Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 28, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | PEOPLES BANCORP OF NORTH CAROLINA INC | ||
Entity Central Index Key | 1093672 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $68,996,228 | ||
Entity Common Stock, Shares Outstanding | 5,612,588 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ||
Cash and due from banks, including reserve requirements of $12,569 and $11,472 | $51,213 | $49,902 |
Interest-bearing deposits | 17,885 | 26,871 |
Cash and cash equivalents | 69,098 | 76,773 |
Investment securities available for sale | 281,099 | 297,890 |
Other investments | 4,031 | 4,990 |
Total securities | 285,130 | 302,880 |
Mortgage loans held for sale | 1,375 | 497 |
Loans | 651,891 | 620,960 |
Less allowance for loan losses | -11,082 | -13,501 |
Net loans | 640,809 | 607,459 |
Premises and equipment, net | 17,000 | 16,358 |
Cash surrender value of life insurance | 14,125 | 13,706 |
Other real estate | 2,016 | 1,679 |
Accrued interest receivable and other assets | 10,941 | 15,332 |
Total assets | 1,040,494 | 1,034,684 |
Deposits: | ||
Non-interest bearing demand | 210,758 | 195,265 |
NOW, MMDA & savings | 407,504 | 386,893 |
Time, $250,000 or more | 47,872 | 49,168 |
Other time | 148,566 | 168,035 |
Total deposits | 814,700 | 799,361 |
Securities sold under agreements to repurchase | 48,430 | 45,396 |
FHLB borrowings | 50,000 | 65,000 |
Junior subordinated debentures | 20,619 | 20,619 |
Accrued interest payable and other liabilities | 8,080 | 20,589 |
Total liabilities | 941,829 | 950,965 |
Commitments | ||
Shareholders' equity: | ||
Series A preferred stock, $1,000 stated value; authorized 5,000,000 shares; no shares issued and outstanding | 0 | 0 |
Common stock, no par value; authorized 20,000,000 shares; issued and outstanding 5,612,588 shares in 2014 and 5,613,495 shares in 2013 | 48,088 | 48,133 |
Retained earnings | 45,124 | 36,758 |
Accumulated other comprehensive income (loss) | 5,453 | -1,172 |
Total shareholders' equity | 98,665 | 83,719 |
Total liabilities and shareholders' equity | $1,040,494 | $1,034,684 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Assets | ||
Cash and due from banks, reserve requirements | $12,569 | $11,472 |
Shareholders' equity: | ||
Series A preferred stock, stated value (in dollars per share) | $1,000 | $1,000 |
Series A preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Series A preferred stock, shares issued (in shares) | 0 | 0 |
Series A preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0 | $0 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 5,612,588 | 5,613,495 |
Common stock, shares outstanding (in shares) | 5,612,588 | 5,613,495 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interest income: | |||
Interest and fees on loans | $30,305 | $30,194 | $32,758 |
Interest on due from banks | 65 | 85 | 51 |
Interest on investment securities: | |||
U.S. Government sponsored enterprises | 2,995 | 1,639 | 2,746 |
States and political subdivisions | 4,677 | 4,427 | 3,403 |
Other | 378 | 351 | 287 |
Total interest income | 38,420 | 36,696 | 39,245 |
Interest expense: | |||
NOW, MMDA & savings deposits | 499 | 732 | 1,180 |
Time deposits | 1,188 | 1,650 | 3,205 |
FHLB borrowings | 2,166 | 2,518 | 2,744 |
Junior subordinated debentures | 389 | 398 | 438 |
Other | 45 | 55 | 129 |
Total interest expense | 4,287 | 5,353 | 7,696 |
Net interest income | 34,133 | 31,343 | 31,549 |
(Reduction of) provision for loan losses | -699 | 2,584 | 4,924 |
Net interest income after provision for loan losses | 34,832 | 28,759 | 26,625 |
Non-interest income: | |||
Service charges | 4,961 | 4,566 | 4,764 |
Other service charges and fees | 1,080 | 1,172 | 1,940 |
Gain on sale of securities | 266 | 614 | 1,218 |
Mortgage banking income | 804 | 1,228 | 1,229 |
Insurance and brokerage commissions | 701 | 661 | 517 |
Loss on sales and write-downs of other real estate | -622 | -581 | -1,136 |
Miscellaneous | 4,974 | 4,992 | 4,005 |
Total non-interest income | 12,164 | 12,652 | 12,537 |
Non-interest expense: | |||
Salaries and employee benefits | 17,530 | 16,851 | 16,426 |
Occupancy | 6,251 | 5,539 | 5,236 |
Other | 11,890 | 10,451 | 10,120 |
Total non-interest expense | 35,671 | 32,841 | 31,782 |
Earnings before income taxes | 11,325 | 8,570 | 7,380 |
Income tax expense | 1,937 | 1,879 | 1,587 |
Net earnings | 9,388 | 6,691 | 5,793 |
Dividends and accretion of preferred stock | 0 | 656 | 1,010 |
Net earnings available to common shareholders | $9,388 | $6,035 | $4,783 |
Basic net earnings per common share | $1.67 | $1.08 | $0.86 |
Diluted net earnings per common share | $1.66 | $1.07 | $0.86 |
Cash dividends declared per common share | $0.18 | $0.12 | $0.18 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Consolidated Statements Of Comprehensive Income Loss | |||
Net earnings | $9,388 | $6,691 | $5,793 |
Other comprehensive income (loss): | |||
Unrealized holding gains (losses) on securities available for sale | 11,117 | -10,498 | 5,371 |
Reclassification adjustment for gains on securities available for sale included in net earnings | -266 | -614 | -1,218 |
Total other comprehensive income (loss), before income taxes | 10,851 | -11,112 | 4,153 |
Income tax (benefit) expense related to other comprehensive (loss) income: | |||
Unrealized holding gains (losses) on securities available for sale | 4,330 | -4,089 | 2,091 |
Reclassification adjustment for gains on securities available for sale included in net earnings | -104 | -239 | -474 |
Total income tax expense (benefit) related to other comprehensive income (loss) | 4,226 | -4,328 | 1,617 |
Total other comprehensive income (loss), net of tax | 6,625 | -6,784 | 2,536 |
Total comprehensive income (loss) | $16,013 | ($93) | $8,329 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders' Equity (USD $) | Preferred Stock | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total |
In Thousands, except Share data | |||||
Beginning Balance, Amount at Dec. 31, 2011 | $24,758 | $48,298 | $26,895 | $3,076 | $103,027 |
Beginning Balance, Shares at Dec. 31, 2011 | 25,054 | 5,544,160 | |||
Accretion of Series A preferred stock | 70 | -70 | |||
Preferred stock and warrant repurchase, Shares | -12,530 | ||||
Preferred stock and warrant repurchase, Amount | -12,304 | -704 | 886 | -12,122 | |
Cash dividends declared on Series A preferred stock | -1,023 | -1,023 | |||
Cash dividends declared on common stock | -1,003 | -1,003 | |||
Stock options exercised, Shares | 69,335 | ||||
Stock options exercised, Amount | 539 | 539 | |||
Net earnings | 5,793 | 5,793 | |||
Change in accumulated other comprehensive income, net of tax | 2,536 | 2,536 | |||
Ending Balance, Amount at Dec. 31, 2012 | 12,524 | 48,133 | 31,478 | 5,612 | 97,747 |
Ending Balance, Shares at Dec. 31, 2012 | 12,524 | 5,613,495 | |||
Accretion of Series A preferred stock, shares | -12,524 | ||||
Accretion of Series A preferred stock | -12,524 | -12,524 | |||
Cash dividends declared on Series A preferred stock | -734 | -734 | |||
Cash dividends declared on common stock | -677 | -677 | |||
Net earnings | 6,691 | 6,691 | |||
Change in accumulated other comprehensive income, net of tax | -6,784 | -6,784 | |||
Ending Balance, Amount at Dec. 31, 2013 | 48,133 | 36,758 | -1,172 | 83,719 | |
Ending Balance, Shares at Dec. 31, 2013 | 5,613,495 | ||||
Common stock repurchase, shares | -4,537 | ||||
Common stock repurchase | -82 | -82 | |||
Cash dividends declared on common stock | -1,022 | -1,022 | |||
Stock options exercised, Shares | 3,630 | ||||
Stock options exercised, Amount | 37 | 37 | |||
Net earnings | 9,388 | 9,388 | |||
Change in accumulated other comprehensive income, net of tax | 6,625 | 6,625 | |||
Ending Balance, Amount at Dec. 31, 2014 | $48,088 | $45,124 | $5,453 | $98,665 | |
Ending Balance, Shares at Dec. 31, 2014 | 5,612,588 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net earnings | $9,388 | $6,691 | $5,793 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation, amortization and accretion | 6,889 | 8,453 | 8,876 |
Provision for loan losses | -699 | 2,584 | 4,924 |
Deferred income taxes | 178 | 534 | -213 |
Gain on sale of investment securities | -266 | -614 | -1,218 |
(Gain) loss on sale of other real estate | -5 | -14 | 98 |
Write-down of other real estate | 627 | 595 | 1,038 |
Restricted stock expense | 389 | 173 | 42 |
Change in: | |||
Mortgage loans held for sale | -878 | 6,425 | -1,776 |
Cash surrender value of life insurance | -419 | -432 | -438 |
Other assets | -778 | 1,508 | -441 |
Other liabilities | 15 | -982 | 2,342 |
Net cash provided by operating activities | 14,441 | 24,921 | 19,027 |
Cash flows from investing activities: | |||
Purchases of investment securities available for sale | -32,851 | -98,129 | -88,304 |
Proceeds from calls, maturities and paydowns of investment securities available for sale | 36,148 | 63,597 | 63,225 |
Proceeds from sales of investment securities available for sale | 20,202 | 17,463 | 47,076 |
Purchases of other investments | 0 | 0 | -493 |
FHLB stock redemption | 959 | 609 | 606 |
Net change in loans | -36,692 | -6,137 | 38,170 |
Purchases of premises and equipment | -3,120 | -2,434 | -917 |
Proceeds from sale of other real estate and repossessions | 3,456 | 5,797 | 5,434 |
Net cash (used) provided by investing activities | -11,898 | -19,234 | 64,797 |
Cash flows from financing activities: | |||
Net change in deposits | 15,339 | 17,836 | -45,586 |
Net change in securities sold under agreement to repurchase | 3,034 | 10,818 | -5,022 |
Proceeds from FHLB borrowings | 0 | 15,001 | 25,400 |
Repayments of FHLB borrowings | -15,000 | -20,001 | -25,400 |
Proceeds from FRB borrowings | 1 | 1 | 2 |
Repayments of FRB borrowings | -1 | -1 | -2 |
Preferred stock and warrant repurchase | -12,524 | 0 | -12,122 |
Stock options exercised | 37 | 0 | 539 |
Common stock repurchased | -82 | 0 | 0 |
Cash dividends paid on Series A preferred stock | 0 | -734 | -1,023 |
Cash dividends paid on common stock | -1,022 | -677 | -1,003 |
Net cash (used) provided by financing activities | -10,218 | 22,243 | -64,217 |
Net change in cash and cash equivalents | -7,675 | 27,930 | 19,607 |
Cash and cash equivalents at beginning of period | 76,773 | 48,843 | 29,236 |
Cash and cash equivalents at end of period | 69,098 | 76,773 | 48,843 |
Cash paid during the year for: | |||
Interest | 4,388 | 5,452 | 7,822 |
Income taxes | 1,939 | 2,256 | 2,013 |
Noncash investing and financing activities: | |||
Change in unrealized (loss) gain on investment securities available for sale, net | 6,625 | -6,784 | 2,536 |
Transfer of loans to other real estate and repossessions | 4,415 | 2,353 | 6,323 |
Financed portion of sale of other real estate | 374 | 708 | 1,076 |
Accretion of Series A preferred stock | 0 | 0 | 70 |
Discount on preferred stock repurchased | 0 | 0 | 835 |
Accrued redemption of Series A Preferred Stock | $0 | $12,632 | $0 |
1_Summary_of_Significant_Accou
1. Summary of Significant Accounting Policies | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Accounting Policies [Abstract] | ||||||||||
1. Summary of Significant Accounting Policies | Organization | |||||||||
Peoples Bancorp of North Carolina, Inc. (“Bancorp”) received regulatory approval to operate as a bank holding company on July 22, 1999, and became effective August 31, 1999. Bancorp is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for Peoples Bank (the “Bank”). | ||||||||||
The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina State Banking Commission (the “SBC”). The Bank is primarily regulated by the SBC and the Federal Deposit Insurance Corporation (the “FDIC”) and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, Union, Wake and Durham counties in North Carolina. | ||||||||||
Peoples Investment Services, Inc. is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. | ||||||||||
Real Estate Advisory Services, Inc. (“REAS”) is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. | ||||||||||
Community Bank Real Estate Solutions, LLC is a wholly owned subsidiary of Bancorp and began operations in 2009 as a “clearing house” for appraisal services for community banks. Other banks are able to contract with Community Bank Real Estate Solutions, LLC to find and engage appropriate appraisal companies in the area where the property is located. | ||||||||||
In March 2015, the Bank established a new wholly owned subsidiary, PB Real Estate Holdings, LLC, which will acquire, manage and dispose of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. | ||||||||||
Principles of Consolidation | ||||||||||
The consolidated financial statements include the financial statements of Bancorp and its wholly owned subsidiaries, the Bank and Community Bank Real Estate Solutions, LLC, along with the Bank’s wholly owned subsidiaries, Peoples Investment Services, Inc. and REAS (collectively called the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. | ||||||||||
Basis of Presentation | ||||||||||
The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“GAAP”) and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans. | ||||||||||
Cash and Cash Equivalents | ||||||||||
Cash, due from banks and interest-bearing deposits are considered cash and cash equivalents for cash flow reporting purposes. | ||||||||||
Investment Securities | ||||||||||
There are three classifications the Company is able to classify its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2014 and 2013, the Company classified all of its investment securities as available for sale. | ||||||||||
Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized. | ||||||||||
Management evaluates investment securities for other-than-temporary impairment on an annual basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. | ||||||||||
Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold. | ||||||||||
Other Investments | ||||||||||
Other investments include equity securities with no readily determinable fair value. These investments are carried at cost. | ||||||||||
Mortgage Loans Held for Sale | ||||||||||
Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. | ||||||||||
Loans | ||||||||||
Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. | ||||||||||
A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. | ||||||||||
Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings. | ||||||||||
Allowance for Loan Losses | ||||||||||
The allowance for loan losses reflects management’s assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance for loan losses that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: | ||||||||||
· | the Bank’s loan loss experience; | |||||||||
· | the amount of past due and non-performing loans; | |||||||||
· | specific known risks; | |||||||||
· | the status and amount of other past due and non-performing assets; | |||||||||
· | underlying estimated values of collateral securing loans; | |||||||||
· | current and anticipated economic conditions; and | |||||||||
· | other factors which management believes affect the allowance for potential credit losses. | |||||||||
Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank’s originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan’s performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank’s Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank’s Credit Administration. Any issues regarding the risk assessments are addressed by the Bank’s senior credit administrators and factored into management’s decision to originate or renew the loan. The Bank’s Board of Directors reviews, on a monthly basis, an analysis of the Bank’s reserves relative to the range of reserves estimated by the Bank’s Credit Administration. | ||||||||||
As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than $1.0 million, excluding loans in default, and loans in process of litigation or liquidation. The third party’s evaluation and report is shared with management and the Bank’s Board of Directors. | ||||||||||
Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. | ||||||||||
Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance for loan losses. The provision for loan losses charged or credited to earnings is based upon management’s judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management’s assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance for loan losses. | ||||||||||
The allowance for loan losses is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management’s current evaluation of the Bank’s loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. | ||||||||||
The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four or five years’ loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. | ||||||||||
The unallocated allowance is determined through management’s assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management’s acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management’s evaluation of the factors affecting the assumptions used in calculating the allowance. | ||||||||||
There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for loan losses for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. | ||||||||||
Effective December 31, 2012, stated income mortgage loans from the Banco de la Gente division of the Bank were analyzed separately from other single family residential loans in the Bank’s loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. These loans were made as stated income loans rather than full documentation loans because the customer may not have had complete documentation on the income supporting the loan. | ||||||||||
Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance for loan losses adequate to cover the estimated losses inherent in the Bank’s loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company. | ||||||||||
Mortgage Banking Activities | ||||||||||
Mortgage banking income represents net gains from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank’s origination of single-family residential mortgage loans. | ||||||||||
Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $2.1 million, $2.4 million and $3.1 million at December 31, 2014, 2013 and 2012, respectively. | ||||||||||
The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements. | ||||||||||
Premises and Equipment | ||||||||||
Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for the period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: | ||||||||||
Buildings and improvements | 10 - 50 years | |||||||||
Furniture and equipment | 3 - 10 years | |||||||||
Other Real Estate | ||||||||||
Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate. | ||||||||||
Income Taxes | ||||||||||
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. | ||||||||||
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. | ||||||||||
Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company’s financial position, results of operations or disclosures. | ||||||||||
Derivative Financial Instruments and Hedging Activities | ||||||||||
In the normal course of business, the Company enters into derivative contracts to manage interest rate risk by modifying the characteristics of the related balance sheet instruments in order to reduce the adverse effect of changes in interest rates. All material derivative financial instruments are recorded at fair value in the financial statements. The fair value of derivative contracts related to the origination of fixed rate mortgage loans and the commitments to sell these loans to a third party is immaterial and has no effect on the recorded amounts in the financial statements. | ||||||||||
The disclosure requirements for derivatives and hedging activities have the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The disclosure requirements include qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. | ||||||||||
On the date a derivative contract is entered into, the Company designates the derivative as a fair value hedge, a cash flow hedge, or a trading instrument. Changes in the fair value of instruments used as fair value hedges are accounted for in the earnings of the period simultaneous with accounting for the fair value change of the item being hedged. Changes in the fair value of the effective portion of cash flow hedges are accounted for in other comprehensive income rather than earnings. Changes in fair value of instruments that are not intended as a hedge are accounted for in the earnings of the period of the change. | ||||||||||
If a derivative instrument designated as a fair value hedge is terminated or the hedge designation removed, the difference between a hedged item’s then carrying amount and its face amount is recognized into income over the original hedge period. Likewise, if a derivative instrument designated as a cash flow hedge is terminated or the hedge designation removed, related amounts accumulated in other accumulated comprehensive income are reclassified into earnings over the original hedge period during which the hedged item affects income. | ||||||||||
The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. | ||||||||||
The Company formally documents all hedging relationships, including an assessment that the derivative instruments are expected to be highly effective in offsetting the changes in fair values or cash flows of the hedged items. | ||||||||||
Advertising Costs | ||||||||||
Advertising costs are expensed as incurred. | ||||||||||
Stock-Based Compensation | ||||||||||
The Company has an Omnibus Stock Ownership and Long Term Incentive Plan (the “1999 Plan”) whereby certain stock-based rights, such as stock options, restricted stock and restricted stock units were granted to eligible directors and employees. The 1999 Plan expired on May 13, 2009 but still governs the rights and obligations of the parties for grants made thereunder. | ||||||||||
Under the 1999 Plan, the Company granted incentive stock options to certain eligible employees in order that they may purchase Company stock at a price equal to the fair market value on the date of the grant. The options granted in 1999 vested over a five-year period. Options granted subsequent to 1999 vested over a three-year period. All options expire ten years after issuance. As of December 31, 2014, there were no outstanding options under the 1999 Plan. A summary of the stock option activity for the year ended December 31, 2014 is presented below: | ||||||||||
Stock Option Activity | ||||||||||
For the Year Ended December 31, 2014 | ||||||||||
Shares | Weighted | Weighted Average | Aggregate | |||||||
Average Option | Remaining | Intrinsic | ||||||||
Price Per Share | Contractual Term (in | Value | ||||||||
years) | (Dollars in | |||||||||
thousands) | ||||||||||
Outstanding, December 31, 2013 | 3,630 | $ | 10.31 | |||||||
Granted during the period | - | $ | - | |||||||
Expired during the period | - | $ | - | |||||||
Forfeited during the period | - | $ | - | |||||||
Exercised during the period | (3,630 | ) | $ | 10.31 | ||||||
Outstanding, December 31, 2014 | - | $ | - | $ | - | |||||
Exercisable, December 31, 2014 | - | $ | - | $ | - | |||||
In addition, under the 1999 Plan, the Company granted 3,000 restricted stock units in 2007 at a grant date fair value of $17.40 per share. The Company granted 1,750 restricted stock units at a grant date fair value of $12.80 per share during the third quarter of 2008 and 2,000 restricted stock units at a grant date fair value of $11.37 per share during the fourth quarter of 2008. The Company recognized compensation expense on the restricted stock units over the period of time the restrictions were in place (three years from the grant date for the grants of restricted stock units to date under the 1999 Plan). The amount of expense recorded in each period reflected the changes in the Company’s stock price during such period. As of December 31, 2014, there was no unrecognized compensation expense related to the 2007 and 2008 restricted stock unit grants granted under the 1999 Plan. | ||||||||||
The Company also has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the “2009 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 282,635 shares are currently reserved for possible issuance under the 2009 Plan. All stock-based rights under the 2009 Plan must be granted or awarded by May 7, 2019 (or ten years from the 2009 Plan effective date). | ||||||||||
The Company granted 29,514 restricted stock units under the 2009 Plan at a grant date fair value of $7.90 per share during the first quarter of 2012, of which 5,355 restricted stock units were forfeited by the executive officers of the Company as required by the agreement with the U.S. Department of the Treasury (“UST”) in conjunction with the Company’s participation in the Capital Purchase Program (“CPP”) under the Troubled Asset Relief Program (“TARP”). In July 2012, the Company granted 5,355 restricted stock units at a grant date fair value of $8.25 per share. The Company granted 26,795 restricted stock units under the 2009 Plan at a grant date fair value of $11.90 per share during the second quarter of 2013. The Company granted 21,056 restricted stock units under the 2009 Plan at a grant date fair value of $15.70 per share during the first quarter of 2014. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (five years from the grant date for the 2012 grants, four years from the grant date for the 2013 grants and three years from the grant date for the 2014 grants). The amount of expense recorded each period reflects the changes in the Company’s stock price during such period. As of December 31, 2014, the total unrecognized compensation expense related to the restricted stock unit grants under the 2009 Plan was $770,000. | ||||||||||
The Company recognized compensation expense for restricted stock units granted under the 2009 Plan of $389,000, $173,000 and $42,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||
Net Earnings Per Share | ||||||||||
Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. | ||||||||||
The reconciliations of the amounts used in the computation of both “basic earnings per common share” and “diluted earnings per common share” for the years ended December 31, 2014, 2013 and 2012 are as follows: | ||||||||||
For the year ended December 31, 2014: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 9,388 | 5,615,666 | $ | 1.67 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 26,326 | ||||||||
Diluted earnings per common share | $ | 9,388 | 5,641,992 | $ | 1.66 | |||||
For the year ended December 31, 2013: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 6,035 | 5,613,495 | $ | 1.08 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 9,725 | ||||||||
Diluted earnings per common share | $ | 6,035 | 5,623,220 | $ | 1.07 | |||||
For the year ended December 31, 2012: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 4,783 | 5,559,401 | $ | 0.86 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 3,206 | ||||||||
Diluted earnings per common share | $ | 4,783 | 5,562,607 | $ | 0.86 | |||||
Recent Accounting Pronouncements | ||||||||||
In November 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-16, (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. ASU No. 2014-16 provides more direction for determining whether embedded features, such as a conversion option embedded in a share of preferred stock, need to be accounted for separately from their host shares. ASU No. 2014-16 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
In November 2014, FASB issued ASU No. 2014-17, (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-17 gives acquired entities the option to apply pushdown accounting in their separate financial statements when an acquirer obtains control of them. ASU No. 2014-17 was effective upon issuance for current and future reporting periods and any open reporting periods for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
In January 2015, FASB issued ASU No. 2015-01, (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU No. 2015-01 eliminates the concept of extraordinary items from GAAP. ASU No. 2015-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
In February 2015, FASB issued ASU No. 2015-02, (Topic 810): Amendments to the Consolidation Analysis. ASU No. 2015-02 provides amendments to respond to stakeholders’ concerns about the current accounting for consolidation of certain legal entities. Stakeholders expressed concerns that GAAP might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. ASU No. 2015-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
Reclassification | ||||||||||
Certain amounts in the 2012 and 2013 consolidated financial statements have been reclassified to conform to the 2014 presentation. | ||||||||||
2_Investment_Securities
2. Investment Securities | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||
Investment Securities | Investment securities available for sale at December 31, 2014 and 2013 are as follows: | ||||||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-14 | |||||||||||||
Amortized | Gross | Gross | Estimated | ||||||||||
Cost | Unrealized | Unrealized | Fair Value | ||||||||||
Gains | Losses | ||||||||||||
Mortgage-backed securities | $ | 88,496 | 1,766 | 52 | 90,210 | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | 33,766 | 418 | 136 | 34,048 | |||||||||
State and political subdivisions | 145,938 | 6,534 | 226 | 152,246 | |||||||||
Corporate bonds | 2,469 | 16 | 18 | 2,467 | |||||||||
Trust preferred securities | 750 | - | - | 750 | |||||||||
Equity securities | 748 | 630 | - | 1,378 | |||||||||
Total | $ | 272,167 | 9,364 | 432 | 281,099 | ||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Amortized | Gross | Gross | Estimated | ||||||||||
Cost | Unrealized | Unrealized | Fair Value | ||||||||||
Gains | Losses | ||||||||||||
Mortgage-backed securities | $ | 123,706 | 1,040 | 769 | 123,977 | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | 22,115 | 97 | 69 | 22,143 | |||||||||
State and political subdivisions | 148,468 | 1,987 | 5,087 | 145,368 | |||||||||
Corporate bonds | 3,522 | 11 | 70 | 3,463 | |||||||||
Trust preferred securities | 1,250 | - | - | 1,250 | |||||||||
Equity securities | 748 | 941 | - | 1,689 | |||||||||
Total | $ | 299,809 | 4,076 | 5,995 | 297,890 | ||||||||
The current fair value and associated unrealized losses on investments in debt securities with unrealized losses at December 31, 2014 and 2013 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. | |||||||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-14 | |||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||
Losses | Losses | Losses | |||||||||||
Mortgage-backed securities | $ | 436 | 1 | 2,963 | 51 | 3,399 | 52 | ||||||
U.S. Government | |||||||||||||
sponsored enterprises | 2,996 | 4 | 9,850 | 132 | 12,846 | 136 | |||||||
State and political subdivisions | 567 | 1 | 14,998 | 225 | 15,565 | 226 | |||||||
Corporate bonds | - | - | 525 | 18 | 525 | 18 | |||||||
Total | $ | 3,999 | 6 | 28,336 | 426 | 32,335 | 432 | ||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||
Losses | Losses | Losses | |||||||||||
Mortgage-backed securities | $ | 40,857 | 691 | 10,128 | 78 | 50,985 | 769 | ||||||
U.S. Government | |||||||||||||
sponsored enterprises | 9,714 | 69 | - | - | 9,714 | 69 | |||||||
State and political subdivisions | 77,187 | 4,863 | 1,824 | 224 | 79,011 | 5,087 | |||||||
Corporate bonds | 1,984 | 16 | 511 | 54 | 2,495 | 70 | |||||||
Total | $ | 129,742 | 5,639 | 12,463 | 356 | 142,205 | 5,995 | ||||||
At December 31, 2014, unrealized losses in the investment securities portfolio relating to debt securities totaled $432,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the December 31, 2014 tables above, 20 out of 176 securities issued by state and political subdivisions contained unrealized losses, eight out of 80 securities issued by U.S. Government sponsored enterprises, including mortgage-backed securities, contained unrealized losses, and one out of four securities issued by corporations contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations on each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. | |||||||||||||
The Company periodically evaluates its investments for any impairment which would be deemed other-than-temporary. No investment impairments were deemed other-than-temporary in 2014, 2013 or 2012. | |||||||||||||
The amortized cost and estimated fair value of investment securities available for sale at December 31, 2014, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. | |||||||||||||
31-Dec-14 | |||||||||||||
(Dollars in thousands) | |||||||||||||
Amortized | Estimated | ||||||||||||
Cost | Fair Value | ||||||||||||
Due within one year | $ | 4,308 | 4,323 | ||||||||||
Due from one to five years | 40,564 | 42,548 | |||||||||||
Due from five to ten years | 117,452 | 121,399 | |||||||||||
Due after ten years | 20,599 | 21,241 | |||||||||||
Mortgage-backed securities | 88,496 | 90,210 | |||||||||||
Equity securities | 748 | 1,378 | |||||||||||
Total | $ | 272,167 | 281,099 | ||||||||||
Proceeds from sales of securities available for sale during 2014 were $20.2 million and resulted in gross gains of $291,000 and gross losses of $25,000. During 2013, proceeds from sales of securities available for sale were $17.5 million and resulted in gross gains of $738,000 and gross losses of $124,000. During 2012, the proceeds from sales of securities available for sale were $47.1 million and resulted in gross gains of $1.3 million and gross losses of $103,000. | |||||||||||||
Securities with a fair value of approximately $89.9 million and $86.0 million at December 31, 2014 and 2013, respectively, were pledged to secure public deposits, Federal Home Loan Bank of Atlanta (“FHLB”) borrowings and for other purposes as required by law. | |||||||||||||
GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. There is a three-level fair value hierarchy for fair value measurements. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The table below presents the balance of securities available for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2014 and 2013. | |||||||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-14 | |||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||
Measurements | Valuation | Valuation | Valuation | ||||||||||
Mortgage-backed securities | $ | 90,210 | - | 90,210 | - | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | $ | 34,048 | - | 34,048 | - | ||||||||
State and political subdivisions | $ | 152,246 | - | 152,246 | - | ||||||||
Corporate bonds | $ | 2,467 | - | 2,467 | - | ||||||||
Trust preferred securities | $ | 750 | - | - | 750 | ||||||||
Equity securities | $ | 1,378 | 1,378 | - | - | ||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||
Measurements | Valuation | Valuation | Valuation | ||||||||||
Mortgage-backed securities | $ | 123,977 | - | 123,977 | - | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | $ | 22,143 | - | 22,143 | - | ||||||||
State and political subdivisions | $ | 145,368 | - | 145,368 | - | ||||||||
Corporate bonds | $ | 3,463 | - | 3,463 | - | ||||||||
Trust preferred securities | $ | 1,250 | - | - | 1,250 | ||||||||
Equity securities | $ | 1,689 | 1,689 | - | - | ||||||||
Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. | |||||||||||||
The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the year ended December 31, 2014. | |||||||||||||
(Dollars in thousands) | |||||||||||||
Investment Securities | |||||||||||||
Available for Sale | |||||||||||||
Level 3 Valuation | |||||||||||||
Balance, beginning of period | $ | 1,250 | |||||||||||
Change in book value | - | ||||||||||||
Change in gain/(loss) realized and unrealized | - | ||||||||||||
Purchases/(sales and calls) | (500 | ) | |||||||||||
Transfers in and/or (out) of Level 3 | - | ||||||||||||
Balance, end of period | $ | 750 | |||||||||||
Change in unrealized gain/(loss) for assets still held in Level 3 | $ | - | |||||||||||
3_Loans
3. Loans | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||
Loans | Major classifications of loans at December 31, 2014 and 2013 are summarized as follows: | |||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 57,617 | 63,742 | |||||||||||||||||||
Single-family residential | 206,417 | 195,975 | ||||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 47,015 | 49,463 | ||||||||||||||||||||
Commercial | 228,558 | 209,287 | ||||||||||||||||||||
Multifamily and farmland | 12,400 | 11,801 | ||||||||||||||||||||
Total real estate loans | 552,007 | 530,268 | ||||||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 76,262 | 68,047 | ||||||||||||||||||||
Farm loans | 7 | 19 | ||||||||||||||||||||
Consumer loans | 10,060 | 9,593 | ||||||||||||||||||||
All other loans | 13,555 | 13,033 | ||||||||||||||||||||
Total loans | 651,891 | 620,960 | ||||||||||||||||||||
Less allowance for loan losses | 11,082 | 13,501 | ||||||||||||||||||||
Total net loans | $ | 640,809 | 607,459 | |||||||||||||||||||
The Bank grants loans and extensions of credit primarily within the Catawba Valley region of North Carolina, which encompasses Catawba, Alexander, Iredell and Lincoln counties and also in Mecklenburg, Union, Wake and Durham counties of North Carolina. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, the value of which is dependent upon the real estate market. Risk characteristics of the major components of the Bank’s loan portfolio are discussed below: | ||||||||||||||||||||||
· | Construction and land development loans – The risk of loss is largely dependent on the initial estimate of whether the property’s value at completion equals or exceeds the cost of property construction and the availability of take-out financing. During the construction phase, a number of factors can result in delays or cost overruns. If the estimate is inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan, sale of the property, or by seizure of collateral. As of December 31, 2014, construction and land development loans comprised approximately 9% of the Bank’s total loan portfolio. | |||||||||||||||||||||
· | Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. As of December 31, 2014, single-family residential loans comprised approximately 39% of the Bank’s total loan portfolio, including Banco de la Gente single-family residential stated income loans which were approximately 7% of the Bank’s total loan portfolio. | |||||||||||||||||||||
· | Commercial real estate loans – Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they are generally not fully amortizing over a loan period, but rather have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property. As of December 31, 2014, commercial real estate loans comprised approximately 35% of the Bank’s total loan portfolio. | |||||||||||||||||||||
· | Commercial loans – Repayment is generally dependent upon the successful operation of the borrower’s business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in value based on the success of the business. As of December 31, 2014, commercial loans comprised approximately 12% of the Bank’s total loan portfolio. | |||||||||||||||||||||
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. | ||||||||||||||||||||||
The following tables present an age analysis of past due loans, by loan type, as of December 31, 2014 and 2013: | ||||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Loans 30-89 | Loans 90 or | Total | Total | Total | Accruing | |||||||||||||||||
Days Past | More Days | Past Due | Current | Loans | Loans 90 or | |||||||||||||||||
Due | Past Due | Loans | Loans | More Days | ||||||||||||||||||
Past Due | ||||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 294 | 3,540 | 3,834 | 53,783 | 57,617 | - | |||||||||||||||
Single-family residential | 5,988 | 268 | 6,256 | 200,161 | 206,417 | - | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 8,998 | 610 | 9,608 | 37,407 | 47,015 | - | ||||||||||||||||
Commercial | 3,205 | 366 | 3,571 | 224,987 | 228,558 | - | ||||||||||||||||
Multifamily and farmland | 85 | - | 85 | 12,315 | 12,400 | - | ||||||||||||||||
Total real estate loans | 18,570 | 4,784 | 23,354 | 528,653 | 552,007 | - | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 241 | 49 | 290 | 75,972 | 76,262 | - | ||||||||||||||||
Farm loans | - | - | - | 7 | 7 | - | ||||||||||||||||
Consumer loans | 184 | - | 184 | 9,876 | 10,060 | - | ||||||||||||||||
All other loans | - | - | - | 13,555 | 13,555 | - | ||||||||||||||||
Total loans | $ | 18,995 | 4,833 | 23,828 | 628,063 | 651,891 | - | |||||||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Loans 30-89 | Loans 90 or | Total | Total | Total | Accruing | |||||||||||||||||
Days Past | More Days | Past Due | Current | Loans | Loans 90 or | |||||||||||||||||
Due | Past Due | Loans | Loans | More Days | ||||||||||||||||||
Past Due | ||||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 3,416 | 5,426 | 8,842 | 54,900 | 63,742 | - | |||||||||||||||
Single-family residential | 4,518 | 1,555 | 6,073 | 189,902 | 195,975 | - | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 9,833 | 1,952 | 11,785 | 37,678 | 49,463 | 881 | ||||||||||||||||
Commercial | 1,643 | 486 | 2,129 | 207,158 | 209,287 | - | ||||||||||||||||
Multifamily and farmland | 177 | - | 177 | 11,624 | 11,801 | - | ||||||||||||||||
Total real estate loans | 19,587 | 9,419 | 29,006 | 501,262 | 530,268 | 881 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 424 | 29 | 453 | 67,594 | 68,047 | - | ||||||||||||||||
Farm loans | - | - | - | 19 | 19 | - | ||||||||||||||||
Consumer loans | 181 | 3 | 184 | 9,409 | 9,593 | 1 | ||||||||||||||||
All other loans | - | - | - | 13,033 | 13,033 | - | ||||||||||||||||
Total loans | $ | 20,192 | 9,451 | 29,643 | 591,317 | 620,960 | 882 | |||||||||||||||
The following table presents the Bank’s non-accrual loans as of December 31, 2014 and 2013: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 3,854 | 6,546 | |||||||||||||||||||
Single-family residential | 2,370 | 2,980 | ||||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 1,545 | 1,990 | ||||||||||||||||||||
Commercial | 2,598 | 2,043 | ||||||||||||||||||||
Multifamily and farmland | 110 | - | ||||||||||||||||||||
Total real estate loans | 10,477 | 13,559 | ||||||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 176 | 250 | ||||||||||||||||||||
Consumer loans | 75 | 27 | ||||||||||||||||||||
Total | $ | 10,728 | 13,836 | |||||||||||||||||||
At each reporting period, the Bank determines which loans are impaired. Accordingly, the Bank’s impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan that is collateral-dependent is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by REAS, a subsidiary of the Bank. REAS is staffed by certified appraisers that also perform appraisals for other companies. Various factors, including the assumptions and techniques utilized by the appraiser, are considered by management in determining the impairment of a loan. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. An allowance for each impaired loan that is non-collateral dependent is calculated based on the present value of projected cash flows. If the recorded investment in the impaired loan exceeds the present value of projected cash flows, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans under $250,000 are not individually evaluated for impairment with the exception of the Bank’s troubled debt restructured (“TDR”) loans in the residential mortgage loan portfolio, which are individually evaluated for impairment. Accruing impaired loans were $25.6 million and $27.6 million at December 31, 2014 and December 31, 2013, respectively. Interest income recognized on accruing impaired loans was $1.3 million for the years ended December 31, 2014 and 2013. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. | ||||||||||||||||||||||
The following tables present the Bank’s impaired loans as of December 31, 2014 and 2013: | ||||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Unpaid | Recorded | Recorded | Recorded | Related | Average | |||||||||||||||||
Contractual | Investment | Investment | Investment | Allowance | Outstanding | |||||||||||||||||
Principal | With No | With | in Impaired | Impaired | ||||||||||||||||||
Balance | Allowance | Allowance | Loans | Loans | ||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 5,481 | 3,639 | 555 | 4,194 | 31 | 5,248 | |||||||||||||||
Single-family residential | 6,717 | 933 | 5,540 | 6,473 | 154 | 7,430 | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 21,243 | - | 20,649 | 20,649 | 1,191 | 19,964 | ||||||||||||||||
Commercial | 4,752 | 1,485 | 2,866 | 4,351 | 272 | 4,399 | ||||||||||||||||
Multifamily and farmland | 111 | - | 110 | 110 | 1 | 154 | ||||||||||||||||
Total impaired real estate loans | 38,304 | 6,057 | 29,720 | 35,777 | 1,649 | 37,195 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 218 | - | 201 | 201 | 4 | 641 | ||||||||||||||||
Consumer loans | 318 | - | 313 | 313 | 5 | 309 | ||||||||||||||||
Total impaired loans | $ | 38,840 | 6,057 | 30,234 | 36,291 | 1,658 | 38,145 | |||||||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Unpaid | Recorded | Recorded | Recorded | Related | Average | |||||||||||||||||
Contractual | Investment | Investment | Investment | Allowance | Outstanding | |||||||||||||||||
Principal | With No | With | in Impaired | Impaired | ||||||||||||||||||
Balance | Allowance | Allowance | Loans | Loans | ||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 9,861 | 6,293 | 868 | 7,161 | 53 | 8,289 | |||||||||||||||
Single-family residential | 7,853 | 1,428 | 5,633 | 7,061 | 123 | 7,859 | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 22,034 | - | 21,242 | 21,242 | 1,300 | 21,242 | ||||||||||||||||
Commercial | 5,079 | 3,045 | 1,489 | 4,534 | 182 | 4,171 | ||||||||||||||||
Multifamily and farmland | 177 | - | 177 | 177 | 1 | 184 | ||||||||||||||||
Total impaired real estate loans | 45,004 | 10,766 | 29,409 | 40,175 | 1,659 | 41,745 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 999 | 257 | 724 | 981 | 15 | 826 | ||||||||||||||||
Consumer loans | 302 | 264 | 35 | 299 | 1 | 247 | ||||||||||||||||
Total impaired loans | $ | 46,305 | 11,287 | 30,168 | 41,455 | 1,675 | 42,818 | |||||||||||||||
The fair value measurements for impaired loans and other real estate on a non-recurring basis at December 31, 2014 and 2013 are presented below. The fair value measurement process uses certified appraisals and other market-based information; however, in many cases, it also requires significant input based on management’s knowledge of and judgment about current market conditions, specific issues relating to the collateral, and other matters. As a result, all fair value measurements for impaired loans and other real estate are considered Level 3. | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Total Gains/(Losses) for | ||||||||||||||||||
Measurements | Valuation | Valuation | Valuation | the Year Ended | ||||||||||||||||||
31-Dec-14 | 31-Dec-14 | |||||||||||||||||||||
Impaired loans | $ | 34,633 | - | - | 34,633 | (1,444 | ) | |||||||||||||||
Other real estate | $ | 2,016 | - | - | 2,016 | (622 | ) | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Total Gains/(Losses) for | ||||||||||||||||||
Measurements | Valuation | Valuation | Valuation | the Year Ended | ||||||||||||||||||
31-Dec-13 | 31-Dec-13 | |||||||||||||||||||||
Impaired loans | $ | 39,780 | - | - | 39,780 | (3,207 | ) | |||||||||||||||
Other real estate | $ | 1,679 | - | - | 1,679 | (581 | ) | |||||||||||||||
Changes in the allowance for loan losses for the year ended December 31, 2014 were as follows: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family | Family | and | and All | ||||||||||||||||||
Residential | Residential- | Farmland | Other | |||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Charge-offs | (884 | ) | (309 | ) | (190 | ) | (290 | ) | - | (430 | ) | - | (534 | ) | - | (2,637 | ) | |||||
Recoveries | 428 | 72 | 16 | 171 | - | 54 | - | 176 | - | 917 | ||||||||||||
Provision | 23 | (320 | ) | (79 | ) | (198 | ) | (30 | ) | 405 | - | 346 | (846 | ) | (699 | ) | ||||||
Ending balance | $ | 2,785 | 2,566 | 1,610 | 1,902 | 7 | 1,098 | - | 233 | 881 | 11,082 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | - | 82 | 1,155 | 260 | - | - | - | - | - | 1,497 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 2,785 | 2,484 | 455 | 1,642 | 7 | 1,098 | - | 233 | 881 | 9,585 | ||||||||||||
Ending balance | $ | 2,785 | 2,566 | 1,610 | 1,902 | 7 | 1,098 | - | 233 | 881 | 11,082 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 57,617 | 206,417 | 47,015 | 228,558 | 12,400 | 76,262 | 7 | 23,615 | - | 651,891 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 3,639 | 2,298 | 18,884 | 3,345 | - | - | - | - | - | 28,166 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 53,978 | 204,119 | 28,131 | 225,213 | 12,400 | 76,262 | 7 | 23,615 | - | 623,725 | |||||||||||
Changes in the allowance for loan losses for the year ended December 31, 2013 were as follows: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family | Family | and | and All | ||||||||||||||||||
Residential | Residential- Banco de la | Farmland | Other | |||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Charge-offs | (777 | ) | (1,724 | ) | (272 | ) | (445 | ) | - | (502 | ) | - | (652 | ) | - | (4,372 | ) | |||||
Recoveries | 377 | 111 | 141 | 50 | - | 44 | - | 143 | - | 866 | ||||||||||||
Provision | (781 | ) | 1,505 | (4 | ) | 565 | 9 | 439 | - | 509 | 342 | 2,584 | ||||||||||
Ending balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | - | 39 | 1,268 | 171 | - | - | - | - | - | 1,478 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 3,218 | 3,084 | 595 | 2,048 | 37 | 1,069 | - | 245 | 1,727 | 12,023 | ||||||||||||
Ending balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 63,742 | 195,975 | 49,463 | 209,287 | 11,801 | 68,047 | 19 | 22,626 | - | 620,960 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 6,293 | 3,127 | 19,958 | 3,767 | - | 256 | - | 265 | - | 33,666 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 57,449 | 192,848 | 29,505 | 205,520 | 11,801 | 67,791 | 19 | 22,361 | - | 587,294 | |||||||||||
Changes in the allowance for loan losses for the year ended December 31, 2012 were as follows: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family Residential | Family Residential- Banco de la | and | and All | ||||||||||||||||||
Gente | Farmland | Other | ||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 7,182 | 3,253 | 2,104 | 1,731 | 13 | 1,029 | - | 255 | 1,037 | 16,604 | |||||||||||
Charge-offs | (4,728 | ) | (886 | ) | (668 | ) | (937 | ) | - | (555 | ) | - | (557 | ) | - | (8,331 | ) | |||||
Recoveries | 528 | 72 | - | 374 | - | 104 | - | 148 | - | 1,226 | ||||||||||||
Provision | 1,417 | 792 | 562 | 881 | 15 | 510 | - | 399 | 348 | 4,924 | ||||||||||||
Ending balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 24 | 84 | 1,254 | - | - | - | - | - | - | 1,362 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 4,375 | 3,147 | 744 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 13,061 | ||||||||||||
Ending balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 73,176 | 195,003 | 52,019 | 200,633 | 8,951 | 64,295 | 11 | 25,886 | - | 619,974 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 11,961 | 3,885 | 20,024 | 4,569 | - | 346 | - | - | - | 40,785 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 61,215 | 191,118 | 31,995 | 196,064 | 8,951 | 63,949 | 11 | 25,886 | - | 579,189 | |||||||||||
The Company utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis. A description of the general characteristics of the eight risk grades is as follows: | ||||||||||||||||||||||
· | Risk Grade 1 – Excellent Quality: Loans are well above average quality and a minimal amount of credit risk exists. CD or cash secured loans or properly margined actively traded stock or bond secured loans would fall in this grade. | |||||||||||||||||||||
· | Risk Grade 2 – High Quality: Loans are of good quality with risk levels well within the Company’s range of acceptability. The organization or individual is established with a history of successful performance though somewhat susceptible to economic changes. | |||||||||||||||||||||
· | Risk Grade 3 – Good Quality: Loans of average quality with risk levels within the Company’s range of acceptability but higher than normal. This may be a new organization or an existing organization in a transitional phase (e.g. expansion, acquisition, market change). | |||||||||||||||||||||
· | Risk Grade 4 – Management Attention: These loans have higher risk and servicing needs but still are acceptable. Evidence of marginal performance or deteriorating trends is observed. These are not problem credits presently, but may be in the future if the borrower is unable to change its present course. | |||||||||||||||||||||
· | Risk Grade 5 – Watch: These loans are currently performing satisfactorily, but there has been some recent past due history on repayment and there are potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Company’s position at some future date. | |||||||||||||||||||||
· | Risk Grade 6 – Substandard: A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged (if there is any). There is a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. | |||||||||||||||||||||
· | Risk Grade 7 – Doubtful: Loans classified as Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. | |||||||||||||||||||||
· | Risk Grade 8 – Loss: Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be realized in the future. Loss is a temporary grade until the appropriate authority is obtained to charge the loan off. | |||||||||||||||||||||
The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of December 31, 2014 and 2013. | ||||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | All Other | Total | |||||||||||||
and Land Development | Family | Family | and | |||||||||||||||||||
Residential | Residential- | Farmland | ||||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
1- Excellent Quality | $ | - | 15,099 | - | - | - | 924 | - | 1,232 | - | 17,255 | |||||||||||
2- High Quality | 6,741 | 74,367 | - | 39,888 | 241 | 18,730 | - | 3,576 | 1,860 | 145,403 | ||||||||||||
3- Good Quality | 24,641 | 74,453 | 21,022 | 142,141 | 8,376 | 44,649 | 7 | 4,549 | 8,055 | 327,893 | ||||||||||||
4- Management Attention | 13,013 | 30,954 | 12,721 | 36,433 | 1,001 | 11,312 | - | 566 | 3,640 | 109,640 | ||||||||||||
5- Watch | 9,294 | 5,749 | 5,799 | 6,153 | 2,672 | 383 | - | 46 | - | 30,096 | ||||||||||||
6- Substandard | 3,928 | 5,795 | 7,473 | 3,943 | 110 | 264 | - | 87 | - | 21,600 | ||||||||||||
7- Doubtful | - | - | - | - | - | - | - | - | - | - | ||||||||||||
8- Loss | - | - | - | - | - | - | - | 4 | - | 4 | ||||||||||||
Total | $ | 57,617 | 206,417 | 47,015 | 228,558 | 12,400 | 76,262 | 7 | 10,060 | 13,555 | 651,891 | |||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | All Other | Total | |||||||||||||
and Land Development | Family | Family | and | |||||||||||||||||||
Residential | Residential- | Farmland | ||||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
1- Excellent Quality | $ | 7 | 15,036 | - | - | - | 365 | - | 1,270 | - | 16,678 | |||||||||||
2- High Quality | 7,852 | 60,882 | - | 33,340 | 715 | 8,442 | - | 3,519 | 2,139 | 116,889 | ||||||||||||
3- Good Quality | 22,899 | 73,118 | 22,255 | 123,604 | 7,882 | 44,353 | 19 | 4,061 | 8,565 | 306,756 | ||||||||||||
4- Management Attention | 14,464 | 34,090 | 8,369 | 42,914 | 286 | 13,704 | - | 358 | 2,329 | 116,514 | ||||||||||||
5- Watch | 8,163 | 6,806 | 8,113 | 5,190 | 2,741 | 320 | - | 50 | - | 31,383 | ||||||||||||
6- Substandard | 10,357 | 6,043 | 10,726 | 4,239 | 177 | 863 | - | 330 | - | 32,735 | ||||||||||||
7- Doubtful | - | - | - | - | - | - | - | - | - | - | ||||||||||||
8- Loss | - | - | - | - | - | - | - | 5 | - | 5 | ||||||||||||
Total | $ | 63,742 | 195,975 | 49,463 | 209,287 | 11,801 | 68,047 | 19 | 9,593 | 13,033 | 620,960 | |||||||||||
Total TDR loans amounted to $15.0 million and $21.9 million at December 31, 2014 and 2013, respectively. The terms of these loans have been renegotiated to provide a reduction in principal or interest as a result of the deteriorating financial position of the borrower. There were $1.4 million and $355,000 in performing loans classified as TDR loans at December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||
The following tables present an analysis of loan modifications during the years ended December 31, 2014 and 2013: | ||||||||||||||||||||||
Year ended December 31, 2014 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||||
Contracts | Outstanding | Outstanding | ||||||||||||||||||||
Recorded | Recorded | |||||||||||||||||||||
Investment | Investment | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | 1 | $ | 291 | 266 | ||||||||||||||||||
Single-family residential | 2 | 849 | 845 | |||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 3 | 281 | 278 | |||||||||||||||||||
Total real estate TDR loans | 6 | 1,421 | 1,389 | |||||||||||||||||||
Total TDR loans | 6 | $ | 1,421 | 1,389 | ||||||||||||||||||
Year ended December 31, 2013 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||||
Contracts | Outstanding | Outstanding | ||||||||||||||||||||
Recorded | Recorded | |||||||||||||||||||||
Investment | Investment | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | 2 | $ | 841 | 824 | ||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 7 | 796 | 788 | |||||||||||||||||||
Total real estate TDR loans | 9 | 1,637 | 1,612 | |||||||||||||||||||
Total TDR loans | 9 | $ | 1,637 | 1,612 | ||||||||||||||||||
4_Premises_and_Equipment
4. Premises and Equipment | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Property, Plant and Equipment [Abstract] | |||||
Premises and Equipment | Major classifications of premises and equipment at December 31, 2014 and 2013 are summarized as follows: | ||||
(Dollars in thousands) | |||||
2014 | 2013 | ||||
Land | $ | 3,681 | 3,667 | ||
Buildings and improvements | 15,864 | 15,126 | |||
Furniture and equipment | 18,442 | 16,239 | |||
Total premises and equipment | 37,987 | 35,032 | |||
Less accumulated depreciation | 20,987 | 18,674 | |||
Total net premises and equipment | $ | 17,000 | 16,358 | ||
The Company recognized approximately $2.5 million in depreciation expense for the year ended December 31, 2014. Depreciation expense was approximately $1.9 million for the years ended December 31, 2013 and 2012. | |||||
5_Time_Deposits
5. Time Deposits | 12 Months Ended | ||
Dec. 31, 2014 | |||
Banking and Thrift [Abstract] | |||
Time Deposits | At December 31, 2014, the scheduled maturities of time deposits are as follows: | ||
(Dollars in thousands) | |||
2015 | $ | 131,001 | |
2016 | 37,065 | ||
2017 | 17,029 | ||
2018 | 8,336 | ||
2019 and thereafter | 3,007 | ||
Total | $ | 196,438 | |
At December 31, 2014 and 2013, the Company had approximately $11.4 million and $15.1 million, respectively, in time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service (“CDARS”) on behalf of local customers. CDARS balances totaled $11.0 million and $15.1 million as of December 31, 2014 and 2013, respectively. The weighted average rate of brokered deposits as of December 31, 2014 and 2013 was 0.13% and 0.14%, respectively. | |||
6_Federal_Home_Loan_Bank_and_F
6. Federal Home Loan Bank and Federal Reserve Bank Borrowings | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Banking and Thrift [Abstract] | ||||||
Federal Home Loan Bank and Federal Reserve Bank Borrowings | The Bank has borrowings from the FHLB with monthly or quarterly interest payments at December 31, 2014. The FHLB borrowings are collateralized by a blanket assignment on all residential first mortgage loans, home equity lines of credit and loans secured by multi-family real estate that the Bank owns. At December 31, 2014, the carrying value of loans pledged as collateral totaled approximately $126.0 million. | |||||
Borrowings from the FHLB outstanding at December 31, 2014 and 2013 consist of the following: | ||||||
31-Dec-14 | ||||||
(Dollars in thousands) | ||||||
Maturity Date | Call Date | Rate | Rate Type | Amount | ||
17-Oct-18 | N/A | 3.40% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.64% | Adjustable Rate Hybrid | 15,000 | ||
17-Oct-18 | N/A | 3.41% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.47% | Adjustable Rate Hybrid | 5,000 | ||
8-May-18 | N/A | 1.79% | Floating to Fixed | 5,000 | ||
8-May-18 | N/A | 3.43% | Floating to Fixed | 15,000 | ||
$ | 50,000 | |||||
31-Dec-13 | ||||||
(Dollars in thousands) | ||||||
Maturity Date | Call Date | Rate | Rate Type | Amount | ||
25-Mar-19 | N/A | 4.26% | Convertible | 5,000 | ||
12-Nov-14 | N/A | 2.23% | Fixed Rate Hybrid | 5,000 | ||
17-Oct-16 | N/A | 3.73% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.41% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.65% | Adjustable Rate Hybrid | 15,000 | ||
17-Oct-18 | N/A | 3.43% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.48% | Adjustable Rate Hybrid | 5,000 | ||
8-May-18 | N/A | 1.80% | Floating to Fixed | 5,000 | ||
8-May-18 | N/A | 3.44% | Floating to Fixed | 15,000 | ||
$ | 65,000 | |||||
The Bank is required to purchase and hold certain amounts of FHLB stock in order to obtain FHLB borrowings. No ready market exists for the FHLB stock, and it has no quoted market value. The stock is redeemable at $100 per share subject to certain limitations set by the FHLB. The Bank owned $3.2 million and $4.1 million of FHLB stock, included in other investments, at December 31, 2014 and 2013, respectively. | ||||||
As of December 31, 2014 and 2013, the Bank had no borrowings from the Federal Reserve Bank (“FRB”). FRB borrowings are collateralized by a blanket assignment on all qualifying loans that the Bank owns which are not pledged to the FHLB. At December 31, 2014, the carrying value of loans pledged as collateral totaled approximately $340.5 million. | ||||||
7_Junior_Subordinated_Debentur
7. Junior Subordinated Debentures | 12 Months Ended |
Dec. 31, 2014 | |
Brokers and Dealers [Abstract] | |
Junior Subordinated Debentures | In June 2006, the Company formed a second wholly owned Delaware statutory trust, PEBK Capital Trust II (“PEBK Trust II”), which issued $20.0 million of guaranteed preferred beneficial interests in the Company’s junior subordinated deferrable interest debentures. All of the common securities of PEBK Trust II are owned by the Company. The proceeds from the issuance of the common securities and the trust preferred securities were used by PEBK Trust II to purchase $20.6 million of junior subordinated debentures of the Company. The proceeds received by the Company from the sale of the junior subordinated debentures were used to repay in December 2006 the trust preferred securities issued in December 2001 by PEBK Capital Trust, a wholly owned Delaware statutory trust of the Company, and for general purposes. The debentures represent the sole assets of PEBK Trust II. PEBK Trust II is not included in the consolidated financial statements. |
The trust preferred securities issued by PEBK Trust II accrue and pay interest quarterly at a floating rate of three-month LIBOR plus 163 basis points. The Company has guaranteed distributions and other payments due on the trust preferred securities to the extent PEBK Trust II does not have funds with which to make the distributions and other payments. The net combined effect of all the documents entered into in connection with the trust preferred securities is that the Company is liable to make the distributions and other payments required on the trust preferred securities. | |
These trust preferred securities are mandatorily redeemable upon maturity of the debentures on June 28, 2036, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the debentures purchased by PEBK Trust II, in whole or in part, which became effective on June 28, 2011. As specified in the indenture, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount plus any accrued but unpaid interest. | |
8_Income_Taxes
8. Income Taxes | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
Income Taxes | The provision for income taxes is summarized as follows: | |||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Current | $ | 1,759 | 1,345 | 1,800 | ||||
Deferred | 178 | 534 | (213 | ) | ||||
Total | $ | 1,937 | 1,879 | 1,587 | ||||
The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows: | ||||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Pre-tax income at statutory rate (34%) | $ | 3,851 | 2,914 | 2,509 | ||||
Differences: | ||||||||
Tax exempt interest income | (1,630 | ) | (1,481 | ) | (1,168 | ) | ||
Nondeductible interest and other expense | 119 | 141 | 52 | |||||
Cash surrender value of life insurance | (143 | ) | (147 | ) | (149 | ) | ||
State taxes, net of federal benefits | (283 | ) | 428 | 324 | ||||
Other, net | 23 | 24 | 19 | |||||
Total | $ | 1,937 | 1,879 | 1,587 | ||||
The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities. The net deferred tax asset is included as a component of other assets at December 31, 2014 and 2014. | ||||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Allowance for loan losses | $ | 4,134 | 5,205 | |||||
Accrued retirement expense | 1,529 | 1,489 | ||||||
Other real estate | 206 | 218 | ||||||
Federal credit carryforward | 342 | 79 | ||||||
State credit carryforward | 734 | - | ||||||
Other | 176 | 334 | ||||||
Unrealized loss on available for sale securities | - | 747 | ||||||
Total gross deferred tax assets | 7,121 | 8,072 | ||||||
Deferred tax liabilities: | ||||||||
Deferred loan fees | 433 | 581 | ||||||
Premises and equipment | 652 | 530 | ||||||
Unrealized gain on available for sale securities | 3,479 | - | ||||||
Total gross deferred tax liabilities | 4,564 | 1,111 | ||||||
Net deferred tax asset | $ | 2,557 | 6,961 | |||||
9_Related_Party_Transactions
9. Related Party Transactions | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Related Party Transactions [Abstract] | ||||
Related Party Transactions | The Company conducts transactions with its directors and executive officers, including companies in which they have beneficial interests, in the normal course of business. It is the policy of the Bank that loan transactions with directors and officers are made on substantially the same terms as those prevailing at the time made for comparable loans to other persons. The following is a summary of activity for related party loans for 2014: | |||
(Dollars in thousands) | ||||
Beginning balance | $ | 4,340 | ||
New loans | 6,903 | |||
Repayments | (6,483 | ) | ||
Ending balance | $ | 4,760 | ||
At December 31, 2014 and 2013, the Bank had deposit relationships with related parties of approximately $15.1 million and $17.6 million, respectively. | ||||
10_Commitments_and_Contingenci
10. Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Commitments and Contingencies | The Company leases various office spaces for banking and operational facilities and equipment under operating lease arrangements. Future minimum lease payments required for all operating leases having a remaining term in excess of one year at December 31, 2014 are as follows: | ||||
(Dollars in thousands) | |||||
Year ending December 31, | |||||
2015 | 600 | ||||
2016 | 603 | ||||
2017 | 537 | ||||
2018 | 501 | ||||
2019 | 490 | ||||
Thereafter | 1,854 | ||||
Total minimum obligation | $ | 4,585 | |||
Total rent expense was approximately $691,000, $672,000 and $643,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | |||||
The Bank is 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, standby letters of credit and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments. | |||||
The 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 and financial guarantees written is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. | |||||
In most cases, the Bank requires collateral or other security to support financial instruments with credit risk. | |||||
(Dollars in thousands) | |||||
Contractual Amount | |||||
2014 | 2013 | ||||
Financial instruments whose contract amount represent credit risk: | |||||
Commitments to extend credit | $ | 168,733 | 146,243 | ||
Standby letters of credit and financial guarantees written | $ | 3,911 | 4,361 | ||
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 and because they may expire without being drawn upon, the total commitment amount of $172.6 million does not necessarily represent future cash requirements. | |||||
Standby letters of credit and financial guarantees written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to businesses in the Bank’s delineated market area. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds real estate, equipment, automobiles and customer deposits as collateral supporting those commitments for which collateral is deemed necessary. | |||||
In the normal course of business, the Company is a party (both as plaintiff and defendant) to a number of lawsuits. In the opinion of management and counsel, none of these cases should have a material adverse effect on the financial position of the Company. | |||||
Bancorp and the Bank have employment agreements with certain key employees. The agreements, among other things, include salary, bonus, incentive stock option, and change in control provisions. | |||||
The Company has $54.5 million available for the purchase of overnight federal funds from five correspondent financial institutions as of December 31, 2014. | |||||
11_Employee_and_Director_Benef
11. Employee and Director Benefit Programs | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Compensation and Retirement Disclosure [Abstract] | |||||||
Employee and Director Benefit Programs | The Company has a profit sharing and 401(k) plan for the benefit of substantially all employees subject to certain minimum age and service requirements. Under the 401(k) plan, the Company matched employee contributions to a maximum of 3.50% of annual compensation in 2012 and 4.00% of annual compensation in 2013 and 2014. The Company’s contribution pursuant to this formula was approximately $439,000, $430,000 and $345,000 for the years 2014, 2013 and 2012, respectively. Investments of the 401(k) plan are determined by a committee comprised of senior management . No investments in Company stock have been made by the 401(k) plan. Prior to January 1, 2015, the vesting schedule for the 401(k) plan began at 20 percent after two years of employment and graduated 20 percent each year until reaching 100 percent after six years of employment. Effective January 1, 2015, contributions to the 401(k) plan are vested immediately. | ||||||
In December 2001, the Company initiated a postretirement benefit plan to provide retirement benefits to key officers and its Board of Directors and to provide death benefits for their designated beneficiaries. Under the postretirement benefit plan, the Company purchased life insurance contracts on the lives of the key officers and each director. The increase in cash surrender value of the contracts constitutes the Company’s contribution to the postretirement benefit plan each year. Postretirement benefit plan participants are to be paid annual benefits for a specified number of years commencing upon retirement. Expenses incurred for benefits relating to the postretirement benefit plan were approximately $422,000, $395,000 and $546,000 for the years 2014, 2013 and 2012, respectively. | |||||||
The Company is currently paying medical benefits for certain retired employees. Postretirement medical benefits expense, including amortization of the transition obligation, as applicable, was approximately $24,000 for the year ended December 31, 2012. The Company did not incur any postretirement medical benefits expense in 2014 and 2013 due to an excess accrual balance. | |||||||
The following table sets forth the change in the accumulated benefit obligation for the Company’s two postretirement benefit plans described above: | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | ||||||
Benefit obligation at beginning of period | $ | 3,581 | 3,382 | ||||
Service cost | 348 | 336 | |||||
Interest cost | 67 | 65 | |||||
Benefits paid | (184 | ) | (142 | ) | |||
Reversal of excess accrual | - | (60 | ) | ||||
Benefit obligation at end of period | $ | 3,812 | 3,581 | ||||
The amounts recognized in the Company’s Consolidated Balance Sheet as of December 31, 2014 and 2013 are shown in the following two tables: | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | ||||||
Benefit obligation | $ | 3,812 | 3,581 | ||||
Fair value of plan assets | - | - | |||||
(Dollars in thousands) | |||||||
2014 | 2013 | ||||||
Funded status | $ | (3,812 | ) | (3,581 | ) | ||
Unrecognized prior service cost/benefit | - | - | |||||
Unrecognized net actuarial loss | - | - | |||||
Net amount recognized | $ | (3,812 | ) | (3,581 | ) | ||
Unfunded accrued liability | $ | (3,812 | ) | (3,581 | ) | ||
Intangible assets | - | - | |||||
Net amount recognized | $ | (3,812 | ) | (3,581 | ) | ||
Net periodic benefit cost of the Company’s postretirement benefit plans for the years ended December 31, 2014, 2013 and 2012 consisted of the following: | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Service cost | $ | 348 | 336 | 430 | |||
Interest cost | 67 | 65 | 89 | ||||
Net periodic cost | $ | 415 | 401 | 519 | |||
Weighted average discount rate assumption used to | |||||||
determine benefit obligation | 5.47% | 5.46% | 5.43% | ||||
The Company paid benefits under the two postretirement plans totaling $184,000 and $142,000 during the years ended December 31, 2014 and 2013, respectively. Information about the expected benefit payments for the Company’s two postretirement benefit plans is as follows: | |||||||
(Dollars in thousands) | |||||||
Year ending December 31, | |||||||
2015 | $ | 232 | |||||
2016 | $ | 244 | |||||
2017 | $ | 262 | |||||
2018 | $ | 275 | |||||
2019 | $ | 310 | |||||
Thereafter | $ | 8,345 | |||||
12_Regulatory_Matters
12. Regulatory Matters | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Banking and Thrift [Abstract] | |||||||||||||
Regulatory Matters | The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. | ||||||||||||
Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of capital in relation to both on- and off-balance sheet items at various risk weights. Total capital consists of two tiers of capital. Tier 1 Capital includes common shareholders’ equity and trust preferred securities less adjustments for intangible assets. Tier 2 Capital consists of the allowance for loan losses, up to 1.25% of risk-weighted assets and other adjustments. Management believes, as of December 31, 2014, that the Company and the Bank meet all capital adequacy requirements to which they are subject. | |||||||||||||
As of December 31, 2014, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank’s category. | |||||||||||||
On July 2, 2013, the FRB approved its final rule on the Basel III capital standards, which implement changes to the regulatory capital framework for banking organizations. Capital levels at the Company and the Bank currently exceed the new capital requirements, which are effective on January 1, 2015. | |||||||||||||
The Company’s and the Bank’s actual capital amounts and ratios are presented below: | |||||||||||||
(Dollars in thousands) | |||||||||||||
Actual | For Capital | To Be Well | |||||||||||
Adequacy Purposes | Capitalized Under | ||||||||||||
Prompt Corrective | |||||||||||||
Action Provisions | |||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||
As of December 31, 2014: | |||||||||||||
Total Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 122,732 | 16.62% | 59,085 | 8.00% | N/A | N/A | ||||||
Bank | $ | 118,356 | 16.06% | 58,974 | 8.00% | 73,717 | 10.00% | ||||||
Tier 1 Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 113,211 | 15.33% | 29,542 | 4.00% | N/A | N/A | ||||||
Bank | $ | 108,934 | 14.78% | 29,487 | 4.00% | 44,230 | 6.00% | ||||||
Tier 1 Capital (to Average Assets) | |||||||||||||
Consolidated | $ | 113,211 | 10.74% | 42,181 | 4.00% | N/A | N/A | ||||||
Bank | $ | 108,934 | 10.33% | 42,164 | 4.00% | 52,706 | 5.00% | ||||||
As of December 31, 2013: | |||||||||||||
Total Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 114,185 | 16.14% | 56,582 | 8.00% | N/A | N/A | ||||||
Bank | $ | 110,935 | 15.73% | 56,412 | 8.00% | 70,515 | 10.00% | ||||||
Tier 1 Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 104,890 | 14.83% | 28,291 | 4.00% | N/A | N/A | ||||||
Bank | $ | 101,733 | 14.43% | 28,206 | 4.00% | 42,309 | 6.00% | ||||||
Tier 1 Capital (to Average Assets) | |||||||||||||
Consolidated | $ | 104,890 | 10.08% | 41,622 | 4.00% | N/A | N/A | ||||||
Bank | $ | 101,733 | 9.79% | 41,584 | 4.00% | 51,981 | 5.00% | ||||||
13_Shareholders_Equity
13. Shareholders' Equity | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Shareholders' Equity | The Company received regulatory approval in December 2013 to repurchase and redeem the remaining 12,524 outstanding shares of its Series A preferred stock. The repurchase and redemption was completed on January 17, 2014 and was reflected on the Company’s Consolidated Balance Sheets as of December 31, 2013. “Accrued interest payable and other liabilities” at December 31, 2013 includes $12.6 million for the payment to preferred shareholders of principal and accrued dividends on January 17, 2014. |
The Board of Directors, at its discretion, can issue shares of preferred stock up to a maximum of 5,000,000 shares. The Board of Directors is authorized to determine the number of shares, voting powers, designations, preferences, limitations and relative rights. | |
In September 2014, the Company’s Board of Directors authorized a stock repurchase program, pursuant to which up to $2 million will be allocated to repurchase the Company’s common stock. Any purchases under the Company’s stock repurchase program may be made periodically as permitted by securities laws and other legal requirements in the open market or in privately negotiated transactions. The timing and amount of any repurchase of shares will be determined by the Company’s management, based on its evaluation of market conditions and other factors. The repurchase program may be suspended at any time or from time-to-time without prior notice. The Company has repurchased and retired $82,000, or 4,537 shares, of its common stock under this program as of December 31, 2014. | |
14_Other_Operating_Income_and_
14. Other Operating Income and Expense | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Other Income and Expenses [Abstract] | |||||||
Other Operating Income and Expense | Miscellaneous non-interest income for the years ended December 31, 2014, 2013 and 2012 included the following items that exceeded one percent of total revenues at some point during the following three-year period: | ||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Visa debit card income | $ | 3,170 | 2,990 | 2,092 | |||
Net appraisal management fee income | $ | 525 | 718 | 737 | |||
Insurance and brokerage commissions | $ | 701 | 661 | 517 | |||
Other non-interest expense for the years ended December 31, 2014, 2013 and 2012 included the following items that exceeded one percent of total revenues at some point during the following three-year period: | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Advertising | $ | 804 | 685 | 695 | |||
FDIC insurance | $ | 739 | 864 | 894 | |||
Visa debit card expense | $ | 905 | 823 | 729 | |||
Telephone | $ | 574 | 570 | 554 | |||
Foreclosure/OREO expense | $ | 317 | 356 | 677 | |||
Internet banking expense | $ | 644 | 568 | 593 | |||
FHLB advance prepayment penalty | $ | 869 | 530 | - | |||
Consulting | $ | 609 | 468 | 499 | |||
NC Tax Credit Amortization | $ | 870 | 160 | - |
15_Fair_Value_of_Financial_Ins
15. Fair Value of Financial Instruments | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Fair Value Disclosures [Abstract] | |||||||||||
Fair Value of Financial Instruments | The Company is required to disclose fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company’s financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination, or issuance. | ||||||||||
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: | |||||||||||
· | Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets. | ||||||||||
· | Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | ||||||||||
· | Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. | ||||||||||
Cash and Cash Equivalents | |||||||||||
For cash, due from banks and interest-bearing deposits, the carrying amount is a reasonable estimate of fair value. Cash and cash equivalents are reported in the Level 1 fair value category. | |||||||||||
Investment Securities Available for Sale | |||||||||||
Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Fair values for investment securities with quoted market prices are reported in the Level 1 fair value category. Fair value measurements obtained from independent pricing services are reported in the Level 2 fair value category. All other fair value measurements are reported in the Level 3 fair value category. | |||||||||||
Other Investments | |||||||||||
For other investments, the carrying value is a reasonable estimate of fair value. Other investments are reported in the Level 3 fair value category. | |||||||||||
Mortgage Loans Held for Sale | |||||||||||
Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Mortgage loans held for sale are reported in the Level 3 fair value category. | |||||||||||
Loans | |||||||||||
The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value. Loans are reported in the Level 3 fair value category, as the pricing of loans is more subjective than the pricing of other financial instruments. | |||||||||||
Cash Surrender Value of Life Insurance | |||||||||||
For cash surrender value of life insurance, the carrying value is a reasonable estimate of fair value. Cash surrender value of life insurance is reported in the Level 2 fair value category. | |||||||||||
Other Real Estate | |||||||||||
The fair value of other real estate is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Other real estate is reported in the Level 3 fair value category. | |||||||||||
Deposits | |||||||||||
The fair value of demand deposits, interest-bearing demand deposits and savings is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Deposits are reported in the Level 2 fair value category. | |||||||||||
Securities Sold Under Agreements to Repurchase | |||||||||||
For securities sold under agreements to repurchase, the carrying value is a reasonable estimate of fair value. Securities sold under agreements to repurchase are reported in the Level 2 fair value category. | |||||||||||
FHLB Borrowings | |||||||||||
The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discount rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 2 fair value category. | |||||||||||
Junior Subordinated Debentures | |||||||||||
Because the Company’s junior subordinated debentures were issued at a floating rate, the carrying amount is a reasonable estimate of fair value. Junior subordinated debentures are reported in the Level 2 fair value category. | |||||||||||
Commitments to Extend Credit and Standby Letters of Credit | |||||||||||
Commitments to extend credit and standby letters of credit are generally short-term and at variable interest rates. Therefore, both the carrying value and estimated fair value associated with these instruments are immaterial. | |||||||||||
Limitations | |||||||||||
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments. 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. | |||||||||||
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. | |||||||||||
The carrying amount and estimated fair value of the Company’s financial instruments at December 31, 2014 and 2013 are as follows: | |||||||||||
(Dollars in thousands) | |||||||||||
Fair Value Measurements at December 31, 2014 | |||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||
Amount | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 69,098 | 69,098 | - | - | 69,098 | |||||
Investment securities available for sale | $ | 281,099 | 1,378 | 278,971 | 750 | 281,099 | |||||
Other investments | $ | 4,031 | - | - | 4,031 | 4,031 | |||||
Mortgage loans held for sale | $ | 1,375 | - | - | 1,375 | 1,375 | |||||
Loans, net | $ | 640,809 | - | - | 644,708 | 644,708 | |||||
Cash surrender value of life insurance | $ | 14,125 | - | 14,125 | - | 14,125 | |||||
Liabilities: | |||||||||||
Deposits | $ | 814,700 | - | - | 813,288 | 813,288 | |||||
Securities sold under agreements | |||||||||||
to repurchase | $ | 48,430 | - | 48,430 | - | 48,430 | |||||
FHLB borrowings | $ | 50,000 | - | 49,598 | - | 49,598 | |||||
Junior subordinated debentures | $ | 20,619 | - | 20,619 | - | 20,619 | |||||
(Dollars in thousands) | |||||||||||
Fair Value Measurements at December 31, 2013 | |||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||
Amount | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 76,773 | 76,773 | - | - | 76,773 | |||||
Investment securities available for sale | $ | 297,890 | 1,689 | 294,951 | 1,250 | 297,890 | |||||
Other investments | $ | 4,990 | - | - | 4,990 | 4,990 | |||||
Mortgage loans held for sale | $ | 497 | - | - | 497 | 497 | |||||
Loans, net | $ | 607,459 | - | - | 612,132 | 612,132 | |||||
Cash surrender value of life insurance | $ | 13,706 | - | 13,706 | - | 13,706 | |||||
Liabilities: | |||||||||||
Deposits | $ | 799,361 | - | - | 798,460 | 798,460 | |||||
Securities sold under agreements | |||||||||||
to repurchase | $ | 45,396 | - | 45,396 | - | 45,396 | |||||
FHLB borrowings | $ | 65,000 | - | 65,891 | - | 65,891 | |||||
Junior subordinated debentures | $ | 20,619 | - | 20,619 | - | 20,619 | |||||
16_Peoples_Bancorp_of_North_Ca
16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||
Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements | Balance Sheets | |||||||
December 31, 2014 and 2013 | ||||||||
(Dollars in thousands) | ||||||||
Assets | 2014 | 2013 | ||||||
Cash | $ | 745 | 12,879 | |||||
Interest-bearing time deposit | 1,000 | - | ||||||
Investment in subsidiaries | 116,076 | 102,113 | ||||||
Investment securities available for sale | 1,235 | 1,721 | ||||||
Other assets | 245 | 273 | ||||||
Total assets | $ | 119,301 | 116,986 | |||||
Liabilities and Shareholders' Equity | ||||||||
Junior subordinated debentures | $ | 20,619 | 20,619 | |||||
Liabilities | 17 | 12,648 | ||||||
Shareholders' equity | 98,665 | 83,719 | ||||||
Total liabilities and shareholders' equity | $ | 119,301 | 116,986 | |||||
Statements of Earnings | ||||||||
For the Years Ended December 31, 2014, 2013 and 2012 | ||||||||
(Dollars in thousands) | ||||||||
Revenues: | 2014 | 2013 | 2012 | |||||
Interest and dividend income | $ | 2,718 | 13,576 | 113 | ||||
Total revenues | 2,718 | 13,576 | 113 | |||||
Expenses: | ||||||||
Interest | 389 | 398 | 438 | |||||
Other operating expenses | 527 | 159 | 476 | |||||
Total expenses | 916 | 557 | 914 | |||||
Income/(Loss) before income tax benefit and equity in | ||||||||
undistributed earnings of subsidiaries | 1,802 | 13,019 | (801 | ) | ||||
Income tax benefit | 239 | 84 | 166 | |||||
Income/(Loss) before equity in undistributed | ||||||||
earnings of subsidiaries | 2,041 | 13,103 | (635 | ) | ||||
Equity in undistributed earnings (loss) of subsidiaries | 7,347 | (6,412 | ) | 6,428 | ||||
Net earnings | $ | 9,388 | 6,691 | 5,793 | ||||
Statements of Cash Flows | ||||||||
For the Years Ended December 31, 2014, 2013 and 2012 | ||||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 9,388 | 6,691 | 5,793 | ||||
Adjustments to reconcile net earnings to net | ||||||||
cash used by operating activities: | ||||||||
Equity in undistributed earnings of subsidiaries | (7,347 | ) | 6,412 | (6,428 | ) | |||
Impairment of investment securities | - | - | - | |||||
Change in: | ||||||||
Other assets | 28 | (73 | ) | - | ||||
Accrued income | (5 | ) | - | 11 | ||||
Accrued expense | 1 | 27 | 41 | |||||
Other liabilities | (108 | ) | 108 | - | ||||
Net cash provided (used) by operating activities | 1,957 | 13,165 | (583 | ) | ||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities of investment securities available for sale | 500 | 1 | - | |||||
Net change in interest-bearing time deposit | (1,000 | ) | 800 | 14,200 | ||||
Net cash provided by investing activities | (500 | ) | 801 | 14,200 | ||||
Cash flows from financing activities: | ||||||||
Cash dividends paid on Series A preferred stock | - | (734 | ) | (1,023 | ) | |||
Cash dividends paid on common stock | (1,022 | ) | (677 | ) | (1,003 | ) | ||
Preferred stock and warrant repurchase | (12,524 | ) | - | (12,122 | ) | |||
Stock repurchase | (82 | ) | - | - | ||||
Proceeds from exercise of stock options | 37 | - | 539 | |||||
Net cash used by financing activities | (13,591 | ) | (1,411 | ) | (13,609 | ) | ||
Net change in cash | (12,134 | ) | 12,555 | 8 | ||||
Cash at beginning of year | 12,879 | 324 | 316 | |||||
Cash at end of year | $ | 745 | 12,879 | 324 | ||||
Noncash investing and financing activities: | ||||||||
Change in unrealized gain on investment securities | ||||||||
available for sale, net | $ | 8 | 77 | (46 | ) | |||
Accrued redemption of Series A Preferred Stock | - | 12,632 | - | |||||
1_Summary_of_Significant_Accou1
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Accounting Policies [Abstract] | ||||||||||
Organization | Peoples Bancorp of North Carolina, Inc. (“Bancorp”) received regulatory approval to operate as a bank holding company on July 22, 1999, and became effective August 31, 1999. Bancorp is primarily regulated by the Board of Governors of the Federal Reserve System, and serves as the one-bank holding company for Peoples Bank (the “Bank”). | |||||||||
The Bank commenced business in 1912 upon receipt of its banking charter from the North Carolina State Banking Commission (the “SBC”). The Bank is primarily regulated by the SBC and the Federal Deposit Insurance Corporation (the “FDIC”) and undergoes periodic examinations by these regulatory agencies. The Bank, whose main office is in Newton, North Carolina, provides a full range of commercial and consumer banking services primarily in Catawba, Alexander, Lincoln, Mecklenburg, Iredell, Union, Wake and Durham counties in North Carolina. | ||||||||||
Peoples Investment Services, Inc. is a wholly owned subsidiary of the Bank and began operations in 1996 to provide investment and trust services through agreements with an outside party. | ||||||||||
Real Estate Advisory Services, Inc. (“REAS”) is a wholly owned subsidiary of the Bank and began operations in 1997 to provide real estate appraisal and property management services to individuals and commercial customers of the Bank. | ||||||||||
Community Bank Real Estate Solutions, LLC is a wholly owned subsidiary of Bancorp and began operations in 2009 as a “clearing house” for appraisal services for community banks. Other banks are able to contract with Community Bank Real Estate Solutions, LLC to find and engage appropriate appraisal companies in the area where the property is located. | ||||||||||
In March 2015, the Bank established a new wholly owned subsidiary, PB Real Estate Holdings, LLC, which will acquire, manage and dispose of real property, other collateral and other assets obtained in the ordinary course of collecting debts previously contracted. | ||||||||||
Principles of Consolidation | The consolidated financial statements include the financial statements of Bancorp and its wholly owned subsidiaries, the Bank and Community Bank Real Estate Solutions, LLC, along with the Bank’s wholly owned subsidiaries, Peoples Investment Services, Inc. and REAS (collectively called the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Basis of Presentation | The accounting principles followed by the Company, and the methods of applying these principles, conform with accounting principles generally accepted in the United States of America (“GAAP”) and with general practices in the banking industry. In preparing the financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ significantly from these estimates. Material estimates common to the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses and valuation of real estate acquired in connection with or in lieu of foreclosure on loans. | |||||||||
Cash and Cash Equivalents | Cash, due from banks and interest-bearing deposits are considered cash and cash equivalents for cash flow reporting purposes. | |||||||||
Investment Securities | There are three classifications the Company is able to classify its investment securities: trading, available for sale, or held to maturity. Trading securities are bought and held principally for sale in the near term. Held to maturity securities are those securities for which the Company has the ability and intent to hold until maturity. All other securities not included in trading or held to maturity are classified as available for sale. At December 31, 2014 and 2013, the Company classified all of its investment securities as available for sale. | |||||||||
Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of shareholders’ equity until realized. | ||||||||||
Management evaluates investment securities for other-than-temporary impairment on an annual basis. A decline in the market value of any investment below cost that is deemed other-than-temporary is charged to earnings for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to non-credit related factors is recognized in comprehensive income. | ||||||||||
Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to the yield. Realized gains and losses for securities classified as available for sale are included in earnings and are derived using the specific identification method for determining the cost of securities sold. | ||||||||||
Other Investments | Other investments include equity securities with no readily determinable fair value. These investments are carried at cost. | |||||||||
Mortgage Loans Held for Sale | Mortgage loans held for sale are carried at lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. | |||||||||
Loans | Loans that management has the intent and ability to hold for the foreseeable future or until maturity are reported at the principal amount outstanding, net of the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The recognition of certain loan origination fee income and certain loan origination costs is deferred when such loans are originated and amortized over the life of the loan. | |||||||||
A loan is impaired when, based on current information and events, it is probable that all amounts due according to the contractual terms of the loan will not be collected. Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. | ||||||||||
Accrual of interest is discontinued on a loan when management believes, after considering economic conditions and collection efforts, that the borrower’s financial condition is such that collection of interest is doubtful. Interest previously accrued but not collected is reversed against current period earnings. | ||||||||||
Allowance for Loan Losses | The allowance for loan losses reflects management’s assessment and estimate of the risks associated with extending credit and its evaluation of the quality of the loan portfolio. The Bank periodically analyzes the loan portfolio in an effort to review asset quality and to establish an allowance for loan losses that management believes will be adequate in light of anticipated risks and loan losses. In assessing the adequacy of the allowance, size, quality and risk of loans in the portfolio are reviewed. Other factors considered are: | |||||||||
· | the Bank’s loan loss experience; | |||||||||
· | the amount of past due and non-performing loans; | |||||||||
· | specific known risks; | |||||||||
· | the status and amount of other past due and non-performing assets; | |||||||||
· | underlying estimated values of collateral securing loans; | |||||||||
· | current and anticipated economic conditions; and | |||||||||
· | other factors which management believes affect the allowance for potential credit losses. | |||||||||
Management uses several measures to assess and monitor the credit risks in the loan portfolio, including a loan grading system that begins upon loan origination and continues until the loan is collected or collectability becomes doubtful. Upon loan origination, the Bank’s originating loan officer evaluates the quality of the loan and assigns one of eight risk grades. The loan officer monitors the loan’s performance and credit quality and makes changes to the credit grade as conditions warrant. When originated or renewed, all loans over a certain dollar amount receive in-depth reviews and risk assessments by the Bank’s Credit Administration. Before making any changes in these risk grades, management considers assessments as determined by the third party credit review firm (as described below), regulatory examiners and the Bank’s Credit Administration. Any issues regarding the risk assessments are addressed by the Bank’s senior credit administrators and factored into management’s decision to originate or renew the loan. The Bank’s Board of Directors reviews, on a monthly basis, an analysis of the Bank’s reserves relative to the range of reserves estimated by the Bank’s Credit Administration. | ||||||||||
As an additional measure, the Bank engages an independent third party to review the underwriting, documentation and risk grading analyses. This independent third party reviews and evaluates loan relationships greater than $1.0 million, excluding loans in default, and loans in process of litigation or liquidation. The third party’s evaluation and report is shared with management and the Bank’s Board of Directors. | ||||||||||
Management considers certain commercial loans with weak credit risk grades to be individually impaired and measures such impairment based upon available cash flows and the value of the collateral. Allowance or reserve levels are estimated for all other graded loans in the portfolio based on their assigned credit risk grade, type of loan and other matters related to credit risk. | ||||||||||
Management uses the information developed from the procedures described above in evaluating and grading the loan portfolio. This continual grading process is used to monitor the credit quality of the loan portfolio and to assist management in estimating the allowance for loan losses. The provision for loan losses charged or credited to earnings is based upon management’s judgment of the amount necessary to maintain the allowance at a level appropriate to absorb probable incurred losses in the loan portfolio at the balance sheet date. The amount each quarter is dependent upon many factors, including growth and changes in the composition of the loan portfolio, net charge-offs, delinquencies, management’s assessment of loan portfolio quality, the value of collateral, and other macro-economic factors and trends. The evaluation of these factors is performed quarterly by management through an analysis of the appropriateness of the allowance for loan losses. | ||||||||||
The allowance for loan losses is comprised of three components: specific reserves, general reserves and unallocated reserves. After a loan has been identified as impaired, management measures impairment. When the measure of the impaired loan is less than the recorded investment in the loan, the amount of the impairment is recorded as a specific reserve. These specific reserves are determined on an individual loan basis based on management’s current evaluation of the Bank’s loss exposure for each credit, given the appraised value of any underlying collateral. Loans for which specific reserves are provided are excluded from the general allowance calculations as described below. | ||||||||||
The general allowance reflects reserves established under GAAP for collective loan impairment. These reserves are based upon historical net charge-offs using the greater of the last two, three, four or five years’ loss experience. This charge-off experience may be adjusted to reflect the effects of current conditions. The Bank considers information derived from its loan risk ratings and external data related to industry and general economic trends in establishing reserves. | ||||||||||
The unallocated allowance is determined through management’s assessment of probable losses that are in the portfolio but are not adequately captured by the other two components of the allowance, including consideration of current economic and business conditions and regulatory requirements. The unallocated allowance also reflects management’s acknowledgement of the imprecision and subjectivity that underlie the modeling of credit risk. Due to the subjectivity involved in determining the overall allowance, including the unallocated portion, the unallocated portion may fluctuate from period to period based on management’s evaluation of the factors affecting the assumptions used in calculating the allowance. | ||||||||||
There were no significant changes in the estimation methods or fundamental assumptions used in the evaluation of the allowance for loan losses for the year ended December 31, 2014 as compared to the year ended December 31, 2013. Revisions, estimates and assumptions may be made in any period in which the supporting factors indicate that loss levels may vary from the previous estimates. | ||||||||||
Effective December 31, 2012, stated income mortgage loans from the Banco de la Gente division of the Bank were analyzed separately from other single family residential loans in the Bank’s loan portfolio. These loans are first mortgage loans made to the Latino market, primarily in Mecklenburg and surrounding counties. These loans are non-traditional mortgages in that the customer normally did not have a credit history, so all credit information was accumulated by the loan officers. These loans were made as stated income loans rather than full documentation loans because the customer may not have had complete documentation on the income supporting the loan. | ||||||||||
Various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require adjustments to the allowance based on their judgments of information available to them at the time of their examinations. Management believes it has established the allowance for credit losses pursuant to GAAP, and has taken into account the views of its regulators and the current economic environment. Management considers the allowance for loan losses adequate to cover the estimated losses inherent in the Bank’s loan portfolio as of the date of the financial statements. Although management uses the best information available to make evaluations, significant future additions to the allowance may be necessary based on changes in economic and other conditions, thus adversely affecting the operating results of the Company. | ||||||||||
Mortgage Banking Activities | Mortgage banking income represents net gains from the sale of mortgage loans and fees received from borrowers and loan investors related to the Bank’s origination of single-family residential mortgage loans. | |||||||||
Mortgage loans serviced for others are not included in the accompanying balance sheets. The unpaid principal balances of mortgage loans serviced for others was approximately $2.1 million, $2.4 million and $3.1 million at December 31, 2014, 2013 and 2012, respectively. | ||||||||||
The Bank originates certain fixed rate mortgage loans and commits these loans for sale. The commitments to originate fixed rate mortgage loans and the commitments to sell these loans to a third party are both derivative contracts. The fair value of these derivative contracts is immaterial and has no effect on the recorded amounts in the financial statements. | ||||||||||
Premises and Equipment | Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets. When assets are retired or otherwise disposed, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is reflected in earnings for the period. The cost of maintenance and repairs that do not improve or extend the useful life of the respective asset is charged to earnings as incurred, whereas significant renewals and improvements are capitalized. The range of estimated useful lives for premises and equipment are generally as follows: | |||||||||
Buildings and improvements | 10 - 50 years | |||||||||
Furniture and equipment | 3 - 10 years | |||||||||
Other Real Estate | Foreclosed assets include all assets received in full or partial satisfaction of a loan. Foreclosed assets are reported at fair value less estimated selling costs. Any write-downs at the time of foreclosure are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management, and a valuation allowance is established if fair value declines below carrying value. Costs relating to the development and improvement of the property are capitalized. Revenues and expenses from operations are included in other expenses. Changes in the valuation allowance are included in loss on sale and write-down of other real estate. | |||||||||
Income Taxes | Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that the realization of such benefits is more likely than not to occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. | |||||||||
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities results in a deferred tax asset, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of a deferred tax asset, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. | ||||||||||
Tax effects from an uncertain tax position can be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The Company assessed the impact of this guidance and determined that it did not have a material impact on the Company’s financial position, results of operations or disclosures. | ||||||||||
Derivative Financial Instruments and Hedging Activities | In the normal course of business, the Company enters into derivative contracts to manage interest rate risk by modifying the characteristics of the related balance sheet instruments in order to reduce the adverse effect of changes in interest rates. All material derivative financial instruments are recorded at fair value in the financial statements. The fair value of derivative contracts related to the origination of fixed rate mortgage loans and the commitments to sell these loans to a third party is immaterial and has no effect on the recorded amounts in the financial statements. | |||||||||
The disclosure requirements for derivatives and hedging activities have the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The disclosure requirements include qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. | ||||||||||
On the date a derivative contract is entered into, the Company designates the derivative as a fair value hedge, a cash flow hedge, or a trading instrument. Changes in the fair value of instruments used as fair value hedges are accounted for in the earnings of the period simultaneous with accounting for the fair value change of the item being hedged. Changes in the fair value of the effective portion of cash flow hedges are accounted for in other comprehensive income rather than earnings. Changes in fair value of instruments that are not intended as a hedge are accounted for in the earnings of the period of the change. | ||||||||||
If a derivative instrument designated as a fair value hedge is terminated or the hedge designation removed, the difference between a hedged item’s then carrying amount and its face amount is recognized into income over the original hedge period. Likewise, if a derivative instrument designated as a cash flow hedge is terminated or the hedge designation removed, related amounts accumulated in other accumulated comprehensive income are reclassified into earnings over the original hedge period during which the hedged item affects income. | ||||||||||
The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. | ||||||||||
The Company formally documents all hedging relationships, including an assessment that the derivative instruments are expected to be highly effective in offsetting the changes in fair values or cash flows of the hedged items. | ||||||||||
Advertising Costs | Advertising costs are expensed as incurred. | |||||||||
Stock-Based Compensation | The Company has an Omnibus Stock Ownership and Long Term Incentive Plan (the “1999 Plan”) whereby certain stock-based rights, such as stock options, restricted stock and restricted stock units were granted to eligible directors and employees. The 1999 Plan expired on May 13, 2009 but still governs the rights and obligations of the parties for grants made thereunder. | |||||||||
Under the 1999 Plan, the Company granted incentive stock options to certain eligible employees in order that they may purchase Company stock at a price equal to the fair market value on the date of the grant. The options granted in 1999 vested over a five-year period. Options granted subsequent to 1999 vested over a three-year period. All options expire ten years after issuance. As of December 31, 2014, there were no outstanding options under the 1999 Plan. A summary of the stock option activity for the year ended December 31, 2014 is presented below: | ||||||||||
Stock Option Activity | ||||||||||
For the Year Ended December 31, 2014 | ||||||||||
Shares | Weighted | Weighted Average | Aggregate | |||||||
Average Option | Remaining | Intrinsic | ||||||||
Price Per Share | Contractual Term (in | Value | ||||||||
years) | (Dollars in | |||||||||
thousands) | ||||||||||
Outstanding, December 31, 2013 | 3,630 | $ | 10.31 | |||||||
Granted during the period | - | $ | - | |||||||
Expired during the period | - | $ | - | |||||||
Forfeited during the period | - | $ | - | |||||||
Exercised during the period | (3,630 | ) | $ | 10.31 | ||||||
Outstanding, December 31, 2014 | - | $ | - | $ | - | |||||
Exercisable, December 31, 2014 | - | $ | - | $ | - | |||||
In addition, under the 1999 Plan, the Company granted 3,000 restricted stock units in 2007 at a grant date fair value of $17.40 per share. The Company granted 1,750 restricted stock units at a grant date fair value of $12.80 per share during the third quarter of 2008 and 2,000 restricted stock units at a grant date fair value of $11.37 per share during the fourth quarter of 2008. The Company recognized compensation expense on the restricted stock units over the period of time the restrictions were in place (three years from the grant date for the grants of restricted stock units to date under the 1999 Plan). The amount of expense recorded in each period reflected the changes in the Company’s stock price during such period. As of December 31, 2014, there was no unrecognized compensation expense related to the 2007 and 2008 restricted stock unit grants granted under the 1999 Plan. | ||||||||||
The Company also has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the “2009 Plan”) whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 282,635 shares are currently reserved for possible issuance under the 2009 Plan. All stock-based rights under the 2009 Plan must be granted or awarded by May 7, 2019 (or ten years from the 2009 Plan effective date). | ||||||||||
The Company granted 29,514 restricted stock units under the 2009 Plan at a grant date fair value of $7.90 per share during the first quarter of 2012, of which 5,355 restricted stock units were forfeited by the executive officers of the Company as required by the agreement with the U.S. Department of the Treasury (“UST”) in conjunction with the Company’s participation in the Capital Purchase Program (“CPP”) under the Troubled Asset Relief Program (“TARP”). In July 2012, the Company granted 5,355 restricted stock units at a grant date fair value of $8.25 per share. The Company granted 26,795 restricted stock units under the 2009 Plan at a grant date fair value of $11.90 per share during the second quarter of 2013. The Company granted 21,056 restricted stock units under the 2009 Plan at a grant date fair value of $15.70 per share during the first quarter of 2014. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (five years from the grant date for the 2012 grants, four years from the grant date for the 2013 grants and three years from the grant date for the 2014 grants). The amount of expense recorded each period reflects the changes in the Company’s stock price during such period. As of December 31, 2014, the total unrecognized compensation expense related to the restricted stock unit grants under the 2009 Plan was $770,000. | ||||||||||
The Company recognized compensation expense for restricted stock units granted under the 2009 Plan of $389,000, $173,000 and $42,000 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||
Net Earnings Per Share | Net earnings per common share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per common share. The average market price during the year is used to compute equivalent shares. | |||||||||
The reconciliations of the amounts used in the computation of both “basic earnings per common share” and “diluted earnings per common share” for the years ended December 31, 2014, 2013 and 2012 are as follows: | ||||||||||
For the year ended December 31, 2014: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 9,388 | 5,615,666 | $ | 1.67 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 26,326 | ||||||||
Diluted earnings per common share | $ | 9,388 | 5,641,992 | $ | 1.66 | |||||
For the year ended December 31, 2013: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 6,035 | 5,613,495 | $ | 1.08 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 9,725 | ||||||||
Diluted earnings per common share | $ | 6,035 | 5,623,220 | $ | 1.07 | |||||
For the year ended December 31, 2012: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 4,783 | 5,559,401 | $ | 0.86 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 3,206 | ||||||||
Diluted earnings per common share | $ | 4,783 | 5,562,607 | $ | 0.86 | |||||
Recent Accounting Pronouncements | In November 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-16, (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. ASU No. 2014-16 provides more direction for determining whether embedded features, such as a conversion option embedded in a share of preferred stock, need to be accounted for separately from their host shares. ASU No. 2014-16 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | |||||||||
In November 2014, FASB issued ASU No. 2014-17, (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-17 gives acquired entities the option to apply pushdown accounting in their separate financial statements when an acquirer obtains control of them. ASU No. 2014-17 was effective upon issuance for current and future reporting periods and any open reporting periods for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
In January 2015, FASB issued ASU No. 2015-01, (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU No. 2015-01 eliminates the concept of extraordinary items from GAAP. ASU No. 2015-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
In February 2015, FASB issued ASU No. 2015-02, (Topic 810): Amendments to the Consolidation Analysis. ASU No. 2015-02 provides amendments to respond to stakeholders’ concerns about the current accounting for consolidation of certain legal entities. Stakeholders expressed concerns that GAAP might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. ASU No. 2015-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company’s results of operations, financial position or disclosures. | ||||||||||
Reclassification | Certain amounts in the 2012 and 2013 consolidated financial statements have been reclassified to conform to the 2014 presentation. |
1_Summary_of_Significant_Accou2
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Summary Of Significant Accounting Policies Tables | ||||||||||
Stock Option Activity | Stock Option Activity | |||||||||
For the Year Ended December 31, 2014 | ||||||||||
Shares | Weighted | Weighted Average | Aggregate | |||||||
Average Option | Remaining | Intrinsic | ||||||||
Price Per Share | Contractual Term (in | Value | ||||||||
years) | (Dollars in | |||||||||
thousands) | ||||||||||
Outstanding, December 31, 2013 | 3,630 | $ | 10.31 | |||||||
Granted during the period | - | $ | - | |||||||
Expired during the period | - | $ | - | |||||||
Forfeited during the period | - | $ | - | |||||||
Exercised during the period | (3,630 | ) | $ | 10.31 | ||||||
Outstanding, December 31, 2014 | - | $ | - | $ | - | |||||
Exercisable, December 31, 2014 | - | $ | - | $ | - | |||||
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share | For the year ended December 31, 2014: | Net Earnings | Common | Per Share | ||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 9,388 | 5,615,666 | $ | 1.67 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 26,326 | ||||||||
Diluted earnings per common share | $ | 9,388 | 5,641,992 | $ | 1.66 | |||||
For the year ended December 31, 2013: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 6,035 | 5,613,495 | $ | 1.08 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 9,725 | ||||||||
Diluted earnings per common share | $ | 6,035 | 5,623,220 | $ | 1.07 | |||||
For the year ended December 31, 2012: | Net Earnings | Common | Per Share | |||||||
Available to | Shares | Amount | ||||||||
Common | ||||||||||
Shareholders | ||||||||||
(Dollars in | ||||||||||
thousands) | ||||||||||
Basic earnings per common share | $ | 4,783 | 5,559,401 | $ | 0.86 | |||||
Effect of dilutive securities: | ||||||||||
Stock options | - | 3,206 | ||||||||
Diluted earnings per common share | $ | 4,783 | 5,562,607 | $ | 0.86 | |||||
2_Investment_Securities_Tables
2. Investment Securities (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Investment Securities Tables | |||||||||||||
Investment securities available for sale | (Dollars in thousands) | ||||||||||||
31-Dec-14 | |||||||||||||
Amortized | Gross | Gross | Estimated | ||||||||||
Cost | Unrealized | Unrealized | Fair Value | ||||||||||
Gains | Losses | ||||||||||||
Mortgage-backed securities | $ | 88,496 | 1,766 | 52 | 90,210 | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | 33,766 | 418 | 136 | 34,048 | |||||||||
State and political subdivisions | 145,938 | 6,534 | 226 | 152,246 | |||||||||
Corporate bonds | 2,469 | 16 | 18 | 2,467 | |||||||||
Trust preferred securities | 750 | - | - | 750 | |||||||||
Equity securities | 748 | 630 | - | 1,378 | |||||||||
Total | $ | 272,167 | 9,364 | 432 | 281,099 | ||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Amortized | Gross | Gross | Estimated | ||||||||||
Cost | Unrealized | Unrealized | Fair Value | ||||||||||
Gains | Losses | ||||||||||||
Mortgage-backed securities | $ | 123,706 | 1,040 | 769 | 123,977 | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | 22,115 | 97 | 69 | 22,143 | |||||||||
State and political subdivisions | 148,468 | 1,987 | 5,087 | 145,368 | |||||||||
Corporate bonds | 3,522 | 11 | 70 | 3,463 | |||||||||
Trust preferred securities | 1,250 | - | - | 1,250 | |||||||||
Equity securities | 748 | 941 | - | 1,689 | |||||||||
Total | $ | 299,809 | 4,076 | 5,995 | 297,890 | ||||||||
Current fair value and associated unrealized losses on investments in debt securities with unrealized losses | (Dollars in thousands) | ||||||||||||
31-Dec-14 | |||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||
Losses | Losses | Losses | |||||||||||
Mortgage-backed securities | $ | 436 | 1 | 2,963 | 51 | 3,399 | 52 | ||||||
U.S. Government | |||||||||||||
sponsored enterprises | 2,996 | 4 | 9,850 | 132 | 12,846 | 136 | |||||||
State and political subdivisions | 567 | 1 | 14,998 | 225 | 15,565 | 226 | |||||||
Corporate bonds | - | - | 525 | 18 | 525 | 18 | |||||||
Total | $ | 3,999 | 6 | 28,336 | 426 | 32,335 | 432 | ||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||
Fair Value | Unrealized | Fair Value | Unrealized | Fair Value | Unrealized | ||||||||
Losses | Losses | Losses | |||||||||||
Mortgage-backed securities | $ | 40,857 | 691 | 10,128 | 78 | 50,985 | 769 | ||||||
U.S. Government | |||||||||||||
sponsored enterprises | 9,714 | 69 | - | - | 9,714 | 69 | |||||||
State and political subdivisions | 77,187 | 4,863 | 1,824 | 224 | 79,011 | 5,087 | |||||||
Corporate bonds | 1,984 | 16 | 511 | 54 | 2,495 | 70 | |||||||
Total | $ | 129,742 | 5,639 | 12,463 | 356 | 142,205 | 5,995 | ||||||
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity | |||||||||||||
(Dollars in thousands) | |||||||||||||
Amortized | Estimated | ||||||||||||
Cost | Fair Value | ||||||||||||
Due within one year | $ | 4,308 | 4,323 | ||||||||||
Due from one to five years | 40,564 | 42,548 | |||||||||||
Due from five to ten years | 117,452 | 121,399 | |||||||||||
Due after ten years | 20,599 | 21,241 | |||||||||||
Mortgage-backed securities | 88,496 | 90,210 | |||||||||||
Equity securities | 748 | 1,378 | |||||||||||
Total | $ | 272,167 | 281,099 | ||||||||||
Available for sale securities measured at fair value on a recurring basis | (Dollars in thousands) | ||||||||||||
31-Dec-14 | |||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||
Measurements | Valuation | Valuation | Valuation | ||||||||||
Mortgage-backed securities | $ | 90,210 | - | 90,210 | - | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | $ | 34,048 | - | 34,048 | - | ||||||||
State and political subdivisions | $ | 152,246 | - | 152,246 | - | ||||||||
Corporate bonds | $ | 2,467 | - | 2,467 | - | ||||||||
Trust preferred securities | $ | 750 | - | - | 750 | ||||||||
Equity securities | $ | 1,378 | 1,378 | - | - | ||||||||
(Dollars in thousands) | |||||||||||||
31-Dec-13 | |||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||
Measurements | Valuation | Valuation | Valuation | ||||||||||
Mortgage-backed securities | $ | 123,977 | - | 123,977 | - | ||||||||
U.S. Government | |||||||||||||
sponsored enterprises | $ | 22,143 | - | 22,143 | - | ||||||||
State and political subdivisions | $ | 145,368 | - | 145,368 | - | ||||||||
Corporate bonds | $ | 3,463 | - | 3,463 | - | ||||||||
Trust preferred securities | $ | 1,250 | - | - | 1,250 | ||||||||
Equity securities | $ | 1,689 | 1,689 | - | - | ||||||||
Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs | (Dollars in thousands) | ||||||||||||
Investment Securities | |||||||||||||
Available for Sale | |||||||||||||
Level 3 Valuation | |||||||||||||
Balance, beginning of period | $ | 1,250 | |||||||||||
Change in book value | - | ||||||||||||
Change in gain/(loss) realized and unrealized | - | ||||||||||||
Purchases/(sales and calls) | (500 | ) | |||||||||||
Transfers in and/or (out) of Level 3 | - | ||||||||||||
Balance, end of period | $ | 750 | |||||||||||
Change in unrealized gain/(loss) for assets still held in Level 3 | $ | - | |||||||||||
3_Loans_Tables
3. Loans (Tables) | 12 Months Ended | |||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||
Loans Tables | ||||||||||||||||||||||
Major classifications of loans | Major classifications of loans at December 31, 2014 and 2013 are summarized as follows: | |||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 57,617 | 63,742 | |||||||||||||||||||
Single-family residential | 206,417 | 195,975 | ||||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 47,015 | 49,463 | ||||||||||||||||||||
Commercial | 228,558 | 209,287 | ||||||||||||||||||||
Multifamily and farmland | 12,400 | 11,801 | ||||||||||||||||||||
Total real estate loans | 552,007 | 530,268 | ||||||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 76,262 | 68,047 | ||||||||||||||||||||
Farm loans | 7 | 19 | ||||||||||||||||||||
Consumer loans | 10,060 | 9,593 | ||||||||||||||||||||
All other loans | 13,555 | 13,033 | ||||||||||||||||||||
Total loans | 651,891 | 620,960 | ||||||||||||||||||||
Less allowance for loan losses | 11,082 | 13,501 | ||||||||||||||||||||
Total net loans | $ | 640,809 | 607,459 | |||||||||||||||||||
Age analysis of past due loans, by loan type | The following tables present an age analysis of past due loans, by loan type, as of December 31, 2014 and 2013: | |||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Loans 30-89 | Loans 90 or | Total | Total | Total | Accruing | |||||||||||||||||
Days Past | More Days | Past Due | Current | Loans | Loans 90 or | |||||||||||||||||
Due | Past Due | Loans | Loans | More Days | ||||||||||||||||||
Past Due | ||||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 294 | 3,540 | 3,834 | 53,783 | 57,617 | - | |||||||||||||||
Single-family residential | 5,988 | 268 | 6,256 | 200,161 | 206,417 | - | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 8,998 | 610 | 9,608 | 37,407 | 47,015 | - | ||||||||||||||||
Commercial | 3,205 | 366 | 3,571 | 224,987 | 228,558 | - | ||||||||||||||||
Multifamily and farmland | 85 | - | 85 | 12,315 | 12,400 | - | ||||||||||||||||
Total real estate loans | 18,570 | 4,784 | 23,354 | 528,653 | 552,007 | - | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 241 | 49 | 290 | 75,972 | 76,262 | - | ||||||||||||||||
Farm loans | - | - | - | 7 | 7 | - | ||||||||||||||||
Consumer loans | 184 | - | 184 | 9,876 | 10,060 | - | ||||||||||||||||
All other loans | - | - | - | 13,555 | 13,555 | - | ||||||||||||||||
Total loans | $ | 18,995 | 4,833 | 23,828 | 628,063 | 651,891 | - | |||||||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Loans 30-89 | Loans 90 or | Total | Total | Total | Accruing | |||||||||||||||||
Days Past | More Days | Past Due | Current | Loans | Loans 90 or | |||||||||||||||||
Due | Past Due | Loans | Loans | More Days | ||||||||||||||||||
Past Due | ||||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 3,416 | 5,426 | 8,842 | 54,900 | 63,742 | - | |||||||||||||||
Single-family residential | 4,518 | 1,555 | 6,073 | 189,902 | 195,975 | - | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 9,833 | 1,952 | 11,785 | 37,678 | 49,463 | 881 | ||||||||||||||||
Commercial | 1,643 | 486 | 2,129 | 207,158 | 209,287 | - | ||||||||||||||||
Multifamily and farmland | 177 | - | 177 | 11,624 | 11,801 | - | ||||||||||||||||
Total real estate loans | 19,587 | 9,419 | 29,006 | 501,262 | 530,268 | 881 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 424 | 29 | 453 | 67,594 | 68,047 | - | ||||||||||||||||
Farm loans | - | - | - | 19 | 19 | - | ||||||||||||||||
Consumer loans | 181 | 3 | 184 | 9,409 | 9,593 | 1 | ||||||||||||||||
All other loans | - | - | - | 13,033 | 13,033 | - | ||||||||||||||||
Total loans | $ | 20,192 | 9,451 | 29,643 | 591,317 | 620,960 | 882 | |||||||||||||||
Non-accrual loans | The following table presents the Bank’s non-accrual loans as of December 31, 2014 and 2013: | |||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
31-Dec-14 | 31-Dec-13 | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 3,854 | 6,546 | |||||||||||||||||||
Single-family residential | 2,370 | 2,980 | ||||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 1,545 | 1,990 | ||||||||||||||||||||
Commercial | 2,598 | 2,043 | ||||||||||||||||||||
Multifamily and farmland | 110 | - | ||||||||||||||||||||
Total real estate loans | 10,477 | 13,559 | ||||||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 176 | 250 | ||||||||||||||||||||
Consumer loans | 75 | 27 | ||||||||||||||||||||
Total | $ | 10,728 | 13,836 | |||||||||||||||||||
Impaired loans | The following tables present the Bank’s impaired loans as of December 31, 2014 and 2013: | |||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Unpaid | Recorded | Recorded | Recorded | Related | Average | |||||||||||||||||
Contractual | Investment | Investment | Investment | Allowance | Outstanding | |||||||||||||||||
Principal | With No | With | in Impaired | Impaired | ||||||||||||||||||
Balance | Allowance | Allowance | Loans | Loans | ||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 5,481 | 3,639 | 555 | 4,194 | 31 | 5,248 | |||||||||||||||
Single-family residential | 6,717 | 933 | 5,540 | 6,473 | 154 | 7,430 | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 21,243 | - | 20,649 | 20,649 | 1,191 | 19,964 | ||||||||||||||||
Commercial | 4,752 | 1,485 | 2,866 | 4,351 | 272 | 4,399 | ||||||||||||||||
Multifamily and farmland | 111 | - | 110 | 110 | 1 | 154 | ||||||||||||||||
Total impaired real estate loans | 38,304 | 6,057 | 29,720 | 35,777 | 1,649 | 37,195 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 218 | - | 201 | 201 | 4 | 641 | ||||||||||||||||
Consumer loans | 318 | - | 313 | 313 | 5 | 309 | ||||||||||||||||
Total impaired loans | $ | 38,840 | 6,057 | 30,234 | 36,291 | 1,658 | 38,145 | |||||||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Unpaid | Recorded | Recorded | Recorded | Related | Average | |||||||||||||||||
Contractual | Investment | Investment | Investment | Allowance | Outstanding | |||||||||||||||||
Principal | With No | With | in Impaired | Impaired | ||||||||||||||||||
Balance | Allowance | Allowance | Loans | Loans | ||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | $ | 9,861 | 6,293 | 868 | 7,161 | 53 | 8,289 | |||||||||||||||
Single-family residential | 7,853 | 1,428 | 5,633 | 7,061 | 123 | 7,859 | ||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 22,034 | - | 21,242 | 21,242 | 1,300 | 21,242 | ||||||||||||||||
Commercial | 5,079 | 3,045 | 1,489 | 4,534 | 182 | 4,171 | ||||||||||||||||
Multifamily and farmland | 177 | - | 177 | 177 | 1 | 184 | ||||||||||||||||
Total impaired real estate loans | 45,004 | 10,766 | 29,409 | 40,175 | 1,659 | 41,745 | ||||||||||||||||
Loans not secured by real estate: | ||||||||||||||||||||||
Commercial loans | 999 | 257 | 724 | 981 | 15 | 826 | ||||||||||||||||
Consumer loans | 302 | 264 | 35 | 299 | 1 | 247 | ||||||||||||||||
Total impaired loans | $ | 46,305 | 11,287 | 30,168 | 41,455 | 1,675 | 42,818 | |||||||||||||||
Fair value measurements for impaired loans and other real estate on a non-recurring basis | (Dollars in thousands) | |||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Total Gains/(Losses) for | ||||||||||||||||||
Measurements | Valuation | Valuation | Valuation | the Year Ended | ||||||||||||||||||
31-Dec-14 | 31-Dec-14 | |||||||||||||||||||||
Impaired loans | $ | 34,633 | - | - | 34,633 | (1,444 | ) | |||||||||||||||
Other real estate | $ | 2,016 | - | - | 2,016 | (622 | ) | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Total Gains/(Losses) for | ||||||||||||||||||
Measurements | Valuation | Valuation | Valuation | the Year Ended | ||||||||||||||||||
31-Dec-13 | 31-Dec-13 | |||||||||||||||||||||
Impaired loans | $ | 39,780 | - | - | 39,780 | (3,207 | ) | |||||||||||||||
Other real estate | $ | 1,679 | - | - | 1,679 | (581 | ) | |||||||||||||||
Changes in the allowance for loan losses | Changes in the allowance for loan losses for the year ended December 31, 2014 were as follows: | |||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family | Family | and | and All | ||||||||||||||||||
Residential | Residential- | Farmland | Other | |||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Charge-offs | (884 | ) | (309 | ) | (190 | ) | (290 | ) | - | (430 | ) | - | (534 | ) | - | (2,637 | ) | |||||
Recoveries | 428 | 72 | 16 | 171 | - | 54 | - | 176 | - | 917 | ||||||||||||
Provision | 23 | (320 | ) | (79 | ) | (198 | ) | (30 | ) | 405 | - | 346 | (846 | ) | (699 | ) | ||||||
Ending balance | $ | 2,785 | 2,566 | 1,610 | 1,902 | 7 | 1,098 | - | 233 | 881 | 11,082 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | - | 82 | 1,155 | 260 | - | - | - | - | - | 1,497 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 2,785 | 2,484 | 455 | 1,642 | 7 | 1,098 | - | 233 | 881 | 9,585 | ||||||||||||
Ending balance | $ | 2,785 | 2,566 | 1,610 | 1,902 | 7 | 1,098 | - | 233 | 881 | 11,082 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 57,617 | 206,417 | 47,015 | 228,558 | 12,400 | 76,262 | 7 | 23,615 | - | 651,891 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 3,639 | 2,298 | 18,884 | 3,345 | - | - | - | - | - | 28,166 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 53,978 | 204,119 | 28,131 | 225,213 | 12,400 | 76,262 | 7 | 23,615 | - | 623,725 | |||||||||||
Changes in the allowance for loan losses for the year ended December 31, 2013 were as follows: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family | Family | and | and All | ||||||||||||||||||
Residential | Residential- Banco de la | Farmland | Other | |||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Charge-offs | (777 | ) | (1,724 | ) | (272 | ) | (445 | ) | - | (502 | ) | - | (652 | ) | - | (4,372 | ) | |||||
Recoveries | 377 | 111 | 141 | 50 | - | 44 | - | 143 | - | 866 | ||||||||||||
Provision | (781 | ) | 1,505 | (4 | ) | 565 | 9 | 439 | - | 509 | 342 | 2,584 | ||||||||||
Ending balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | - | 39 | 1,268 | 171 | - | - | - | - | - | 1,478 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 3,218 | 3,084 | 595 | 2,048 | 37 | 1,069 | - | 245 | 1,727 | 12,023 | ||||||||||||
Ending balance | $ | 3,218 | 3,123 | 1,863 | 2,219 | 37 | 1,069 | - | 245 | 1,727 | 13,501 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 63,742 | 195,975 | 49,463 | 209,287 | 11,801 | 68,047 | 19 | 22,626 | - | 620,960 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 6,293 | 3,127 | 19,958 | 3,767 | - | 256 | - | 265 | - | 33,666 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 57,449 | 192,848 | 29,505 | 205,520 | 11,801 | 67,791 | 19 | 22,361 | - | 587,294 | |||||||||||
Changes in the allowance for loan losses for the year ended December 31, 2012 were as follows: | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | Unallocated | Total | |||||||||||||
and Land Development | Family Residential | Family Residential- Banco de la | and | and All | ||||||||||||||||||
Gente | Farmland | Other | ||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Beginning balance | $ | 7,182 | 3,253 | 2,104 | 1,731 | 13 | 1,029 | - | 255 | 1,037 | 16,604 | |||||||||||
Charge-offs | (4,728 | ) | (886 | ) | (668 | ) | (937 | ) | - | (555 | ) | - | (557 | ) | - | (8,331 | ) | |||||
Recoveries | 528 | 72 | - | 374 | - | 104 | - | 148 | - | 1,226 | ||||||||||||
Provision | 1,417 | 792 | 562 | 881 | 15 | 510 | - | 399 | 348 | 4,924 | ||||||||||||
Ending balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Allowance for loan losses: | ||||||||||||||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 24 | 84 | 1,254 | - | - | - | - | - | - | 1,362 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | 4,375 | 3,147 | 744 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 13,061 | ||||||||||||
Ending balance | $ | 4,399 | 3,231 | 1,998 | 2,049 | 28 | 1,088 | - | 245 | 1,385 | 14,423 | |||||||||||
Loans: | ||||||||||||||||||||||
Ending balance | $ | 73,176 | 195,003 | 52,019 | 200,633 | 8,951 | 64,295 | 11 | 25,886 | - | 619,974 | |||||||||||
Ending balance: individually | ||||||||||||||||||||||
evaluated for impairment | $ | 11,961 | 3,885 | 20,024 | 4,569 | - | 346 | - | - | - | 40,785 | |||||||||||
Ending balance: collectively | ||||||||||||||||||||||
evaluated for impairment | $ | 61,215 | 191,118 | 31,995 | 196,064 | 8,951 | 63,949 | 11 | 25,886 | - | 579,189 | |||||||||||
Credit risk profile of each loan type based on internally assigned risk grade | The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of December 31, 2014 and 2013. | |||||||||||||||||||||
31-Dec-14 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | All Other | Total | |||||||||||||
and Land | Family | Family | and | |||||||||||||||||||
Development | Residential | Residential- | Farmland | |||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
1- Excellent Quality | $ | - | 15,099 | - | - | - | 924 | - | 1,232 | - | 17,255 | |||||||||||
2- High Quality | 6,741 | 74,367 | - | 39,888 | 241 | 18,730 | - | 3,576 | 1,860 | 145,403 | ||||||||||||
3- Good Quality | 24,641 | 74,453 | 21,022 | 142,141 | 8,376 | 44,649 | 7 | 4,549 | 8,055 | 327,893 | ||||||||||||
4- Management Attention | 13,013 | 30,954 | 12,721 | 36,433 | 1,001 | 11,312 | - | 566 | 3,640 | 109,640 | ||||||||||||
5- Watch | 9,294 | 5,749 | 5,799 | 6,153 | 2,672 | 383 | - | 46 | - | 30,096 | ||||||||||||
6- Substandard | 3,928 | 5,795 | 7,473 | 3,943 | 110 | 264 | - | 87 | - | 21,600 | ||||||||||||
7- Doubtful | - | - | - | - | - | - | - | - | - | - | ||||||||||||
8- Loss | - | - | - | - | - | - | - | 4 | - | 4 | ||||||||||||
Total | $ | 57,617 | 206,417 | 47,015 | 228,558 | 12,400 | 76,262 | 7 | 10,060 | 13,555 | 651,891 | |||||||||||
31-Dec-13 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Real Estate Loans | ||||||||||||||||||||||
Construction | Single- | Single- | Commercial | Multifamily | Commercial | Farm | Consumer | All Other | Total | |||||||||||||
and Land | Family | Family | and | |||||||||||||||||||
Development | Residential | Residential- | Farmland | |||||||||||||||||||
Banco de la | ||||||||||||||||||||||
Gente | ||||||||||||||||||||||
Stated | ||||||||||||||||||||||
Income | ||||||||||||||||||||||
1- Excellent Quality | $ | 7 | 15,036 | - | - | - | 365 | - | 1,270 | - | 16,678 | |||||||||||
2- High Quality | 7,852 | 60,882 | - | 33,340 | 715 | 8,442 | - | 3,519 | 2,139 | 116,889 | ||||||||||||
3- Good Quality | 22,899 | 73,118 | 22,255 | 123,604 | 7,882 | 44,353 | 19 | 4,061 | 8,565 | 306,756 | ||||||||||||
4- Management Attention | 14,464 | 34,090 | 8,369 | 42,914 | 286 | 13,704 | - | 358 | 2,329 | 116,514 | ||||||||||||
5- Watch | 8,163 | 6,806 | 8,113 | 5,190 | 2,741 | 320 | - | 50 | - | 31,383 | ||||||||||||
6- Substandard | 10,357 | 6,043 | 10,726 | 4,239 | 177 | 863 | - | 330 | - | 32,735 | ||||||||||||
7- Doubtful | - | - | - | - | - | - | - | - | - | - | ||||||||||||
8- Loss | - | - | - | - | - | - | - | 5 | - | 5 | ||||||||||||
Total | $ | 63,742 | 195,975 | 49,463 | 209,287 | 11,801 | 68,047 | 19 | 9,593 | 13,033 | 620,960 | |||||||||||
Analysis of TDR loans by loan type | The following tables present an analysis of loan modifications during the years ended December 31, 2014 and 2013: | |||||||||||||||||||||
Year ended December 31, 2014 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||||
Contracts | Outstanding | Outstanding | ||||||||||||||||||||
Recorded | Recorded | |||||||||||||||||||||
Investment | Investment | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | 1 | $ | 291 | 266 | ||||||||||||||||||
Single-family residential | 2 | 849 | 845 | |||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 3 | 281 | 278 | |||||||||||||||||||
Total real estate TDR loans | 6 | 1,421 | 1,389 | |||||||||||||||||||
Total TDR loans | 6 | $ | 1,421 | 1,389 | ||||||||||||||||||
Year ended December 31, 2013 | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||||
Contracts | Outstanding | Outstanding | ||||||||||||||||||||
Recorded | Recorded | |||||||||||||||||||||
Investment | Investment | |||||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||
Construction and land development | 2 | $ | 841 | 824 | ||||||||||||||||||
Single-family residential - | ||||||||||||||||||||||
Banco de la Gente stated income | 7 | 796 | 788 | |||||||||||||||||||
Total real estate TDR loans | 9 | 1,637 | 1,612 | |||||||||||||||||||
Total TDR loans | 9 | $ | 1,637 | 1,612 | ||||||||||||||||||
4_Premises_and_Equipment_Table
4. Premises and Equipment (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Property, Plant and Equipment [Abstract] | |||||
Summary of premises and equipment | Major classifications of premises and equipment at December 31, 2014 and 2013 are summarized as follows: | ||||
(Dollars in thousands) | |||||
2014 | 2013 | ||||
Land | $ | 3,681 | 3,667 | ||
Buildings and improvements | 15,864 | 15,126 | |||
Furniture and equipment | 18,442 | 16,239 | |||
Total premises and equipment | 37,987 | 35,032 | |||
Less accumulated depreciation | 20,987 | 18,674 | |||
Total net premises and equipment | $ | 17,000 | 16,358 |
5_Time_Deposits_Tables
5. Time Deposits (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Banking and Thrift [Abstract] | |||||||
Scheduled maturities of time deposits | At December 31, 2014, the scheduled maturities of time deposits are as follows: | ||||||
(Dollars in thousands) | |||||||
2015 | $ | 131,001 | |||||
2016 | 37,065 | ||||||
2017 | 17,029 | ||||||
2018 | 8,336 | ||||||
2019 and thereafter | 3,007 | ||||||
Total | $ | 196,438 | |||||
6_Federal_Home_Loan_Bank_and_F1
6. Federal Home Loan Bank and Federal Reserve Bank Borrowings (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Banking and Thrift [Abstract] | ||||||
Borrowings from the FHLB outstanding | Borrowings from the FHLB outstanding at December 31, 2014 and 2013 consist of the following: | |||||
31-Dec-14 | ||||||
(Dollars in thousands) | ||||||
Maturity Date | Call Date | Rate | Rate Type | Amount | ||
17-Oct-18 | N/A | 3.40% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.64% | Adjustable Rate Hybrid | 15,000 | ||
17-Oct-18 | N/A | 3.41% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.47% | Adjustable Rate Hybrid | 5,000 | ||
8-May-18 | N/A | 1.79% | Floating to Fixed | 5,000 | ||
8-May-18 | N/A | 3.43% | Floating to Fixed | 15,000 | ||
$ | 50,000 | |||||
31-Dec-13 | ||||||
(Dollars in thousands) | ||||||
Maturity Date | Call Date | Rate | Rate Type | Amount | ||
25-Mar-19 | N/A | 4.26% | Convertible | 5,000 | ||
12-Nov-14 | N/A | 2.23% | Fixed Rate Hybrid | 5,000 | ||
17-Oct-16 | N/A | 3.73% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.41% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.65% | Adjustable Rate Hybrid | 15,000 | ||
17-Oct-18 | N/A | 3.43% | Adjustable Rate Hybrid | 5,000 | ||
17-Oct-18 | N/A | 3.48% | Adjustable Rate Hybrid | 5,000 | ||
8-May-18 | N/A | 1.80% | Floating to Fixed | 5,000 | ||
8-May-18 | N/A | 3.44% | Floating to Fixed | 15,000 | ||
$ | 65,000 | |||||
8_Income_Taxes_Tables
8. Income Taxes (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ||||||||
Components of Income Tax Expense (Benefit) | The provision for income taxes is summarized as follows: | |||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Current | $ | 1,759 | 1,345 | 1,800 | ||||
Deferred | 178 | 534 | (213 | ) | ||||
Total | $ | 1,937 | 1,879 | 1,587 | ||||
Schedule of Effective Income Tax Rate Reconciliation | The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows: | |||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Pre-tax income at statutory rate (34%) | $ | 3,851 | 2,914 | 2,509 | ||||
Differences: | ||||||||
Tax exempt interest income | (1,630 | ) | (1,481 | ) | (1,168 | ) | ||
Nondeductible interest and other expense | 119 | 141 | 52 | |||||
Cash surrender value of life insurance | (143 | ) | (147 | ) | (149 | ) | ||
State taxes, net of federal benefits | (283 | ) | 428 | 324 | ||||
Other, net | 23 | 24 | 19 | |||||
Total | $ | 1,937 | 1,879 | 1,587 | ||||
Schedule of Deferred Tax Assets and Liabilities | (Dollars in thousands) | |||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Allowance for loan losses | $ | 4,134 | 5,205 | |||||
Accrued retirement expense | 1,529 | 1,489 | ||||||
Other real estate | 206 | 218 | ||||||
Federal credit carryforward | 342 | 79 | ||||||
State credit carryforward | 734 | - | ||||||
Other | 176 | 334 | ||||||
Unrealized loss on available for sale securities | - | 747 | ||||||
Total gross deferred tax assets | 7,121 | 8,072 | ||||||
Deferred tax liabilities: | ||||||||
Deferred loan fees | 433 | 581 | ||||||
Premises and equipment | 652 | 530 | ||||||
Unrealized gain on available for sale securities | 3,479 | - | ||||||
Total gross deferred tax liabilities | 4,564 | 1,111 | ||||||
Net deferred tax asset | $ | 2,557 | 6,961 | |||||
9_Related_Party_Transactions_T
9. Related Party Transactions (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Related Party Transactions [Abstract] | ||||
Summary of activity for related party loans | (Dollars in thousands) | |||
Beginning balance | $ | 4,340 | ||
New loans | 6,903 | |||
Repayments | (6,483 | ) | ||
Ending balance | $ | 4,760 | ||
10_Commitments_and_Contingenci1
10. Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||
Future Minimum Rental Payments for Operating Leases | (Dollars in thousands) | ||||||||
Year ending December 31 | |||||||||
2015 | 600 | ||||||||
2016 | 603 | ||||||||
2017 | 537 | ||||||||
2018 | 501 | ||||||||
2019 | 490 | ||||||||
Thereafter | 1,854 | ||||||||
Total minimum obligation | $ | 4,585 | |||||||
Financial instruments with credit risk | (Dollars in thousands) | ||||||||
Contractual Amount | |||||||||
2014 | 2013 | ||||||||
Financial instruments whose contract amount represent credit risk: | |||||||||
Commitments to extend credit | $ | 168,733 | 146,243 | ||||||
Standby letters of credit and financial guarantees written | $ | 3,911 | 4,361 | ||||||
11_Employee_and_Director_Benef1
11. Employee and Director Benefit Programs (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Compensation and Retirement Disclosure [Abstract] | |||||||
Change in accumulated benefit obligation | (Dollars in thousands) | ||||||
2014 | 2013 | ||||||
Benefit obligation at beginning of period | $ | 3,581 | 3,382 | ||||
Service cost | 348 | 336 | |||||
Interest cost | 67 | 65 | |||||
Benefits paid | (184 | ) | (142 | ) | |||
Reversal of excess accrual | - | (60 | ) | ||||
Benefit obligation at end of period | $ | 3,812 | 3,581 | ||||
Amounts recognized in the Consolidated Balance Sheet | (Dollars in thousands) | ||||||
2014 | 2013 | ||||||
Benefit obligation | $ | 3,812 | 3,581 | ||||
Fair value of plan assets | - | - | |||||
(Dollars in thousands) | |||||||
2014 | 2013 | ||||||
Funded status | $ | (3,812 | ) | (3,581 | ) | ||
Unrecognized prior service cost/benefit | - | - | |||||
Unrecognized net actuarial loss | - | - | |||||
Net amount recognized | $ | (3,812 | ) | (3,581 | ) | ||
Unfunded accrued liability | $ | (3,812 | ) | (3,581 | ) | ||
Intangible assets | - | - | |||||
Net amount recognized | $ | (3,812 | ) | (3,581 | ) | ||
Schedule of Net Benefit Costs | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Service cost | $ | 348 | 336 | 430 | |||
Interest cost | 67 | 65 | 89 | ||||
Net periodic cost | $ | 415 | 401 | 519 | |||
Weighted average discount rate assumption used to | |||||||
determine benefit obligation | 5.47% | 5.46% | 5.43% | ||||
Schedule of Expected Benefit Payments | (Dollars in thousands) | ||||||
Year ending December 31, | |||||||
2015 | $ | 232 | |||||
2016 | $ | 244 | |||||
2017 | $ | 262 | |||||
2018 | $ | 275 | |||||
2019 | $ | 310 | |||||
Thereafter | $ | 8,345 | |||||
12_Regulatory_Matters_Tables
12. Regulatory Matters (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Banking and Thrift [Abstract] | |||||||||||||
Bank's actual capital amounts and ratios | (Dollars in thousands) | ||||||||||||
Actual | For Capital | To Be Well | |||||||||||
Adequacy Purposes | Capitalized Under | ||||||||||||
Prompt Corrective | |||||||||||||
Action Provisions | |||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||
As of December 31, 2014: | |||||||||||||
Total Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 122,732 | 16.62% | 59,085 | 8.00% | N/A | N/A | ||||||
Bank | $ | 118,356 | 16.06% | 58,974 | 8.00% | 73,717 | 10.00% | ||||||
Tier 1 Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 113,211 | 15.33% | 29,542 | 4.00% | N/A | N/A | ||||||
Bank | $ | 108,934 | 14.78% | 29,487 | 4.00% | 44,230 | 6.00% | ||||||
Tier 1 Capital (to Average Assets) | |||||||||||||
Consolidated | $ | 113,211 | 10.74% | 42,181 | 4.00% | N/A | N/A | ||||||
Bank | $ | 108,934 | 10.33% | 42,164 | 4.00% | 52,706 | 5.00% | ||||||
As of December 31, 2013: | |||||||||||||
Total Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 114,185 | 16.14% | 56,582 | 8.00% | N/A | N/A | ||||||
Bank | $ | 110,935 | 15.73% | 56,412 | 8.00% | 70,515 | 10.00% | ||||||
Tier 1 Capital (to Risk-Weighted Assets) | |||||||||||||
Consolidated | $ | 104,890 | 14.83% | 28,291 | 4.00% | N/A | N/A | ||||||
Bank | $ | 101,733 | 14.43% | 28,206 | 4.00% | 42,309 | 6.00% | ||||||
Tier 1 Capital (to Average Assets) | |||||||||||||
Consolidated | $ | 104,890 | 10.08% | 41,622 | 4.00% | N/A | N/A | ||||||
Bank | $ | 101,733 | 9.79% | 41,584 | 4.00% | 51,981 | 5.00% | ||||||
14_Other_Operating_Income_and_1
14. Other Operating Income and Expense (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Other Income and Expenses [Abstract] | |||||||
Other operating income and expense | Miscellaneous non-interest income for the years ended December 31, 2014, 2013 and 2012 included the following items that exceeded one percent of total revenues at some point during the following three-year period: | ||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Visa debit card income | $ | 3,170 | 2,990 | 2,092 | |||
Net appraisal management fee income | $ | 525 | 718 | 737 | |||
Insurance and brokerage commissions | $ | 701 | 661 | 517 | |||
Other non-interest expense for the years ended December 31, 2014, 2013 and 2012 included the following items that exceeded one percent of total revenues at some point during the following three-year period: | |||||||
(Dollars in thousands) | |||||||
2014 | 2013 | 2012 | |||||
Advertising | $ | 804 | 685 | 695 | |||
FDIC insurance | $ | 739 | 864 | 894 | |||
Visa debit card expense | $ | 905 | 823 | 729 | |||
Telephone | $ | 574 | 570 | 554 | |||
Foreclosure/OREO expense | $ | 317 | 356 | 677 | |||
Internet banking expense | $ | 644 | 568 | 593 | |||
FHLB advance prepayment penalty | $ | 869 | 530 | - | |||
Consulting | $ | 609 | 468 | 499 | |||
NC Tax Credit Amortization | $ | 870 | 160 | - | |||
15_Fair_Value_of_Financial_Ins1
15. Fair Value of Financial Instruments (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Fair Value Disclosures [Abstract] | |||||||||||
Carrying amount and estimated fair value of the Company's financial instruments | The carrying amount and estimated fair value of the Company’s financial instruments at December 31, 2014 and 2013 are as follows: | ||||||||||
(Dollars in thousands) | |||||||||||
Fair Value Measurements at December 31, 2014 | |||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||
Amount | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 69,098 | 69,098 | - | - | 69,098 | |||||
Investment securities available for sale | $ | 281,099 | 1,378 | 278,971 | 750 | 281,099 | |||||
Other investments | $ | 4,031 | - | - | 4,031 | 4,031 | |||||
Mortgage loans held for sale | $ | 1,375 | - | - | 1,375 | 1,375 | |||||
Loans, net | $ | 640,809 | - | - | 644,708 | 644,708 | |||||
Cash surrender value of life insurance | $ | 14,125 | - | 14,125 | - | 14,125 | |||||
Liabilities: | |||||||||||
Deposits | $ | 814,700 | - | - | 813,288 | 813,288 | |||||
Securities sold under agreements | |||||||||||
to repurchase | $ | 48,430 | - | 48,430 | - | 48,430 | |||||
FHLB borrowings | $ | 50,000 | - | 49,598 | - | 49,598 | |||||
Junior subordinated debentures | $ | 20,619 | - | 20,619 | - | 20,619 | |||||
(Dollars in thousands) | |||||||||||
Fair Value Measurements at December 31, 2013 | |||||||||||
Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||
Amount | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 76,773 | 76,773 | - | - | 76,773 | |||||
Investment securities available for sale | $ | 297,890 | 1,689 | 294,951 | 1,250 | 297,890 | |||||
Other investments | $ | 4,990 | - | - | 4,990 | 4,990 | |||||
Mortgage loans held for sale | $ | 497 | - | - | 497 | 497 | |||||
Loans, net | $ | 607,459 | - | - | 612,132 | 612,132 | |||||
Cash surrender value of life insurance | $ | 13,706 | - | 13,706 | - | 13,706 | |||||
Liabilities: | |||||||||||
Deposits | $ | 799,361 | - | - | 798,460 | 798,460 | |||||
Securities sold under agreements | |||||||||||
to repurchase | $ | 45,396 | - | 45,396 | - | 45,396 | |||||
FHLB borrowings | $ | 65,000 | - | 65,891 | - | 65,891 | |||||
Junior subordinated debentures | $ | 20,619 | - | 20,619 | - | 20,619 | |||||
16_Peoples_Bancorp_of_North_Ca1
16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | ||||||||
Balance Sheets | Balance Sheets | |||||||
December 31, 2014 and 2013 | ||||||||
(Dollars in thousands) | ||||||||
Assets | 2014 | 2013 | ||||||
Cash | $ | 745 | 12,879 | |||||
Interest-bearing time deposit | 1,000 | - | ||||||
Investment in subsidiaries | 116,076 | 102,113 | ||||||
Investment securities available for sale | 1,235 | 1,721 | ||||||
Other assets | 245 | 273 | ||||||
Total assets | $ | 119,301 | 116,986 | |||||
Liabilities and Shareholders' Equity | ||||||||
Junior subordinated debentures | $ | 20,619 | 20,619 | |||||
Liabilities | 17 | 12,648 | ||||||
Shareholders' equity | 98,665 | 83,719 | ||||||
Total liabilities and shareholders' equity | $ | 119,301 | 116,986 | |||||
Statements of Earnings | Statements of Earnings | |||||||
For the Years Ended December 31, 2014, 2013 and 2012 | ||||||||
(Dollars in thousands) | ||||||||
Revenues: | 2014 | 2013 | 2012 | |||||
Interest and dividend income | $ | 2,718 | 13,576 | 113 | ||||
Total revenues | 2,718 | 13,576 | 113 | |||||
Expenses: | ||||||||
Interest | 389 | 398 | 438 | |||||
Other operating expenses | 527 | 159 | 476 | |||||
Total expenses | 916 | 557 | 914 | |||||
Income/(Loss) before income tax benefit and equity in | ||||||||
undistributed earnings of subsidiaries | 1,802 | 13,019 | (801 | ) | ||||
Income tax benefit | 239 | 84 | 166 | |||||
Income/(Loss) before equity in undistributed | ||||||||
earnings of subsidiaries | 2,041 | 13,103 | (635 | ) | ||||
Equity in undistributed earnings (loss) of subsidiaries | 7,347 | (6,412 | ) | 6,428 | ||||
Net earnings | $ | 9,388 | 6,691 | 5,793 | ||||
Statements of Cash Flows | Statements of Cash Flows | |||||||
For the Years Ended December 31, 2014, 2013 and 2012 | ||||||||
(Dollars in thousands) | ||||||||
2014 | 2013 | 2012 | ||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 9,388 | 6,691 | 5,793 | ||||
Adjustments to reconcile net earnings to net | ||||||||
cash used by operating activities: | ||||||||
Equity in undistributed earnings of subsidiaries | (7,347 | ) | 6,412 | (6,428 | ) | |||
Impairment of investment securities | - | - | - | |||||
Change in: | ||||||||
Other assets | 28 | (73 | ) | - | ||||
Accrued income | (5 | ) | - | 11 | ||||
Accrued expense | 1 | 27 | 41 | |||||
Other liabilities | (108 | ) | 108 | - | ||||
Net cash provided (used) by operating activities | 1,957 | 13,165 | (583 | ) | ||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities of investment securities available for sale | 500 | 1 | - | |||||
Net change in interest-bearing time deposit | (1,000 | ) | 800 | 14,200 | ||||
Net cash provided by investing activities | (500 | ) | 801 | 14,200 | ||||
Cash flows from financing activities: | ||||||||
Cash dividends paid on Series A preferred stock | - | (734 | ) | (1,023 | ) | |||
Cash dividends paid on common stock | (1,022 | ) | (677 | ) | (1,003 | ) | ||
Preferred stock and warrant repurchase | (12,524 | ) | - | (12,122 | ) | |||
Stock repurchase | (82 | ) | - | - | ||||
Proceeds from exercise of stock options | 37 | - | 539 | |||||
Net cash used by financing activities | (13,591 | ) | (1,411 | ) | (13,609 | ) | ||
Net change in cash | (12,134 | ) | 12,555 | 8 | ||||
Cash at beginning of year | 12,879 | 324 | 316 | |||||
Cash at end of year | $ | 745 | 12,879 | 324 | ||||
Noncash investing and financing activities: | ||||||||
Change in unrealized gain on investment securities | ||||||||
available for sale, net | $ | 8 | 77 | (46 | ) | |||
Accrued redemption of Series A Preferred Stock | - | 12,632 | - | |||||
1_Summary_of_Significant_Accou3
1. Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 |
Number of Options | |
Number of Options Outstanding, Beginning | 3,630 |
Number of Options Granted | 0 |
Number of Options Expired | 0 |
Number of Options Forfeited | 0 |
Number of Options Exercised | -3,630 |
Number of Options Outstanding, Ending | 0 |
Exercisable, December 31, 2014 | 0 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price Outstanding, Beginning | $10.31 |
Weighted Average Exercise Price Granted | $0 |
Weighted Average Exercise Price Expired | $0 |
Weighted Average Exercise Price Forfeited | $0 |
Weighted Average Exercise Price Exercised | $10.31 |
Weighted Average Exercise Price Outstanding, Ending | $0 |
Weighted Average Exercise Price Exercisable, December 31, 2014 | $0 |
Weighted Average Remaining Contractual Life (in years) | |
Weighted Average Remaining Contractual Term (in years) Outstanding | 0 years |
Weighted Average Remaining Contractual Term (in years) Exercisable, December 31, 2014 | 0 years |
Aggregate Intrinsic Value | |
Options Outstanding, Intrinsic Value, December 31, 2014 | $0 |
Options Exercisable, Intrinsic Value, December 31, 2014 | $0 |
1_Summary_of_Significant_Accou4
1. Summary of Significant Accounting Policies (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Net Earnings Available to Common Shareholders | |||
Basic earnings | $9,388 | $6,035 | $4,783 |
Effect of dilutive securities: Stock options | 0 | 0 | 0 |
Diluted earnings | $9,388 | $6,035 | $4,783 |
Common Shares | |||
Basic earnings per common share (in shares) | 5,615,666 | 5,613,495 | 5,559,401 |
Effect of dilutive securities: Stock options (in shares) | 26,326 | 9,725 | 3,206 |
Diluted earnings per common share (in shares) | 5,641,992 | 5,623,220 | 5,562,607 |
Per Share Amount | |||
Basic earnings per common share (in dollars per share) | $1.67 | $1.08 | $0.86 |
Diluted earnings per common share (in dollars per share) | $1.66 | $1.07 | $0.86 |
1_Summary_of_Significant_Accou5
1. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Summary Of Significant Accounting Policies Details Narrative | |||
Unpaid principal balances of mortgage loans serviced for others | $2,100 | $2,400 | $3,100 |
Compensation expense for restricted stock units | 389 | 173 | 42 |
Unrecognized compensation expense | $770 |
2_Investment_Securities_Detail
2. Investment Securities (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investment securities available for sale | ||
Amortized Cost | $272,167 | $299,809 |
Estimated Fair Value | 281,099 | 297,890 |
Mortgage-backed securities | ||
Investment securities available for sale | ||
Amortized Cost | 88,496 | 123,706 |
Gross Unrealized Gains | 1,766 | 1,040 |
Gross Unrealized Losses | 52 | 769 |
Estimated Fair Value | 90,210 | 123,977 |
U.S. Government sponsored enterprises | ||
Investment securities available for sale | ||
Amortized Cost | 33,766 | 22,115 |
Gross Unrealized Gains | 418 | 97 |
Gross Unrealized Losses | 136 | 69 |
Estimated Fair Value | 34,048 | 22,143 |
State and political subdivisions | ||
Investment securities available for sale | ||
Amortized Cost | 145,938 | 148,468 |
Gross Unrealized Gains | 6,534 | 1,987 |
Gross Unrealized Losses | 226 | 5,087 |
Estimated Fair Value | 152,246 | 145,368 |
Corporate bonds | ||
Investment securities available for sale | ||
Amortized Cost | 2,469 | 3,522 |
Gross Unrealized Gains | 16 | 11 |
Gross Unrealized Losses | 18 | 70 |
Estimated Fair Value | 2,467 | 3,463 |
Trust preferred securities | ||
Investment securities available for sale | ||
Amortized Cost | 750 | 1,250 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 750 | 1,250 |
Equity securities | ||
Investment securities available for sale | ||
Amortized Cost | 748 | 748 |
Gross Unrealized Gains | 630 | 941 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 1,378 | 1,689 |
Total | ||
Investment securities available for sale | ||
Amortized Cost | 272,167 | 299,809 |
Gross Unrealized Gains | 9,364 | 4,076 |
Gross Unrealized Losses | 432 | 5,995 |
Estimated Fair Value | $281,099 | $297,890 |
2_Investment_securities_Contin
2. Investment securities, Continuous Unrealized Loss Position (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investment securities with continuous unrealized loss position | ||
Less than 12 Months, Fair Value | $3,999 | $129,742 |
Less than 12 Months, Unrealized Losses | 6 | 5,639 |
12 Months or More, Fair Value | 28,336 | 12,463 |
12 Months or More, Unrealized Losses | 426 | 356 |
Total, Fair Value | 32,335 | 142,205 |
Total, Unrealized Losses | 432 | 5,995 |
Mortgage-backed securities | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 Months, Fair Value | 436 | 40,857 |
Less than 12 Months, Unrealized Losses | 1 | 691 |
12 Months or More, Fair Value | 2,963 | 10,128 |
12 Months or More, Unrealized Losses | 51 | 78 |
Total, Fair Value | 3,399 | 50,985 |
Total, Unrealized Losses | 52 | 769 |
U.S. Government sponsored enterprises | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 Months, Fair Value | 2,996 | 9,714 |
Less than 12 Months, Unrealized Losses | 4 | 69 |
12 Months or More, Fair Value | 9,850 | 0 |
12 Months or More, Unrealized Losses | 132 | 0 |
Total, Fair Value | 12,846 | 9,714 |
Total, Unrealized Losses | 136 | 69 |
State and political subdivisions | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 Months, Fair Value | 567 | 77,187 |
Less than 12 Months, Unrealized Losses | 1 | 4,863 |
12 Months or More, Fair Value | 14,998 | 1,824 |
12 Months or More, Unrealized Losses | 225 | 224 |
Total, Fair Value | 15,565 | 79,011 |
Total, Unrealized Losses | 226 | 5,087 |
Corporate bonds | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 Months, Fair Value | 0 | 1,984 |
Less than 12 Months, Unrealized Losses | 0 | 16 |
12 Months or More, Fair Value | 525 | 511 |
12 Months or More, Unrealized Losses | 18 | 54 |
Total, Fair Value | 525 | 2,495 |
Total, Unrealized Losses | $18 | $70 |
2_Investment_securities_Contra
2. Investment securities, Contractual Maturity (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Amortized Cost | ||
Due within one year | $4,308 | |
Due from one to five years | 40,564 | |
Due from five to ten years | 117,452 | |
Due after ten years | 20,599 | |
Mortgage-backed securities | 88,496 | |
Equity securities | 748 | |
Total | 272,167 | 299,809 |
Estimated Fair Value | ||
Due within one year | 4,323 | |
Due from one to five years | 42,548 | |
Due from five to ten years | 121,399 | |
Due after ten years | 21,241 | |
Mortgage-backed securities | 90,210 | |
Equity securities | 1,378 | |
Total | $281,099 |
2_Investment_securities_Fair_V
2. Investment securities, Fair Value Measurements (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Estimated Fair Value | $281,099 | $297,890 |
Mortgage-backed securities | ||
Estimated Fair Value | 90,210 | 123,977 |
Level 1 valuation | 0 | 0 |
Level 2 valuation | 90,210 | 123,977 |
Level 3 valuation | 0 | 0 |
U.S. Government sponsored enterprises | ||
Estimated Fair Value | 34,048 | 22,143 |
Level 1 valuation | 0 | 0 |
Level 2 valuation | 34,048 | 22,143 |
Level 3 valuation | 0 | 0 |
State and political subdivisions | ||
Estimated Fair Value | 152,246 | 145,368 |
Level 1 valuation | 0 | 0 |
Level 2 valuation | 152,246 | 145,368 |
Level 3 valuation | 0 | 0 |
Corporate bonds | ||
Estimated Fair Value | 2,467 | 3,463 |
Level 1 valuation | 0 | 0 |
Level 2 valuation | 2,467 | 3,463 |
Level 3 valuation | 0 | 0 |
Trust preferred securities | ||
Estimated Fair Value | 750 | 1,250 |
Level 1 valuation | 0 | 0 |
Level 2 valuation | 0 | 0 |
Level 3 valuation | 750 | 1,250 |
Equity securities | ||
Estimated Fair Value | 1,378 | 1,689 |
Level 1 valuation | 1,378 | 1,689 |
Level 2 valuation | 0 | 0 |
Level 3 valuation | $0 | $0 |
2_Investment_securities_Fair_V1
2. Investment securities, Fair Value Level 3 Valuation (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Investment Securities Available for Sale Level 3 Valuation | |
Balance, beginning of period | $1,250 |
Change in book value | 0 |
Change in gain/(loss) realized and unrealized | 0 |
Purchases/(sales and calls) | -500 |
Transfers in and/or (out) of Level 3 | 0 |
Balance, end of period | 750 |
Change in unrealized gain/(loss) for assets still held in Level 3 | $0 |
2_Investment_Securities_Detail1
2. Investment Securities (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Investment Securities Details Narrative | |||
Unrealized losses in the investment securites portfolio relating to debt securities | $432 | ||
Proceeds from sales of investment securities available for sale | 20,202 | 17,463 | 47,076 |
Gains on sales of available for sale securities | 291 | 738 | 1,300 |
Loss on sales of available for sale securities | 25 | 124 | 103 |
Securities pledged to secure public deposits | $89,900 | $86,000 |
3_Loans_Details
3. Loans (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Major classifications | ||||
Total Loans | $651,891 | $620,960 | $619,974 | |
Less allowance for loan losses | 11,082 | 13,501 | 14,423 | 16,604 |
Net loans | 640,809 | 607,459 | ||
Construction and land development | ||||
Major classifications | ||||
Total Loans | 57,617 | 63,742 | 73,176 | |
Less allowance for loan losses | 2,785 | 3,218 | 4,399 | 7,182 |
Single-family residential | ||||
Major classifications | ||||
Total Loans | 206,417 | 195,975 | 195,003 | |
Less allowance for loan losses | 2,566 | 3,123 | 3,231 | 3,253 |
Single-family residential - Banco de la Gente stated income | ||||
Major classifications | ||||
Total Loans | 47,015 | 49,463 | 52,019 | |
Less allowance for loan losses | 1,610 | 1,863 | 1,998 | 2,104 |
Commercial | ||||
Major classifications | ||||
Total Loans | 228,558 | 209,287 | 200,633 | |
Less allowance for loan losses | 1,902 | 2,219 | 2,049 | 1,731 |
Multifamily and Farmland | ||||
Major classifications | ||||
Total Loans | 12,400 | 11,801 | 8,951 | |
Less allowance for loan losses | 7 | 37 | 28 | 13 |
Total real estate loans | ||||
Major classifications | ||||
Total Loans | 552,007 | 530,268 | ||
Commercial loans (not secured by real estate) | ||||
Major classifications | ||||
Total Loans | 76,262 | 68,047 | 64,295 | |
Less allowance for loan losses | 1,098 | 1,069 | 1,088 | 1,029 |
Farm loans (not secured by real estate) | ||||
Major classifications | ||||
Total Loans | 7 | 19 | 11 | |
Less allowance for loan losses | 0 | 0 | 0 | 0 |
Consumer loans (not secured by real estate) | ||||
Major classifications | ||||
Total Loans | 10,060 | 9,593 | ||
All other loans (not secured by real estate) | ||||
Major classifications | ||||
Total Loans | $13,555 | $13,033 |
3_Loans_Past_Due_Details
3. Loans, Past Due (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Past due loans | |||
Loans 30-89 Days Past Due | $18,995 | $20,192 | |
Loans 90 or More Days Past Due | 4,833 | 9,451 | |
Total Past Due Loans | 23,828 | 29,643 | |
Total Current Loans | 628,063 | 591,317 | |
Total loans | 651,891 | 620,960 | 619,974 |
Accruing Loans 90 or More Days Past Due | 0 | 882 | |
Construction and land development | |||
Past due loans | |||
Loans 30-89 Days Past Due | 294 | 3,416 | |
Loans 90 or More Days Past Due | 3,540 | 5,426 | |
Total Past Due Loans | 3,834 | 8,842 | |
Total Current Loans | 53,783 | 54,900 | |
Total loans | 57,617 | 63,742 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Single-family residential | |||
Past due loans | |||
Loans 30-89 Days Past Due | 5,988 | 4,518 | |
Loans 90 or More Days Past Due | 268 | 1,555 | |
Total Past Due Loans | 6,256 | 6,073 | |
Total Current Loans | 200,161 | 189,902 | |
Total loans | 206,417 | 195,975 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Single-family residential - Banco de la Gente stated income | |||
Past due loans | |||
Loans 30-89 Days Past Due | 8,998 | 9,833 | |
Loans 90 or More Days Past Due | 610 | 1,952 | |
Total Past Due Loans | 9,608 | 11,785 | |
Total Current Loans | 37,407 | 37,678 | |
Total loans | 47,015 | 49,463 | |
Accruing Loans 90 or More Days Past Due | 0 | 881 | |
Commercial | |||
Past due loans | |||
Loans 30-89 Days Past Due | 3,205 | 1,643 | |
Loans 90 or More Days Past Due | 366 | 486 | |
Total Past Due Loans | 3,571 | 2,129 | |
Total Current Loans | 224,987 | 207,158 | |
Total loans | 228,558 | 209,287 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Multifamily and Farmland | |||
Past due loans | |||
Loans 30-89 Days Past Due | 85 | 177 | |
Loans 90 or More Days Past Due | 0 | 0 | |
Total Past Due Loans | 85 | 177 | |
Total Current Loans | 12,315 | 11,624 | |
Total loans | 12,400 | 11,801 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Total real estate loans | |||
Past due loans | |||
Loans 30-89 Days Past Due | 18,570 | 19,587 | |
Loans 90 or More Days Past Due | 4,784 | 9,419 | |
Total Past Due Loans | 23,354 | 29,006 | |
Total Current Loans | 528,653 | 501,262 | |
Total loans | 552,007 | 530,268 | |
Accruing Loans 90 or More Days Past Due | 0 | 881 | |
Commercial loans (not secured by real estate) | |||
Past due loans | |||
Loans 30-89 Days Past Due | 241 | 424 | |
Loans 90 or More Days Past Due | 49 | 29 | |
Total Past Due Loans | 290 | 453 | |
Total Current Loans | 75,972 | 67,594 | |
Total loans | 76,262 | 68,047 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Farm loans (not secured by real estate) | |||
Past due loans | |||
Loans 30-89 Days Past Due | 0 | 0 | |
Loans 90 or More Days Past Due | 0 | 0 | |
Total Past Due Loans | 0 | 0 | |
Total Current Loans | 7 | 19 | |
Total loans | 7 | 19 | |
Accruing Loans 90 or More Days Past Due | 0 | 0 | |
Consumer loans (not secured by real estate) | |||
Past due loans | |||
Loans 30-89 Days Past Due | 184 | 181 | |
Loans 90 or More Days Past Due | 0 | 3 | |
Total Past Due Loans | 184 | 184 | |
Total Current Loans | 9,876 | 9,409 | |
Total loans | 10,060 | 9,593 | |
Accruing Loans 90 or More Days Past Due | 0 | 1 | |
All other loans (not secured by real estate) | |||
Past due loans | |||
Loans 30-89 Days Past Due | 0 | 0 | |
Loans 90 or More Days Past Due | 0 | 0 | |
Total Past Due Loans | 0 | 0 | |
Total Current Loans | 13,555 | 13,033 | |
Total loans | 13,555 | 13,033 | |
Accruing Loans 90 or More Days Past Due | $0 | $0 |
3_Loans_Nonaccrual_Details
3. Loans, Nonaccrual (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Non-accrual loans | ||
Non-accrual loans | $10,728 | $13,836 |
Construction and land development | ||
Non-accrual loans | ||
Non-accrual loans | 3,854 | 6,546 |
Single-family residential | ||
Non-accrual loans | ||
Non-accrual loans | 2,370 | 2,980 |
Single-family residential - Banco de la Gente stated income | ||
Non-accrual loans | ||
Non-accrual loans | 1,545 | 1,990 |
Commercial | ||
Non-accrual loans | ||
Non-accrual loans | 2,598 | 2,043 |
Multifamily and Farmland | ||
Non-accrual loans | ||
Non-accrual loans | 110 | 0 |
Total real estate loans | ||
Non-accrual loans | ||
Non-accrual loans | 10,477 | 13,559 |
Commercial loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | 176 | 250 |
Consumer loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | $75 | $27 |
3_Loans_Impaired_Details
3. Loans, Impaired (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Impaired loans | ||
Unpaid Contractual Principal Balance | $38,840 | $46,305 |
Recorded Investment With No Allowance | 6,057 | 11,287 |
Recorded Investment With Allowance | 30,234 | 30,168 |
Recorded Investment in Impaired Loans | 36,291 | 41,455 |
Related Allowance | 1,658 | 1,675 |
Average Outstanding Impaired Loans | 38,145 | 42,818 |
Construction and land development | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 5,481 | 9,861 |
Recorded Investment With No Allowance | 3,639 | 6,293 |
Recorded Investment With Allowance | 555 | 868 |
Recorded Investment in Impaired Loans | 4,194 | 7,161 |
Related Allowance | 31 | 53 |
Average Outstanding Impaired Loans | 5,248 | 8,289 |
Single-family residential | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 6,717 | 7,853 |
Recorded Investment With No Allowance | 933 | 1,428 |
Recorded Investment With Allowance | 5,540 | 5,633 |
Recorded Investment in Impaired Loans | 6,473 | 7,061 |
Related Allowance | 154 | 123 |
Average Outstanding Impaired Loans | 7,430 | 7,859 |
Single-family residential - Banco de la Gente stated income | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 21,243 | 22,034 |
Recorded Investment With No Allowance | 0 | 0 |
Recorded Investment With Allowance | 20,649 | 21,242 |
Recorded Investment in Impaired Loans | 20,649 | 21,242 |
Related Allowance | 1,191 | 1,300 |
Average Outstanding Impaired Loans | 19,964 | 21,242 |
Commercial | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 4,752 | 5,079 |
Recorded Investment With No Allowance | 1,485 | 3,045 |
Recorded Investment With Allowance | 2,866 | 1,489 |
Recorded Investment in Impaired Loans | 4,351 | 4,534 |
Related Allowance | 272 | 182 |
Average Outstanding Impaired Loans | 4,399 | 4,171 |
Multifamily and Farmland | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 111 | 177 |
Recorded Investment With No Allowance | 0 | 0 |
Recorded Investment With Allowance | 110 | 177 |
Recorded Investment in Impaired Loans | 110 | 177 |
Related Allowance | 1 | 1 |
Average Outstanding Impaired Loans | 154 | 184 |
Total real estate loans | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 38,304 | 45,004 |
Recorded Investment With No Allowance | 6,057 | 10,766 |
Recorded Investment With Allowance | 29,720 | 29,409 |
Recorded Investment in Impaired Loans | 35,777 | 40,175 |
Related Allowance | 1,649 | 1,659 |
Average Outstanding Impaired Loans | 37,195 | 41,745 |
Commercial loans (not secured by real estate) | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 218 | 999 |
Recorded Investment With No Allowance | 0 | 257 |
Recorded Investment With Allowance | 201 | 724 |
Recorded Investment in Impaired Loans | 201 | 981 |
Related Allowance | 4 | 15 |
Average Outstanding Impaired Loans | 641 | 826 |
Consumer loans (not secured by real estate) | ||
Impaired loans | ||
Unpaid Contractual Principal Balance | 318 | 302 |
Recorded Investment With No Allowance | 0 | 264 |
Recorded Investment With Allowance | 313 | 35 |
Recorded Investment in Impaired Loans | 313 | 299 |
Related Allowance | 5 | 1 |
Average Outstanding Impaired Loans | $309 | $247 |
3_Loans_Impaired_Fair_Value_Me
3. Loans Impaired, Fair Value Measurements (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Impaired loans | $34,633 | $39,780 |
Other real estate | 2,016 | 1,679 |
Level 1 | ||
Impaired loans | 0 | 0 |
Other real estate | 0 | 0 |
Level 2 | ||
Impaired loans | 0 | 0 |
Other real estate | 0 | 0 |
Level 3 | ||
Impaired loans | 34,633 | 39,780 |
Other real estate | 2,016 | 1,679 |
Total gains (losses) for the year ended | ||
Impaired loans | -1,444 | -3,207 |
Other real estate | ($622) | ($581) |
3_Loans_Allowance_for_Loan_Los
3. Loans, Allowance for Loan Losses (Details) (USD $) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for loan losses | |||
Beginning balance | $13,501 | $14,423 | $16,604 |
Charge-offs | -2,637 | -4,372 | -8,331 |
Recoveries | 917 | 866 | 1,226 |
Provision | -699 | 2,584 | 4,924 |
Ending balance | 11,082 | 13,501 | 14,423 |
Ending balance: individually evaluated for impairments | 1,497 | 1,478 | 1,362 |
Ending balance: collectively evaluated for impairments | 9,585 | 12,023 | 13,061 |
Ending balance | 11,082 | 13,501 | 14,423 |
Loans | |||
Ending balance | 651,891 | 620,960 | 619,974 |
Ending balance: individually evaluated for impairment | 28,166 | 33,666 | 40,785 |
Ending balance: collectively evaluated for impairment | 623,725 | 587,294 | 579,189 |
Construction and land development | |||
Allowance for loan losses | |||
Beginning balance | 3,218 | 4,399 | 7,182 |
Charge-offs | -884 | -777 | -4,728 |
Recoveries | 428 | 377 | 528 |
Provision | 23 | -781 | 1,417 |
Ending balance | 2,785 | 3,218 | 4,399 |
Ending balance: individually evaluated for impairments | 0 | 0 | 24 |
Ending balance: collectively evaluated for impairments | 2,785 | 3,218 | 4,375 |
Ending balance | 2,785 | 3,218 | 4,399 |
Loans | |||
Ending balance | 57,617 | 63,742 | 73,176 |
Ending balance: individually evaluated for impairment | 3,639 | 6,293 | 11,961 |
Ending balance: collectively evaluated for impairment | 53,978 | 57,449 | 61,215 |
Single-family residential | |||
Allowance for loan losses | |||
Beginning balance | 3,123 | 3,231 | 3,253 |
Charge-offs | -309 | -1,724 | -886 |
Recoveries | 72 | 111 | 72 |
Provision | -320 | 1,505 | 792 |
Ending balance | 2,566 | 3,123 | 3,231 |
Ending balance: individually evaluated for impairments | 82 | 39 | 84 |
Ending balance: collectively evaluated for impairments | 2,484 | 3,084 | 3,147 |
Ending balance | 2,566 | 3,123 | 3,231 |
Loans | |||
Ending balance | 206,417 | 195,975 | 195,003 |
Ending balance: individually evaluated for impairment | 2,298 | 3,127 | 3,885 |
Ending balance: collectively evaluated for impairment | 204,119 | 192,848 | 191,118 |
Single-family residential - Banco de la Gente stated income | |||
Allowance for loan losses | |||
Beginning balance | 1,863 | 1,998 | 2,104 |
Charge-offs | -190 | -272 | -668 |
Recoveries | 16 | 141 | 0 |
Provision | -79 | -4 | 562 |
Ending balance | 1,610 | 1,863 | 1,998 |
Ending balance: individually evaluated for impairments | 1,155 | 1,268 | 1,254 |
Ending balance: collectively evaluated for impairments | 455 | 595 | 744 |
Ending balance | 1,610 | 1,863 | 1,998 |
Loans | |||
Ending balance | 47,015 | 49,463 | 52,019 |
Ending balance: individually evaluated for impairment | 18,884 | 19,958 | 20,024 |
Ending balance: collectively evaluated for impairment | 28,131 | 29,505 | 31,995 |
Commercial | |||
Allowance for loan losses | |||
Beginning balance | 2,219 | 2,049 | 1,731 |
Charge-offs | -290 | -445 | -937 |
Recoveries | 171 | 50 | 374 |
Provision | -198 | 565 | 881 |
Ending balance | 1,902 | 2,219 | 2,049 |
Ending balance: individually evaluated for impairments | 260 | 171 | 0 |
Ending balance: collectively evaluated for impairments | 1,642 | 2,048 | 2,049 |
Ending balance | 1,902 | 2,219 | 2,049 |
Loans | |||
Ending balance | 228,558 | 209,287 | 200,633 |
Ending balance: individually evaluated for impairment | 3,345 | 3,767 | 4,569 |
Ending balance: collectively evaluated for impairment | 225,213 | 205,520 | 196,064 |
Multifamily and Farmland | |||
Allowance for loan losses | |||
Beginning balance | 37 | 28 | 13 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | -30 | 9 | 15 |
Ending balance | 7 | 37 | 28 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 7 | 37 | 28 |
Ending balance | 7 | 37 | 28 |
Loans | |||
Ending balance | 12,400 | 11,801 | 8,951 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | 12,400 | 11,801 | 8,951 |
Commercial loans (not secured by real estate) | |||
Allowance for loan losses | |||
Beginning balance | 1,069 | 1,088 | 1,029 |
Charge-offs | -430 | -502 | -555 |
Recoveries | 54 | 44 | 104 |
Provision | 405 | 439 | 510 |
Ending balance | 1,098 | 1,069 | 1,088 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 1,098 | 1,069 | 1,088 |
Ending balance | 1,098 | 1,069 | 1,088 |
Loans | |||
Ending balance | 76,262 | 68,047 | 64,295 |
Ending balance: individually evaluated for impairment | 0 | 256 | 346 |
Ending balance: collectively evaluated for impairment | 76,262 | 67,791 | 63,949 |
Farm loans (not secured by real estate) | |||
Allowance for loan losses | |||
Beginning balance | 0 | 0 | 0 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | 0 | 0 | 0 |
Ending balance | 0 | 0 | 0 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 0 | 0 | 0 |
Ending balance | 0 | 0 | 0 |
Loans | |||
Ending balance | 7 | 19 | 11 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | 7 | 19 | 11 |
Consumer And All Other Loans | |||
Allowance for loan losses | |||
Beginning balance | 245 | 245 | 255 |
Charge-offs | -534 | -652 | -557 |
Recoveries | 176 | 143 | 148 |
Provision | 346 | 509 | 399 |
Ending balance | 233 | 245 | 245 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 233 | 245 | 245 |
Ending balance | 233 | 245 | 245 |
Loans | |||
Ending balance | 23,615 | 22,626 | 25,886 |
Ending balance: individually evaluated for impairment | 0 | 265 | 0 |
Ending balance: collectively evaluated for impairment | 23,615 | 22,361 | 25,886 |
Unallocated | |||
Allowance for loan losses | |||
Beginning balance | 1,727 | 1,385 | 1,037 |
Charge-offs | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 |
Provision | -846 | 342 | 348 |
Ending balance | 881 | 1,727 | 1,385 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 881 | 1,727 | 1,385 |
Ending balance | 881 | 1,727 | 1,385 |
Loans | |||
Ending balance | 0 | 0 | 0 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | $0 | $0 | $0 |
3_Loans_Credit_Risk_Details
3. Loans, Credit Risk (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Credit risk profile | |||
Total Loans | $651,891 | $620,960 | $619,974 |
Excellent Quality | |||
Credit risk profile | |||
Total Loans | 17,255 | 16,678 | |
High Quality | |||
Credit risk profile | |||
Total Loans | 145,403 | 116,889 | |
Good Quality | |||
Credit risk profile | |||
Total Loans | 327,893 | 306,756 | |
Management Attention | |||
Credit risk profile | |||
Total Loans | 109,640 | 116,514 | |
Watch | |||
Credit risk profile | |||
Total Loans | 30,096 | 31,383 | |
Substandard | |||
Credit risk profile | |||
Total Loans | 21,600 | 32,735 | |
Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Loss | |||
Credit risk profile | |||
Total Loans | 4 | 5 | |
Construction and land development | |||
Credit risk profile | |||
Total Loans | 57,617 | 63,742 | |
Single-family residential | |||
Credit risk profile | |||
Total Loans | 206,417 | 195,975 | |
Single-family residential - Banco de la Gente stated income | |||
Credit risk profile | |||
Total Loans | 47,015 | 49,463 | |
Commercial | |||
Credit risk profile | |||
Total Loans | 228,558 | 209,287 | |
Multifamily and Farmland | |||
Credit risk profile | |||
Total Loans | 12,400 | 11,801 | |
Commercial loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 76,262 | 68,047 | |
Farm loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 7 | 19 | |
Consumer loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 10,060 | 9,593 | |
All other loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 13,555 | 13,033 | |
Construction and land development | |||
Credit risk profile | |||
Total Loans | 57,617 | 63,742 | 73,176 |
Construction and land development | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 7 | |
Construction and land development | High Quality | |||
Credit risk profile | |||
Total Loans | 6,741 | 7,852 | |
Construction and land development | Good Quality | |||
Credit risk profile | |||
Total Loans | 24,641 | 22,899 | |
Construction and land development | Management Attention | |||
Credit risk profile | |||
Total Loans | 13,013 | 14,464 | |
Construction and land development | Watch | |||
Credit risk profile | |||
Total Loans | 9,294 | 8,163 | |
Construction and land development | Substandard | |||
Credit risk profile | |||
Total Loans | 3,928 | 10,357 | |
Construction and land development | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Construction and land development | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential | |||
Credit risk profile | |||
Total Loans | 206,417 | 195,975 | 195,003 |
Single-family residential | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 15,099 | 15,036 | |
Single-family residential | High Quality | |||
Credit risk profile | |||
Total Loans | 74,367 | 60,882 | |
Single-family residential | Good Quality | |||
Credit risk profile | |||
Total Loans | 74,453 | 73,118 | |
Single-family residential | Management Attention | |||
Credit risk profile | |||
Total Loans | 30,954 | 34,090 | |
Single-family residential | Watch | |||
Credit risk profile | |||
Total Loans | 5,749 | 6,806 | |
Single-family residential | Substandard | |||
Credit risk profile | |||
Total Loans | 5,795 | 6,043 | |
Single-family residential | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential - Banco de la Gente stated income | |||
Credit risk profile | |||
Total Loans | 47,015 | 49,463 | 52,019 |
Single-family residential - Banco de la Gente stated income | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential - Banco de la Gente stated income | High Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential - Banco de la Gente stated income | Good Quality | |||
Credit risk profile | |||
Total Loans | 21,022 | 22,255 | |
Single-family residential - Banco de la Gente stated income | Management Attention | |||
Credit risk profile | |||
Total Loans | 12,721 | 8,369 | |
Single-family residential - Banco de la Gente stated income | Watch | |||
Credit risk profile | |||
Total Loans | 5,799 | 8,113 | |
Single-family residential - Banco de la Gente stated income | Substandard | |||
Credit risk profile | |||
Total Loans | 7,473 | 10,726 | |
Single-family residential - Banco de la Gente stated income | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Single-family residential - Banco de la Gente stated income | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Commercial | |||
Credit risk profile | |||
Total Loans | 228,558 | 209,287 | 200,633 |
Commercial | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Commercial | High Quality | |||
Credit risk profile | |||
Total Loans | 39,888 | 33,340 | |
Commercial | Good Quality | |||
Credit risk profile | |||
Total Loans | 142,141 | 123,604 | |
Commercial | Management Attention | |||
Credit risk profile | |||
Total Loans | 36,433 | 42,914 | |
Commercial | Watch | |||
Credit risk profile | |||
Total Loans | 6,153 | 5,190 | |
Commercial | Substandard | |||
Credit risk profile | |||
Total Loans | 3,943 | 4,239 | |
Commercial | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Commercial | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Multifamily and Farmland | |||
Credit risk profile | |||
Total Loans | 12,400 | 11,801 | 8,951 |
Multifamily and Farmland | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Multifamily and Farmland | High Quality | |||
Credit risk profile | |||
Total Loans | 241 | 715 | |
Multifamily and Farmland | Good Quality | |||
Credit risk profile | |||
Total Loans | 8,376 | 7,882 | |
Multifamily and Farmland | Management Attention | |||
Credit risk profile | |||
Total Loans | 1,001 | 286 | |
Multifamily and Farmland | Watch | |||
Credit risk profile | |||
Total Loans | 2,672 | 2,741 | |
Multifamily and Farmland | Substandard | |||
Credit risk profile | |||
Total Loans | 110 | 177 | |
Multifamily and Farmland | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Multifamily and Farmland | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Commercial loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 76,262 | 68,047 | 64,295 |
Commercial loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 924 | 365 | |
Commercial loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total Loans | 18,730 | 8,442 | |
Commercial loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total Loans | 44,649 | 44,353 | |
Commercial loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total Loans | 11,312 | 13,704 | |
Commercial loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total Loans | 383 | 320 | |
Commercial loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total Loans | 264 | 863 | |
Commercial loans (not secured by real estate) | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Commercial loans (not secured by real estate) | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 7 | 19 | 11 |
Farm loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total Loans | 7 | 19 | |
Farm loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Farm loans (not secured by real estate) | Loss | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Consumer loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 10,060 | 9,593 | |
Consumer loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 1,232 | 1,270 | |
Consumer loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total Loans | 3,576 | 3,519 | |
Consumer loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total Loans | 4,549 | 4,061 | |
Consumer loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total Loans | 566 | 358 | |
Consumer loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total Loans | 46 | 50 | |
Consumer loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total Loans | 87 | 330 | |
Consumer loans (not secured by real estate) | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
Consumer loans (not secured by real estate) | Loss | |||
Credit risk profile | |||
Total Loans | 4 | 5 | |
All other loans (not secured by real estate) | |||
Credit risk profile | |||
Total Loans | 13,555 | 13,033 | |
All other loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
All other loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total Loans | 1,860 | 2,139 | |
All other loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total Loans | 8,055 | 8,565 | |
All other loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total Loans | 3,640 | 2,329 | |
All other loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
All other loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
All other loans (not secured by real estate) | Doubtful | |||
Credit risk profile | |||
Total Loans | 0 | 0 | |
All other loans (not secured by real estate) | Loss | |||
Credit risk profile | |||
Total Loans | $0 | $0 |
3_Loans_TDR_Loan_Modifications
3. Loans, TDR Loan Modifications (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
TDR Loans | ||
Post-Modification Outstanding Recorded Investment | $15,000 | $21,900 |
Construction and land development | ||
TDR Loans | ||
Number of Contracts | 1 | 2 |
Pre-Modification Outstanding Recorded Investment | 291 | 841 |
Post-Modification Outstanding Recorded Investment | 266 | 824 |
Single-family residential | ||
TDR Loans | ||
Number of Contracts | 2 | |
Pre-Modification Outstanding Recorded Investment | 849 | |
Post-Modification Outstanding Recorded Investment | 845 | |
Single-family residential- Banco de la Gente stated income | ||
TDR Loans | ||
Number of Contracts | 3 | 7 |
Pre-Modification Outstanding Recorded Investment | 281 | 796 |
Post-Modification Outstanding Recorded Investment | 278 | 788 |
Total real estate TDR loans | ||
TDR Loans | ||
Number of Contracts | 6 | 9 |
Pre-Modification Outstanding Recorded Investment | 1,421 | 1,637 |
Post-Modification Outstanding Recorded Investment | 1,389 | 1,612 |
Total TDR Loans | ||
TDR Loans | ||
Number of Contracts | 6 | 9 |
Pre-Modification Outstanding Recorded Investment | 1,421 | 1,637 |
Post-Modification Outstanding Recorded Investment | $1,389 | $1,612 |
3_Loans_Details_Narrative
3. Loans (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Loans Details Narrative | ||
Percentage of construction and land development loans in Bank's loan portfolio | 9.00% | |
Percentage of single-family residential loans in Bank's loan portfolio | 39.00% | |
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio | 7.00% | |
Percentage of commercial real estate loans in Bank's loan portfolio | 35.00% | |
Percentage of commercial loans in Bank's loan portfolio | 12.00% | |
Accruing impaired loans | $25,600 | $27,600 |
Interest income recognized on accruing impaired loans | 1,300 | 1,300 |
TDR loan amounts | 15,000 | 21,900 |
Amount of performing TDR loans included | $1,400 | $355 |
4_Premises_and_Equipment_Detai
4. Premises and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Premises And Equipment Details | ||
Land | $3,681 | $3,667 |
Buildings and improvements | 15,864 | 15,126 |
Furniture and equipment | 18,442 | 16,239 |
Total premises and equipment | 37,987 | 35,032 |
Less accumulated depreciation | 20,987 | 18,674 |
Total net premises and equipment | $17,000 | $16,358 |
4_Premises_and_Equipment_Detai1
4. Premises and Equipment (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Premises And Equipment Details Narrative | |||
Depreciation expense | $2,500 | $1,900 | $1,900 |
5_Time_Deposits_Details
5. Time Deposits (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Time Deposits Details | |
2015 | $131,001 |
2016 | 37,065 |
2017 | 17,029 |
2018 | 8,336 |
2019 and thereafter | 3,007 |
Total | $196,438 |
5_Time_Deposits_Details_Narrat
5. Time Deposits (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Time Deposits Details Narrative | ||
Time deposits purchased through third party brokers, including certificates of deposit participated through the Certificate of Deposit Account Registry Service ("CDARS") on behalf of local customers | $11,400 | $15,100 |
CDARS balances | $11,000 | $15,100 |
Weighted average rate of brokered deposits | 0.13% | 0.14% |
6_Federal_Home_Loan_Bank_and_F2
6. Federal Home Loan Bank and Federal Reserve Bank Borrowings (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Federal Home Loan Bank And Federal Reserve Bank Borrowings Details Narrative | ||
Loans pledged as collateral to the FHLB | $126,000 | |
FLHB stock owned | 3,200 | 4,100 |
Carrying value of loans pledged as collateral to the FRB | $340,500 |
8_Income_Taxes_Details
8. Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes Details | |||
Current | $1,759 | $1,345 | $1,800 |
Deferred | 178 | 534 | -213 |
Total | $1,937 | $1,879 | $1,587 |
8_Income_Taxes_Details_1
8. Income Taxes (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes Details 1 | |||
Pre-tax income at statutory rate (34%) | $3,851 | $2,914 | $2,509 |
Differences: | |||
Tax exempt interest income | -1,630 | -1,481 | -1,168 |
Nondeductible interest and other expense | 119 | 141 | 52 |
Cash surrender value of life insurance | -143 | -147 | -149 |
State taxes, net of federal benefits | -283 | 428 | 324 |
Other, net | 23 | 24 | 19 |
Total | $1,937 | $1,879 | $1,587 |
8_Income_Taxes_Details_2
8. Income Taxes (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ||
Allowance for loan losses | $4,134 | $5,205 |
Accrued retirement expense | 1,529 | 1,489 |
Other real estate | 206 | 218 |
Federal credit carryforward | 342 | 79 |
State credit carryforward | 734 | 0 |
Other | 176 | 334 |
Unrealized loss on available for sale securities | 0 | 747 |
Total gross deferred tax assets | 7,121 | 8,072 |
Deferred tax liabilities: | ||
Deferred loan fees | 433 | 581 |
Premises and equipment | 652 | 530 |
Unrealized gain on available for sale securities | 3,479 | 0 |
Total gross deferred tax liabilities | 4,564 | 1,111 |
Net deferred tax asset | $2,557 | $6,961 |
9_Related_Party_Transactions_D
9. Related Party Transactions (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Related Party Transactions Details | |
Beginning balance | $4,340 |
New loans | 6,903 |
Repayments | -6,483 |
Ending balance | $4,760 |
9_Related_Party_Transactions_D1
9. Related Party Transactions (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Related Party Transactions Details Narrative | ||
Related party deposits | $15,100 | $17,600 |
10_Commitments_and_Contingenci2
10. Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Commitments And Contingencies Details | |
2015 | $600 |
2016 | 603 |
2017 | 537 |
2018 | 501 |
2019 | 490 |
Thereafter | 1,854 |
Total minimum obligation | $4,585 |
10_Commitments_and_Contingenci3
10. Commitments and Contingencies (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Commitments and contingencies | ||
Commitments to extend credit | ||
Commitments and contingencies | 168,733 | 146,243 |
Standby letters of credit and financial guarantees written | ||
Commitments and contingencies | $3,911 | $4,361 |
10_Commitments_and_Contingenci4
10. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments And Contingencies Details Narrative | |||
Rent expense | $691 | $672 | $643 |
Overnight federal funds | $54,500 |
11_Employee_and_Director_Benef2
11. Employee and Director Benefit Programs (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee And Director Benefit Programs Details | |||
Benefit obligation at beginning of period | $3,581 | $3,382 | |
Service cost | 348 | 336 | 430 |
Interest cost | 67 | 65 | 89 |
Benefits paid | -184 | -142 | |
Reversal of excess accrual | 0 | -60 | |
Benefit obligation at end of period | $3,812 | $3,581 | $3,382 |
11_Employee_and_Director_Benef3
11. Employee and Director Benefit Programs (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee And Director Benefit Programs Details 1 | |||
Benefit obligation | $3,812 | $3,581 | $3,382 |
Fair value of plan assets | 0 | 0 | |
Funded status | -3,812 | -3,581 | |
Unrecognized prior service cost/benefit | 0 | 0 | |
Unrecognized net actuarial loss | 0 | 0 | |
Net amount recognized | -3,812 | -3,581 | |
Unfunded accrued liability | -3,812 | -3,581 | |
Intangible assets | 0 | 0 | |
Net amounts recognized | ($3,812) | ($3,581) |
11_Employee_and_Director_Benef4
11. Employee and Director Benefit Programs (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee And Director Benefit Programs Details 2 | |||
Service cost | $348 | $336 | $430 |
Interest cost | 67 | 65 | 89 |
Net periodic cost | $415 | $401 | $519 |
Weighted average discount rate assumption used to determine benefit obligation | 5.47% | 5.46% | 5.43% |
11_Employee_and_Director_Benef5
11. Employee and Director Benefit Programs (Details 3) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Employee And Director Benefit Programs Details 3 | |
2015 | $232 |
2016 | 244 |
2017 | 262 |
2018 | 275 |
2019 | 310 |
Thereafter | $8,345 |
11_Employee_and_Director_Benef6
11. Employee and Director Benefit Programs (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Employee And Director Benefit Programs Details Narrative | |||
Employee contributions, percentage | 4.00% | 4.00% | 3.50% |
Defined Benefit Plan, Contributions by Employer | $439 | $430 | $345 |
Expenses incurred for benefits relating to the postretirement benefit | 422 | 395 | 546 |
Postretirement medical benefits expense, including amortization of the transition obligation | 24 | ||
Benefits paid | $184 | $142 |
12_Regulatory_Matters_Details
12. Regulatory Matters (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Total capital (to Risk-Weighted Assets) | Consolidated | ||
Actual, amount | $122,732 | $114,185 |
Actual, ratio | 16.62% | 16.14% |
For Capital Adequacy Purposes, amount | 59,085 | 56,582 |
For Capital Adequacy Purposes, ratio | 8.00% | 8.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | 0 | 0 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.00% | 0.00% |
Total capital (to Risk-Weighted Assets) | Bank | ||
Actual, amount | 118,356 | 110,935 |
Actual, ratio | 16.06% | 15.73% |
For Capital Adequacy Purposes, amount | 58,974 | 56,412 |
For Capital Adequacy Purposes, ratio | 8.00% | 8.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | 73,717 | 70,515 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 10.00% | 10.00% |
Tier 1 Capital (to Risk- Weighted Assets) | Consolidated | ||
Actual, amount | 113,211 | 104,890 |
Actual, ratio | 15.33% | 14.83% |
For Capital Adequacy Purposes, amount | 29,542 | 28,291 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | 0 | 0 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.00% | 0.00% |
Tier 1 Capital (to Risk- Weighted Assets) | Bank | ||
Actual, amount | 108,934 | 101,733 |
Actual, ratio | 14.78% | 14.43% |
For Capital Adequacy Purposes, amount | 29,487 | 28,206 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | 44,230 | 42,309 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 6.00% | 6.00% |
Tier 1 Capital (Average Assets) | Consolidated | ||
Actual, amount | 113,211 | 104,890 |
Actual, ratio | 10.74% | 10.08% |
For Capital Adequacy Purposes, amount | 42,181 | 41,622 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | 0 | 0 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 0.00% | 0.00% |
Tier 1 Capital (Average Assets) | Bank | ||
Actual, amount | 108,934 | 101,733 |
Actual, ratio | 10.33% | 9.79% |
For Capital Adequacy Purposes, amount | 42,164 | 41,584 |
For Capital Adequacy Purposes, ratio | 4.00% | 4.00% |
To Be Well Capitalized Under Prompt Corrective Action Provisions, amount | $52,706 | $51,981 |
To Be Well Capitalized Under Prompt Corrective Action Provisions, ratio | 5.00% | 5.00% |
14_Other_Operating_Income_and_2
14. Other Operating Income and Expense (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other Operating Income And Expense Details | |||
Visa debit card income | $3,170 | $2,990 | $2,092 |
Net appraisal management fee income | 525 | 718 | 737 |
Insurance and brokerage commissions | 701 | 661 | 517 |
Advertising | 804 | 685 | 695 |
FDIC insurance | 739 | 864 | 894 |
Visa debit card expense | 905 | 823 | 729 |
Telephone | 574 | 570 | 554 |
Foreclosure/OREO expense | 317 | 356 | 677 |
Internet banking expense | 644 | 568 | 593 |
FHLB advance prepayment penalty | 869 | 530 | 0 |
Consulting | 609 | 468 | 499 |
NC Tax Credit Amortization | $870 | $160 | $0 |
15_Fair_Value_of_Financial_Ins2
15. Fair Value of Financial Instruments (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets: | ||
Investment securities available for sale | $281,099 | $297,890 |
Carrying Amount | ||
Assets: | ||
Cash and cash equivalents | 69,098 | 76,773 |
Investment securities available for sale | 281,099 | 297,890 |
Other investments | 4,031 | 4,990 |
Mortgage loans held for sale | 1,375 | 497 |
Loans, net | 640,809 | 607,459 |
Cash surrender value of life insurance | 14,125 | 13,706 |
Liabilities: | ||
Deposits | 814,700 | 799,361 |
Securities sold under agreements to repurchase | 48,430 | 45,396 |
FHLB borrowings | 50,000 | 65,000 |
Junior subordinated debentures | 20,619 | 20,619 |
Level 1 | ||
Assets: | ||
Cash and cash equivalents | 69,098 | 76,773 |
Investment securities available for sale | 1,378 | 1,689 |
Other investments | 0 | 0 |
Mortgage loans held for sale | 0 | 0 |
Loans, net | 0 | 0 |
Cash surrender value of life insurance | 0 | 0 |
Liabilities: | ||
Deposits | 0 | 0 |
Securities sold under agreements to repurchase | 0 | 0 |
FHLB borrowings | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Level 2 | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 278,971 | 294,951 |
Other investments | 0 | 0 |
Mortgage loans held for sale | 0 | 0 |
Loans, net | 0 | 0 |
Cash surrender value of life insurance | 14,125 | 13,706 |
Liabilities: | ||
Deposits | 0 | 0 |
Securities sold under agreements to repurchase | 48,430 | 45,396 |
FHLB borrowings | 49,598 | 65,891 |
Junior subordinated debentures | 20,619 | 20,619 |
Level 3 | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 750 | 1,250 |
Other investments | 4,031 | 4,990 |
Mortgage loans held for sale | 1,375 | 497 |
Loans, net | 644,708 | 612,132 |
Cash surrender value of life insurance | 0 | 0 |
Liabilities: | ||
Deposits | 813,288 | 798,460 |
Securities sold under agreements to repurchase | 0 | 0 |
FHLB borrowings | 0 | 0 |
Junior subordinated debentures | 0 | 0 |
Estimated Fair Value | ||
Assets: | ||
Cash and cash equivalents | 69,098 | 76,773 |
Investment securities available for sale | 281,099 | 297,890 |
Other investments | 4,031 | 4,990 |
Mortgage loans held for sale | 1,375 | 497 |
Loans, net | 644,708 | 612,132 |
Cash surrender value of life insurance | 14,125 | 13,706 |
Liabilities: | ||
Deposits | 813,288 | 798,460 |
Securities sold under agreements to repurchase | 48,430 | 45,396 |
FHLB borrowings | 49,598 | 65,891 |
Junior subordinated debentures | $20,619 | $20,619 |
16_Peoples_Bancorp_of_North_Ca2
16. Peoples Bancorp of North Carolina, Inc. (Parent Company Only) Condensed Financial Statements (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Assets | |||
Interest-bearing time deposit | $17,885 | $26,871 | |
Investment securities available for sale | 281,099 | 297,890 | |
Total assets | 1,040,494 | 1,034,684 | |
Liabilities and Shareholders' Equity | |||
Junior subordinated debentures | 20,619 | 20,619 | |
Liabilities | 941,829 | 950,965 | |
Shareholders' equity | 98,665 | 83,719 | |
Total liabilities and shareholders' equity | 1,040,494 | 1,034,684 | |
Revenues: | |||
Interest and dividend income | 38,420 | 36,696 | 39,245 |
Expenses: | |||
Interest | 4,287 | 5,353 | 7,696 |
Income/(Loss) before income tax benefit and equity in undistributed earnings of subsidiaries | 11,325 | 8,570 | 7,380 |
Income tax benefit | 1,937 | 1,879 | 1,587 |
Net earnings | 9,388 | 6,691 | 5,793 |
Cash flows from operating activities: | |||
Net earnings | 9,388 | 6,691 | 5,793 |
Change in: | |||
Other assets | -778 | 1,508 | -441 |
Net cash provided (used by) operating activities | 14,441 | 24,921 | 19,027 |
Cash flows from investing activities: | |||
Purchases of investment securities available for sale | -32,851 | -98,129 | -88,304 |
Proceeds from maturities of investment securities available for sale | 36,148 | 63,597 | 63,225 |
Net cash (used) provided by investing activities | -11,898 | -19,234 | 64,797 |
Cash flows from financing activities: | |||
Cash dividends paid on Series A preferred stock | -734 | -1,023 | |
Proceeds from exercise of stock options | 37 | 0 | 539 |
Net cash (used) provided by financing activities | -10,218 | 22,243 | -64,217 |
Net change in cash and cash equivalents | -7,675 | 27,930 | 19,607 |
Noncash investing and financing activities: | |||
Change in unrealized gain on investment securities available for sale, net | 6,625 | -6,784 | 2,536 |
Accrued redemption of Series A Preferred Stock | 0 | 12,632 | 0 |
Parent Company | |||
Assets | |||
Cash | 745 | 12,879 | 324 |
Interest-bearing time deposit | 1,000 | 0 | |
Investment in subsidiaries | 116,076 | 102,113 | |
Investment securities available for sale | 1,235 | 1,721 | |
Other assets | 245 | 273 | |
Total assets | 119,301 | 116,986 | |
Liabilities and Shareholders' Equity | |||
Junior subordinated debentures | 20,619 | 20,619 | |
Liabilities | 17 | 12,648 | |
Shareholders' equity | 98,665 | 83,719 | |
Total liabilities and shareholders' equity | 119,301 | 116,986 | |
Revenues: | |||
Interest and dividend income | 2,718 | 13,576 | 113 |
Total revenues | 2,718 | 13,576 | 113 |
Expenses: | |||
Interest | 389 | 398 | 438 |
Other operating expenses | 527 | 159 | 476 |
Total expenses | 916 | 557 | 914 |
Income/(Loss) before income tax benefit and equity in undistributed earnings of subsidiaries | 1,802 | 13,019 | -801 |
Income tax benefit | 239 | 84 | 166 |
Income/(Loss) before equity in undistributed earnings of subsidiaries | 2,041 | 13,103 | -635 |
Equity in undistributed earnings (loss) of subsidiaries | 7,347 | -6,412 | 6,428 |
Net earnings | 9,388 | 6,691 | 5,793 |
Cash flows from operating activities: | |||
Net earnings | 9,388 | 6,691 | 5,793 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Equity in undistributed earnings of subsidiaries | -7,347 | 6,412 | -6,428 |
Change in: | |||
Other assets | 28 | -73 | 0 |
Accrued income | -5 | 0 | 11 |
Accrued expense | 1 | 27 | 41 |
Other liabilities | -108 | 108 | 0 |
Net cash provided (used by) operating activities | 1,957 | 13,165 | -583 |
Cash flows from investing activities: | |||
Proceeds from maturities of investment securities available for sale | 500 | 1 | 0 |
Net change in interest-bearing time deposit | -1,000 | 800 | 14,200 |
Net cash (used) provided by investing activities | -500 | 801 | 14,200 |
Cash flows from financing activities: | |||
Cash dividends paid on Series A preferred stock | 0 | -734 | -1,023 |
Cash dividends paid on common stock | -1,022 | -677 | -1,003 |
Preferred stock and warrant repurchase | -12,524 | 0 | -12,122 |
Stock repurchase | -82 | 0 | 0 |
Proceeds from exercise of stock options | 37 | 0 | 539 |
Net cash (used) provided by financing activities | -13,591 | -1,411 | -13,609 |
Net change in cash and cash equivalents | -12,134 | 12,555 | 8 |
Cash at beginning of year | 12,879 | 324 | 316 |
Cash at end of year | 745 | 12,879 | 324 |
Noncash investing and financing activities: | |||
Change in unrealized gain on investment securities available for sale, net | 8 | 77 | -46 |
Accrued redemption of Series A Preferred Stock | $0 | $12,632 | $0 |