Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 13, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Independence Bancshares, Inc. | |
Entity Central Index Key | 1,311,828 | |
Trading Symbol | IEBS | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,502,760 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and due from banks | $ 4,244,259 | $ 4,631,727 |
Federal funds sold | 4,277,000 | 6,143,000 |
Cash and cash equivalents | 8,521,259 | 10,774,727 |
Interest bearing deposits in other institutions | 8,750,000 | 10,500,000 |
Investment securities available for sale | 7,729,006 | 2,499,805 |
Non-marketable equity securities | 483,450 | 380,050 |
Loans, net of allowance for loan losses of $1,372,000 and $1,338,149, respectively | 53,716,239 | 59,144,847 |
Accrued interest receivable | 217,575 | 170,342 |
Property, equipment, and software, net | 1,980,272 | 2,025,774 |
Other real estate owned and repossessed assets | 1,988,900 | 2,222,667 |
Bank owned life insurance | 2,603,392 | 2,542,910 |
Other assets | 182,682 | 187,935 |
Total assets | 86,172,775 | 90,449,057 |
Deposits: | ||
Non-interest bearing | 11,600,301 | 13,723,903 |
Interest bearing | 61,295,192 | 65,983,745 |
Total deposits | 72,895,493 | 79,707,648 |
Federal Home Loan Bank advances | 4,000,000 | |
Securities sold under agreements to repurchase | 5,979 | 113,598 |
Accrued interest payable | 12,954 | 8,802 |
Accounts payable and accrued expenses | 526,915 | 674,644 |
Total liabilities | 77,441,341 | 80,504,692 |
Commitments and contingencies | ||
Shareholders' equity | ||
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; 8,425 Series A shares issued and outstanding | 84 | 84 |
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 | 43,053,599 | 43,053,599 |
Accumulated other comprehensive loss | (8,444) | (8,056) |
Accumulated deficit | (34,518,833) | (33,306,290) |
Total shareholders' equity | 8,731,434 | 9,944,365 |
Total liabilities and shareholders' equity | $ 86,172,775 | $ 90,449,057 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Allowance for loan losses | $ 1,372,000 | $ 1,338,149 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 8,425 | 8,425 |
Preferred stock, shares outstanding | 8,425 | 8,425 |
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 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Interest income | ||||
Loans | $ 835,938 | $ 820,984 | $ 2,540,276 | $ 2,496,404 |
Investment securities | 7,631 | 61,709 | 21,167 | 195,793 |
Federal funds sold and other | 57,564 | 15,386 | 135,082 | 48,251 |
Total interest income | 901,133 | 898,079 | 2,696,525 | 2,740,448 |
Interest expense | ||||
Deposits | 93,118 | 84,896 | 257,355 | 243,799 |
Borrowings | 8,719 | 103 | 22,125 | 181 |
Total interest expense | 101,837 | 84,999 | 279,480 | 243,980 |
Net interest income | 799,296 | 813,080 | 2,417,045 | 2,496,468 |
Provision (reversal of provision) for loan losses | (7,159) | 179,543 | (68,000) | |
Net interest income after provision for loan losses | 806,455 | 813,080 | 2,237,502 | 2,564,468 |
Non-interest income | ||||
Service fees on deposit accounts | 25,139 | 24,329 | 59,070 | 71,044 |
Residential loan origination fees | 52,506 | 67,167 | 157,350 | 167,093 |
SBA loan fees | 119,306 | |||
Other income | 30,316 | 52,042 | 92,367 | 70,904 |
Total non-interest income | 107,961 | 143,538 | 308,787 | 428,347 |
Non-interest expenses | ||||
Compensation and benefits | 580,154 | 637,297 | 1,768,660 | 1,944,260 |
Real estate owned activity | (25,388) | (15,473) | 16,768 | 348,839 |
Occupancy and equipment | 134,112 | 188,407 | 400,290 | 507,220 |
Insurance | 57,136 | 50,272 | 175,579 | 165,449 |
Data processing and related costs | 158,675 | 90,876 | 383,247 | 256,650 |
Professional fees | 290,958 | 234,381 | 682,372 | 707,534 |
Product research and development expense | 27,364 | 204,554 | ||
Other | 75,875 | 104,521 | 331,916 | 304,930 |
Total non-interest expenses | 1,271,522 | 1,317,645 | 3,758,832 | 4,439,436 |
Loss before income tax expense | (357,106) | (361,027) | (1,212,543) | (1,446,621) |
Income tax expense | ||||
Net loss | (357,106) | (361,027) | (1,212,543) | (1,446,621) |
Other comprehensive income (loss), net of tax | ||||
Unrealized gain (loss) on investment securities available for sale, net of tax | (233) | 9,712 | (388) | 153,510 |
Reclassification adjustment included in net loss, net of tax | ||||
Other comprehensive income (loss) | (233) | 9,712 | (388) | 153,510 |
Total comprehensive loss | $ (357,339) | $ (351,315) | $ (1,212,931) | $ (1,293,111) |
Net loss per common share - basic and diluted | $ (0.02) | $ (0.02) | $ (0.06) | $ (0.07) |
Weighted average common shares outstanding - basic and diluted | 20,502,760 | 20,502,760 | 20,502,760 | 20,502,760 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) | Total | Preferred stock | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit |
Balance at Dec. 31, 2015 | $ 12,644,159 | $ 84 | $ 205,028 | $ 43,043,473 | $ 113,846 | $ (30,718,272) |
Balance, shares at Dec. 31, 2015 | 8,425 | 20,502,760 | ||||
Compensation expense related to stock options granted | 10,126 | 10,126 | ||||
Net loss | (1,446,621) | (1,446,621) | ||||
Other comprehensive income (loss) | 153,510 | 153,510 | ||||
Balance at Sep. 30, 2016 | 11,361,174 | $ 84 | $ 205,028 | 43,053,599 | 267,356 | (32,164,893) |
Balance, shares at Sep. 30, 2016 | 8,425 | 20,502,760 | ||||
Balance at Dec. 31, 2016 | 9,944,365 | $ 84 | $ 205,028 | 43,053,599 | (8,056) | (33,306,290) |
Balance, shares at Dec. 31, 2016 | 8,425 | 20,502,760 | ||||
Compensation expense related to stock options granted | ||||||
Net loss | (1,212,543) | (1,212,543) | ||||
Other comprehensive income (loss) | (388) | (388) | ||||
Balance at Sep. 30, 2017 | $ 8,731,434 | $ 84 | $ 205,028 | $ 43,053,599 | $ (8,444) | $ (34,518,833) |
Balance, shares at Sep. 30, 2017 | 8,425 | 20,502,760 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities | ||
Net loss | $ (1,212,543) | $ (1,446,621) |
Adjustments to reconcile net loss to cash used in operating activities | ||
Provision (reversal of provision) for loan losses | 179,543 | (68,000) |
Depreciation | 78,197 | 182,567 |
Amortization of investment securities discounts/premiums, net | 3,127 | 120,651 |
Stock option expense related to stock options granted | 10,126 | |
Net changes in fair value and (gains) losses on other real estate owned and repossessed assets | (51,965) | 133,207 |
Increase in value of bank owned life insurance | (60,482) | (21,199) |
Loss on disposal of property, equipment and software | 566 | |
Increase in other assets, net | (41,980) | (284,001) |
Decrease in other liabilities, net | (143,577) | (411,852) |
Net cash used in operating activities | (1,249,680) | (1,784,556) |
Investing activities | ||
Net decrease in loans | 5,084,065 | 2,734,658 |
Repayments of investment securities available for sale | 576,492 | |
Purchases of investment securities available for sale | (5,232,716) | |
Maturities (purchases) of interest bearing deposits in other institutions | 1,750,000 | (250,000) |
(Purchases) redemption of non-marketable equity securities, net | (103,400) | 12,450 |
Purchase of property, equipment and software | (32,695) | (28,140) |
Proceeds from sale of other real estate owned and repossessed assets | 450,732 | 418,493 |
Purchase of bank owned life insurance | (2,500,000) | |
Net cash provided by (used in) investing activities | 1,915,986 | (963,953) |
Financing activities | ||
Decrease in deposits, net | (6,812,155) | (1,810,521) |
Federal Home Loan Bank advance | 4,000,000 | |
Decrease in securities sold under agreements to repurchase | (107,619) | (51,260) |
Net cash used in financing activities | (2,919,774) | (1,861,781) |
Net decrease in cash and cash equivalents | (2,253,468) | (2,682,384) |
Cash and cash equivalents at beginning of the period | 10,774,727 | 13,899,795 |
Cash and cash equivalents at end of the period | 8,521,259 | 11,217,411 |
Cash paid for | ||
Interest | 275,328 | 243,374 |
Income taxes | ||
Schedule of non-cash transactions | ||
Unrealized gain (loss) on securities available for sale, net of tax | (388) | 153,510 |
Loans transferred to other real estate owned and repossessed assets | $ 165,000 | $ 1,257,289 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Nature of Business and Basis of Presentation [Abstract] | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION 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”), a national association organized under the laws of the United States. Since opening for business on May 16, 2005, the Bank has operated as a traditional community bank in Greenville, South Carolina, fulfilling the financial needs of individuals and small businesses in its market. The Bank provides traditional checking and savings products insured by the Federal Deposit Insurance Corporation (the “FDIC”) and consumer, commercial and mortgage loans, as well as ATM and online banking, cash management and safe deposit boxes. On September 25, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with First Reliance Bancshares, Inc. (“First Reliance”), the holding company for First Reliance Bank, Florence, South Carolina, which provides that, subject to the terms and conditions set forth in the Merger Agreement, the Company will merge with and into First Reliance, with First Reliance as the surviving corporation (the “Merger”). In addition, concurrently with or as soon as practicable following the Merger, the Bank will be merged with and into First Reliance Bank. Under the terms of the Merger Agreement, each share of common stock of the Company will be converted into the right to receive a cash payment of $0.125 and each share of Series A Preferred Stock of the Company will be redeemed for $1,000 per share. The Merger is subject to, among other things, regulatory approval and the approval of the Company’s shareholders, as well as other customary closing conditions, as well as requirements to maintain balances for total loans of no less than $50 million, total deposits of no less than $65 million, and shareholder equity of at least $300,000 as of December 31, 2017 and $100,000 as of March 1, 2018, without giving effect to reasonable expenses paid or incurred by the Company in connection with the Merger, which may not to exceed $525,000 plus accumulated other comprehensive income. The Merger is currently expected to close in the first quarter of 2018. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and the 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. All adjustments consist of normally recurring accruals that, in the opinion of management, are necessary for fair presentation of the consolidated financial position of the Company. The foregoing discussion is a summary only and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 10-K”) as filed with the Securities and Exchange Commission (the “SEC”) on March 24, 2017 and Management’s Discussion and Analysis in this Quarterly Report on Form 10-Q. Operating results for the three and nine month periods ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. Use of 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 in the near term relate to the determination of the allowance for loan losses, other real estate owned, fair value of financial instruments, evaluating other-than-temporary impairment of investment securities and valuation of deferred tax assets. Business Segments Through December 31, 2016, the Company reported 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. As previously reported, the Company determined that segment reporting was no longer necessary based on the lack of activity in the Transaction Services and Asset Management segments. Substantially all of the Company’s consolidated activity for the three and nine months ended September 30, 2017 was derived from community banking. Please refer to “Note 8–Business Segments” for further information on the reporting for business segments. 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, and concluded that no subsequent events had occurred requiring accrual or disclosure through the date of this filing. |
Liquidity and Capital Considera
Liquidity and Capital Considerations | 9 Months Ended |
Sep. 30, 2017 | |
Liquidity and Capital Considerations [Abstract] | |
LIQUIDITY AND CAPITAL CONSIDERATIONS | NOTE 2 – LIQUIDITY AND CAPITAL CONSIDERATIONS The Company The Company’s cash balances, independent of the Bank, were approximately $1.5 million at September 30, 2017 compared to cash balances of approximately $1.8 million at December 31, 2016. Liquid assets decreased by $330,299 from December 31, 2016 due to the payment of professional fees and data processing expenses incurred by the Company. There were no expenses incurred related to the transaction services or asset management segments during the nine month period ended September 30, 2017. See “Note 8—Business Segments” for additional information related to the transaction services segment. If we are unable to consummate the Merger and decide to pursue new business strategies or plans, the Company may not have sufficient working capital to bring the development to operational capability and would need to raise additional capital. The Company’s ability to raise additional capital will depend on a number of factors outside of its control, including conditions in the capital markets. There is a risk that the Company would not be able to raise the capital it needs at all or upon favorable terms. If the Company cannot raise capital when needed, the Company would not be able to implement any such strategies or plans and the Company may be subject to increased regulatory supervision and restriction. Any restrictions imposed by regulators could have a material adverse effect on the Company’s financial condition and results of operations, whether directly or indirectly. The Bank Our ability to maintain and expand our deposit base and borrowing capabilities serves as our primary source of liquidity at the Bank. We currently have $8.6 million in cash and federal funds sold. If our cash needs at the Bank exceed that amount, we plan to liquidate temporary investments and generate deposits within our market. In addition, we will receive cash upon the maturity and sale of loans and the maturity of investment securities and investments in interest bearing deposits. Our investments in interest bearing deposits at September 30, 2017 amounted to $8.8 million, or 10.1% of total assets. Our investment securities available for sale at September 30, 2017 amounted to $7.7 million, or 9.0% of total assets. Investment securities traditionally provide a secondary source of liquidity since they can be converted into cash in a timely manner. At September 30, 2017, $2.4 million of our investment portfolio was pledged against outstanding debt. Therefore, the related debt would need to be repaid prior to the securities being sold and converted to cash. The Bank is a member of the Federal Home Loan Bank of Atlanta (“FHLB”), from which applications for borrowings can be made for leverage purposes. The FHLB requires that securities, qualifying mortgage loans, and stock of the FHLB owned by the Bank be pledged to secure any advances from the FHLB. At September 30, 2017, we had collateral that would support approximately $29.9 million in additional borrowings. We are subject to the FHLB’s credit risk rating policy which assigns member institutions a rating that is reviewed quarterly. The rating system utilizes key factors such as loan quality, capital, liquidity, profitability, etc. Our ability to access our available borrowing capacity from the FHLB in the future is subject to our rating and any subsequent changes based on our financial performance as compared to factors considered by the FHLB in their assignment of our credit risk rating each quarter. The Bank also pledges collateral to the Federal Reserve Bank’s Borrower-in-Custody of Collateral program, and our available credit under this program was $10.4 million as of September 30, 2017. The Bank has $5.5 million in federal funds purchased lines of credit through correspondent banks that are unsecured, but have not been utilized. We believe our liquidity sources are adequate to meet our operating needs at the Bank. However, we continue to carefully focus on liquidity management during 2017. Comprehensive weekly and monthly liquidity analyses serve management as vital decision-making tools by providing summaries of anticipated changes in loans, investments, core deposits, and wholesale funds. These internal funding reports provide management with the details critical to anticipate immediate and long-term cash requirements, such as expected deposit runoff, loan pay downs and amount and cost of available borrowing sources, including secured overnight federal funds lines with our various correspondent banks. The Consolidated Company The Company’s level of liquidity is measured by the cash, cash equivalents, and federal funds sold to total assets ratio which was 9.9% at September 30, 2017 compared to 11.9% as of December 31, 2016. The decrease in liquidity is due primarily to a decrease in federal funds sold. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For further information refer to the consolidated financial statements and footnotes thereto included in our 2016 10–K. Cash and Cash Equivalents - For purposes of reporting cash flows, cash and cash equivalents include 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 September 30, 2017 and December 31, 2016, the Company had no restricted cash. 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. 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 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 three and nine month periods ended September 30, 2017 and September 30, 2016, as a result of the Company’s net loss, all of the potential common shares 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 for customers. The Company did not achieve technological feasibility in connection with the development its digital banking, payments and transaction services business and therefore expensed all computer software purchases and development expenses related to research and development. On September 25, 2015 the Company suspended the development of its digital banking business. During the year ended December 31, 2016 and 2015, we incurred product research and development expenses of approximately $250,000 and $2.2 million, respectively. The 2016 expenses related to remaining monthly contract costs which have since been completed, and no further research and development expenses have been incurred in 2017. Fair Value Measurements - The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”), which provides a framework for measuring and disclosing fair value under generally accepted accounting principles. 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. 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. We did not recognize any income tax benefit or expense for the three and nine month periods ended September 30, 2017 and 2016 due to our net operating loss carryforward position. 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 that the Company will not recognize the entire deferred tax asset. The determination of whether a deferred tax asset is realizable is based on 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. We will continue to analyze our deferred tax assets and related valuation allowance on a quarterly basis, taking into account performance compared to forecasted earnings as well as current economic and internal information. The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities, and does not anticipate any adjustments that will result in a material adverse impact on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. 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 May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. The Company’s revenue is comprised of net interest income and noninterest income. The scope of the guidance explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities and derivatives. Accordingly, the majority of our revenues will not be affected. The Company is currently assessing our revenue contracts related to revenue streams that are within the scope of the standard. Our accounting policies will not change materially since the principles of revenue recognition from the ASU are largely consistent with existing guidance and current practices applied by our businesses. We have not identified material changes to the timing or amount of revenue recognition. Based on the updated guidance, we do anticipate changes in our disclosures associated with our revenues. We will provide qualitative disclosures of our performance obligations related to our revenue recognition and we continue to evaluate disaggregation for significant categories of revenue in this scope of the guidance. 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 amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years . Early adoption is permitted. We expect to adopt the guidance using the modified retrospective method and practical expedients for transition. The practical expedients allow us to largely account for our existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. We have started an initial evaluation of our leasing contracts and activities. We have also started developing our methodology to estimate the right-of-use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2016 future minimum lease payments were $443,160). We do not expect a material change to the timing of expense recognition, but we are early in the implementation process and will continue to evaluate the impact. We are evaluating our existing disclosures and may need to provide additional information as a result of adoption of the ASU. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments 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 March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them to apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments became effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. These amendments have not had a material effect on the Company’s financial statements. In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments 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 May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments 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 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for all organizations for periods beginning after December 15, 2018. The Company will apply the amendments to the ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in the first quarter of 2019, we do not expect to elect that option. We are evaluating the impact of the ASU on our consolidated financial statements. We expect the ASU will have no material impact on the recorded allowance for loan losses given the change to estimated losses over the contractual life of the loans adjusted for expected prepayments. In addition to our allowance for loan losses, we will also record an allowance for credit losses on debt securities instead of applying the impairment model currently utilized. The amount of the adjustments will be impacted by each portfolio’s composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In November 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments 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 May 2017, the FASB amended the requirements in the Compensation-Stock Compensation Topic of the Accounting Standards Codification related to changes to the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. 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
Investment Securities | 9 Months Ended |
Sep. 30, 2017 | |
Investment Securities [Abstract] | |
INVESTMENT SECURITIES | NOTE 4 – INVESTMENT SECURITIES Investment securities classified as “available for sale” are carried at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of shareholders’ equity (net of estimated tax effects). Realized gains or losses on the sale of investments are based on the specific identification method. The amortized costs and fair values of investment securities available for sale are as follows: September 30, 2017 Amortized Gross Unrealized Fair Cost Gains Losses Value US treasury note $ 2,504,851 $ - $ (8,561 ) $ 2,496,290 Government sponsored mortgage-backed securities 5,232,599 117 - 5,232,716 Total investment securities $ 7,737,450 $ 117 $ (8,561 ) $ 7,729,006 December 31, 2016 Amortized Gross Unrealized Fair Cost Gains Losses Value US treasury note $ 2,507,861 $ - $ (8,056 ) $ 2,499,805 Total investment securities $ 2,507,861 $ - $ (8,056 ) $ 2,499,805 The following table presents information regarding securities with unrealized losses at September 30, 2017: Securities in an Unrealized Securities in an Unrealized Loss Position for Less than Loss Position for More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses US treasury note $ 2,496,290 $ 8,561 $ - $ - $ 2,496,290 $ 8,561 Total temporarily impaired securities $ 2,496,290 $ 8,561 $ - $ - $ 2,496,290 $ 8,561 The following table presents information regarding securities with unrealized losses at December 31, 2016: Securities in an Unrealized Securities in an Unrealized Loss Position for Less than Loss Position for More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses US treasury note $ 2,499,805 $ 8,056 $ - $ - $ 2,499,805 $ 8,056 Total temporarily impaired securities $ 2,499,805 $ 8,056 $ - $ - $ 2,499,805 $ 8,056 At September 30, 2017, one investment security with a fair value of approximately $2.5 million and unrealized losses of $8,561 had been in a continuous loss position for less than twelve months. At September 30, 2017, there were no investment securities in a continuous loss position for more than twelve months. At September 30, 2017, the remaining two investment securities were in a gain position. The Company believes, based on industry analyst reports and credit ratings that the deterioration in the fair value of the investment security available for sale with unrealized losses is attributed to changes in market interest rates and not in the credit quality of the issuer and therefore, this loss is not considered other-than-temporary. The Company has the ability and intent to hold securities until such time as the values recover or the securities mature. At December 31, 2016, our one investment security with a fair value of $2.5 million and unrealized losses of $8,056 had been in a continuous loss for less than twelve months. At December 31, 2016, there were no investment securities that had been in a continuous loss position for more than twelve months. The amortized costs and fair values of investment securities available for sale at September 30, 2017, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers have the right to prepay the obligations. September 30, 2017 Amortized Fair Cost Value Due within one year $ — $ — Due after one through three years 2,504,851 2,496,290 Due after three through five years — — Due after five through ten years 2,649,052 2,649,122 Due after ten years 2,583,547 2,583,594 Total investment securities $ 7,737,450 $ 7,729,006 |
Loans
Loans | 9 Months Ended |
Sep. 30, 2017 | |
Loans [Abstract] | |
LOANS | NOTE 5 – LOANS At September 30, 2017, our gross loan portfolio consisted primarily of $18.6 million of commercial real estate loans, $6.8 million of construction and development loans, $12.8 million of commercial business loans, $11.7 million of residential real estate and home equity loans and $5.3 million of consumer loans. Our current loan portfolio composition is not materially different than the loan portfolio composition disclosed in the footnotes to the consolidated financial statements included in our 2016 10-K, other than the increase in consumer loans resulting from the purchase of $4.8 million in unsecured consumer loans, which occurred in the quarter ended March 31, 2017. During the nine months ended September 30, 2017, one nonaccrual loan at the Bank was transferred to other real estate owned for $165,000. A specific reserve was included in the December 31, 2016 allowance account. During the nine months ended September 30, 2016, three nonaccrual loans were transferred to other real estate owned for $1,257,289. Specific reserves for each of these loans were included in the December 31, 2015 allowance account. While certain credit quality statistics related to our loan portfolio have improved over the past several quarters, we have experienced an increase of in-migration of nonaccrual loans as well as in the aggregate level of nonperforming assets during 2017. We will continue to evaluate our allowance for loan losses in future periods based on our assessment of the inherent risk in the loan portfolio at those future reporting dates. There can be no assurance that loan losses in future periods will not exceed the current allowance for loan losses amount or that future increases in the allowance for loan losses will not be required. Additionally, no assurance can be given that our ongoing evaluation of the loan portfolio, in light of changing economic conditions and other relevant factors, will not require significant future additions to the allowance for loan losses, thus adversely impacting our business, financial condition, results of operations, and cash flows. Loan Performance and Asset Quality Generally, a loan will be placed on nonaccrual status when it becomes 90 days past due as to principal or interest (unless the loan is well-collateralized and in the process of collection), or when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that collection of the loan is doubtful. When a loan is placed in nonaccrual status, interest accruals are discontinued and income earned but not collected is reversed. Cash receipts on nonaccrual loans are not recorded as interest income, but are used to reduce principal. Loans are removed from nonaccrual status when they become current as to both principal and interest and when concern no longer exists as to the collectability of principal or interest based on current available information or as evidenced by sufficient payment history, generally six months. The following table summarizes delinquencies and nonaccruals, by portfolio class, as of September 30, 2017 and December 31, 2016. Single and multifamily Construction Commercial residential and real estate - Commercial real estate development other business Consumer Total September 30, 2017 30-59 days past due $ 30,706 $ - $ - $ 123,335 $ - $ 154,041 60-89 days past due 61,579 - - - 4,623 66,202 90-120 days past due - - - - 11,051 11,051 Nonaccrual - - - 638,205 - 638,205 Total past due and nonaccrual 92,285 - - 761,540 15,674 869,499 Current 11,635,874 6,787,780 18,602,481 12,026,811 5,271,171 54,324,117 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 Deferred fees (105,377 ) Loan loss reserve (1,372,000 ) Total Loans, net $ 53,716,239 Single and multifamily Construction Commercial residential and real estate - Commercial real estate development other business Consumer Total December 31, 2016 30-59 days past due $ 442,295 $ - $ - $ 617,052 $ - $ 1,059,347 60-89 days past due - - - 409,675 - 409,675 90-120 days past due - - - - - - Nonaccrual 108,951 - 195,500 - - 304,451 Total past due and nonaccrual 551,246 - 195,500 1,026,727 - 1,773,473 Current 12,762,884 7,913,783 21,838,090 14,927,379 1,434,449 58,876,585 Total loans (gross of deferred fees) $ 13,314,130 $ 7,913,783 $ 22,033,590 $ 15,954,106 $ 1,434,449 $ 60,650,058 Deferred fees (167,062 ) Loan loss reserve (1,338,149 ) Total Loans, net $ 59,144,847 At September 30, 2017 and December 31, 2016, there were nonaccrual loans of $638,205 and $304,451, respectively. The increase in nonaccrual loans was a result of the movement of four loans during January and February to nonaccrual status, partially offset by one nonaccrual loan transferring to other real estate owned and one nonaccrual loan being fully charged off during the quarter ended March 31, 2017. In the quarter ended September 30, 2017, the three remaining nonaccrual loans from one relationship were restructured into one nonaccrual loan. Foregone interest income related to nonaccrual loans equaled $34,811 and $55,231 for the nine months ended September 30, 2017 and 2016, respectively. No interest income was recognized on nonaccrual loans during the nine months ended September 30, 2017 and 2016. At September 30, 2017, there was one accruing purchased consumer loan which was contractually past due 90 days or more as to principal and interest payments. While our policy is to move past due loans over 90 days to nonaccrual status, we will report the purchased consumer loans as accruing until the point they are deemed charged off by the broker, Banc Alliance, as Banc Alliance can better substantiate loss histories in the areas of the country in which the loans are originated. At December 31, 2016, 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 September 30, 2017 and December 31, 2016. Single and multifamily Construction Commercial residential and real estate - Commercial September 30, 2017 real estate development other business Consumer Total Pass Loans $ 7,820,727 $ 1,175,703 $ - $ - $ 5,275,594 $ 14,272,224 Grade 1 - Prime - - - - - - Grade 2 - Good - - - - - - Grade 3 - Acceptable 1,142,061 1,756,778 8,536,445 6,097,063 - 17,532,347 Grade 4 – Acceptable w/ Care 2,703,791 3,792,063 8,550,572 5,734,583 - 20,781,009 Grade 5 – Special Mention - 63,236 750,426 - - 813,662 Grade 6 - Substandard 61,580 - 765,038 956,705 - 1,783,323 Grade 7 - Doubtful - - - - 11,051 11,051 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 Single and multifamily Construction Commercial residential and real estate - Commercial December 31, 2016 real estate development other business Consumer Total Pass Loans $ 8,246,567 $ 1,462,925 $ - $ - $ 1,434,449 $ 11,143,941 Grade 1 - Prime - - - - - - Grade 2 - Good - - - - - - Grade 3 - Acceptable 1,919,685 1,108,334 11,057,550 7,676,592 - 21,762,161 Grade 4 – Acceptable w/ Care 2,877,013 5,273,411 9,232,019 7,307,961 - 24,690,404 Grade 5 – Special Mention - 69,113 766,388 - - 835,501 Grade 6 - Substandard 270,865 - 977,633 969,553 - 2,218,051 Grade 7 - Doubtful - - - - - - Total loans (gross of deferred fees) $ 13,314,130 $ 7,913,783 $ 22,033,590 $ 15,954,106 $ 1,434,449 $ 60,650,058 Loans graded one through four are considered “pass” credits. At September 30, 2017, approximately 95% of the loan portfolio had a credit grade of “pass” compared to 95% at December 31, 2016. 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. As of September 30, 2017 and December 31, 2016, we had loans totaling $813,662 and $835,501, respectively, classified as special mention. 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 September 30, 2017, substandard loans totaled approximately $1.8 million, with most loans being collateralized by real estate, equipment and inventory, compared to $2.2 million at December 31, 2016. Substandard credits are evaluated for impairment on a quarterly basis. The Company identifies impaired loans through its normal internal loan review process. A loan is considered impaired when, based on current information and events, it is probable that 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. However, loans may be considered impaired strictly based on a decrease in the underlying value of the collateral securing the loan while the loan is still considered to be performing, thus preventing the need to move the loan to nonaccrual status. 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. At September 30, 2017, impaired loans totaled $850,636, all of which were valued on a nonrecurring basis at the lower of cost or market value of the underlying collateral. Impaired loans decreased $1.4 million from December 31, 2016 due to one loan being transferred to other real estate owned for $165,000, two loans for approximately $119,000 being charged off which were fully reserved at December 31, 2016, three loans for approximately $969,000 which were moved to classified status within the quarter, one loan for approximately $100,000 being repaid in full during the quarter and approximately $45,000 in loan balance reductions through pay downs, partially offset by one loan being deemed impaired for approximately $58,000. Market values were obtained using independent appraisals, updated in accordance with our reappraisal policy, or other market data such as recent offers to the borrower. As of September 30, 2017, we had loans totaling approximately $814,000 that were classified in accordance with our loan rating policies but were not considered impaired. The following table summarizes information relative to impaired loans, by portfolio class, at September 30, 2017 and December 31, 2016. Unpaid Recorded Related Average Year to date September 30, 2017 With no related allowance recorded: Single and multifamily residential real estate $ - $ - $ - $ 106,250 $ - Construction and development - - - 54,830 - Commercial real estate - other - - - 552,872 31,097 Commercial business - - - 104,260 - Consumer - - - - - With related allowance recorded: Single and multifamily residential real estate 61,580 61,580 3,980 131,268 2,393 Construction and development - - - 49,070 - Commercial real estate - other - - - 262,142 4,458 Commercial business 789,056 752,319 596,568 473,672 - Consumer - - - - - Total: Single and multifamily residential real estate 61,580 61,580 3,980 237,518 2,393 Construction and development - - - 103,900 - Commercial real estate - other - - - 815,014 35,555 Commercial business 789,056 752,319 596,568 577,932 - Consumer - - - - - $ 850,636 $ 813,899 $ 600,548 $ 1,734,364 $ 37,948 December 31, 2016 With no related allowance recorded: Single and multifamily residential real estate $ 99,794 $ 99,794 $ - $ 179,235 $ 3,261 Construction and development - - - 109,660 6,130 Commercial real estate - other 782,133 782,133 - 718,589 46,778 Commercial business 231,448 231,448 - 96,283 4,744 Consumer - - - - - With related allowance recorded: Single and multifamily residential real estate 171,071 171,071 93,471 201,000 3,251 Construction and development - - - 98,139 - Commercial real estate - other 195,500 195,500 30,500 524,283 - Commercial business 738,105 738,105 487,490 191,329 46,315 Consumer - - - - - Total: Single and multifamily residential real estate 270,865 270,865 93,471 380,235 6,512 Construction and development - - - 207,799 6,130 Commercial real estate - other 977,633 977,633 30,500 1,242,872 46,778 Commercial business 969,553 969,553 487,490 287,612 51,059 Consumer - - - - - $ 2,218,051 $ 2,218,051 $ 611,461 $ 2,118,518 $ 110,479 During the nine months ended September 30, 2017, we recorded interest income on impaired loans of $37,948, which were related to commercial real estate and single and multifamily residential real estate loans. Troubled debt restructurings (“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. Our policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance. That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms; continued accrual of interest at the restructured interest rate is likely. If a borrower was materially delinquent on payments prior to the restructuring, but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status. We will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms. At December 31, 2016, the principal balance of TDRs was zero. No TDRs went into default during the year ended December 31, 2016 or the nine months ended September 30, 2017. At September 30, 2017, the recorded investment and outstanding principal balance was $638,205 and $674,942, respectively. The balance consisted of one performing loan. The loan is considered as performing primarily due to the timely repayment of principal and interest during the nine months ended September 30, 2017. However, based on previous history with this relationship, this loan is not accruing interest even though it is performing in accordance with updated terms. There were three loans within one relationship that were modified as a troubled debt restructuring within the previous 12-month period for which there was a payment default during the nine months ended September 30, 2017. A repayment of $75,000 was made in June 2017. The three loans were restructured into one loan with a change in loan terms. Provision and Allowance for Loan Losses An allowance for loan losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent losses in the loan portfolio. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The provision and allowance for loan losses are evaluated on a regular basis by management and are 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 or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. The following table summarizes activity related to our allowance for loan losses for the nine months ended September 30, 2017 and 2016, by portfolio segment. Single and Construction Commercial Commercial Consumer Total September 30, 2017 Allowance for loan losses: Balance, beginning of period $ 235,797 $ 73,630 $ 330,785 $ 684,679 $ 13,258 $ 1,338,149 Provision (reversal of provision) for loan losses - - - 23,000 156,543 179,543 Loan charge-offs (88,951 ) - (30,500 ) - (28,358 ) (147,809 ) Loan recoveries 1,000 - 1,117 - - 2,117 Net loans charged-off (87,951 ) - (29,383 ) - (28,358 ) (145,692 ) Balance, end of period $ 147,846 $ 73,630 $ 301,402 $ 707,679 $ 141,443 $ 1,372,000 Individually reviewed for impairment $ 3,980 $ - $ - $ 596,568 $ - $ 600,548 Collectively reviewed for impairment 143,866 73,630 301,402 111,111 141,443 771,452 Total allowance for loan losses $ 147,846 $ 73,630 $ 301,402 $ 707,679 $ 141,443 $ 1,372,000 Gross loans, end of period: Individually reviewed for impairment $ 61,580 $ - $ - $ 789,056 $ - $ 850,636 Collectively reviewed for impairment 11,666,579 6,787,780 18,602,481 11,999,295 5,286,845 54,342,980 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 September 30, 2016 Allowance for loan losses: Balance, beginning of year $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Provision (reversal of provision) for loan losses (30,000 ) (60,000 ) 45,000 (28,000 ) 5,000 (68,000 ) Loan charge-offs - (10,500 ) (209,045 ) - (139 ) (219,684 ) Loan recoveries - - - - 1,312 1,312 Net loans charged-off - (10,500 ) (209,045 ) - 1,173 (218,372 ) Balance, end of period $ 235,797 $ 113,630 $ 275,785 $ 216,679 $ 11,246 $ 853,137 Individually reviewed for impairment $ 101,283 $ - $ 28,188 $ - $ - $ 129,471 Collectively reviewed for impairment 134,514 113,630 247,597 216,679 11,246 723,666 Total allowance for loan losses $ 235,797 $ 113,630 $ 275,785 $ 216,679 $ 11,246 $ 853,137 Gross loans, end of period: Individually reviewed for impairment $ 200,483 $ - $ 981,286 $ 242,646 $ - $ 1,424,415 Collectively reviewed for impairment 12,905,727 8,664,401 22,650,227 16,068,808 1,811,517 62,100,680 Total loans (gross of deferred fees) $ 13,106,210 $ 8,664,401 $ 23,631,513 $ 16,311,454 $ 1,811,517 $ 63,525,095 September 30, September 30, 2017 2016 Nonaccrual loans $ 638,205 $ 331,233 Average gross loans $ 60,468,110 $ 64,628,769 Net loans charged-off as a percentage of average gross loans 0.24 % 0.34 % Allowance for loan losses as a percentage of total gross loans 2.49 % 1.34 % Allowance for loan losses as a percentage of non-accrual loans 214.98 % 257.56 % Portions of the allowance for loan losses may be allocated for specific loans or portfolio segments. However, the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged-off. The general reserve as a percentage of loans collectively reviewed for impairment increased to 1.42% at September 30, 2017 from 1.22% at December 31, 2016. While management utilizes the best judgment and information available to it, the ultimate adequacy of the allowance for loan losses depends on a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates, and the view of the regulatory authorities toward loan classifications. If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which would adversely affect our results of operations and financial condition. There can be no assurance that charge-offs of loans in future periods will not exceed the allowance for loan losses as estimated at any point in time or that provisions for loan losses will not be significant to a particular accounting period. Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following tables summarizes the loan maturity distribution by type and related interest rate characteristics based on the contractual maturities of individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below, because borrowers have the right to prepay obligations with or without prepayment penalties. After one but One year or within five After five less years years Total September 30, 2017 Single and multifamily residential real estate $ 1,309,158 $ 6,316,493 $ 4,102,508 $ 11,728,159 Construction and development 2,082,172 3,997,008 708,600 6,787,780 Commercial real estate - other 3,364,591 13,353,636 1,884,254 18,602,481 Commercial business 4,460,366 7,715,910 612,075 12,788,351 Consumer 320,435 4,928,997 37,413 5,286,845 Total $ 11,536,722 $ 36,312,044 $ 7,344,850 $ 55,193,616 After one but One year or within five After five less years years Total December 31, 2016 Single and multifamily residential real estate $ 1,445,328 $ 6,710,484 $ 5,158,318 $ 13,314,130 Construction and development 2,987,321 4,829,172 97,290 7,913,783 Commercial real estate - other 3,144,814 16,958,206 1,930,570 22,033,590 Commercial business 6,203,428 8,736,000 1,014,678 15,954,106 Consumer 540,500 821,639 72,310 1,434,449 Total $ 14,321,391 $ 38,055,501 $ 8,273,166 $ 60,650,058 Loans maturing after one year with: September 30, 2017 December 31, 2016 Fixed interest rates $ 19,326,434 $ 16,767,328 Floating interest rates $ 24,330,460 $ 29,561,339 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value [Abstract] | |
FAIR VALUE | NOTE 6 – FAIR VALUE 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 2. Available-for-sale investment securities ($7,729,006 and $2,499,805 at September 30, 2017 and December 31, 2016, respectively) are carried at fair value and measured on a recurring basis using Level 2 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 September 30, 2017, 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 September 30, 2017 and December 31, 2016 was $250,088 and $1.6 million, respectively. 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 of cost 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 September 30, 2017 and December 31, 2016 was $2.0 million and $2.2 million, 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 September 30, 2017, the significant observable inputs used in the fair value measurements were as follows: Fair Value at September 30, Significant Description 2017 Valuation Technique Unobservable Inputs Other real estate owned and repossessed assets $1,988,900 Appraised value Discounts to reflect current Impaired loans $250,088 Internal assessment based on Adjustments to estimated For Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2016, the significant unobservable inputs used in the fair value measurements were as follows: Fair Value at December 31, Significant Description 2016 Valuation Technique Unobservable Inputs Other real estate owned and repossessed assets $2,222,667 Appraised value Discounts to reflect current Impaired loans $1,606,590 Internal assessment based on Adjustments to estimated 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. Fair value for demand deposit accounts and interest bearing accounts with no fixed maturity date is equal to the carrying value. 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 September 30, 2017 and December 31, 2016 are as follows: Carrying September 30, 2017 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 4,244,259 $ 4,244,259 $ 4,244,259 - - Interest bearing deposits in other institutions 8,750,000 8,750,000 - 8,750,000 - Federal funds sold 4,277,000 4,277,000 4,277,000 - - Investment securities available for sale 7,729,006 7,729,006 - 7,729,006 - Non-marketable equity securities 483,450 483,450 - 483,450 - Loans, net 53,716,239 53,606,063 - - 53,606,063 Bank owned life insurance 2,603,392 2,603,392 - 2,603,392 - Financial Liabilities: Federal Home Loan Bank advances 4,000,000 4,001,933 - - 4,001,933 Deposits 72,895,493 72,684,063 - 72,684,063 - Securities sold under agreements to repurchase 5,979 5,979 - 5,979 - Carrying December 31, 2016 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 4,631,727 $ 4,631,727 $ 4,631,727 $ - $ - Interest bearing deposits in other institutions 10,500,000 10,500,000 - 10,500,000 - Federal funds sold 6,143,000 6,143,000 6,143,000 - - Investment securities available for sale 2,499,805 2,499,805 - 2,499,805 - Non-marketable equity securities 380,050 380,050 - 380,050 - Loans, net 59,144,847 59,084,364 - - 59,084,364 Bank owned life insurance 2,542,910 2,542,910 - 2,542,910 - Financial Liabilities: Deposits 79,707,648 79,598,034 - 79,598,034 - Securities sold under agreements to repurchase 113,598 113,598 - 113,598 - |
Stock Compensation Plans
Stock Compensation Plans | 9 Months Ended |
Sep. 30, 2017 | |
Stock Compensation Plans [Abstract] | |
STOCK COMPENSATION PLANS | NOTE 7 – STOCK COMPENSATION PLANS On July 26, 2005, the Company adopted the Independence Bancshares, Inc. 2005 Stock Incentive Plan (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 Independence Bancshares, Inc. 2013 Equity Incentive Plan (the “2013 Incentive Plan”) which was subsequently approved by the Company’s shareholders at the 2013 annual shareholders’ meeting. 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. As of September 30, 2017 and December 31, 2016, 3,012,030 and 3,064,380, respectively, in total options were outstanding at a weighted average price of $0.94 and $1.04, respectively. Of the 3,012,030 options outstanding, all options were vested. Compensation expense related to stock options granted was $10,126 for the nine months ended September 30, 2016. There was no compensation expense for the nine months ended September 30, 2017 due the remaining stock options being fully vested in July 2016. 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. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2017 | |
Business Segments [Abstract] | |
BUSINESS SEGMENTS | NOTE 8 – BUSINESS SEGMENTS Through December 31, 2016, the Company reported its activities as four business segments—Community Banking, Transaction Services, Asset Management and Parent Only—as defined in Note 1. 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. As previously reported, the Company determined that segment reporting was no longer necessary based on the lack of activity in the Transaction Services and Asset Management segments. Substantially all of the Company’s consolidated activity for the three and nine months ended September 30, 2017 was derived from community banking. As previously disclosed in the Form 10-Q filed November 9, 2016, our segment activity for the three months ended September 30, 2016 consisted of net loss of $149,529 from the Community Banking segment, a loss of $27,364 at the Transaction Services segment resulting from product research and development expense, $43,664 of income at the Asset Management segment resulting from the sales of real estate owned, and a loss of $227,798 for the Parent Only segment. Our segment activity for the nine months ended September 30, 2016 consisted of net loss of $428,034 from the Community Banking segment, a loss of $204,554 at the Transaction Services segment resulting from product research and development expense, $73,446 of loss at the Asset Management segment resulting from the costs to hold real estate owned, and a loss of $740,587 for the Parent Only segment. Also as previously reported, at September 30, 2016 the Holding Company had $293,142 in other real estate owned consisting of one commercial real estate property and had accrued expenses and other liabilities totaling $458,308. |
Bank Owned Life Insurance and P
Bank Owned Life Insurance and Pre-Retirement Benefit Plan | 9 Months Ended |
Sep. 30, 2017 | |
Bank Owned Life Insurance and Pre-Retirement Benefit Plan [Abstract] | |
BANK OWNED LIFE INSURANCE AND PRE-RETIREMENT BENEFIT PLAN | NOTE 9 – BANK OWNED LIFE INSURANCE AND PRE-RETIREMENT BENEFIT PLAN In June of 2016, the Bank purchased two bank owned life insurance policies with aggregate death benefits of $2,500,000 for investment purposes. The Bank is responsible for paying all premiums and is the owner and beneficiary of the policies. In connection with the purchase of the bank owned life insurance, the Bank offered pre-retirement death benefits to selected employees of the Bank. The policies are not transferrable to the employees and are not impacted by a change in control. The pre-retirement death benefits are indirectly funded by the bank owned life insurance. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents - For purposes of reporting cash flows, cash and cash equivalents include 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 September 30, 2017 and December 31, 2016, the Company had no restricted cash. 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. |
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 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 three and nine month periods ended September 30, 2017 and September 30, 2016, as a result of the Company’s net loss, all of the potential common shares 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 for customers. The Company did not achieve technological feasibility in connection with the development its digital banking, payments and transaction services business and therefore expensed all computer software purchases and development expenses related to research and development. On September 25, 2015 the Company suspended the development of its digital banking business. During the year ended December 31, 2016 and 2015, we incurred product research and development expenses of approximately $250,000 and $2.2 million, respectively. The 2016 expenses related to remaining monthly contract costs which have since been completed, and no further research and development expenses have been incurred in 2017. |
Fair Value Measurements | Fair Value Measurements - The Company determines the fair market values of its financial instruments based on the fair value hierarchy established in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”), which provides a framework for measuring and disclosing fair value under generally accepted accounting principles. 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. |
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. We did not recognize any income tax benefit or expense for the three and nine month periods ended September 30, 2017 and 2016 due to our net operating loss carryforward position. 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 that the Company will not recognize the entire deferred tax asset. The determination of whether a deferred tax asset is realizable is based on 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. We will continue to analyze our deferred tax assets and related valuation allowance on a quarterly basis, taking into account performance compared to forecasted earnings as well as current economic and internal information. The Company believes that its income tax filing positions taken or expected to be taken in its tax returns will more likely than not be sustained upon audit by the taxing authorities, and does not anticipate any adjustments that will result in a material adverse impact on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. |
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 May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. The Company’s revenue is comprised of net interest income and noninterest income. The scope of the guidance explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities and derivatives. Accordingly, the majority of our revenues will not be affected. The Company is currently assessing our revenue contracts related to revenue streams that are within the scope of the standard. Our accounting policies will not change materially since the principles of revenue recognition from the ASU are largely consistent with existing guidance and current practices applied by our businesses. We have not identified material changes to the timing or amount of revenue recognition. Based on the updated guidance, we do anticipate changes in our disclosures associated with our revenues. We will provide qualitative disclosures of our performance obligations related to our revenue recognition and we continue to evaluate disaggregation for significant categories of revenue in this scope of the guidance. 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 amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years . Early adoption is permitted. We expect to adopt the guidance using the modified retrospective method and practical expedients for transition. The practical expedients allow us to largely account for our existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. We have started an initial evaluation of our leasing contracts and activities. We have also started developing our methodology to estimate the right-of-use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2016 future minimum lease payments were $443,160). We do not expect a material change to the timing of expense recognition, but we are early in the implementation process and will continue to evaluate the impact. We are evaluating our existing disclosures and may need to provide additional information as a result of adoption of the ASU. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments 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 March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them to apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments became effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. These amendments have not had a material effect on the Company’s financial statements. In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments 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 May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments 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 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for all organizations for periods beginning after December 15, 2018. The Company will apply the amendments to the ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in the first quarter of 2019, we do not expect to elect that option. We are evaluating the impact of the ASU on our consolidated financial statements. We expect the ASU will have no material impact on the recorded allowance for loan losses given the change to estimated losses over the contractual life of the loans adjusted for expected prepayments. In addition to our allowance for loan losses, we will also record an allowance for credit losses on debt securities instead of applying the impairment model currently utilized. The amount of the adjustments will be impacted by each portfolio’s composition and credit quality at the adoption date as well as economic conditions and forecasts at that time. In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In November 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements. In January 2017, the FASB issued guidance to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments 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 May 2017, the FASB amended the requirements in the Compensation-Stock Compensation Topic of the Accounting Standards Codification related to changes to the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements. 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) | 9 Months Ended |
Sep. 30, 2017 | |
Investment Securities [Abstract] | |
Schedule of amortized costs and fair values of investment securities available for sale | September 30, 2017 Amortized Gross Unrealized Fair Cost Gains Losses Value US treasury note $ 2,504,851 $ - $ (8,561 ) $ 2,496,290 Government sponsored mortgage-backed securities 5,232,599 117 - 5,232,716 Total investment securities $ 7,737,450 $ 117 $ (8,561 ) $ 7,729,006 December 31, 2016 Amortized Gross Unrealized Fair Cost Gains Losses Value US treasury note $ 2,507,861 $ - $ (8,056 ) $ 2,499,805 Total investment securities $ 2,507,861 $ - $ (8,056 ) $ 2,499,805 |
Schedule of securities with unrealized losses | The following table presents information regarding securities with unrealized losses at September 30, 2017: Securities in an Unrealized Securities in an Unrealized Loss Position for Less than Loss Position for More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses US treasury note $ 2,496,290 $ 8,561 $ - $ - $ 2,496,290 $ 8,561 Total temporarily impaired securities $ 2,496,290 $ 8,561 $ - $ - $ 2,496,290 $ 8,561 The following table presents information regarding securities with unrealized losses at December 31, 2016: Securities in an Unrealized Securities in an Unrealized Loss Position for Less than Loss Position for More than 12 Months 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses US treasury note $ 2,499,805 $ 8,056 $ - $ - $ 2,499,805 $ 8,056 Total temporarily impaired securities $ 2,499,805 $ 8,056 $ - $ - $ 2,499,805 $ 8,056 |
Schedule of amortized costs and fair values of investment securities available for sale by contractual maturity | September 30, 2017 Amortized Fair Cost Value Due within one year $ — $ — Due after one through three years 2,504,851 2,496,290 Due after three through five years — — Due after five through ten years 2,649,052 2,649,122 Due after ten years 2,583,547 2,583,594 Total investment securities $ 7,737,450 $ 7,729,006 |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loans [Abstract] | |
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 September 30, 2017 30-59 days past due $ 30,706 $ - $ - $ 123,335 $ - $ 154,041 60-89 days past due 61,579 - - - 4,623 66,202 90-120 days past due - - - - 11,051 11,051 Nonaccrual - - - 638,205 - 638,205 Total past due and nonaccrual 92,285 - - 761,540 15,674 869,499 Current 11,635,874 6,787,780 18,602,481 12,026,811 5,271,171 54,324,117 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 Deferred fees (105,377 ) Loan loss reserve (1,372,000 ) Total Loans, net $ 53,716,239 Single and multifamily Construction Commercial residential and real estate - Commercial real estate development other business Consumer Total December 31, 2016 30-59 days past due $ 442,295 $ - $ - $ 617,052 $ - $ 1,059,347 60-89 days past due - - - 409,675 - 409,675 90-120 days past due - - - - - - Nonaccrual 108,951 - 195,500 - - 304,451 Total past due and nonaccrual 551,246 - 195,500 1,026,727 - 1,773,473 Current 12,762,884 7,913,783 21,838,090 14,927,379 1,434,449 58,876,585 Total loans (gross of deferred fees) $ 13,314,130 $ 7,913,783 $ 22,033,590 $ 15,954,106 $ 1,434,449 $ 60,650,058 Deferred fees (167,062 ) Loan loss reserve (1,338,149 ) Total Loans, net $ 59,144,847 |
Summarizes management's internal credit risk grades, by portfolio class | Single and multifamily Construction Commercial residential and real estate - Commercial September 30, 2017 real estate development other business Consumer Total Pass Loans $ 7,820,727 $ 1,175,703 $ - $ - $ 5,275,594 $ 14,272,224 Grade 1 - Prime - - - - - - Grade 2 - Good - - - - - - Grade 3 - Acceptable 1,142,061 1,756,778 8,536,445 6,097,063 - 17,532,347 Grade 4 – Acceptable w/ Care 2,703,791 3,792,063 8,550,572 5,734,583 - 20,781,009 Grade 5 – Special Mention - 63,236 750,426 - - 813,662 Grade 6 - Substandard 61,580 - 765,038 956,705 - 1,783,323 Grade 7 - Doubtful - - - - 11,051 11,051 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 Single and multifamily Construction Commercial residential and real estate - Commercial December 31, 2016 real estate development other business Consumer Total Pass Loans $ 8,246,567 $ 1,462,925 $ - $ - $ 1,434,449 $ 11,143,941 Grade 1 - Prime - - - - - - Grade 2 - Good - - - - - - Grade 3 - Acceptable 1,919,685 1,108,334 11,057,550 7,676,592 - 21,762,161 Grade 4 – Acceptable w/ Care 2,877,013 5,273,411 9,232,019 7,307,961 - 24,690,404 Grade 5 – Special Mention - 69,113 766,388 - - 835,501 Grade 6 - Substandard 270,865 - 977,633 969,553 - 2,218,051 Grade 7 - Doubtful - - - - - - Total loans (gross of deferred fees) $ 13,314,130 $ 7,913,783 $ 22,033,590 $ 15,954,106 $ 1,434,449 $ 60,650,058 |
Summarizes information relative to impaired loans, by portfolio class | Unpaid Recorded Related Average Year to date September 30, 2017 With no related allowance recorded: Single and multifamily residential real estate $ - $ - $ - $ 106,250 $ - Construction and development - - - 54,830 - Commercial real estate - other - - - 552,872 31,097 Commercial business - - - 104,260 - Consumer - - - - - With related allowance recorded: Single and multifamily residential real estate 61,580 61,580 3,980 131,268 2,393 Construction and development - - - 49,070 - Commercial real estate - other - - - 262,142 4,458 Commercial business 789,056 752,319 596,568 473,672 - Consumer - - - - - Total: Single and multifamily residential real estate 61,580 61,580 3,980 237,518 2,393 Construction and development - - - 103,900 - Commercial real estate - other - - - 815,014 35,555 Commercial business 789,056 752,319 596,568 577,932 - Consumer - - - - - $ 850,636 $ 813,899 $ 600,548 $ 1,734,364 $ 37,948 December 31, 2016 With no related allowance recorded: Single and multifamily residential real estate $ 99,794 $ 99,794 $ - $ 179,235 $ 3,261 Construction and development - - - 109,660 6,130 Commercial real estate - other 782,133 782,133 - 718,589 46,778 Commercial business 231,448 231,448 - 96,283 4,744 Consumer - - - - - With related allowance recorded: Single and multifamily residential real estate 171,071 171,071 93,471 201,000 3,251 Construction and development - - - 98,139 - Commercial real estate - other 195,500 195,500 30,500 524,283 - Commercial business 738,105 738,105 487,490 191,329 46,315 Consumer - - - - - Total: Single and multifamily residential real estate 270,865 270,865 93,471 380,235 6,512 Construction and development - - - 207,799 6,130 Commercial real estate - other 977,633 977,633 30,500 1,242,872 46,778 Commercial business 969,553 969,553 487,490 287,612 51,059 Consumer - - - - - $ 2,218,051 $ 2,218,051 $ 611,461 $ 2,118,518 $ 110,479 |
Schedule of activity related to allowance for loan losses | Single and Construction Commercial Commercial Consumer Total September 30, 2017 Allowance for loan losses: Balance, beginning of period $ 235,797 $ 73,630 $ 330,785 $ 684,679 $ 13,258 $ 1,338,149 Provision (reversal of provision) for loan losses - - - 23,000 156,543 179,543 Loan charge-offs (88,951 ) - (30,500 ) - (28,358 ) (147,809 ) Loan recoveries 1,000 - 1,117 - - 2,117 Net loans charged-off (87,951 ) - (29,383 ) - (28,358 ) (145,692 ) Balance, end of period $ 147,846 $ 73,630 $ 301,402 $ 707,679 $ 141,443 $ 1,372,000 Individually reviewed for impairment $ 3,980 $ - $ - $ 596,568 $ - $ 600,548 Collectively reviewed for impairment 143,866 73,630 301,402 111,111 141,443 771,452 Total allowance for loan losses $ 147,846 $ 73,630 $ 301,402 $ 707,679 $ 141,443 $ 1,372,000 Gross loans, end of period: Individually reviewed for impairment $ 61,580 $ - $ - $ 789,056 $ - $ 850,636 Collectively reviewed for impairment 11,666,579 6,787,780 18,602,481 11,999,295 5,286,845 54,342,980 Total loans (gross of deferred fees) $ 11,728,159 $ 6,787,780 $ 18,602,481 $ 12,788,351 $ 5,286,845 $ 55,193,616 September 30, 2016 Allowance for loan losses: Balance, beginning of year $ 265,797 $ 184,130 $ 439,830 $ 244,679 $ 5,073 $ 1,139,509 Provision (reversal of provision) for loan losses (30,000 ) (60,000 ) 45,000 (28,000 ) 5,000 (68,000 ) Loan charge-offs - (10,500 ) (209,045 ) - (139 ) (219,684 ) Loan recoveries - - - - 1,312 1,312 Net loans charged-off - (10,500 ) (209,045 ) - 1,173 (218,372 ) Balance, end of period $ 235,797 $ 113,630 $ 275,785 $ 216,679 $ 11,246 $ 853,137 Individually reviewed for impairment $ 101,283 $ - $ 28,188 $ - $ - $ 129,471 Collectively reviewed for impairment 134,514 113,630 247,597 216,679 11,246 723,666 Total allowance for loan losses $ 235,797 $ 113,630 $ 275,785 $ 216,679 $ 11,246 $ 853,137 Gross loans, end of period: Individually reviewed for impairment $ 200,483 $ - $ 981,286 $ 242,646 $ - $ 1,424,415 Collectively reviewed for impairment 12,905,727 8,664,401 22,650,227 16,068,808 1,811,517 62,100,680 Total loans (gross of deferred fees) $ 13,106,210 $ 8,664,401 $ 23,631,513 $ 16,311,454 $ 1,811,517 $ 63,525,095 |
Schedule of non accrual loan activities | September 30, September 30, 2017 2016 Nonaccrual loans $ 638,205 $ 331,233 Average gross loans $ 60,468,110 $ 64,628,769 Net loans charged-off as a percentage of average gross loans 0.24 % 0.34 % Allowance for loan losses as a percentage of total gross loans 2.49 % 1.34 % Allowance for loan losses as a percentage of non-accrual loans 214.98 % 257.56 % |
Schedule of loan maturity distribution by type and related interest rate | After one but One year or within five After five less years years Total September 30, 2017 Single and multifamily residential real estate $ 1,309,158 $ 6,316,493 $ 4,102,508 $ 11,728,159 Construction and development 2,082,172 3,997,008 708,600 6,787,780 Commercial real estate - other 3,364,591 13,353,636 1,884,254 18,602,481 Commercial business 4,460,366 7,715,910 612,075 12,788,351 Consumer 320,435 4,928,997 37,413 5,286,845 Total $ 11,536,722 $ 36,312,044 $ 7,344,850 $ 55,193,616 After one but One year or within five After five less years years Total December 31, 2016 Single and multifamily residential real estate $ 1,445,328 $ 6,710,484 $ 5,158,318 $ 13,314,130 Construction and development 2,987,321 4,829,172 97,290 7,913,783 Commercial real estate - other 3,144,814 16,958,206 1,930,570 22,033,590 Commercial business 6,203,428 8,736,000 1,014,678 15,954,106 Consumer 540,500 821,639 72,310 1,434,449 Total $ 14,321,391 $ 38,055,501 $ 8,273,166 $ 60,650,058 Loans maturing after one year with: September 30, 2017 December 31, 2016 Fixed interest rates $ 19,326,434 $ 16,767,328 Floating interest rates $ 24,330,460 $ 29,561,339 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value [Abstract] | |
Summary of fair value assets measured on non recurring basis unobservable inputs | Fair Value at September 30, Significant Description 2017 Valuation Technique Unobservable Inputs Other real estate owned and repossessed assets $1,988,900 Appraised value Discounts to reflect current Impaired loans $250,088 Internal assessment based on Adjustments to estimated Fair Value at December 31, Significant Description 2016 Valuation Technique Unobservable Inputs Other real estate owned and repossessed assets $2,222,667 Appraised value Discounts to reflect current Impaired loans $1,606,590 Internal assessment based on Adjustments to estimated |
Summary of estimated fair values of the company's financial instruments | Carrying September 30, 2017 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 4,244,259 $ 4,244,259 $ 4,244,259 - - Interest bearing deposits in other institutions 8,750,000 8,750,000 - 8,750,000 - Federal funds sold 4,277,000 4,277,000 4,277,000 - - Investment securities available for sale 7,729,006 7,729,006 - 7,729,006 - Non-marketable equity securities 483,450 483,450 - 483,450 - Loans, net 53,716,239 53,606,063 - - 53,606,063 Bank owned life insurance 2,603,392 2,603,392 - 2,603,392 - Financial Liabilities: Federal Home Loan Bank advances 4,000,000 4,001,933 - - 4,001,933 Deposits 72,895,493 72,684,063 - 72,684,063 - Securities sold under agreements to repurchase 5,979 5,979 - 5,979 - Carrying December 31, 2016 Amount Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 4,631,727 $ 4,631,727 $ 4,631,727 $ - $ - Interest bearing deposits in other institutions 10,500,000 10,500,000 - 10,500,000 - Federal funds sold 6,143,000 6,143,000 6,143,000 - - Investment securities available for sale 2,499,805 2,499,805 - 2,499,805 - Non-marketable equity securities 380,050 380,050 - 380,050 - Loans, net 59,144,847 59,084,364 - - 59,084,364 Bank owned life insurance 2,542,910 2,542,910 - 2,542,910 - Financial Liabilities: Deposits 79,707,648 79,598,034 - 79,598,034 - Securities sold under agreements to repurchase 113,598 113,598 - 113,598 - |
Nature of Business and Basis 20
Nature of Business and Basis of Presentation (Details) | 1 Months Ended |
Sep. 25, 2017 | |
Nature of Business and Basis of Presentation (Textual) | |
Merger agreement, description | Under the terms of the Merger Agreement, each share of common stock of the Company will be converted into the right to receive a cash payment of $0.125 and each share of Series A Preferred Stock of the Company will be redeemed for $1,000 per share. The Merger is subject to, among other things, regulatory approval and the approval of the Company's shareholders, as well as other customary closing conditions, as well as requirements to maintain balances for total loans of no less than $50 million, total deposits of no less than $65 million, and shareholder equity of at least $300,000 as of December 31, 2017 and $100,000 as of March 1, 2018, without giving effect to reasonable expenses paid or incurred by the Company in connection with the Merger, which may not to exceed $525,000 plus accumulated other comprehensive income. The Merger is currently expected to close in the first quarter of 2018. |
Liquidity and Capital Conside21
Liquidity and Capital Considerations (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Liquidity and Capital Considerations (Textual) | |||
Cash balances | $ 1,500,000 | $ 1,800,000 | |
Decrease in liquid assets | (2,253,468) | $ (2,682,384) | |
Cash and federal funds sold | 8,600,000 | ||
Investment securities available for sale | $ 7,700,000 | ||
Percentage of investment securities available for sale | 9.00% | ||
Pledged outstanding debt | $ 2,400,000 | ||
Additional borrowings | 29,900,000 | ||
Pledges collateral federal reserve bank borrower custody | 10,400,000 | ||
Federal funds purchased | 5,500,000 | ||
Investments in interest bearing deposits | $ 8,750,000 | 10,500,000 | |
Percentage of investments in interest-bearing deposits | 10.10% | ||
Professional fees and data processing expenses [Member] | |||
Liquidity and Capital Considerations (Textual) | |||
Decrease in liquid assets | $ 330,299 | ||
Investment securities [Member] | |||
Liquidity and Capital Considerations (Textual) | |||
Percentage liquidity ratio | 9.90% | 11.90% | |
Investments in interest bearing deposits | $ 8,800,000 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of Significant Accounting Policies (Textual) | ||||||
Restricted cash | ||||||
Income tax expense | ||||||
Product research and development expense | $ 27,364 | $ 204,554 | 250,000 | $ 2,200,000 | ||
Future minimum lease payments | $ 443,160 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Available-for-sale Securities [Abstract] | ||
Amortized Cost | $ 7,737,450 | $ 2,507,861 |
Gross Unrealized Gains | 117 | |
Gross Unrealized Losses | (8,561) | (8,056) |
Fair Value | 7,729,006 | 2,499,805 |
US treasury note [Member] | ||
Available-for-sale Securities [Abstract] | ||
Amortized Cost | 2,504,851 | 2,507,861 |
Gross Unrealized Gains | ||
Gross Unrealized Losses | (8,561) | (8,056) |
Fair Value | 2,496,290 | $ 2,499,805 |
Government sponsored mortgage-backed securities [Member] | ||
Available-for-sale Securities [Abstract] | ||
Amortized Cost | 5,232,599 | |
Gross Unrealized Gains | 117 | |
Gross Unrealized Losses | ||
Fair Value | $ 5,232,716 |
Investment Securities (Details
Investment Securities (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Available-for-sale Securities [Abstract] | ||
Securities Fair Value Loss Position for Less than 12 Months | $ 2,496,290 | $ 2,499,805 |
Securities Unrealized losses Loss Position, Less than 12 Months | 8,561 | 8,056 |
Securities Fair Value Loss Position for More than 12 Months | ||
Securities Unrealized Losses Loss Position, More than 12 Months | ||
Total Fair Value | 2,496,290 | 2,499,805 |
Total Unrealized Losses | 8,561 | 8,056 |
US treasury note [Member] | ||
Available-for-sale Securities [Abstract] | ||
Securities Fair Value Loss Position for Less than 12 Months | 2,496,290 | 2,499,805 |
Securities Unrealized losses Loss Position, Less than 12 Months | 8,561 | 8,056 |
Securities Fair Value Loss Position for More than 12 Months | ||
Securities Unrealized Losses Loss Position, More than 12 Months | ||
Total Fair Value | 2,496,290 | 2,499,805 |
Total Unrealized Losses | $ 8,561 | $ 8,056 |
Investment Securities (Detail25
Investment Securities (Details 2) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 2,504,851 | |
Due after three through five years, Amortized Cost | ||
Due after five through ten years, Amortized Cost | 2,649,052 | |
Due after ten years, Amortized Cost | 2,583,547 | |
Total investment securities, Amortized Cost | 7,737,450 | |
Due within one year, Fair Value | ||
Due after one through three years, Fair Value | 2,496,290 | |
Due after three through five years, Fair Value | ||
Due after five through ten years, Fair Value | 2,649,122 | |
Due after ten years, Fair Value | 2,583,594 | |
Total investment securities, Fair Value | $ 7,729,006 | $ 2,499,805 |
Investment Securities (Detail26
Investment Securities (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Investment Securities (Textual) | ||
Investment securities, fair value for continuous loss position for less than twelve months | $ 2,496,290 | $ 2,499,805 |
Securities Unrealized losses Loss Position, Less than 12 Months | 8,561 | 8,056 |
Investment securities, fair value for more than twelve months | ||
Investment securities, unrealized loss for more than twelve months |
Loans (Details)
Loans (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | $ 154,041 | $ 1,059,347 | ||
60-89 days past due | 66,202 | 409,675 | ||
90-120 days past due | 11,051 | |||
Nonaccrual | 638,205 | 304,451 | $ 331,233 | |
Total past due and nonaccrual | 869,499 | 1,773,473 | ||
Current | 54,324,117 | 58,876,585 | ||
Total loans (gross of deferred fees) | 55,193,616 | 60,650,058 | 63,525,095 | |
Deferred fees | (105,377) | (167,062) | ||
Loan loss reserve | 1,372,000 | 1,338,149 | 853,137 | $ 1,139,509 |
Total Loans, net | 53,716,239 | 59,144,847 | ||
Single and multifamily residential real estate [Member] | ||||
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | 30,706 | 442,295 | ||
60-89 days past due | 61,579 | |||
90-120 days past due | ||||
Nonaccrual | 108,951 | |||
Total past due and nonaccrual | 92,285 | 551,246 | ||
Current | 11,635,874 | 12,762,884 | ||
Total loans (gross of deferred fees) | 11,728,159 | 13,314,130 | 13,106,210 | |
Loan loss reserve | 147,846 | 235,797 | 235,797 | 265,797 |
Construction and development [Member] | ||||
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | ||||
60-89 days past due | ||||
90-120 days past due | ||||
Nonaccrual | ||||
Total past due and nonaccrual | ||||
Current | 6,787,780 | 7,913,783 | ||
Total loans (gross of deferred fees) | 6,787,780 | 7,913,783 | 8,664,401 | |
Loan loss reserve | 73,630 | 73,630 | 113,630 | 184,130 |
Commercial real estate - other [Member] | ||||
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | ||||
60-89 days past due | ||||
90-120 days past due | ||||
Nonaccrual | 195,500 | |||
Total past due and nonaccrual | 195,500 | |||
Current | 18,602,481 | 21,838,090 | ||
Total loans (gross of deferred fees) | 18,602,481 | 22,033,590 | 23,631,513 | |
Loan loss reserve | 301,402 | 330,785 | 275,785 | 439,830 |
Commercial business [Member] | ||||
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | 123,335 | 617,052 | ||
60-89 days past due | 409,675 | |||
90-120 days past due | ||||
Nonaccrual | 638,205 | |||
Total past due and nonaccrual | 761,540 | |||
Current | 12,026,811 | 14,927,379 | ||
Total loans (gross of deferred fees) | 12,788,351 | 15,954,106 | 16,311,454 | |
Loan loss reserve | 707,679 | 684,679 | 216,679 | 244,679 |
Consumer [Member] | ||||
Summary of delinquencies and nonaccruals, by portfolio class | ||||
30-59 days past due | ||||
60-89 days past due | 4,623 | |||
90-120 days past due | 11,051 | |||
Nonaccrual | ||||
Total past due and nonaccrual | 15,674 | |||
Current | 5,271,171 | 1,434,449 | ||
Total loans (gross of deferred fees) | 5,286,845 | 1,434,449 | 1,811,517 | |
Loan loss reserve | $ 141,443 | $ 13,258 | $ 11,246 | $ 5,073 |
Loans (Details 1)
Loans (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | $ 55,193,616 | $ 60,650,058 | $ 63,525,095 |
Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 11,728,159 | 13,314,130 | 13,106,210 |
Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 6,787,780 | 7,913,783 | 8,664,401 |
Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 18,602,481 | 22,033,590 | 23,631,513 |
Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 12,788,351 | 15,954,106 | 16,311,454 |
Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 5,286,845 | 1,434,449 | $ 1,811,517 |
Pass Loans [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 14,272,224 | 11,143,941 | |
Pass Loans [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 7,820,727 | 8,246,567 | |
Pass Loans [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 1,175,703 | 1,462,925 | |
Pass Loans [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Pass Loans [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Pass Loans [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 5,275,594 | 1,434,449 | |
Grade 1 - Prime [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 1 - Prime [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 1 - Prime [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 1 - Prime [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 1 - Prime [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 1 - Prime [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 2 - Good [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 3 - Acceptable [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 17,532,347 | 21,762,161 | |
Grade 3 - Acceptable [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 1,142,061 | 1,919,685 | |
Grade 3 - Acceptable [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 1,756,778 | 1,108,334 | |
Grade 3 - Acceptable [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 8,536,445 | 11,057,550 | |
Grade 3 - Acceptable [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 6,097,063 | 7,676,592 | |
Grade 3 - Acceptable [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 4 - Acceptable w/ Care [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 20,781,009 | 24,690,404 | |
Grade 4 - Acceptable w/ Care [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 2,703,791 | 2,877,013 | |
Grade 4 - Acceptable w/ Care [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 3,792,063 | 5,273,411 | |
Grade 4 - Acceptable w/ Care [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 8,550,572 | 9,232,019 | |
Grade 4 - Acceptable w/ Care [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 5,734,583 | 7,307,961 | |
Grade 4 - Acceptable w/ Care [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 5 - Special Mention [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 813,662 | 835,501 | |
Grade 5 - Special Mention [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 5 - Special Mention [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 63,236 | 69,113 | |
Grade 5 - Special Mention [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 750,426 | 766,388 | |
Grade 5 - Special Mention [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 5 - Special Mention [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 6 - Substandard [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 1,783,323 | 2,218,051 | |
Grade 6 - Substandard [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 61,580 | 270,865 | |
Grade 6 - Substandard [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 6 - Substandard [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 765,038 | 977,633 | |
Grade 6 - Substandard [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 956,705 | 969,553 | |
Grade 6 - Substandard [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 7 - Doubtful [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | 11,051 | ||
Grade 7 - Doubtful [Member] | Single and multifamily residential real estate [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 7 - Doubtful [Member] | Construction and development [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 7 - Doubtful [Member] | Commercial real estate - other [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 7 - Doubtful [Member] | Commercial business [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | |||
Grade 7 - Doubtful [Member] | Consumer [Member] | |||
Summary of management's internal credit risk grades | |||
Total loans (gross of deferred fees) | $ 11,051 |
Loans (Details 2)
Loans (Details 2) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Summary of information relative to impaired loans, by portfolio class | ||
Total, Unpaid principal balance | $ 850,636 | $ 2,218,051 |
Total, Recorded investment | 813,899 | 2,218,051 |
Total, Related allowance | 600,548 | 611,461 |
Total, Average impaired investment | 1,734,364 | 2,118,518 |
Total, Interest income | 37,948 | 110,479 |
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 | 99,794 | |
With no related allowance recorded, Recorded investment | 99,794 | |
With no related allowance recorded, Related allowance | ||
With no related allowance recorded, Average impaired investment | 106,250 | 179,235 |
With no related allowance recorded, Interest income | 3,261 | |
With related allowance recorded, Unpaid principal balance | 61,580 | 171,071 |
With related allowance recorded, Recorded investment | 61,580 | 171,071 |
With related allowance recorded, Related allowance | 3,980 | 93,471 |
With related allowance recorded, Average impaired investment | 131,256 | 201,000 |
With related allowance recorded, Interest income | 2,393 | 3,251 |
Total, Unpaid principal balance | 61,580 | 270,865 |
Total, Recorded investment | 61,580 | 270,865 |
Total, Related allowance | 3,980 | 93,471 |
Total, Average impaired investment | 237,518 | 380,235 |
Total, Interest income | 2,393 | 6,512 |
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 recorded, Related allowance | ||
With no related allowance recorded, Average impaired investment | 54,830 | 109,660 |
With no related allowance recorded, Interest income | 6,130 | |
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 | 49,070 | 98,139 |
With related allowance recorded, Interest income | ||
Total, Unpaid principal balance | ||
Total, Recorded investment | ||
Total, Related allowance | ||
Total, Average impaired investment | 103,900 | 207,799 |
Total, Interest income | 6,130 | |
Commercial real estate - other [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | 782,133 | |
With no related allowance recorded, Recorded investment | 782,133 | |
With no related allowance recorded, Related allowance | ||
With no related allowance recorded, Average impaired investment | 552,872 | 718,589 |
With no related allowance recorded, Interest income | 31,097 | 46,778 |
With related allowance recorded, Unpaid principal balance | 195,500 | |
With related allowance recorded, Recorded investment | 195,500 | |
With related allowance recorded, Related allowance | 30,500 | |
With related allowance recorded, Average impaired investment | 262,142 | 524,283 |
With related allowance recorded, Interest income | 4,458 | |
Total, Unpaid principal balance | 977,633 | |
Total, Recorded investment | 977,633 | |
Total, Related allowance | 30,500 | |
Total, Average impaired investment | 815,014 | 1,242,872 |
Total, Interest income | 35,555 | 46,778 |
Commercial business [Member] | ||
Summary of information relative to impaired loans, by portfolio class | ||
With no related allowance recorded, Unpaid principal balance | 231,448 | |
With no related allowance recorded, Recorded investment | 231,448 | |
With no related allowance recorded, Related allowance | ||
With no related allowance recorded, Average impaired investment | 104,260 | 96,283 |
With no related allowance recorded, Interest income | 4,744 | |
With related allowance recorded, Unpaid principal balance | 789,056 | 738,105 |
With related allowance recorded, Recorded investment | 752,319 | 738,105 |
With related allowance recorded, Related allowance | 596,568 | 487,490 |
With related allowance recorded, Average impaired investment | 473,672 | 191,329 |
With related allowance recorded, Interest income | 46,315 | |
Total, Unpaid principal balance | 915,945 | 969,553 |
Total, Recorded investment | 879,208 | 969,553 |
Total, Related allowance | 562,035 | 487,490 |
Total, Average impaired investment | 577,932 | 287,612 |
Total, Interest income | 51,059 | |
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 recorded, 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 3)
Loans (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Allowance for loan losses: | |||||||
Balance, beginning of period | $ 1,338,149 | $ 1,139,509 | |||||
Provision (reversal of provision) for loan losses | $ (7,159) | 179,543 | (68,000) | ||||
Loan charge-offs | (147,809) | (219,684) | |||||
Loan recoveries | 2,117 | 1,312 | |||||
Net loans charged-off | (145,692) | (218,372) | |||||
Balance, end of period | 1,372,000 | 853,137 | 1,372,000 | 853,137 | |||
Individually reviewed for impairment | $ 600,548 | $ 129,471 | |||||
Collectively reviewed for impairment | 771,452 | 723,666 | |||||
Total allowance for loan losses | 1,372,000 | 853,137 | 1,338,149 | 1,139,509 | 1,372,000 | $ 1,338,149 | 853,137 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | 850,636 | 1,424,415 | |||||
Collectively reviewed for impairment | 54,342,980 | 62,100,680 | |||||
Total loans (gross of deferred fees) | 55,193,616 | 60,650,058 | 63,525,095 | ||||
Single and multifamily residential real estate [Member] | |||||||
Allowance for loan losses: | |||||||
Balance, beginning of period | 235,797 | 265,797 | |||||
Provision (reversal of provision) for loan losses | (30,000) | ||||||
Loan charge-offs | (88,951) | ||||||
Loan recoveries | 1,000 | ||||||
Net loans charged-off | (87,951) | ||||||
Balance, end of period | 147,846 | 235,797 | 147,846 | 235,797 | |||
Individually reviewed for impairment | 3,980 | 101,283 | |||||
Collectively reviewed for impairment | 143,866 | 134,514 | |||||
Total allowance for loan losses | 147,846 | 235,797 | 235,797 | 265,797 | 147,846 | 235,797 | 235,797 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | 61,850 | 200,483 | |||||
Collectively reviewed for impairment | 11,666,579 | 12,905,727 | |||||
Total loans (gross of deferred fees) | 11,728,159 | 13,314,130 | 13,106,210 | ||||
Construction and development [Member] | |||||||
Allowance for loan losses: | |||||||
Balance, beginning of period | 73,630 | 184,130 | |||||
Provision (reversal of provision) for loan losses | (60,000) | ||||||
Loan charge-offs | (10,500) | ||||||
Loan recoveries | |||||||
Net loans charged-off | (10,500) | ||||||
Balance, end of period | 73,630 | 113,630 | 73,630 | 113,630 | |||
Individually reviewed for impairment | |||||||
Collectively reviewed for impairment | 73,630 | 113,630 | |||||
Total allowance for loan losses | 73,630 | 113,630 | 73,630 | 184,130 | 73,630 | 73,630 | 113,630 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | |||||||
Collectively reviewed for impairment | 6,787,780 | 8,664,401 | |||||
Total loans (gross of deferred fees) | 6,787,780 | 7,913,783 | 8,664,401 | ||||
Commercial real estate - other [Member] | |||||||
Allowance for loan losses: | |||||||
Balance, beginning of period | 330,785 | 439,830 | |||||
Provision (reversal of provision) for loan losses | 45,000 | ||||||
Loan charge-offs | (30,500) | (209,045) | |||||
Loan recoveries | 1,117 | ||||||
Net loans charged-off | (29,383) | (209,045) | |||||
Balance, end of period | 301,402 | 275,785 | 301,402 | 275,785 | |||
Individually reviewed for impairment | 28,188 | ||||||
Collectively reviewed for impairment | 301,402 | 247,597 | |||||
Total allowance for loan losses | 301,402 | 275,785 | 330,785 | 439,830 | 301,402 | 330,785 | 275,785 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | 981,286 | ||||||
Collectively reviewed for impairment | 18,602,481 | 22,650,227 | |||||
Total loans (gross of deferred fees) | 18,602,481 | 22,033,590 | 23,631,513 | ||||
Commercial business [Member] | |||||||
Allowance for loan losses: | |||||||
Balance, beginning of period | 684,679 | 244,679 | |||||
Provision (reversal of provision) for loan losses | 23,000 | (28,000) | |||||
Loan charge-offs | |||||||
Loan recoveries | |||||||
Net loans charged-off | |||||||
Balance, end of period | 707,679 | 216,679 | 707,679 | 216,679 | |||
Individually reviewed for impairment | 596,568 | ||||||
Collectively reviewed for impairment | 111,111 | 216,679 | |||||
Total allowance for loan losses | 707,679 | 216,679 | 684,679 | 244,679 | 707,679 | 684,679 | 216,679 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | 789,056 | 242,646 | |||||
Collectively reviewed for impairment | 11,999,295 | 16,068,808 | |||||
Total loans (gross of deferred fees) | 12,788,351 | 15,954,106 | 16,311,454 | ||||
Consumer [Member] | |||||||
Allowance for loan losses: | |||||||
Balance, beginning of period | 13,258 | 5,073 | |||||
Provision (reversal of provision) for loan losses | 156,543 | 5,000 | |||||
Loan charge-offs | (28,358) | (139) | |||||
Loan recoveries | 1,312 | ||||||
Net loans charged-off | (28,358) | 1,173 | |||||
Balance, end of period | 141,443 | 11,246 | 141,443 | 11,246 | |||
Individually reviewed for impairment | |||||||
Collectively reviewed for impairment | 141,443 | 11,246 | |||||
Total allowance for loan losses | $ 141,443 | $ 11,246 | $ 13,258 | $ 5,073 | 141,443 | 13,258 | 11,246 |
Gross loans, end of period: | |||||||
Individually reviewed for impairment | |||||||
Collectively reviewed for impairment | 5,286,845 | 1,811,517 | |||||
Total loans (gross of deferred fees) | $ 5,286,845 | $ 1,434,449 | $ 1,811,517 |
Loans (Details 4)
Loans (Details 4) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Loans [Abstract] | |||
Nonaccrual loans | $ 638,205 | $ 304,451 | $ 331,233 |
Average gross loans | $ 60,468,110 | $ 64,628,769 | |
Net loans charged-off as a percentage of average gross loans | 0.24% | 0.34% | |
Allowance for loan losses as a percentage of total gross loans | 2.49% | 1.34% | |
Allowance for loan losses as a percentage of non-accrual loans | 214.98% | 257.56% |
Loans (Details 5)
Loans (Details 5) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | $ 11,536,722 | $ 14,321,391 | |
Loans, After one but within five years | 36,312,044 | 38,055,501 | |
Loan, After five years | 7,344,850 | 8,273,166 | |
Total loans | 55,193,616 | 60,650,058 | $ 63,525,095 |
Loans maturing after one year with: | |||
Fixed interest rates | 19,326,434 | 16,767,328 | |
Floating interest rates | 24,330,460 | 29,561,339 | |
Single and multifamily residential real estate [Member] | |||
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | 1,309,158 | 1,445,328 | |
Loans, After one but within five years | 6,316,493 | 6,710,484 | |
Loan, After five years | 4,102,508 | 5,158,318 | |
Total loans | 11,728,159 | 13,314,130 | 13,106,210 |
Construction and development [Member] | |||
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | 2,082,172 | 2,987,321 | |
Loans, After one but within five years | 3,997,008 | 4,829,172 | |
Loan, After five years | 708,600 | 97,290 | |
Total loans | 6,787,780 | 7,913,783 | 8,664,401 |
Commercial real estate - other [Member] | |||
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | 3,364,591 | 3,144,814 | |
Loans, After one but within five years | 13,353,636 | 16,958,206 | |
Loan, After five years | 1,884,254 | 1,930,570 | |
Total loans | 18,602,481 | 22,033,590 | 23,631,513 |
Commercial business [Member] | |||
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | 4,460,366 | 6,203,428 | |
Loans, After one but within five years | 7,715,910 | 8,736,000 | |
Loan, After five years | 612,075 | 1,014,678 | |
Total loans | 12,788,351 | 15,954,106 | 16,311,454 |
Consumer [Member] | |||
Loan maturity distribution by type and related interest rate | |||
Loans, One year or less | 320,435 | 540,500 | |
Loans, After one but within five years | 4,928,997 | 821,639 | |
Loan, After five years | 37,413 | 72,310 | |
Total loans | $ 5,286,845 | $ 1,434,449 | $ 1,811,517 |
Loans (Details Textual)
Loans (Details Textual) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Loans (Textual) | |||
Commercial real estate loans | $ 18,600,000 | ||
Commercial development loans | 6,800,000 | ||
Commercial business loans | 12,800,000 | ||
Residential real estate and home equity loans | 11,700,000 | ||
Consumer loans | 5,300,000 | ||
Unsecured consumer loans | 4,800,000 | ||
Loans transferred to other real estate owned and repossessed assets | 165,000 | $ 1,257,289 | $ 165,000 |
Nonaccrual loans | 638,205 | 331,233 | $ 304,451 |
Foregone interest income related to nonaccrual loans | $ 34,811 | 55,231 | |
Percentage of credit grade "pass" for loan portfolio | 95.00% | 95.00% | |
Total gross loans | $ 55,193,616 | 63,525,095 | $ 60,650,058 |
Impaired loans decreased | 80.5 | 1,400,000 | |
Loan balance reductions through pay downs | $ 119,000 | $ 45,000 | |
Percentage of increase decrease in reserves | 1.42% | 1.22% | |
Repaid loan amount | $ 100,000 | ||
Impaired loans | 1,800,000 | ||
Loans amount | 813,662 | $ 835,501 | |
Repayments of debt restructuring | 75,000 | ||
Interest income on impaired loans | 37,948 | ||
Commercial business [Member] | |||
Loans (Textual) | |||
Nonaccrual loans | 638,205 | ||
Total gross loans | 12,788,351 | $ 16,311,454 | 15,954,106 |
Outstanding principal balance | 789,056 | 738,105 | |
Recorded investment | 752,319 | 738,105 | |
Special Mention [Member] | |||
Loans (Textual) | |||
Total gross loans | 813,662 | 835,501 | |
Loans amount | 814,000 | ||
Special Mention [Member] | Commercial business [Member] | |||
Loans (Textual) | |||
Total gross loans | |||
Substandard [Member] | |||
Loans (Textual) | |||
Total gross loans | 1,783,323 | 2,218,051 | |
Substandard [Member] | Commercial business [Member] | |||
Loans (Textual) | |||
Total gross loans | $ 956,705 | $ 969,553 |
Fair Value (Details)
Fair Value (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Schedule of assets measured at fair value on a non-recurring basis | ||
Other real estate owned and repossessed assets, Fair Value | $ 1,988,900 | $ 2,222,667 |
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, Fair Value | $ 1,988,900 | $ 2,222,667 |
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, Fair Value | $ 250,088 | $ 1,606,590 |
Valuation Technique | Internal assessment based onexternal third party appraisedvalue | Internal assessment based on external third party appraised value |
Significant Unobservable Inputs | Adjustments to estimatedvalue based on recent salesof comparable collateral | Adjustments to estimated value based on recent sales of comparable collateral |
Fair Value (Details 1)
Fair Value (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Financial Assets: | ||
Cash and due from banks | $ 4,244,259 | $ 4,631,727 |
Interest bearing deposits in other institutions | 8,750,000 | 10,500,000 |
Federal funds sold | 4,277,000 | 6,143,000 |
Investment securities available for sale | 7,729,006 | 2,499,805 |
Non-marketable equity securities | 483,450 | 380,050 |
Loans, net | 53,716,239 | 59,144,847 |
Bank owned life insurance | 2,603,392 | 2,542,910 |
Financial Liabilities: | ||
Deposits | 72,895,493 | 79,707,648 |
Securities sold under agreements to repurchase | 5,979 | 113,598 |
Carrying Amount [Member] | ||
Financial Assets: | ||
Cash and due from banks | 4,244,259 | 4,631,727 |
Interest bearing deposits in other institutions | 8,750,000 | 10,500,000 |
Federal funds sold | 4,277,000 | 6,143,000 |
Investment securities available for sale | 7,729,006 | 2,499,805 |
Non-marketable equity securities | 483,450 | 380,050 |
Loans, net | 53,716,239 | 59,144,847 |
Bank owned life insurance | 2,603,392 | 2,542,910 |
Financial Liabilities: | ||
Federal Home Loan Bank advances | 4,000,000 | |
Deposits | 72,895,493 | 79,707,648 |
Securities sold under agreements to repurchase | 5,979 | 113,598 |
Fair Value [Member] | ||
Financial Assets: | ||
Cash and due from banks | 4,244,259 | 4,631,727 |
Interest bearing deposits in other institutions | 8,750,000 | 10,500,000 |
Federal funds sold | 4,277,000 | 6,143,000 |
Investment securities available for sale | 7,729,006 | 2,499,805 |
Non-marketable equity securities | 483,450 | 380,050 |
Loans, net | 53,606,063 | 59,084,364 |
Bank owned life insurance | 2,603,392 | 2,542,910 |
Financial Liabilities: | ||
Federal Home Loan Bank advances | 4,001,933 | |
Deposits | 72,684,063 | 79,598,034 |
Securities sold under agreements to repurchase | 5,979 | 113,598 |
Fair Value [Member] | Level 1 [Member] | ||
Financial Assets: | ||
Cash and due from banks | 4,244,259 | 4,631,727 |
Interest bearing deposits in other institutions | ||
Federal funds sold | 4,277,000 | 6,143,000 |
Investment securities available for sale | ||
Non-marketable equity securities | ||
Loans, net | ||
Bank owned life insurance | ||
Financial Liabilities: | ||
Federal Home Loan Bank advances | ||
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 | 8,750,000 | 10,500,000 |
Federal funds sold | ||
Investment securities available for sale | 7,729,006 | 2,499,805 |
Non-marketable equity securities | 483,450 | 380,050 |
Loans, net | ||
Bank owned life insurance | 2,603,392 | 2,542,910 |
Financial Liabilities: | ||
Federal Home Loan Bank advances | ||
Deposits | 72,684,063 | 79,598,034 |
Securities sold under agreements to repurchase | 5,979 | 113,598 |
Fair Value [Member] | Level 3 [Member] | ||
Financial Assets: | ||
Cash and due from banks | ||
Interest bearing deposits in other institutions | ||
Federal funds sold | ||
Investment securities available for sale | ||
Non-marketable equity securities | 53,606,063 | |
Loans, net | 59,084,364 | |
Bank owned life insurance | ||
Financial Liabilities: | ||
Federal Home Loan Bank advances | 4,001,933 | |
Deposits | ||
Securities sold under agreements to repurchase |
Fair Value (Details Textual)
Fair Value (Details Textual) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value (Textual) | ||
Investment securities available for sale | $ 7,729,006 | $ 2,499,805 |
Net of specific reserves of impaired loans carried at fair value | 250,088 | 1,600,000 |
Other real estate owned and repossessed assets | $ 1,988,900 | $ 2,222,667 |
Stock Compensation Plans (Detai
Stock Compensation Plans (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Jul. 26, 2005 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Feb. 28, 2013 | |
Stock Compensation Plans (Textual) | |||||
Stock options outstanding | 3,012,030 | 3,064,380 | |||
Weighted average exercise price | $ 0.94 | $ 1.04 | |||
Options vested | 3,012,030 | ||||
Compensation expense | $ 10,126 | ||||
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 | 260,626 | ||||
2013 Incentive Plan [Member] | |||||
Stock Compensation Plans (Textual) | |||||
Number of shares reserved for issuance of stock options | 2,466,720 |
Business Segments (Details)
Business Segments (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($)Segment | |
Business Segments (Textual) | |||||
Net income (loss) | $ (357,106) | $ (361,027) | $ (1,212,543) | $ (1,446,621) | |
Other real estate owned | $ 1,988,900 | $ 1,988,900 | $ 2,222,667 | ||
Number of business segments | Segment | 4 | ||||
Community Banking [Member] | |||||
Business Segments (Textual) | |||||
Net income (loss) | 149,529 | 428,034 | |||
Transaction Services [Member] | |||||
Business Segments (Textual) | |||||
Net income (loss) | 27,364 | 204,554 | |||
Asset Management [Member] | |||||
Business Segments (Textual) | |||||
Net income (loss) | 43,664 | 73,446 | |||
Parent Only [Member] | |||||
Business Segments (Textual) | |||||
Net income (loss) | 227,798 | 740,587 | |||
Holding Company [Member] | |||||
Business Segments (Textual) | |||||
Other real estate owned | 293,142 | 293,142 | |||
Accrued expenses and other liabilities | $ 458,308 | $ 458,308 |
Bank Owned Life Insurance and39
Bank Owned Life Insurance and Pre-Retirement Benefit Plan (Details) | Sep. 30, 2016USD ($)InsurancePolicies |
Bank Owned Life Insurance and Pre-Retirement Benefit Plan (Textual) | |
Number of life insurance policies | InsurancePolicies | 2 |
Life insurance policies, aggregate death benefits | $ | $ 2,500,000 |