Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | PEOPLES BANCORP OF NORTH CAROLINA INC | |
Entity Central Index Key | 0001093672 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,933,140 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and due from banks, including reserve requirements of $12,362 at 06/30/19 and $8,918 at 12/31/18 | $ 38,138 | $ 40,553 |
Interest-bearing deposits | 684 | 2,817 |
Cash and cash equivalents | 38,822 | 43,370 |
Investment securities available for sale | 188,972 | 194,578 |
Other investments | 4,296 | 4,361 |
Total securities | 193,268 | 198,939 |
Mortgage loans held for sale | 2,309 | 680 |
Loans | 833,367 | 804,023 |
Less allowance for loan losses | (6,541) | (6,445) |
Net loans | 826,826 | 797,578 |
Premises and equipment, net | 19,184 | 18,450 |
Cash surrender value of life insurance | 16,126 | 15,936 |
Other real estate | 10 | 27 |
Right of use lease asset | 4,000 | 0 |
Accrued interest receivable and other assets | 16,027 | 18,271 |
Total assets | 1,116,572 | 1,093,251 |
Deposits: | ||
Noninterest-bearing demand | 321,154 | 298,817 |
NOW, MMDA & savings | 488,461 | 475,223 |
Time, $250,000 or more | 14,096 | 16,239 |
Other time | 80,516 | 86,934 |
Total deposits | 904,227 | 877,213 |
Securities sold under agreements to repurchase | 47,733 | 58,095 |
Junior subordinated debentures | 20,619 | 20,619 |
Lease liability | 4,013 | 0 |
Accrued interest payable and other liabilities | 10,053 | 13,707 |
Total liabilities | 986,645 | 969,634 |
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 5,933,140 shares at June 30, 2019 and 5,995,256 shares December 31, 2018 | 60,390 | 62,096 |
Retained earnings | 65,738 | 60,535 |
Accumulated other comprehensive income | 3,799 | 986 |
Total shareholders' equity | 129,927 | 123,617 |
Total liabilities and shareholders' equity | $ 1,116,572 | $ 1,093,251 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and due from banks, reserve requirements | $ 12,362 | $ 8,918 |
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) | 5,933,140 | 5,995,256 |
Common stock, shares outstanding (in shares) | 5,933,140 | 5,995,256 |
Consolidated Statements of Earn
Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Interest income: | ||||
Interest and fees on loans | $ 10,894 | $ 9,386 | $ 21,513 | $ 18,455 |
Interest on due from banks | 35 | 124 | 49 | 169 |
Interest on investment securities: | ||||
U.S. Government sponsored enterprises | 641 | 524 | 1,314 | 1,130 |
State and political subdivisions | 760 | 980 | 1,594 | 1,976 |
Other | 45 | 45 | 88 | 88 |
Total interest income | 12,375 | 11,059 | 24,558 | 21,818 |
Interest expense: | ||||
NOW, MMDA & savings deposits | 320 | 186 | 602 | 362 |
Time deposits | 171 | 110 | 322 | 215 |
FHLB borrowings | 3 | 0 | 49 | 0 |
Junior subordinated debentures | 220 | 198 | 446 | 369 |
Other | 67 | 19 | 119 | 34 |
Total interest expense | 781 | 513 | 1,538 | 980 |
Net interest income | 11,594 | 10,546 | 23,020 | 20,838 |
Provision for loan losses | 77 | 231 | 255 | 262 |
Net interest income after provision for loan losses | 11,517 | 10,315 | 22,765 | 20,576 |
Non-interest income: | ||||
Service charges | 1,138 | 1,056 | 2,231 | 2,080 |
Other service charges and fees | 177 | 175 | 346 | 355 |
Gain on sale of investment securities | 0 | 50 | 231 | 50 |
Mortgage banking income | 311 | 240 | 458 | 456 |
Insurance and brokerage commissions | 205 | 203 | 436 | 385 |
Appraisal management fee income | 1,112 | 854 | 1,974 | 1,643 |
Gain/(loss) on sale and write-down of other real estate | (17) | (3) | (17) | 3 |
Miscellaneous | 1,459 | 1,441 | 2,846 | 2,780 |
Total non-interest income | 4,385 | 4,016 | 8,505 | 7,752 |
Non-interest expense: | ||||
Salaries and employee benefits | 5,718 | 5,385 | 11,365 | 10,347 |
Occupancy | 1,811 | 1,750 | 3,548 | 3,606 |
Professional fees | 429 | 373 | 718 | 753 |
Advertising | 275 | 260 | 541 | 501 |
Debit card expense | 239 | 283 | 466 | 492 |
FDIC insurance | 80 | 84 | 152 | 167 |
Appraisal management fee expense | 864 | 654 | 1,526 | 1,246 |
Other | 1,828 | 1,771 | 3,844 | 3,490 |
Total non-interest expense | 11,244 | 10,560 | 22,160 | 20,602 |
Earnings before income taxes | 4,658 | 3,771 | 9,110 | 7,726 |
Income tax expense | 845 | 595 | 1,630 | 1,247 |
Net earnings | $ 3,813 | $ 3,176 | $ 7,480 | $ 6,479 |
Basic net earnings per share | $ 0.64 | $ 0.53 | $ 1.25 | $ 1.08 |
Diluted net earnings per share | 0.64 | 0.53 | 1.25 | 1.08 |
Cash dividends declared per share | $ 0.14 | $ 0.13 | $ 0.28 | $ 0.26 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 3,813 | $ 3,176 | $ 7,480 | $ 6,479 |
Other comprehensive income: | ||||
Unrealized holding gains (losses) on securities available for sale | 2,757 | (869) | 3,883 | (3,483) |
Reclassification adjustment for gains on securities available for sale included in net earnings | 0 | (50) | (231) | (50) |
Total other comprehensive income (loss), before income taxes | 2,757 | (919) | 3,652 | (3,533) |
Income tax benefit related to other comprehensive income: | ||||
Unrealized holding gains (losses) on securities available for sale | 633 | (200) | 892 | (801) |
Reclassification adjustment for gains on securities available for sale included in net earnings | 0 | (11) | (53) | (11) |
Total income tax benefit related to other comprehensive income (loss) | 633 | (211) | 839 | (812) |
Total other comprehensive income (loss), net of tax | 2,124 | (708) | 2,813 | (2,721) |
Total comprehensive income | $ 5,937 | $ 2,468 | $ 10,293 | $ 3,758 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Beginning balance, shares at Dec. 31, 2017 | 5,995,256 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 62,096 | $ 50,286 | $ 3,593 | $ 115,975 |
Cash dividends declared on common stock | (783) | (783) | ||
Net earnings | 3,303 | 3,303 | ||
Change in accumulated other comprehensive income, net of tax | (2,013) | (2,013) | ||
Ending balance, shares at Mar. 31, 2018 | 5,995,256 | |||
Ending balance, amount at Mar. 31, 2018 | $ 62,096 | 52,806 | 1,580 | 116,482 |
Cash dividends declared on common stock | (784) | (784) | ||
Net earnings | 3,176 | 3,176 | ||
Change in accumulated other comprehensive income, net of tax | (708) | (708) | ||
Ending balance, shares at Jun. 30, 2018 | 5,995,256 | |||
Ending balance, amount at Jun. 30, 2018 | $ 62,096 | 55,198 | 872 | 118,166 |
Beginning balance, shares at Dec. 31, 2018 | 5,995,256 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 62,096 | 60,535 | 986 | 123,617 |
Common stock repurchase, shares | (5,518) | |||
Common stock repurchase, amount | $ (152) | (152) | ||
Cash dividends declared on common stock | (1,445) | (1,445) | ||
Restricted stock units exercised, shares | 7,398 | |||
Restricted stock units exercised, amount | $ 207 | 207 | ||
Net earnings | 3,667 | 3,667 | ||
Change in accumulated other comprehensive income, net of tax | 690 | 690 | ||
Ending balance, shares at Mar. 31, 2019 | 5,997,136 | |||
Ending balance, amount at Mar. 31, 2019 | $ 62,151 | 62,757 | 1,676 | 126,584 |
Common stock repurchase, shares | (63,996) | |||
Common stock repurchase, amount | $ (1,761) | (1,761) | ||
Cash dividends declared on common stock | (832) | (832) | ||
Net earnings | 3,813 | 3,813 | ||
Change in accumulated other comprehensive income, net of tax | 2,123 | 2,123 | ||
Ending balance, shares at Jun. 30, 2019 | 5,933,140 | |||
Ending balance, amount at Jun. 30, 2019 | $ 60,390 | $ 65,738 | $ 3,799 | $ 129,927 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net earnings | $ 7,480 | $ 6,479 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 1,926 | 2,418 |
Right of use lease asset amortization | 392 | 0 |
Provision for loan losses | 255 | 262 |
Deferred income taxes | (4) | (7) |
Gain on sale of investment securities | (231) | (50) |
Gain on sale of other real estate | 0 | (3) |
Write-down of other real estate | 17 | 0 |
Loss on sale of premises and equipment | 0 | 2 |
Restricted stock expense | 170 | 139 |
Proceeds from sales of mortgage loans held for sale | 18,572 | 18,475 |
Origination of mortgage loans held for sale | (20,201) | (18,289) |
Change in: | ||
Cash surrender value of life insurance | (190) | (191) |
Other assets | 1,409 | (1,249) |
Other liabilities | (3,996) | (197) |
Net cash provided by operating activities | 5,599 | 7,789 |
Cash flows from investing activities: | ||
Purchases of investment securities available for sale | (21,405) | (17,347) |
Proceeds from sales, calls and maturities of investment securities available for sale | 23,707 | 23,384 |
Proceeds from paydowns of investment securities available for sale | 6,354 | 8,519 |
Purchases of other investments | 0 | (2,611) |
Proceeds from paydowns on other investments | 66 | 29 |
Purchases of FHLB stock | (1) | (4) |
Net change in loans | (29,503) | (22,044) |
Purchases of premises and equipment | (1,827) | (898) |
Proceeds from sale of other real estate and repossessions | 0 | 128 |
Net cash used by investing activities | (22,609) | (10,844) |
Cash flows from financing activities: | ||
Net change in deposits | 27,014 | 8,060 |
Net change in securities sold under agreement to repurchase | (10,362) | 8,813 |
Proceeds from FHLB borrowings | 89,000 | 0 |
Repayments of FHLB borrowings | (89,000) | 0 |
Proceeds from Fed Funds Purchased | 74,450 | 850 |
Repayments of Fed Funds Purchased | (74,450) | (850) |
Common stock repurchased | (1,913) | 0 |
Cash dividends paid on common stock | (2,277) | (1,567) |
Net cash provided by financing activities | 12,462 | 15,306 |
Net change in cash and cash equivalents | (4,548) | 12,251 |
Cash and cash equivalents at beginning of period | 43,370 | 57,304 |
Cash and cash equivalents at end of period | 38,822 | 69,555 |
Cash paid during the period for: | ||
Interest | 1,529 | 973 |
Income taxes | 1,616 | 252 |
Noncash investing and financing activities: | ||
Change in unrealized gain on investment securities available for sale, net | 2,813 | (2,721) |
Issuance of accrued restricted stock units | 207 | 0 |
Transfers of loans to other real estate and repossessions | 0 | 97 |
Initial recognition of lease right-of-use asset and lease liability | $ 4,392 | $ 0 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
1. Summary of Significant Accounting Policies | The consolidated financial statements include the financial statements of Peoples Bancorp of North Carolina, Inc. and its wholly owned subsidiary, Peoples Bank (the “Bank”), along with the Bank’s wholly owned subsidiaries, Peoples Investment Services, Inc. (“PIS”), Real Estate Advisory Services, Inc. (“REAS”), Community Bank Real Estate Solutions, LLC (“CBRES”) and PB Real Estate Holdings, LLC (collectively called the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. The Bank operates three banking offices focused on the Latino population that were formerly operated as a division of the Bank under the name Banco de la Gente (“Banco”). These offices are now branded as Bank branches and considered a separate market territory of the Bank as they offer normal and customary banking services as are offered in the Bank’s other branches such as the taking of deposits and the making of loans. The consolidated financial statements in this report (other than the Consolidated Balance Sheet at December 31, 2018) are unaudited. In the opinion of management, all adjustments (none of which were other than normal accruals) necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). Actual results could differ from those estimates. The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. Many of the Company’s accounting policies require significant judgment regarding valuation of assets and liabilities and/or significant interpretation of the specific accounting guidance. A description of the Company’s significant accounting policies can be found in Note 1 of the Notes to Consolidated Financial Statements in the Company’s 2018 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 2, 2019 Annual Meeting of Shareholders. Recent Accounting Pronouncements The following tables provide a summary of Accounting Standards Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) that the Company has recently adopted. Recently Adopted Accounting Guidance ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2014-09: Revenue from Contracts with Customers Provides guidance on the recognition of revenue from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. January 1, 2018 See section titled “ASU 2014-09” below for a description of the effect on the Company’s results of operations, financial position and disclosures. ASU 2016-01: Recognition and Measurement of Financial Assets and Financial Liabilities Addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. January 1, 2018 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs Amended the requirements related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. January 1, 2018 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2017-09: Scope of Modification Accounting Amended the requirements related to changes to the terms or conditions of a share-based payment award. January 1, 2018 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2017-14: Income Statement—Reporting Comprehensive, Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606) Incorporates into the ASC recent SEC guidance related to revenue recognition. Effective upon issuance The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-03: Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities Clarifies certain aspects of the guidance issued in ASU 2016-01. January 1, 2018 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-04: Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273 (SEC Update) Incorporates recent SEC guidance which was issued in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulation. Effective upon issuance The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-06: Codification Improvements to Topic 942: Financial Services—Depository and Lending Eliminates a reference to the Office of the Comptroller of the Currency’s Banking Circular 202, Accounting for Net Deferred Tax Charges, from the ASC. The Office of the Comptroller of the Currency published the guidance in 1985 but has since rescinded it. Effective upon issuance The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2016-02: Leases Increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. January 1, 2019 See section titled “ASU 2016-02” below for a description of the effect on the Company’s results of operations, financial position and disclosures. ASU 2017-08: Premium Amortization on Purchased Callable Debt Securities Amended the requirements related to the amortization period for certain purchased callable debt securities held at a premium. January 1, 2019 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-11: Leases (Topic 842): Targeted Improvements Intended to reduce costs and ease implementation of ASU 2016-02. January 1, 2019 The adoption of this guidance did not have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-20: Narrow- Scope Improvements for Lessors Provides narrow-scope improvements for lessors, that provide relief in the accounting for sales, use and similar taxes, the accounting for other costs paid by a lessee that may benefit a lessor, and variable payments when contracts have lease and non-lease components. January 1, 2019 See comments for ASU 2016-02 below. ASU 2014-09 The Company has applied ASU 2014-09 using a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The scope of ASU 2014-09 explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives. Accordingly, the majority of the Company’s revenues are not affected. Appraisal management fee income and expense from the Bank’s subsidiary, CBRES, was reported as a net amount prior to March 31, 2018, which was included in miscellaneous non-interest income. This income and expense is now reported on separate line items under non-interest income and non-interest expense. See below for additional information related to revenue generated from contracts with customers. Revenue and Method of Adoption The majority of the Company’s revenue is derived primarily from interest income from receivables (loans) and securities. Other revenues are derived from fees received in connection with deposit accounts, investment advisory, and appraisal services. On January 1, 2018, the Company adopted the requirements of ASU 2014-09. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASU 2014-09 using the modified retrospective transition approach which does not require restatement of prior periods. The method was selected as there were no material changes in the timing of revenue recognition resulting in no comparability issues with prior periods. This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of, and reason for, the change, which is solely a result of the adoption of the required standard. When applying the modified retrospective approach under ASU 2014-09, the Company has elected, as a practical expedient, to apply this approach only to contracts that were not completed as of January 1, 2018. A completed contract is considered to be a contract for which all (or substantially all) of the revenue was recognized in accordance with revenue guidance that was in effect before January 1, 2018. There were no uncompleted contracts as of January 1, 2018 for which application of the new standard required an adjustment to retained earnings. The following disclosures involve the Company’s material income streams derived from contracts with customers which are within the scope of ASU 2014-09. Through the Company’s wholly-owned subsidiary, PIS, the Company contracts with a registered investment advisor to perform investment advisory services on behalf of the Company’s customers. The Company receives commissions from this third party investment advisor based on the volume of business that the Company’s customers do with such investment advisor. Total revenue recognized from these contracts was $435,000 and $384,000 for the six months ended June 30, 2019 and 2018, respectively. The Company utilizes third parties to contract with the Company’s customers to perform debit and credit card clearing services. These third parties pay the Company commissions based on the volume of transactions that they process on behalf of the Company’s customers. Total revenue recognized from these contracts with these third parties was $2.0 million and $1.9 million for the six months ended June 30, 2019 and 2018, respectively. Through the Company’s wholly-owned subsidiary, REAS, the Company provides property appraisal services for negotiated fee amounts on a per appraisal basis. Total revenue recognized from these contracts with customers was $304,000 and $278,000 for the six months ended June 30, 2019 and 2018, respectively. Through the Company’s wholly-owned subsidiary, CBRES, the Company provides appraisal management services. Total revenue recognized from these contracts with customers was $2.0 million and $1.6 million for the six months ended June 30, 2019 and 2018, respectively. Due to the nature of the Company’s relationship with the customers that the Company provides services, the Company does not incur costs to obtain contracts and there are no material incremental costs to fulfill these contracts that should be capitalized. Disaggregation of Revenue Contract Balances Performance Obligations Significant Judgements ASU 2016-02 On January 1, 2019, the Company adopted the requirements of ASU 2016-02, Leases (Topic 842). Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; and ASU 2018-11, Targeted Improvements. The purpose of Topic 842 is to increase transparency and comparability between organizations that enter into lease agreements. The key difference of Topic 842 from the previous guidance (Topic 840) is the recognition of a right-of-use (“ROU”) asset and lease liability on the statement of financial position for those leases previously classified as operating leases under the previous guidance. Topic 842 states that a contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company reviewed its material non-real estate contracts to determine if they included a lease and did not note any that would need to be considered under Topic 842. The Company also reviewed equipment leases in the implementation of Topic 842. The Company’s lease agreements in which Topic 842 has been applied are primarily for retail branch real estate properties. These leases have lease terms from less than 12 months to leases with options up to 15 years. Related to lease payment terms, some are fixed payments or based on a fixed annual increase while others are variable and the annual increases are based on market rates or other indexes. Initially transition from Topic 840 to Topic 842 required a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11, which, among other things, provided an additional transition method that would allow entities to not apply the initial guidance of ASU 2016-02 to the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company chose the transition method of adoption provided by ASU 2018-11, therefore, the Company will apply this standard to all existing leases as of the adoption date of January 1, 2019, recording a ROU asset and a lease liability and a cumulative-effect adjustment to the opening balance of retained earnings (if applicable) in the period of adoption. With this transition method, comparative prior period disclosures will be under the previous accounting guidance for leases (Topic 840). This adoption method is considered a change in accounting principle requiring additional disclosure of the nature of and reason for the change, which is solely a result of the adoption of the required standard. Topic 842 provides a package of practical expedients in applying the lease standard to be chosen at the date of adoption. The Company has chosen to elect the package of practical expedients provided under ASU 2016-02 whereby it will not reassess (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases. The Company has also chosen not to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by related accounting guidance). The Company will account for lease and non-lease components separately because such amounts are readily determinable under its lease contracts. Additionally, the Company has chosen to elect the use of hindsight, when applicable, in determining the lease term, in assessing the likelihood that a lessee purchase option will be exercised; and in assessing the impairment of ROU assets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determined that all of its leases are classified as operating leases under Topic 842. For operating and finance leases, lease liabilities are initially measured at commencement date based on the present value of lease payments not yet paid, discounted using the discount rate for the lease at the lease commencement date over the lease term. For operating and finance leases, ROU assets are measured at the commencement date as the amount of the initial liability, adjusted for lease payments made to the lessor at or before commencement date, minus incentives; and for any initial direct costs incurred by the lessee. Based on the transition method that the Company has chosen to follow, the initial application date of the lease term for all existing leases is January 1, 2019. For operating leases, after lease commencement, the lease liability is recorded at the present value of the unpaid lease payments discounted at the discount rate for the lease established at the commencement date. Lease expense is determined by the sum of the lease payments to be recognized on a straight-line basis over the lease term. The ROU asset is subsequently amortized as the difference between the straight line lease cost for the period and the periodic accretion of the lease liability. The lease term used for the calculation of the initial operating ROU asset and lease liability will include the initial lease term in addition to one renewal options the Company thinks it is reasonably certain to exercise or incur. Regarding the discount rate, Topic 842 requires that the implicit rate within the lease agreement be used if available. If not available, the Company should use its incremental borrowing rate in effect at the time of the lease commencement date. The Company utilized Federal Home Loan Bank (“FHLB”) Atlanta’s Fixed Rate Credit rates for terms consistent with the Company’s lease terms. The Company recorded operating ROU assets and operating lease liabilities of $4.4 million and $4.4 million, respectively at the commencement date of January 1, 2019. The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of ASU 2016-02 did not have a material impact on the Company’s results of operations, financial position or disclosures. A director of the Company has a membership interest in a company that leases two branch facilities to the Bank. The Bank’s lease payments for these facilities totaled $115,000 for the six months ended June 30, 2019 and 2018. The following tables provide a summary of ASU’s issued by the FASB that the Company has not adopted as of June 30, 2019, which may impact the Company’s financial statements. Recently Issued Accounting Guidance Not Yet Adopted ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2016-13: Measurement of Credit Losses on Financial Instruments Provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. January 1, 2020 Early adoption permitted The Company will apply this guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company is still evaluating the impact of this guidance on its consolidated financial statements. The Company has formed a Current Expected Credit Losses (“CECL”) committee and implemented a model from a third-party vendor for running CECL calculations. The Company is currently developing CECL model assumptions and comparing results to current allowance for loan loss calculations. The Company plans to run parallel calculations leading up to the effective date of this guidance to ensure it is prepared for implementation by the effective date. In addition to the Company’s allowance for loan losses, it will also record an allowance for credit losses on debt securities instead of applying the impairment model currently utilized. The amount of the adjustments will be impacted by each portfolio’s composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. ASU 2018-13: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820) Updates the disclosure requirements on fair value measurements in ASC 820, Fair Value Measurement. January 1, 2020 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-14: Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (Subtopic 715-20) Updates disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. January 1, 2021 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2018-18: Clarifying the Interaction between Topic 808 and Topic 606 Clarifies the interaction between the guidance for certain collaborative arrangements and the new revenue recognition financial accounting and reporting standard. January 1, 2020 Early adoption permitted The Company does not intend to adopt this guidance early. The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU Description Effective Date Effect on Financial Statements or Other Significant Matters ASU 2018-19: Codification Improvements to Topic 326, Financial Instruments—Credit Losses Aligns the implementation date of the topic for annual financial statements of nonpublic companies with the implementation date for their interim financial statements. The guidance also clarifies that receivables arising from operating leases are not within the scope of the topic, but rather, should be accounted for in accordance with the leases topic. January 1, 2020 Early adoption permitted See comments for ASU 2016-13 above. ASU 2018-19: Leases (Topic 842): Codification Improvements Provides guidance to address concerns companies had raised about an accounting exception they would lose when assessing the fair value of underlying assets under the leases standard and clarify that lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new standard. January 1, 2020 The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2019-04: Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Addresses unintended issues accountants flagged when implementing ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. January 1, 2020 Early adoption permitted The adoption of this guidance is not expected to have a material impact on the Company’s results of operations, financial position or disclosures. ASU 2019-05: Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief Guidance to provide entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. January 1, 2020 Early adoption permitted 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. |
2. Investment Securities
2. Investment Securities | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
2. Investment Securities | Investment securities available for sale at June 30, 2019 and December 31, 2018 are as follows: (Dollars in thousands) June 30, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 57,988 1,301 170 59,119 U.S. Government sponsored enterprises 33,211 670 407 33,474 State and political subdivisions 92,589 3,540 - 96,129 Trust preferred securities 250 - - 250 Total $ 184,038 5,511 577 188,972 (Dollars in thousands) December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 52,145 516 558 52,103 U.S. Government sponsored enterprises 35,356 71 793 34,634 State and political subdivisions 105,545 2,089 43 107,591 Trust preferred securities 250 - - 250 Total $ 193,296 2,676 1,394 194,578 The current fair value and associated unrealized losses on investments in securities with unrealized losses at June 30, 2019 and December 31, 2018 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position. (Dollars in thousands) June 30, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 3,186 6 13,994 164 17,180 170 U.S. Government sponsored enterprises - - 9,146 407 9,146 407 Total $ 3,186 6 23,140 571 26,326 577 (Dollars in thousands) December 31, 2018 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 6,932 56 17,670 502 24,602 558 U.S. Government sponsored enterprises 1,784 69 25,172 724 26,956 793 State and political subdivisions 4,815 26 1,578 17 6,393 43 Total $ 13,531 151 44,420 1,243 57,951 1,394 At June 30, 2019, unrealized losses in the investment securities portfolio relating to debt securities totaled $577,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the June 30, 2019 tables above, 20 out of 50 securities issued by U.S. Government sponsored enterprises contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations of entities that issued each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed. The amortized cost and estimated fair value of investment securities available for sale at June 30, 2019, 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. June 30, 2019 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 13,134 13,168 Due from one to five years 64,858 66,959 Due from five to ten years 41,506 43,011 Due after ten years 6,302 6,465 Mortgage-backed securities 57,988 59,119 Trust preferred securities 250 250 Total $ 184,038 188,972 No securities available for sale were sold during the three months ended June 30, 2019. Proceeds from sales of securities available for sale during the six months ended June 30, 2019 were $12.3 million and resulted in net gains of $231,000. Proceeds from sales of securities available for sale during the three and six months ended June 30, 2018 were $14.0 million and resulted in net gains of $50,000. Securities with a fair value of approximately $89.0 million and $93.0 million at June 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes as required by law. |
3. Loans
3. Loans | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
3. Loans | Major classifications of loans at June 30, 2019 and December 31, 2018 are summarized as follows: (Dollars in thousands) June 30, 2019 December 31, 2018 Real estate loans: Construction and land development $ 86,920 94,178 Single-family residential 264,724 252,983 Single-family residential - Banco de la Gente non-traditional 32,499 34,261 Commercial 281,895 270,055 Multifamily and farmland 44,065 33,163 Total real estate loans 710,103 684,640 Loans not secured by real estate: Commercial loans 103,466 97,465 Farm loans 1,060 926 Consumer loans 8,684 9,165 All other loans 10,054 11,827 Total loans 833,367 804,023 Less allowance for loan losses 6,541 6,445 Total net loans $ 826,826 797,578 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, 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 June 30, 2019, construction and land development loans comprised approximately 10% 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 June 30, 2019, single-family residential loans comprised approximately 36% of the Bank’s total loan portfolio, and include Banco’s non-traditional single-family residential loans, which were approximately 4% 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 June 30, 2019, commercial real estate loans comprised approximately 34% 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 June 30, 2019, 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 of 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 June 30, 2019 and December 31, 2018: June 30, 2019 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 257 - 257 86,663 86,920 - Single-family residential 2,608 682 3,290 261,434 264,724 - Single-family residential - Banco de la Gente non-traditional 827 - 827 31,672 32,499 - Commercial 324 - 324 281,571 281,895 - Multifamily and farmland - - - 44,065 44,065 - Total real estate loans 4,016 682 4,698 705,405 710,103 - Loans not secured by real estate: Commercial loans 150 - 150 103,316 103,466 - Farm loans - - - 1,060 1,060 - Consumer loans 43 4 47 8,637 8,684 - All other loans - - - 10,054 10,054 - Total loans $ 4,209 686 4,895 828,472 833,367 - December 31, 2018 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 3 - 3 94,175 94,178 - Single-family residential 4,162 570 4,732 248,251 252,983 - Single-family residential - Banco de la Gente non-traditional 4,627 580 5,207 29,054 34,261 - Commercial 228 - 228 269,827 270,055 - Multifamily and farmland - - - 33,163 33,163 - Total real estate loans 9,020 1,150 10,170 674,470 684,640 - Loans not secured by real estate: Commercial loans 445 90 535 96,930 97,465 - Farm loans - - - 926 926 - Consumer loans 99 4 103 9,062 9,165 - All other loans - - - 11,827 11,827 - Total loans $ 9,564 1,244 10,808 793,215 804,023 - The following table presents non-accrual loans as of June 30, 2019 and December 31, 2018: (Dollars in thousands) June 30, 2019 December 31, 2018 Real estate loans: Construction and land development $ - 1 Single-family residential 1,224 1,530 Single-family residential - Banco de la Gente non-traditional 1,616 1,440 Commercial 85 244 Multifamily and farmland - - Total real estate loans 2,925 3,215 Loans not secured by real estate: Commercial loans 85 89 Consumer loans 17 10 Total $ 3,027 3,314 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. Factors, including the assumptions and techniques utilized by the appraiser, are considered by management. 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 not 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 $21.4 million, $22.8 million and $24.3 million at June 30, 2019, December 31, 2018 and June 30, 2018, respectively. Interest income recognized on accruing impaired loans was $668,000, $1.3 million, and $697,000 for the six months ended June 30, 2019, the year ended December 31, 2018 and the six months ended June 30, 2018, respectively. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual. The following table presents impaired loans as of June 30, 2019: June 30, 2019 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Real estate loans: Construction and land development $ 189 - 189 189 5 Single-family residential 4,785 413 3,928 4,341 29 Single-family residential - Banco de la Gente stated income 15,694 - 14,975 14,975 988 Commercial 1,734 - 1,728 1,728 13 Multifamily and farmland - - - - - Total impaired real estate loans 22,402 413 20,820 21,233 1,035 Loans not secured by real estate: Commercial loans 280 38 80 118 - Consumer loans 105 - 101 101 2 Total impaired loans $ 22,787 451 21,001 21,452 1,037 The following table presents the average impaired loan balance and the interest income recognized by loan class for the three and six months ended June 30, 2019 and 2018. (Dollars in thousands) Three months ended Six months ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Real estate loans: Construction and land development $ 232 2 373 5 248 6 341 11 Single-family residential 4,214 57 6,306 66 4,826 118 6,325 135 Single-family residential - Banco de la Gente stated income 15,347 239 14,841 230 15,010 491 14,981 467 Commercial 1,739 22 2,304 42 1,801 45 2,359 80 Multifamily and farmland - - - - - - 4 - Total impaired real estate loans 21,532 320 23,824 343 21,885 660 24,010 693 Loans not secured by real estate: Commercial loans 114 3 98 - 106 4 100 - Farm loans (non RE) - - - - - - - - Consumer loans 104 2 141 2 107 4 146 4 Total impaired loans $ 21,750 325 24,063 345 22,098 668 24,256 697 The following table presents impaired loans as of and for the year ended December 31, 2018: December 31, 2018 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 281 - 279 279 5 327 19 Single-family residential 5,059 422 4,188 4,610 32 6,271 261 Single-family residential - Banco de la Gente non-traditional 16,424 - 15,776 15,776 1,042 14,619 944 Commercial 1,995 - 1,925 1,925 17 2,171 111 Total impaired real estate loans 23,759 422 22,168 22,590 1,096 23,388 1,335 Loans not secured by real estate: Commercial loans 251 89 1 90 - 96 - Consumer loans 116 - 113 113 2 137 7 Total impaired loans $ 24,126 511 22,282 22,793 1,098 23,621 1,342 Changes in the allowance for loan losses for the three and six months ended June 30, 2019 and 2018 were as follows: (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 - 161 982 6,445 Charge-offs (21 ) (22 ) - - - (1 ) - (316 ) - (360 ) Recoveries 3 53 - 23 - 14 - 108 - 201 Provision (32 ) (44 ) (61 ) 33 27 (91 ) - 208 215 255 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Three months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 831 1,256 1,174 1,292 98 610 - 162 1,138 6,561 Charge-offs (21 ) (9 ) - - - - - (166 ) - (196 ) Recoveries 2 5 - 19 - 8 - 65 - 99 Provision (49 ) 60 (58 ) 23 12 (70 ) - 100 59 77 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Allowance for loan losses at June 30, 2019: Ending balance: individually evaluated for impairment $ - 2 970 12 - - - - - 984 Ending balance: collectively evaluated for impairment 763 1,310 146 1,322 110 548 - 161 1,197 5,557 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Loans at June 30, 2019: Ending balance $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 18,738 - 833,367 Ending balance: individually evaluated for impairment $ 11 1,738 13,508 1,643 - 38 - - - 16,938 Ending balance: collectively evaluated for impairment $ 86,909 262,986 18,991 280,252 44,065 103,428 1,060 18,738 - 816,429 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 804 1,812 1,280 1,193 72 574 - 155 476 6,366 Charge-offs - (43 ) - (271 ) (5 ) (2 ) - (186 ) - (507 ) Recoveries 3 27 - 7 1 16 - 102 - 156 Provision (139 ) (158 ) (47 ) 491 4 (1 ) - 79 33 262 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Three months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 651 1,640 1,265 1,298 73 706 - 136 604 6,373 Charge-offs - (43 ) - (271 ) - (2 ) - (85 ) - (401 ) Recoveries 1 22 - 4 - 8 - 39 - 74 Provision 16 19 (32 ) 389 (1 ) (125 ) - 60 (95 ) 231 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Allowance for loan losses at June 30, 2018: Ending balance: individually evaluated for impairment $ - 2 1,066 18 - - - - - 1,086 Ending balance: collectively evaluated for impairment 668 1,636 167 1,402 72 587 - 150 509 5,191 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Loans at June 30, 2018: Ending balance $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 22,586 - 781,884 Ending balance: individually evaluated for impairment $ 95 2,132 14,975 2,103 - 94 - - - 19,399 Ending balance: collectively evaluated for impairment $ 79,674 248,488 20,872 267,689 28,667 93,486 1,023 22,586 - 762,485 The provision for loan losses for the three months ended June 30, 2019 was $77,000, compared to $231,000 for the three months ended June 30, 2018. The decrease in the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses in the Company’s Accounting Standards Codification (“ASC”) 450-20 reserve calculation resulting from lower historical loss rates and lower qualitative adjustments for economic conditions and other factors. The provision for loan losses for the six months ended June 30, 2019 was $255,000, as compared to $262,000 for the six months ended June 30, 2018. 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. Certificates of deposit 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 as 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 June 30, 2019 and December 31, 2018: June 30,2019 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 82 7,788 - - - 586 - 792 - 9,248 2- High Quality 27,751 131,136 - 23,245 326 23,039 - 2,896 2,063 210,456 3- Good Quality 49,964 100,854 13,094 220,899 39,442 72,668 933 4,521 7,253 509,628 4- Management Attention 6,015 18,695 14,355 34,730 3,739 6,847 127 431 738 85,677 5- Watch 3,041 3,303 2,164 2,936 558 234 - 12 - 12,248 6- Substandard 67 2,948 2,886 85 - 92 - 32 - 6,110 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 8,684 10,054 833,367 December 31, 2018 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 504 5,795 - - - 605 - 673 - 7,577 2- High Quality 24,594 128,588 - 25,321 395 20,520 - 3,229 2,145 204,792 3- Good Quality 59,549 92,435 13,776 211,541 27,774 69,651 785 4,699 8,932 489,142 4- Management Attention 5,707 19,200 15,012 30,333 3,906 6,325 141 529 750 81,903 5- Watch 3,669 3,761 2,408 2,616 1,088 264 - 18 - 13,824 6- Substandard 155 3,204 3,065 244 - 100 - 17 - 6,785 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 94,178 252,983 34,261 270,055 33,163 97,465 926 9,165 11,827 804,023 Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $2.2 million and $4.7 million at June 30, 2019 and December 31, 2018, respectively. The terms of these loans have been renegotiated to provide a concession to original terms, including a reduction in principal or interest as a result of the deteriorating financial position of the borrower. There was zero and $92,000 in performing loans classified as TDR loans at June 30, 2019 and December 31, 2018, respectively. There were no new TDR modifications during the three and six months ended June 30, 2019 and 2018. There were no loans modified as TDR that defaulted during the three and six months ended June 30, 2019 and 2018, which were within 12 months of their modification date. Generally, a TDR loan is considered to be in default once it becomes 90 days or more past due following a modification. |
4. Net Earnings Per Share
4. Net Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
4. Net Earnings Per Share | Net earnings per share is based on the weighted average number of shares outstanding during the period while the effects of potential shares outstanding during the period are included in diluted earnings per share. The average market price during the year is used to compute equivalent shares. The reconciliation of the amounts used in the computation of both “basic earnings per share” and “diluted earnings per share” for the three and six months ended June 30, 2019 and 2018 is as follows: For the three months ended June 30, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,813 5,940,556 $ 0.64 Effect of dilutive securities: Restricted stock units - 24,453 Diluted earnings per share $ 3,813 5,965,009 $ 0.64 For the six months ended June 30, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,480 5,968,368 $ 1.25 Effect of dilutive securities: Restricted stock units - 24,412 Diluted earnings per share $ 7,480 5,992,780 $ 1.25 For the three months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,176 5,995,256 $ 0.53 Effect of dilutive securities: Restricted stock units - 18,917 Diluted earnings per share $ 3,176 6,014,173 $ 0.53 For the six months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 6,479 5,995,256 $ 1.08 Effect of dilutive securities: Restricted stock units - 17,964 Diluted earnings per share $ 6,479 6,013,220 $ 1.08 |
5. Stock-Based Compensation
5. Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
5. Stock-Based Compensation | The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the “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. No shares were available for issuance under the Plan at June 30, 2019 as all stock-based rights under the Plan must have been granted or awarded by May 7, 2019 (i.e., ten years from the Plan effective date). The Company granted 32,465 restricted stock units under the Plan at a grant date fair value of $7.18 per share during the first quarter of 2012, of which 5,891 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 in conjunction with the Company’s participation in the Capital Purchase Program under the Troubled Asset Relief Program. In July 2012, the Company granted 5,891 restricted stock units at a grant date fair value of $7.50 per share. The Company granted 29,475 restricted stock units under the Plan at a grant date fair value of $10.82 per share during the second quarter of 2013. The Company granted 23,162 restricted stock units under the Plan at a grant date fair value of $14.27 per share during the first quarter of 2014. The Company granted 16,583 restricted stock units under the Plan at a grant date fair value of $16.34 per share during the first quarter of 2015. The Company granted 5,544 restricted stock units under the Plan at a grant date fair value of $16.91 per share during the first quarter of 2016. The Company granted 4,114 restricted stock units under the Plan at a grant date fair value of $25.00 per share during the first quarter of 2017. The Company granted 3,725 restricted stock units under the Plan at a grant date fair value of $31.43 per share during the first quarter of 2018. The Company granted 5,290 restricted stock units under the Plan at a grant date fair value of $28.43 per share during the first quarter of 2019. The number of restricted stock units granted and grant date fair values have been restated to reflect the 10% stock dividend that was paid in the fourth quarter of 2017. 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, 2015, 2016, 2017, 2018 and 2019 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 June 30, 2019, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $286,000. The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $170,000 and $139,000 for the six months ended June 30, 2019 and 2018, respectively. |
6. Fair Value
6. Fair Value | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
6. Fair Value | 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 methods of determining the fair value of assets and liabilities presented in this note are consistent with methodologies disclosed in Note 15 of the Company’s 2018 Form 10-K, except for the valuation of loans which was impacted by the adoption of ASU No. 2016-01. 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 the 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 In accordance with ASU No. 2016-01, the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit, and nonperformance risk of the loans. 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 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 June 30, 2019 and December 31, 2018. (Dollars in thousands) June 30, 2019 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 59,119 - 59,119 - U.S. Government sponsored enterprises $ 33,474 - 33,474 - State and political subdivisions $ 96,129 - 96,129 - Trust preferred securities $ 250 - - 250 December 31, 2018 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 52,103 - 52,103 - U.S. Government sponsored enterprises $ 34,634 - 34,634 - State and political subdivisions $ 107,591 - 107,591 - Trust preferred securities $ 250 - - 250 The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the three months ended June 30, 2019. (Dollars in thousands) Investment Securities Available for Sale Level 3 Valuation Balance, beginning of period $ 250 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 250 Change in unrealized gain/(loss) for assets still held in Level 3 $ - The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at June 30, 2019 and December 31, 2018 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 Measurements June 30, 2019 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 2,309 - - 2,309 Impaired loans $ 20,415 - - 20,415 Other real estate $ 10 - - 10 (Dollars in thousands) Fair Value Measurements December 31, 2018 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 680 - - 680 Impaired loans $ 21,695 - - 21,695 Other real estate $ 27 - - 27 (Dollars in thousands) Fair Value June 30, 2019 Fair Value December 31, 2018 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,309 680 Rate lock commitment N/A N/A Impaired loans $ 20,415 21,695 Appraised values and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 10 27 Appraised value Discounts to reflect current market conditions and estimated costs to sell 0 - 25% The carrying amount and estimated fair value of financial instruments at June 30, 2019 and December 31, 2018 are as follows: (Dollars in thousands) Fair Value Measurements at June 30, 2019 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 38,822 38,822 - - 38,822 Investment securities available for sale $ 188,972 - 188,722 250 188,972 Other investments $ 4,296 - - 4,296 4,296 Mortgage loans held for sale $ 2,309 - - 2,309 2,309 Loans, net $ 826,826 - - 803,542 803,542 Cash surrender value of life insurance $ 16,126 - 16,126 - 16,126 Liabilities: Deposits $ 904,227 - - 884,712 884,712 Securities sold under agreements to repurchase $ 47,733 - 47,733 - 47,733 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 43,370 43,370 - - 43,370 Investment securities available for sale $ 194,578 - 194,328 250 194,578 Other investments $ 4,361 - - 4,361 4,361 Mortgage loans held for sale $ 680 - - 680 680 Loans, net $ 797,578 - - 748,917 748,917 Cash surrender value of life insurance $ 15,936 - 15,936 - 15,936 Liabilities: Deposits $ 877,213 - - 857,999 857,999 Securities sold under agreements to repurchase $ 58,095 - 58,095 - 58,095 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 |
7. Leases
7. Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
7. Leases | As of June 30, 2019 the Company had operating ROU assets of $4.0 million and operating lease liabilities of $4.0 million. The Company maintains operating leases on land and buildings for some of the Bank’s branch facilities and Loan Production Offices. Most leases include one option to renew, with renewal terms extending up to 15 years. The exercise of renewal options is based on the judgment of management as to whether or not the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. As allowed by the standard, leases with a term of 12 months or less are not recorded on the balance sheet and instead are recognized in lease expense on a straight-line basis over the lease term. The following table presents lease cost and other lease information as of June 30, 2019. (Dollars in thousands) June 30, 2019 Operating lease cost: Operating lease cost $ 4,392 Amortization of right-of-use assets (392 ) Interest on lease liability - Variable lease cost - Total operating lease cost $ 4,000 Other information: Cash paid for amounts included in the measurement of lease liabilities 433 Operating cash flows from operating leases - Right-of-use assets obtained in exchange for new finance operating liabilities - Weighted-average remaining lease term - operating leases 4.17 years Weighted-average discount rate - operating leases 2.90 % The following table presents lease maturities as of June 30, 2019. (Dollars in thousands) Maturity Analysis of Operating Lease Liabilities: June 30, 2019 2020 $ 850 2021 801 2022 648 2023 452 2024 343 Thereafter 1,466 Total $ 4,560 Less: Imputed Interest (547 ) Operating Lease Liability $ 4,013 |
8. Subsequent Events
8. Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
8. Subsequent Events | The Company has reviewed and evaluated subsequent events and transactions for material subsequent events through the date the financial statements are issued. Management has concluded that there were no material subsequent events. |
2. Investment Securities (Table
2. Investment Securities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment securities available for sale | (Dollars in thousands) June 30, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 57,988 1,301 170 59,119 U.S. Government sponsored enterprises 33,211 670 407 33,474 State and political subdivisions 92,589 3,540 - 96,129 Trust preferred securities 250 - - 250 Total $ 184,038 5,511 577 188,972 (Dollars in thousands) December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Mortgage-backed securities $ 52,145 516 558 52,103 U.S. Government sponsored enterprises 35,356 71 793 34,634 State and political subdivisions 105,545 2,089 43 107,591 Trust preferred securities 250 - - 250 Total $ 193,296 2,676 1,394 194,578 |
Current fair value and associated unrealized losses on investments in securities with unrealized losses | (Dollars in thousands) June 30, 2019 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 3,186 6 13,994 164 17,180 170 U.S. Government sponsored enterprises - - 9,146 407 9,146 407 Total $ 3,186 6 23,140 571 26,326 577 (Dollars in thousands) December 31, 2018 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Mortgage-backed securities $ 6,932 56 17,670 502 24,602 558 U.S. Government sponsored enterprises 1,784 69 25,172 724 26,956 793 State and political subdivisions 4,815 26 1,578 17 6,393 43 Total $ 13,531 151 44,420 1,243 57,951 1,394 |
Amortized cost and estimated fair value of investment securities available for sale by contractual maturity | June 30, 2019 (Dollars in thousands) Amortized Cost Estimated Fair Value Due within one year $ 13,134 13,168 Due from one to five years 64,858 66,959 Due from five to ten years 41,506 43,011 Due after ten years 6,302 6,465 Mortgage-backed securities 57,988 59,119 Trust preferred securities 250 250 Total $ 184,038 188,972 |
3. Loans (Tables)
3. Loans (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Major classifications of loans | (Dollars in thousands) June 30, 2019 December 31, 2018 Real estate loans: Construction and land development $ 86,920 94,178 Single-family residential 264,724 252,983 Single-family residential - Banco de la Gente non-traditional 32,499 34,261 Commercial 281,895 270,055 Multifamily and farmland 44,065 33,163 Total real estate loans 710,103 684,640 Loans not secured by real estate: Commercial loans 103,466 97,465 Farm loans 1,060 926 Consumer loans 8,684 9,165 All other loans 10,054 11,827 Total loans 833,367 804,023 Less allowance for loan losses 6,541 6,445 Total net loans $ 826,826 797,578 |
Age analysis of past due loans, by loan type | June 30, 2019 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 257 - 257 86,663 86,920 - Single-family residential 2,608 682 3,290 261,434 264,724 - Single-family residential - Banco de la Gente non-traditional 827 - 827 31,672 32,499 - Commercial 324 - 324 281,571 281,895 - Multifamily and farmland - - - 44,065 44,065 - Total real estate loans 4,016 682 4,698 705,405 710,103 - Loans not secured by real estate: Commercial loans 150 - 150 103,316 103,466 - Farm loans - - - 1,060 1,060 - Consumer loans 43 4 47 8,637 8,684 - All other loans - - - 10,054 10,054 - Total loans $ 4,209 686 4,895 828,472 833,367 - December 31, 2018 (Dollars in thousands) Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Total Current Loans Total Loans Accruing Loans 90 or More Days Past Due Real estate loans: Construction and land development $ 3 - 3 94,175 94,178 - Single-family residential 4,162 570 4,732 248,251 252,983 - Single-family residential - Banco de la Gente non-traditional 4,627 580 5,207 29,054 34,261 - Commercial 228 - 228 269,827 270,055 - Multifamily and farmland - - - 33,163 33,163 - Total real estate loans 9,020 1,150 10,170 674,470 684,640 - Loans not secured by real estate: Commercial loans 445 90 535 96,930 97,465 - Farm loans - - - 926 926 - Consumer loans 99 4 103 9,062 9,165 - All other loans - - - 11,827 11,827 - Total loans $ 9,564 1,244 10,808 793,215 804,023 - |
Non-accrual loans | (Dollars in thousands) June 30, 2019 December 31, 2018 Real estate loans: Construction and land development $ - 1 Single-family residential 1,224 1,530 Single-family residential - Banco de la Gente non-traditional 1,616 1,440 Commercial 85 244 Multifamily and farmland - - Total real estate loans 2,925 3,215 Loans not secured by real estate: Commercial loans 85 89 Consumer loans 17 10 Total $ 3,027 3,314 |
Impaired loans | June 30, 2019 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Real estate loans: Construction and land development $ 189 - 189 189 5 Single-family residential 4,785 413 3,928 4,341 29 Single-family residential - Banco de la Gente stated income 15,694 - 14,975 14,975 988 Commercial 1,734 - 1,728 1,728 13 Multifamily and farmland - - - - - Total impaired real estate loans 22,402 413 20,820 21,233 1,035 Loans not secured by real estate: Commercial loans 280 38 80 118 - Consumer loans 105 - 101 101 2 Total impaired loans $ 22,787 451 21,001 21,452 1,037 December 31, 2018 (Dollars in thousands) Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Recorded Investment in Impaired Loans Related Allowance Average Outstanding Impaired Loans YTD Interest Income Recognized Real estate loans: Construction and land development $ 281 - 279 279 5 327 19 Single-family residential 5,059 422 4,188 4,610 32 6,271 261 Single-family residential - Banco de la Gente non-traditional 16,424 - 15,776 15,776 1,042 14,619 944 Commercial 1,995 - 1,925 1,925 17 2,171 111 Total impaired real estate loans 23,759 422 22,168 22,590 1,096 23,388 1,335 Loans not secured by real estate: Commercial loans 251 89 1 90 - 96 - Consumer loans 116 - 113 113 2 137 7 Total impaired loans $ 24,126 511 22,282 22,793 1,098 23,621 1,342 |
Changes in the allowance for loan losses | (Dollars in thousands) Three months ended Six months ended June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Average Balance Interest Income Recognized Real estate loans: Construction and land development $ 232 2 373 5 248 6 341 11 Single-family residential 4,214 57 6,306 66 4,826 118 6,325 135 Single-family residential - Banco de la Gente stated income 15,347 239 14,841 230 15,010 491 14,981 467 Commercial 1,739 22 2,304 42 1,801 45 2,359 80 Multifamily and farmland - - - - - - 4 - Total impaired real estate loans 21,532 320 23,824 343 21,885 660 24,010 693 Loans not secured by real estate: Commercial loans 114 3 98 - 106 4 100 - Farm loans (non RE) - - - - - - - - Consumer loans 104 2 141 2 107 4 146 4 Total impaired loans $ 21,750 325 24,063 345 22,098 668 24,256 697 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 813 1,325 1,177 1,278 83 626 - 161 982 6,445 Charge-offs (21 ) (22 ) - - - (1 ) - (316 ) - (360 ) Recoveries 3 53 - 23 - 14 - 108 - 201 Provision (32 ) (44 ) (61 ) 33 27 (91 ) - 208 215 255 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Three months ended June 30, 2019: Allowance for loan losses: Beginning balance $ 831 1,256 1,174 1,292 98 610 - 162 1,138 6,561 Charge-offs (21 ) (9 ) - - - - - (166 ) - (196 ) Recoveries 2 5 - 19 - 8 - 65 - 99 Provision (49 ) 60 (58 ) 23 12 (70 ) - 100 59 77 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Allowance for loan losses at June 30, 2019: Ending balance: individually evaluated for impairment $ - 2 970 12 - - - - - 984 Ending balance: collectively evaluated for impairment 763 1,310 146 1,322 110 548 - 161 1,197 5,557 Ending balance $ 763 1,312 1,116 1,334 110 548 - 161 1,197 6,541 Loans at June 30, 2019: Ending balance $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 18,738 - 833,367 Ending balance: individually evaluated for impairment $ 11 1,738 13,508 1,643 - 38 - - - 16,938 Ending balance: collectively evaluated for impairment $ 86,909 262,986 18,991 280,252 44,065 103,428 1,060 18,738 - 816,429 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente Stated Income Commercial Multifamily and Farmland Commercial Farm Consumer and All Other Unallocated Total Six months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 804 1,812 1,280 1,193 72 574 - 155 476 6,366 Charge-offs - (43 ) - (271 ) (5 ) (2 ) - (186 ) - (507 ) Recoveries 3 27 - 7 1 16 - 102 - 156 Provision (139 ) (158 ) (47 ) 491 4 (1 ) - 79 33 262 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Three months ended June 30, 2018: Allowance for loan losses: Beginning balance $ 651 1,640 1,265 1,298 73 706 - 136 604 6,373 Charge-offs - (43 ) - (271 ) - (2 ) - (85 ) - (401 ) Recoveries 1 22 - 4 - 8 - 39 - 74 Provision 16 19 (32 ) 389 (1 ) (125 ) - 60 (95 ) 231 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Allowance for loan losses at June 30, 2018: Ending balance: individually evaluated for impairment $ - 2 1,066 18 - - - - - 1,086 Ending balance: collectively evaluated for impairment 668 1,636 167 1,402 72 587 - 150 509 5,191 Ending balance $ 668 1,638 1,233 1,420 72 587 - 150 509 6,277 Loans at June 30, 2018: Ending balance $ 79,769 250,620 35,847 269,792 28,667 93,580 1,023 22,586 - 781,884 Ending balance: individually evaluated for impairment $ 95 2,132 14,975 2,103 - 94 - - - 19,399 Ending balance: collectively evaluated for impairment $ 79,674 248,488 20,872 267,689 28,667 93,486 1,023 22,586 - 762,485 |
Credit risk profile of each loan type based on internally assigned risk grade | June 30,2019 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 82 7,788 - - - 586 - 792 - 9,248 2- High Quality 27,751 131,136 - 23,245 326 23,039 - 2,896 2,063 210,456 3- Good Quality 49,964 100,854 13,094 220,899 39,442 72,668 933 4,521 7,253 509,628 4- Management Attention 6,015 18,695 14,355 34,730 3,739 6,847 127 431 738 85,677 5- Watch 3,041 3,303 2,164 2,936 558 234 - 12 - 12,248 6- Substandard 67 2,948 2,886 85 - 92 - 32 - 6,110 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 86,920 264,724 32,499 281,895 44,065 103,466 1,060 8,684 10,054 833,367 December 31, 2018 (Dollars in thousands) Real Estate Loans Construction and Land Development Single-Family Residential Single-Family Residential - Banco de la Gente non-traditional Commercial Multifamily and Farmland Commercial Farm Consumer All Other Total 1- Excellent Quality $ 504 5,795 - - - 605 - 673 - 7,577 2- High Quality 24,594 128,588 - 25,321 395 20,520 - 3,229 2,145 204,792 3- Good Quality 59,549 92,435 13,776 211,541 27,774 69,651 785 4,699 8,932 489,142 4- Management Attention 5,707 19,200 15,012 30,333 3,906 6,325 141 529 750 81,903 5- Watch 3,669 3,761 2,408 2,616 1,088 264 - 18 - 13,824 6- Substandard 155 3,204 3,065 244 - 100 - 17 - 6,785 7- Doubtful - - - - - - - - - - 8- Loss - - - - - - - - - - Total $ 94,178 252,983 34,261 270,055 33,163 97,465 926 9,165 11,827 804,023 |
4. Net Earnings Per Share (Tabl
4. Net Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share | For the three months ended June 30, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,813 5,940,556 $ 0.64 Effect of dilutive securities: Restricted stock units - 24,453 Diluted earnings per share $ 3,813 5,965,009 $ 0.64 For the six months ended June 30, 2019 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 7,480 5,968,368 $ 1.25 Effect of dilutive securities: Restricted stock units - 24,412 Diluted earnings per share $ 7,480 5,992,780 $ 1.25 For the three months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 3,176 5,995,256 $ 0.53 Effect of dilutive securities: Restricted stock units - 18,917 Diluted earnings per share $ 3,176 6,014,173 $ 0.53 For the six months ended June 30, 2018 Net Earnings (Dollars in thousands) Weighted Average Number of Shares Per Share Amount Basic earnings per share $ 6,479 5,995,256 $ 1.08 Effect of dilutive securities: Restricted stock units - 17,964 Diluted earnings per share $ 6,479 6,013,220 $ 1.08 |
6. Fair Value (Tables)
6. Fair Value (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Available for sale securities measured at fair value on a recurring basis | (Dollars in thousands) June 30, 2019 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 59,119 - 59,119 - U.S. Government sponsored enterprises $ 33,474 - 33,474 - State and political subdivisions $ 96,129 - 96,129 - Trust preferred securities $ 250 - - 250 December 31, 2018 Fair Value Measurements Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage-backed securities $ 52,103 - 52,103 - U.S. Government sponsored enterprises $ 34,634 - 34,634 - State and political subdivisions $ 107,591 - 107,591 - Trust preferred securities $ 250 - - 250 |
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 $ 250 Change in book value - Change in gain/(loss) realized and unrealized - Purchases/(sales and calls) - Transfers in and/or (out) of Level 3 - Balance, end of period $ 250 Change in unrealized gain/(loss) for assets still held in Level 3 $ - |
Fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis | (Dollars in thousands) Fair Value Measurements June 30, 2019 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 2,309 - - 2,309 Impaired loans $ 20,415 - - 20,415 Other real estate $ 10 - - 10 (Dollars in thousands) Fair Value Measurements December 31, 2018 Level 1 Valuation Level 2 Valuation Level 3 Valuation Mortgage loans held for sale $ 680 - - 680 Impaired loans $ 21,695 - - 21,695 Other real estate $ 27 - - 27 (Dollars in thousands) Fair Value June 30, 2019 Fair Value December 31, 2018 Valuation Technique Significant Unobservable Inputs General Range of Significant Unobservable Input Values Mortgage loans held for sale $ 2,309 680 Rate lock commitment N/A N/A Impaired loans $ 20,415 21,695 Appraised values and discounted cash flows Discounts to reflect current market conditions and ultimate collectability 0 - 25% Other real estate $ 10 27 Appraised value Discounts to reflect current market conditions and estimated costs to sell 0 - 25% |
Carrying amount and estimated fair value of the Company's financial instruments | (Dollars in thousands) Fair Value Measurements at June 30, 2019 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 38,822 38,822 - - 38,822 Investment securities available for sale $ 188,972 - 188,722 250 188,972 Other investments $ 4,296 - - 4,296 4,296 Mortgage loans held for sale $ 2,309 - - 2,309 2,309 Loans, net $ 826,826 - - 803,542 803,542 Cash surrender value of life insurance $ 16,126 - 16,126 - 16,126 Liabilities: Deposits $ 904,227 - - 884,712 884,712 Securities sold under agreements to repurchase $ 47,733 - 47,733 - 47,733 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 (Dollars in thousands) Fair Value Measurements at December 31, 2018 Carrying Amount Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 43,370 43,370 - - 43,370 Investment securities available for sale $ 194,578 - 194,328 250 194,578 Other investments $ 4,361 - - 4,361 4,361 Mortgage loans held for sale $ 680 - - 680 680 Loans, net $ 797,578 - - 748,917 748,917 Cash surrender value of life insurance $ 15,936 - 15,936 - 15,936 Liabilities: Deposits $ 877,213 - - 857,999 857,999 Securities sold under agreements to repurchase $ 58,095 - 58,095 - 58,095 Junior subordinated debentures $ 20,619 - 20,619 - 20,619 |
7. Leases (Tables)
7. Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Lease expense | (Dollars in thousands) June 30, 2019 Operating lease cost: Operating lease cost $ 4,392 Amortization of right-of-use assets (392 ) Interest on lease liability - Variable lease cost - Total operating lease cost $ 4,000 Other information: Cash paid for amounts included in the measurement of lease liabilities 433 Operating cash flows from operating leases - Right-of-use assets obtained in exchange for new finance operating liabilities - Weighted-average remaining lease term - operating leases 4.17 years Weighted-average discount rate - operating leases 2.90 % |
Maturity analysis of operating lease liabilities | (Dollars in thousands) Maturity Analysis of Operating Lease Liabilities: June 30, 2019 2020 $ 850 2021 801 2022 648 2023 452 2024 343 Thereafter 1,466 Total $ 4,560 Less: Imputed Interest (547 ) Operating Lease Liability $ 4,013 |
2. Investment Securities (Detai
2. Investment Securities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Investment securities available for sale | ||
Amortized cost | $ 184,038 | $ 193,296 |
Estimated fair value | 188,972 | 194,578 |
Mortgage-backed securities | ||
Investment securities available for sale | ||
Amortized cost | 57,988 | 52,145 |
Gross unrealized gains | 1,301 | 516 |
Gross unrealized losses | 170 | 558 |
Estimated fair value | 59,119 | 52,103 |
U.S. Government sponsored enterprises | ||
Investment securities available for sale | ||
Amortized cost | 33,211 | 35,356 |
Gross unrealized gains | 670 | 71 |
Gross unrealized losses | 407 | 793 |
Estimated fair value | 33,474 | 34,634 |
State and political subdivisions | ||
Investment securities available for sale | ||
Amortized cost | 92,589 | 105,545 |
Gross unrealized gains | 3,540 | 2,089 |
Gross unrealized losses | 0 | 43 |
Estimated fair value | 96,129 | 107,591 |
Trust preferred securities | ||
Investment securities available for sale | ||
Amortized cost | 250 | 250 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | 0 | 0 |
Estimated fair value | 250 | 250 |
Total | ||
Investment securities available for sale | ||
Amortized cost | 184,038 | 193,296 |
Gross unrealized gains | 5,511 | 2,676 |
Gross unrealized losses | 577 | 1,394 |
Estimated fair value | $ 188,972 | $ 194,578 |
2. Investment securities (Det_2
2. Investment securities (Details 1) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Investment securities with continuous unrealized loss position | ||
Less than 12 months, fair value | $ 3,186 | $ 13,531 |
Less than 12 months, unrealized losses | 6 | 151 |
12 months or more, fair value | 23,140 | 44,420 |
12 months or more, unrealized losses | 571 | 1,243 |
Total, fair value | 26,326 | 57,951 |
Total, unrealized losses | 577 | 1,394 |
Mortgage-backed securities | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 months, fair value | 3,186 | 6,932 |
Less than 12 months, unrealized losses | 6 | 56 |
12 months or more, fair value | 13,994 | 17,670 |
12 months or more, unrealized losses | 164 | 502 |
Total, fair value | 17,180 | 24,602 |
Total, unrealized losses | 170 | 558 |
U.S. Government sponsored enterprises | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 months, fair value | 0 | 1,784 |
Less than 12 months, unrealized losses | 0 | 69 |
12 months or more, fair value | 9,146 | 25,172 |
12 months or more, unrealized losses | 407 | 724 |
Total, fair value | 9,146 | 26,956 |
Total, unrealized losses | $ 407 | 793 |
State and political subdivisions | ||
Investment securities with continuous unrealized loss position | ||
Less than 12 months, fair value | 4,815 | |
Less than 12 months, unrealized losses | 26 | |
12 months or more, fair value | 1,578 | |
12 months or more, unrealized losses | 17 | |
Total, fair value | 6,393 | |
Total, unrealized losses | $ 43 |
2. Investment securities (Det_3
2. Investment securities (Details 2) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Due within one year | $ 13,134 | |
Due from one to five years | 64,858 | |
Due from five to ten years | 41,506 | |
Due after ten years | 6,302 | |
Mortgage-backed securities | 57,988 | |
Trust preferred securities | 250 | |
Total | 184,038 | $ 193,296 |
Estimated Fair Value | ||
Due within one year | 13,168 | |
Due from one to five years | 66,959 | |
Due from five to ten years | 43,011 | |
Due after ten years | 6,465 | |
Mortgage-backed securities | 59,119 | |
Trust preferred securities | 250 | |
Total | $ 188,972 |
2. Investment Securities (Det_4
2. Investment Securities (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Investments, Debt and Equity Securities [Abstract] | ||
Pledged to secure public deposits | $ 89,000 | $ 93,000 |
3. Loans (Details)
3. Loans (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Major classifications | ||||||
Total loans | $ 833,367 | $ 804,023 | $ 781,884 | |||
Less allowance for loan losses | 6,541 | $ 6,561 | 6,445 | 6,277 | $ 6,373 | $ 6,366 |
Total net loans | 826,826 | 797,578 | ||||
Construction and land development | ||||||
Major classifications | ||||||
Total loans | 86,920 | 94,178 | 79,769 | |||
Less allowance for loan losses | 763 | 831 | 813 | 668 | 651 | 804 |
Single-family residential | ||||||
Major classifications | ||||||
Total loans | 264,724 | 252,983 | 250,620 | |||
Less allowance for loan losses | 1,312 | 1,256 | 1,325 | 1,638 | 1,640 | 1,812 |
Single-family residential - Banco de la Gente stated income | ||||||
Major classifications | ||||||
Total loans | 32,499 | 34,261 | 35,847 | |||
Less allowance for loan losses | 1,116 | 1,174 | 1,177 | 1,233 | 1,265 | 1,280 |
Commercial | ||||||
Major classifications | ||||||
Total loans | 281,895 | 270,055 | 269,792 | |||
Less allowance for loan losses | 1,334 | 1,292 | 1,278 | 1,420 | 1,298 | 1,193 |
Multifamily and Farmland | ||||||
Major classifications | ||||||
Total loans | 44,065 | 33,163 | 28,667 | |||
Less allowance for loan losses | 110 | 98 | 83 | 72 | 73 | 72 |
Total real estate loans | ||||||
Major classifications | ||||||
Total loans | 710,103 | 684,640 | ||||
Commercial loans (not secured by real estate) | ||||||
Major classifications | ||||||
Total loans | 103,466 | 97,465 | 93,580 | |||
Less allowance for loan losses | 548 | 610 | 626 | 587 | 706 | 574 |
Farm loans (not secured by real estate) | ||||||
Major classifications | ||||||
Total loans | 1,060 | 926 | 1,023 | |||
Less allowance for loan losses | 0 | $ 0 | 0 | $ 0 | $ 0 | $ 0 |
Consumer loans (not secured by real estate) | ||||||
Major classifications | ||||||
Total loans | 8,684 | 9,165 | ||||
All other loans (not secured by real estate) | ||||||
Major classifications | ||||||
Total loans | $ 10,054 | $ 11,827 |
3. Loans (Details 1)
3. Loans (Details 1) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Past due loans | |||
Loans 30-89 days past due | $ 4,209 | $ 9,564 | |
Loans 90 or more days past due | 686 | 1,244 | |
Total past due loans | 4,895 | 10,808 | |
Total current loans | 828,472 | 793,215 | |
Total loans | 833,367 | 804,023 | $ 781,884 |
Accruing loans 90 or more days past due | 0 | 0 | |
Construction and land development | |||
Past due loans | |||
Loans 30-89 days past due | 257 | 3 | |
Loans 90 or more days past due | 0 | 0 | |
Total past due loans | 257 | 3 | |
Total current loans | 86,663 | 94,175 | |
Total loans | 86,920 | 94,178 | |
Accruing loans 90 or more days past due | 0 | 0 | |
Single-family residential | |||
Past due loans | |||
Loans 30-89 days past due | 2,608 | 4,162 | |
Loans 90 or more days past due | 682 | 570 | |
Total past due loans | 3,290 | 4,732 | |
Total current loans | 261,434 | 248,251 | |
Total loans | 264,724 | 252,983 | |
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 | 827 | 4,627 | |
Loans 90 or more days past due | 0 | 580 | |
Total past due loans | 827 | 5,207 | |
Total current loans | 31,672 | 29,054 | |
Total loans | 32,499 | 34,261 | |
Accruing loans 90 or more days past due | 0 | 0 | |
Commercial | |||
Past due loans | |||
Loans 30-89 days past due | 324 | 228 | |
Loans 90 or more days past due | 0 | 0 | |
Total past due loans | 324 | 228 | |
Total current loans | 281,571 | 269,827 | |
Total loans | 281,895 | 270,055 | |
Accruing loans 90 or more days past due | 0 | 0 | |
Multifamily and Farmland | |||
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 | 44,065 | 33,163 | |
Total loans | 44,065 | 33,163 | |
Accruing loans 90 or more days past due | 0 | 0 | |
Total real estate loans | |||
Past due loans | |||
Loans 30-89 days past due | 4,016 | 9,020 | |
Loans 90 or more days past due | 682 | 1,150 | |
Total past due loans | 4,698 | 10,170 | |
Total current loans | 705,405 | 674,470 | |
Total loans | 710,103 | 684,640 | |
Accruing loans 90 or more days past due | 0 | 0 | |
Commercial loans (not secured by real estate) | |||
Past due loans | |||
Loans 30-89 days past due | 150 | 445 | |
Loans 90 or more days past due | 0 | 90 | |
Total past due loans | 150 | 535 | |
Total current loans | 103,316 | 96,930 | |
Total loans | 103,466 | 97,465 | |
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 | 1,060 | 926 | |
Total loans | 1,060 | 926 | |
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 | 43 | 99 | |
Loans 90 or more days past due | 4 | 4 | |
Total past due loans | 47 | 103 | |
Total current loans | 8,637 | 9,062 | |
Total loans | 8,684 | 9,165 | |
Accruing loans 90 or more days past due | 0 | 0 | |
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 | 10,054 | 11,827 | |
Total loans | 10,054 | 11,827 | |
Accruing loans 90 or more days past due | $ 0 | $ 0 |
3. Loans (Details 2)
3. Loans (Details 2) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Non-accrual loans | ||
Non-accrual loans | $ 3,027 | $ 3,314 |
Construction and land development | ||
Non-accrual loans | ||
Non-accrual loans | 0 | 1 |
Single-family residential | ||
Non-accrual loans | ||
Non-accrual loans | 1,224 | 1,530 |
Single-family residential - Banco de la Gente stated income | ||
Non-accrual loans | ||
Non-accrual loans | 1,616 | 1,440 |
Commercial | ||
Non-accrual loans | ||
Non-accrual loans | 85 | 244 |
Multifamily and Farmland | ||
Non-accrual loans | ||
Non-accrual loans | 0 | 0 |
Total real estate loans | ||
Non-accrual loans | ||
Non-accrual loans | 2,925 | 3,215 |
Commercial loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | 85 | 89 |
Consumer loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | $ 17 | $ 10 |
3. Loans (Details 3)
3. Loans (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Impaired loans | |||||
Unpaid contractual principal balance | $ 22,787 | $ 22,787 | $ 24,126 | ||
Recorded investment with no allowance | 451 | 451 | 511 | ||
Recorded investment with allowance | 21,001 | 21,001 | 22,282 | ||
Recorded investment in impaired loans | 21,452 | 21,452 | 22,793 | ||
Related allowance | 1,037 | 1,037 | 1,098 | ||
Average outstanding impaired loans | 21,750 | $ 24,063 | 22,098 | $ 24,256 | 23,621 |
Interest income recognized | 325 | 345 | 668 | 697 | 1,342 |
Construction and land development | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 189 | 189 | 281 | ||
Recorded investment with no allowance | 0 | 0 | 0 | ||
Recorded investment with allowance | 189 | 189 | 279 | ||
Recorded investment in impaired loans | 189 | 189 | 279 | ||
Related allowance | 5 | 5 | 5 | ||
Average outstanding impaired loans | 232 | 373 | 248 | 341 | 327 |
Interest income recognized | 2 | 5 | 6 | 11 | 19 |
Single-family residential | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 4,785 | 4,785 | 5,059 | ||
Recorded investment with no allowance | 413 | 413 | 422 | ||
Recorded investment with allowance | 3,928 | 3,928 | 4,188 | ||
Recorded investment in impaired loans | 4,341 | 4,341 | 4,610 | ||
Related allowance | 29 | 29 | 32 | ||
Average outstanding impaired loans | 4,214 | 6,306 | 4,826 | 6,325 | 6,271 |
Interest income recognized | 57 | 66 | 118 | 135 | 261 |
Single-family residential - Banco de la Gente stated income | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 15,694 | 15,694 | 16,424 | ||
Recorded investment with no allowance | 0 | 0 | 0 | ||
Recorded investment with allowance | 14,975 | 14,975 | 15,776 | ||
Recorded investment in impaired loans | 14,975 | 14,975 | 15,776 | ||
Related allowance | 988 | 988 | 1,042 | ||
Average outstanding impaired loans | 15,347 | 14,841 | 15,010 | 14,981 | 14,619 |
Interest income recognized | 239 | 230 | 491 | 467 | 944 |
Commercial | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 1,734 | 1,734 | 1,995 | ||
Recorded investment with no allowance | 0 | 0 | 0 | ||
Recorded investment with allowance | 1,728 | 1,728 | 1,925 | ||
Recorded investment in impaired loans | 1,728 | 1,728 | 1,925 | ||
Related allowance | 13 | 13 | 17 | ||
Average outstanding impaired loans | 1,739 | 2,304 | 1,801 | 2,359 | 2,171 |
Interest income recognized | 22 | 42 | 45 | 80 | 111 |
Multifamily and Farmland | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 0 | 0 | 0 | ||
Recorded investment with no allowance | 0 | 0 | 0 | ||
Recorded investment with allowance | 0 | 0 | 0 | ||
Recorded investment in impaired loans | 0 | 0 | 0 | ||
Related allowance | 0 | 0 | 0 | ||
Average outstanding impaired loans | 0 | 0 | 0 | 4 | 0 |
Interest income recognized | 0 | 0 | 0 | 0 | 0 |
Total real estate loans | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 22,402 | 22,402 | 23,759 | ||
Recorded investment with no allowance | 413 | 413 | 422 | ||
Recorded investment with allowance | 20,820 | 20,820 | 22,168 | ||
Recorded investment in impaired loans | 21,233 | 21,233 | 22,590 | ||
Related allowance | 1,035 | 1,035 | 1,096 | ||
Average outstanding impaired loans | 21,532 | 23,824 | 21,885 | 24,010 | 23,388 |
Interest income recognized | 320 | 343 | 660 | 693 | 1,335 |
Commercial loans (not secured by real estate) | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 280 | 280 | 251 | ||
Recorded investment with no allowance | 38 | 38 | 89 | ||
Recorded investment with allowance | 80 | 80 | 1 | ||
Recorded investment in impaired loans | 118 | 118 | 90 | ||
Related allowance | 0 | 0 | 0 | ||
Average outstanding impaired loans | 114 | 98 | 106 | 100 | 96 |
Interest income recognized | 3 | 0 | 4 | 0 | 0 |
Consumer loans (not secured by real estate) | |||||
Impaired loans | |||||
Unpaid contractual principal balance | 105 | 105 | 116 | ||
Recorded investment with no allowance | 0 | 0 | 0 | ||
Recorded investment with allowance | 101 | 101 | 113 | ||
Recorded investment in impaired loans | 101 | 101 | 113 | ||
Related allowance | 2 | 2 | 2 | ||
Average outstanding impaired loans | 104 | 141 | 107 | 146 | 137 |
Interest income recognized | 2 | 2 | 4 | 4 | $ 7 |
Farm loans (not secured by real estate) | |||||
Impaired loans | |||||
Average outstanding impaired loans | 0 | 0 | 0 | 0 | |
Interest income recognized | $ 0 | $ 0 | $ 0 | $ 0 |
3. Loans (Details 4)
3. Loans (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Allowance for loan losses | ||||
Beginning balance | $ 6,561 | $ 6,373 | $ 6,445 | $ 6,366 |
Charge-offs | (196) | (401) | (360) | (507) |
Recoveries | 99 | 74 | 201 | 156 |
Provision | 77 | 231 | 255 | 262 |
Ending balance | 6,541 | 6,277 | 6,541 | 6,277 |
Ending balance: individually evaluated for impairments | 984 | 1,086 | 984 | 1,086 |
Ending balance: collectively evaluated for impairments | 5,557 | 5,191 | 5,557 | 5,191 |
Ending balance | 6,541 | 6,277 | 6,541 | 6,277 |
Loans | ||||
Ending balance | 833,367 | 781,884 | 833,367 | 781,884 |
Ending balance: individually evaluated for impairment | 16,938 | 19,399 | 16,938 | 19,399 |
Ending balance: collectively evaluated for impairment | 816,429 | 762,485 | 816,429 | 762,485 |
Construction and land development | ||||
Allowance for loan losses | ||||
Beginning balance | 831 | 651 | 813 | 804 |
Charge-offs | (21) | 0 | (21) | 0 |
Recoveries | 2 | 1 | 3 | 3 |
Provision | (49) | 16 | (32) | (139) |
Ending balance | 763 | 668 | 763 | 668 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 763 | 668 | 763 | 668 |
Ending balance | 763 | 668 | 763 | 668 |
Loans | ||||
Ending balance | 86,920 | 79,769 | 86,920 | 79,769 |
Ending balance: individually evaluated for impairment | 11 | 95 | 11 | 95 |
Ending balance: collectively evaluated for impairment | 86,909 | 79,674 | 86,909 | 79,674 |
Single-family residential | ||||
Allowance for loan losses | ||||
Beginning balance | 1,256 | 1,640 | 1,325 | 1,812 |
Charge-offs | (9) | (43) | (22) | (43) |
Recoveries | 5 | 22 | 53 | 27 |
Provision | 60 | 19 | (44) | (158) |
Ending balance | 1,312 | 1,638 | 1,312 | 1,638 |
Ending balance: individually evaluated for impairments | 2 | 2 | 2 | 2 |
Ending balance: collectively evaluated for impairments | 1,310 | 1,636 | 1,310 | 1,636 |
Ending balance | 1,312 | 1,638 | 1,312 | 1,638 |
Loans | ||||
Ending balance | 264,724 | 250,620 | 264,724 | 250,620 |
Ending balance: individually evaluated for impairment | 1,738 | 2,132 | 1,738 | 2,132 |
Ending balance: collectively evaluated for impairment | 262,986 | 248,488 | 262,986 | 248,488 |
Single-family residential - Banco de la Gente stated income | ||||
Allowance for loan losses | ||||
Beginning balance | 1,174 | 1,265 | 1,177 | 1,280 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision | (58) | (32) | (61) | (47) |
Ending balance | 1,116 | 1,233 | 1,116 | 1,233 |
Ending balance: individually evaluated for impairments | 970 | 1,066 | 970 | 1,066 |
Ending balance: collectively evaluated for impairments | 146 | 167 | 146 | 167 |
Ending balance | 1,116 | 1,233 | 1,116 | 1,233 |
Loans | ||||
Ending balance | 32,499 | 35,847 | 32,499 | 35,847 |
Ending balance: individually evaluated for impairment | 13,508 | 14,975 | 13,508 | 14,975 |
Ending balance: collectively evaluated for impairment | 18,991 | 20,872 | 18,991 | 20,872 |
Commercial | ||||
Allowance for loan losses | ||||
Beginning balance | 1,292 | 1,298 | 1,278 | 1,193 |
Charge-offs | 0 | (271) | 0 | (271) |
Recoveries | 19 | 4 | 23 | 7 |
Provision | 23 | 389 | 33 | 491 |
Ending balance | 1,334 | 1,420 | 1,334 | 1,420 |
Ending balance: individually evaluated for impairments | 12 | 18 | 12 | 18 |
Ending balance: collectively evaluated for impairments | 1,322 | 1,402 | 1,322 | 1,402 |
Ending balance | 1,334 | 1,420 | 1,334 | 1,420 |
Loans | ||||
Ending balance | 281,895 | 269,792 | 281,895 | 269,792 |
Ending balance: individually evaluated for impairment | 1,643 | 2,103 | 1,643 | 2,103 |
Ending balance: collectively evaluated for impairment | 280,252 | 267,689 | 280,252 | 267,689 |
Multifamily and Farmland | ||||
Allowance for loan losses | ||||
Beginning balance | 98 | 73 | 83 | 72 |
Charge-offs | 0 | 0 | 0 | (5) |
Recoveries | 0 | 0 | 0 | 1 |
Provision | 12 | (1) | 27 | 4 |
Ending balance | 110 | 72 | 110 | 72 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 110 | 72 | 110 | 72 |
Ending balance | 110 | 72 | 110 | 72 |
Loans | ||||
Ending balance | 44,065 | 28,667 | 44,065 | 28,667 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | 44,065 | 28,667 | 44,065 | 28,667 |
Commercial loans (not secured by real estate) | ||||
Allowance for loan losses | ||||
Beginning balance | 610 | 706 | 626 | 574 |
Charge-offs | 0 | (2) | (1) | (2) |
Recoveries | 8 | 8 | 14 | 16 |
Provision | (70) | (125) | (91) | (1) |
Ending balance | 548 | 587 | 548 | 587 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 548 | 587 | 548 | 587 |
Ending balance | 548 | 587 | 548 | 587 |
Loans | ||||
Ending balance | 103,466 | 93,580 | 103,466 | 93,580 |
Ending balance: individually evaluated for impairment | 38 | 94 | 38 | 94 |
Ending balance: collectively evaluated for impairment | 103,428 | 93,486 | 103,428 | 93,486 |
Farm loans (not secured by real estate) | ||||
Allowance for loan losses | ||||
Beginning balance | 0 | 0 | 0 | 0 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision | 0 | 0 | 0 | 0 |
Ending balance | 0 | 0 | 0 | 0 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance | 0 | 0 | 0 | 0 |
Loans | ||||
Ending balance | 1,060 | 1,023 | 1,060 | 1,023 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | 1,060 | 1,023 | 1,060 | 1,023 |
Consumer And All Other Loans | ||||
Allowance for loan losses | ||||
Beginning balance | 162 | 136 | 161 | 155 |
Charge-offs | (166) | (85) | (316) | (186) |
Recoveries | 65 | 39 | 108 | 102 |
Provision | 100 | 60 | 208 | 79 |
Ending balance | 161 | 150 | 161 | 150 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 161 | 150 | 161 | 150 |
Ending balance | 161 | 150 | 161 | 150 |
Loans | ||||
Ending balance | 18,738 | 22,586 | 18,738 | 22,586 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | 18,738 | 22,586 | 18,738 | 22,586 |
Unallocated | ||||
Allowance for loan losses | ||||
Beginning balance | 1,138 | 604 | 982 | 476 |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Provision | 59 | (95) | 215 | 33 |
Ending balance | 1,197 | 509 | 1,197 | 509 |
Ending balance: individually evaluated for impairments | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairments | 1,197 | 509 | 1,197 | 509 |
Ending balance | 1,197 | 509 | 1,197 | 509 |
Loans | ||||
Ending balance | 0 | 0 | 0 | 0 |
Ending balance: individually evaluated for impairment | 0 | 0 | 0 | 0 |
Ending balance: collectively evaluated for impairment | $ 0 | $ 0 | $ 0 | $ 0 |
3. Loans (Details 5)
3. Loans (Details 5) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Credit risk profile | |||
Total loans | $ 833,367 | $ 804,023 | $ 781,884 |
Excellent Quality | |||
Credit risk profile | |||
Total loans | 9,248 | 7,577 | |
High Quality | |||
Credit risk profile | |||
Total loans | 210,456 | 204,792 | |
Good Quality | |||
Credit risk profile | |||
Total loans | 509,628 | 489,142 | |
Management Attention | |||
Credit risk profile | |||
Total loans | 85,677 | 81,903 | |
Watch | |||
Credit risk profile | |||
Total loans | 12,248 | 13,824 | |
Substandard | |||
Credit risk profile | |||
Total loans | 6,110 | 6,785 | |
Doubtful | |||
Credit risk profile | |||
Total loans | 0 | 0 | |
Loss | |||
Credit risk profile | |||
Total loans | 0 | 0 | |
Construction and land development | |||
Credit risk profile | |||
Total loans | 86,920 | 94,178 | |
Single-family residential | |||
Credit risk profile | |||
Total loans | 264,724 | 252,983 | |
Single-family residential - Banco de la Gente stated income | |||
Credit risk profile | |||
Total loans | 32,499 | 34,261 | |
Commercial | |||
Credit risk profile | |||
Total loans | 281,895 | 270,055 | |
Multifamily and Farmland | |||
Credit risk profile | |||
Total loans | 44,065 | 33,163 | |
Commercial loans (not secured by real estate) | |||
Credit risk profile | |||
Total loans | 103,466 | 97,465 | |
Farm loans (not secured by real estate) | |||
Credit risk profile | |||
Total loans | 1,060 | 926 | |
Consumer loans (not secured by real estate) | |||
Credit risk profile | |||
Total loans | 8,684 | 9,165 | |
All other loans (not secured by real estate) | |||
Credit risk profile | |||
Total loans | 10,054 | 11,827 | |
Construction and land development | |||
Credit risk profile | |||
Total loans | 86,920 | 94,178 | 79,769 |
Construction and land development | Excellent Quality | |||
Credit risk profile | |||
Total loans | 82 | 504 | |
Construction and land development | High Quality | |||
Credit risk profile | |||
Total loans | 27,751 | 24,594 | |
Construction and land development | Good Quality | |||
Credit risk profile | |||
Total loans | 49,964 | 59,549 | |
Construction and land development | Management Attention | |||
Credit risk profile | |||
Total loans | 6,015 | 5,707 | |
Construction and land development | Watch | |||
Credit risk profile | |||
Total loans | 3,041 | 3,669 | |
Construction and land development | Substandard | |||
Credit risk profile | |||
Total loans | 67 | 155 | |
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 | 264,724 | 252,983 | 250,620 |
Single-family residential | Excellent Quality | |||
Credit risk profile | |||
Total loans | 7,788 | 5,795 | |
Single-family residential | High Quality | |||
Credit risk profile | |||
Total loans | 131,136 | 128,588 | |
Single-family residential | Good Quality | |||
Credit risk profile | |||
Total loans | 100,854 | 92,435 | |
Single-family residential | Management Attention | |||
Credit risk profile | |||
Total loans | 18,695 | 19,200 | |
Single-family residential | Watch | |||
Credit risk profile | |||
Total loans | 3,303 | 3,761 | |
Single-family residential | Substandard | |||
Credit risk profile | |||
Total loans | 2,948 | 3,204 | |
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 | 32,499 | 34,261 | 35,847 |
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 | 13,094 | 13,776 | |
Single-family residential - Banco de la Gente stated income | Management Attention | |||
Credit risk profile | |||
Total loans | 14,355 | 15,012 | |
Single-family residential - Banco de la Gente stated income | Watch | |||
Credit risk profile | |||
Total loans | 2,164 | 2,408 | |
Single-family residential - Banco de la Gente stated income | Substandard | |||
Credit risk profile | |||
Total loans | 2,886 | 3,065 | |
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 | 281,895 | 270,055 | 269,792 |
Commercial | Excellent Quality | |||
Credit risk profile | |||
Total loans | 0 | 0 | |
Commercial | High Quality | |||
Credit risk profile | |||
Total loans | 23,245 | 25,321 | |
Commercial | Good Quality | |||
Credit risk profile | |||
Total loans | 220,899 | 211,541 | |
Commercial | Management Attention | |||
Credit risk profile | |||
Total loans | 34,730 | 30,333 | |
Commercial | Watch | |||
Credit risk profile | |||
Total loans | 2,936 | 2,616 | |
Commercial | Substandard | |||
Credit risk profile | |||
Total loans | 85 | 244 | |
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 | 44,065 | 33,163 | 28,667 |
Multifamily and Farmland | Excellent Quality | |||
Credit risk profile | |||
Total loans | 0 | 0 | |
Multifamily and Farmland | High Quality | |||
Credit risk profile | |||
Total loans | 326 | 395 | |
Multifamily and Farmland | Good Quality | |||
Credit risk profile | |||
Total loans | 39,442 | 27,774 | |
Multifamily and Farmland | Management Attention | |||
Credit risk profile | |||
Total loans | 3,739 | 3,906 | |
Multifamily and Farmland | Watch | |||
Credit risk profile | |||
Total loans | 558 | 1,088 | |
Multifamily and Farmland | Substandard | |||
Credit risk profile | |||
Total loans | 0 | 0 | |
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 | 103,466 | 97,465 | 93,580 |
Commercial loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total loans | 586 | 605 | |
Commercial loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total loans | 23,039 | 20,520 | |
Commercial loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total loans | 72,668 | 69,651 | |
Commercial loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total loans | 6,847 | 6,325 | |
Commercial loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total loans | 234 | 264 | |
Commercial loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total loans | 92 | 100 | |
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 | 1,060 | 926 | $ 1,023 |
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 | 933 | 785 | |
Farm loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total loans | 127 | 141 | |
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 | 8,684 | 9,165 | |
Consumer loans (not secured by real estate) | Excellent Quality | |||
Credit risk profile | |||
Total loans | 792 | 673 | |
Consumer loans (not secured by real estate) | High Quality | |||
Credit risk profile | |||
Total loans | 2,896 | 3,229 | |
Consumer loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total loans | 4,521 | 4,699 | |
Consumer loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total loans | 431 | 529 | |
Consumer loans (not secured by real estate) | Watch | |||
Credit risk profile | |||
Total loans | 12 | 18 | |
Consumer loans (not secured by real estate) | Substandard | |||
Credit risk profile | |||
Total loans | 32 | 17 | |
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 | 0 | 0 | |
All other loans (not secured by real estate) | |||
Credit risk profile | |||
Total loans | 10,054 | 11,827 | |
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 | 2,063 | 2,145 | |
All other loans (not secured by real estate) | Good Quality | |||
Credit risk profile | |||
Total loans | 7,253 | 8,932 | |
All other loans (not secured by real estate) | Management Attention | |||
Credit risk profile | |||
Total loans | 738 | 750 | |
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 (Details Narrative)
3. Loans (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Receivables [Abstract] | |||||
Percentage of construction and land development loans in Bank's loan portfolio | 10.00% | 10.00% | |||
Percentage of single-family residential loans in Bank's loan portfolio | 36.00% | 36.00% | |||
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio | 4.00% | 4.00% | |||
Percentage of commercial real estate loans in Bank's loan portfolio | 34.00% | 34.00% | |||
Percentage of commercial loans in Bank's loan portfolio | 12.00% | 12.00% | |||
Accruing impaired loans | $ 21,400 | $ 24,300 | $ 21,400 | $ 24,300 | $ 22,800 |
Interest income recognized on accruing impaired loans | 325 | 345 | 668 | 697 | 1,342 |
Provision for loan losses | 77 | $ 231 | 255 | $ 262 | |
TDR loans modified, past-due TDR loans and non-accrual TDR Loans | $ 2,200 | $ 2,200 | $ 4,700 |
4. Net Earnings Per Share (Deta
4. Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net Earnings | ||||
Basic earnings per share | $ 3,813 | $ 3,176 | $ 7,480 | $ 6,479 |
Effect of dilutive securities: restricted stock units | 0 | 0 | 0 | 0 |
Diluted earnings per share | $ 3,813 | $ 3,176 | $ 7,480 | $ 6,479 |
Weighted Average Number of Shares | ||||
Basic earnings per share (in shares) | 5,940,556 | 5,995,256 | 5,968,368 | 5,995,256 |
Effect of dilutive securities: restricted stock units (in shares) | 24,453 | 18,917 | 24,412 | 17,964 |
Diluted earnings per share (in shares) | 5,965,009 | 6,014,173 | 5,992,780 | 6,013,220 |
Per Share Amount | ||||
Basic earnings per share | $ 0.64 | $ 0.53 | $ 1.25 | $ 1.08 |
Diluted earnings per share | $ 0.64 | $ 0.53 | $ 1.25 | $ 1.08 |
5. Stock-Based Compensation (De
5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||
Unrecognized compensation cost | $ 286 | |
Recognized compensation expense | $ 170 | $ 139 |
6. Fair Value (Details)
6. Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Estimated fair value | $ 188,972 | $ 194,578 |
Level 1 | ||
Estimated fair value | 0 | 0 |
Level 2 | ||
Estimated fair value | 188,722 | 194,328 |
Level 3 | ||
Estimated fair value | 250 | 250 |
Mortgage-backed securities | ||
Estimated fair value | 59,119 | 52,103 |
Mortgage-backed securities | Level 1 | ||
Estimated fair value | 0 | 0 |
Mortgage-backed securities | Level 2 | ||
Estimated fair value | 59,119 | 52,103 |
Mortgage-backed securities | Level 3 | ||
Estimated fair value | 0 | 0 |
U.S. Government sponsored enterprises | ||
Estimated fair value | 33,474 | 34,634 |
U.S. Government sponsored enterprises | Level 1 | ||
Estimated fair value | 0 | 0 |
U.S. Government sponsored enterprises | Level 2 | ||
Estimated fair value | 33,474 | 34,634 |
U.S. Government sponsored enterprises | Level 3 | ||
Estimated fair value | 0 | 0 |
State and political subdivisions | ||
Estimated fair value | 96,129 | 107,591 |
State and political subdivisions | Level 1 | ||
Estimated fair value | 0 | 0 |
State and political subdivisions | Level 2 | ||
Estimated fair value | 96,129 | 107,591 |
State and political subdivisions | Level 3 | ||
Estimated fair value | 0 | 0 |
Trust preferred securities | ||
Estimated fair value | 250 | 250 |
Trust preferred securities | Level 1 | ||
Estimated fair value | 0 | 0 |
Trust preferred securities | Level 2 | ||
Estimated fair value | 0 | 0 |
Trust preferred securities | Level 3 | ||
Estimated fair value | $ 250 | $ 250 |
6. Fair Value (Details 1)
6. Fair Value (Details 1) - Level 3 $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Investment Securities Available for Sale Level 3 Valuation | |
Balance, beginning of period | $ 250 |
Change in book value | 0 |
Change in gain/(loss) realized and unrealized | 0 |
Purchases/(sales and calls) | 0 |
Transfers in and/or (out) of Level 3 | 0 |
Balance, end of period | 250 |
Change in unrealized gain/(loss) for assets still held in Level 3 | $ 0 |
6. Fair Value (Details 2)
6. Fair Value (Details 2) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Mortgage loans held for sale | $ 2,309 | $ 680 |
Impaired loans | 20,415 | 21,695 |
Other real estate | $ 10 | 27 |
Mortgage loans held for sale [Member] | ||
Valuation technique | Rate lock commitment | |
Significant unobservable inputs | N/A | |
General range of significant unobservable input values | N/A | |
Impaired loans [Member] | ||
Valuation technique | Appraised value and discounted cash flows | |
Significant unobservable inputs | Discounts to reflect current market conditions and ultimate collectability | |
General range of significant unobservable input values | Discounts to reflect current market conditions and estimated costs to sell | |
Other real estate [Member] | ||
Valuation technique | Appraised value | |
Significant unobservable inputs | 0 - 25% | |
General range of significant unobservable input values | 0 - 25% | |
Level 1 | ||
Mortgage loans held for sale | $ 0 | 0 |
Impaired loans | 0 | 0 |
Other real estate | 0 | 0 |
Level 2 | ||
Mortgage loans held for sale | 0 | 0 |
Impaired loans | 0 | 0 |
Other real estate | 0 | 0 |
Level 3 | ||
Mortgage loans held for sale | 2,309 | 680 |
Impaired loans | 20,415 | 21,695 |
Other real estate | $ 10 | $ 27 |
6. Fair Value (Details 3)
6. Fair Value (Details 3) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and cash equivalents | $ 38,822 | $ 43,370 |
Investment securities available for sale | 188,972 | 194,578 |
Other investments | 4,296 | 4,361 |
Mortgage loans held for sale | 2,309 | 680 |
Loans, net | 826,826 | 797,578 |
Cash surrender value of life insurance | 16,126 | 15,936 |
Liabilities: | ||
Deposits | 904,227 | 877,213 |
Securities sold under agreements to repurchase | 47,733 | 58,095 |
Junior subordinated debentures | 20,619 | 20,619 |
Estimated Fair Value | ||
Assets: | ||
Cash and cash equivalents | 38,822 | 43,370 |
Investment securities available for sale | 188,972 | 194,578 |
Other investments | 4,296 | 4,361 |
Mortgage loans held for sale | 2,309 | 680 |
Loans, net | 803,542 | 748,917 |
Cash surrender value of life insurance | 16,126 | 15,936 |
Liabilities: | ||
Deposits | 884,712 | 857,999 |
Securities sold under agreements to repurchase | 47,733 | 58,095 |
Junior subordinated debentures | 20,619 | 20,619 |
Level 1 | ||
Assets: | ||
Cash and cash equivalents | 38,822 | 43,370 |
Investment securities available for sale | 0 | 0 |
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 |
Junior subordinated debentures | 0 | 0 |
Level 2 | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 188,722 | 194,328 |
Other investments | 0 | 0 |
Mortgage loans held for sale | 0 | 0 |
Loans, net | 0 | 0 |
Cash surrender value of life insurance | 16,126 | 15,936 |
Liabilities: | ||
Deposits | 0 | 0 |
Securities sold under agreements to repurchase | 47,733 | 58,095 |
Junior subordinated debentures | 20,619 | 20,619 |
Level 3 | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Investment securities available for sale | 250 | 250 |
Other investments | 4,296 | 4,361 |
Mortgage loans held for sale | 2,309 | 680 |
Loans, net | 803,542 | 748,917 |
Cash surrender value of life insurance | 0 | 0 |
Liabilities: | ||
Deposits | 884,712 | 857,999 |
Securities sold under agreements to repurchase | 0 | 0 |
Junior subordinated debentures | $ 0 | $ 0 |
7. Leases (Details)
7. Leases (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Leases [Abstract] | ||
Operating lease cost | $ 4,392 | |
Amortization of right-of-use assets | (392) | $ 0 |
Interest on lease liability | 0 | |
Variable lease cost | 0 | |
Total operating lease cost | 4,000 | |
Cash paid for amounts included in the measurement of lease liabilities | 433 | |
Operating cash flows from operating leases | 0 | |
Right-of-use assets obtained in exchange for new finance operating liabilities | $ 0 | |
Weighted-average remaining lease term - operating leases | 4 years 2 months 1 day | |
Weighted-average discount rate - operating leases | 2.90% |
7. Leases (Details 1)
7. Leases (Details 1) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
2020 | $ 850 | |
2021 | 801 | |
2022 | 648 | |
2023 | 452 | |
2024 | 343 | |
Thereafter | 1,466 | |
Total | 4,560 | |
Less: imputed interest | (547) | |
Operating lease liability | $ 4,013 | $ 0 |