Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 25, 2016 | Jun. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Independence Bancshares, Inc. | ||
Entity Central Index Key | 1,311,828 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 8,816,187 | ||
Entity Common Stock, Shares Outstanding | 20,502,760 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and due from banks | $ 5,453,795 | $ 5,261,080 |
Federal funds sold | 8,446,000 | 5,643,000 |
Cash and cash equivalents | 13,899,795 | $ 10,904,080 |
Interest-bearing deposits in other institutions | 1,500,000 | |
Investment securities available for sale | 10,687,851 | $ 15,615,526 |
Non-marketable equity securities | 392,500 | 609,650 |
Loans, net of an allowance for loan losses of $1,139,509 and $1,032,776, respectively | 66,402,246 | 67,994,667 |
Accrued interest receivable | 232,215 | 291,288 |
Property, equipment, and software, net | 2,198,796 | 2,384,007 |
Other real estate owned and repossessed assets | 1,910,220 | 2,557,457 |
Other assets | 243,683 | 355,307 |
Total assets | 97,467,306 | 100,711,982 |
Deposits: | ||
Non-interest bearing | 13,010,209 | 11,016,882 |
Interest bearing | 70,557,116 | 71,857,781 |
Total deposits | $ 83,567,325 | 82,874,663 |
Federal Home Loan Bank advances | 5,000,000 | |
Note payable | 600,000 | |
Securities sold under agreements to repurchase | $ 113,080 | 153,603 |
Accrued interest payable | 7,909 | 8,226 |
Accounts payable and accrued expenses | 1,134,833 | 2,664,910 |
Total liabilities | $ 84,823,147 | $ 91,301,402 |
Commitments and contingencies - notes 13 and 14 | ||
Shareholders' equity | ||
Common stock, par value $.01 per share; 300,000,000 shares authorized; 20,502,760 shares issued and outstanding | $ 205,028 | $ 205,028 |
Additional paid-in capital | 43,043,473 | 35,124,151 |
Accumulated other comprehensive income | 113,846 | 1,154 |
Accumulated deficit | (30,718,272) | (25,919,753) |
Total shareholders' equity | 12,644,159 | 9,410,580 |
Total liabilities and shareholders' equity | 97,467,306 | $ 100,711,982 |
Series A Preferred Stock [Member] | ||
Shareholders' equity | ||
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; 8,425 Series A shares issued and outstanding | $ 84 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Allowance for loan losses | $ 1,139,509 | $ 1,032,776 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 20,502,760 | 20,502,760 |
Common stock, shares outstanding | 20,502,760 | 20,502,760 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares issued | 8,425 | |
Preferred stock, shares outstanding | 8,425 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Interest income | ||
Loans | $ 3,193,831 | $ 3,388,060 |
Investment securities | 323,979 | 495,403 |
Federal funds sold and other | 49,953 | 34,505 |
Total interest income | 3,567,763 | 3,917,968 |
Interest expense | ||
Deposits | 315,483 | 292,287 |
Borrowings | 15,578 | 19,737 |
Total interest expense | 331,062 | 312,024 |
Net interest income | 3,236,701 | 3,605,944 |
Provision (reversal of provision) for loan losses | 150,000 | (30,000) |
Net interest income after provision for loan losses | 3,086,701 | 3,635,944 |
Non-interest income | ||
Service fees on deposit accounts | 81,159 | 54,244 |
Residential loan origination fees | 224,663 | $ 191,384 |
Forgiveness of debt | $ (403,245) | |
Gain on sale of loans held for sale | $ 118,452 | |
(Loss) gain on sale of investments | $ (87,995) | 1,032 |
Other income | 45,835 | 75,646 |
Total non-interest income | 666,907 | 440,758 |
Non-interest expenses | ||
Compensation and benefits | 2,950,953 | 2,634,902 |
Real estate owned activity | 457,173 | 651,038 |
Occupancy and equipment | 678,404 | 630,638 |
Insurance | 233,168 | 281,503 |
Data processing and related costs | 343,107 | 337,510 |
Professional fees | 1,320,505 | 739,618 |
Product research and development expense | 2,209,978 | 4,938,034 |
Other | 353,759 | 363,715 |
Total non-interest expenses | 8,547,047 | 10,576,958 |
Loss before income tax expense | (4,793,439) | $ (6,500,256) |
Income tax expense | 5,080 | |
Net loss | (4,798,519) | $ (6,500,256) |
Other comprehensive income, net of tax | ||
Unrealized gain on investment securities available for sale, net of tax | 24,697 | 1,218,904 |
Reclassification adjustment included in net income, net of tax | 87,995 | (1,032) |
Other comprehensive income | 112,692 | 1,217,872 |
Total comprehensive loss | $ (4,685,827) | $ (5,282,384) |
Loss per common share - basic and diluted | $ (0.23) | $ (0.32) |
Weighted average common shares outstanding - basic and diluted | 20,502,760 | 20,502,760 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Total | Common stock | Preferred stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit |
Beginning Balance at Dec. 31, 2013 | $ 14,307,456 | $ 205,028 | $ 34,738,643 | $ (1,216,718) | $ (19,419,797) | |
Beginning Balance, shares at Dec. 31, 2013 | 20,502,760 | |||||
Compensation expense related to stock options granted | 385,508 | 385,508 | ||||
Net loss | (6,500,256) | (6,500,256) | ||||
Other comprehensive income | 1,217,872 | 1,217,872 | ||||
Ending Balance at Dec. 31, 2014 | 9,410,580 | $ 205,028 | 35,124,151 | 1,154 | (25,919,753) | |
Ending Balance, shares at Dec. 31, 2014 | 20,502,760 | |||||
Compensation expense related to stock options granted | 303,829 | 303,829 | ||||
Issuance of preferred stock - net of expenses | 7,615,577 | $ 84 | 7,615,493 | |||
Issuance of preferred stock - net of expenses, shares | 8,425 | |||||
Net loss | (4,798,519) | (4,798,519) | ||||
Other comprehensive income | 112,692 | 112,692 | ||||
Ending Balance at Dec. 31, 2015 | $ 12,644,159 | $ 205,208 | $ 84 | $ 43,043,473 | $ 113,846 | $ (30,718,272) |
Ending Balance, shares at Dec. 31, 2015 | 20,502,760 | 8,425 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | ||
Net loss | $ (4,798,519) | $ (6,500,256) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Provision (reversal of provision) for loan losses | 150,000 | (30,000) |
Depreciation | 215,471 | 216,323 |
Amortization of investment securities discounts/premiums, net | 110,134 | 240,072 |
Stock option expense related to stock based amortization | $ 303,829 | 385,508 |
Loss (gain) on sale of investment securities | (118,452) | |
Gain on sale of loans held for sale | $ 87,995 | (1,032) |
Net changes in fair value and losses on other real estate owned and repossessed assets | 364,942 | 588,450 |
Decrease in other assets, net | 170,697 | $ 361,679 |
Forgiveness of debt | (403,245) | |
Increase (decrease) in other liabilities, net | (1,185,202) | $ 1,976,418 |
Net cash used in operating activities | (4,983,898) | (2,881,290) |
Investing activities | ||
Net decrease (increase) in loans | $ 1,142,421 | (6,753,965) |
Proceeds from sale of loans held for sale | $ 1,033,000 | |
Purchases of investment securities available for sale | $ (336,864) | |
Purchases of interest bearing deposits in other institutions | (1,500,000) | |
Maturities and sales of investment securities available for sale | 4,070,789 | $ 4,097,244 |
Repayments of investment securities available for sale | 1,166,366 | 1,392,127 |
Redemption (purchase) of non-marketable equity securities | 217,150 | (185,450) |
Purchase of property, equipment, and software | (30,260) | (87,514) |
Proceeds from sale of other real estate owned and repossessed assets | 582,295 | 505,263 |
Net cash provided by investing activities | 5,311,897 | 705 |
Financing activities | ||
Increase (decrease) in deposits, net | 692,662 | (6,294,014) |
(Repayments on) proceeds from borrowings | (5,000,000) | 5,000,000 |
(Decrease) increase in securities sold under agreements to repurchase | (40,523) | 56,724 |
(Repayments on) proceeds from issuance of note payable | (600,000) | $ 600,000 |
Issuance of preferred stock, net of offering expenses | 7,615,577 | |
Net cash provided by (used in) financing activities | 2,667,716 | $ (637,290) |
Net increase (decrease) in cash and cash equivalents | 2,995,715 | (3,517,875) |
Cash and cash equivalents at beginning of the year | 10,904,080 | 14,421,955 |
Cash and cash equivalents at end of the year | 13,899,795 | 10,904,080 |
Cash paid for | ||
Interest | 331,379 | 311,230 |
Schedule of non-cash transactions | ||
Unrealized gain on securities available for sale, net of tax | 24,697 | 1,218,904 |
Loans transferred to other real estate owned and repossessed assets | $ 300,000 | $ 1,143,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Activities | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies and Activities [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES | NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES Independence Bancshares, Inc. (the “Company”) is a South Carolina corporation organized to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act of 1996, and to own and control all of the capital stock of Independence National Bank (the “Bank”). The Bank is a national association organized under the laws of the United States to conduct general banking business in Greenville, South Carolina. The Bank operates three full service branch offices in Greenville, South Carolina. On May 31, 2005, the Company sold 2,085,010 shares of its common stock in its initial public offering. All shares were sold at $10.00 per share. The offering raised approximately $20.5 million, net of offering costs. On December 31, 2012, the Company sold 17,648,750 shares of its common stock to certain accredited investors in a Private Placement (the “Private Placement”), which equated to gross proceeds of $14.1 million. All shares were sold at $0.80 per share. On August 1, 2013, the Company sold 769,000 shares of its common stock at a price of $0.80 per share to certain existing shareholders in a follow-on offering for gross proceeds of approximately $615,200 (the “Follow-on Offering”). On May 14, 2015, the Company issued 8,425 shares of Series A convertible preferred stock (the “Series A Shares”) to certain institutional investors and members of the Company’s management team for gross cash proceeds of approximately $8,425,000, at a price of $1,000 per share (the “Series A Private Placement). Each Series A share is convertible, at the holder’s option, into 1,250 shares of common stock and rank senior to our common stock with respect to dividends, distributions and liquidation preferences. The Series A shares have a liquidation preference of $1,000 per share. Also on May 14, 2015, the Company entered into a license agreement with MPIB Holdings, LLC (“MPIB”) pursuant to which it received a non-exclusive, non-transferable, non-licensable, worldwide license to use certain intellectual property of MPIB related to mobile payments and digital transactions. On January 4, 2016, the parties amended and restated the license agreement (the “Amended and Restated License Agreement”) pursuant to which MPIB agreed to make the license perpetual, subject to termination rights of the parties set forth in the Amended and Restated License Agreement, in exchange for the Company’s payment of an additional license fee of $275,000. On September 25, 2015, the Company suspended further development of its digital banking, payments and transaction services business. The board of directors intends to explore strategic alternatives for this line of business and the Company. In conjunction with the suspension of further development of the digital banking, payments and transaction services business, the Company terminated the employment of those employees who were primarily engaged in this development, including Gordon A. Baird, the Company’s former Chief Executive Officer. The board of directors terminated the Mr. Baird’s employment agreement with the Company effective as of September 25, 2015. No Bank employees were terminated, and there have been no material changes to the Bank’s operations. On October 4, 2015, the board of directors appointed Lawrence R. Miller, the president and chief executive officer of the Bank, as the Company’s interim Chief Executive Officer. The following is a description of the significant accounting and reporting policies that the Company follows in preparing and presenting consolidated financial statements. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Independence National Bank. In consolidation, all significant intercompany transactions have been eliminated. The accounting and reporting policies conform to accounting principles generally accepted in the United States and to general practices in the banking industry. Subsequent Events Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management performed an evaluation to determine whether or not there have been any subsequent events since the balance sheet date. Reclassifications Certain amounts have been reclassified to state all periods on a comparable basis. Reclassifications had no effect on previously reported shareholders’ equity or net loss. Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of income and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, including valuation allowances for impaired loans, and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation of foreclosed real estate, management obtains independent appraisals for significant properties and takes into account other current market information. Management must also make estimates in determining the useful lives and methods for depreciating premises and equipment. While management uses available information to recognize losses on loans and foreclosed real estate, future additions to the allowance for loan losses and changes to valuation of foreclosed real estate may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and valuation of foreclosed real estate. Such agencies may require the Company to recognize additions to the allowance for loan losses or additional write-downs on foreclosed real estate based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan losses and valuation of foreclosed real estate may change materially in the near term. Business Segments The Company reports its activities as four business segments — Community Banking, Transaction Services, Asset Management and Parent Only. In determining proper segment definition, the Company considers the materiality of a potential segment and components of the business about which financial information is available and regularly evaluated, relative to a resource allocation and performance assessment. Please refer to “Note 19 — Business Segments” for further information on the reporting for the four business segments. Risks and Uncertainties In the normal course of its business, the Company encounters two significant types of risks: economic and regulatory. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk to the degree that its interest bearing liabilities mature or reprice at different speeds, or on different bases, than its interest-earning assets. Credit risk is the risk of default within the Company’s loan portfolio that results from borrowers’ inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loans receivable and the valuation of real estate held by the Company. The Company is subject to the regulations of various governmental agencies. These regulations can change significantly from period to period. The Company also undergoes periodic examinations by the regulatory agencies, which may subject it to changes with respect to valuation of assets, amount of required loss allowance and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations. The Bank makes loans to individuals and businesses in and around “Upstate” South Carolina for various personal and commercial purposes. The Bank has a diversified loan portfolio. Borrowers’ ability to repay their loans is not dependent upon any specific economic sector. Regulatory Considerations On June 5, 2014, the Board of Directors of the Bank received an Order Terminating the Consent Order indicating that the Bank’s Consent Order with the OCC, which, among other things, required the Bank to maintain minimum capital levels in excess of the minimum regulatory capital ratios for “well-capitalized” banks, had been terminated effective June 4, 2014. The Bank was considered “well-capitalized” as of December 31, 2015. The Bank entered into the Consent Order with the OCC on November 14, 2011, which, among other things, contained a requirement that the Bank maintain minimum capital levels that exceed the minimum regulatory capital ratios for “well-capitalized” banks. The Consent Order required the Bank to achieve and maintain Tier 1 capital at least equal to 9% of adjusted total average assets, Tier 1 risk based capital at least equal to 10%, and total risk based capital at least equal to 12% of risk-weighted assets. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents includes cash, amounts due from banks and federal funds sold. Generally, federal funds are sold for one-day periods. Due to the short term nature of cash and cash equivalents, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value. At December 31, 2015 and 2014, the Company had restricted cash totaling $2,000 with the Federal Home Loan Bank (“FHLB”) of Atlanta. The Company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant. Investment Securities Investment securities are accounted for in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments — Debt and Equity Securities.” Management classifies securities at the time of purchase into one of three categories as follows: (1) Securities Held to Maturity: securities which the Company has the positive intent and ability to hold to maturity, which are reported at amortized cost; (2) Trading Securities: securities that are bought and held principally for the purpose of selling them in the near future, which are reported at fair value with unrealized gains and losses included in earnings; and (3) Securities Available for Sale: securities that may be sold under certain conditions, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of shareholders’ equity as accumulated other comprehensive income. The amortization of premiums and accretion of discounts on investment securities are recorded as adjustments to interest income. Gains or losses on sales of investment securities are based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Unrealized losses on securities, reflecting a decline in value or impairment judged by the Company to be other-than-temporary, are charged to earnings in the consolidated statements of operations. Non-Marketable Equity Securities The Bank, as a member of the Federal Reserve Bank (“FRB”) and the FHLB, is required to own capital stock in these organizations. The amount of FRB stock owned is based on the Bank’s capital levels and totaled $303,500 and $295,250 at December 31, 2015 and 2014, respectively. The amount of FHLB stock owned is determined based on the Bank’s balances of residential mortgages and advances from the FHLB and totaled $89,000 and $314,400 at December 31, 2015 and 2014, respectively. No ready market exists for these stocks, and they have no quoted market value. However, redemption of these stocks has historically been at par value. Accordingly, the carrying amounts are deemed to be a reasonable estimate of fair value. Loans Receivable Loans are stated at their unpaid principal balance net of any charge-offs. Interest income is computed using the simple interest method and is recorded in the period earned. Fees earned and direct costs incurred on loans are amortized using the effective interest method over the life of the loan. When serious doubt exists as to the collectability of a loan or when a loan becomes contractually 90 days past due as to principal or interest, interest income is generally discontinued unless the estimated net realizable value of collateral exceeds the principal balance and accrued interest. When interest accruals are discontinued, income earned but not collected is reversed. Cash receipts on nonaccrual loans are not recorded as interest income, but are used to reduce principal. Generally, loans are returned to accrual status when the loan is brought current and ultimate collectability of principal and interest is no longer in doubt. Allowance for Loan Losses An allowance for loan losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent losses in the loan portfolio. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. In cases where management deems the amount of the reserve for loan losses to be less than previously determined, an adjustment to lower or reverse the provision will be recorded. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, as well as any reversal of provision, if any, are credited to the allowance. The allowance for loan losses or any reversal of provision is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of both a specific and a general component. The specific component relates to loans that are impaired loans as defined in FASB ASC Topic 310, “Receivables”. For such loans, an allowance is established when either the discounted cash flows or collateral value (less estimated selling costs) or observable market price of the impaired loan is lower than the carrying value of that loan. The general reserve component covers non-impaired loans and is calculated by applying historical loss factors to each sector of the loan portfolio and adjusting for qualitative environmental factors. Qualitative adjustments are used to adjust the historical average for changes to loss indicators within the economy, our market, and specifically our portfolio. The general reserve component is then combined with the specific reserve to determine the total allowance for loan losses. The Company identifies impaired loans through its internal loan review process. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans on the Company’s problem loan watch list are considered potentially impaired loans. Generally, once loans are considered impaired, they are moved to nonaccrual status and recognition of interest income is discontinued. Impairment is measured on a loan-by-loan basis based on the determination of the most probable source of repayment which is usually liquidation of the underlying collateral, but may also include discounted future cash flows, or in rare cases, the market value of the loan itself. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement. The Company designates loan modifications as troubled debt restructurings (TDRs) when, for economic or legal reasons related to the borrower’s financial difficulties, a concession is granted to the borrower that would not otherwise be considered. Upon initial restructuring, TDRs are considered classified and impaired and are placed in nonaccrual status if not already categorized. TDRs are returned to accrual status when there is economic substance to the restructuring, any portion of the debt not expected to be repaid has been charged off, the remaining note is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally six months). Property and Equipment and Software Land is reported at cost. Buildings and improvements, furniture and equipment, capitalized software, and automobiles are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method, based on the estimated useful lives of 40 years for buildings and 3 to 15 years for software, furniture, equipment and automobiles. Leasehold improvements are amortized over the life of the lease. The cost of assets sold or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the statement of operations when incurred. Maintenance and repairs are charged to current expense. The costs of major renewals and improvements are capitalized. Other Real Estate Owned and Repossessed Assets Real estate and other property acquired in settlement of loans, is recorded at the lower of cost or fair value less estimated selling costs, establishing a new cost basis at the time of acquisition. Fair value of such property is reviewed regularly and write-downs are recorded when it is determined that the carrying value of the property exceeds the fair value less estimated costs to sell. Write-downs resulting from the periodic reevaluation of such properties, costs related to holding such properties, and gains and losses on the sale of foreclosed properties are charged against income. Costs relating to the development and improvement of such properties are capitalized. Securities Sold Under Agreements to Repurchase The Bank enters into sales of securities under agreements to repurchase. Repurchase agreements are treated as financing, with the obligation to repurchase securities sold being reflected as a liability and the securities underlying the agreements remaining as assets. Fair Value The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”), which provides a framework for measuring and disclosing fair value under GAAP. ASC Topic 820 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans). ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 Valuations are based on quoted prices in active markets for identical assets or liabilities. Level 2 Valuations are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Valuations include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Residential Loan Origination Fees The Company offers residential loan origination services to its customers. The loans are offered on terms and prices offered by the Company’s correspondents and are closed in the name of the correspondents. The Company receives fees for services it provides in conjunction with these origination services. The fees are recognized at the time the loans are closed by the Company’s correspondent. Residential loan origination fees are included in other income on the Company’s consolidated statements of operations. Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets if it is determined to be “more likely than not” that all or some portion of the potential deferred tax asset will not be realized. Net Loss per Common Share Basic loss per common share represents net loss divided by the weighted-average number of common shares outstanding during the period. Diluted loss per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options and warrants, and are determined using the treasury stock method. For the years ended December 31, 2015 and 2014 as a result of the Company’s net loss, all of the potential common shares (3,097,255 and 3,102,255 stock options, respectively, and zero and 312,500 warrants, respectively, as the warrants were not exercised and were deemed expired in May 2015) were considered anti-dilutive. Research and Development All costs incurred to establish the technological feasibility of computer software to be sold, leased or otherwise marketed as research and development are expensed as incurred. Once technological feasibility has been established, the subsequent costs of producing, coding and testing the products should be capitalized. The expensing of computer software costs is discontinued when the product is available for general release to customers. Currently, the Company has not achieved technological feasibility and is expensing all computer software purchases and development expenses related to research and development. Once technological feasibility is reached, the Company will capitalize costs as incurred until such point that the software being produced is available for general release to customers. On September 25, 2015, the Company suspended further development of its digital banking, payments and transaction services business. The board of directors intends to explore strategic alternatives for this line of business and the Company. Recently Issued Accounting Pronouncements The following is a summary of recent authoritative pronouncements that may affect our accounting, reporting, and disclosure of financial information: In January 2014, the Financial Accounting Standards Board (“FASB”) amended Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (“OREO”). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments were effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company applied the amendments prospectively. These amendments did not have a material effect on the Company’s financial statements. In April 2014, the FASB issued guidance to change the criteria for reporting a discontinued operation. Under the new guidance, a disposal of part of an organization that has a major effect on its operations and financial results is a discontinued operation. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2014 and August 2015, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments will be effective for the Company for the first interim or annual period beginning after December 15, 2014. The Company applied the guidance by making a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. These amendments did not have a material effect on the Company’s financial statements. In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments will be effective for the Company for fiscal years that begin after December 15, 2015. The Company will apply the guidance to all stock awards granted or modified after the amendments are effective. The Company does not expect these amendments to have a material effect on its financial statements. In August 2014, the FASB issued guidance that is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements, management will need to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the organization’s ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments will be effective for the Company for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under the U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted, provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees wil |
Investment Securities
Investment Securities | 12 Months Ended |
Dec. 31, 2015 | |
Investment Securities [Abstract] | |
INVESTMENT SECURITIES | NOTE 2 — INVESTMENT SECURITIES The amortized costs and fair values of investment securities available for sale are as follows: December 31, 2015 Gross Unrealized Amortized Fair Cost Gains Losses Value Government-sponsored mortgage-backed $ 4,290,680 $ 66,350 $ (44,581 ) $ 4,312,449 Municipals, tax-exempt 4,916,379 140,335 (17,267 ) 5,039,447 Municipals, taxable 1,308,298 27,657 — 1,335,955 Total investment securities available for sale $ 10,515,357 $ 234,342 $ (61,848 ) $ 10,687,851 December 31, 2014 Gross Unrealized Amortized Fair Cost Gains Losses Value Government-sponsored mortgage-backed $ 7,597,334 $ 122,491 $ (118,308 ) $ 7,601,517 Collateralized mortgage-backed 2,040,478 — (57,518 ) 1,982,960 Municipals, tax-exempt 4,658,532 68,643 (30,179 ) 4,696,996 Municipals, taxable 1,317,433 16,620 — 1,334,053 Total investment securities available for sale $ 15,613,777 $ 207,754 $ (206,005 ) $ 15,615,526 The following table presents information regarding securities with unrealized losses at December 31, 2015: Securities in an Securities in an Unrealized Unrealized Loss Position for Loss Position for Less than More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Government-sponsored mortgage-backed $ 627,542 $ 5,569 $ 764,462 $ 39,012 $ 1,392,004 $ 44,581 Municipals, tax-exempt 323,796 6,249 1,074,440 11,018 1,398,236 17,267 Total temporarily impaired securities $ 951,338 $ 11,818 $ 1,838,902 $ 50,030 $ 2,790,240 $ 61,848 The following table presents information regarding securities with unrealized losses at December 31, 2014: Securities in an Securities in an Unrealized Unrealized Loss Position for Loss Position for Less than More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Government-sponsored mortgage-backed $ — $ — $ 3,247,141 $ 118,308 $ 3,189,623 $ 118,308 Collateralized mortgage-backed — — 1,982,960 57,518 2,040,478 57,518 Municipals, tax-exempt — — 1,072,090 30,179 1,072,090 30,179 Total temporarily impaired securities $ — $ — $ 6,302,191 $ 206,005 $ 6,302,191 $ 206,005 At December 31, 2015, there were investment securities with a fair value of approximately $ 951,000 which had been in a continuous loss position for less than twelve months. At December 31, 2015, investment securities with a fair value of approximately $1.8 million and unrealized losses of $50,030 had been in a continuous loss position for more than one year. All remaining investment securities were in an unrealized gain position. The Company believes, based on industry analyst reports and credit ratings that the deterioration in the fair value of these investment securities available for sale is attributed to changes in market interest rates and not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company has the ability and intent to hold these securities until such time as the values recover or the securities mature. At December 31, 2014, there were no investment securities which had been in a continuous loss position for less than twelve months. At December 31, 2014, investment securities with a fair value of approximately $6.3 million and unrealized losses of $206,005 had been in a continuous loss position for more than one year. All remaining investment securities were in an unrealized gain position. The amortized costs and fair values of investment securities available for sale at December 31, 2015, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers have the right to prepay the obligations. December 31, 2015 Amortized Fair Cost Value Due within one year $ — $ — Due after one through three years — — Due after three through five years — — Due after five through ten years 1,308,298 1,335,955 Due after ten years 9,207,059 9,351,896 Total investment securities $ 10,515,357 $ 10,687,851 During 2015, the Company received proceeds from sales of securities of $4.1 million for a total loss of $87,995. During 2014, the Company received proceeds from sales of securities of $4.1 million for a total gain of $1,032. At December 31, 2015 and 2014, $2.7 million in securities were pledged as collateral for repurchase agreements, a credit line and public deposits. The Company’s investment portfolio consists principally of obligations of the United States of America, its agencies or enterprises it sponsors. In the opinion of management, there is no concentration of credit risk in its investment portfolio. |
Loans
Loans | 12 Months Ended |
Dec. 31, 2015 | |
Debt [Abstract] | |
LOANS | NOTE 3 — LOANS The composition of net loans by major category is as follows: December 31, 2015 2014 Real estate: Commercial $ 25,559,943 $ 25,246,396 Construction and development 7,286,459 8,425,453 Single and multifamily residential 16,434,722 18,073,429 Total real estate loans 49,281,124 51,745,278 Commercial business 17,027,054 16,059,082 Consumer 1,369,224 1,372,906 Deferred origination fees, net (135,647 ) (149,823 ) Gross loans, net of deferred fees 67,541,755 69,027,443 Less allowance for loan losses (1,139,509 ) (1,032,776 ) Loans, net $ 66,402,246 $ 67,994,667 The Company, through the Bank, makes loans to individuals and small- to mid-sized businesses for various personal and commercial purposes primarily in Greenville County, South Carolina. Credit concentrations can exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, certain loan products, or certain regions of the country. Credit risk associated with these concentrations could arise when a significant amount of loans, related by similar characteristics, are simultaneously impacted by changes in economic or other conditions that cause their probability of repayment to be adversely affected. The Company regularly monitors its credit concentrations. The Company does not have a significant concentration to any individual client. The major concentrations of credit arise by collateral type. As of December 31, 2014, management has determined that the Company has a concentration in commercial real estate loans, including construction and development loans. At December 31, 2015, the Company had $32.8 million in commercial real estate loans, representing 48.6% of gross loans. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to its commercial real estate portfolio. During the year ended December 31, 2014, the two loans which were previously classified as held for sale and previously classified as TDRs in 2013 were sold for total proceeds of $1,033,000. A success fee of approximately $41,000 and a gain of approximately $118,000 was recognized as a result of this sale. During 2014, the one remaining loan held for sale by the Company was transferred into other real estate owned at its remaining outstanding principal balance at the time of transfer of approximately $809,000. There were no loans classified as held for sale at December 31, 2014 or 2015. In addition to monitoring potential concentrations of loans to a particular borrower or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk that could arise from potential concentrations of lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc.) and loans with high loan-to-value ratios. Additionally, there are industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loan’s life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with maturities prior to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. Management has determined that there is no concentration of credit risk associated with its lending policies or practices. The composition of gross loans, before the deduction for deferred origination fees, by rate type is as follows: December 31, 2015 Variable rate loans $ 43,744,860 Fixed rate loans 23,932,542 $ 67,677,402 Directors, executive officers and associates of such persons are customers of and have transactions with the Bank in the ordinary course of business. Included in such transactions are outstanding loans and commitments, all of which were made under substantially the same credit terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of these outstanding loans was $2.8 million and $3.2 million at December 31, 2015 and 2014, respectively. During 2015, there were approximately $266,000 in new loans and advances on these lines of credit and repayments were approximately $557,000. During 2014, there were $1.6 million new loans and advances on these lines of credit and repayments were approximately $67,000. At December 31, 2015 and 2014, there were commitments to extend additional credit to related parties in the amount of approximately $140,000 and $158,000, respectively. The Bank has a line of credit with the FHLB to borrow funds, subject to the pledge of qualified collateral. Acceptable collateral includes certain types of commercial real estate, consumer residential and home equity loans. At December 31, 2015, approximately $39.9 million of first and second mortgage loans, commercial loans and home equity lines of credit were specifically pledged to the FHLB, resulting in $13.0 million in lendable collateral. At December 31, 2015, the Bank had also pledged $15.3 million of commercial loans to the FRB’s Borrower-in-Custody of Collateral program, resulting in $10.5 million in lendable collateral. In July 2014, the Bank obtained $5,000,000 in new FLHB advances in order to fund future loan growth. These advances were secured by $13.9 million in collateralized loans. The terms of this note required monthly interest payments through the January 2015 maturity date. The advance was repaid in its entirety upon maturity. The Bank had no outstanding borrowings from the FRB or FHLB as of December 31, 2015. Credit Quality The following table summarizes delinquencies and nonaccruals, by portfolio class, as of December 31, 2015 and 2014. Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 30–59 days past due $ 75,890 $ — $ — $ — $ — $ 75,890 60–89 days past due 63,702 250,378 — — — 314,080 Nonaccrual 168,879 40,500 1,390,013 65,798 — 1,665,190 Total past due and nonaccrual 308,471 290,878 1,390,013 65,798 — 2,055,160 Current 16,126,251 6,995,581 24,169,930 16,961,256 1,369,224 65,622,242 Total loans $ 16,434,722 $ 7,286,459 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 December 31, 2014 30–59 days past due $ 188,033 $ 39,561 $ — $ 23,938 $ — $ 251,532 60–89 days past due — — — 9,129 — 9,129 Nonaccrual — — 534,057 — — 534,057 Total past due and nonaccrual 188,033 39,561 534,057 33,067 — 794,718 Current 17,885,396 8,385,892 24,712,339 16,026,015 1,372,906 68,382,548 Total loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 At December 31, 2015 and 2014, there were nonaccrual loans of $1.7 million and $534,057, respectively, included in the above loan balances. Foregone interest income related to nonaccrual loans equaled $129,066 and $77,639 for the years ended December 31, 2015 and 2014, respectively. No interest income was recognized on nonaccrual loans during 2015 and 2014. At both December 31, 2015 and 2014, there were no accruing loans which were contractually past due 90 days or more as to principal or interest payments. As part of the loan review process, loans are given individual credit grades, representing the risk the Company believes is associated with the loan balance. Credit grades are assigned based on factors that impact the collectability of the loan, the strength of the borrower, the type of collateral, and loan performance. Commercial loans are individually graded at origination and credit grades are reviewed on a regular basis in accordance with our loan policy. Consumer loans are assigned a “pass” credit rating unless something within the loan warrants a specific classification grade. The following table summarizes management’s internal credit risk grades, by portfolio class, as of December 31, 2015 and 2014. Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 Pass Loans (Consumer) $ 8,340,816 $ 1,350,332 $ — $ — $ 1,369,224 $ 11,060,372 Grade 1 — Prime — — — — — — Grade 2 — Good — — — — — — Grade 3 — Acceptable 4,479,116 809,004 8,121,125 7,667,706 — 21,076,951 Grade 4 — Acceptable w/Care 3,382,209 4,759,864 14,724,468 8,199,385 — 31,065,926 Grade 5 — Special Mention 63,702 76,381 611,189 846,106 — 1,597,378 Grade 6 — Substandard 168,879 290,878 2,103,161 313,857 — 2,876,775 Grade 7 — Doubtful — — — — — — Total loans $ 16,434,722 $ 7,286,459 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2014 Pass Loans (Consumer) $ 10,739,155 $ 1,362,322 $ — $ — $ 1,341,699 $ 13,443,176 Grade 1 — Prime — — — — — — Grade 2 — Good — — — 1,652,739 — 1,652,739 Grade 3 — Acceptable 2,594,126 1,284,107 9,123,260 4,629,684 31,207 17,662,384 Grade 4 — Acceptable w/Care 3,792,456 5,277,692 14,184,482 9,754,850 — 33,009,480 Grade 5 — Special Mention — 82,413 648,152 — — 730,565 Grade 6 — Substandard 947,692 418,919 1,290,502 21,809 — 2,678,922 Grade 7 — Doubtful — — — — — — Total loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 Loans graded one through four are considered “pass” credits. At December 31, 2015, approximately 93% of the loan portfolio had a credit grade of “pass” compared to 95% at December 31, 2014. For loans to qualify for this grade, they must be performing relatively close to expectations, with no significant departures from the intended source and timing of repayment. Loans totaling $1.6 million and $730,565, respectively, were classified as special mention at December 31, 2015 and 2014. This classification is utilized when an initial concern is identified about the financial health of a borrower. Loans are designated as such in order to be monitored more closely than other credits in the loan portfolio. At December 31, 2015 and 2014, substandard loans totaled $2.9 million and $2.7 million, respectively, with the vast majority of these loans being collateralized by real estate. Substandard credits are evaluated for impairment on a quarterly basis. The following table summarizes information relative to impaired loans, by portfolio class, at December 31, 2015 and 2014. Unpaid Recorded Related Average Interest December 31, 2015 With no related allowance recorded: Single and multifamily residential real estate $ — $ — $ — $ 411,430 $ 21,667 Construction and development — — — 177,047 — Commercial real estate — other 905,968 905,968 — 415,488 29,423 Commercial business — — — 62,015 — Consumer — — — — — With related allowance recorded: Single and multifamily residential real estate 236,938 236,938 163,138 270,668 — Construction and development 40,500 40,500 10,500 239,206 727 Commercial real estate — other 1,197,193 1,197,193 201,793 805,654 46,761 Commercial business — — — 18,139 2,119 Consumer — — — — — Total: Single and multifamily residential real estate 236,938 236,938 163,138 682,098 21,667 Construction and development 40,500 40,500 10,500 416,253 727 Commercial real estate — other 2,103,161 2,103,161 201,793 1,221,142 76,184 Commercial business — — — 80,154 2,119 Consumer — — — — — $ 2,380,599 $ 2,380,599 $ 375,431 $ 2,399,647 $ 100,697 Unpaid Average principal Recorded Related impaired Interest balance investment allowance investment income December 31, 2014 With no related allowance recorded: Single and multifamily residential real estate $ 725,090 $ 725,090 $ — $ 604,851 $ 44,239 Construction and development — — — 332,954 — Commercial real estate — other 190,791 190,791 — 229,385 — Commercial business — — — — — Consumer — — — — — With related allowance recorded: Single and multifamily residential real estate — — — 442,094 — Construction and development — — — 649,560 — Commercial real estate — other 1,099,712 1,099,712 88,712 645,833 42,321 Commercial business — — — 17,156 — Consumer — — — — — Total: Single and multifamily residential real estate 725,090 725,090 — 1,046,945 44,239 Construction and development — — — 982,514 — Commercial real estate — other 1,290,503 1,290,503 88,712 875,218 42,321 Commercial business — — — 17,156 — Consumer — — — — — $ 2,015,593 $ 2,015,593 $ 88,712 $ 2,921,833 $ 86,560 TDRs are loans which have been restructured from their original contractual terms and include concessions that would not otherwise have been granted outside of the financial difficulty of the borrower. Concessions can relate to the contractual interest rate, maturity date, or payment structure of the note. As part of our workout plan for individual loan relationships, we may restructure loan terms to assist borrowers facing challenges in the current economic environment. The purpose of a TDR is to facilitate ultimate repayment of the loan. At December 31, 2014, the principal balance of TDRs was approximately $343,000. At December 31, 2015, the principal balance of TDRs was zero as the one loan constituting our sole TDR had been transferred to other real estate owned. During the year ended December 31, 2014, the two loans classified as held for sale and previously classified as TDRs in 2013 were sold for total proceeds of $1,033,000. A success fee of approximately $41,000 and a gain of approximately $118,000 was recognized as a result of this sale. No TDRs went into default during the years ended December 31, 2014 and 2015. A TDR can be removed from “troubled” status once there is sufficient history of demonstrating the borrower can service the credit under market terms. We currently consider sufficient history to be approximately six months. As of December 31, 2014, the carrying balance consisted of one performing loan within one relationship which was restructured and granted a period of interest only payments during January 2014. Provision and Allowance for Loan Losses The provision, reversal of provision and allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The following table summarizes activity related to our allowance for loan losses for the years ended December 31, 2015 and 2014, by portfolio segment. Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 Allowance for loan losses: Balance, beginning of year $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Provision (reversal of provision) for loan losses 105,000 (50,000 ) 120,000 60,000 (85,000 ) 150,000 Loan charge-offs — — (43,267 ) — — (43,267 ) Loan recoveries — — — — — — Net loans charged-off — — (43,267 ) — — (43,267 ) Balance, end of year $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Individually reviewed for impairment $ 163,138 $ 10,500 $ 201,793 $ — $ — $ 375,431 Collectively reviewed for impairment 102,659 173,630 238,037 244,679 5,073 764,078 Total allowance for loan losses $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Gross loans, end of period: Individually reviewed for impairment $ 236,938 $ 40,500 $ 2,103,161 $ — $ — $ 2,380,599 Collectively reviewed for impairment 16,197,784 7,245,959 23,456,782 17,027,054 1,369,224 65,296,803 Total gross loans $ 16,434,722 $ 7,286,959 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2014 Allowance for loan losses: Balance, beginning of year $ 237,230 $ 485,010 $ 360,564 $ 129,009 $ 90,073 $ 1,301,886 Provision (reversal of provision) for loan losses (150,000 ) (295,265 ) 100,106 315,159 — (30,000 ) Loan charge-offs — (118,577 ) (101,000 ) (297,889 ) — (517,466 ) Loan recoveries 73,567 162,962 3,427 38,400 — 278,356 Net loans charged-off 73,567 44,385 (97,573 ) (259,489 ) — (239,110 ) Balance, end of year $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Individually reviewed for impairment $ — $ — $ 88,712 $ — $ — $ 88,712 Collectively reviewed for impairment 160,797 234,130 274,385 184,679 90,073 944,064 Total allowance for loan losses $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Gross loans, end of period: Individually reviewed for impairment $ 725,090 $ — $ 1,290,503 $ — $ — $ 2,015,593 Collectively reviewed for impairment 17,348,339 8,425,453 23,955,893 16,059,082 1,372,906 67,161,673 Total gross loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 |
Property, Equipment and Softwar
Property, Equipment and Software | 12 Months Ended |
Dec. 31, 2015 | |
Property, Equipment and Software [Abstract] | |
PROPERTY, EQUIPMENT AND SOFTWARE | NOTE 4 — PROPERTY, EQUIPMENT AND SOFTWARE Property, equipment and software are stated at cost less accumulated depreciation. Components of property, equipment and software included in the consolidated balance sheets are as follows: December 31, 2015 2014 Land and land improvements $ 1,108,064 $ 1,108,064 Building 784,845 784,845 Leasehold improvements 257,159 257,159 Software 374,039 374,039 Furniture and equipment 1,432,378 1,402,118 3,956,485 3,926,225 Accumulated depreciation (1,757,689 ) (1,542,218 ) Total property, equipment and software $ 2,198,796 $ 2,384,007 Depreciation expense for the years ended December 31, 2015 and 2014 was $215,471 and $216,323, respectively. There were asset purchases of $30,260 and four asset retirements, totaling $43,466, during 2015. There were no disposals during 2015. |
Other Real Estate Owned and Rep
Other Real Estate Owned and Repossessed Assets | 12 Months Ended |
Dec. 31, 2015 | |
Other Real Estate Owned and Repossessed Assets [Abstract] | |
OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS | NOTE 5 — OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS The following table summarizes the composition of other real estate owned and repossessed assets as of the dates noted. December 31, 2015 2014 Residential land lots $ 31,320 $ 552,200 Single and multifamily residential real estate — 62,257 Commercial office space 1,008,900 1,233,000 Commercial land 870,000 710,000 $ 1,910,220 $ 2,557,457 Changes in other real estate owned and repossessed assets are presented below: 2015 2014 Balance at beginning of year $ 2,557,457 $ 2,508,170 Repossessed property acquired in settlement of loans 300,000 1,143,000 Proceeds from sales of repossessed property (582,295 ) (505,263 ) Loss on sale and write-downs of repossessed property, net (364,942 ) (588,450 ) Balance at end of year $ 1,910,220 $ 2,557,457 During 2015, other real estate owned for the Company decreased due to the sale of real estate owned that were purchased from the Bank for proceeds of approximately $455,000, which resulted in a gain of approximately $17,000 to the Company. Real estate owned also decreased due to the sale of two pieces of real estate held by the Bank for proceeds of approximately $143,000, which resulted in a loss of approximately $5,200. In addition, the Company recognized writedowns on real estate owned of approximately $377,000 during 2015. The remaining pieces of real estate owned that were purchased from the Bank are being actively marketed for sale. One piece of real estate was moved to other real estate owned in March for $300,000, and subsequently written down by $30,000. On January 28, 2016, proceeds of $35,332 were received from the sale of one piece of real estate held by the Company. A loss of $4,680 was recognized as a result of this transaction. During 2014, other real estate owned for the Company increased due to the repossession of one property of $809,000, partially offset by the sale of real estate owned that were purchased from the Bank for proceeds of approximately $151,000, which resulted in losses of approximately $3,000 to the Company. In addition, the Company recognized write downs on real estate owned that were purchased from the Bank of approximately $579,000 during 2014. |
Deposits
Deposits | 12 Months Ended |
Dec. 31, 2015 | |
Deposit [Abstract] | |
DEPOSITS | NOTE 6 — DEPOSITS Deposits at December 31, 2015 and 2014 are summarized as follows: 2015 2014 Non-interest bearing $ 13,010,209 $ 11,016,882 Interest bearing: NOW accounts 8,894,408 7,335,360 Money market accounts 33,164,973 35,077,304 Savings 1,034,438 767,668 Time, less than $100,000 5,756,202 6,695,936 Time, $100,000 and over 21,707,095 21,981,513 Brokered time deposits, less than $100,000 — — Brokered time deposits, $100,000 and over — — Total deposits $ 83,567,325 $ 82,874,663 Interest expense on time deposits greater than $100,000 was $182,041 and $141,597 for the years ended December 31, 2015 and 2014 respectively. Time deposits that meet or exceed the FDIC insurance limit at $250,000 amounted to $7,578,766 and $7,028,406 as of December 31, 2015 and 2014, respectively. At December 31, 2015 the scheduled maturities of certificates of deposit (including brokered time deposits) are as follows: 2016 $ 16,380,255 2017 6,581,652 2018 711,477 2019 3,026,300 2020 763,614 $ 27,463,298 At December 31, 2015, $2.6 million in securities were pledged as collateral for public deposits and approximately $107,000 in securities were pledged as collateral for business deposits. |
Securities Sold Under Agreement
Securities Sold Under Agreements To Repurchase | 12 Months Ended |
Dec. 31, 2015 | |
Securities Sold Under Agreements To Repurchase [Abstract] | |
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE | NOTE 7 — SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE At December 31, 2015 and 2014 the Bank had sold $113,080 and $153,603, respectively, of securities under agreements to repurchase with brokers with a weighted rate of 0.10% and 0.10%, respectively that mature in less than 90 days. These agreements were secured with approximately $107,000 and $130,000 of investment securities, respectively. The securities, under agreements to repurchase, averaged $98,636 during 2015, with $354,739 being the maximum amount outstanding at any month-end. The average rate paid in 2015 was 0.10%. The securities, under agreements to repurchase, averaged $110,307 during 2014, with $221,467 being the maximum amount outstanding at any month-end. The average rate paid in 2014 was 0.10%. |
Federal Home Loan Bank Advances
Federal Home Loan Bank Advances | 12 Months Ended |
Dec. 31, 2015 | |
Federal Home Loan Bank Advances [Abstract] | |
FEDERAL HOME LOAN BANK ADVANCES | NOTE 8 — FEDERAL HOME LOAN BANK ADVANCES At December 31, 2014, the Bank had $5.0 million of advances from the FHLB, with a weighted average rate of 0.25%. The advance was obtained in July 2014 with a maturity date of January 2015. FHLB advances averaged $2.3 million during 2014, with $5.0 million being the maximum amount outstanding at any month-end. The average rate paid in 2014 was 0.25%. FHLB advances averaged approximately $260,000 during 2015. The average rate paid in 2015 was 0.28%. The FHLB advance from 2014 was repaid in full in January 2015 upon maturity. There were no advances from the FHLB for the year ended December 31, 2015. |
Note Payable - Related Party
Note Payable - Related Party | 12 Months Ended |
Dec. 31, 2015 | |
Debt [Abstract] | |
NOTE PAYABLE - RELATED PARTY | NOTE 9 — NOTE PAYABLE - RELATED PARTY In September 2014, the Company closed a $600,000 one-year borrowing. The loan was provided by a board member of the Bank and as a result needed to comply with Regulation O. Proceeds of the loan were used primarily to fund the research and development effort in the Transaction Services business segment. The loan was collateralized by a first perfected security interest in certain real estate assets of the Company. The loan was fully drawn at closing, and carried an annual interest rate of 7% per annum for the first six months on any outstanding borrowings and then stepped up to 8% per annum for the remaining 6 months of the term. On March 18, 2015, one of the parcels of real estate was sold and a payment was made on the loan so that the outstanding balance of the loan was $149,774, which was equal to the balance on June 30, 2015. The outstanding balance of $149,774 plus accrued interest was repaid in its entirety on September 3, 2015. |
Unused Lines of Credit
Unused Lines of Credit | 12 Months Ended |
Dec. 31, 2015 | |
Unused Lines of Credit [Abstract] | |
UNUSED LINES OF CREDIT | NOTE 10 — UNUSED LINES OF CREDIT At December 31, 2015 and 2014, the Bank had an unused unsecured line of credit to purchase federal funds of $2.0 million that has not been utilized. The line of credit is available on a one to fourteen day basis for general corporate purposes of the Bank. The lender has reserved the right to withdraw the line at its option. The Bank has a line of credit with the FHLB to borrow funds, subject to the pledge of qualified collateral. At December 31, 2014, approximately $41.4 million of first and second mortgage loans, commercial loans and home equity lines of credit were specifically pledged to the FHLB, resulting in $8.4 million in lendable collateral. In July 2014, the Bank obtained $5,000,000 in new FLHB advances in order to fund future loan growth. These advances were secured by $13.9 million in collateralized loans. The terms of this note required monthly interest payments through the January 2015 maturity date. The advance was repaid in its entirety upon maturity. The Bank had no outstanding borrowings from the FHLB as of December 31, 2015. In addition, the Bank could pledge investment securities or cash for additional borrowing capacity of $8.4 million. At December 31, 2015, approximately $39.9 million of first and second mortgage loans, commercial loans and home equity lines of credit were specifically pledged to the FHLB, resulting in $13.0 million in lendable collateral. The Bank is subject to the FHLB’s credit risk rating policy which assigns member institutions a rating which is reviewed quarterly. The rating system utilizes key factors such as loan quality, capital, liquidity, profitability, etc. During the fourth quarter of 2010, the Bank’s credit risk rating was downgraded by the FHLB, which resulted in decreased borrowing availability (total line reduced to 15% of total assets from 20% of total assets) and increased collateral requirements (moved to 125% of borrowings from 115%). During the third quarter of 2013, the FHLB upgraded our credit risk rating, which resulted in increased borrowing availability (total line increased from 15% of total assets to 20% of total assets) and decreased collateral requirements (moved to 115% of borrowings from 125%). The Bank’s ability to access available borrowing capacity from the FHLB in the future is subject to its rating and any subsequent changes based on financial performance as compared to factors considered by the FHLB in their assignment of our credit risk rating each quarter. At December 31, 2015, the Bank had pledged $15.3 million in loans to the FRB’s Borrower-in-Custody of Collateral program resulting in $10.5 million in lendable collateral. Our available credit under this line was approximately $10.5 million and $11.9 million as of December 31, 2015 and 2014, respectively. The Bank had no outstanding borrowings from the FRB as of December 31, 2015 and 2014. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE 11 — INCOME TAXES The components of income tax expense were as follows: Year Ended December 31, 2015 2014 Current income tax expense (benefit) $ 5,080 $ — Deferred income tax expense (benefit) (2,404,737 ) (2,338,716 ) (2,404,737 ) (2,338,716 ) Change in valuation allowance 2,404,737 2,338,716 Income tax expense $ 5,080 $ — The following is a summary of the items that caused recorded income taxes to differ from taxes computed using the Company’s statutory federal income tax rate of 35%: Year Ended December 31, 2015 2014 Income tax benefit at federal statutory rate $ (1,629,769 ) $ (2,210,087 ) Change in valuation allowance (2,404,737 ) 2,338,716 IRC Section 382 limitation to net operating loss carry-forward 4,020,027 — Other 19,559 (128,629 ) Income tax expense $ 5,080 $ — The components of the net deferred tax asset are as follows: December 31, 2015 2014 Deferred tax assets (liabilities): Allowance for loan losses $ 140,131 $ 89,131 Lost interest on nonaccrual loans 44,348 7,598 Real estate acquired in settlement of loans 250,453 248,148 Net operating loss carry-forward 1,987,292 5,213,659 Deferred operational and start-up costs 56,513 69,554 Other-than-temporary impairment on non-marketable equity securities — 52,497 Unrealized loss (gain) on investment securities available for sale (58,648 ) (595 ) Internally developed software 3,771,558 3,081,561 Other 185,313 78,197 6,376,960 8,839,750 Valuation allowance (6,376,960 ) (8,839,750 ) Net deferred tax asset $ — $ — The valuation allowance for deferred tax assets as of December 31, 2015 and 2014 was $6.4 million and $8.8 million, respectively. Accounting literature states that a deferred tax asset should be reduced by a valuation allowance if, based on the weight of all available evidence, it is more likely than not (a likelihood of more than 50%) that some portion or the entire deferred tax asset will not be realized. The determination of whether a deferred tax asset is realizable is based on the weighting all available evidence, including both positive and negative evidence. In making such judgments, significant weight is given to evidence that can be objectively verified. As of December 31, 2015 and 2014, the Company determined that it is not more likely than not that deferred tax assets will be recognized in future years. The Company will continue to analyze deferred tax assets and the related valuation allowance on a quarterly basis, taking into account performance compared to forecasted earnings as well as current economic and internal information. The net deferred tax liability is recorded in other liabilities in the Company’s consolidated balance sheets. At December 31, 2015, the Company has federal operating loss carry-forwards of approximately $17.7 million that may be used to offset future taxable income and expire beginning in 2025. The Company has analyzed the tax positions taken or expected to be taken on its tax returns and concluded it has no liability related to uncertain tax positions in accordance with FIN 48. With limited exceptions, income tax returns for 2012 and subsequent years are subject to examination by the taxing authorities. We have generated significant net operating losses, or NOLs, as a result of our recent losses. We are generally able to carry NOLs forward to reduce taxable income in future years. However, the ability to utilize the NOLs is subject to the rules of Section 382 of the Internal Revenue Code. Section 382 generally restricts the use of NOLs after an “ownership change.” An ownership change occurs if, among other things, the shareholders (or specified groups of shareholders) who own or have owned, directly or indirectly, 5% or more of a corporation’s common stock or are otherwise treated as 5% shareholders under Section 382 and U.S. Treasury regulations promulgated thereunder because of an increase of their aggregate percentage ownership of that corporation’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these shareholders over a rolling three-year period. In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carryforwards. This annual limitation is generally equal to the product of the value of the corporation’s stock on the date of the ownership change, multiplied by the long-term tax-exempt rate published monthly by the Internal Revenue Service. Any unused annual limitation may be carried over to later years until the applicable expiration date for the respective NOL carryforwards. We do not believe that the 2012 Private Placement and 2013 Follow-on Offering (see Note 1) caused an “ownership change” at the Company, within the meaning of Section 382. The 2015 Series A Private Placement did trigger a Section 382 limitation of $11.8 million, reducing the utilizable NOL carryforward to be $5.8 million. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 — RELATED PARTY TRANSACTIONS On December 31, 2015 and 2014, the Bank had various loans outstanding to directors and officers. All of these loans were made under normal credit terms and did not involve more than normal risk of collection. See Note 3 for further details. In September 2014, the Company closed a $600,000 one-year borrowing. The loan was provided by a board member of the Bank and as a result needed to comply with Regulation O. Proceeds of the loan were used primarily to fund the research and development effort in the Transaction Services business segment. The loan was collateralized by a first perfected security interest in certain real estate assets of the Company. The loan was fully drawn at closing, and carried an annual interest rate of 7% per annum for the first six months on any outstanding borrowings and then stepped up to 8% per annum for the remaining 6 months of the term. On March 18, 2015, one of the parcels of real estate was sold and a payment was made on the loan so that the outstanding balance of the loan was $149,774, which was equal to the balance on June 30, 2015. The outstanding balance of $149,774 plus accrued interest was repaid in its entirety on September 3, 2015. On May 14, 2015, the Company entered into a license agreement with MPIB pursuant to which it received a non-exclusive, non-transferable, non-licensable, worldwide license to use certain intellectual property of MPIB related to mobile payments and digital transactions. On January 4, 2016, the parties amended and restated the license agreement (the “Amended and Restated License Agreement”) pursuant to which MPIB agreed to make the license perpetual, subject to termination rights of the parties set forth in the Amended and Restated License Agreement, in exchange for the Company’s payment of an additional license fee of $275,000. |
Financial Instruments With Off
Financial Instruments With Off Balance Sheet Risk | 12 Months Ended |
Dec. 31, 2015 | |
Financial Instruments With Off Balance Sheet Risk [Abstract] | |
FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK | NOTE 13 — FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK In the ordinary course of business, and to meet the financing needs of its customers, the Company is a party to various financial instruments with off balance sheet risk. These financial instruments, which include commitments to extend credit and standby letters of credit, involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the balance sheets. The contract amount of those instruments reflects the extent of involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amounts of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any material condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. At December 31, 2015, unfunded commitments to extend credit were $8.5 million, of which approximately $8.0 million is at fixed rates and $1.5 million is at variable rates. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, and commercial and residential real estate. The fair value of these off-balance sheet financial instruments is considered immaterial. The Company does not have any commitments to lend additional funds to borrowers whose loans have been modified as a TDR. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 — COMMITMENTS AND CONTINGENCIES The Bank has a two-year operating lease on its main office facility which began in October 2008. The Bank exercised its remaining two-year renewal options in September 2012. The Bank renegotiated on terms similar to the current lease and amended the current lease in October 2014 for a term of five years. The monthly rent under the lease amendment is $10,370 from October 1, 2012 through September 30, 2014, $10,789 from October 1, 2014 through September 30, 2015 and $11,005 from October 1, 2015 through September 30, 2016. The Bank has a ten-year operating lease on a branch facility which began in August 2007. The monthly rent under the lease is $9,229 from August 1, 2012 through July 31, 2017. The Company had a 21- month operating lease on its New York office which began in May 2013. The monthly rent under the lease agreement allowed for one month free rent from May 23, 2013 through June 22, 2013, an installment of $2,680 for June 23, 2013 through June 30, 2013, and fixed monthly installments of $9,450 from July 1, 2013 through February 27, 2015. The New York office lease was not renewed in February 2015. At that time, the Company moved to a month to month lease for the New York office at a rate of $2,189 per month. The New York office month to month lease was terminated during 2015. Rent expense of $314,117 and $351,821 was recorded for the years ended December 31, 2015 and 2014, respectively. Future minimum lease payments under these operating leases are summarized as follows: For the year ended December 31, 2016 $ 243,466 2017 199,975 2018 138,080 2019 105,105 Thereafter — $ 686,626 As of December 31, 2015, there were no other commitments outstanding. There were no new commitments as of March xx, 2016. The board of directors has approved employment agreements with the president and chief executive officer of the Bank, the chief financial officer of the Company and Bank and the Bank’s retail banking officer. The agreements include provisions regarding term, compensation, benefits, annual bonus, incentive program, stock option plan and severance and non-compete upon early termination. The Bank may become party to litigation and claims in the normal course of business. As of December 31, 2015, management believes there is no material litigation pending. |
Stock Compensation Plans
Stock Compensation Plans | 12 Months Ended |
Dec. 31, 2015 | |
Stock Compensation Plans [Abstract] | |
STOCK COMPENSATION PLANS | NOTE 15— STOCK COMPENSATION PLANS On July 26, 2005, the Company adopted the 2005 Incentive Plan for the benefit of the directors, officers and employees. The 2005 Incentive Plan initially reserved up to 260,626 shares of the Company’s common stock for the issuance of stock options and contained evergreen provision, which provided that the maximum number of shares to be issued under the 2005 Incentive Plan would automatically increase each time the Company issues additional shares of common stock such that the total number of shares issuable under the 2005 Incentive Plan would at all times equal 12.5% of the then outstanding shares of common stock. In February 2013, our board of directors amended the 2005 Incentive Plan to cap the number of shares issuable thereunder at 2,466,720 and adopted the 2013 Incentive Plan. The 2013 Incentive Plan is an omnibus equity incentive plan which provides for the granting of various types of equity compensation awards, including stock options, restricted stock, and stock appreciation rights, to the Company’s employees and directors. Our board of directors submitted the 2013 Incentive Plan to the shareholders of the Company for their consideration at the 2013 annual shareholders’ meeting and it was approved. In February 2014, the Company granted an additional 155,000 stock options at a price of $1.59 to certain employees and to a third-party contractor, for a total outstanding of 3,428,505 options at a price of $1.11. In April 2014, 240,000 options granted to one former employee were forfeited. In December 2014, 86,250 options granted to three employees and to a third-party contractor were forfeited because the qualifying event date for vesting passed with no performance. As of December 31, 2014, 3,102,255 total options were outstanding at a weighted average price of $1.11. Of the 3,102,255 options issued, 2,186,005 options have vested. In May 2015, the Company granted an additional 115,000 stock options at a price of $0.65 to certain directors and the chairman of the Company, for a total outstanding of 3,217,255 options at a weighted average price of $1.10. In September 2015, 120,000 options granted to one former employee were forfeited. As of December 31, 2015, 3,097,255 total options were outstanding at a weighted average price of $1.11. Of the 3,097,255 options outstanding, 3,022,255 options have vested. A summary of the status of the plans and changes for the years ended December 31, 2015 and 2014 are presented below: 2015 2014 Weighted Weighted average Average average exercise Intrinsic exercise Shares price Value Shares price Outstanding at beginning of year 3,102,255 $ 1.08 3,273,505 $ 1.08 Granted 115,000 1.59 155,000 1.59 Exercised — — — — Forfeited or expired (120,000 ) 0.80 (326,250 ) 1.01 Outstanding at end of year 3,097,255 1.11 $0.00 3,102,255 1.11 Options exercisable at year-end 3,022,255 $0.00 2,186,005 Shares available for grant 2,023,435 2,023,435 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2015. This amount changes based on the fair market value of the Company’s stock. Fair market value is based on the most recent trade of common stock reported through the OTC Bulletin Board. As of December 31, 2015, the Company’s closing stock price was $0.23 resulting in no intrinsic value. Compensation expense related to stock options granted was $303,829 and $385,508 for the years ended December 31, 2015 and 2014, respectively. Compensation expense is based on the fair value of the option estimated at the date of grant using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight line basis over the vesting period of the option. In February 2014, the Company granted an additional 155,000 stock options to certain employees and to a third-party contractor. Compensation expense of $43,788 was unrecognized in 2014 due to 116,250 in related incentive stock options being forfeited as the options will not vest. In May 2015, the Company granted an additional 115,000 stock options to certain directors and the chairman of the Company. In September 2015, 120,000 options granted to one former employee were forfeited. Options awarded are awarded with a fair market value exercise price based on the valuation methodology established by the board of directors, which uses a model based on then current and historical prices of the Company’s stock transacted between two independent parties. Upon completion of the stock offering in 2005, the Company issued warrants to each of its organizers to purchase up to an additional 312,500 shares of common stock at $10.00 per share. These warrants vested six-months from the date the Bank opened for business, or May 16, 2005, and they were exercisable in whole or in part until May 16, 2015. No warrants were exercised by May 16, 2015, at which time the warrants were deemed expired. During the past several years, 75,000 warrants were forfeited when the directors retired from the board or declined to stand for reelection upon the completion of their terms. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2015 | |
Employee Benefit Plan [Abstract] | |
EMPLOYEE BENEFIT PLAN | NOTE 16 — EMPLOYEE BENEFIT PLAN The Bank maintains an employee benefit plan for all eligible employees of the Bank under the provisions of Internal Revenue Code Section 401(k). The Independence National Bank 401(k) Profit Sharing Plan (the “Plan”), adopted in 2005, allows for employee contributions. Upon annual approval of the board of directors, the Company also matches 50% of employee contributions up to a maximum of 6% of annual compensation. For the year ended December 31, 2015 and 2014, $15,859 and $17,762, respectively, was charged to operations for the Company’s matching contribution. Employees are immediately vested in their contributions to the Plan and become fully vested in the employer matching contribution after six years of service. |
Regulatory Matters
Regulatory Matters | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Matters [Abstract] | |
REGULATORY MATTERS | NOTE 17 — REGULATORY MATTERS The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Total capital includes Tier 1 and Tier 2 capital. Tier 2 capital consists of the allowance for loan losses subject to certain limitations. In July 2013, the FDIC approved a final rule to implement the Basel III regulatory capital reforms among other changes required by the Dodd-Frank Act. The framework requires banking organizations to hold more and higher quality capital, which acts as a financial cushion to absorb losses, taking into account the impact of risk. The approved rule includes a new minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5% as well as a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rule also raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking institutions. For the largest, most internationally active banking organizations, the rule includes a new minimum supplementary leverage ratio that takes into account off-balance sheet exposures. In terms of quality of capital, the final rule emphasized common equity Tier 1 capital and implemented strict eligibility criteria for regulatory capital instruments. It also changed the methodology for calculating risk-weighted assets to enhance risk sensitivity. The changes began to take effect for the Bank on January 1, 2015. The following table summarizes the capital amounts and ratios of the Bank and the regulatory minimum requirements at December 31, 2015 and 2014. To be well capitalized under prompt For capital corrective action adequacy purposes provisions Actual Minimum Minimum Amount Ratio Amount Ratio Amount Ratio As of December 31, 2015 Total Capital (to risk weighted assets) $ 10,598,000 14.1 % $ 6,029,000 8.0 % $ 7,536,000 10.0 % Tier 1 Capital (to risk weighted assets) 9,653,000 12.8 3,014,000 4.0 4,521,000 6.0 Tier 1 Capital (to average assets) 9,653,000 10.0 3,875,000 4.0 4,844,000 5.0 Common Equity Tier 1 Capital (to risk weighted assets) 9,653,000 12.8 3,391,000 4.5 3,391,000 4.5 As of December 31, 2014 Total Capital (to risk weighted assets) $ 11,494,000 15.3 % $ 6,023,000 8.0 % $ 7,534,000 10.0 % Tier 1 Capital (to risk weighted assets) 10,551,000 14.0 3,014,000 4.0 4,521,000 6.0 Tier 1 Capital (to average assets) 10,551,000 10.6 3,970,000 4.0 4,963,000 5.0 Common Equity Tier 1 Capital (to risk weighted assets) n/a n/a n/a n/a n/a n/a The Federal Reserve has similar requirements for bank holding companies. The Company is currently not subject to these requirements because the Federal Reserve guidelines contain an exemption for bank holding companies of less than $1 billion in consolidated assets, subject to certain limitations. Since December 31, 2015, no conditions or events have occurred, of which we are aware, that have resulted in a material change in the Company’s or the Bank’s category, other than as reported in this Annual Report on Form 10-K. |
Restrictions on Subsidiary Divi
Restrictions on Subsidiary Dividends, Loans, or Advances | 12 Months Ended |
Dec. 31, 2015 | |
Restrictions on Subsidiary Dividends, Loans, or Advances [Abstract] | |
RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES | NOTE 18 — RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES The ability of the Company to pay cash dividends is dependent upon receiving cash in the form of dividends from the Bank. However, certain restrictions exist regarding the ability of the subsidiary to transfer funds to Independence Bancshares, Inc. in the form of cash dividends, loans, or advances. The approval of the OCC is required to pay dividends in excess of the Bank’s net profits (as defined) for the current year plus retained net profits (as defined) for the preceding two years, less any required transfers to surplus. The Company also has to obtain the prior written approval of the Federal Reserve Bank of Richmond before declaring or paying any dividends. |
Business Segments
Business Segments | 12 Months Ended |
Dec. 31, 2015 | |
Business Segments [Abstract] | |
BUSINESS SEGMENTS | NOTE 19 — BUSINESS SEGMENTS The Company reports its activities as four business segments — Community Banking, Transaction Services, Asset Management and Parent Only — as defined in “Item 1. Business”. In determining proper segment definition, the Company considers the materiality of a potential segment and components of the business about which financial information is available and regularly evaluated, relative to a resource allocation and performance assessment. The following table presents selected financial information for the Company’s reportable business segments for the year ended December 31, 2015 and 2014. See Note 21 for parent company condensed financial information. Parent Company Community Transaction Asset Banking Services Management Parent Only Total For the year ended December 31, 2015 Interest income $ 3,567,763 $ — $ — $ — $ 3,567,763 Interest expense 316,358 — 14,704 331,062 Net interest income 3,251,405 — — (14,704 ) 3,236,071 Provision for loan losses 150,000 — — — 150,000 Noninterest income 262,521 383,312 — 21,074 666,907 Noninterest expense 4,271,806 2,214,478 140,782 1,919,981 8,547,047 Loss before income taxes (907,580 ) (1,831,166 ) (140,782 ) (1,913,611 ) (4,793,439 ) Income taxes 5,080 — — — 5,080 Net loss $ (912,960 ) $ (1,831,166 ) $ (140,782 ) $ (1,913,611 ) $ (4,798,519 ) Community Holding As of December 31, 2015 Banking Company(1) Eliminations Total Cash and due from banks $ 5,458,252 $ 2,909,255 $ (2,913,712 ) $ 5,453,795 Interest bearing deposits in other institutions 1,500,000 — — 1,500,000 Federal funds sold 8,446,000 — — 8,446,000 Investment securities 10,687,851 — — 10,687,851 Loans receivable, net 66,402.246 — — 66,402,246 Other real estate owned 1,278,900 631,320 — 1,910,220 Property, equipment, and software, net 2,053,575 145,221 — 2,198,796 Other assets 771,437 96,961 — 868,398 Total Assets $ 96,598,261 $ 3,782,757 $ (2,913,712 ) $ 97,467,306 Deposits $ 86,481,037 $ — $ (2,913,712 ) $ 83,567,325 Securities sold under agreement to repurchase 113,080 — — 113,080 Accrued and other liabilities 236,918 905,824 — 1,142,742 Shareholders’ equity 9,767,226 2,876,933 — 12,644,159 Total liabilities and shareholders’ equity $ 96,598,261 $ 3,782,757 $ (2,913,712 ) $ 97,467,306 ____________________ (1) Excludes investment in wholly-owned Bank subsidiary Parent Company Community Transaction Asset Banking Services Management Parent Only Total For the year ended December 31, 2014 Interest income $ 3,940,632 $ — $ (22,664 ) $ — $ 3,917,968 Interest expense 298,216 — 13,808 312,024 Net interest income 3,642,416 — (22,664 ) (13,808 ) 3,605,944 Reversal of provision for loan losses (30,000 ) — — — (30,000 ) Noninterest income 398,939 16,663 118,452 225,641 440,758 Noninterest expense 3,845,751 4,938,034 767,809 1,118,697 10,576,958 Income (loss) before income taxes 225,604 (4,921,371 ) (672,021 ) (906,864 ) (6,500,256 ) Income taxes — — — — — Net income (loss) $ 225,604 $ (4,921,371 ) $ (672,021 ) $ (906,864 ) $ (6,500,256 ) Community Holding As of December 31, 2014 Banking Company (1) Eliminations Total Cash and due from banks $ 5,105,940 $ 288,440 $ (133,300 ) $ 5,261,080 Federal funds sold 5,643,000 — — 5,643,000 Investment securities 15,615,526 — — 15,615,526 Loans receivable, net 67,994,667 — — 67,994,667 Other real estate owned 1,365,257 1,192,200 — 2,557,457 Property, equipment, and software, net 2,117,645 266,362 — 2,384,007 Other assets 1,005,955 250,290 — 1,256,245 Total Assets $ 98,847,990 $ 1,997,292 $ (133,300 ) $ 100,711,982 Deposits $ 83,007,963 $ — $ (133,300 ) $ 82,874,663 Securities sold under agreement to repurchase 153,603 — — 153,603 Borrowings 5,000,000 — — 5,000,000 Note payable — 600,000 — 600,000 Accrued and other liabilities 133,786 2,539,350 — 2,673,136 Shareholders’ equity (deficit) 10,552,638 (1,142,058 ) — 9,410,580 Total liabilities and shareholders’ equity $ 98,847,990 $ 1,997,292 $ (133,300 ) $ 100,711,982 ____________________ (1) Excludes investment in wholly-owned Bank subsidiary The sole activity conducted within our Asset Management business segment is the resolution of assets purchased by the Company in the second quarter of 2013 from the Bank. The activities conducted within our Transaction Services business segment relate to the Company’s research and development efforts to enhance existing and develop new digital banking, payments and transaction services. The Company incurred approximately $2.2 million and $4.9 million in research and development expenses during 2015 and 2014, respectively. The Company recognized approximately $383,000 in noninterest income during 2015 within the Transaction Services business segment and approximately $21,000 representing forgiveness of debt as a result of settling certain outstanding liabilities for the Company. The Company recognized approximately $17,000 in noninterest income within the Transaction Services business segment during 2014 relating to revenue received under a contract with an independent third party to develop a proprietary mobile peer-to-peer payment service offering. On September 25, 2015, the Company suspended development of its digital banking, payments and transaction services business, and the board of directors is exploring strategic alternatives for this line of business and the Company. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 20 — FAIR VALUE OF FINANCIAL INSTRUMENTS Assets and Liabilities Measured at Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are detailed in Note 1. Available-for-sale investment securities ($10,687,851 and $15,615,526 at December 31, 2015 and 2014, respectively) are carried at fair value and measured on a recurring basis using Level 2 inputs (other observable inputs). Fair values are estimated by using bid prices and quoted prices of pools or tranches of securities with similar characteristics. We do not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and a specific reserve within the allowance for loan losses is established or the loan is charged down to the fair value less costs to sell. At December 31, 2015, all impaired loans were evaluated on a nonrecurring basis based on the market value of the underlying collateral. Market values are generally obtained using independent appraisals or other market data, which the Company considers to be Level 3 inputs. The aggregate carrying amount, net of specific reserves, of impaired loans carried at fair value at December 31, 2015 and 2014 was $2.0 million and $1.9 million, respectively. During the year ended December 31, 2014, two loans which were classified as held for sale in 2013 were sold for total proceeds of $1,033,000. A success fee of approximately $41,000 and a net gain of approximately $118,000 was recognized as a result of this sale. Other real estate owned and repossessed assets, generally consisting of properties or other collateral obtained through foreclosure or in satisfaction of loans, are carried at the lower or market value and measured on a non-recurring basis. Market values are generally obtained using independent appraisals which are generally prepared using the income or market valuation approach, adjusted for estimated selling costs which the Company considers to be Level 3 inputs. The carrying amount of other real estate owned and repossessed assets carried at fair value at December 31, 2015 and 2014 was $1,910,220 and $2,557,457, respectively. The Company utilizes two methods to determine carrying values, either appraised value, or if lower, current net listing price. The Company has no assets whose fair values are measured using Level 1 inputs. The Company also has no liabilities carried at fair value or measured at fair value. For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2015, the significant observable inputs used in the fair value measurements were as follows: Fair Value at Valuation Significant Description December 31, 2015 Technique Unobservable Inputs Other real estate owned and Discounts to reflect current repossessed assets $1,910,220 Appraised value market conditions, abbreviated holding period, and estimated costs to sell Impaired loans $2,005,168 Internal Adjustments to estimated assessment of value based on recent sales of appraised value comparable collateral For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows: Fair Value at Valuation Significant Description December 31, 2014 Technique Unobservable Inputs Other real estate owned and Discounts to reflect current repossessed assets $2,557,457 Appraised value market conditions and estimated costs to sell Impaired loans $1,926,881 Internal Adjustments to estimated assessment of value based on recent sales of appraised value comparable collateral Disclosures about Fair Value of Financial Instruments FASB ASC Topic 825, “Financial Instruments” requires disclosure of fair value information, whether or not recognized in the consolidated balance sheets, when it is practical to estimate the fair value. FASB ASC Topic 825 defines a financial instrument as cash, evidence of an ownership interest in an entity or contractual obligations which require the exchange of cash or other financial instruments. Certain items are specifically excluded from the disclosure requirements, including the Company’s common stock, property, equipment, and software and other assets and liabilities. Fair value approximates carrying value for the following financial instruments due to the short-term nature of the instrument: cash and due from banks, federal funds sold, and securities sold under agreements to repurchase. Investment securities are valued using quoted market prices. No ready market exists for non-marketable equity securities, and they have no quoted market value. However, redemption of these stocks has historically been at par value. Accordingly, the carrying amounts are deemed to be a reasonable estimate of fair value. Fair value of loans is based on the discounted present value of the estimated future cash flows. Discount rates used in these computations approximate the rates currently offered for similar loans of comparable terms and credit quality. The carrying value of loans held for sale as of December 31, 2015 approximates fair value as these loans were discounted to their liquidation value which is equal to the minimum acceptable bid price established by the Company in connection with the Company’s intent to sell these loans to unaffiliated third party investors. Fair value for demand deposit accounts and interest bearing accounts with no fixed maturity date is equal to the carrying value. The fair value of certificate of deposit accounts are estimated by discounting cash flows from expected maturities using current interest rates on similar instruments. Fair value for FHLB Advances is based on discounted cash flows using the Company’s current incremental borrowing rate. The Company has used management’s best estimate of fair value based on the above assumptions. Thus, the fair values presented may not be the amounts that could be realized in an immediate sale or settlement of the instrument. In addition, any income taxes or other expenses, which would be incurred in an actual sale or settlement, are not taken into consideration in the fair value presented. The estimated fair values of the Company’s financial instruments at December 31, 2015 and 2014 are as follows: Carrying December 31, 2015 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 5,453,795 $ 5,453,795 $ 5,453,795 $ — $ — Interest bearing deposits in other institutions 1,500,000 1,500,000 — 1,500,000 — Federal funds sold 8,446,000 8,446,000 8,446,000 — — Investment securities available for sale 10,687,851 10,687,851 — 10,687,851 — Non-marketable equity securities 392,500 392,500 — 392,500 — Loans, net 66,602,246 66,873,213 — — 66,873,213 Financial Liabilities: Deposits 83,567,325 83,538,827 — 83,538,827 — Securities sold under agreements to repurchase 113,080 113,080 — 113,080 — Carrying December 31, 2014 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 5,261,080 $ 5,261,080 $ 5,261,080 $ — $ — Federal funds sold 5,643,000 5,643,000 5,643,000 — — Investment securities available for sale 15,615,526 15,615,526 — 15,615,526 — Non-marketable equity securities 609,650 609,650 — 609,650 — Loans, net 67,994,667 67,925,640 — — 67,925,640 Financial Liabilities: FHLB advance 5,000,000 5,000,347 — 5,000,347 — Note payable 600,000 603,567 — 603,567 — Deposits 82,874,663 81,928,307 — 81,928,307 — Securities sold under agreements to repurchase 153,603 153,603 — 153,603 — |
Parent Company Financial Inform
Parent Company Financial Information | 12 Months Ended |
Dec. 31, 2015 | |
Parent Company Financial Information [Abstract] | |
PARENT COMPANY FINANCIAL INFORMATION | NOTE 21 — PARENT COMPANY FINANCIAL INFORMATION Following is condensed financial information of Independence Bancshares, Inc. (includes transaction service, asset management and holding company segments — for further detail, see “Note 19 — Business segments”): Condensed Balance Sheets December 31, 2015 2014 Cash and cash equivalents $ 2,909,255 $ 288,440 Investment in subsidiary 9,767,226 10,552,638 Premises and equipment, net 145,221 266,362 Other real estate owned 631,320 1,192,200 Other assets 96,961 250,290 $ 13,549,983 $ 12,549,930 Liabilities and Shareholders’ Equity Note payable $ — $ 600,000 Accrued and other liabilities 905,824 2,539,350 Shareholders’ equity 12,644,159 9,410,580 Total liabilities and shareholders’ equity $ 13,549,983 $ 12,549,930 Condensed Statements of Operations Year Ended December 31, 2015 2014 Equity in undistributed net (loss) income of subsidiary $ (912,960 ) $ 225,604 Product research and development — Transaction Services (2,209,978 ) (4,938,034 ) Forgiveness of debt 403,245 — Loan interest and other income 1,141 2,855 Interest expense on note payable (14,704 ) (23,128 ) Gain on sale of loans held for sale — 118,452 Provision for loan losses — — Property tax expense (23,504 ) (36,775 ) Consulting and miscellaneous fees (378,825 ) (203,373 ) Real estate owned activity (117,278 ) (581,856 ) General and administrative expenses (852,012 ) (502,729 ) Legal expense (404,672 ) (195,026 ) Stock compensation expense (288,972 ) (366,246 ) Net loss $ (4,798,519 ) $ (6,500,256 ) Condensed Statements of Cash Flows Year Ended December 31, 2015 2014 Operating activities Net loss $ (4,798,519 ) $ (6,500,256 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation expense 288,973 366,246 Equity in undistributed net loss (income) of subsidiary 912,960 (225,604 ) Gain on sale of loans held for sale — (118,452 ) Net changes in fair value and losses on other real estate owned 105,603 581,856 Loan loss provision — — Depreciation expense 128,549 126,115 Change in other assets 153,329 (67,762 ) Change in accrued items (1,633,526 ) 1,996,911 Net cash used in operating activities (4,842,631 ) (3,840,946 ) Investing activities Purchase of premises and equipment (7,408 ) (5,943 ) Change in loans, net of allowance — 2,120 Proceeds from sale of loans held for sale — 1,033,000 Proceeds from sale of other real estate owned 455,277 151,214 Net cash provided by investing activities 447,869 1,180,391 Financing activities Issuance of preferred stock, net of closing costs 7,615,577 — (Repayments of) proceeds from note payable from affiliate (600,000 ) 600,000 Net cash provided by financing activities 7,015,577 600,000 Net increase (decrease) in cash and cash equivalents 2,620,815 (2,060,555 ) Cash and cash equivalents, beginning of year 288,440 2,348,995 Cash and cash equivalents, end of year $ 2,909,255 $ 288,440 Schedule of non-cash transactions Loans transferred to other real estate owned $ — $ 809,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies and Activities (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of Significant Accounting Policies and Activities [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Independence National Bank. In consolidation, all significant intercompany transactions have been eliminated. The accounting and reporting policies conform to accounting principles generally accepted in the United States and to general practices in the banking industry. |
Subsequent Events | Subsequent Events Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management performed an evaluation to determine whether or not there have been any subsequent events since the balance sheet date. |
Reclassifications | Reclassifications Certain amounts have been reclassified to state all periods on a comparable basis. Reclassifications had no effect on previously reported shareholders’ equity or net loss. |
Estimates | Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of income and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, including valuation allowances for impaired loans, and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation of foreclosed real estate, management obtains independent appraisals for significant properties and takes into account other current market information. Management must also make estimates in determining the useful lives and methods for depreciating premises and equipment. While management uses available information to recognize losses on loans and foreclosed real estate, future additions to the allowance for loan losses and changes to valuation of foreclosed real estate may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and valuation of foreclosed real estate. Such agencies may require the Company to recognize additions to the allowance for loan losses or additional write-downs on foreclosed real estate based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan losses and valuation of foreclosed real estate may change materially in the near term. |
Business Segments | Business Segments The Company reports its activities as four business segments — Community Banking, Transaction Services, Asset Management and Parent Only. In determining proper segment definition, the Company considers the materiality of a potential segment and components of the business about which financial information is available and regularly evaluated, relative to a resource allocation and performance assessment. Please refer to “Note 19 — Business Segments” for further information on the reporting for the four business segments. |
Risks and Uncertainties | Risks and Uncertainties In the normal course of its business, the Company encounters two significant types of risks: economic and regulatory. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk to the degree that its interest bearing liabilities mature or reprice at different speeds, or on different bases, than its interest-earning assets. Credit risk is the risk of default within the Company’s loan portfolio that results from borrowers’ inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loans receivable and the valuation of real estate held by the Company. The Company is subject to the regulations of various governmental agencies. These regulations can change significantly from period to period. The Company also undergoes periodic examinations by the regulatory agencies, which may subject it to changes with respect to valuation of assets, amount of required loss allowance and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations. The Bank makes loans to individuals and businesses in and around “Upstate” South Carolina for various personal and commercial purposes. The Bank has a diversified loan portfolio. Borrowers’ ability to repay their loans is not dependent upon any specific economic sector. |
Regulatory Considerations | Regulatory Considerations On June 5, 2014, the Board of Directors of the Bank received an Order Terminating the Consent Order indicating that the Bank’s Consent Order with the OCC, which, among other things, required the Bank to maintain minimum capital levels in excess of the minimum regulatory capital ratios for “well-capitalized” banks, had been terminated effective June 4, 2014. The Bank was considered “well-capitalized” as of December 31, 2015. The Bank entered into the Consent Order with the OCC on November 14, 2011, which, among other things, contained a requirement that the Bank maintain minimum capital levels that exceed the minimum regulatory capital ratios for “well-capitalized” banks. The Consent Order required the Bank to achieve and maintain Tier 1 capital at least equal to 9% of adjusted total average assets, Tier 1 risk based capital at least equal to 10%, and total risk based capital at least equal to 12% of risk-weighted assets. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents includes cash, amounts due from banks and federal funds sold. Generally, federal funds are sold for one-day periods. Due to the short term nature of cash and cash equivalents, the carrying amount of these instruments is deemed to be a reasonable estimate of fair value. At December 31, 2015 and 2014, the Company had restricted cash totaling $2,000 with the Federal Home Loan Bank (“FHLB”) of Atlanta. The Company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant. |
Investment Securities | Investment Securities Investment securities are accounted for in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments — Debt and Equity Securities.” Management classifies securities at the time of purchase into one of three categories as follows: (1) Securities Held to Maturity: securities which the Company has the positive intent and ability to hold to maturity, which are reported at amortized cost; (2) Trading Securities: securities that are bought and held principally for the purpose of selling them in the near future, which are reported at fair value with unrealized gains and losses included in earnings; and (3) Securities Available for Sale: securities that may be sold under certain conditions, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of shareholders’ equity as accumulated other comprehensive income. The amortization of premiums and accretion of discounts on investment securities are recorded as adjustments to interest income. Gains or losses on sales of investment securities are based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Unrealized losses on securities, reflecting a decline in value or impairment judged by the Company to be other-than-temporary, are charged to earnings in the consolidated statements of operations. |
Non-Marketable Equity Securities | Non-Marketable Equity Securities The Bank, as a member of the Federal Reserve Bank (“FRB”) and the FHLB, is required to own capital stock in these organizations. The amount of FRB stock owned is based on the Bank’s capital levels and totaled $303,500 and $295,250 at December 31, 2015 and 2014, respectively. The amount of FHLB stock owned is determined based on the Bank’s balances of residential mortgages and advances from the FHLB and totaled $89,000 and $314,400 at December 31, 2015 and 2014, respectively. No ready market exists for these stocks, and they have no quoted market value. However, redemption of these stocks has historically been at par value. Accordingly, the carrying amounts are deemed to be a reasonable estimate of fair value. |
Loans Receivable | Loans Receivable Loans are stated at their unpaid principal balance net of any charge-offs. Interest income is computed using the simple interest method and is recorded in the period earned. Fees earned and direct costs incurred on loans are amortized using the effective interest method over the life of the loan. When serious doubt exists as to the collectability of a loan or when a loan becomes contractually 90 days past due as to principal or interest, interest income is generally discontinued unless the estimated net realizable value of collateral exceeds the principal balance and accrued interest. When interest accruals are discontinued, income earned but not collected is reversed. Cash receipts on nonaccrual loans are not recorded as interest income, but are used to reduce principal. Generally, loans are returned to accrual status when the loan is brought current and ultimate collectability of principal and interest is no longer in doubt. |
Allowance for Loan Losses | Allowance for Loan Losses An allowance for loan losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent losses in the loan portfolio. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. In cases where management deems the amount of the reserve for loan losses to be less than previously determined, an adjustment to lower or reverse the provision will be recorded. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, as well as any reversal of provision, if any, are credited to the allowance. The allowance for loan losses or any reversal of provision is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of both a specific and a general component. The specific component relates to loans that are impaired loans as defined in FASB ASC Topic 310, “Receivables”. For such loans, an allowance is established when either the discounted cash flows or collateral value (less estimated selling costs) or observable market price of the impaired loan is lower than the carrying value of that loan. The general reserve component covers non-impaired loans and is calculated by applying historical loss factors to each sector of the loan portfolio and adjusting for qualitative environmental factors. Qualitative adjustments are used to adjust the historical average for changes to loss indicators within the economy, our market, and specifically our portfolio. The general reserve component is then combined with the specific reserve to determine the total allowance for loan losses. The Company identifies impaired loans through its internal loan review process. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Loans on the Company’s problem loan watch list are considered potentially impaired loans. Generally, once loans are considered impaired, they are moved to nonaccrual status and recognition of interest income is discontinued. Impairment is measured on a loan-by-loan basis based on the determination of the most probable source of repayment which is usually liquidation of the underlying collateral, but may also include discounted future cash flows, or in rare cases, the market value of the loan itself. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement. The Company designates loan modifications as troubled debt restructurings (TDRs) when, for economic or legal reasons related to the borrower’s financial difficulties, a concession is granted to the borrower that would not otherwise be considered. Upon initial restructuring, TDRs are considered classified and impaired and are placed in nonaccrual status if not already categorized. TDRs are returned to accrual status when there is economic substance to the restructuring, any portion of the debt not expected to be repaid has been charged off, the remaining note is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally six months). |
Property and Equipment and Software | Property and Equipment and Software Land is reported at cost. Buildings and improvements, furniture and equipment, capitalized software, and automobiles are stated at cost less accumulated depreciation. Depreciation is computed by the straight-line method, based on the estimated useful lives of 40 years for buildings and 3 to 15 years for software, furniture, equipment and automobiles. Leasehold improvements are amortized over the life of the lease. The cost of assets sold or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the statement of operations when incurred. Maintenance and repairs are charged to current expense. The costs of major renewals and improvements are capitalized. |
Other Real Estate Owned and Repossessed Assets | Other Real Estate Owned and Repossessed Assets Real estate and other property acquired in settlement of loans, is recorded at the lower of cost or fair value less estimated selling costs, establishing a new cost basis at the time of acquisition. Fair value of such property is reviewed regularly and write-downs are recorded when it is determined that the carrying value of the property exceeds the fair value less estimated costs to sell. Write-downs resulting from the periodic reevaluation of such properties, costs related to holding such properties, and gains and losses on the sale of foreclosed properties are charged against income. Costs relating to the development and improvement of such properties are capitalized. |
Securities Sold Under Agreements to Repurchase | Securities Sold Under Agreements to Repurchase The Bank enters into sales of securities under agreements to repurchase. Repurchase agreements are treated as financing, with the obligation to repurchase securities sold being reflected as a liability and the securities underlying the agreements remaining as assets. |
Fair Value | Fair Value The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”), which provides a framework for measuring and disclosing fair value under GAAP. ASC Topic 820 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans). ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 Valuations are based on quoted prices in active markets for identical assets or liabilities. Level 2 Valuations are based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Valuations include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Residential Loan Origination Fees | Residential Loan Origination Fees The Company offers residential loan origination services to its customers. The loans are offered on terms and prices offered by the Company’s correspondents and are closed in the name of the correspondents. The Company receives fees for services it provides in conjunction with these origination services. The fees are recognized at the time the loans are closed by the Company’s correspondent. Residential loan origination fees are included in other income on the Company’s consolidated statements of operations. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with FASB ASC Topic 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets if it is determined to be “more likely than not” that all or some portion of the potential deferred tax asset will not be realized. |
Net Loss per Common Share | Net Loss per Common Share Basic loss per common share represents net loss divided by the weighted-average number of common shares outstanding during the period. Diluted loss per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options and warrants, and are determined using the treasury stock method. For the years ended December 31, 2015 and 2014 as a result of the Company’s net loss, all of the potential common shares (3,097,255 and 3,102,255 stock options, respectively, and zero and 312,500 warrants, respectively, as the warrants were not exercised and were deemed expired in May 2015) were considered anti-dilutive. |
Research and Development | Research and Development All costs incurred to establish the technological feasibility of computer software to be sold, leased or otherwise marketed as research and development are expensed as incurred. Once technological feasibility has been established, the subsequent costs of producing, coding and testing the products should be capitalized. The expensing of computer software costs is discontinued when the product is available for general release to customers. Currently, the Company has not achieved technological feasibility and is expensing all computer software purchases and development expenses related to research and development. Once technological feasibility is reached, the Company will capitalize costs as incurred until such point that the software being produced is available for general release to customers. On September 25, 2015, the Company suspended further development of its digital banking, payments and transaction services business. The board of directors intends to explore strategic alternatives for this line of business and the Company. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The following is a summary of recent authoritative pronouncements that may affect our accounting, reporting, and disclosure of financial information: In January 2014, the Financial Accounting Standards Board (“FASB”) amended Receivables topic of the Accounting Standards Codification. The amendments are intended to resolve diversity in practice with respect to when a creditor should reclassify a collateralized consumer mortgage loan to other real estate owned (“OREO”). In addition, the amendments require a creditor reclassify a collateralized consumer mortgage loan to OREO upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments were effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. In implementing this guidance, assets that are reclassified from real estate to loans are measured at the carrying value of the real estate at the date of adoption. Assets reclassified from loans to real estate are measured at the lower of the net amount of the loan receivable or the fair value of the real estate less costs to sell at the date of adoption. The Company applied the amendments prospectively. These amendments did not have a material effect on the Company’s financial statements. In April 2014, the FASB issued guidance to change the criteria for reporting a discontinued operation. Under the new guidance, a disposal of part of an organization that has a major effect on its operations and financial results is a discontinued operation. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods beginning after December 15, 2014, with early implementation of the guidance permitted. The Company does not expect these amendments to have a material effect on its financial statements. In May 2014 and August 2015, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements. In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments will be effective for the Company for the first interim or annual period beginning after December 15, 2014. The Company applied the guidance by making a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. These amendments did not have a material effect on the Company’s financial statements. In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments will be effective for the Company for fiscal years that begin after December 15, 2015. The Company will apply the guidance to all stock awards granted or modified after the amendments are effective. The Company does not expect these amendments to have a material effect on its financial statements. In August 2014, the FASB issued guidance that is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements, management will need to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the organization’s ability to continue as a going concern within one year after the date that the financial statements are issued. The amendments will be effective for the Company for annual periods ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under the U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted, provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases at Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investment Securities [Abstract] | |
Schedule of amortized costs and fair values of investment securities available for sale | December 31, 2015 Gross Unrealized Amortized Fair Cost Gains Losses Value Government-sponsored mortgage-backed $ 4,290,680 $ 66,350 $ (44,581 ) $ 4,312,449 Municipals, tax-exempt 4,916,379 140,335 (17,267 ) 5,039,447 Municipals, taxable 1,308,298 27,657 — 1,335,955 Total investment securities available for sale $ 10,515,357 $ 234,342 $ (61,848 ) $ 10,687,851 December 31, 2014 Gross Unrealized Amortized Fair Cost Gains Losses Value Government-sponsored mortgage-backed $ 7,597,334 $ 122,491 $ (118,308 ) $ 7,601,517 Collateralized mortgage-backed 2,040,478 — (57,518 ) 1,982,960 Municipals, tax-exempt 4,658,532 68,643 (30,179 ) 4,696,996 Municipals, taxable 1,317,433 16,620 — 1,334,053 Total investment securities available for sale $ 15,613,777 $ 207,754 $ (206,005 ) $ 15,615,526 |
Securities with unrealized losses | Securities in an Securities in an Unrealized Unrealized Loss Position for Loss Position for Less than More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Government-sponsored mortgage-backed $ 627,542 $ 5,569 $ 764,462 $ 39,012 $ 1,392,004 $ 44,581 Municipals, tax-exempt 323,796 6,249 1,074,440 11,018 1,398,236 17,267 Total temporarily impaired securities $ 951,338 $ 11,818 $ 1,838,902 $ 50,030 $ 2,790,240 $ 61,848 Securities in an Securities in an Unrealized Unrealized Loss Position for Loss Position for Less than More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Government-sponsored mortgage-backed $ — $ — $ 3,247,141 $ 118,308 $ 3,189,623 $ 118,308 Collateralized mortgage-backed — — 1,982,960 57,518 2,040,478 57,518 Municipals, tax-exempt — — 1,072,090 30,179 1,072,090 30,179 Total temporarily impaired securities $ — $ — $ 6,302,191 $ 206,005 $ 6,302,191 $ 206,005 |
Amortized costs and fair values of investment securities available for sale by contractual maturity | December 31, 2015 Amortized Fair Cost Value Due within one year $ — $ — Due after one through three years — — Due after three through five years — — Due after five through ten years 1,308,298 1,335,955 Due after ten years 9,207,059 9,351,896 Total investment securities $ 10,515,357 $ 10,687,851 |
Loans (Tables)
Loans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt [Abstract] | |
Composition of net loans by major category | December 31, 2015 2014 Real estate: Commercial $ 25,559,943 $ 25,246,396 Construction and development 7,286,459 8,425,453 Single and multifamily residential 16,434,722 18,073,429 Total real estate loans 49,281,124 51,745,278 Commercial business 17,027,054 16,059,082 Consumer 1,369,224 1,372,906 Deferred origination fees, net (135,647 ) (149,823 ) Gross loans, net of deferred fees 67,541,755 69,027,443 Less allowance for loan losses (1,139,509 ) (1,032,776 ) Loans, net $ 66,402,246 $ 67,994,667 |
Composition of gross loan before deduction of deferred origination fees by rate type | December 31, 2015 Variable rate loans $ 43,744,860 Fixed rate loans 23,932,542 $ 67,677,402 |
Summary of delinquencies and nonaccruals, by portfolio class | Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 30–59 days past due $ 75,890 $ — $ — $ — $ — $ 75,890 60–89 days past due 63,702 250,378 — — — 314,080 Nonaccrual 168,879 40,500 1,390,013 65,798 — 1,665,190 Total past due and nonaccrual 308,471 290,878 1,390,013 65,798 — 2,055,160 Current 16,126,251 6,995,581 24,169,930 16,961,256 1,369,224 65,622,242 Total loans $ 16,434,722 $ 7,286,459 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 December 31, 2014 30–59 days past due $ 188,033 $ 39,561 $ — $ 23,938 $ — $ 251,532 60–89 days past due — — — 9,129 — 9,129 Nonaccrual — — 534,057 — — 534,057 Total past due and nonaccrual 188,033 39,561 534,057 33,067 — 794,718 Current 17,885,396 8,385,892 24,712,339 16,026,015 1,372,906 68,382,548 Total loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 |
Summarizes management's internal credit risk grades, by portfolio class | Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 Pass Loans (Consumer) $ 8,340,816 $ 1,350,332 $ — $ — $ 1,369,224 $ 11,060,372 Grade 1 — Prime — — — — — — Grade 2 — Good — — — — — — Grade 3 — Acceptable 4,479,116 809,004 8,121,125 7,667,706 — 21,076,951 Grade 4 — Acceptable w/Care 3,382,209 4,759,864 14,724,468 8,199,385 — 31,065,926 Grade 5 — Special Mention 63,702 76,381 611,189 846,106 — 1,597,378 Grade 6 — Substandard 168,879 290,878 2,103,161 313,857 — 2,876,775 Grade 7 — Doubtful — — — — — — Total loans $ 16,434,722 $ 7,286,459 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2014 Pass Loans (Consumer) $ 10,739,155 $ 1,362,322 $ — $ — $ 1,341,699 $ 13,443,176 Grade 1 — Prime — — — — — — Grade 2 — Good — — — 1,652,739 — 1,652,739 Grade 3 — Acceptable 2,594,126 1,284,107 9,123,260 4,629,684 31,207 17,662,384 Grade 4 — Acceptable w/Care 3,792,456 5,277,692 14,184,482 9,754,850 — 33,009,480 Grade 5 — Special Mention — 82,413 648,152 — — 730,565 Grade 6 — Substandard 947,692 418,919 1,290,502 21,809 — 2,678,922 Grade 7 — Doubtful — — — — — — Total loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 |
Summarizes information relative to impaired loans, by portfolio class | Unpaid Recorded Related Average Interest December 31, 2015 With no related allowance recorded: Single and multifamily residential real estate $ — $ — $ — $ 411,430 $ 21,667 Construction and development — — — 177,047 — Commercial real estate — other 905,968 905,968 — 415,488 29,423 Commercial business — — — 62,015 — Consumer — — — — — With related allowance recorded: Single and multifamily residential real estate 236,938 236,938 163,138 270,668 — Construction and development 40,500 40,500 10,500 239,206 727 Commercial real estate — other 1,197,193 1,197,193 201,793 805,654 46,761 Commercial business — — — 18,139 2,119 Consumer — — — — — Total: Single and multifamily residential real estate 236,938 236,938 163,138 682,098 21,667 Construction and development 40,500 40,500 10,500 416,253 727 Commercial real estate — other 2,103,161 2,103,161 201,793 1,221,142 76,184 Commercial business — — — 80,154 2,119 Consumer — — — — — $ 2,380,599 $ 2,380,599 $ 375,431 $ 2,399,647 $ 100,697 Unpaid Average principal Recorded Related impaired Interest balance investment allowance investment income December 31, 2014 With no related allowance recorded: Single and multifamily residential real estate $ 725,090 $ 725,090 $ — $ 604,851 $ 44,239 Construction and development — — — 332,954 — Commercial real estate — other 190,791 190,791 — 229,385 — Commercial business — — — — — Consumer — — — — — With related allowance recorded: Single and multifamily residential real estate — — — 442,094 — Construction and development — — — 649,560 — Commercial real estate — other 1,099,712 1,099,712 88,712 645,833 42,321 Commercial business — — — 17,156 — Consumer — — — — — Total: Single and multifamily residential real estate 725,090 725,090 — 1,046,945 44,239 Construction and development — — — 982,514 — Commercial real estate — other 1,290,503 1,290,503 88,712 875,218 42,321 Commercial business — — — 17,156 — Consumer — — — — — $ 2,015,593 $ 2,015,593 $ 88,712 $ 2,921,833 $ 86,560 |
Activity related to allowance for loan losses | Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2015 Allowance for loan losses: Balance, beginning of year $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Provision (reversal of provision) for loan losses 105,000 (50,000 ) 120,000 60,000 (85,000 ) 150,000 Loan charge-offs — — (43,267 ) — — (43,267 ) Loan recoveries — — — — — — Net loans charged-off — — (43,267 ) — — (43,267 ) Balance, end of year $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Individually reviewed for impairment $ 163,138 $ 10,500 $ 201,793 $ — $ — $ 375,431 Collectively reviewed for impairment 102,659 173,630 238,037 244,679 5,073 764,078 Total allowance for loan losses $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Gross loans, end of period: Individually reviewed for impairment $ 236,938 $ 40,500 $ 2,103,161 $ — $ — $ 2,380,599 Collectively reviewed for impairment 16,197,784 7,245,959 23,456,782 17,027,054 1,369,224 65,296,803 Total gross loans $ 16,434,722 $ 7,286,959 $ 25,559,943 $ 17,027,054 $ 1,369,224 $ 67,677,402 Single and multifamily Construction Commercial residential and real estate — Commercial real estate development other business Consumer Total December 31, 2014 Allowance for loan losses: Balance, beginning of year $ 237,230 $ 485,010 $ 360,564 $ 129,009 $ 90,073 $ 1,301,886 Provision (reversal of provision) for loan losses (150,000 ) (295,265 ) 100,106 315,159 — (30,000 ) Loan charge-offs — (118,577 ) (101,000 ) (297,889 ) — (517,466 ) Loan recoveries 73,567 162,962 3,427 38,400 — 278,356 Net loans charged-off 73,567 44,385 (97,573 ) (259,489 ) — (239,110 ) Balance, end of year $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Individually reviewed for impairment $ — $ — $ 88,712 $ — $ — $ 88,712 Collectively reviewed for impairment 160,797 234,130 274,385 184,679 90,073 944,064 Total allowance for loan losses $ 160,797 $ 234,130 $ 363,097 $ 184,679 $ 90,073 $ 1,032,776 Gross loans, end of period: Individually reviewed for impairment $ 725,090 $ — $ 1,290,503 $ — $ — $ 2,015,593 Collectively reviewed for impairment 17,348,339 8,425,453 23,955,893 16,059,082 1,372,906 67,161,673 Total gross loans $ 18,073,429 $ 8,425,453 $ 25,246,396 $ 16,059,082 $ 1,372,906 $ 69,177,266 |
Property, Equipment and Softw31
Property, Equipment and Software (Table) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Equipment and Software [Abstract] | |
Components of property, equipment and software | December 31, 2015 2014 Land and land improvements $ 1,108,064 $ 1,108,064 Building 784,845 784,845 Leasehold improvements 257,159 257,159 Software 374,039 374,039 Furniture and equipment 1,432,378 1,402,118 3,956,485 3,926,225 Accumulated depreciation (1,757,689 ) (1,542,218 ) Total property, equipment and software $ 2,198,796 $ 2,384,007 |
Other Real Estate Owned and R32
Other Real Estate Owned and Repossessed Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Real Estate Owned and Repossessed Assets [Abstract] | |
Composition of other real estate owned and repossessed assets | December 31, 2015 2014 Residential land lots $ 31,320 $ 552,200 Single and multifamily residential real estate — 62,257 Commercial office space 1,008,900 1,233,000 Commercial land 870,000 710,000 $ 1,910,220 $ 2,557,457 |
Summary of changes in other real estate owned and repossessed assets | 2015 2014 Balance at beginning of year $ 2,557,457 $ 2,508,170 Repossessed property acquired in settlement of loans 300,000 1,143,000 Proceeds from sales of repossessed property (582,295 ) (505,263 ) Loss on sale and write-downs of repossessed property, net (364,942 ) (588,450 ) Balance at end of year $ 1,910,220 $ 2,557,457 |
Deposits (Tables)
Deposits (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Deposit [Abstract] | |
Summary of deposits | 2015 2014 Non-interest bearing $ 13,010,209 $ 11,016,882 Interest bearing: NOW accounts 8,894,408 7,335,360 Money market accounts 33,164,973 35,077,304 Savings 1,034,438 767,668 Time, less than $100,000 5,756,202 6,695,936 Time, $100,000 and over 21,707,095 21,981,513 Brokered time deposits, less than $100,000 — — Brokered time deposits, $100,000 and over — — Total deposits $ 83,567,325 $ 82,874,663 |
Scheduled maturities of certificates of deposit (including brokered time deposits | 2016 $ 16,380,255 2017 6,581,652 2018 711,477 2019 3,026,300 2020 763,614 $ 27,463,298 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes [Abstract] | |
Summary of components of income tax expense | Year Ended December 31, 2015 2014 Current income tax expense (benefit) $ 5,080 $ — Deferred income tax expense (benefit) (2,404,737 ) (2,338,716 ) (2,404,737 ) (2,338,716 ) Change in valuation allowance 2,404,737 2,338,716 Income tax expense $ 5,080 $ — |
Summary of the items that caused recorded income taxes computed earlier | Year Ended December 31, 2015 2014 Income tax benefit at federal statutory rate $ (1,629,769 ) $ (2,210,087 ) Change in valuation allowance (2,404,737 ) 2,338,716 IRC Section 382 limitation to net operating loss carry-forward 4,020,027 — Other 19,559 (128,629 ) Income tax expense $ 5,080 $ — |
Summary of components of the net deferred tax liability | December 31, 2015 2014 Deferred tax assets (liabilities): Allowance for loan losses $ 140,131 $ 89,131 Lost interest on nonaccrual loans 44,348 7,598 Real estate acquired in settlement of loans 250,453 248,148 Net operating loss carry-forward 1,987,292 5,213,659 Deferred operational and start-up costs 56,513 69,554 Other-than-temporary impairment on non-marketable equity securities — 52,497 Unrealized loss (gain) on investment securities available for sale (58,648 ) (595 ) Internally developed software 3,771,558 3,081,561 Other 185,313 78,197 6,376,960 8,839,750 Valuation allowance (6,376,960 ) (8,839,750 ) Net deferred tax asset $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Future minimum lease payments under operating leases | For the year ended December 31, 2016 $ 243,466 2017 199,975 2018 138,080 2019 105,105 Thereafter — $ 686,626 |
Stock Compensation Plans (Table
Stock Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock Compensation Plans [Abstract] | |
Summary of status of plan and changes for years | 2015 2014 Weighted Weighted average Average average exercise Intrinsic exercise Shares price Value Shares price Outstanding at beginning of year 3,102,255 $ 1.08 3,273,505 $ 1.08 Granted 115,000 1.59 155,000 1.59 Exercised — — — — Forfeited or expired (120,000 ) 0.80 (326,250 ) 1.01 Outstanding at end of year 3,097,255 1.11 $0.00 3,102,255 1.11 Options exercisable at year-end 3,022,255 $0.00 2,186,005 Shares available for grant 2,023,435 2,023,435 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Matters [Abstract] | |
Summarizes capital amounts and ratios of the Bank and the regulatory minimum requirements | To be well capitalized under prompt For capital corrective action adequacy purposes provisions Actual Minimum Minimum Amount Ratio Amount Ratio Amount Ratio As of December 31, 2015 Total Capital (to risk weighted assets) $ 10,598,000 14.1 % $ 6,029,000 8.0 % $ 7,536,000 10.0 % Tier 1 Capital (to risk weighted assets) 9,653,000 12.8 3,014,000 4.0 4,521,000 6.0 Tier 1 Capital (to average assets) 9,653,000 10.0 3,875,000 4.0 4,844,000 5.0 Common Equity Tier 1 Capital (to risk weighted assets) 9,653,000 12.8 3,391,000 4.5 3,391,000 4.5 As of December 31, 2014 Total Capital (to risk weighted assets) $ 11,494,000 15.3 % $ 6,023,000 8.0 % $ 7,534,000 10.0 % Tier 1 Capital (to risk weighted assets) 10,551,000 14.0 3,014,000 4.0 4,521,000 6.0 Tier 1 Capital (to average assets) 10,551,000 10.6 3,970,000 4.0 4,963,000 5.0 Common Equity Tier 1 Capital (to risk weighted assets) n/a n/a n/a n/a n/a n/a |
Business Segments (Tables)
Business Segments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Segments [Abstract] | |
Summary of selected financial information for Company's reportable business segments | Parent Company Community Transaction Asset Banking Services Management Parent Only Total For the year ended December 31, 2015 Interest income $ 3,567,763 $ — $ — $ — $ 3,567,763 Interest expense 316,358 — 14,704 331,062 Net interest income 3,251,405 — — (14,704 ) 3,236,071 Provision for loan losses 150,000 — — — 150,000 Noninterest income 262,521 383,312 — 21,074 666,907 Noninterest expense 4,271,806 2,214,478 140,782 1,919,981 8,547,047 Loss before income taxes (907,580 ) (1,831,166 ) (140,782 ) (1,913,611 ) (4,793,439 ) Income taxes 5,080 — — — 5,080 Net loss $ (912,960 ) $ (1,831,166 ) $ (140,782 ) $ (1,913,611 ) $ (4,798,519 ) Community Holding As of December 31, 2015 Banking Company(1) Eliminations Total Cash and due from banks $ 5,458,252 $ 2,909,255 $ (2,913,712 ) $ 5,453,795 Interest bearing deposits in other institutions 1,500,000 — — 1,500,000 Federal funds sold 8,446,000 — — 8,446,000 Investment securities 10,687,851 — — 10,687,851 Loans receivable, net 66,402.246 — — 66,402,246 Other real estate owned 1,278,900 631,320 — 1,910,220 Property, equipment, and software, net 2,053,575 145,221 — 2,198,796 Other assets 771,437 96,961 — 868,398 Total Assets $ 96,598,261 $ 3,782,757 $ (2,913,712 ) $ 97,467,306 Deposits $ 86,481,037 $ — $ (2,913,712 ) $ 83,567,325 Securities sold under agreement to repurchase 113,080 — — 113,080 Accrued and other liabilities 236,918 905,824 — 1,142,742 Shareholders’ equity 9,767,226 2,876,933 — 12,644,159 Total liabilities and shareholders’ equity $ 96,598,261 $ 3,782,757 $ (2,913,712 ) $ 97,467,306 ____________________ (1) Excludes investment in wholly-owned Bank subsidiary Parent Company Community Transaction Asset Banking Services Management Parent Only Total For the year ended December 31, 2014 Interest income $ 3,940,632 $ — $ (22,664 ) $ — $ 3,917,968 Interest expense 298,216 — 13,808 312,024 Net interest income 3,642,416 — (22,664 ) (13,808 ) 3,605,944 Reversal of provision for loan losses (30,000 ) — — — (30,000 ) Noninterest income 398,939 16,663 118,452 225,641 440,758 Noninterest expense 3,845,751 4,938,034 767,809 1,118,697 10,576,958 Income (loss) before income taxes 225,604 (4,921,371 ) (672,021 ) (906,864 ) (6,500,256 ) Income taxes — — — — — Net income (loss) $ 225,604 $ (4,921,371 ) $ (672,021 ) $ (906,864 ) $ (6,500,256 ) Community Holding As of December 31, 2014 Banking Company (1) Eliminations Total Cash and due from banks $ 5,105,940 $ 288,440 $ (133,300 ) $ 5,261,080 Federal funds sold 5,643,000 — — 5,643,000 Investment securities 15,615,526 — — 15,615,526 Loans receivable, net 67,994,667 — — 67,994,667 Other real estate owned 1,365,257 1,192,200 — 2,557,457 Property, equipment, and software, net 2,117,645 266,362 — 2,384,007 Other assets 1,005,955 250,290 — 1,256,245 Total Assets $ 98,847,990 $ 1,997,292 $ (133,300 ) $ 100,711,982 Deposits $ 83,007,963 $ — $ (133,300 ) $ 82,874,663 Securities sold under agreement to repurchase 153,603 — — 153,603 Borrowings 5,000,000 — — 5,000,000 Note payable — 600,000 — 600,000 Accrued and other liabilities 133,786 2,539,350 — 2,673,136 Shareholders’ equity (deficit) 10,552,638 (1,142,058 ) — 9,410,580 Total liabilities and shareholders’ equity $ 98,847,990 $ 1,997,292 $ (133,300 ) $ 100,711,982 ____________________ (1) Excludes investment in wholly-owned Bank subsidiary |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
Fair value assets measured on non recurring basis unobservable inputs | Fair Value at Valuation Significant Description December 31, 2015 Technique Unobservable Inputs Other real estate owned and Discounts to reflect current repossessed assets $1,910,220 Appraised value market conditions, abbreviated holding period, and estimated costs to sell Impaired loans $2,005,168 Internal Adjustments to estimated assessment of value based on recent sales of appraised value comparable collateral For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2014, the significant unobservable inputs used in the fair value measurements were as follows: Fair Value at Valuation Significant Description December 31, 2014 Technique Unobservable Inputs Other real estate owned and Discounts to reflect current repossessed assets $2,557,457 Appraised value market conditions and estimated costs to sell Impaired loans $1,926,881 Internal Adjustments to estimated assessment of value based on recent sales of appraised value comparable collateral |
Estimated fair values of the Company's financial instruments | Carrying December 31, 2015 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 5,453,795 $ 5,453,795 $ 5,453,795 $ — $ — Interest bearing deposits in other institutions 1,500,000 1,500,000 — 1,500,000 — Federal funds sold 8,446,000 8,446,000 8,446,000 — — Investment securities available for sale 10,687,851 10,687,851 — 10,687,851 — Non-marketable equity securities 392,500 392,500 — 392,500 — Loans, net 66,602,246 66,873,213 — — 66,873,213 Financial Liabilities: Deposits 83,567,325 83,538,827 — 83,538,827 — Securities sold under agreements to repurchase 113,080 113,080 — 113,080 — Carrying December 31, 2014 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 5,261,080 $ 5,261,080 $ 5,261,080 $ — $ — Federal funds sold 5,643,000 5,643,000 5,643,000 — — Investment securities available for sale 15,615,526 15,615,526 — 15,615,526 — Non-marketable equity securities 609,650 609,650 — 609,650 — Loans, net 67,994,667 67,925,640 — — 67,925,640 Financial Liabilities: FHLB advance 5,000,000 5,000,347 — 5,000,347 — Note payable 600,000 603,567 — 603,567 — Deposits 82,874,663 81,928,307 — 81,928,307 — Securities sold under agreements to repurchase 153,603 153,603 — 153,603 — |
Parent Company Financial Info40
Parent Company Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Parent Company Financial Information [Abstract] | |
Condensed balance sheet of Independence Bancshares, Inc. (parent company) | December 31, 2015 2014 Cash and cash equivalents $ 2,909,255 $ 288,440 Investment in subsidiary 9,767,226 10,552,638 Premises and equipment, net 145,221 266,362 Other real estate owned 631,320 1,192,200 Other assets 96,961 250,290 $ 13,549,983 $ 12,549,930 Liabilities and Shareholders’ Equity Note payable $ — $ 600,000 Accrued and other liabilities 905,824 2,539,350 Shareholders’ equity 12,644,159 9,410,580 Total liabilities and shareholders’ equity $ 13,549,983 $ 12,549,930 |
Condensed statements of operations of Independence Bancshares, Inc. (parent Company) | Year Ended December 31, 2015 2014 Equity in undistributed net (loss) income of subsidiary $ (912,960 ) $ 225,604 Product research and development — Transaction Services (2,209,978 ) (4,938,034 ) Forgiveness of debt 403,245 — Loan interest and other income 1,141 2,855 Interest expense on note payable (14,704 ) (23,128 ) Gain on sale of loans held for sale — 118,452 Provision for loan losses — — Property tax expense (23,504 ) (36,775 ) Consulting and miscellaneous fees (378,825 ) (203,373 ) Real estate owned activity (117,278 ) (581,856 ) General and administrative expenses (852,012 ) (502,729 ) Legal expense (404,672 ) (195,026 ) Stock compensation expense (288,972 ) (366,246 ) Net loss $ (4,798,519 ) $ (6,500,256 ) |
Condensed statements of cash flows of Independence Bancshares, Inc. (parent company) | Year Ended December 31, 2015 2014 Operating activities Net loss $ (4,798,519 ) $ (6,500,256 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation expense 288,973 366,246 Equity in undistributed net loss (income) of subsidiary 912,960 (225,604 ) Gain on sale of loans held for sale — (118,452 ) Net changes in fair value and losses on other real estate owned 105,603 581,856 Loan loss provision — — Depreciation expense 128,549 126,115 Change in other assets 153,329 (67,762 ) Change in accrued items (1,633,526 ) 1,996,911 Net cash used in operating activities (4,842,631 ) (3,840,946 ) Investing activities Purchase of premises and equipment (7,408 ) (5,943 ) Change in loans, net of allowance — 2,120 Proceeds from sale of loans held for sale — 1,033,000 Proceeds from sale of other real estate owned 455,277 151,214 Net cash provided by investing activities 447,869 1,180,391 Financing activities Issuance of preferred stock, net of closing costs 7,615,577 — (Repayments of) proceeds from note payable from affiliate (600,000 ) 600,000 Net cash provided by financing activities 7,015,577 600,000 Net increase (decrease) in cash and cash equivalents 2,620,815 (2,060,555 ) Cash and cash equivalents, beginning of year 288,440 2,348,995 Cash and cash equivalents, end of year $ 2,909,255 $ 288,440 Schedule of non-cash transactions Loans transferred to other real estate owned $ — $ 809,000 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies and Activities (Details) - USD ($) | Jan. 04, 2016 | May. 14, 2015 | Aug. 01, 2013 | Dec. 31, 2012 | May. 31, 2005 | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Common stock sold initial public offering | 2,085,010 | ||||||
Sale of stock, price per share | $ 0.80 | $ 0.80 | $ 10 | ||||
Proceeds from issuance of initial public offering | $ 20,500,000 | ||||||
Common stock sold to certain accredited investors in private placement | 769,000 | 17,648,750 | |||||
Proceeds from issuance of common stock | $ 615,200 | $ 14,100,000 | |||||
Tier 1 Capital (to average assets), required minimum capital ratio minimum ratio | 9.00% | ||||||
Tier 1 Capital (to risk weighted assets), required minimum adequacy purposes minimum ratio | 10.00% | ||||||
Total Capital (to risk weighted assets), required minimum capital ratio minimum ratio | 12.00% | ||||||
Federal reserve bank stock | $ 303,500 | $ 295,250 | |||||
FHLB advances secured by stock | $ 89,000 | $ 314,400 | |||||
Series A convertible preferred stock [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Sale of stock, price per share | $ 1,000 | ||||||
Preferred stock, shares issued | 8,425 | 8,425 | |||||
Proceeds from issuance of preferred stock | $ 8,425,000 | ||||||
Convertible shares of common stock | 1,250 | ||||||
Liquidation preference of per share | $ 1,000 | ||||||
Subsequent Event [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Payment for license fee | $ 275,000 | ||||||
Stock Options [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Anti-dilutive securities | 3,097,255 | 3,102,255 | |||||
Warrant [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Anti-dilutive securities | 0 | 312,500 | |||||
Building [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Estimated useful lives | 40 years | ||||||
Software furniture equipment and automobiles [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Estimated useful lives | 3 to 15 years | ||||||
Federal Home Loan Bank of Atlanta [Member] | |||||||
Summary of Significant Accounting Policies and Activities (Textual) | |||||||
Restricted cash | $ 2,000 | $ 2,000 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of amortized costs and fair values of investment securities available for sale | ||
Amortized cost | $ 10,515,357 | $ 15,613,777 |
Gross Unrealized Gains | 234,342 | 207,754 |
Gross Unrealized Losses | (61,848) | (206,005) |
Fair Value | 10,687,851 | 15,615,526 |
Government-sponsored mortgage-backed [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Amortized cost | 4,290,680 | 7,597,334 |
Gross Unrealized Gains | 66,350 | 122,491 |
Gross Unrealized Losses | (44,581) | (118,308) |
Fair Value | 4,312,449 | 7,601,517 |
Collateralized mortgage-backed [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Amortized cost | $ 2,040,478 | |
Gross Unrealized Gains | ||
Gross Unrealized Losses | $ (57,518) | |
Fair Value | 1,982,960 | |
Municipals, tax-exempt [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Amortized cost | 4,916,379 | 4,658,532 |
Gross Unrealized Gains | 140,335 | 68,643 |
Gross Unrealized Losses | (17,267) | (30,179) |
Fair Value | 5,039,447 | 4,696,996 |
Municipals, taxable [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Amortized cost | 1,308,298 | 1,317,433 |
Gross Unrealized Gains | $ 27,657 | $ 16,620 |
Gross Unrealized Losses | ||
Fair Value | $ 1,335,955 | $ 1,334,053 |
Investment Securities (Details
Investment Securities (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of amortized costs and fair values of investment securities available for sale | ||
Securities Fair Value Loss Position for Less than 12 Months | $ 951,338 | |
Securities Unrealized losses Loss Position, Less than 12 Months | 11,818 | |
Securities Fair Value Loss Position for More than 12 Months | 1,838,902 | $ 6,302,191 |
Securities Unrealized Losses Loss Position, More than 12 Months | 50,030 | 206,005 |
Total Fair Value | 2,790,240 | 6,302,191 |
Total Unrealized Losses | 61,848 | $ 206,005 |
Government-sponsored mortgage-backed [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Securities Fair Value Loss Position for Less than 12 Months | 627,542 | |
Securities Unrealized losses Loss Position, Less than 12 Months | 5,569 | |
Securities Fair Value Loss Position for More than 12 Months | 764,462 | $ 3,247,141 |
Securities Unrealized Losses Loss Position, More than 12 Months | 39,012 | 118,308 |
Total Fair Value | 1,392,004 | 3,189,623 |
Total Unrealized Losses | 44,581 | $ 118,308 |
Collateralized mortgage-backed [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Securities Fair Value Loss Position for Less than 12 Months | ||
Securities Unrealized losses Loss Position, Less than 12 Months | ||
Securities Fair Value Loss Position for More than 12 Months | $ 1,982,960 | |
Securities Unrealized Losses Loss Position, More than 12 Months | 57,518 | |
Total Fair Value | 2,040,478 | |
Total Unrealized Losses | $ 57,518 | |
Municipals, tax-exempt [Member] | ||
Schedule of amortized costs and fair values of investment securities available for sale | ||
Securities Fair Value Loss Position for Less than 12 Months | 323,796 | |
Securities Unrealized losses Loss Position, Less than 12 Months | 6,249 | |
Securities Fair Value Loss Position for More than 12 Months | 1,074,440 | $ 1,072,090 |
Securities Unrealized Losses Loss Position, More than 12 Months | 11,018 | 30,179 |
Total Fair Value | 1,398,236 | 1,072,090 |
Total Unrealized Losses | $ 17,267 | $ 30,179 |
Investment Securities (Detail44
Investment Securities (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Amortized costs and fair values of investment securities available for sale by contractual maturity | ||
Due within one year, Amortized Cost | ||
Due after one through three years, Amortized Cost | ||
Due after three through five years, Amortized Cost | ||
Due after five through ten years, Amortized Cost | $ 1,308,298 | |
Due after ten years, Amortized Cost | 9,207,059 | |
Total investment securities, Amortized Cost | $ 10,515,357 | |
Due within one year, Fair Value | ||
Due after one through three years, Fair Value | ||
Due after three through five years, Fair Value | ||
Due after five through ten years, Fair Value | $ 1,335,955 | |
Due after ten years, Fair Value | 9,351,896 | |
Total investment securities, Fair Value | $ 10,687,851 | $ 15,615,526 |
Investment Securities (Detail45
Investment Securities (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Investment Securities (Textual) | ||
Investment securities, fair value for continuous loss position for less than twelve months | $ 951,338 | |
Investment securities, fair value for more than one year | 1,838,902 | $ 6,302,191 |
Investment securities, unrealized loss for more than one year | 50,030 | 206,005 |
Proceeds from sales of securities | 4,100,000 | 4,100,000 |
Securities pledged as collateral for repurchase agreements | $ 2,700,000 | 2,700,000 |
Gain on sale of investment securities | $ 118,452 |
Loans (Details)
Loans (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Real estate: | |||
Total real estate loans | $ 49,281,124 | $ 51,745,278 | |
Commercial business | 17,027,054 | 16,059,082 | |
Consumer | 1,369,224 | 1,372,906 | |
Deferred origination fees, net | (135,647) | (149,823) | |
Gross loans, net of deferred fees | 67,541,755 | 69,027,443 | |
Less allowance for loan losses | (1,139,509) | (1,032,776) | $ (1,301,886) |
Loans, net | 66,402,246 | 67,994,667 | |
Commercial [Member] | |||
Real estate: | |||
Total real estate loans | 25,559,943 | 25,246,396 | |
Less allowance for loan losses | (439,830) | (363,097) | (360,564) |
Construction and development [Member] | |||
Real estate: | |||
Total real estate loans | 7,286,459 | 8,425,453 | |
Less allowance for loan losses | (184,130) | (234,130) | (485,010) |
Single and multifamily residential [Member] | |||
Real estate: | |||
Total real estate loans | 16,434,722 | 18,073,429 | |
Less allowance for loan losses | $ (265,797) | $ (160,797) | $ (237,230) |
Loans (Details 1)
Loans (Details 1) | Dec. 31, 2015USD ($) |
Composition of gross loans before deduction of deferred origination fees by rate type | |
Variable rate loans | $ 43,744,860 |
Fixed rate loans | 23,932,542 |
Gross loan before deduction of deferred origination fees | $ 67,677,402 |
Loans (Details 2)
Loans (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | $ 75,890 | $ 251,532 |
60-89 days past due | 314,080 | 9,129 |
Nonaccrual loans | 1,665,190 | 534,057 |
Total past due and nonaccrual | 2,055,160 | 794,718 |
Current | 65,622,242 | 68,382,548 |
Total loans | 67,677,402 | 69,177,266 |
Single and multifamily residential real estate [Member] | ||
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | 75,890 | $ 188,033 |
60-89 days past due | 63,702 | |
Nonaccrual loans | 168,879 | |
Total past due and nonaccrual | 308,471 | $ 188,033 |
Current | 16,126,251 | 17,885,396 |
Total loans | $ 16,434,722 | 18,073,429 |
Construction and development [Member] | ||
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | $ 39,561 | |
60-89 days past due | $ 250,378 | |
Nonaccrual loans | 40,500 | |
Total past due and nonaccrual | 290,878 | $ 39,561 |
Current | 6,995,581 | 8,385,892 |
Total loans | $ 7,286,459 | $ 8,425,453 |
Commercial [Member] | ||
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | ||
60-89 days past due | ||
Nonaccrual loans | $ 1,390,013 | $ 534,057 |
Total past due and nonaccrual | 1,390,013 | 534,057 |
Current | 24,169,930 | 24,712,339 |
Total loans | $ 25,559,943 | 25,246,396 |
Commercial business [Member] | ||
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | 23,938 | |
60-89 days past due | $ 9,129 | |
Nonaccrual loans | $ 65,798 | |
Total past due and nonaccrual | 65,798 | $ 33,067 |
Current | 16,961,256 | 16,026,015 |
Total loans | $ 17,027,054 | $ 16,059,082 |
Consumer [Member] | ||
Summary of delinquencies and nonaccruals, by portfolio class | ||
30-59 days past due | ||
60-89 days past due | ||
Nonaccrual loans | ||
Total past due and nonaccrual | ||
Current | $ 1,369,224 | $ 1,372,906 |
Total loans | $ 1,369,224 | $ 1,372,906 |
Loans (Details 3)
Loans (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of management's internal credit risk grades | ||
Total loans | $ 67,677,402 | $ 69,177,266 |
Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 16,434,722 | 18,073,429 |
Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 7,286,459 | 8,425,453 |
Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 25,559,943 | 25,246,396 |
Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 17,027,054 | 16,059,082 |
Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 1,369,224 | 1,372,906 |
Pass Loans (Consumer) [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 11,060,372 | 13,443,176 |
Pass Loans (Consumer) [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 8,340,816 | 10,739,155 |
Pass Loans (Consumer) [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 1,350,332 | $ 1,362,322 |
Pass Loans (Consumer) [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Pass Loans (Consumer) [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Pass Loans (Consumer) [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 1,369,224 | $ 1,341,699 |
Grade 1 - Prime [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 1 - Prime [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 1 - Prime [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 1 - Prime [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 1 - Prime [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 1 - Prime [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 2 - Good [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 1,652,739 | |
Grade 2 - Good [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 2 - Good [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 2 - Good [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 2 - Good [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 1,652,739 | |
Grade 2 - Good [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 3 - Acceptable [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 21,076,951 | $ 17,662,384 |
Grade 3 - Acceptable [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 4,479,116 | 2,594,126 |
Grade 3 - Acceptable [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 809,004 | 1,284,107 |
Grade 3 - Acceptable [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 8,121,125 | 9,123,260 |
Grade 3 - Acceptable [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 7,667,706 | 4,629,684 |
Grade 3 - Acceptable [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 31,207 | |
Grade 4 - Acceptable w/Care [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 31,065,926 | 33,009,480 |
Grade 4 - Acceptable w/Care [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 3,382,209 | 3,792,456 |
Grade 4 - Acceptable w/Care [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 4,759,864 | 5,277,692 |
Grade 4 - Acceptable w/Care [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 14,724,468 | 14,184,482 |
Grade 4 - Acceptable w/Care [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 8,199,385 | $ 9,754,850 |
Grade 4 - Acceptable w/Care [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 5 - Special Mention [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 1,597,378 | $ 730,565 |
Grade 5 - Special Mention [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 63,702 | |
Grade 5 - Special Mention [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 76,381 | $ 82,413 |
Grade 5 - Special Mention [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 611,189 | $ 648,152 |
Grade 5 - Special Mention [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 846,106 | |
Grade 5 - Special Mention [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 6 - Substandard [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 2,876,775 | $ 2,678,922 |
Grade 6 - Substandard [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 168,879 | 947,692 |
Grade 6 - Substandard [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 290,878 | 418,919 |
Grade 6 - Substandard [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | 2,103,161 | 1,290,502 |
Grade 6 - Substandard [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | $ 313,857 | $ 21,809 |
Grade 6 - Substandard [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | Single and multifamily residential real estate [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | Construction and development [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | Commercial [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | Commercial business [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans | ||
Grade 7 - Doubtful [Member] | Consumer [Member] | ||
Summary of management's internal credit risk grades | ||
Total loans |
Loans (Details 4)
Loans (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of information relative to impaired loans, by portfolio class | ||
Total, Unpaid principal balance | $ 2,380,599 | $ 2,015,593 |
Total, Recorded investment | 2,380,599 | 2,015,593 |
Total, Related allowance | 375,431 | 88,712 |
Total, Average impaired investment | 2,399,647 | 2,921,833 |
Total, Interest income | $ 100,697 | 86,560 |
Single and multifamily residential real estate [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | 725,090 | |
With no related allowance recorded, Recorded investment | $ 725,090 | |
With no related allowance, Related allowance | ||
With no related allowance recorded, Average impaired investment | $ 411,430 | $ 604,851 |
With no related allowance recorded, Interest income | 21,667 | $ 44,239 |
With related allowance recorded, Unpaid principal balance | 236,938 | |
With related allowance recorded, Recorded investment | 236,938 | |
With related allowance recorded, Related allowance | 163,138 | |
With related allowance recorded, Average impaired investment | $ 270,668 | $ 442,094 |
With related allowance recorded, Interest income | ||
Total, Unpaid principal balance | $ 236,938 | $ 725,090 |
Total, Recorded investment | 236,938 | $ 725,090 |
Total, Related allowance | 163,138 | |
Total, Average impaired investment | 682,098 | $ 1,046,945 |
Total, Interest income | $ 21,667 | $ 44,239 |
Construction and development [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | ||
With no related allowance recorded, Recorded investment | ||
With no related allowance, Related allowance | ||
With no related allowance recorded, Average impaired investment | $ 177,047 | $ 332,954 |
With no related allowance recorded, Interest income | ||
With related allowance recorded, Unpaid principal balance | $ 40,500 | |
With related allowance recorded, Recorded investment | 40,500 | |
With related allowance recorded, Related allowance | 10,500 | |
With related allowance recorded, Average impaired investment | 239,206 | $ 649,560 |
With related allowance recorded, Interest income | 727 | |
Total, Unpaid principal balance | 40,500 | |
Total, Recorded investment | 40,500 | |
Total, Related allowance | 10,500 | |
Total, Average impaired investment | 416,253 | $ 982,514 |
Total, Interest income | 727 | |
Commercial real estate - other [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | 905,968 | $ 190,791 |
With no related allowance recorded, Recorded investment | $ 905,968 | $ 190,791 |
With no related allowance, Related allowance | ||
With no related allowance recorded, Average impaired investment | $ 415,488 | $ 229,385 |
With no related allowance recorded, Interest income | 29,423 | |
With related allowance recorded, Unpaid principal balance | 1,197,193 | $ 1,099,712 |
With related allowance recorded, Recorded investment | 1,197,193 | 1,099,712 |
With related allowance recorded, Related allowance | 201,793 | 88,712 |
With related allowance recorded, Average impaired investment | 805,654 | 645,833 |
With related allowance recorded, Interest income | 46,761 | 42,321 |
Total, Unpaid principal balance | 2,103,161 | 1,290,503 |
Total, Recorded investment | 2,103,161 | 1,290,503 |
Total, Related allowance | 201,793 | 88,712 |
Total, Average impaired investment | 1,221,142 | 875,218 |
Total, Interest income | $ 76,184 | $ 42,321 |
Commercial business [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | ||
With no related allowance recorded, Recorded investment | ||
With no related allowance, Related allowance | ||
With no related allowance recorded, Average impaired investment | $ 62,015 | |
With no related allowance recorded, Interest income | ||
With related allowance recorded, Unpaid principal balance | ||
With related allowance recorded, Recorded investment | ||
With related allowance recorded, Related allowance | ||
With related allowance recorded, Average impaired investment | $ 18,139 | $ 17,156 |
With related allowance recorded, Interest income | $ 2,119 | |
Total, Unpaid principal balance | ||
Total, Recorded investment | ||
Total, Related allowance | ||
Total, Average impaired investment | $ 80,154 | $ 17,156 |
Total, Interest income | $ 2,119 | |
Consumer [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | ||
With no related allowance recorded, Recorded investment | ||
With no related allowance, Related allowance | ||
With no related allowance recorded, Average impaired investment | ||
With no related allowance recorded, Interest income | ||
With related allowance recorded, Unpaid principal balance | ||
With related allowance recorded, Recorded investment | ||
With related allowance recorded, Related allowance | ||
With related allowance recorded, Average impaired investment | ||
With related allowance recorded, Interest income | ||
Total, Unpaid principal balance | ||
Total, Recorded investment | ||
Total, Related allowance | ||
Total, Average impaired investment | ||
Total, Interest income |
Loans (Details 5)
Loans (Details 5) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for loan losses: | ||||
Balance, beginning of year | $ 1,032,776 | $ 1,301,886 | ||
Provision (reversal of provision) for loan losses | 150,000 | (30,000) | ||
Loan charge-offs | $ (43,267) | (517,466) | ||
Loan recoveries | 278,356 | |||
Net loans charged-off | $ (43,267) | (239,110) | ||
Balance, end of year | 1,139,509 | 1,032,776 | ||
Individually reviewed for impairment | $ 375,431 | $ 88,712 | ||
Collectively reviewed for impairment | 764,078 | 944,064 | ||
Total allowance for loan losses | 1,032,776 | 1,032,776 | 1,139,509 | 1,032,776 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | 2,380,599 | 2,015,593 | ||
Collectively reviewed for impairment | 65,296,803 | 67,161,673 | ||
Total gross loans | 67,677,402 | $ 69,177,266 | ||
Single and multifamily residential real estate [Member] | ||||
Allowance for loan losses: | ||||
Balance, beginning of year | 160,797 | 237,230 | ||
Provision (reversal of provision) for loan losses | $ 105,000 | $ (150,000) | ||
Loan charge-offs | ||||
Loan recoveries | $ 73,567 | |||
Net loans charged-off | 73,567 | |||
Balance, end of year | $ 265,797 | 160,797 | ||
Individually reviewed for impairment | 163,138 | |||
Collectively reviewed for impairment | 102,659 | $ 160,797 | ||
Total allowance for loan losses | 160,797 | 160,797 | 265,797 | 160,797 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | 236,938 | 725,090 | ||
Collectively reviewed for impairment | 16,197,784 | 17,348,339 | ||
Total gross loans | 16,434,722 | $ 18,073,429 | ||
Construction and development [Member] | ||||
Allowance for loan losses: | ||||
Balance, beginning of year | 234,130 | 485,010 | ||
Provision (reversal of provision) for loan losses | $ (50,000) | (295,265) | ||
Loan charge-offs | (118,577) | |||
Loan recoveries | 162,962 | |||
Net loans charged-off | 44,385 | |||
Balance, end of year | $ 184,130 | 234,130 | ||
Individually reviewed for impairment | 10,500 | |||
Collectively reviewed for impairment | 173,630 | $ 234,130 | ||
Total allowance for loan losses | 234,130 | 234,130 | 184,130 | $ 234,130 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | 40,500 | |||
Collectively reviewed for impairment | 7,245,959 | $ 8,425,453 | ||
Total gross loans | 7,286,459 | 8,425,453 | ||
Commercial real estate - other [Member] | ||||
Allowance for loan losses: | ||||
Balance, beginning of year | 363,097 | 360,564 | ||
Provision (reversal of provision) for loan losses | 120,000 | 100,106 | ||
Loan charge-offs | $ (43,267) | (101,000) | ||
Loan recoveries | 3,427 | |||
Net loans charged-off | $ (43,267) | (97,573) | ||
Balance, end of year | 439,830 | 363,097 | ||
Individually reviewed for impairment | 201,793 | 88,712 | ||
Collectively reviewed for impairment | 238,037 | 274,385 | ||
Total allowance for loan losses | 363,097 | 363,097 | 439,830 | 363,097 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | 2,103,161 | 1,290,503 | ||
Collectively reviewed for impairment | 23,456,782 | 23,955,893 | ||
Total gross loans | $ 25,559,943 | $ 25,246,396 | ||
Commercial business [Member] | ||||
Allowance for loan losses: | ||||
Balance, beginning of year | 184,679 | 129,009 | ||
Provision (reversal of provision) for loan losses | $ 60,000 | 315,159 | ||
Loan charge-offs | (297,889) | |||
Loan recoveries | 38,400 | |||
Net loans charged-off | (259,489) | |||
Balance, end of year | $ 244,679 | 184,679 | ||
Individually reviewed for impairment | ||||
Collectively reviewed for impairment | $ 244,679 | $ 184,679 | ||
Total allowance for loan losses | 184,679 | 184,679 | $ 244,679 | $ 184,679 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | ||||
Collectively reviewed for impairment | $ 17,027,054 | $ 16,059,082 | ||
Total gross loans | $ 17,027,054 | $ 16,059,082 | ||
Consumer [Member] | ||||
Allowance for loan losses: | ||||
Balance, beginning of year | 90,073 | $ 90,073 | ||
Provision (reversal of provision) for loan losses | $ (85,000) | |||
Loan charge-offs | ||||
Loan recoveries | ||||
Net loans charged-off | ||||
Balance, end of year | $ 5,073 | $ 90,073 | ||
Individually reviewed for impairment | ||||
Collectively reviewed for impairment | $ 5,073 | $ 90,073 | ||
Total allowance for loan losses | $ 90,073 | $ 90,073 | $ 5,073 | $ 90,073 |
Gross loans, end of period: | ||||
Individually reviewed for impairment | ||||
Collectively reviewed for impairment | $ 1,369,224 | $ 1,372,906 | ||
Total gross loans | $ 1,369,224 | $ 1,372,906 |
Loans (Details Textual)
Loans (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2014 | |
Loans (Textual) | |||
Commercial real estate loans | $ 32,800,000 | ||
Remaining outstanding principal balance | $ 809,000 | ||
Commercial real estate loan percentage of gross loan | 48.60% | ||
Fee related to sale of loans | 41,000 | ||
Aggregate amount outstanding | $ 2,800,000 | 3,200,000 | |
Lines of credit | 266,000 | 1,600,000 | |
Repayments of lines of credit | 557,000 | 67,000 | |
Additional credit to related party | 140,000 | 158,000 | |
Mortgage loan pledged with FHLB | 39,900,000 | 41,400,000 | $ 5,000,000 |
Mortgage loan lendable collateral | 13,000,000 | 8,400,000 | |
Commercial loan pledged with FRB | 15,300,000 | $ 13,900,000 | |
Available credit under FRB collateral | 10,500,000 | ||
Nonaccrual loans | 1,665,190 | 534,057 | |
Foregone interest income related to nonaccrual loans | $ 129,066 | $ 77,639 | |
Maximum number of days for nonaccrual status | 90 days | ||
Percentage of credit grade "pass" for loan portfolio | 93.00% | 95.00% | |
Total gross loans | $ 67,677,402 | $ 69,177,266 | |
Carrying balance of troubled debt restructurings | $ 0 | $ 343,000 | |
Loans held for sale | |||
Gain or loss on sale | $ 118,000 | ||
Special Mention [Member] | |||
Loans (Textual) | |||
Total gross loans | $ 1,597,378 | 730,565 | |
Substandard [Member] | |||
Loans (Textual) | |||
Total gross loans | $ 2,876,775 | 2,678,922 | |
Two Loans [Member] | |||
Loans (Textual) | |||
Loans transferred in asset sale | 1,033,000 | ||
Loans held for sale | 1,033,000 | ||
Gain or loss on sale | 118,000 | ||
Success fee | $ 41,000 |
Property, Equipment and Softw53
Property, Equipment and Software (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and software, Gross | $ 3,956,485 | $ 3,926,225 |
Accumulated depreciation | (1,757,689) | (1,542,218) |
Total property, equipment and software | 2,198,796 | 2,384,007 |
Land and land improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | 1,108,064 | 1,108,064 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | 784,845 | 784,845 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | 257,159 | 257,159 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | 374,039 | 374,039 |
Furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, equipment and software | $ 1,432,378 | $ 1,402,118 |
Property, Equipment and Softw54
Property, Equipment and Software (Details Textual) | 12 Months Ended | |
Dec. 31, 2015USD ($)Assets | Dec. 31, 2014USD ($) | |
Property, Equipment and Software [Abstract] | ||
Depreciation expense | $ 215,471 | $ 216,323 |
Asset purchases | 30,260 | |
Asset retirement totaling | $ 43,466 | |
Number of asset retirement | Assets | 4 |
Other Real Estate Owned and R55
Other Real Estate Owned and Repossessed Assets (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Composition of other real estate owned and repossessed assets | |||
Other real estate owned and repossessed assets | $ 1,910,220 | $ 2,557,457 | $ 2,508,170 |
Residential land lots [Member] | |||
Composition of other real estate owned and repossessed assets | |||
Other real estate owned and repossessed assets | $ 31,320 | 552,200 | |
Single and multifamily residential real estate [Member] | |||
Composition of other real estate owned and repossessed assets | |||
Other real estate owned and repossessed assets | 62,257 | ||
Commercial office space [Member] | |||
Composition of other real estate owned and repossessed assets | |||
Other real estate owned and repossessed assets | $ 1,008,900 | 1,233,000 | |
Commercial land [Member] | |||
Composition of other real estate owned and repossessed assets | |||
Other real estate owned and repossessed assets | $ 870,000 | $ 710,000 |
Other Real Estate Owned and R56
Other Real Estate Owned and Repossessed Assets (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of changes in other real estate owned and repossessed assets | ||
Balance at beginning of year | $ 2,557,457 | $ 2,508,170 |
Repossessed property acquired in settlement of loans | 300,000 | 1,143,000 |
Proceeds from sales of repossessed property | (582,295) | (505,263) |
Loss on sale and write-downs of repossessed property, net | (364,942) | (588,450) |
Balance at end of year | $ 1,910,220 | $ 2,557,457 |
Other Real Estate Owned and R57
Other Real Estate Owned and Repossessed Assets (Details Textual) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 28, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Subsequent Event [Line Items] | ||||
Proceeds from owned real estate | $ 455,000 | $ 151,000 | ||
Other real estate owned increased | 809,000 | |||
Loss from sale | 5,200 | 3,000 | ||
Write downs on real estate owned purchased from Bank | $ 30,000 | 377,000 | $ 579,000 | |
Proceeds from sale of land | 143,000 | |||
Gain on sale of real estate | $ 17,000 | |||
Transfer of owned real estate | $ 300,000 | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Loss from sale | $ 4,680 | |||
Proceeds from sale of land | $ 35,332 |
Deposits (Details)
Deposits (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Summary of Deposits | ||
Non-interest bearing | $ 13,010,209 | $ 11,016,882 |
Interest bearing: | ||
NOW accounts | 8,894,408 | 7,335,360 |
Money market accounts | 33,164,973 | 35,077,304 |
Savings | 1,034,438 | 767,668 |
Time, less than $100,000 | 5,756,202 | 6,695,936 |
Time, $100,000 and over | $ 21,707,095 | $ 21,981,513 |
Brokered time deposits, less than $100,000 | ||
Brokered time deposits, $100,000 and over | ||
Total deposits | $ 83,567,325 | $ 82,874,663 |
Deposits (Details1)
Deposits (Details1) | Dec. 31, 2015USD ($) |
Scheduled maturities of certificates of deposit (including brokered time deposits) | |
2,016 | $ 16,380,255 |
2,017 | 6,581,652 |
2,018 | 711,477 |
2,019 | 3,026,300 |
2,020 | 763,614 |
Total | $ 27,463,298 |
Deposits (Details Textual)
Deposits (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Deposits (Textual) | ||
Interest expense on time deposits greater than $100,000 | $ 182,041 | $ 141,597 |
FDIC insurance limit | 250,000 | |
Time deposits | 7,578,766 | $ 7,028,406 |
Securities were pledged as collateral for public deposits | 2,600,000 | |
Securities were pledged as collateral for business deposits | $ 107,000 |
Securities Sold Under Agreeme61
Securities Sold Under Agreements To Repurchase (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Securities sold under agreements to repurchase (Textual) | ||
Securities sold under agreement to repurchase | $ 113,080 | $ 153,603 |
Securities under agreements to repurchase with brokers, weighted rate | 0.10% | 0.10% |
Securities under agreements to repurchase with brokers, maturity period | 90 days | 90 days |
Amount of investment securities held as collateral pursuant to securities under agreements | $ 107,000 | $ 130,000 |
Average securities under agreements to repurchase | 98,636 | 110,307 |
Maximum amount of securities under agreements to repurchase outstanding at any month-end | $ 354,739 | $ 221,467 |
Securities under agreements to repurchase average rate paid | 0.10% | 0.10% |
Federal Home Loan Bank Advanc62
Federal Home Loan Bank Advances (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Federal Home Loan Bank Advances (Textual) | ||
Federal home loan bank advances | $ 5,000,000 | |
FHLB weighted average rate | 0.28% | 0.25% |
FHLB advance maturity | 2,015 | |
FHLB advances average | $ 260,000 | $ 2,300,000 |
FHLB advances maximum amount outstanding | $ 5,000,000 |
Note Payable - Related Party (D
Note Payable - Related Party (Details) - USD ($) | Sep. 03, 2015 | Sep. 30, 2014 | Jun. 30, 2015 |
Note Payable - Related Party (Textual) | |||
Repayments of Debt | $ 600,000 | ||
Interest rate on mortgage loans | 7.00% | ||
Interest rate on mortgage loans, maturity | 8.00% | ||
Real Estate Loan [Member] | |||
Note Payable - Related Party (Textual) | |||
Outstanding loan | $ 149,774 | ||
Repayments of outstanding loan | $ 149,774 |
Unused Lines of Credit (Details
Unused Lines of Credit (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Dec. 31, 2010 | Dec. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2014 | |
Unused Lines of Credit (Textual) | |||||
Unused line of credit to purchase federal funds | $ 2,000,000 | $ 2,000,000 | |||
Line of credit facility, description | One to fourteen day basis for general corporate purposes of the Bank. | ||||
FHLB advances secured by mortgage loans | $ 39,900,000 | 41,400,000 | $ 5,000,000 | ||
Mortgage loan lendable collateral | 13,000,000 | 8,400,000 | |||
Investment securities or cash pledged for additional borrowing | 8,400,000 | ||||
FHLB's credit risk rating, description | Increased borrowing availability (total line increased from 15% of total assets to 20% of total assets) and decreased collateral requirements (moved to 115% of borrowings from 125%). | Decreased borrowing availability (total line reduced to 15% of total assets from 20% of total assets) and increased collateral requirements (moved to 125% of borrowings from 115%). | |||
Loan pledged with FRB | 15,300,000 | $ 13,900,000 | |||
Mortgage loan lendable collateral, FRB | 10,500,000 | ||||
Available credit under FRB collateral | $ 10,500,000 | $ 11,900,000 | |||
Outstanding borrowings from FRB |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of components of income tax expense | ||
Current income tax expense (benefit) | ||
Deferred income tax expense (benefit) | $ (2,404,737) | $ (2,338,716) |
Income tax expense, gross | (2,404,737) | (2,338,716) |
Change in valuation allowance | 2,404,737 | $ 2,338,716 |
Income tax expense | $ 5,080 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of the items that caused recorded income taxes to differ from taxes computed using the Company's statutory federal income tax rate | ||
Income tax benefit at federal statutory rate | $ (1,629,769) | $ (2,210,087) |
Change in valuation allowance | (2,404,737) | 2,338,716 |
IRC Section 382 limitation amount | 4,020,027 | |
Other | 14,480 | $ (128,629) |
Income tax expense | $ 5,080 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets (liabilities): | ||
Allowance for loan losses | $ 140,131 | $ 89,131 |
Lost interest on nonaccrual loans | 44,348 | 7,598 |
Real estate acquired in settlement of loans | 250,453 | 248,148 |
Net operating loss carry-forward | 1,987,292 | 5,213,659 |
Deferred operational and start-up costs | $ 56,513 | 69,554 |
Other-than-temporary impairment on non-marketable equity securities. | 52,497 | |
Unrealized loss (gain) on investment securities available for sale | $ (58,648) | (595) |
Internally developed software | 3,771,558 | 3,081,561 |
Other | 185,313 | 78,197 |
Deferred tax liability, gross | 6,376,960 | 8,839,750 |
Valuation allowance | $ (6,376,960) | $ (8,839,750) |
Net deferred tax asset |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes (Textual) | ||
Statutory federal income tax rate | 35.00% | |
Deferred tax assets valuation allowance | $ 6,400,000 | $ 8,800,000 |
Federal operating loss carry-forwards | $ 17,700,000 | |
Federal operating loss carry-forwards expiration period | Jan. 1, 2025 | |
IRC Section 382 limitation amount | $ 4,020,027 | |
Private Placement [Member] | ||
Income Taxes (Textual) | ||
IRC Section 382 limitation amount | 11,800,000 | |
NOL carryforward | $ 5,800,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jan. 04, 2016 | Sep. 03, 2015 | Sep. 30, 2014 | Jun. 30, 2015 |
Related Party Transactions (Textual) | ||||
Repayments of Debt | $ 600,000 | |||
Interest rate on mortgage loans | 7.00% | |||
Interest rate on mortgage loans, maturity | 8.00% | |||
Subsequent Event [Member] | ||||
Related Party Transactions (Textual) | ||||
Additional license fee | $ 275,000 | |||
Real Estate Loan [Member] | ||||
Related Party Transactions (Textual) | ||||
Outstanding loan | $ 149,774 | |||
Repayment of loan | $ 149,774 |
Financial Instruments With of70
Financial Instruments With off Balance Sheet Risk (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Financial Instruments with off Balance Sheet Risk (Textual) | |
Unfunded commitments to extend credit | $ 8.5 |
Commitments to extend credit at fixed rate | 8 |
Commitments to extend credit at variable rate | $ 1.5 |
Commitments and Contingencies71
Commitments and Contingencies (Details) | Dec. 31, 2015USD ($) |
Future minimum lease payments under operating leases | |
2,016 | $ 243,466 |
2,017 | 199,975 |
2,018 | 138,080 |
2,019 | $ 105,105 |
Thereafter | |
Total | $ 686,626 |
Commitments and Contingencies72
Commitments and Contingencies (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies (Textual) | ||
Operating lease period | 2 years | |
Rent expense | $ 314,117 | $ 351,821 |
Operating lease renewal options, description | Two-year renewal options in September 2012. | |
NEW YORK [Member] | ||
Commitments and Contingencies (Textual) | ||
Rent expense | $ 2,189 | |
Office facility [Member] | October 1, 2012 through September 30, 2014 [Member] | ||
Commitments and Contingencies (Textual) | ||
Monthly rent under lease | 10,370 | |
Office facility [Member] | October 1, 2014 through September 30, 2015 [Member] | ||
Commitments and Contingencies (Textual) | ||
Monthly rent under lease | 10,789 | |
Office facility [Member] | October 1, 2015 through September 30, 2016 [Member] | ||
Commitments and Contingencies (Textual) | ||
Monthly rent under lease | $ 11,005 | |
Office facility [Member] | NEW YORK [Member] | ||
Commitments and Contingencies (Textual) | ||
Operating lease period | 21 months | |
Office facility [Member] | NEW YORK [Member] | June 23, 2013 through June 30, 2013 [Member] | ||
Commitments and Contingencies (Textual) | ||
Rent installment amount | $ 2,680 | |
Office facility [Member] | NEW YORK [Member] | July 1, 2013 through February 27, 2015 [Member] | ||
Commitments and Contingencies (Textual) | ||
Rent installment amount | $ 9,450 | |
Branch facility [Member] | ||
Commitments and Contingencies (Textual) | ||
Operating lease period | 10 years | |
Branch facility [Member] | August 1, 2012 through July 31, 2017 [Member] | ||
Commitments and Contingencies (Textual) | ||
Monthly rent under lease | $ 9,229 |
Stock Compensation Plans (Detai
Stock Compensation Plans (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||
May. 31, 2015 | Feb. 28, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding at beginning of year, Shares | 3,102,255 | |||
Granted, Shares | 115,000 | 155,000 | ||
Outstanding at end of year, Shares | 3,217,255 | 3,428,505 | 3,097,255 | 3,102,255 |
Outstanding at beginning of year, Weighted average exercise price | $ 1.11 | |||
Granted, Weighted average exercise price | $ 0.65 | $ 1.59 | ||
Outstanding at end of year, Weighted average exercise price | $ 1.10 | $ 1.11 | $ 1.11 | $ 1.11 |
Stock Compensation Plans [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding at beginning of year, Shares | 3,102,255 | 3,273,505 | ||
Granted, Shares | 115,000 | 155,000 | ||
Exercised, Shares | ||||
Forfeited or expired, Shares | (120,000) | (326,250) | ||
Outstanding at end of year, Shares | 3,097,255 | 3,102,255 | ||
Options exercisable at year-end, Shares | 3,022,255 | 2,186,005 | ||
Shares available for grant, Shares | 2,023,435 | 2,023,435 | ||
Outstanding at beginning of year, Weighted average exercise price | $ 1.08 | $ 1.08 | ||
Granted, Weighted average exercise price | $ 1.59 | $ 1.59 | ||
Exercised, Weighted average exercise price | ||||
Forfeited or expired, Weighted average exercise price | $ 0.80 | $ 1.01 | ||
Outstanding at end of year, Weighted average exercise price | $ 1.11 | $ 1.08 |
Stock Compensation Plans (Det74
Stock Compensation Plans (Details Textual) - USD ($) | Apr. 30, 2014 | Aug. 01, 2013 | Sep. 30, 2015 | May. 31, 2015 | Feb. 28, 2014 | Dec. 31, 2005 | May. 31, 2005 | Dec. 31, 2015 | Dec. 31, 2014 | May. 07, 2015 | Feb. 28, 2013 | Dec. 31, 2012 | Jul. 26, 2005 |
Stock Compensation Plans (Textual) | |||||||||||||
Sale of stock, Price per share | $ 0.80 | $ 10 | $ 0.80 | ||||||||||
Number of shares sold | 769,000 | 2,085,010 | |||||||||||
Stock options outstanding | 3,217,255 | 3,428,505 | 3,097,255 | 3,102,255 | 3,217,255 | ||||||||
Weighted average exercise price | $ 1.10 | $ 1.11 | $ 1.11 | $ 1.11 | $ 1.10 | ||||||||
Options vested | 3,022,255 | 2,186,005 | |||||||||||
Stock options granted to certain employees and an advisor to the Company | 115,000 | 155,000 | |||||||||||
Granted, Weighted average exercise price | $ 0.65 | $ 1.59 | |||||||||||
Proceeds from issuance | $ 615,200 | ||||||||||||
Earnings Per Share, Basic and Diluted | $ (0.23) | $ (0.32) | |||||||||||
Stock compensation expense | $ 303,829 | $ 385,508 | |||||||||||
Expense unrecognized | $ 43,788 | ||||||||||||
Stock options not vest | 116,250 | ||||||||||||
Options cancelled | 240,000 | 120,000 | 120,000 | 86,250 | |||||||||
Common stock shares purchasable through additional warrants | 312,500 | ||||||||||||
Per share price of common stock issued for warrants | $ 10 | ||||||||||||
Warrants vested period, description | Six-months from the date the Bank opened for business, or May 16, 2005. | ||||||||||||
Warrant exercisable date | May 16, 2015 | ||||||||||||
Warrants forfeited | 75,000 | ||||||||||||
Directors and the chairman [Member] | |||||||||||||
Stock Compensation Plans (Textual) | |||||||||||||
Stock options granted to certain employees and an advisor to the Company | 115,000 | ||||||||||||
Employee Stock Option [Member] | |||||||||||||
Stock Compensation Plans (Textual) | |||||||||||||
Stock options outstanding | 120,000 | ||||||||||||
2005 Incentive Plan [Member] | |||||||||||||
Stock Compensation Plans (Textual) | |||||||||||||
Description of shares issuable under Incentive Plan | The total number of shares issuable under the 2005 Incentive Plan would at all times equal 12.5% of the then outstanding shares of common stock. | ||||||||||||
Number of shares reserved for issuance of stock options | 2,466,720 | 260,626 | |||||||||||
Number of shares reserved for the issuance of stock options under Incentive Plan | The number of shares reserved for the issuance of stock options under the 2005 Incentive Plan increased from 260,626 shares to 2,466,720 shares. | ||||||||||||
2013 Incentive Plan [Member] | |||||||||||||
Stock Compensation Plans (Textual) | |||||||||||||
Number of shares reserved for issuance of stock options | 2,466,720 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plan (Textual) | ||
Percentage of employer contribution in profit sharing plan | 50.00% | |
Percentage of maximum annual compensation in profit sharing plan | 6.00% | |
Amount charged to operation for Company's matching contribution | $ 15,859 | $ 17,762 |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Summarizes Capital Amounts and Ratios of Bank and Regulatory Minimum Requirements | ||
Total Capital (to risk weighted assets), Actual amount | $ 10,598,000 | $ 11,494,000 |
Total Capital (to risk weighted assets), For capital adequacy purposes Minimum Amount | 6,029,000 | 6,023,000 |
Total Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Amount | 7,536,000 | 7,534,000 |
Tier 1 Capital (to risk weighted assets), Actual Amount | 9,653,000 | 10,551,000 |
Tier 1 Capital (to risk weighted assets), For capital adequacy purposes Minimum Amount | 3,014,000 | 3,014,000 |
Tier 1 Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Amount | 4,521,000 | 4,521,000 |
Tier 1 Capital (to average assets), Actual Amount | 9,653,000 | 10,551,000 |
Tier 1 Capital (to average assets), For capital adequacy purposes Minimum Amount | 3,875,000 | 3,970,000 |
Tier 1 Capital (to average assets), To be well capitalized under prompt corrective action provisions Minimum Amount | 4,844,000 | $ 4,963,000 |
Common Equity Tier 1 Capital (to risk weighted assets), Actual Amount | 9,653,000 | |
Common Equity Tier 1 Capital (to risk weighted assets), For capital adequacy purposes Minimum Amount | 3,391,000 | |
Common Equity Tier 1 Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Amount | $ 3,391,000 | |
Total Capital (to risk weighted assets), Actual ratio | 14.10% | 15.30% |
Total Capital (to risk weighted assets), For capital adequacy purposes Minimum Ratio | 8.00% | 8.00% |
Total Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Ratio | 10.00% | 10.00% |
Tier 1 Capital (to risk weighted assets), Actual Ratio | 12.80% | 14.00% |
Tier 1 Capital (to risk weighted assets), For capital adequacy purposes Minimum ratio | 4.00% | 4.00% |
Tier 1 Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Ratio | 6.00% | 6.00% |
Tier 1 Capital (to average assets), Actual Ratio | 10.00% | 10.60% |
Tier 1 Capital (to average assets), For capital adequacy purposes Minimum Ratio | 4.00% | 4.00% |
Tier 1 Capital (to average assets), To be well capitalized under prompt corrective action provisions Minimum Ratio | 5.00% | 5.00% |
Common Equity Tier 1 Capital (to risk weighted assets), Actual Ratio | 12.80% | |
Common Equity Tier 1 Capital (to risk weighted assets), For capital adequacy purposes Minimum ratio | 4.50% | |
Common Equity Tier 1 Capital (to risk weighted assets), To be well capitalized under prompt corrective action provisions Minimum Ratio | 4.50% |
Regulatory Matters (Details Tex
Regulatory Matters (Details Textual) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Jul. 31, 2013 | |
Regulatory Matters (Textual) | |||
Federal reserve guidelines on exemption for bank holding companies, description | The Federal Reserve guidelines contain an exemption for bank holding companies of less than $1 billion in consolidated assets, subject to certain limitations. | ||
Common equity tier 1 capital to risk-weighted assets | 4.50% | ||
Tier 1 capital to risk-weighted assets | 4.00% | 4.00% | |
Minimum leverage ratio | 4.00% | 4.00% | |
FDIC [Member] | |||
Regulatory Matters (Textual) | |||
Common equity tier 1 capital to risk-weighted assets | 4.50% | ||
Minimum leverage ratio | 4.00% | ||
Common equity Tier 1 capital conservation risk weighted assets | 2.50% | ||
FDIC [Member] | Maximum [Member] | |||
Regulatory Matters (Textual) | |||
Tier 1 capital to risk-weighted assets | 6.00% | ||
FDIC [Member] | Minimum [Member] | |||
Regulatory Matters (Textual) | |||
Tier 1 capital to risk-weighted assets | 4.00% |
Business Segments (Details)
Business Segments (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Summary of selected financial information for Company's reportable business segments | ||||
Interest income | $ 3,567,763 | $ 3,917,968 | ||
Interest expense | 331,062 | 312,024 | ||
Net interest income | 3,236,701 | 3,605,944 | ||
Provision for loan losses | 150,000 | (30,000) | ||
Noninterest income | 666,907 | 440,758 | ||
Noninterest expense | 8,547,047 | 10,576,958 | ||
Loss before income taxes | (4,793,439) | $ (6,500,256) | ||
Income taxes | 5,080 | |||
Net loss | (4,798,519) | $ (6,500,256) | ||
Cash and due from banks | 5,453,795 | $ 5,261,080 | ||
Interest bearing deposits in other institutions | 1,500,000 | |||
Federal funds sold | 8,446,000 | $ 5,643,000 | ||
Investment securities | 10,687,851 | 15,615,526 | ||
Loans receivable, net | 66,402,246 | 67,994,667 | ||
Other real estate owned | 1,910,220 | 2,557,457 | $ 2,508,170 | |
Property, equipment, and software, net | 2,198,796 | 2,384,007 | ||
Other assets | 243,683 | 355,307 | ||
Total Assets | 97,467,306 | 100,711,982 | ||
Deposits | 83,567,325 | 82,874,663 | ||
Securities sold under agreement to repurchase | $ 113,080 | 153,603 | ||
Borrowings | 5,000,000 | |||
Note payable | 600,000 | |||
Accrued and other liabilities | $ 1,142,742 | 2,673,136 | ||
Shareholders' equity | 12,644,159 | 9,410,580 | $ 14,307,456 | |
Total liabilities and shareholders' equity | 97,467,306 | 100,711,982 | ||
Community Banking [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Interest income | 3,567,763 | 3,940,632 | ||
Interest expense | 316,358 | 298,216 | ||
Net interest income | 3,251,405 | 3,642,416 | ||
Provision for loan losses | 150,000 | (30,000) | ||
Noninterest income | 262,521 | 398,939 | ||
Noninterest expense | 4,271,806 | 3,845,751 | ||
Loss before income taxes | (907,580) | $ 225,604 | ||
Income taxes | 5,080 | |||
Net loss | (912,960) | $ 225,604 | ||
Cash and due from banks | 5,458,252 | 5,105,940 | ||
Interest bearing deposits in other institutions | 1,500,000 | |||
Federal funds sold | 8,446,000 | 5,643,000 | ||
Investment securities | 10,687,851 | 15,615,526 | ||
Loans receivable, net | 66,402.246 | 67,994,667 | ||
Other real estate owned | 1,278,900 | 1,365,257 | ||
Property, equipment, and software, net | 2,053,575 | 2,117,645 | ||
Other assets | 771,437 | 1,005,955 | ||
Total Assets | 96,598,261 | 98,847,990 | ||
Deposits | 86,481,037 | 83,007,963 | ||
Securities sold under agreement to repurchase | 113,080 | 153,603 | ||
Borrowings | $ 5,000,000 | |||
Note payable | ||||
Accrued and other liabilities | 236,918 | $ 133,786 | ||
Shareholders' equity | 9,767,226 | 10,552,638 | ||
Total liabilities and shareholders' equity | $ 96,598,261 | $ 98,847,990 | ||
Transaction Services [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Interest income | ||||
Net interest income | ||||
Provision for loan losses | ||||
Noninterest income | $ 383,312 | $ 16,663 | ||
Noninterest expense | 2,214,478 | 4,938,034 | ||
Loss before income taxes | $ (1,831,166) | $ (4,921,371) | ||
Income taxes | ||||
Net loss | $ (1,831,166) | $ (4,921,371) | ||
Asset Management [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Interest income | $ (22,664) | |||
Interest expense | ||||
Net interest income | $ (22,664) | |||
Provision for loan losses | ||||
Noninterest income | $ 118,452 | |||
Noninterest expense | $ 140,782 | 767,809 | ||
Loss before income taxes | $ (140,782) | $ (672,021) | ||
Income taxes | ||||
Net loss | $ (140,782) | $ (672,021) | ||
Parent Only [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Interest income | ||||
Interest expense | $ 14,704 | $ 13,808 | ||
Net interest income | $ (14,704) | $ (13,808) | ||
Provision for loan losses | ||||
Noninterest income | $ 21,074 | $ 225,641 | ||
Noninterest expense | 1,919,981 | 1,118,697 | ||
Loss before income taxes | $ (1,913,611) | $ (906,864) | ||
Income taxes | ||||
Net loss | $ (1,913,611) | $ (906,864) | ||
Holding Company [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Cash and due from banks | [1] | $ 2,909,255 | $ 288,440 | |
Interest bearing deposits in other institutions | ||||
Federal funds sold | [1] | |||
Investment securities | [1] | |||
Loans receivable, net | [1] | |||
Other real estate owned | [1] | $ 631,320 | $ 1,192,200 | |
Property, equipment, and software, net | [1] | 145,221 | 266,362 | |
Other assets | [1] | 96,961 | 250,290 | |
Total Assets | [1] | $ 3,782,757 | $ 1,997,292 | |
Deposits | [1] | |||
Securities sold under agreement to repurchase | [1] | |||
Borrowings | [1] | |||
Note payable | [1] | $ 600,000 | ||
Accrued and other liabilities | [1] | $ 905,824 | 2,539,350 | |
Shareholders' equity | [1] | 2,876,933 | (1,142,058) | |
Total liabilities and shareholders' equity | [1] | 3,782,757 | 1,997,292 | |
Eliminations [Member] | ||||
Summary of selected financial information for Company's reportable business segments | ||||
Cash and due from banks | $ (2,913,712) | $ (133,300) | ||
Interest bearing deposits in other institutions | ||||
Federal funds sold | ||||
Investment securities | ||||
Loans receivable, net | ||||
Other real estate owned | ||||
Property, equipment, and software, net | ||||
Other assets | ||||
Total Assets | $ (2,913,712) | $ (133,300) | ||
Deposits | $ (2,913,712) | $ (133,300) | ||
Securities sold under agreement to repurchase | ||||
Borrowings | ||||
Note payable | ||||
Accrued and other liabilities | ||||
Shareholders' equity | ||||
Total liabilities and shareholders' equity | $ (2,913,712) | $ (133,300) | ||
[1] | Excludes investment in wholly-owned Bank subsidiary |
Business Segments (Details Text
Business Segments (Details Textual) | 12 Months Ended | |
Dec. 31, 2015USD ($)Segment | Dec. 31, 2014USD ($) | |
Business Segments (Textual) | ||
Number of business segments | Segment | 4 | |
Research and development expense | $ 2,209,978 | $ 4,938,034 |
Noninterest income | 383,000 | $ 17,000 |
Forgiveness of debt | $ 21,000 |
Fair Value of Financial Instr80
Fair Value of Financial Instruments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of assets measured at fair value on a non-recurring basis | |||
Other real estate owned and repossessed assets | $ 1,910,220 | $ 2,557,457 | $ 2,508,170 |
Other Real Estate Owned and Repossessed Assets [Member] | |||
Schedule of assets measured at fair value on a non-recurring basis | |||
Other real estate owned and repossessed assets | $ 1,910,220 | $ 2,557,457 | |
Valuation Technique | Appraised value | Appraised value | |
Significant Unobservable Inputs | Discounts to reflect current market conditions, abbreviated holding period, and estimated costs to sell | Discounts to reflect current market conditions and estimated costs to sell | |
Impaired Loans [Member] | |||
Schedule of assets measured at fair value on a non-recurring basis | |||
Impaired loans | $ 2,005,168 | $ 1,926,881 | |
Valuation Technique | Internal assessment of appraised value | Internal assessment of appraised value | |
Significant Unobservable Inputs | Adjustments to estimated value based on recent sales of comparable collateral | Adjustments to estimated value based on recent sales of comparable collateral |
Fair Value of Financial Instr81
Fair Value of Financial Instruments (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Assets: | ||
Cash and due from banks | $ 5,453,795 | $ 5,261,080 |
Interest bearing deposits in other institutions | 1,500,000 | |
Federal funds sold | 8,446,000 | $ 5,643,000 |
Investment securities available for sale | 10,687,851 | 15,615,526 |
Non-marketable equity securities | 392,500 | 609,650 |
Loans, net | $ 66,402,246 | 67,994,667 |
Financial Liabilities: | ||
FHLB advance | 5,000,000 | |
Note payable | 600,000 | |
Deposits | $ 83,567,325 | 82,874,663 |
Securities sold under agreements to repurchase | 113,080 | 153,603 |
Carrying Amount [Member] | ||
Financial Assets: | ||
Cash and due from banks | 5,453,795 | 5,261,080 |
Interest bearing deposits in other institutions | 1,500,000 | |
Federal funds sold | 8,446,000 | 5,643,000 |
Investment securities available for sale | 10,687,851 | 15,615,526 |
Non-marketable equity securities | 392,500 | 609,650 |
Loans, net | 66,602,246 | 67,994,667 |
Financial Liabilities: | ||
FHLB advance | 5,000,000 | |
Note payable | 600,000 | |
Deposits | 83,567,325 | 82,874,663 |
Securities sold under agreements to repurchase | 113,080 | 153,603 |
Fair Value [Member] | ||
Financial Assets: | ||
Cash and due from banks | 5,453,795 | 5,261,080 |
Interest bearing deposits in other institutions | 1,500,000 | |
Federal funds sold | 8,446,000 | 5,643,000 |
Investment securities available for sale | 10,687,851 | 15,615,526 |
Non-marketable equity securities | 392,500 | 609,650 |
Loans, net | 66,873,213 | 67,925,640 |
Financial Liabilities: | ||
FHLB advance | 5,000,347 | |
Note payable | 603,567 | |
Deposits | 83,538,827 | 81,928,307 |
Securities sold under agreements to repurchase | 113,080 | 153,603 |
Fair Value [Member] | Level 1 [Member] | ||
Financial Assets: | ||
Cash and due from banks | $ 5,453,795 | 5,261,080 |
Interest bearing deposits in other institutions | ||
Federal funds sold | $ 8,446,000 | $ 5,643,000 |
Investment securities available for sale | ||
Non-marketable equity securities | ||
Loans, net | ||
Financial Liabilities: | ||
FHLB advance | ||
Note payable | ||
Deposits | ||
Securities sold under agreements to repurchase | ||
Fair Value [Member] | Level 2 [Member] | ||
Financial Assets: | ||
Cash and due from banks | ||
Interest bearing deposits in other institutions | $ 1,500,000 | |
Federal funds sold | ||
Investment securities available for sale | $ 10,687,851 | $ 15,615,526 |
Non-marketable equity securities | $ 392,500 | $ 609,650 |
Loans, net | ||
Financial Liabilities: | ||
FHLB advance | $ 5,000,347 | |
Note payable | 603,567 | |
Deposits | $ 83,538,827 | 81,928,307 |
Securities sold under agreements to repurchase | $ 113,080 | $ 153,603 |
Fair Value [Member] | Level 3 [Member] | ||
Financial Assets: | ||
Cash and due from banks | ||
Federal funds sold | ||
Investment securities available for sale | ||
Non-marketable equity securities | ||
Loans, net | $ 66,873,213 | $ 67,925,640 |
Financial Liabilities: | ||
FHLB advance | ||
Note payable | ||
Deposits | ||
Securities sold under agreements to repurchase |
Fair Value of Financial Instr82
Fair Value of Financial Instruments (Details Textual) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair Value of Financial Instruments (Textual) | |||
Investment securities available for sale | $ 10,687,851 | $ 15,615,526 | |
Net of specific reserves of impaired loans carried at fair value | $ 2,000,000 | 1,900,000 | |
Proceeds from sale of loans held for sale | 1,033,000 | ||
Success fee | 41,000 | ||
Net gain on sale of loans | 118,000 | ||
Other real estate owned and repossessed assets | $ 1,910,220 | $ 2,557,457 | $ 2,508,170 |
Parent Company Financial Info83
Parent Company Financial Information (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Financial Assets: | |||
Cash and cash equivalents | $ 13,899,795 | $ 10,904,080 | $ 14,421,955 |
Premises and equipment, net | 2,198,796 | 2,384,007 | |
Other real estate owned | 1,910,220 | 2,557,457 | 2,508,170 |
Other assets | 243,683 | 355,307 | |
Total assets | $ 97,467,306 | 100,711,982 | |
Liabilities and Shareholders' Equity | |||
Note payable | 600,000 | ||
Accrued and other liabilities | $ 1,142,742 | 2,673,136 | |
Shareholders' equity | 12,644,159 | 9,410,580 | 14,307,456 |
Total liabilities and shareholders' equity | 97,467,306 | 100,711,982 | |
Parent Company [Member] | |||
Financial Assets: | |||
Cash and cash equivalents | 2,909,255 | 288,440 | $ 2,348,995 |
Investment in subsidiary | 9,767,226 | 10,552,638 | |
Premises and equipment, net | 145,221 | 266,362 | |
Other real estate owned | 631,320 | 1,192,200 | |
Other assets | 96,961 | 250,290 | |
Total assets | $ 13,549,983 | 12,549,930 | |
Liabilities and Shareholders' Equity | |||
Note payable | 600,000 | ||
Accrued and other liabilities | $ 905,824 | 2,539,350 | |
Shareholders' equity | 12,644,159 | 9,410,580 | |
Total liabilities and shareholders' equity | $ 13,549,983 | $ 12,549,930 |
Parent Company Financial Info84
Parent Company Financial Information (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed statements of operations of Independence Bancshares, Inc. (parent Company) | ||
Product research and development - Transaction Services | $ 2,209,978 | $ 4,938,034 |
Forgiveness of debt | 403,245 | |
Loan interest and other income | 3,193,831 | $ 3,388,060 |
Gain on sale of loans held for sale | (87,995) | 1,032 |
Provision for loan losses | 150,000 | (30,000) |
Real estate owned activity | 457,173 | 651,038 |
Net loss | (4,798,519) | (6,500,256) |
Parent Company [Member] | ||
Condensed statements of operations of Independence Bancshares, Inc. (parent Company) | ||
Equity in undistributed net (loss) income of subsidiary | (912,960) | 225,604 |
Product research and development - Transaction Services | (2,209,978) | $ (4,938,034) |
Forgiveness of debt | 403,245 | |
Loan interest and other income | 1,141 | $ 2,855 |
Interest expense on note payable | $ (14,704) | (23,128) |
Gain on sale of loans held for sale | $ 118,452 | |
Provision for loan losses | ||
Property tax expense | $ (23,504) | $ (36,775) |
Consulting and miscellaneous fees | (378,825) | (203,373) |
Real estate owned activity | (105,603) | (581,856) |
General and administrative expenses | (852,012) | (502,729) |
Legal expense | (404,672) | (195,026) |
Stock compensation expense | (288,972) | (366,246) |
Net loss | $ (4,798,519) | $ (6,500,256) |
Parent Company Financial Info85
Parent Company Financial Information (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | ||
Net loss | $ (4,798,519) | $ (6,500,256) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock compensation expense | 303,829 | 385,508 |
Gain on sale of loans held for sale | 87,995 | (1,032) |
Net changes in fair value and losses on other real estate owned | (457,173) | (651,038) |
Loan loss provision | 150,000 | (30,000) |
Change in other assets | (170,697) | (361,679) |
Net cash used in operating activities | (4,983,898) | (2,881,290) |
Investing activities | ||
Purchase of premises and equipment | 30,260 | 87,514 |
Change in loans, net of allowance | $ (1,142,421) | 6,753,965 |
Proceeds from sale of loans held for sale | 1,033,000 | |
Net cash provided by investing activities | $ 5,311,897 | $ 705 |
Financing activities | ||
Issuance of preferred stock, net of closing costs | 7,615,577 | |
(Repayments of) proceeds from note payable from affiliate | 600,000 | $ (600,000) |
Net cash provided by financing activities | 2,667,716 | (637,290) |
Net increase (decrease) in cash and cash equivalents | 2,995,715 | (3,517,875) |
Cash and cash equivalents at beginning of the year | 10,904,080 | 14,421,955 |
Cash and cash equivalents at end of the year | 13,899,795 | 10,904,080 |
Parent Company [Member] | ||
Operating activities | ||
Net loss | (4,798,519) | (6,500,256) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock compensation expense | 288,973 | 366,246 |
Equity in undistributed net loss (income) of subsidiary | $ 912,960 | (225,604) |
Gain on sale of loans held for sale | (118,452) | |
Net changes in fair value and losses on other real estate owned | $ 105,603 | $ 581,856 |
Loan loss provision | ||
Depreciation expense | $ 128,549 | $ 126,115 |
Change in other assets | 153,329 | (67,762) |
Change in accrued items | (1,633,526) | 1,996,911 |
Net cash used in operating activities | (4,842,631) | (3,840,946) |
Investing activities | ||
Purchase of premises and equipment | $ (7,408) | (5,943) |
Change in loans, net of allowance | 2,120 | |
Proceeds from sale of loans held for sale | 1,033,000 | |
Proceeds from sale of other real estate owned | $ 455,277 | 151,214 |
Net cash provided by investing activities | 447,869 | $ 1,180,391 |
Financing activities | ||
Issuance of preferred stock, net of closing costs | 7,615,577 | |
(Repayments of) proceeds from note payable from affiliate | (600,000) | $ 600,000 |
Net cash provided by financing activities | 7,015,577 | 600,000 |
Net increase (decrease) in cash and cash equivalents | 2,620,815 | (2,060,555) |
Cash and cash equivalents at beginning of the year | 288,440 | 2,348,995 |
Cash and cash equivalents at end of the year | $ 2,909,255 | 288,440 |
Schedule of non-cash transactions | ||
Loans transferred to other real estate owned | $ 809,000 |