 | ||
Proceeds due from life insurance | $ 1,208 | ||
Other | $ 533 | 508 | $ 358 |
Total | $ 994 | $ 2,504 | $ 4,206 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Time Deposits [Maturity] | |||
Less than one year | $ 85,676 | ||
One to three years | 81,307 | ||
Three to five years | $ 6,988 | ||
Beyond five years | |||
Total | $ 173,971 | ||
Time deposits in excess of the FDIC insurance limit of $250 thousand | 3,735 | $ 6,786 | $ 10,107 |
Overdrawn transaction accounts | $ 24 | 17 | 41 |
Brokered deposits | 14,100 | 18,600 | |
Related Party Deposits by directors including their affiliates and executive officers | $ 552 | $ 1,400 | $ 589 |
ADVANCES FROM THE FEDERAL HOM71
ADVANCES FROM THE FEDERAL HOME LOAN BANK (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Loan Balance | $ 17,000 |
Convertible Advance 2018-09-04 [Member] | |
Interest Rate | 3.60% |
Maturity Date | Sep. 4, 2018 |
Loan Balance | $ 2,000 |
Convertible Advance 2018-09-10 [Member] | |
Interest Rate | 3.45% |
Maturity Date | Sep. 10, 2018 |
Loan Balance | $ 5,000 |
Convertible Advance 2018-09-18 [Member] | |
Interest Rate | 2.95% |
Maturity Date | Sep. 18, 2018 |
Loan Balance | $ 5,000 |
Convertible Advance 2019-08-20 [Member] | |
Interest Rate | 3.86% |
Maturity Date | Aug. 20, 2019 |
Loan Balance | $ 5,000 |
ADVANCES FROM THE FEDERAL HOM72
ADVANCES FROM THE FEDERAL HOME LOAN BANK (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Federal Home Loan Bank Stock | $ 1,100 | $ 1,200 | $ 1,600 | ||
Excess borrowing capacity with FHLB | 8,500 | ||||
Scheduled principal reductions | $ 5,000 | $ 12,000 | 12,000 | ||
Deferred interest on subordinated debt | 4,900 | ||||
One To Four Family Residential Properties [Member] | |||||
First mortgage loans pledged as collateral | 4,600 | ||||
Commercial Real Estate [Member] | |||||
First mortgage loans pledged as collateral | 3,400 | ||||
Home Equity Lines Of Credit [Member] | |||||
First mortgage loans pledged as collateral | 9,400 | ||||
Mortgage Backed Securities [Member] | |||||
First mortgage loans pledged as collateral | $ 16,100 |
JUNIOR SUBORDINATED DEBENTURES
JUNIOR SUBORDINATED DEBENTURES (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Feb. 28, 2011 | Dec. 21, 2005 | |
Subordinated Borrowing [Line Items] | ||
Proceeds from Preferred securities issued and sold | $ 6,000 | |
Hcsb Financial Trust I [Member] | ||
Subordinated Borrowing [Line Items] | ||
Proceeds from Preferred securities issued and sold | $ 6,000 | |
Initial proceed from capital investment in trust | 186 | |
Funds due to trust | 6,200 | |
Deferred interest payments | $ 901 |
SUBORDINATED DEBENTURES (Detail
SUBORDINATED DEBENTURES (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | |||
Jul. 30, 2010 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Subordinated Borrowings [Abstract] | ||||
Subordinated debentures | $ 12,062 | $ 11,062 | $ 11,062 | $ 11,062 |
Subordinated promissory note interest rate floor | 8.00% | |||
Subordinated promissory note interest rate ceiling | 12.00% | |||
Subordinated borrowing terms and conditions | Interest at a rate equal to the current Prime Rate in effect, as published by the Wall Street Journal, plus 3 | |||
Subordinated promissory note current Prime Rate margin | 3.00% | |||
Deferred interest on subordinated debt | $ 4,900 | |||
Subordinated debt cancelled | $ 1,000 |
LEASE COMMITMENTS (Details Narr
LEASE COMMITMENTS (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)Number | |
Leases [Abstract] | |
Number of consecutive renewal terms for which the lease can be extended | Number | 8 |
Period of each consecutive renewal term for which the lease can be extended | 5 years |
Lease rental (per month) | $ 1,047 |
Future minimum lease payments | $ 12,654 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | Dec. 31, 2015USD ($) |
Commitments And Contingencies Details Narrative | |
Contribution from Federal Reserve Bank of Richmond | $ 1,800 |
SHAREHOLDERS' EQUITY (Details N
SHAREHOLDERS' EQUITY (Details Narrative) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Feb. 28, 2011USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2014USD ($)shares | Dec. 31, 2015USD ($)Number$ / sharesshares | Dec. 31, 2013shares | Mar. 06, 2009USD ($)$ / sharesshares | |
Fixed Rate Cumulative Perpetual Preferred Stock, Series T, shares issued to U.S. Treasury | shares | 12,895 | 12,895 | 12,895 | |||
Proceeds on trust preferred securities | $ 6,000 | |||||
Approximate quarterly interest payments on trust preferred securities | $ 161 | $ 290 | ||||
Accrued dividend payments due on Series T Preferred Stock | $ 4,700 | |||||
Number of accrued dividend payments due on Series T Preferred Stock when holders have right to elect directors | Number | 6 | |||||
Number of directors shareholders have right to elect | Number | 2 | |||||
Series T Preferred Stock [Member] | ||||||
Fixed Rate Cumulative Perpetual Preferred Stock, Series T, shares issued to U.S. Treasury | shares | 12,895 | |||||
Fixed Rate Cumulative Perpetual Preferred Stock, Series T, Liquidation preference (per share) | $ / shares | $ 1,000 | |||||
Dividend Rate for first five years | 5.00% | |||||
Dividend Rate after first five years | 9.00% | |||||
Aggregate purchase price of Fixed Rate Cumulative Perpetual Preferred Stock, Series T | $ 12,900 | |||||
Capital Purchase Program Warrant [Member] | ||||||
Maximum number of common stock shares purchased under ten-year warrant | shares | 91,714 | |||||
Common stock, initial exercise price | $ / shares | $ 21.09 |
REGULATORY CAPITAL REQUIREMENTS
REGULATORY CAPITAL REQUIREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
The Company [Member] | ||||
Total capital (to risk weighted assets) | ||||
Actual Amount | $ (10,642) | $ (10,402) | $ (10,169) | |
Actual Ratio (as a percent) | (4.15%) | (3.61%) | (3.19%) | |
For Capital Adequacy Purposes Amount | $ 20,537 | $ 23,031 | $ 25,512 | |
For Capital Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% | 8.00% | |
Tier I capital (to risk weighted assets) | ||||
Actual Amount | $ (10,642) | $ (10,402) | $ (10,169) | |
Actual Ratio (as a percent) | (4.15%) | (3.61%) | (3.19%) | |
For Capital Adequacy Purposes Amount | $ 10,269 | $ 11,516 | $ 12,756 | |
For Capital Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% | 4.00% | |
Tier I capital (to average assets) | ||||
Actual Amount | $ (10,642) | $ (10,402) | $ (10,169) | |
Actual Ratio (as a percent) | (2.87%) | (2.36%) | (2.23%) | |
For Capital Adequacy Purposes Amount | $ 14,831 | $ 17,614 | $ 18,242 | |
For Capital Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% | 4.00% | |
The Bank [Member] | ||||
Total capital (to risk weighted assets) | ||||
Actual Amount | $ 15,402 | $ 14,533 | $ 13,842 | |
Actual Ratio (as a percent) | 5.92% | 5.05% | 4.34% | |
For Capital Adequacy Purposes Amount | $ 20,802 | $ 23,008 | $ 25,505 | |
For Capital Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% | 8.00% | |
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Amount | $ 26,002 | $ 28,760 | $ 31,881 | |
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 10.00% | 10.00% | 10.00% | |
Tier I capital (to risk weighted assets) | ||||
Actual Amount | $ 12,135 | $ 10,911 | $ 9,789 | |
Actual Ratio (as a percent) | 4.67% | 3.79% | 3.07% | |
For Capital Adequacy Purposes Amount | $ 15,601 | $ 11,504 | $ 12,753 | |
For Capital Adequacy Purposes Ratio (as a percent) | 6.00% | 4.00% | 4.00% | |
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Amount | [1] | |||
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | [1] | |||
Tier I capital (to average assets) | ||||
Actual Amount | $ 12,135 | $ 10,911 | $ 9,789 | |
Actual Ratio (as a percent) | 3.28% | 2.53% | 2.17% | |
For Capital Adequacy Purposes Amount | $ 14,819 | $ 17,255 | $ 18,067 | |
For Capital Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% | 4.00% | |
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Amount | $ 29,639 | $ 34,510 | $ 36,135 | |
Minimum To Be Well-Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent) | 8.00% | 8.00% | 8.00% | |
Common Equity Tier 1 Capital (to Risk-Weighted Assets) | ||||
CET1 capital to risk-weighted assets, Actual Amount | $ 12,135 | |||
CET1 capital to risk-weighted assets, Actual Percent | 4.67% | |||
CET1 capital to risk-weighted assets, Required to be Categorized Adequately Capitalized, Amount | $ 11,701 | |||
CET1 capital to risk-weighted assets, Required to be Categorized Adequately Capitalized, Percent | 4.50% | |||
[1] | Minimum capital amounts and ratios presented are amounts to be well-capitalized under the various regulatory capital requirements administered by the FDIC. On February 10, 2011, the Bank became subject to a regulatory Consent Order with the FDIC. Minimum capital amounts and ratios presented for the Bank are the minimum levels set forth in the Consent Order. No minimum Tier 1 capital to risk-weighted assets ratio was specified in the Consent Order. Regardless of the Bank's capital ratios, it is unable to be classified as "well-capitalized" while it is operating under the Consent Order with the FDIC. |
RETIREMENT AND BENEFITS (Detail
RETIREMENT AND BENEFITS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Maximum Annual Contribution Per Employee, Percent | 15.00% | ||
Maximum percent match to employees (in percent) | 4.00% | ||
Contributions to employe plans | |||
Directors Deferred Compensation Plan [Member] | |||
Deferred Directors Fees | $ 25 | $ 37 | $ 49 |
INCOME (LOSS) PER SHARE (Detail
INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Basic loss per common share: | |||
Net loss available to common shareholders | $ (1,758) | $ (1,403) | $ 911 |
Weighted average common shares outstanding - basic | 3,823,244 | 3,770,355 | 3,738,337 |
Basic loss per common share | $ (.46) | $ (0.37) | $ .24 |
Diluted loss per common share: | |||
Net loss available to common shareholders | $ (1,758) | $ (1,403) | $ 911 |
Weighted average common shares outstanding - basic | 3,823,244 | 3,770,355 | 3,738,337 |
Incremental shares from assumed conversion of stock options and restricted stock awards | |||
Average common shares outstanding - diluted | 3,823,244 | 3,770,355 | 3,738,337 |
Diluted loss per common share | $ (0.46) | $ (0.37) | $ 0.24 |
Antidilutive stock options excluded from computation of earnings per share (in shares) | 91,714 | 91,714 | 91,714 |
STOCK COMPENSATION PLAN (Detail
STOCK COMPENSATION PLAN (Details Narrative) - Omnibus Stock Ownership and Long Term Incentive Plan [Member] | Dec. 31, 2015shares |
Shares authorized under the Plan | 400,000 |
Bank's return on average assets (ROAA) average (as a percent) | 1.15% |
OTHER EXPENSES (Details)
OTHER EXPENSES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other Expenses Details | |||
Stationery, printing, and postage | $ 290 | $ 275 | $ 318 |
Dues and subscriptions | 69 | 59 | 72 |
Telephone | 186 | 202 | 204 |
Director and officer insurance | 196 | 212 | 486 |
ATM services | 11 | 27 | 115 |
Appraisal fee expense | 84 | 123 | 140 |
Accountant fees | 267 | 277 | 84 |
Legal fees | 853 | 697 | 1,875 |
Marketing | 60 | 16 | 19 |
Consulting fees | 314 | 112 | 186 |
Courier services | 55 | 51 | 58 |
Other | 702 | 864 | 755 |
Total | $ 3,087 | $ 2,915 | $ 4,312 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Currently payable: | |||
Federal | |||
State | $ 27 | $ 78 | |
Total current | $ 27 | $ 78 | |
Deferred income taxes | |||
Income tax benefit | $ 27 | $ 78 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | |||
Allowance for loan losses | $ 1,564 | $ 1,968 | $ 3,211 |
Net unrealized losses on securities available-for-sale | 595 | 313 | 2,321 |
Net capitalized loan costs | 24 | 23 | 25 |
Net operating loss | 20,253 | 19,572 | 16,751 |
Deferred compensation | 8 | 13 | 17 |
Nonaccruing interest | 332 | 232 | 241 |
Tax credits | 241 | 259 | 276 |
Other real estate owned | 265 | 655 | 638 |
Loss on equity securities | 1 | 1 | 43 |
Other | 12 | 8 | 5 |
Total deferred tax assets | 23,295 | 23,044 | 23,528 |
Valuation Allowance | (22,474) | (21,971) | (22,361) |
Total net deferred tax assets | 821 | 1,073 | 1,167 |
Deferred tax liabilities: | |||
Accumulated depreciation | $ (817) | $ (965) | (1,046) |
Gain on sale of real estate | (73) | ||
Prepaid expenses | $ (4) | $ (108) | (48) |
Total deferred tax liabilities | $ (821) | $ (1,073) | $ (1,167) |
Net deferred tax asset |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Currently payable: | |||
Tax benefit at statutory rate | $ (74) | $ (73) | $ 599 |
State income tax benefit net of federal income tax | $ 18 | 52 | |
Tax-exempt interest income | (5) | $ (16) | |
Bank owned life insurance | $ (108) | (113) | |
Life insurance proceeds | (315) | ||
Valuation allowance | $ 220 | 542 | $ (473) |
Other | (29) | (10) | $ (110) |
Income tax expense (benefit) | $ 27 | $ 78 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details Narrative | |||
Federal Net Operating Loss Carryforwards | $ 58,700 | $ 56,800 | $ 48,600 |
South Carolina Net Operating Loss Carryforwards | $ 9,400 | $ 7,900 | $ 6,500 |
Federal statutory rate (as a percent) | 34.00% |
UNUSED LINES OF CREDIT (Details
UNUSED LINES OF CREDIT (Details Narrative) $ in Thousands | Dec. 31, 2015USD ($) |
Unused Lines Of Credit Details Narrative | |
Book value of Investment Securities | $ 54,600 |
Market value of Investment Securities not pledged | $ 53,600 |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Financial Assets: | ||||
Securities available-for-sale | $ 89,701 | $ 106,674 | $ 94,602 | |
Commitments To Extend Credit [Member] | ||||
Off-Balance Sheet Financial Instruments: | ||||
Notional Amount | 21,318 | 27,017 | 29,836 | |
Standby Letters Of Credit [Member] | ||||
Off-Balance Sheet Financial Instruments: | ||||
Notional Amount | 257 | 247 | 361 | |
Carrying Reported Amount Fair Value Disclosure [Member] | ||||
Financial Assets: | ||||
Cash and cash equivalents | 22,137 | 28,527 | 28,081 | |
Securities available-for-sale | 89,701 | 106,674 | 94,602 | |
Nonmarketable equity securities | 1,330 | 1,342 | 1,743 | |
Loans, net | 204,766 | 229,756 | 246,981 | |
Financial Liabilities: | ||||
Demand deposit, interest-bearing transaction, and savings accounts | 156,860 | 170,538 | 163,505 | |
Certificates of deposit | 173,971 | 220,799 | 242,539 | |
Repurchase agreements | 1,716 | 1,612 | 1,337 | |
Advances from the Federal Home Loan Bank | 17,000 | 17,000 | 22,000 | |
Subordinated debentures | 11,062 | 11,062 | 11,062 | |
Junior subordinated debentures | 6,186 | 6,186 | 6,186 | |
Estimate Of Fair Value Fair Value Disclosure [Member] | ||||
Financial Assets: | ||||
Cash and cash equivalents | 22,137 | 28,527 | 28,081 | |
Securities available-for-sale | 89,701 | 106,674 | 94,602 | |
Nonmarketable equity securities | 1,330 | 1,342 | 1,743 | |
Loans, net | 204,975 | 230,038 | 248,633 | |
Financial Liabilities: | ||||
Demand deposit, interest-bearing transaction, and savings accounts | 156,860 | 170,538 | 163,505 | |
Certificates of deposit | 174,964 | 222,789 | 244,463 | |
Repurchase agreements | 1,716 | 1,612 | 1,337 | |
Advances from the Federal Home Loan Bank | $ 17,108 | $ 17,136 | $ 25,055 | |
Subordinated debentures | [1] | |||
Junior subordinated debentures | [1] | |||
Fair Value Inputs Level1 [Member] | ||||
Financial Assets: | ||||
Cash and cash equivalents | $ 22,137 | $ 28,527 | $ 28,081 | |
Securities available-for-sale | ||||
Nonmarketable equity securities | ||||
Loans, net | ||||
Financial Liabilities: | ||||
Demand deposit, interest-bearing transaction, and savings accounts | $ 156,860 | $ 170,538 | $ 163,505 | |
Certificates of deposit | ||||
Repurchase agreements | ||||
Advances from the Federal Home Loan Bank | ||||
Subordinated debentures | ||||
Junior subordinated debentures | ||||
Fair Value Inputs Level2 [Member] | ||||
Financial Assets: | ||||
Cash and cash equivalents | ||||
Securities available-for-sale | $ 89,701 | $ 106,674 | $ 94,602 | |
Nonmarketable equity securities | ||||
Loans, net | ||||
Financial Liabilities: | ||||
Demand deposit, interest-bearing transaction, and savings accounts | ||||
Certificates of deposit | $ 174,964 | $ 222,789 | $ 244,463 | |
Repurchase agreements | 1,716 | 1,612 | 1,337 | |
Advances from the Federal Home Loan Bank | $ 17,108 | $ 17,136 | $ 25,055 | |
Subordinated debentures | ||||
Junior subordinated debentures | ||||
Fair Value Inputs Level3 [Member] | ||||
Financial Assets: | ||||
Cash and cash equivalents | ||||
Securities available-for-sale | ||||
Nonmarketable equity securities | $ 1,330 | $ 1,342 | $ 1,743 | |
Loans, net | $ 204,975 | $ 230,038 | $ 248,633 | |
Financial Liabilities: | ||||
Demand deposit, interest-bearing transaction, and savings accounts | ||||
Certificates of deposit | ||||
Repurchase agreements | ||||
Advances from the Federal Home Loan Bank | ||||
Subordinated debentures | ||||
Junior subordinated debentures | ||||
[1] | The Company is unable to determine this value. |
FAIR VALUE (Details 2)
FAIR VALUE (Details 2) - Fair Value Measurements Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Assets and liabilities fair value disclosure | $ 89,701 | $ 106,674 | $ 94,602 |
Fair Value Inputs Level1 [Member] | |||
Assets and liabilities fair value disclosure | |||
Fair Value Inputs Level2 [Member] | |||
Assets and liabilities fair value disclosure | $ 89,701 | $ 106,674 | $ 94,602 |
Fair Value Inputs Level3 [Member] | |||
Assets and liabilities fair value disclosure | |||
Government Sponsored Enterprises Debt Securities [Member] | |||
Assets and liabilities fair value disclosure | $ 36,032 | $ 40,082 | $ 55,075 |
Government Sponsored Enterprises Debt Securities [Member] | Fair Value Inputs Level1 [Member] | |||
Assets and liabilities fair value disclosure | |||
Government Sponsored Enterprises Debt Securities [Member] | Fair Value Inputs Level2 [Member] | |||
Assets and liabilities fair value disclosure | $ 36,032 | $ 40,082 | $ 55,075 |
Government Sponsored Enterprises Debt Securities [Member] | Fair Value Inputs Level3 [Member] | |||
Assets and liabilities fair value disclosure | |||
Mortgage Backed Securities [Member] | |||
Assets and liabilities fair value disclosure | $ 52,445 | $ 65,348 | $ 37,034 |
Mortgage Backed Securities [Member] | Fair Value Inputs Level1 [Member] | |||
Assets and liabilities fair value disclosure | |||
Mortgage Backed Securities [Member] | Fair Value Inputs Level2 [Member] | |||
Assets and liabilities fair value disclosure | $ 52,445 | $ 65,348 | $ 37,034 |
Mortgage Backed Securities [Member] | Fair Value Inputs Level3 [Member] | |||
Assets and liabilities fair value disclosure | |||
Obligations of state and local governments [Member] | |||
Assets and liabilities fair value disclosure | $ 1,224 | $ 1,244 | $ 2,493 |
Obligations of state and local governments [Member] | Fair Value Inputs Level1 [Member] | |||
Assets and liabilities fair value disclosure | |||
Obligations of state and local governments [Member] | Fair Value Inputs Level2 [Member] | |||
Assets and liabilities fair value disclosure | $ 1,224 | $ 1,244 | $ 2,493 |
Obligations of state and local governments [Member] | Fair Value Inputs Level3 [Member] | |||
Assets and liabilities fair value disclosure |
FAIR VALUE (Details 3)
FAIR VALUE (Details 3) - Fair Value Measurements Nonrecurring [Member] - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair value of assets | $ 46,382 | $ 58,977 | $ 66,855 |
Fair Value Inputs Level3 [Member] | |||
Fair value of assets | 46,382 | 58,977 | 66,855 |
Impaired Loans [Member] | |||
Fair value of assets | 32,758 | 39,476 | 41,883 |
Impaired Loans [Member] | Fair Value Inputs Level3 [Member] | |||
Fair value of assets | 32,758 | 39,476 | 41,883 |
Other Real Estate Owned [Member] | |||
Fair value of assets | 13,624 | 19,501 | 24,972 |
Other Real Estate Owned [Member] | Fair Value Inputs Level3 [Member] | |||
Fair value of assets | $ 13,624 | $ 19,501 | $ 24,972 |
FAIR VALUE (Details 4)
FAIR VALUE (Details 4) - Fair Value Inputs Level3 [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Impaired Loans [Member] | Commercial Loan [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Fair value on a non-recurring basis | $ 2,590 | $ 3,493 | $ 3,728 |
Valuation Techniques | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows |
Unobservable Inputs | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes |
Range (Weighted Avg) | 8.77% | 25.71% | 3.84% |
Impaired Loans [Member] | Commercial Loan [Member] | Minimum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 0.00% | 0.00% | 0.00% |
Impaired Loans [Member] | Commercial Loan [Member] | Maximum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 10.00% | 68.05% | 10.00% |
Impaired Loans [Member] | Commercial Real Estate [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Fair value on a non-recurring basis | $ 21,186 | $ 24,138 | $ 27,085 |
Valuation Techniques | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows |
Unobservable Inputs | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes |
Range (Weighted Avg) | 10.23% | 10.80% | 14.93% |
Impaired Loans [Member] | Commercial Real Estate [Member] | Minimum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 0.00% | 0.00% | 0.00% |
Impaired Loans [Member] | Commercial Real Estate [Member] | Maximum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 32.33% | 10.00% | 52.00% |
Impaired Loans [Member] | Residential Portfolio Segment [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Fair value on a non-recurring basis | $ 8,858 | $ 11,681 | $ 10,865 |
Valuation Techniques | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows |
Unobservable Inputs | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes |
Range (Weighted Avg) | 9.90% | 7.31% | 10.45% |
Impaired Loans [Member] | Residential Portfolio Segment [Member] | Minimum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 0.00% | 0.00% | 0.00% |
Impaired Loans [Member] | Residential Portfolio Segment [Member] | Maximum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 10.00% | 47.31% | 47.31% |
Impaired Loans [Member] | Consumer Loan [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Fair value on a non-recurring basis | $ 124 | $ 164 | $ 205 |
Valuation Techniques | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows |
Unobservable Inputs | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes |
Range (Weighted Avg) | 10.00% | 10.00% | 4.50% |
Impaired Loans [Member] | Consumer Loan [Member] | Minimum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 0.00% | 0.00% | 0.00% |
Impaired Loans [Member] | Consumer Loan [Member] | Maximum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 10.00% | 10.00% | 7.00% |
Other Real Estate Owned [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Valuation Techniques | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows | Appraised Value/ Discounted Cash Flows |
Unobservable Inputs | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes | Appraisals and/or sales of comparable properties/ Independent quotes |
Range (Weighted Avg) | 10.00% | 10.00% | 10.00% |
Fair value on a non-recurring basis | $ 13,624 | $ 19,501 | $ 24,972 |
Other Real Estate Owned [Member] | Minimum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 0.00% | 0.00% | 0.00% |
Other Real Estate Owned [Member] | Maximum [Member] | |||
Quantitative Information For Financial Instruments Measured At Fair Value On A Non-Recurring Basis [Line Items] | |||
Range | 10.00% | 10.00% | 10.00% |
HCSB FINANCIAL CORPORATION (P92
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 30, 2010 |
Assets: | |||||
Other assets | $ 994 | $ 2,504 | $ 4,206 | ||
Total assets | 361,533 | 421,571 | 434,586 | ||
Liabilities and Shareholders' Equity | |||||
Subordinated debentures | 11,062 | 11,062 | 11,062 | $ 12,062 | |
Junior subordinated debentures | 6,186 | 6,186 | 6,186 | ||
Other liabilities | 1,030 | 1,038 | 1,094 | ||
Total liabilities | 373,783 | 432,818 | 451,028 | ||
Total shareholders' deficit | (12,250) | (11,247) | (16,442) | $ (11,762) | |
Total liabilities and shareholders' deficit | 361,533 | 421,571 | 434,586 | ||
The Company [Member] | |||||
Assets: | |||||
Cash | 5 | 26 | 59 | ||
Investment in banking subsidiary | 10,527 | 10,066 | 3,516 | ||
Investment in trust | 186 | 186 | 186 | ||
Other assets | 111 | 123 | 136 | ||
Total assets | 10,829 | 10,401 | 3,897 | ||
Liabilities and Shareholders' Equity | |||||
Interest payable-subordinated debentures | 4,925 | 3,685 | 2,553 | ||
Interest payable-junior subordinated debentures | 901 | 714 | 536 | ||
Subordinated debentures | 11,062 | 11,062 | 11,062 | ||
Junior subordinated debentures | 6,186 | 6,186 | 6,186 | ||
Other liabilities | 5 | 1 | 2 | ||
Total liabilities | 23,079 | 21,648 | 20,339 | ||
Total shareholders' deficit | (12,250) | (11,247) | (16,442) | ||
Total liabilities and shareholders' deficit | $ 10,829 | $ 10,401 | $ 3,897 |
HCSB FINANCIAL CORPORATION (P93
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income | |||
Forgiveness of debt | $ 1,000 | ||
Expenses | |||
Total Expense | $ 12,626 | $ 13,749 | 15,460 |
Loss before income taxes, and equity in undistributed gains (losses) of banking subsidiary | (219) | (213) | $ 1,763 |
Income tax expense | 27 | 78 | |
Net income (loss) | $ (246) | $ (291) | $ 1,763 |
The Company [Member] | |||
Income | |||
Forgiveness of debt | 1,000 | ||
Expenses | |||
Interest expense on subordinated debentures | $ 1,240 | $ 1,132 | 1,081 |
Interest expense on junior subordinated debentures | 186 | 178 | 186 |
Other expenses | 44 | 104 | 39 |
Total Expense | 1,470 | 1,414 | 1,306 |
Loss before income taxes, and equity in undistributed gains (losses) of banking subsidiary | $ (1,470) | $ (1,414) | $ (306) |
Income tax expense | |||
Equity in undistributed gains (losses) of banking subsidiary | $ 1,224 | $ 1,123 | $ 2,069 |
Net income (loss) | $ (246) | $ (291) | $ 1,763 |
HCSB FINANCIAL CORPORATION (P94
HCSB FINANCIAL CORPORATION (PARENT COMPANY ONLY) (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (246) | $ (291) | $ 1,763 |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Forgiveness of debt | (1,000) | ||
Decrease in other assets | $ (1,491) | $ (1,708) | 3,390 |
Increase in accrued interest payable | 1,383 | 1,278 | 1,098 |
Net cash provided by operating activities | 2,400 | 5,115 | $ (2,511) |
Cash flows from financing activities: | |||
Sale of common stock | 6 | 58 | |
Net cash provided by financing activities | (26,160) | (19,374) | $ (29,783) |
Net increase in cash and cash equivalents | (6,390) | 446 | (18,519) |
Cash and cash equivalents, beginning of year | 28,527 | 28,081 | 46,600 |
Cash and cash equivalents, end of year | 22,137 | 28,527 | 28,081 |
The Company [Member] | |||
Cash flows from operating activities: | |||
Net income (loss) | $ (246) | $ (291) | 1,763 |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Forgiveness of debt | (1,000) | ||
Equity in undistributed (gains) losses of banking subsidiary | $ (1,224) | $ (1,123) | (2,069) |
Decrease in other assets | 12 | 13 | 13 |
Increase in accrued interest payable | 1,431 | 1,310 | 1,266 |
Net cash provided by operating activities | (27) | (91) | $ (27) |
Cash flows from financing activities: | |||
Sale of common stock | 6 | 58 | |
Net cash provided by financing activities | 6 | 58 | |
Net increase in cash and cash equivalents | (21) | (33) | $ (27) |
Cash and cash equivalents, beginning of year | 26 | 59 | 86 |
Cash and cash equivalents, end of year | $ 5 | $ 26 | $ 59 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) | Mar. 02, 2016 | Feb. 29, 2016 |
Series T Preferred Stock [Member] | ||
Number of shares to be repurchased | 12,895 | |
Stock Repurchase Program, Authorized Amount | $ 128,950 | |
Series A Preferred Stock [Member] | Private Placement [Member] | ||
Expected proceeds from Private Placement | $ 45,000,000 | |
Minimum Capital levels required under the Consent Order | $ 38,000,000 |