Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 10, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | MACKINAC FINANCIAL CORP /MI/ | |
Entity Central Index Key | 36,506 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 6,217,620 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
ASSETS | |||
Cash and due from banks | $ 28,581 | $ 21,947 | $ 22,399 |
Federal funds sold | 10,000 | 2 | |
Cash and cash equivalents | 38,581 | 21,947 | 22,401 |
Interest-bearing deposits in other financial institutions | 5,089 | 5,797 | 235 |
Securities available for sale | 54,432 | 65,832 | 48,742 |
Federal Home Loan Bank stock | 2,169 | 2,973 | 3,060 |
Loans: | |||
Commercial | 446,327 | 433,566 | 383,759 |
Mortgage | 156,764 | 148,984 | 119,039 |
Consumer | 16,815 | 18,385 | 15,575 |
Total Loans | 619,906 | 600,935 | 518,373 |
Allowance for loan losses | (5,779) | (5,140) | (5,279) |
Net loans | 614,127 | 595,795 | 513,094 |
Premises and equipment | 12,670 | 12,658 | 9,821 |
Other real estate held for sale | 2,296 | 3,010 | 1,843 |
Deferred tax asset | 9,326 | 11,498 | 8,681 |
Deposit based intangibles | 1,106 | 1,196 | |
Goodwill | 3,805 | 3,805 | |
Other assets | 11,371 | 19,274 | 6,066 |
TOTAL ASSETS | 754,972 | 743,785 | 613,943 |
Deposits: | |||
Noninterest bearing deposits | 114,769 | 95,498 | 84,073 |
NOW, money market, interest checking | 213,737 | 212,565 | 173,793 |
Savings | 31,742 | 28,015 | 15,263 |
CDs less than $100,000 | 129,715 | 134,951 | 130,821 |
CDs more than $100,000 | 27,272 | 30,316 | 24,891 |
Brokered | 105,099 | 105,628 | 62,365 |
Total deposits | 622,334 | 606,973 | 491,206 |
Federal funds purchased | 7,500 | ||
Borrowings | 49,593 | 49,846 | 44,909 |
Other liabilities | 6,954 | 12,970 | 3,196 |
Total liabilities | $ 678,881 | $ 669,789 | $ 546,811 |
SHAREHOLDERS' EQUITY: | |||
Preferred stock - No par value: Authorized - 500,000 shares, None issued and outstanding | |||
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares, Issued and outstanding - 6,249,595; 6,266,756 and 5,564,815 respectively | $ 61,320 | $ 61,679 | $ 53,800 |
Retained earnings | 14,229 | 11,804 | 12,923 |
Accumulated other comprehensive income | |||
Unrealized gains(losses) on available for sale securities | 591 | 562 | 409 |
Minimum pension liability | (49) | (49) | |
Total shareholders' equity | 76,091 | 73,996 | 67,132 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 754,972 | $ 743,785 | $ 613,943 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
Preferred stock, par value | $ 0 | $ 0 | $ 0 |
Preferred stock, Authorized shares | 500,000 | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0 | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 6,249,595 | 6,266,756 | 5,564,815 |
Common stock, Shares outstanding | 6,249,595 | 6,266,756 | 5,564,815 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Interest and fees on loans: | ||||
Taxable | $ 8,019 | $ 6,651 | $ 23,986 | $ 19,305 |
Tax-exempt | 3 | 4 | 9 | 27 |
Interest on securities: | ||||
Taxable | 282 | 230 | 845 | 711 |
Tax-exempt | 35 | 14 | 129 | 41 |
Other interest income | 46 | 34 | 148 | 114 |
Total interest income | 8,385 | 6,933 | 25,117 | 20,198 |
INTEREST EXPENSE: | ||||
Deposits | 843 | 813 | 2,467 | 2,435 |
Borrowings | 307 | 234 | 895 | 625 |
Total interest expense | 1,150 | 1,047 | 3,362 | 3,060 |
Net interest income | 7,235 | 5,886 | 21,755 | 17,138 |
Provision for loan losses | 350 | 187 | 855 | 561 |
Net interest income after provision for loan losses | 6,885 | 5,699 | 20,900 | 16,577 |
OTHER INCOME: | ||||
Deposit service fees | 196 | 168 | 624 | 517 |
Income from loans sold on the secondary market | 301 | 212 | 750 | 455 |
SBA/USDA loan sale gains | 40 | 440 | 548 | |
Mortgage servicing income | 9 | 313 | 239 | 415 |
Net security gains | 133 | 402 | ||
Other | 94 | 75 | 292 | 174 |
Total other income | 773 | 768 | 2,747 | 2,109 |
OTHER EXPENSE: | ||||
Salaries and employee benefits | 3,139 | 2,481 | 9,102 | 7,545 |
Occupancy | 602 | 511 | 1,804 | 1,595 |
Furniture and equipment | 370 | 305 | 1,159 | 927 |
Data processing | 327 | 288 | 1,041 | 862 |
Advertising | 153 | 114 | 399 | 344 |
Professional service fees | 348 | 276 | 928 | 883 |
Loan and deposit | 136 | 144 | 399 | 306 |
Writedowns and losses on other real estate held for sale | 104 | 176 | 141 | 190 |
FDIC insurance assessment | 135 | 92 | 383 | 267 |
Telephone | 108 | 84 | 346 | 248 |
Other | 692 | 655 | 1,868 | 1,964 |
Total other expenses | 6,114 | 5,126 | 17,570 | 15,131 |
Income before provision for income taxes | 1,544 | 1,341 | 6,077 | 3,555 |
Provision for income taxes | 526 | 455 | 2,074 | 1,203 |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 1,018 | $ 886 | $ 4,003 | $ 2,352 |
INCOME PER COMMON SHARE: | ||||
Basic (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.64 | $ 0.43 |
Diluted (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.64 | $ 0.42 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME | ||||
Net income | $ 1,018 | $ 886 | $ 4,003 | $ 2,352 |
Other comprehensive income change in securities available for sale: | ||||
Unrealized gains (losses) arising during the period | 297 | (53) | 370 | 292 |
Reclassification adjustment for gains included in net income | (133) | (402) | ||
Tax effect | (56) | 13 | 61 | (99) |
Other comprehensive income (loss) | 108 | (40) | 29 | 193 |
Total comprehensive income | $ 1,126 | $ 846 | $ 4,032 | $ 2,545 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Shares of Common Stock | Common Stock and Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Balance, beginning of period at Dec. 31, 2013 | $ 53,621 | $ 11,412 | $ 216 | $ 65,249 | |
Balance (in shares) at Dec. 31, 2013 | 5,541,390 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income for period | 2,352 | 2,352 | |||
Other comprehensive income | |||||
Net unrealized gain (loss) on securities available for sale | 193 | 193 | |||
Total comprehensive income | 2,352 | 193 | 2,545 | ||
Stock compensation | 321 | 321 | |||
Restricted stock award vesting (in shares) | 37,125 | ||||
Repurchase of common stock | (143) | (143) | |||
Repurchase of common stock (in shares) | (13,700) | ||||
Dividend on common stock | (840) | (840) | |||
Balance, end of period at Sep. 30, 2014 | 53,799 | 12,924 | 409 | 67,132 | |
Balance (in shares) at Sep. 30, 2014 | 5,564,815 | ||||
Balance, beginning of period at Dec. 31, 2013 | 53,621 | 11,412 | 216 | 65,249 | |
Balance (in shares) at Dec. 31, 2013 | 5,541,390 | ||||
Other comprehensive income | |||||
Repurchase of common stock (in shares) | (13,700) | ||||
Balance, end of period at Dec. 31, 2014 | 61,679 | 11,804 | 513 | 73,996 | |
Balance (in shares) at Dec. 31, 2014 | 6,266,756 | ||||
Balance, beginning of period at Jun. 30, 2014 | 53,703 | 12,325 | 449 | 66,477 | |
Balance (in shares) at Jun. 30, 2014 | 5,527,690 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income for period | 886 | 886 | |||
Other comprehensive income | |||||
Net unrealized gain (loss) on securities available for sale | (40) | (40) | |||
Total comprehensive income | 886 | (40) | 846 | ||
Stock compensation | 96 | 96 | |||
Restricted stock award vesting (in shares) | 37,125 | ||||
Dividend on common stock | (287) | (287) | |||
Balance, end of period at Sep. 30, 2014 | 53,799 | 12,924 | 409 | 67,132 | |
Balance (in shares) at Sep. 30, 2014 | 5,564,815 | ||||
Balance, beginning of period at Dec. 31, 2014 | 61,679 | 11,804 | 513 | 73,996 | |
Balance (in shares) at Dec. 31, 2014 | 6,266,756 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income for period | 4,003 | 4,003 | |||
Other comprehensive income | |||||
Net unrealized gain (loss) on securities available for sale | 29 | 29 | |||
Total comprehensive income | 4,003 | 29 | 4,032 | ||
Stock compensation | 432 | 432 | |||
Restricted stock award vesting (in shares) | 53,319 | ||||
Repurchase of common stock | (791) | (791) | |||
Repurchase of common stock (in shares) | (70,480) | ||||
Dividend on common stock | (1,578) | (1,578) | |||
Balance, end of period at Sep. 30, 2015 | 61,320 | 14,229 | 542 | 76,091 | |
Balance (in shares) at Sep. 30, 2015 | 6,249,595 | ||||
Balance, beginning of period at Jun. 30, 2015 | 61,461 | 13,851 | 434 | 75,746 | |
Balance (in shares) at Jun. 30, 2015 | 6,239,250 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income for period | 1,018 | 1,018 | |||
Other comprehensive income | |||||
Net unrealized gain (loss) on securities available for sale | 108 | 108 | |||
Total comprehensive income | 1,018 | 108 | 1,126 | ||
Stock compensation | 144 | 144 | |||
Restricted stock award vesting (in shares) | 37,125 | ||||
Repurchase of common stock | (285) | (285) | |||
Repurchase of common stock (in shares) | (26,780) | ||||
Dividend on common stock | (640) | (640) | |||
Balance, end of period at Sep. 30, 2015 | $ 61,320 | $ 14,229 | $ 542 | $ 76,091 | |
Balance (in shares) at Sep. 30, 2015 | 6,249,595 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net income | $ 4,003 | $ 2,352 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,265 | 1,115 |
Provision for loan losses | 855 | 561 |
Deferred income taxes, net | 2,074 | 1,203 |
(Gain) on sales/calls of securities | (402) | |
(Gain) on sale of loans sold in the secondary market | (604) | (358) |
Origination of loans held for sale in the secondary market | (36,827) | (21,395) |
Proceeds from sale of loans in the secondary market | 37,431 | 21,753 |
Loss on sale of premises, equipment, and other real estate held for sale | 6 | 77 |
Writedown of other real estate held for sale | 135 | 142 |
Stock compensation | 432 | 321 |
Change in other assets | 7,993 | (141) |
Change in other liabilities | (6,016) | (204) |
Net cash provided by operating activities | 10,345 | 5,426 |
Cash Flows from Investing Activities: | ||
Net (increase) in loans | (19,185) | (35,022) |
Net decrease (increase) in interest bearing deposits in other financial institutions | 708 | (225) |
Purchase of securities available for sale | (16,390) | (8,257) |
Proceeds from maturities, sales, calls or paydowns of securities available for sale | 27,546 | 4,059 |
Proceeds from FHLBI repurchases of excess stock | 804 | |
Capital expenditures | (1,123) | (1,156) |
Proceeds from sale of premises, equipment, and other real estate | 1,190 | 876 |
Net cash (used in) investing activities | (6,450) | (39,725) |
Cash Flows from Financing Activities: | ||
Net increase in deposits | 15,361 | 24,907 |
Increase in federal funds purchased | 7,500 | |
Net activity on lines of credit | 121 | 7,330 |
Net (decrease) in borrowings | (374) | (273) |
Repurchase of common stock | (791) | (143) |
Dividend on common stock | (1,578) | (840) |
Net cash provided by financing activities | 12,739 | 38,481 |
Net increase in cash and cash equivalents | 16,634 | 4,182 |
Cash and cash equivalents at beginning of period | 21,947 | 18,219 |
Cash and cash equivalents at end of period | 38,581 | 22,401 |
Cash paid during the year for: | ||
Interest | 3,345 | 3,058 |
Income taxes | 150 | 75 |
Noncash Investing and Financing Activities: | ||
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale | $ 674 | $ 488 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements of Mackinac Financial Corporation (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The unaudited consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. In order to properly reflect some categories of other income and other expenses, reclassifications of expense and income items have been made to prior period numbers. The “net” other income and other expenses was not changed due to these reclassifications. The preparation of 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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. 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, the valuation of investment securities, the valuation of foreclosed real estate, deferred tax assets, and mortgage servicing rights. Acquired Loans Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected on pools of loans sharing common risk characteristics, which are treated in the aggregate when applying various valuation techniques. Management evaluates at each balance sheet date whether the present value of our pools of loans determined using the effective interest rates has decreased significantly and if so, recognizes a provision for loan loss in our consolidated statement of income. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life. Performing acquired loans are accounted for under Financial Accounting Standards Board (“FASB”) Topic 310-20, Receivables — Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans. Allowance for Loan Losses The allowance for loan losses includes specific allowances related to commercial loans, when they have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. The Corporation continues to maintain a general allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for possible loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the Corporation’s allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability. In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date. Stock Compensation Plans On May 22, 2012, the Company’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock units (“RSUs”), or stock appreciation rights. The aggregate number of shares of the Company’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. Awards are made at the discretion of management. Compensation cost equal to the fair value of the award is recognized over the vesting period. The Corporation, in August 2012, March 2014 and March 2015, granted RSUs to members of the Board of Directors and Management. In August 2012, 148,500 RSUs were granted at a market value of $7.91 and will vest equally over a four year term. In exchange for the grant of these RSUs various previously issued stock option awards were surrendered. In March 2014, 52,774 RSUs were granted at a market value of $12.95, also vesting equally over a four year term. In March 2015, 37,730 RSUs were granted at a market value of $11.15, also vesting over a four year term. The RSUs were awarded at no cost to the employee. Compensation cost to be recognized over the four year vesting periods, is $1.175 million, $.683 million and $.421 million, respectively. On August 31, 2013, 2014 and 2015, the Corporation issued 37,125 shares of its common stock for vested RSUs, in each year. In March 2015, the Corporation issued 13,194 shares of its common stock for vested RSUs. In May 2015, the Corporation granted 3,000 shares under the Incentive Compensation Plan, which were immediately vested and issued. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The guidance is effective January 1, 2018 and early adoption is permitted only as of January 1, 2017. The company is currently evaluating the impact of the new guidance and the method of adoption in the consolidated financial results. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 3. EARNINGS PER SHARE Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options were exercised and stock awards were fully vested and resulted in the issuance of common stock that then shared in our earnings, is computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, after giving effect for dilutive shares issued. The following shows the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (dollars in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Numerator): Net income $ $ $ $ (Denominator): Weighted average shares outstanding - basic Effect of dilutive stock options and vesting of restricted stock units Weighted average shares outstanding - diluted Income per common share Basic $ .16 $ .16 $ .64 $ .43 Diluted $ .16 $ .16 $ .64 $ .42 |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 9 Months Ended |
Sep. 30, 2015 | |
INVESTMENT SECURITIES | |
INVESTMENT SECURITIES | 4. INVESTMENT SECURITIES The amortized cost and estimated fair value of investment securities available for sale as of September 30, 2015, December 31, 2014 and September 30, 2014 are as follows (dollars in thousands): Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value September 30, 2015 US Agencies - MBS $ $ $ ) $ US Agencies — Corporate Bonds ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ December 31, 2014 US Treasury $ $ $ ) $ US Agencies ) Corporate Bonds — US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ September 30, 2014 US Agencies - MBS $ $ $ — $ US Agencies ) Corporate Bonds — Obligations of states and political subdivisions — Other — — Total securities available for sale $ $ $ ) $ The Corporation has evaluated gross unrealized losses that exist within the portfolio and considers them temporary in nature. The Corporation has both the ability and the intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses. The amortized cost and estimated fair value of investment securities pledged to secure FHLB borrowings and customer relationships were $5.394 million and $5.460 million, respectively, at September 30, 2015. |
LOANS
LOANS | 9 Months Ended |
Sep. 30, 2015 | |
LOANS | |
LOANS | 5. LOANS The composition of loans is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Commercial real estate $ $ $ Commercial, financial, and agricultural One to four family residential real estate Construction : Consumer Commerical Consumer Total loans $ $ $ The Corporation completed the acquisition of Peninsula Financial Corporation (“PFC”) on December 5, 2014. The acquired loans were divided into loans with evidence of credit quality deterioration, which are accounted for under ASC 310-30 (“acquired impaired”) and loans that do not meet that criteria, which are accounted for under ASC 310-20 (“acquired nonimpaired”). The acquired impaired loans totaled $10.312 million. The Corporation recorded all acquired loans at fair value taking into account a number of factors, including remaining life, estimated loss, estimated value of the underlying collateral and net present values of cash flows. In the first nine months of 2015, the Corporation had positive resolution of one acquired nonperforming loan which resulted in the recognition of approximately $.429 million of the accretable interest. The table below details the acquired portfolio at September 30, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ $ $ Nonaccretable difference ) — ) Expected cash flows Accretable yield ) ) ) Carrying balance at September 30, 2015 $ $ $ The table below presents a rollforward of the accretable yield on acquired loans for the nine months ended September 30, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Balance, December 31, 2014 $ $ $ Accretion ) ) ) Reclassification from nonaccretable difference — Balance at September 30, 2015 $ $ $ An analysis of the allowance for loan losses for nine months ended September 30, 2015, the year ended December 31, 2014 and the nine months ended September 30, 2014 is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Balance at beginning of period $ $ $ Loans charged off ) ) ) Recoveries on loans previously charged off Provision Balance at end of period $ $ $ In the first nine months of 2015, net charge-offs were $.216 million, or .05% of average loans, compared to net recoveries of $.057 million, in the same period in 2014. In the first nine months of 2015, the Corporation recorded a provision for loan loss of $.855 million compared to $.561 million in the first nine months of 2014. The Corporation’s allowance for loan loss reserve policy calls for a measurement of the adequacy of the reserve at each quarter end. This process includes an analysis of the loan portfolio to take into account increases in loans outstanding and portfolio composition, historical loss rates, and specific reserve requirements of nonperforming loans. A breakdown of the allowance for loan losses and recorded balances in loans at September 30, 2015 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Three Months Ended September 30, 2015 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — — — Provision ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Nine Months Ended September 30, 2015 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) — ) Ending balance ALLR $ $ $ $ $ $ $ $ At September 30,2015 Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Acquired with deteriorated credit quality — — — — — — — — Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Acquired with deteriorated credit quality — — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans as of and for the twelve months ended December 31, 2014 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Acquired with deteriorated credit quality — — — — — — — — Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Acquired with deteriorated credit quality — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at September 30, 2014 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Three Months Ended September 30, 2014 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Nine Months Ended September 30, 2014 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) ) ) ) Ending balance ALLR $ $ $ $ $ $ $ $ At September 30,2014 Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. As part of the management of the loan portfolio, risk ratings are assigned to all commercial loans. Through the loan review process, ratings are modified as believed to be appropriate to reflect changes in the credit. Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating to each loan at the time of origination and review loans on a regular basis to determine each loan’s credit risk rating on a scale of 1 through 8, with higher scores indicating higher risk. The credit risk rating structure used is shown below. In the context of the credit risk rating structure, the term Classified is defined as a problem loan which may or may not be in a nonaccrual status, dependent upon current payment status and collectability. Strong (1) Borrower is not vulnerable to sudden economic or technological changes. They have “strong” balance sheets and are within an industry that is very typical for our markets or type of lending culture. Borrowers also have “strong” financial and cash flow performance and excellent collateral (low loan to value or readily available to liquidate collateral) in conjunction with an impeccable repayment history. Good (2) Borrower shows limited vulnerability to sudden economic change. These borrowers have “above average” financial and cash flow performance and a very good repayment history. The balance sheet of the company is also very good as compared to peer and the company is in an industry that is familiar to our markets or our type of lending. The collateral securing the deal is also very good in terms of its type, loan to value, etc. Average (3) Borrower is typically a well-seasoned business, however may be susceptible to unfavorable changes in the economy, and could be somewhat affected by seasonal factors. The borrowers within this category exhibit financial and cash flow performance that appear “average” to “slightly above average” when compared to peer standards and they show an adequate payment history. Collateral securing this type of credit is good, exhibiting above average loan to values, etc. Acceptable/Acceptable Watch (4) A borrower within this category exhibits financial and cash flow performance that appear adequate and satisfactory when compared to peer standards and they show a satisfactory payment history. The collateral securing the request is within supervisory limits and overall is acceptable. Borrowers rated acceptable could also be newer businesses that are typically susceptible to unfavorable changes in the economy, and more than likely could be affected by seasonal factors. Special Mention (5) The borrower may have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Examples of this type of credit include a start-up company fully based on projections, a documentation issue that needs to be corrected or a general market condition that the borrower is working through to get corrected. Substandard (6) Substandard loans are classified assets exhibiting a number of well-defined weaknesses that jeopardize normal repayment. The assets are no longer adequately protected due to declining net worth, lack of earning capacity, or insufficient collateral offering the distinct possibility of the loss of a portion of the loan principal. Loans classified as substandard clearly represent troubled and deteriorating credit situations requiring constant supervision. Doubtful (7) Loans in this category exhibit the same, if not more pronounced weaknesses used to describe the substandard credit. Loans are frozen with collection improbable. Such loans are not yet rated as Charge-off because certain actions may yet occur which would salvage the loan. Charge-off/Loss (8) Loans in this category are largely uncollectible and should be charged against the loan loss reserve immediately. General Reserves: For loans with a credit risk rating of 5 or better and any loans with a risk rating of 6 or 7 with no specific reserve, reserves are established based on the type of loan collateral, if any, and the assigned credit risk rating. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogenous loans based on historical loss experience, and consideration of current environmental factors and economic trends, all of which may be susceptible to significant change. Using a historical average loss by loan type as a base, each loan graded as higher risk is assigned a specific percentage. The residential real estate and consumer loan portfolios are assigned a loss percentage as a homogenous group. If, however, on an individual loan the projected loss based on collateral value and payment histories are in excess of the computed allowance, the allocation is increased for the higher anticipated loss. These computations provide the basis for the allowance for loan losses as recorded by the Corporation. Commercial construction loans in the amount of $2.447 million, $3.251 million and $2.883 million for the periods ended September 30, 2015, December 31, 2014 and September 30, 2014, respectively did not receive a specific risk rating. These amounts represent loans made for land development and unimproved land purchases. Below is a breakdown of loans by risk category as of September 30, 2015 (dollars in thousands): (1) Excellent (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — One to four family residential real estate — — Consumer construction — — — — — — — Consumer — — — — Total loans $ $ $ $ $ — $ $ — $ $ Below is a breakdown of loans by risk category as of December 31, 2014 (dollars in thousands): (1) Strong (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — One-to-four family residential real estate — — Consumer construction — — — — — — — Consumer — — — Total loans $ $ $ $ $ — $ $ — $ $ Below is a breakdown of loans by risk category as of September 30, 2014 (dollars in thousands): (1) Excellent (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — One to four family residential real estate — — — Consumer construction — — — — — — — Consumer — — — — — Total loans $ $ $ $ $ $ $ — $ $ Impaired Loans Nonperforming loans are those which are contractually past due 90 days or more as to interest or principal payments, on nonaccrual status, or loans, the terms of which have been renegotiated to provide a reduction or deferral on interest or principal. Interest income recorded during impairment for the three and nine months ended September 30, 2015 was $.076 million and $.704 million, respectively. Additional interest income that would have been recognized during these periods was $.140 million and $.971 million, respectively. For the three and nine months ended September 30, 2014, the amounts that would have been recognized were $.040 million and $.093 million, respectively. The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans are considered impaired when, based on current information and events, it is probable the Corporation will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loans basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. In determining the estimated fair value of purchased loans, management considers a number of factors including the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, net present value of cash flows expected to be received, among others. Purchased loans are accounted for in accordance with guidance for certain loans acquired in a transfer (ASC 310-30), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income. The ASC 310-30 mark on impaired loans totaled $2.978 million as of the acquisition date. The accretable yield related to these impaired loans was estimated at $.744 million. The Corporation recorded $.429 million due to the positive resolution of one large acquired nonperforming commercial loan relationship in the first quarter of 2015 and no accretable yield of the loan mark in 2014. The following is a summary of impaired loans and their effect on interest income (dollars in thousands): Three Months Ended Nine Months Ended QTD YTD Interest Income Interest Income Interest Income Interest Income Nonaccrual Accrual Average Average Related Recognized on Recognized on Basis Basis Investment Investment Valuation Reserve During Impairment Accrual Basis During Impairment Accrual Basis September 30, 2015 With no valuation reserve: Commercial real estate $ $ $ $ $ — $ $ $ $ Commercial, financial and agricultural — — Commercial construction — — — — — — One to four family residential real estate Consumer construction — — — — Consumer — — — With a valuation reserve: Commercial real estate $ $ — $ $ $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — — Consumer construction — — — — — — — — — Consumer — — — — — — Total: Commercial real estate $ $ $ $ $ $ $ $ $ Commercial, financial and agricultural Commercial construction — — — — — — One to four family residential real estate Consumer construction — — — — Consumer — — — Total $ $ $ $ $ $ $ $ $ Interest Income Interest Income Nonaccrual Accrual Average Related Recognized on Basis Basis Investment Valuation Reserve During Impairment Accrual Basis As of and for the year ended December 31, 2014 With no valuation reserve: Commercial real estate $ $ $ $ — $ — $ Commercial, financial and agricultural — — Commercial construction — — — — One to four family residential real estate — — Consumer construction — — — Consumer — — — With a valuation reserve: Commercial real estate $ $ — $ $ $ — $ Commercial, financial and agricultural — — Commercial construction — — — — — — One to four family residential real estate — — Consumer construction — — — — — — Consumer — — — — — — Total: Commercial real estate $ $ $ $ $ — $ Commercial, financial and agricultural — Commercial construction — — — — One to four family residential real estate — Consumer construction — — — Consumer — — — Total $ $ $ $ $ — $ Three Months Ended Nine Months Ended QTD YTD Interest Income Interest Income Interest Income Interest Income Nonaccrual Accrual Average Average Related Recognized on Recognized on Basis Basis Investment Investment Valuation Reserve During Impairment Accrual Basis During Impairment Accrual Basis September 30, 2014 With no valuation reserve: Commercial real estate $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial, financial and agricultural — — — — — — — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — — — — — — — Consumer construction — — — — — — — — — Consumer — — — — — — — — — With a valuation reserve: $ — Commercial real estate $ $ — $ $ $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — Consumer construction — — — — — — — — — Consumer — — — — Total: Commercial real estate $ $ — $ $ $ $ — $ $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — Consumer construction — — — — — — — — — Consumer — — — — — Total $ $ — $ $ $ $ — $ $ — $ A summary of past due loans at September 30, 2015, December 31, 2014 and September 30, 2014 is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 30-89 days 90+ days 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due/ Past Due Past Due/ Past Due Past Due/ (accruing) Nonaccrual Total (accruing) Nonaccrual Total (accruing) Nonaccrual Total Commercial real estate $ $ $ $ $ $ $ $ $ Commercial, financial and agricultural Commercial construction — — — — One to four family residential real estate Consumer construction — — — — — — Consumer — — Total past due loans $ $ $ $ $ $ $ $ $ A roll-forward of nonaccrual activity for the three months ended September 30, 2015 (dollars in thousands): For the Three Months Ended September 30, 2015 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ $ $ Principal payments ) ) ) ) ) ) ) Charge-offs ) — — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO — — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — — Other — ) ) — ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual activity for the three months ended September 30, 2014 (dollars in thousands): For the Three Months Ended September 30, 2014 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — — ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO ) — — — — — ) Transfers to accruing — — — — — — — Transfers from accruing — — — — Other — — ) — — Ending balance $ $ $ — $ $ — $ — $ A roll-forward of nonaccrual activity for the nine months ended September 30, 2015 (dollars in thousands): For the Nine Months Ended September 30, 2015 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ $ — $ Principal payments ) ) ) ) ) ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — ) — — Transfers to OREO — — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — Other — ) ) ) ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual activity for the nine months ended September 30, 2014 (dollars in thousands): For the Nine Months Ended September 30, 2014 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Other — — — Ending balance $ $ $ — $ $ — $ — $ A roll-forward of nonperforming loan activity during the year ended December 31, 2014 (dollars in thousands): Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Acquired impaired loans — — — Other — — — Ending balance $ $ $ — $ $ $ — $ Troubled Debt Restructuring Troubled debt restructurings (“TDR”) are determined on a loan-by-loan basis. Generally restructurings are related to interest rate reductions, loan term extensions and short term payment forbearance as means to maximize collectability of troubled credits. If a portion of the TDR loan is uncollectible (including forgiveness of principal), the uncollectible amount will be charged off against the allowance at the time of the restructuring. In general, a borrower must make at least six consecutive timely payments before the Corporation would consider a return of a restructured loan to accruing status in accordance with FDIC guidelines regarding restoration of credits to accrual status. The Corporation has, in accordance with generally accepted accounting principles and per recently enacted accounting standard updates, evaluated all loan modifications to determine the fair value impact of the underlying asset. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. A summary of troubled debt restructurings occurring during the periods indicated is as follows (dollars in thousands): Nine months ended Twelve months ended Nine months ended September 30, December 31, September 30, 2015 2014 2014 Number of Recorded Number of Recorded Number of Recorded Modifications Investment Modifications Investment Modifications Investment Commercial real estate $ — $ — — $ — Commercial, financial and agricultural — — — — Commercial construction — — — — One to four family residential real estate — — Consumer construction — — — — — — Consumer — — — — — — Total troubled debt restructurings $ $ — $ — A roll-forward of troubled debt restructuring during the three months ended September 30, 2015 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — Advances — New restructured — Transferred out of TDR — Transfers to nonaccrual — Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ $ — $ — $ $ — $ Principal payments ) — — ) ) Charge-offs — Advances — New restructured — Transfers to foreclosed properties — Transfers from accruing — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — — — Tansfers to nonaccrual — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the three months ended September 30, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments — — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transferred out of TDR — — — — — — Transfers to nonaccrual — — — — — — Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — — — — — — Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ — $ $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments — — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — — — Tansfers to nonaccrual — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the nine months ended September 30, 2015 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — Transferred out of TDRs — — — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ — $ — $ — $ — $ — Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — Transfers out of TDR — — — — — — Transfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — — Transfer from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the nine months ended September 30, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transferred out of TDRs — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — ) — — — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ — $ $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDR — — — — Transfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — — Transfer from accruing — — — ) — ) Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the year ended December 31, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) — ) ) — ) Charge-offs — — — ) — ) Advances — — — — — — New restructured — — — — — — Transferred out of TDR — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — ) — — — ) Charge-offs — ) — ) — ) Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ — $ — $ — $ — $ — $ — TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — ) — ) — ) Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — Tansfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ $ $ $ $ — $ The above includes loans with revolving privileges which are scoped out of ASC 310-30 and certain loans which the Corporation elected to treat under the cost recovery method of accounting. Insider Loans The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands): Nine months ended Year ended Nine months ended September 30, December 31, September 30, 2015 2014 2014 Loans outstanding, beginning of period $ $ $ New loans — Net activity on revolving lines of credit Principal payments ) ) ) Loans outstanding, end of period $ $ $ There were no loans to related parties classified substandard as of September 30, 2015, December 31, 2014 or September 30, 2014. In addition to the outstanding balances above, there were unfunded commitments of $3.255 million to related parties at September 30, 2015. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 6. GOODWILL AND OTHER INTANGIBLE ASSETS During the fourth quarter of 2014, the Corporation recorded $3.805 million of goodwill and $1.206 million of deposit based intangible assets associated with the acquisition of PFC. The excess of the cost of acquired entities over the fair value of identifiable assets acquired less liabilities assumed is recorded as goodwill. In accordance with FASB ASC 350 (SFAS No. 142, Goodwill and Other Intangible Assets ), amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill and other intangible assets are annually tested for impairment. Intangible assets, including core deposits and customer business relationships, are amortized primarily on straight-line basis over their estimated useful lives. The Corporation is currently amortizing the deposit based intangible over a ten-year estimated life. The deposit based intangible is reported net of accumulated amortization at $1.106 million at September 30, 2015. Amortization expense in the first nine months of 2015 is $.090 million. Amortization expense for the next five years is expected to be at $.121 million per year. |
SERVICING RIGHTS
SERVICING RIGHTS | 9 Months Ended |
Sep. 30, 2015 | |
SERVICING RIGHTS | |
SERVICING RIGHTS | 7. SERVICING RIGHTS Mortgage Loans Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of September 30, 2015, the Corporation had obligations to service approximately $229.769 million of residential first mortgage loans. The valuation of MSRs is based upon the net present value of the projected revenues over the expected life of the loans being serviced, as reduced by estimated internal costs to service these loans. The fair value of the capitalized servicing rights approximates the carrying value. On a quarterly basis, management evaluates the MSRs for impairment. The key economic assumptions used in determining the fair value of the mortgage servicing rights include an annual constant prepayment speed of 9.34% and a discount rate of 9.19% for September 30, 2015. The following summarizes mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances (dollars in thousands): Nine Months Ended Year Ended Nine Months Ended September 30, December 31, September 30, 2015 2014 2014 Balance at beginning of period $ $ $ Additions from loans sold with servicing retained MSRs acquired in Peninsula transaction — — Amortization ) ) ) Balance at end of period $ $ $ Balance of loan servicing portfolio $ $ $ Mortgage servicing rights as % of portfolio .78 % .89 % .89 % Commercial Loans The Corporation also retains the servicing on commercial loans that have been sold. These loans were originated and underwritten under the SBA and USDA government guarantee programs, in which the guaranteed portion of the loan was sold to a third party with servicing retained. The balance of these sold loans with servicing retained at September 30, 2015 was approximately $65.830 million. The Corporation valued these servicing rights at $.177 million as of September 30, 2015. This valuation was established in consideration of the discounted cash flow of expected servicing income over the life of the loans. |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2015 | |
BORROWINGS | |
BORROWINGS | 8. BORROWINGS Borrowings consist of the following at September 30, 2015, December 31, 2014 and September 30, 2014 (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Federal Home Loan Bank fixed rate advances at September 30, 2015 with a weighted average rate of 1.68% maturing in 2016, 2018 and 2019 $ $ $ Correspondent bank line of credit - holding company Bank line of credit - wholly-owned asset based lending subsidiary Correspondent bank term note, current floor rate of 4%, maturing December 28, 2017 USDA Rural Development, fixed-rate note payable, maturing August 24, 2024, interest payable at 1% $ $ $ The Federal Home Loan Bank borrowings are collateralized at September 30, 2015 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $36.919 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $5.394 million and $5.460 million, respectively; and Federal Home Loan Bank stock owned by the Bank totaling $2.169 million. Prepayment of the advances is subject to the provisions and conditions of the credit policy of the Federal Home Loan Bank of Indianapolis in effect as of September 30, 2015. The USDA Rural Development borrowing is collateralized by loans totaling $.116 million originated and held by the Corporation’s wholly owned subsidiary, First Rural Relending, and an assignment of a demand deposit account in the amount of $.653 million, and guaranteed by the Corporation. The Corporation currently has two banking borrowing relationships. The first relationship consists of a non-revolving line of credit and a term note. The line of credit bears interest at 90-day LIBOR plus 2.75%, with a floor rate of 4.00% and has an initial term that expires on December 28, 2017. The term note bears the same interest and matures on March 22, 2017 and requires quarterly principal payments of $100,000 beginning June 30, 2014. This relationship is secured by all of the outstanding mBank stock. The second borrowing relationship consists of a $10 million revolving line of credit. The balance of this line of credit was paid in October 2015, when the borrowing relationship was terminated by the Corporation. |
DEFINED BENEFIT PENSION PLAN
DEFINED BENEFIT PENSION PLAN | 9 Months Ended |
Sep. 30, 2015 | |
RETIREMENT PLAN | |
DEFINED BENEFIT PENSION PLAN | 9. DEFINED BENEFIT PENSION PLAN The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan. Effective December 31, 2005, the plan was amended to freeze participation in the plan; therefore, no additional employees are eligible to become participants in the plan. The benefits are based on years of service and the employee’s compensation at the time of retirement. The Plan was amended effective December 31, 2010, to freeze benefit accrual for all participants. Expected contributions to the Plan in 2015 are $.114 million. The anticipated distributions over the next five years and thereafter are detailed in the table below: 2015 $ 2016 2017 2018 2019 Thereafter Total $ At September 30, 2015, the plan’s assets had a fair value of $2.107 million and the Corporation had a net liability of $1.183 million. The accumulated benefit obligation was $3.290 million. Assumptions in the actuarial valuation are: 2015 Weighted average discount rate % Rate of increase in future compensation levels N/A Expected long-term rate of return on plan assets % The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligation. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds. The primary investment objective is to maximize growth of the pension plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the Corporation’s risk tolerance. The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation: Target Actual Allocation Allocation Equity securities 50% to 70% % Fixed income securities 30% to 50% % |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2015 | |
STOCK COMPENSATION PLANS | |
STOCK COMPENSATION PLANS | 10. STOCK COMPENSATION PLANS On May 22, 2012, the Company’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, RSUs, or stock appreciation rights. The aggregate number of shares of the Company’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. Awards are made at the discretion of management. Compensation cost equal to the fair value of the award is recognized over the vesting period. Restricted Stock Awards The Corporation’s restricted stock awards require certain service-based or performance requirements and have a vesting period of four years. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. The Corporation, in August 2012 and March 2014, granted RSUs to members of the Board of Directors and Management. In August 2012, 148,500 RSUs were granted at a market value of $7.91 and will vest equally over a four year term. In exchange for the grant of these RSUs various previously issued stock option awards were surrendered. In March 2014, 52,774 RSUs were granted at a market value of $12.95, also vesting equally over a four year term. In March 2015, 37,730 RSUs were granted at a market value of $11.15, also vesting over a four year term. The RSUs were awarded at no cost to the employee. Compensation cost to be recognized over the four year vesting periods, is $1.175 million, $.683 million and $.421 million, respectively. On August 31, 2013, 2014 and 2015, the Corporation issued 37,125 shares of its common stock for vested RSUs, in each year. In March 2015, the Corporation issued 13,194 shares of its common stock for vested RSUs. In May 2015, the Corporation granted 3,000 shares, which were immediately vested and issued. A summary of changes in our nonvested shares for the period follows: Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2015 $ Granted during the period Vested during the period ) Nonvested balance at September 30, 2015 $ A summary of stock option transactions for the nine months ended September 30, 2015 and 2014, and the year ended December 31, 2014, is as follows: September 30, December 31, September 30, 2015 2014 2014 Outstanding shares at beginning of year Granted during the period — — — Exercised during the period — ) — Expired / forfeited during the period ) ) — Outstanding shares at end of period Exercisable shares at end of period Weighted average exercise price per share at end of period $ $ $ Shares available for grant at end of period — — — There were no options granted in the first nine months of 2015 and 2014. Following is a summary of the options outstanding and exercisable at September 30, 2015. Weighted Average Exercise Number Remaining Price Outstanding Exercisable Unvested Options Contractual Life-Years $ Options issued since the Corporation’s recapitalization in December of 2004 call for 20% immediate vesting upon issue and subsequent vesting to occur over a two to five year period, based upon the market value appreciation of the underlying Corporation’s stock. Compensation related to these options was expensed based upon the vesting period without consideration given to market value appreciation. There are no future compensation expenses related to existing option programs. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized. The net operating loss carryforwards expire twenty years from the date they originated. These carryforwards, if not utilized, will begin to expire in the year 2023. A portion of the NOL and all of the credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code. The annual limitation is $1.400 million for the NOL and the equivalent value of tax credits, which is approximately $.476 million. These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004. The Corporation has reported deferred tax assets of $9.326 million at September 30, 2015, which is net of a valuation allowance of $.760 million. Management evaluated the deferred tax valuation allowance as of September 30, 2015 and determined that no adjustment to the valuation was warranted. The remaining valuation allowance pertains to the existing tax credit carryovers, which will only be utilized after all net operating loss carryforwards. Since a portion of these tax credits may expire before that occurs, a valuation allowance for these has been established. The Corporation will continue to evaluate the future benefits from these carryforwards in order to determine if any adjustment to the deferred tax asset is warranted. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 12. FAIR VALUE MEASUREMENTS Fair value estimates, methods, and assumptions are set forth below for the Corporation’s financial instruments: Cash, cash equivalents, and interest-bearing deposits - The carrying values approximate the fair values for these assets. Securities - Fair values are based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Federal Home Loan Bank stock — Federal Home Loan Bank stock is carried at cost, which is its redeemable value and approximates its fair value, since the market for this stock is limited. Loans - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, residential mortgage, and other consumer. The fair value of loans is calculated by discounting scheduled cash flows using discount rates reflecting the credit and interest rate risk inherent in the loan. The methodology in determining fair value of nonaccrual loans is to average them into the blended interest rate at 0% interest. This has the effect of decreasing the carrying amount below the risk-free rate amount and, therefore, discounts the estimated fair value. Impaired loans are measured at the estimated fair value of the expected future cash flows at the loan’s effective interest rate or the fair value of the collateral for loans which are collateral dependent. Therefore, the carrying values of impaired loans approximate the estimated fair values for these assets. Deposits - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits and savings, is equal to the amount payable on demand at the reporting date. The fair value of time deposits is based on the discounted value of contractual cash flows applying interest rates currently being offered on similar time deposits. Borrowings - Rates currently available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The fair value of borrowed funds due on demand is the amount payable at the reporting date. Accrued interest - The carrying amount of accrued interest approximates fair value. Off-balance-sheet instruments - The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the counterparties. Since the differences in the current fees and those reflected to the off-balance-sheet instruments at year-end are immaterial, no amounts for fair value are presented. The following table presents information for financial instruments at September 30, 2015, December 31, 2014 and September 30, 2014 (dollars in thousands): September 30, 2015 December 31, 2014 September 30, 2014 Level in Fair Carrying Estimated Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ $ $ $ $ $ Interest-bearing deposits Level 2 Securities available for sale Level 2 Federal Home Loan Bank stock Level 2 Net loans Level 3 Accrued interest receivable Level 3 Total financial assets $ $ $ $ $ $ Financial liabilities: Deposits Level 2 $ $ $ $ $ $ Borrowings Level 2 Accrued interest payable Level 3 Total financial liabilties $ $ $ $ $ $ Limitations - Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on-and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, other assets, and other liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The following is information about the Corporation’s assets and liabilities measured at fair value on a recurring basis at September 30, 2015, and the valuation techniques used by the Corporation to determine those fair values. Level 1: In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access. Level 2: Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Level 3 inputs are unobservable inputs, including inputs available in situations where there is little, if any, market activity for the related asset or liability. The fair value of all investment securities at September 30, 2015, December 31, 2014 and September 30, 2014 were based on level 2 inputs. There are no other assets or liabilities measured on a recurring basis at fair value. For additional information regarding investment securities, please refer to “Note 4 Investment Securities.” The Corporation had no Level 3 assets or liabilities on a recurring basis as of September 30, 2015, December 31, 2014 or September 30, 2014. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Corporation’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. The Corporation also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include certain impaired loans and other real estate owned. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections. Assets Measured at Fair Value on a Nonrecurring Basis at September 30, 2015 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Total Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended Nine Months Ended (dollars in thousands) September 30, 2015 (Level 1) (Level 2) (Level 3) September 30, 2015 September 30, 2015 Assets Impaired loans $ $ — $ — $ $ $ Other real estate owned — — $ $ Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2014 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2014 (Level 1) (Level 2) (Level 3) December 31, 2014 Assets Impaired loans $ $ — $ — $ $ Other real estate owned — — $ Assets Measured at Fair Value on a Nonrecurring Basis at September 30, 2014 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Total Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended Nine Months Ended (dollars in thousands) September 30, 2014 (Level 1) (Level 2) (Level 3) September 30, 2014 September 30, 2014 Assets Impaired loans $ $ — $ — $ $ $ Other real estate owned — — $ $ The Corporation had no investments subject to fair value measurement on a nonrecurring basis. Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Corporation estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). |
SHAREHOLDER'S EQUITY
SHAREHOLDER'S EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
SHAREHOLDER'S EQUITY | |
SHAREHOLDER'S EQUITY | 13. SHAREHOLDERS’ EQUITY In December 2014, the Corporation consummated the previously announced acquisition of Peninsula Financial Corporation with a combination of cash and Mackinac Financial Corporation (“MFNC”) stock. Peninsula Financial Corporation was a bank holding company with The Peninsula Bank as its wholly-owned subsidiary. PFC was headquartered in Ishpeming, Michigan with six branch locations. The purchase price of the acquisition was $12.420 million with a combination of cash and MFNC common stock. MFNC issued 695,361 shares of its common stock and an increase shareholder equity of $7.804 million in recording this transaction, after the reduction for issuance costs of $.130 million. The Corporation recorded assets with a fair value of $112.766 million, including loans of $67.139 million, as well as $100.950 million of deposits. The Corporation currently has a share repurchase program. The program is conducted under authorizations from time to time by the Board of Directors. The Corporation repurchased 70,480 shares thus far in 2015, 13,700 shares in 2014 and 55,594 shares in 2013. The share repurchases were conducted under Board authorizations made and publically announced of $600,000 on February 27, 2013, $600,000 on December 17, 2013 and an additional $750,000 on April 28, 2015. None of these authorizations has an expiration date. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | 9 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | |
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | 14. COMMITMENTS, CONTINGENCIES AND CREDIT RISK Financial Instruments With Off-Balance-Sheet Risk The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The Corporation’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. These commitments are as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Commitments to extend credit: Variable rate $ $ $ Fixed rate Standby letters of credit - Variable rate Credit card commitments - Fixed rate $ $ $ Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The commitments are structured to allow for 100% collateralization on all standby letters of credit. Credit card commitments are commitments on credit cards issued by the Corporation’s subsidiary and serviced by other companies. These commitments are unsecured. Legal Proceedings and Contingencies In the normal course of business, the Corporation is involved in various legal proceedings. For expanded discussion on the Corporation’s legal proceedings, see Part II, Item 1, “Legal Proceedings” in this report. Concentration of Credit Risk The Bank grants commercial, residential, agricultural, and consumer loans throughout Michigan. The Bank’s most prominent concentration in the loan portfolio relates to commercial real estate loans to operators of nonresidential buildings. This concentration at September 30, 2015 represents $102.897 million, or 23.05%, compared to $100.912 million, or 26.30%, of the commercial loan portfolio on September 30, 2014. The remainder of the commercial loan portfolio is diversified in such categories as hospitality and tourism, real estate agents and managers, new car dealers, gaming, petroleum, forestry, agriculture and construction. Due to the diversity of the Bank’s locations, the ability of debtors of residential and consumer loans to honor their obligations is not tied to any particular economic sector. |
SUMMARY OF SIGNIFICANT ACCOUN22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements of Mackinac Financial Corporation (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The unaudited consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014. In order to properly reflect some categories of other income and other expenses, reclassifications of expense and income items have been made to prior period numbers. The “net” other income and other expenses was not changed due to these reclassifications. The preparation of 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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. 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, the valuation of investment securities, the valuation of foreclosed real estate, deferred tax assets, and mortgage servicing rights. |
Acquired Loans | Acquired Loans Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected on pools of loans sharing common risk characteristics, which are treated in the aggregate when applying various valuation techniques. Management evaluates at each balance sheet date whether the present value of our pools of loans determined using the effective interest rates has decreased significantly and if so, recognizes a provision for loan loss in our consolidated statement of income. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life. Performing acquired loans are accounted for under Financial Accounting Standards Board (“FASB”) Topic 310-20, Receivables — Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses includes specific allowances related to commercial loans, when they have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. The Corporation continues to maintain a general allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for possible loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the Corporation’s allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability. In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date. |
Stock Compensation Plans | Stock Compensation Plans On May 22, 2012, the Company’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock units (“RSUs”), or stock appreciation rights. The aggregate number of shares of the Company’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. Awards are made at the discretion of management. Compensation cost equal to the fair value of the award is recognized over the vesting period. The Corporation, in August 2012, March 2014 and March 2015, granted RSUs to members of the Board of Directors and Management. In August 2012, 148,500 RSUs were granted at a market value of $7.91 and will vest equally over a four year term. In exchange for the grant of these RSUs various previously issued stock option awards were surrendered. In March 2014, 52,774 RSUs were granted at a market value of $12.95, also vesting equally over a four year term. In March 2015, 37,730 RSUs were granted at a market value of $11.15, also vesting over a four year term. The RSUs were awarded at no cost to the employee. Compensation cost to be recognized over the four year vesting periods, is $1.175 million, $.683 million and $.421 million, respectively. On August 31, 2013, 2014 and 2015, the Corporation issued 37,125 shares of its common stock for vested RSUs, in each year. In March 2015, the Corporation issued 13,194 shares of its common stock for vested RSUs. In May 2015, the Corporation granted 3,000 shares under the Incentive Compensation Plan, which were immediately vested and issued. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
EARNINGS PER SHARE | |
Schedule showing the computation of basic and diluted earnings per share | The following shows the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (dollars in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (Numerator): Net income $ $ $ $ (Denominator): Weighted average shares outstanding - basic Effect of dilutive stock options and vesting of restricted stock units Weighted average shares outstanding - diluted Income per common share Basic $ .16 $ .16 $ .64 $ .43 Diluted $ .16 $ .16 $ .64 $ .42 |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
INVESTMENT SECURITIES | |
Schedule of amortized cost and estimated fair value of investment securities available for sale | The amortized cost and estimated fair value of investment securities available for sale as of September 30, 2015, December 31, 2014 and September 30, 2014 are as follows (dollars in thousands): Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value September 30, 2015 US Agencies - MBS $ $ $ ) $ US Agencies — Corporate Bonds ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ December 31, 2014 US Treasury $ $ $ ) $ US Agencies ) Corporate Bonds — US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ September 30, 2014 US Agencies - MBS $ $ $ — $ US Agencies ) Corporate Bonds — Obligations of states and political subdivisions — Other — — Total securities available for sale $ $ $ ) $ |
LOANS (Tables)
LOANS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
LOANS | |
Schedule of composition of loans | The composition of loans is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Commercial real estate $ $ $ Commercial, financial, and agricultural One to four family residential real estate Construction : Consumer Commerical Consumer Total loans $ $ $ |
Schedule of acquired portfolio at acquisition date | The table below details the acquired portfolio at September 30, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ $ $ Nonaccretable difference ) — ) Expected cash flows Accretable yield ) ) ) Carrying balance at September 30, 2015 $ $ $ |
Schedule of the accretable yield by acquisition | The table below presents a rollforward of the accretable yield on acquired loans for the nine months ended September 30, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Balance, December 31, 2014 $ $ $ Accretion ) ) ) Reclassification from nonaccretable difference — Balance at September 30, 2015 $ $ $ |
Schedule of the allowance for loan losses | An analysis of the allowance for loan losses for nine months ended September 30, 2015, the year ended December 31, 2014 and the nine months ended September 30, 2014 is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Balance at beginning of period $ $ $ Loans charged off ) ) ) Recoveries on loans previously charged off Provision Balance at end of period $ $ $ |
Schedule of breakdown of the allowance for loan losses and recorded balances in loans | A breakdown of the allowance for loan losses and recorded balances in loans at September 30, 2015 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Three Months Ended September 30, 2015 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — — — Provision ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Nine Months Ended September 30, 2015 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) — ) Ending balance ALLR $ $ $ $ $ $ $ $ At September 30,2015 Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Acquired with deteriorated credit quality — — — — — — — — Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Acquired with deteriorated credit quality — — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans as of and for the twelve months ended December 31, 2014 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Acquired with deteriorated credit quality — — — — — — — — Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Acquired with deteriorated credit quality — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at September 30, 2014 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Three Months Ended September 30, 2014 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) Ending balance ALLR $ $ $ $ $ $ $ $ Nine Months Ended September 30, 2014 Allowance for loan loss reserve: Beginning balance ALLR $ $ $ $ $ $ $ $ Charge-offs ) ) — ) — ) — ) Recoveries — — Provision ) ) ) ) ) Ending balance ALLR $ $ $ $ $ $ $ $ At September 30,2014 Loans: Ending balance $ $ $ $ $ $ $ — $ Ending balance ALLR ) ) ) ) ) ) ) ) Net loans $ $ $ $ $ $ $ ) $ Ending balance ALLR: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated Total $ $ $ $ $ $ $ $ Ending balance Loans: Individually evaluated $ $ $ — $ $ — $ $ — $ Collectively evaluated — Total $ $ $ $ $ $ $ — $ Impaired loans, by definition, are individually evaluated. |
Schedule of breakdown of loans by risk category | Below is a breakdown of loans by risk category as of September 30, 2015 (dollars in thousands): (1) Excellent (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — One to four family residential real estate — — Consumer construction — — — — — — — Consumer — — — — Total loans $ $ $ $ $ — $ $ — $ $ Below is a breakdown of loans by risk category as of December 31, 2014 (dollars in thousands): (1) Strong (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — One-to-four family residential real estate — — Consumer construction — — — — — — — Consumer — — — Total loans $ $ $ $ $ — $ $ — $ $ Below is a breakdown of loans by risk category as of September 30, 2014 (dollars in thousands): (1) Excellent (2) Good (3) Average (4) Acceptable/ Acceptable Watch (5) Sp. Mention (6) Substandard (7) Doubtful Rating Unassigned Total Commercial real estate $ $ $ $ $ — $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — One to four family residential real estate — — — Consumer construction — — — — — — — Consumer — — — — — Total loans $ $ $ $ $ $ $ — $ $ |
Summary of impaired loans and their effect on interest income | The following is a summary of impaired loans and their effect on interest income (dollars in thousands): Three Months Ended Nine Months Ended QTD YTD Interest Income Interest Income Interest Income Interest Income Nonaccrual Accrual Average Average Related Recognized on Recognized on Basis Basis Investment Investment Valuation Reserve During Impairment Accrual Basis During Impairment Accrual Basis September 30, 2015 With no valuation reserve: Commercial real estate $ $ $ $ $ — $ $ $ $ Commercial, financial and agricultural — — Commercial construction — — — — — — One to four family residential real estate Consumer construction — — — — Consumer — — — With a valuation reserve: Commercial real estate $ $ — $ $ $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — — Consumer construction — — — — — — — — — Consumer — — — — — — Total: Commercial real estate $ $ $ $ $ $ $ $ $ Commercial, financial and agricultural Commercial construction — — — — — — One to four family residential real estate Consumer construction — — — — Consumer — — — Total $ $ $ $ $ $ $ $ $ Interest Income Interest Income Nonaccrual Accrual Average Related Recognized on Basis Basis Investment Valuation Reserve During Impairment Accrual Basis As of and for the year ended December 31, 2014 With no valuation reserve: Commercial real estate $ $ $ $ — $ — $ Commercial, financial and agricultural — — Commercial construction — — — — One to four family residential real estate — — Consumer construction — — — Consumer — — — With a valuation reserve: Commercial real estate $ $ — $ $ $ — $ Commercial, financial and agricultural — — Commercial construction — — — — — — One to four family residential real estate — — Consumer construction — — — — — — Consumer — — — — — — Total: Commercial real estate $ $ $ $ $ — $ Commercial, financial and agricultural — Commercial construction — — — — One to four family residential real estate — Consumer construction — — — Consumer — — — Total $ $ $ $ $ — $ Three Months Ended Nine Months Ended QTD YTD Interest Income Interest Income Interest Income Interest Income Nonaccrual Accrual Average Average Related Recognized on Recognized on Basis Basis Investment Investment Valuation Reserve During Impairment Accrual Basis During Impairment Accrual Basis September 30, 2014 With no valuation reserve: Commercial real estate $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial, financial and agricultural — — — — — — — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — — — — — — — Consumer construction — — — — — — — — — Consumer — — — — — — — — — With a valuation reserve: $ — Commercial real estate $ $ — $ $ $ $ — $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — Consumer construction — — — — — — — — — Consumer — — — — Total: Commercial real estate $ $ — $ $ $ $ — $ $ — $ Commercial, financial and agricultural — — — Commercial construction — — — — — — — — — One to four family residential real estate — — — Consumer construction — — — — — — — — — Consumer — — — — — Total $ $ — $ $ $ $ — $ $ — $ |
Summary of past due loans | A summary of past due loans at September 30, 2015, December 31, 2014 and September 30, 2014 is as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 30-89 days 90+ days 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due/ Past Due Past Due/ Past Due Past Due/ (accruing) Nonaccrual Total (accruing) Nonaccrual Total (accruing) Nonaccrual Total Commercial real estate $ $ $ $ $ $ $ $ $ Commercial, financial and agricultural Commercial construction — — — — One to four family residential real estate Consumer construction — — — — — — Consumer — — Total past due loans $ $ $ $ $ $ $ $ $ |
Schedule of roll-forward of nonperforming loan activity | A roll-forward of nonaccrual activity for the three months ended September 30, 2015 (dollars in thousands): For the Three Months Ended September 30, 2015 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ $ $ Principal payments ) ) ) ) ) ) ) Charge-offs ) — — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO — — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — — Other — ) ) — ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual activity for the three months ended September 30, 2014 (dollars in thousands): For the Three Months Ended September 30, 2014 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — — ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO ) — — — — — ) Transfers to accruing — — — — — — — Transfers from accruing — — — — Other — — ) — — Ending balance $ $ $ — $ $ — $ — $ A roll-forward of nonaccrual activity for the nine months ended September 30, 2015 (dollars in thousands): For the Nine Months Ended September 30, 2015 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ $ — $ Principal payments ) ) ) ) ) ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — ) — — Transfers to OREO — — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — Other — ) ) ) ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual activity for the nine months ended September 30, 2014 (dollars in thousands): For the Nine Months Ended September 30, 2014 Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Class transfers — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Other — — — Ending balance $ $ $ — $ $ — $ — $ A roll-forward of nonperforming loan activity during the year ended December 31, 2014 (dollars in thousands): Commercial, One to four Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Consumer Total NONACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Acquired impaired loans — — — Other — — — Ending balance $ $ $ — $ $ $ — $ |
Summary of troubled debt restructurings | A summary of troubled debt restructurings occurring during the periods indicated is as follows (dollars in thousands): Nine months ended Twelve months ended Nine months ended September 30, December 31, September 30, 2015 2014 2014 Number of Recorded Number of Recorded Number of Recorded Modifications Investment Modifications Investment Modifications Investment Commercial real estate $ — $ — — $ — Commercial, financial and agricultural — — — — Commercial construction — — — — One to four family residential real estate — — Consumer construction — — — — — — Consumer — — — — — — Total troubled debt restructurings $ $ — $ — |
Schedule of roll-forward of troubled debt restructurings | A roll-forward of troubled debt restructuring during the three months ended September 30, 2015 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — Advances — New restructured — Transferred out of TDR — Transfers to nonaccrual — Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ $ — $ — $ $ — $ Principal payments ) — — ) ) Charge-offs — Advances — New restructured — Transfers to foreclosed properties — Transfers from accruing — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — — — Tansfers to nonaccrual — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the three months ended September 30, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments — — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transferred out of TDR — — — — — — Transfers to nonaccrual — — — — — — Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — — — — — — Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ — $ $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments — — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — — — Tansfers to nonaccrual — — — — — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the nine months ended September 30, 2015 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — Transferred out of TDRs — — — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ — $ — $ — $ — $ — Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — Transfers to foreclosed properties — — — — — — Transfers from accruing — — — — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — Transfers out of TDR — — — — — — Transfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — — Transfer from accruing — — — — — — Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the nine months ended September 30, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transferred out of TDRs — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — ) — — — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ — $ $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — — — — — — Advances — — — — — — New restructured — — — — — — Transfers out of TDR — — — — Transfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — — Transfer from accruing — — — ) — ) Ending Balance $ $ $ $ $ — $ A roll-forward of troubled debt restructuring during the year ended December 31, 2014 (dollars in thousands): Commercial, One to four Consumer and Commercial Financial and Commercial family residential Consumer Real Estate Agricultural Construction real estate Construction Total ACCRUING Beginning balance $ $ $ $ $ — $ Principal payments ) — ) ) — ) Charge-offs — — — ) — ) Advances — — — — — — New restructured — — — — — — Transferred out of TDR — — — — Transfers to nonaccrual — — — ) — ) Ending Balance $ $ $ $ $ — $ NONACCRUAL Beginning balance $ — $ $ — $ $ — $ Principal payments — ) — — — ) Charge-offs — ) — ) — ) Advances — — — — — — New restructured — — — — — — Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ — $ — $ — $ — $ — $ — TOTALS Beginning balance $ $ $ $ $ — $ Principal payments ) ) ) ) — ) Charge-offs — ) — ) — ) Advances — — — — — — New restructured — — — — — — Transfers out of TDRs — — — — Tansfers to nonaccrual — — — ) — ) Transfers to foreclosed properties — — — ) — ) Transfers from accruing — — — — Ending Balance $ $ $ $ $ — $ |
Schedule of activity in insider loans granted to the entity's executive officers and directors, including their families and firms | The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands): Nine months ended Year ended Nine months ended September 30, December 31, September 30, 2015 2014 2014 Loans outstanding, beginning of period $ $ $ New loans — Net activity on revolving lines of credit Principal payments ) ) ) Loans outstanding, end of period $ $ $ |
SERVICING RIGHTS (Tables)
SERVICING RIGHTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
SERVICING RIGHTS | |
Summary of mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances | The following summarizes mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances (dollars in thousands): Nine Months Ended Year Ended Nine Months Ended September 30, December 31, September 30, 2015 2014 2014 Balance at beginning of period $ $ $ Additions from loans sold with servicing retained MSRs acquired in Peninsula transaction — — Amortization ) ) ) Balance at end of period $ $ $ Balance of loan servicing portfolio $ $ $ Mortgage servicing rights as % of portfolio .78 % .89 % .89 % |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
BORROWINGS | |
Schedule of borrowings | Borrowings consist of the following at September 30, 2015, December 31, 2014 and September 30, 2014 (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Federal Home Loan Bank fixed rate advances at September 30, 2015 with a weighted average rate of 1.68% maturing in 2016, 2018 and 2019 $ $ $ Correspondent bank line of credit - holding company Bank line of credit - wholly-owned asset based lending subsidiary Correspondent bank term note, current floor rate of 4%, maturing December 28, 2017 USDA Rural Development, fixed-rate note payable, maturing August 24, 2024, interest payable at 1% $ $ $ |
DEFINED BENEFIT PENSION PLAN (T
DEFINED BENEFIT PENSION PLAN (Tales) | 9 Months Ended |
Sep. 30, 2015 | |
RETIREMENT PLAN | |
Schedule of anticipated distributions over the next five years | 2015 $ 2016 2017 2018 2019 Thereafter Total $ |
Schedule of assumptions in the actuarial valuation | 2015 Weighted average discount rate % Rate of increase in future compensation levels N/A Expected long-term rate of return on plan assets % |
Schedule of asset allocation | Target Actual Allocation Allocation Equity securities 50% to 70% % Fixed income securities 30% to 50% % |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
STOCK COMPENSATION PLANS | |
Summary of changes in nonvested shares | Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2015 $ Granted during the period Vested during the period ) Nonvested balance at September 30, 2015 $ |
Summary of stock option transactions | September 30, December 31, September 30, 2015 2014 2014 Outstanding shares at beginning of year Granted during the period — — — Exercised during the period — ) — Expired / forfeited during the period ) ) — Outstanding shares at end of period Exercisable shares at end of period Weighted average exercise price per share at end of period $ $ $ Shares available for grant at end of period — — — |
Summary of the options outstanding and exercisable | Weighted Average Exercise Number Remaining Price Outstanding Exercisable Unvested Options Contractual Life-Years $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule presenting information for financial instruments | The following table presents information for financial instruments at September 30, 2015, December 31, 2014 and September 30, 2014 (dollars in thousands): September 30, 2015 December 31, 2014 September 30, 2014 Level in Fair Carrying Estimated Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ $ $ $ $ $ Interest-bearing deposits Level 2 Securities available for sale Level 2 Federal Home Loan Bank stock Level 2 Net loans Level 3 Accrued interest receivable Level 3 Total financial assets $ $ $ $ $ $ Financial liabilities: Deposits Level 2 $ $ $ $ $ $ Borrowings Level 2 Accrued interest payable Level 3 Total financial liabilties $ $ $ $ $ $ |
Schedule of assets measured at fair value on a non-recurring basis | Assets Measured at Fair Value on a Nonrecurring Basis at September 30, 2015 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Total Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended Nine Months Ended (dollars in thousands) September 30, 2015 (Level 1) (Level 2) (Level 3) September 30, 2015 September 30, 2015 Assets Impaired loans $ $ — $ — $ $ $ Other real estate owned — — $ $ Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2014 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2014 (Level 1) (Level 2) (Level 3) December 31, 2014 Assets Impaired loans $ $ — $ — $ $ Other real estate owned — — $ Assets Measured at Fair Value on a Nonrecurring Basis at September 30, 2014 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Total Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended Nine Months Ended (dollars in thousands) September 30, 2014 (Level 1) (Level 2) (Level 3) September 30, 2014 September 30, 2014 Assets Impaired loans $ $ — $ — $ $ $ Other real estate owned — — $ $ |
COMMITMENTS, CONTINGENCIES AN31
COMMITMENTS, CONTINGENCIES AND CREDIT RISKS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | |
Schedule of commitments | These commitments are as follows (dollars in thousands): September 30, December 31, September 30, 2015 2014 2014 Commitments to extend credit: Variable rate $ $ $ Fixed rate Standby letters of credit - Variable rate Credit card commitments - Fixed rate $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2015 | May. 31, 2015 | Mar. 31, 2015 | Aug. 31, 2014 | Mar. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | Mar. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | May. 22, 2012 |
Stock Compensation Plans | |||||||||||||
Number of RSUs granted (in shares) | 40,730 | ||||||||||||
RSUs | |||||||||||||
Stock Compensation Plans | |||||||||||||
Number of RSUs granted (in shares) | 3,000 | 37,730 | 52,774 | 148,500 | |||||||||
Market value of granted stock (in dollars per unit) | $ 7.91 | $ 11.15 | $ 12.95 | $ 7.91 | $ 11.15 | $ 11.15 | |||||||
Cost to the employee | $ 0 | $ 0 | |||||||||||
Vesting period | 4 years | 4 years | 4 years | 4 years | 4 years | ||||||||
Recognition period of compensation cost to be recognized | 4 years | ||||||||||||
Compensation cost to be recognized | $ 1,175,000 | $ 421,000 | $ 683,000 | $ 1,175,000 | $ 421,000 | 421,000 | |||||||
Stock issued for vested restricted stocks | 37,125 | 37,125 | 3,000 | 13,194 | 37,125 | 37,125 | 13,194 | ||||||
Unrecognized compensation expenses | $ 1,175,000 | $ 421,000 | $ 683,000 | $ 1,175,000 | $ 421,000 | $ 421,000 | |||||||
2012 Incentive Compensation Plan | |||||||||||||
Stock Compensation Plans | |||||||||||||
Total authorized share balance | 575,000 | ||||||||||||
2012 Incentive Compensation Plan | Stock Options | |||||||||||||
Stock Compensation Plans | |||||||||||||
Total authorized share balance | 392,152 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
(Numerator): | ||||
Net income | $ 1,018 | $ 886 | $ 4,003 | $ 2,352 |
(Denominator): | ||||
Weighted average shares outstanding - basic | 6,238,963 | 5,540,200 | 6,247,416 | 5,532,966 |
Effect of dilutive stock options and vesting of restricted stock units | 39,046 | 71,722 | 31,400 | 70,268 |
Weighted average shares outstanding - diluted | 6,278,009 | 5,611,922 | 6,278,816 | 5,603,234 |
Income per common share: | ||||
Basic (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.64 | $ 0.43 |
Diluted (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.64 | $ 0.42 |
INVESTMENT SECURITIES (Details)
INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | $ 53,535 | $ 64,903 | $ 48,122 |
Gross Unrealized Gains | 910 | 1,210 | 893 |
Gross Unrealized Losses | (13) | (281) | (273) |
Estimated Fair Value | 54,432 | 65,832 | 48,742 |
US Treasury | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 5,287 | ||
Gross Unrealized Gains | 3 | ||
Gross Unrealized Losses | (10) | ||
Estimated Fair Value | 5,280 | ||
US Agencies - MBS | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 3,543 | 13,461 | 6,142 |
Gross Unrealized Gains | 22 | 262 | 241 |
Gross Unrealized Losses | (8) | (35) | |
Estimated Fair Value | 3,557 | 13,688 | 6,383 |
US Agencies | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 25,321 | 22,667 | 22,725 |
Gross Unrealized Gains | 277 | 144 | 41 |
Gross Unrealized Losses | (94) | (273) | |
Estimated Fair Value | 25,598 | 22,717 | 22,493 |
Corporate Bonds | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 14,742 | 12,558 | 12,621 |
Gross Unrealized Gains | 75 | 116 | 172 |
Gross Unrealized Losses | (2) | ||
Estimated Fair Value | 14,815 | 12,674 | 12,793 |
Obligations of states and political subdivisions | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 9,929 | 10,930 | 6,383 |
Gross Unrealized Gains | 536 | 685 | 439 |
Gross Unrealized Losses | (3) | (142) | |
Estimated Fair Value | 10,462 | $ 11,473 | 6,822 |
Other | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 251 | ||
Estimated Fair Value | $ 251 | ||
FHLB borrowings and customer relationships | |||
SECURITIES AVAILABLE FOR SALE | |||
Amortized Cost | 5,394 | ||
Estimated Fair Value | $ 5,460 |
LOANS (Details)
LOANS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Insider Loans | |||||
Total loans | $ 619,906 | $ 518,373 | $ 619,906 | $ 518,373 | $ 600,935 |
Acquired portfolio | |||||
Accretable yield | 0 | ||||
Balance at the beginning of period | 2,786 | ||||
Accretion | (954) | ||||
Reclassification from nonaccretable difference | 188 | ||||
Balance at the end of period | 2,020 | 2,020 | 2,786 | ||
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 5,600 | 5,097 | 5,140 | 4,661 | 4,661 |
Loans charged off | (207) | (70) | (365) | (185) | (1,046) |
Recoveries on loans previously charged off | (36) | (65) | (149) | (242) | (325) |
Provision | 350 | 187 | 855 | 561 | 1,200 |
Balance at end of period | 5,779 | 5,279 | 5,779 | 5,279 | 5,140 |
Net recoveries | 216 | ||||
Net charge off activity | $ 57 | ||||
Net charge off activity as percentage of average loans outstanding | 0.05% | ||||
Peninsula Financial Corporation | |||||
Acquired portfolio | |||||
Loans acquired - contractual payments | 58,051 | 58,051 | |||
Nonaccretable difference | (1,370) | (1,370) | |||
Expected cash flows | 56,681 | 56,681 | |||
Accretable yield | (2,020) | (2,020) | |||
Carrying balance at the end of period | 54,661 | 54,661 | |||
Commercial real estate loans | |||||
Insider Loans | |||||
Total loans | 310,025 | 272,803 | 310,025 | $ 272,803 | 315,387 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 2,550 | 1,630 | 2,813 | 1,849 | 1,849 |
Loans charged off | (52) | (18) | (52) | (19) | (19) |
Recoveries on loans previously charged off | (28) | (31) | (120) | (105) | (131) |
Provision | (221) | (1) | (576) | (293) | 852 |
Balance at end of period | 2,305 | 1,642 | 2,305 | 1,642 | 2,813 |
Commercial, financial, and agricultural | |||||
Insider Loans | |||||
Total loans | 120,804 | 98,714 | 120,804 | 98,714 | 101,895 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 2,571 | 1,669 | 1,539 | 1,378 | 1,378 |
Loans charged off | (57) | (9) | (157) | (74) | (663) |
Recoveries on loans previously charged off | (3) | (16) | (3) | (75) | (78) |
Provision | 355 | (153) | 1,487 | 144 | 746 |
Balance at end of period | 2,872 | 1,523 | 2,872 | 1,523 | 1,539 |
One to four family residential real estate | |||||
Insider Loans | |||||
Total loans | 144,807 | 110,310 | 144,807 | 110,310 | 139,553 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 282 | 345 | 285 | 516 | 516 |
Loans charged off | (62) | (28) | (92) | (44) | (290) |
Recoveries on loans previously charged off | (4) | (1) | (18) | (22) | |
Provision | 74 | 80 | 100 | (89) | 37 |
Balance at end of period | 294 | 401 | 294 | 401 | 285 |
Consumer construction | |||||
Insider Loans | |||||
Total loans | 11,957 | 8,729 | 11,957 | 8,729 | 9,431 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 5 | 15 | 6 | 25 | 25 |
Recoveries on loans previously charged off | (1) | ||||
Provision | 2 | 3 | (7) | (19) | |
Balance at end of period | 7 | 18 | 7 | 18 | 6 |
Commercial construction | |||||
Insider Loans | |||||
Total loans | 15,498 | 12,242 | 15,498 | 12,242 | 16,284 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 128 | 40 | 142 | 80 | 80 |
Recoveries on loans previously charged off | (3) | (9) | (50) | ||
Provision | (17) | 1 | (31) | (45) | 12 |
Balance at end of period | 111 | 44 | 111 | 44 | 142 |
Consumer | |||||
Insider Loans | |||||
Total loans | 16,815 | 15,575 | 16,815 | 15,575 | 18,385 |
Changes in the allowance for loan losses | |||||
Balance at beginning of period | 27 | 111 | 13 | 148 | 148 |
Loans charged off | (36) | (15) | (64) | (48) | (74) |
Recoveries on loans previously charged off | (5) | (11) | (24) | (35) | (44) |
Provision | 46 | 1 | 69 | (27) | (105) |
Balance at end of period | 42 | $ 108 | 42 | $ 108 | 13 |
Acquired impaired | |||||
Acquired portfolio | |||||
Balance at the beginning of period | 744 | ||||
Accretion | (429) | ||||
Reclassification from nonaccretable difference | 188 | ||||
Balance at the end of period | 503 | 503 | 744 | ||
Acquired impaired | Peninsula Financial Corporation | |||||
Acquired portfolio | |||||
Loans acquired - contractual payments | 10,391 | 10,391 | |||
Nonaccretable difference | (1,370) | (1,370) | |||
Expected cash flows | 9,021 | 9,021 | |||
Accretable yield | (503) | (503) | |||
Carrying balance at the end of period | 8,518 | 8,518 | |||
Acquired nonimpaired | |||||
Acquired portfolio | |||||
Balance at the beginning of period | 2,042 | ||||
Accretion | (525) | ||||
Balance at the end of period | 1,517 | 1,517 | $ 2,042 | ||
Acquired nonimpaired | Peninsula Financial Corporation | |||||
Acquired portfolio | |||||
Loans acquired - contractual payments | 47,660 | 47,660 | |||
Expected cash flows | 47,660 | 47,660 | |||
Accretable yield | (1,517) | (1,517) | |||
Carrying balance at the end of period | $ 46,143 | $ 46,143 |
LOANS (Details 2)
LOANS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | $ 5,600 | $ 5,097 | $ 5,140 | $ 4,661 | $ 4,661 | |||
Charge-offs | (207) | (70) | (365) | (185) | (1,046) | |||
Recoveries | 36 | 65 | 149 | 242 | 325 | |||
Provision | 350 | 187 | 855 | 561 | 1,200 | |||
Balance at end of period | 5,779 | 5,279 | 5,779 | 5,279 | 5,140 | |||
Loans: | ||||||||
Ending balance | $ 619,906 | $ 600,935 | $ 518,373 | |||||
Ending balance ALLR | (5,600) | (5,097) | (5,140) | (4,661) | (4,661) | (5,779) | (5,140) | (5,279) |
Net loans | 614,127 | 595,795 | 513,094 | |||||
Ending balance ALLR: | ||||||||
Individually evaluated | 2,524 | 1,216 | 1,615 | |||||
Collectively evaluated | 3,255 | 3,924 | 3,664 | |||||
Total | 5,600 | 5,097 | 5,140 | 4,661 | 4,661 | 5,779 | 5,140 | 5,279 |
Ending balance Loans: | ||||||||
Individually evaluated | 7,092 | 3,077 | 3,371 | |||||
Collectively evaluated | 604,296 | 587,546 | 515,002 | |||||
Acquired with deteriorated credit quality | 8,518 | 10,312 | ||||||
Total Loans | 619,906 | 600,935 | 518,373 | |||||
Commercial real estate loans | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 2,550 | 1,630 | 2,813 | 1,849 | 1,849 | |||
Charge-offs | (52) | (18) | (52) | (19) | (19) | |||
Recoveries | 28 | 31 | 120 | 105 | 131 | |||
Provision | (221) | (1) | (576) | (293) | 852 | |||
Balance at end of period | 2,305 | 1,642 | 2,305 | 1,642 | 2,813 | |||
Loans: | ||||||||
Ending balance | 310,025 | 315,387 | 272,803 | |||||
Ending balance ALLR | (2,550) | (1,630) | (2,813) | (1,849) | (1,849) | (2,305) | (2,813) | (1,642) |
Net loans | 307,720 | 312,574 | 271,161 | |||||
Ending balance ALLR: | ||||||||
Individually evaluated | 518 | 704 | 312 | |||||
Collectively evaluated | 1,787 | 2,109 | 1,330 | |||||
Total | 2,550 | 1,630 | 2,813 | 1,849 | 1,849 | 2,305 | 2,813 | 1,642 |
Ending balance Loans: | ||||||||
Individually evaluated | 1,924 | 1,374 | 378 | |||||
Collectively evaluated | 303,390 | 308,661 | 272,425 | |||||
Acquired with deteriorated credit quality | 4,711 | 5,352 | ||||||
Total Loans | 310,025 | 315,387 | 272,803 | |||||
Commercial, financial, and agricultural | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 2,571 | 1,669 | 1,539 | 1,378 | 1,378 | |||
Charge-offs | (57) | (9) | (157) | (74) | (663) | |||
Recoveries | 3 | 16 | 3 | 75 | 78 | |||
Provision | 355 | (153) | 1,487 | 144 | 746 | |||
Balance at end of period | 2,872 | 1,523 | 2,872 | 1,523 | 1,539 | |||
Loans: | ||||||||
Ending balance | 120,804 | 101,895 | 98,714 | |||||
Ending balance ALLR | (2,571) | (1,669) | (1,539) | (1,378) | (1,378) | (2,872) | (1,539) | (1,523) |
Net loans | 117,932 | 100,356 | 97,191 | |||||
Ending balance ALLR: | ||||||||
Individually evaluated | 1,927 | 492 | 1,104 | |||||
Collectively evaluated | 945 | 1,047 | 419 | |||||
Total | 2,571 | 1,669 | 1,539 | 1,378 | 1,378 | 2,872 | 1,539 | 1,523 |
Ending balance Loans: | ||||||||
Individually evaluated | 4,728 | 863 | 1,730 | |||||
Collectively evaluated | 115,897 | 100,330 | 96,984 | |||||
Acquired with deteriorated credit quality | 179 | 702 | ||||||
Total Loans | 120,804 | 101,895 | 98,714 | |||||
Commercial construction | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 128 | 40 | 142 | 80 | 80 | |||
Recoveries | 3 | 9 | 50 | |||||
Provision | (17) | 1 | (31) | (45) | 12 | |||
Balance at end of period | 111 | 44 | 111 | 44 | 142 | |||
Loans: | ||||||||
Ending balance | 15,498 | 16,284 | 12,242 | |||||
Ending balance ALLR | (128) | (40) | (142) | (80) | (80) | (111) | (142) | (44) |
Net loans | 15,387 | 16,142 | 12,198 | |||||
Ending balance ALLR: | ||||||||
Collectively evaluated | 111 | 142 | 44 | |||||
Total | 128 | 40 | 142 | 80 | 80 | 111 | 142 | 44 |
Ending balance Loans: | ||||||||
Collectively evaluated | 15,496 | 16,126 | 12,242 | |||||
Acquired with deteriorated credit quality | 2 | 158 | ||||||
Total Loans | 15,498 | 16,284 | 12,242 | |||||
One to four family residential real estate | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 282 | 345 | 285 | 516 | 516 | |||
Charge-offs | (62) | (28) | (92) | (44) | (290) | |||
Recoveries | 4 | 1 | 18 | 22 | ||||
Provision | 74 | 80 | 100 | (89) | 37 | |||
Balance at end of period | 294 | 401 | 294 | 401 | 285 | |||
Loans: | ||||||||
Ending balance | 144,807 | 139,553 | 110,310 | |||||
Ending balance ALLR | (282) | (345) | (285) | (516) | (516) | (294) | (285) | (401) |
Net loans | 144,513 | 139,268 | 109,909 | |||||
Ending balance ALLR: | ||||||||
Individually evaluated | 56 | 19 | 167 | |||||
Collectively evaluated | 238 | 266 | 234 | |||||
Total | 282 | 345 | 285 | 516 | 516 | 294 | 285 | 401 |
Ending balance Loans: | ||||||||
Individually evaluated | 394 | 768 | 1,202 | |||||
Collectively evaluated | 140,789 | 134,908 | 109,108 | |||||
Acquired with deteriorated credit quality | 3,624 | 3,877 | ||||||
Total Loans | 144,807 | 139,553 | 110,310 | |||||
Consumer construction | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 5 | 15 | 6 | 25 | 25 | |||
Recoveries | 1 | |||||||
Provision | 2 | 3 | (7) | (19) | ||||
Balance at end of period | 7 | 18 | 7 | 18 | 6 | |||
Loans: | ||||||||
Ending balance | 11,957 | 9,431 | 8,729 | |||||
Ending balance ALLR | (5) | (15) | (6) | (25) | (25) | (7) | (6) | (18) |
Net loans | 11,950 | 9,425 | 8,711 | |||||
Ending balance ALLR: | ||||||||
Collectively evaluated | 7 | 6 | 18 | |||||
Total | 5 | 15 | 6 | 25 | 25 | 7 | 6 | 18 |
Ending balance Loans: | ||||||||
Collectively evaluated | 11,957 | 9,216 | 8,729 | |||||
Acquired with deteriorated credit quality | 215 | |||||||
Total Loans | 11,957 | 9,431 | 8,729 | |||||
Consumer | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 27 | 111 | 13 | 148 | 148 | |||
Charge-offs | (36) | (15) | (64) | (48) | (74) | |||
Recoveries | 5 | 11 | 24 | 35 | 44 | |||
Provision | 46 | 1 | 69 | (27) | (105) | |||
Balance at end of period | 42 | 108 | 42 | 108 | 13 | |||
Loans: | ||||||||
Ending balance | 16,815 | 18,385 | 15,575 | |||||
Ending balance ALLR | (27) | (111) | (13) | (148) | (148) | (42) | (13) | (108) |
Net loans | 16,773 | 18,372 | 15,467 | |||||
Ending balance ALLR: | ||||||||
Individually evaluated | 23 | 1 | 32 | |||||
Collectively evaluated | 19 | 12 | 76 | |||||
Total | 27 | 111 | 13 | 148 | 148 | 42 | 13 | 108 |
Ending balance Loans: | ||||||||
Individually evaluated | 46 | 72 | 61 | |||||
Collectively evaluated | 16,767 | 18,305 | 15,514 | |||||
Acquired with deteriorated credit quality | 2 | 8 | ||||||
Total Loans | 16,815 | 18,385 | 15,575 | |||||
Unallocated | ||||||||
Allowance for loan loss reserve: | ||||||||
Balance at beginning of period | 37 | 1,287 | 342 | 665 | 665 | |||
Provision | 111 | 256 | (194) | 878 | (323) | |||
Balance at end of period | 148 | 1,543 | 148 | 1,543 | 342 | |||
Loans: | ||||||||
Ending balance ALLR | (37) | (1,287) | (342) | (665) | (665) | (148) | (342) | (1,543) |
Net loans | (148) | (342) | (1,543) | |||||
Ending balance ALLR: | ||||||||
Collectively evaluated | 148 | 342 | 1,543 | |||||
Total | $ 37 | $ 1,287 | $ 342 | $ 665 | $ 665 | $ 148 | $ 342 | $ 1,543 |
LOANS (Details 3)
LOANS (Details 3) $ in Thousands | Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) |
Breakdown of loans by risk category | |||
Total loans | $ 619,906 | $ 600,935 | $ 518,373 |
Minimum | |||
Breakdown of loans by risk category | |||
Credit risk rating for which reserves are established if no specific reserves made | item | 6 | ||
Maximum | |||
Breakdown of loans by risk category | |||
Credit risk rating for which general reserves are established | item | 5 | ||
Credit risk rating for which reserves are established if no specific reserves made | item | 7 | ||
Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | $ 310,025 | 315,387 | 272,803 |
Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 120,804 | 101,895 | 98,714 |
Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 15,498 | 16,284 | 12,242 |
One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 144,807 | 139,553 | 110,310 |
Consumer construction | |||
Breakdown of loans by risk category | |||
Total loans | 11,957 | 9,431 | 8,729 |
Consumer | |||
Breakdown of loans by risk category | |||
Total loans | 16,815 | 18,385 | 15,575 |
Strong (1) | |||
Breakdown of loans by risk category | |||
Total loans | 18,092 | 4,516 | 3,477 |
Strong (1) | Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | 3,594 | 859 | 1,741 |
Strong (1) | Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 13,854 | 3,227 | 1,736 |
Strong (1) | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 80 | ||
Strong (1) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 617 | 297 | |
Strong (1) | Consumer | |||
Breakdown of loans by risk category | |||
Total loans | 27 | 53 | |
Good (2) | |||
Breakdown of loans by risk category | |||
Total loans | 34,022 | 34,832 | 30,038 |
Good (2) | Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | 26,806 | 28,740 | 24,827 |
Good (2) | Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 5,641 | 4,577 | 4,472 |
Good (2) | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 404 | 441 | 444 |
Good (2) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 1,171 | 1,074 | 295 |
Average (3) | |||
Breakdown of loans by risk category | |||
Total loans | 168,503 | 169,077 | 153,796 |
Average (3) | Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | 113,266 | 129,791 | 116,621 |
Average (3) | Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 48,918 | 33,794 | 34,547 |
Average (3) | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 2,911 | 2,282 | 1,578 |
Average (3) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 3,388 | 3,207 | 1,046 |
Average (3) | Consumer | |||
Breakdown of loans by risk category | |||
Total loans | 20 | 3 | 4 |
Acceptable/Acceptable Watch (4) | |||
Breakdown of loans by risk category | |||
Total loans | 217,731 | 220,135 | 192,512 |
Acceptable/Acceptable Watch (4) | Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | 159,045 | 147,624 | 128,126 |
Acceptable/Acceptable Watch (4) | Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 45,976 | 57,295 | 53,311 |
Acceptable/Acceptable Watch (4) | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 8,970 | 9,324 | 6,935 |
Acceptable/Acceptable Watch (4) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 3,736 | 5,882 | 4,119 |
Acceptable/Acceptable Watch (4) | Consumer | |||
Breakdown of loans by risk category | |||
Total loans | 4 | 10 | 21 |
Special Mention (5) | |||
Breakdown of loans by risk category | |||
Total loans | 60 | ||
Special Mention (5) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 60 | ||
Substandard (6) | |||
Breakdown of loans by risk category | |||
Total loans | 19,113 | 18,037 | 6,538 |
Substandard (6) | Commercial real estate loans | |||
Breakdown of loans by risk category | |||
Total loans | 7,314 | 8,373 | 1,488 |
Substandard (6) | Commercial, financial, and agricultural | |||
Breakdown of loans by risk category | |||
Total loans | 6,415 | 3,002 | 4,648 |
Substandard (6) | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 766 | 906 | 402 |
Substandard (6) | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 4,618 | 5,745 | |
Substandard (6) | Consumer | |||
Breakdown of loans by risk category | |||
Total loans | 11 | ||
Rating Unassigned | |||
Breakdown of loans by risk category | |||
Total loans | 162,445 | 154,338 | 131,952 |
Rating Unassigned | Commercial construction | |||
Breakdown of loans by risk category | |||
Total loans | 2,447 | 3,251 | 2,883 |
Rating Unassigned | One to four family residential real estate | |||
Breakdown of loans by risk category | |||
Total loans | 131,277 | 123,348 | 104,790 |
Rating Unassigned | Consumer construction | |||
Breakdown of loans by risk category | |||
Total loans | 11,957 | 9,431 | 8,729 |
Rating Unassigned | Consumer | |||
Breakdown of loans by risk category | |||
Total loans | $ 16,764 | $ 18,308 | $ 15,550 |
LOANS (Details 4)
LOANS (Details 4) - USD ($) $ in Thousands | Dec. 05, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Impaired Loans | ||||||
Number of days past due to be considered as nonperforming loans | 90 days | |||||
Non performing loans | $ 2,978 | |||||
Accretion | $ (954) | |||||
Accretable yield | $ 0 | |||||
Average investment | ||||||
Total | $ 15,295 | $ 2,610 | 15,529 | $ 2,143 | 3,354 | |
Related Valuation Reserve | 2,129 | 1,478 | 2,129 | 1,478 | 720 | |
Interest Income Recognized During Impairment | ||||||
Total | 76 | 704 | ||||
Interest Income on Accrual Basis | ||||||
Total | 140 | 40 | 971 | 93 | 130 | |
Nonaccrual Basis | ||||||
Recorded investment | ||||||
Total | 8,028 | 2,695 | 8,028 | 2,695 | 3,939 | |
Accrual Basis | ||||||
Recorded investment | ||||||
Total | 6,745 | 6,745 | 10,312 | |||
Commercial real estate loans | ||||||
Average investment | ||||||
With no valuation reserve | 4,740 | 5,344 | 532 | |||
With a valuation reserve | 929 | 340 | 686 | 427 | 229 | |
Total | 5,669 | 340 | 6,030 | 427 | 761 | |
Related Valuation Reserve | 118 | 227 | 118 | 227 | 227 | |
Interest Income Recognized During Impairment | ||||||
With no valuation reserve | 41 | 574 | ||||
Total | 41 | 574 | ||||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 45 | 611 | 7 | |||
With a valuation reserve | 6 | 4 | 26 | 20 | 18 | |
Total | 51 | 4 | 637 | 20 | 25 | |
Commercial real estate loans | Nonaccrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 692 | 692 | 632 | |||
With a valuation reserve | 929 | 227 | 929 | 227 | 227 | |
Total | 1,621 | 227 | 1,621 | 227 | 859 | |
Commercial real estate loans | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 3,978 | 3,978 | 5,352 | |||
Total | 3,978 | 3,978 | 5,352 | |||
Commercial, financial, and agricultural | ||||||
Average investment | ||||||
With no valuation reserve | 219 | 357 | 685 | |||
With a valuation reserve | 4,747 | 1,770 | 3,935 | 1,268 | 1,109 | |
Total | 4,966 | 1,770 | 4,292 | 1,268 | 1,794 | |
Related Valuation Reserve | 1,927 | 1,104 | 1,927 | 1,104 | 484 | |
Interest Income Recognized During Impairment | ||||||
With no valuation reserve | 2 | 21 | ||||
Total | 2 | 21 | ||||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 2 | 23 | 27 | |||
With a valuation reserve | 50 | 28 | 140 | 52 | 45 | |
Total | 52 | 28 | 163 | 52 | 72 | |
Commercial, financial, and agricultural | Nonaccrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 74 | |||||
With a valuation reserve | 4,706 | 1,735 | 4,706 | 1,735 | 774 | |
Total | 4,706 | 1,735 | 4,706 | 1,735 | 848 | |
Commercial, financial, and agricultural | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 179 | 179 | 702 | |||
Total | 179 | 179 | 702 | |||
Commercial construction | ||||||
Average investment | ||||||
With no valuation reserve | 103 | 11 | ||||
Total | 103 | 11 | ||||
Interest Income Recognized During Impairment | ||||||
With no valuation reserve | 3 | |||||
Total | 3 | |||||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 7 | |||||
Total | 7 | |||||
Commercial construction | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 158 | |||||
Total | 158 | |||||
One to four family residential real estate | ||||||
Average investment | ||||||
With no valuation reserve | 3,968 | 4,401 | 656 | |||
With a valuation reserve | 576 | 489 | 546 | 434 | 116 | |
Total | 4,544 | 489 | 4,947 | 434 | 772 | |
Related Valuation Reserve | 84 | 147 | 84 | 147 | 9 | |
Interest Income Recognized During Impairment | ||||||
With no valuation reserve | 33 | 105 | ||||
Total | 33 | 105 | ||||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 37 | 150 | 25 | |||
With a valuation reserve | 7 | 12 | 20 | 7 | ||
Total | 37 | 7 | 162 | 20 | 32 | |
One to four family residential real estate | Nonaccrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 1,017 | 1,017 | 1,844 | |||
With a valuation reserve | 597 | 733 | 597 | 733 | 114 | |
Total | 1,614 | 733 | 1,614 | 733 | 1,958 | |
One to four family residential real estate | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 2,584 | 2,584 | 3,877 | |||
Total | 2,584 | 2,584 | 3,877 | |||
Consumer construction | ||||||
Average investment | ||||||
With no valuation reserve | 76 | 117 | 15 | |||
Total | 76 | 117 | 15 | |||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 1 | |||||
Total | 1 | |||||
Consumer construction | Nonaccrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 21 | 21 | 274 | |||
Total | 21 | 21 | 274 | |||
Consumer construction | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 2 | 2 | 215 | |||
Total | 2 | 2 | 215 | |||
Consumer | ||||||
Average investment | ||||||
With no valuation reserve | 20 | 20 | 1 | |||
With a valuation reserve | 20 | 11 | 20 | 14 | ||
Total | 40 | 11 | 40 | 14 | 1 | |
Interest Income Recognized During Impairment | ||||||
With no valuation reserve | 1 | |||||
Total | 1 | |||||
Interest Income on Accrual Basis | ||||||
With no valuation reserve | 1 | 1 | ||||
With a valuation reserve | 1 | 1 | ||||
Total | $ 1 | 1 | $ 1 | 1 | ||
Consumer | Nonaccrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 5 | 5 | ||||
With a valuation reserve | 61 | 61 | ||||
Total | 66 | 66 | ||||
Consumer | Accrual Basis | ||||||
Recorded investment | ||||||
With no valuation reserve | 2 | 2 | 8 | |||
Total | $ 2 | $ 2 | $ 8 |
LOANS (Details 5)
LOANS (Details 5) - USD ($) $ in Thousands | Sep. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 |
Past due loans | ||||||
30-89 days Past Due (accruing) | $ 1,919 | $ 3,499 | $ 1,370 | |||
90+ days Past Due/Nonaccrual | 8,028 | $ 9,512 | 3,939 | 2,695 | $ 2,652 | $ 2,024 |
Total | 9,947 | 7,438 | 4,065 | |||
Commercial real estate loans | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 380 | 1,857 | 540 | |||
90+ days Past Due/Nonaccrual | 1,621 | 2,398 | 859 | 227 | 454 | 572 |
Total | 2,001 | 2,716 | 767 | |||
Commercial, financial, and agricultural | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 46 | 104 | 306 | |||
90+ days Past Due/Nonaccrual | 4,706 | 4,905 | 848 | 1,735 | 1,808 | 811 |
Total | 4,752 | 952 | 2,041 | |||
Commercial construction | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 347 | 55 | ||||
90+ days Past Due/Nonaccrual | 21 | |||||
Total | 368 | 55 | ||||
One to four family residential real estate | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 1,109 | 1,412 | 414 | |||
90+ days Past Due/Nonaccrual | 1,614 | 2,157 | 1,958 | 733 | 383 | 611 |
Total | 2,723 | 3,370 | 1,147 | |||
Consumer construction | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 38 | |||||
90+ days Past Due/Nonaccrual | 21 | 23 | 274 | |||
Total | 312 | |||||
Consumer | ||||||
Past due loans | ||||||
30-89 days Past Due (accruing) | 37 | 88 | 55 | |||
90+ days Past Due/Nonaccrual | 66 | $ 29 | $ 7 | $ 30 | ||
Total | $ 103 | $ 88 | $ 55 |
LOANS (Details 6)
LOANS (Details 6) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Roll-forward of nonaccrual activity | |||||
Beginning balance | $ 9,512 | $ 2,652 | $ 3,939 | $ 2,024 | $ 2,024 |
Principal payments | (702) | (88) | (2,863) | (297) | (835) |
Charge-offs | (150) | (38) | (308) | (119) | (691) |
Transfers to OREO | (74) | (207) | (303) | (490) | (590) |
Transfers to accruing | (1,118) | (1,578) | (137) | (137) | |
Transfers from accruing | 651 | 371 | 9,524 | 1,687 | 1,858 |
Acquired impaired loans | 2,281 | ||||
Other | (91) | 5 | (383) | 27 | 29 |
Ending balance | 8,028 | 2,695 | 8,028 | 2,695 | 3,939 |
Commercial real estate loans | |||||
Roll-forward of nonaccrual activity | |||||
Beginning balance | 2,398 | 454 | 859 | 572 | 572 |
Principal payments | (181) | (2) | (282) | (104) | (104) |
Charge-offs | (52) | (18) | (52) | (18) | (18) |
Transfers to OREO | (207) | (233) | (233) | ||
Transfers to accruing | (892) | (1,291) | |||
Transfers from accruing | 320 | 2,350 | |||
Acquired impaired loans | 632 | ||||
Other | 28 | 37 | 10 | 10 | |
Ending balance | 1,621 | 227 | 1,621 | 227 | 859 |
Commercial, financial, and agricultural | |||||
Roll-forward of nonaccrual activity | |||||
Beginning balance | 4,905 | 1,808 | 848 | 811 | 811 |
Principal payments | (112) | (79) | (2,108) | (160) | (692) |
Charge-offs | (3) | (100) | (56) | (435) | |
Transfers to accruing | (87) | (88) | (10) | (10) | |
Transfers from accruing | 3 | 6,154 | 1,142 | 1,167 | |
Other | 6 | 8 | 7 | ||
Ending balance | 4,706 | 1,735 | 4,706 | 1,735 | 848 |
Commercial construction | |||||
Roll-forward of nonaccrual activity | |||||
Principal payments | (1) | (1) | |||
Class transfers | 250 | ||||
Transfers from accruing | 104 | 104 | |||
Other | (103) | (353) | |||
Ending balance | 21 | 21 | |||
One to four family residential real estate | |||||
Roll-forward of nonaccrual activity | |||||
Beginning balance | 2,157 | 383 | 1,958 | 611 | 611 |
Principal payments | (393) | (7) | (449) | (29) | (35) |
Charge-offs | (62) | (10) | (92) | (13) | (206) |
Transfers to OREO | (74) | (303) | (257) | (357) | |
Transfers to accruing | (139) | (199) | (127) | (127) | |
Transfers from accruing | 151 | 368 | 794 | 539 | 685 |
Acquired impaired loans | 1,375 | ||||
Other | (26) | (1) | (95) | 9 | 12 |
Ending balance | 1,614 | 733 | 1,614 | 733 | 1,958 |
Consumer construction | |||||
Roll-forward of nonaccrual activity | |||||
Beginning balance | 23 | 274 | |||
Principal payments | (2) | (2) | |||
Class transfers | (250) | ||||
Acquired impaired loans | 274 | ||||
Other | (1) | ||||
Ending balance | 21 | 21 | 274 | ||
Consumer | |||||
Roll-forward of nonaccrual activity | |||||
Beginning balance | 29 | 7 | 30 | 30 | |
Principal payments | (13) | (21) | (4) | (4) | |
Charge-offs | (36) | $ (7) | (64) | (32) | (32) |
Transfers from accruing | 76 | 122 | $ 6 | $ 6 | |
Other | 10 | 29 | |||
Ending balance | $ 66 | $ 66 |
LOANS (Details 7)
LOANS (Details 7) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($)item | |
Troubled Debt Restructuring | ||
Number of Modifications | item | 30 | 1 |
Recorded Investment | $ 3,288 | $ 89 |
Commercial real estate loans | ||
Troubled Debt Restructuring | ||
Number of Modifications | item | 3 | |
Recorded Investment | $ 1,216 | |
Commercial, financial, and agricultural | ||
Troubled Debt Restructuring | ||
Number of Modifications | item | 3 | |
Recorded Investment | $ 268 | |
Commercial construction | ||
Troubled Debt Restructuring | ||
Number of Modifications | item | 4 | |
Recorded Investment | $ 266 | |
One to four family residential real estate | ||
Troubled Debt Restructuring | ||
Number of Modifications | item | 20 | 1 |
Recorded Investment | $ 1,538 | $ 89 |
LOANS (Details 8)
LOANS (Details 8) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Changes in troubled debt restructuring | |||||
Beginning balance | $ 5,983 | $ 3,746 | $ 3,105 | $ 6,277 | $ 6,277 |
Principal payments | (328) | (4) | (740) | (2,535) | (2,842) |
Charge-offs | (278) | ||||
New restructured | 3,290 | ||||
Transferred out of TDRs | 91 | 91 | |||
Transfers to nonaccrual | (60) | (89) | (89) | ||
Transfers to foreclosed properties | 89 | (143) | |||
Transfers to accruing | 60 | ||||
Transfers from accruing | (91) | 89 | |||
Ending balance | 5,655 | 3,742 | 5,655 | 3,742 | 3,105 |
Accrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 5,161 | 3,149 | 3,105 | 5,663 | 5,663 |
Principal payments | (308) | (4) | (350) | (2,520) | (2,523) |
Charge-offs | (37) | ||||
New restructured | 2,158 | ||||
Transferred out of TDRs | 91 | 91 | |||
Transfers to nonaccrual | (60) | (89) | (89) | ||
Ending balance | 4,853 | 3,145 | 4,853 | 3,145 | 3,105 |
Nonaccrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 822 | 597 | 614 | 614 | |
Principal payments | (20) | (390) | (15) | (319) | |
Charge-offs | (241) | ||||
New restructured | 1,132 | ||||
Transfers to foreclosed properties | (91) | (143) | |||
Transfers from accruing | 60 | 89 | 89 | ||
Ending balance | 802 | 597 | 802 | 597 | |
Commercial real estate loans | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 2,123 | 1,007 | 1,007 | 3,520 | 3,520 |
Principal payments | (280) | (382) | (2,513) | (2,513) | |
New restructured | 1,218 | ||||
Ending balance | 1,843 | 1,007 | 1,843 | 1,007 | 1,007 |
Commercial real estate loans | Accrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 1,647 | 1,007 | 1,007 | 3,520 | 3,520 |
Principal payments | (270) | (277) | (2,513) | (2,513) | |
New restructured | 647 | ||||
Ending balance | 1,377 | 1,007 | 1,377 | 1,007 | 1,007 |
Commercial real estate loans | Nonaccrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 476 | ||||
Principal payments | (10) | (105) | |||
New restructured | 571 | ||||
Ending balance | 466 | 466 | |||
Commercial, financial, and agricultural | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 1,441 | 1,694 | 1,186 | 1,709 | 1,709 |
Principal payments | (13) | (26) | (15) | (319) | |
Charge-offs | (204) | ||||
New restructured | 268 | ||||
Ending balance | 1,428 | 1,694 | 1,428 | 1,694 | 1,186 |
Commercial, financial, and agricultural | Accrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 1,441 | 1,186 | 1,186 | 1,186 | 1,186 |
Principal payments | (13) | (26) | |||
New restructured | 268 | ||||
Ending balance | 1,428 | 1,186 | 1,428 | 1,186 | 1,186 |
Commercial, financial, and agricultural | Nonaccrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 508 | 523 | 523 | ||
Principal payments | (15) | (319) | |||
Charge-offs | (204) | ||||
Ending balance | 508 | 508 | |||
Commercial construction | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 844 | 858 | 852 | 858 | 858 |
Principal payments | (5) | (3) | (279) | (3) | (6) |
New restructured | 266 | ||||
Ending balance | 839 | 855 | 839 | 855 | 852 |
Commercial construction | Accrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 844 | 858 | 852 | 858 | 858 |
Principal payments | (5) | (3) | (13) | (3) | (6) |
Ending balance | 839 | 855 | 839 | 855 | 852 |
Commercial construction | Nonaccrual Basis | |||||
Changes in troubled debt restructuring | |||||
Principal payments | (266) | ||||
New restructured | 266 | ||||
One to four family residential real estate | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 1,575 | 187 | 60 | 190 | 190 |
Principal payments | (30) | (1) | (53) | (4) | (4) |
Charge-offs | (74) | ||||
New restructured | 1,538 | ||||
Transferred out of TDRs | 91 | 91 | |||
Transfers to nonaccrual | (60) | (89) | (89) | ||
Transfers to foreclosed properties | 89 | (143) | |||
Transfers to accruing | 60 | ||||
Transfers from accruing | (91) | 89 | |||
Ending balance | 1,545 | 186 | 1,545 | 186 | 60 |
One to four family residential real estate | Accrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 1,229 | 98 | 60 | 99 | 99 |
Principal payments | (20) | (1) | (34) | (4) | (4) |
Charge-offs | (37) | ||||
New restructured | 1,243 | ||||
Transferred out of TDRs | 91 | 91 | |||
Transfers to nonaccrual | (60) | (89) | (89) | ||
Ending balance | 1,209 | 97 | 1,209 | 97 | 60 |
One to four family residential real estate | Nonaccrual Basis | |||||
Changes in troubled debt restructuring | |||||
Beginning balance | 346 | 89 | 91 | 91 | |
Principal payments | (10) | (19) | |||
Charge-offs | (37) | ||||
New restructured | 295 | ||||
Transfers to foreclosed properties | (91) | (143) | |||
Transfers from accruing | 60 | 89 | $ 89 | ||
Ending balance | $ 336 | $ 89 | $ 336 | $ 89 |
LOANS (Details 9)
LOANS (Details 9) - Bank - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms | |||
Loans outstanding, beginning of period | $ 8,789 | $ 9,043 | $ 9,043 |
New loans | 33 | 33 | |
Net activity on revolving lines of credit | 88 | 1,052 | 1,390 |
Principal payments | (2,596) | (1,614) | (1,677) |
Loans outstanding, end of period | 6,281 | 8,514 | 8,789 |
Unfunded commitments | 3,255 | ||
Substandard (6) | |||
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms | |||
Loans outstanding, beginning of period | 0 | ||
Loans outstanding, end of period | $ 0 | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE44
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Goodwill | $ 3,805 | $ 3,805 |
Deposit based intangible assets | 1,106 | 1,196 |
Amortization of Intangible Assets | 90 | |
Amortization expense year one | 121 | |
Amortization expense year two | 121 | |
Amortization expense year three | 121 | |
Amortization expense year four | 121 | |
Amortization expense year five | $ 121 | |
Peninsula Financial Corporation | ||
Goodwill | 3,805 | |
Deposit based intangible assets | $ 1,206 | |
Estimated life | 10 years | 10 years |
SERVICING RIGHTS (Details)
SERVICING RIGHTS (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Commercial loans | |||
Commercial Loans | |||
Commercial Loans | $ 65,830 | ||
Servicing rights | $ 177 | ||
Mortgage loans | |||
Mortgage Loans | |||
Annual constant prepayment speed (as a percent) | 9.34% | ||
Discount rate (as a percent) | 9.19% | ||
Changes in mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances | |||
Balance at beginning of period | $ 1,994 | $ 1,129 | $ 1,129 |
Additions from loans sold with servicing retained | 200 | 375 | 636 |
MSRs acquired in Peninsula transaction | 539 | ||
Amortization | (396) | (218) | (310) |
Balance at end of period | 1,798 | 1,286 | 1,994 |
Balance of loan servicing portfolio | $ 229,769 | $ 144,051 | $ 223,549 |
Mortgage servicing rights as % of portfolio | 0.78% | 0.89% | 0.89% |
BORROWINGS (Details)
BORROWINGS (Details) | 9 Months Ended | |||
Sep. 30, 2015USD ($)item | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | |
BORROWINGS | ||||
Borrowings | $ 49,593,000 | $ 49,846,000 | $ 44,909,000 | |
Number of banking borrowing relationship | item | 2 | |||
Mortgage related and municipal securities | ||||
BORROWINGS | ||||
Loans pledged as collateral | $ 5,460,000 | |||
Federal Home Loan Bank borrowings | ||||
BORROWINGS | ||||
Borrowings | $ 35,000,000 | 35,000,000 | 35,000,000 | |
Interest rate on note (as a percent) | 1.68% | |||
Federal Home Loan Bank borrowings | Mortgage related and municipal securities | ||||
BORROWINGS | ||||
Securities pledged as collateral, amortized cost | $ 5,394,000 | |||
Federal Home Loan Bank borrowings | FHLB stock | ||||
BORROWINGS | ||||
Stock owned and pledged as collateral | 2,169,000 | |||
Federal Home Loan Bank borrowings | One to four family residential real estate | ||||
BORROWINGS | ||||
Loans pledged as collateral | 36,919,000 | |||
Line of Credit | ||||
BORROWINGS | ||||
Borrowings | $ 11,250,000 | 8,000,000 | 4,500,000 | |
Variable rate basis | 90-day LIBOR | |||
Floor rate (as a percent) | 4.00% | |||
Line of Credit | 90-day LIBOR | ||||
BORROWINGS | ||||
Variable rate (as a percent) | 2.75% | |||
Bank line of credit - wholly owned asset based lending subsidiary | ||||
BORROWINGS | ||||
Borrowings | $ 239,000 | 3,367,000 | 1,830,000 | |
Correspondent bank term note, current floor rate of 4%, maturing December 28, 2017 | ||||
BORROWINGS | ||||
Borrowings | $ 2,400,000 | 2,700,000 | $ 2,800,000 | |
Interest rate on note (as a percent) | 4.00% | |||
Frequency of period payment | quarterly | |||
Quarterly principal payment | $ 100,000 | |||
USDA Rural Development, fixed-rate note payable, maturing August 24, 2024, interest payable at 1% | ||||
BORROWINGS | ||||
Borrowings | $ 704,000 | $ 779,000 | $ 779,000 | |
Interest rate on note (as a percent) | 1.00% | |||
USDA Rural Development, fixed-rate note payable, maturing August 24, 2024, interest payable at 1% | First Rural Relending | ||||
BORROWINGS | ||||
Loans pledged as collateral | $ 116,000 | |||
Demand deposit account pledged as collateral | 653,000 | |||
Revolving Credit Facility | 90-day LIBOR | ||||
BORROWINGS | ||||
Maximum borrowing | $ 10,000,000 |
DEFINED BENEFIT PENSION PLAN (D
DEFINED BENEFIT PENSION PLAN (Details) | 9 Months Ended |
Sep. 30, 2015USD ($)item | |
Defined Benefit Pension Plan | |
Expected contributions to the plan | $ 114,000 |
Number of years over which anticipated pension distributions disclosed | item | 5 |
Anticipated distributions from the plan | |
2,015 | $ 132,026 |
2,016 | 130,003 |
2,017 | 127,902 |
2,018 | 128,608 |
2,019 | 126,361 |
Thereafter | 701,944 |
Total | $ 1,346,844 |
Assumptions in the actuarial valuation | |
Weighted average discount rate | 3.98% |
Expected long-term rate of return on plan assets | 8.00% |
Equity securities | |
Plan assets | |
Target Allocation, minimum | 50.00% |
Target Allocation, maximum | 70.00% |
Actual Allocation | 60.00% |
Debt securities | |
Plan assets | |
Target Allocation, minimum | 30.00% |
Target Allocation, maximum | 50.00% |
Actual Allocation | 40.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | |
Anticipated distributions from the plan | |
Fair value of plan assets | $ 2,107,000 |
Net liability of Plan assets | 1,183,000 |
Accumulated benefit obligation | $ 3,290,000 |
STOCK COMPENSATION PLANS (Detai
STOCK COMPENSATION PLANS (Details) - USD ($) | Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2015 | May. 31, 2015 | Mar. 31, 2015 | Aug. 31, 2014 | Mar. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | May. 22, 2012 |
Stock Compensation Plans | |||||||||||||||||
Number of RSUs granted (in shares) | 40,730 | ||||||||||||||||
Number of RSUs unvested (in shares) | 127,024 | 127,024 | 127,024 | 114,435 | 127,024 | ||||||||||||
Summary of nonvested shares | |||||||||||||||||
Nonvested beginning balance (in shares) | 127,024 | 127,024 | |||||||||||||||
Granted during the period (in shares) | 40,730 | ||||||||||||||||
Vested during the period (in shares) | (53,319) | ||||||||||||||||
Nonvested ending balance (in shares) | 114,435 | 127,024 | |||||||||||||||
Weighted Average Grant Date Fair Value | |||||||||||||||||
Nonvested beginning balance (in dollars per share) | $ 10.07 | $ 10.07 | |||||||||||||||
Granted during the period (in dollars per share) | 11.15 | ||||||||||||||||
Vested during the period (in dollars per share) | 9.34 | ||||||||||||||||
Nonvested ending balance (in dollars per share) | $ 10.72 | $ 10.07 | |||||||||||||||
Stock option transactions | |||||||||||||||||
Outstanding shares at beginning of year | 20,000 | 20,000 | 237,152 | 237,152 | |||||||||||||
Granted during the year (in shares) | 0 | 0 | |||||||||||||||
Exercised during the year (in shares) | (70,502) | ||||||||||||||||
Expired / forfeited during the period | (10,000) | (146,650) | |||||||||||||||
Outstanding shares at end of year | 10,000 | 237,152 | 20,000 | ||||||||||||||
Exercisable shares at end of year | 124,861 | 2,000 | 4,000 | ||||||||||||||
Weighted average exercise price per share at end of year (in dollars per share) | $ 9.80 | $ 10.65 | $ 11.33 | ||||||||||||||
RSUs | |||||||||||||||||
Stock Compensation Plans | |||||||||||||||||
Number of RSUs granted (in shares) | 3,000 | 37,730 | 52,774 | 148,500 | |||||||||||||
Share price (in dollars per share) | $ 7.91 | $ 7.91 | |||||||||||||||
Stock issued for vested restricted stocks | 37,125 | 37,125 | 3,000 | 13,194 | 37,125 | 37,125 | 13,194 | ||||||||||
Cost to the employee | $ 0 | $ 0 | |||||||||||||||
Vesting period | 4 years | 4 years | 4 years | 4 years | 4 years | ||||||||||||
Recognition period of compensation cost to be recognized | 4 years | ||||||||||||||||
Compensation cost to be recognized | $ 1,175,000 | $ 421,000 | $ 683,000 | $ 1,175,000 | $ 421,000 | $ 421,000 | |||||||||||
Market value of granted stock (in dollars per unit) | $ 7.91 | $ 11.15 | $ 12.95 | $ 7.91 | $ 11.15 | $ 11.15 | |||||||||||
Summary of nonvested shares | |||||||||||||||||
Granted during the period (in shares) | 3,000 | 37,730 | 52,774 | 148,500 | |||||||||||||
2012 Incentive Compensation Plan | |||||||||||||||||
Stock Compensation Plans | |||||||||||||||||
Total authorized share balance | 575,000 | ||||||||||||||||
2012 Incentive Compensation Plan | Stock Options | |||||||||||||||||
Stock Compensation Plans | |||||||||||||||||
Total authorized share balance | 392,152 |
STOCK COMPENSATION PLANS (Det49
STOCK COMPENSATION PLANS (Details 2) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Stock option plans | |
Percentage of stock options to be vested immediately upon issue | 20.00% |
Future compensation expenses | $ | $ 0 |
$ 10.65 | |
Stock option plans | |
Exercise Price (in dollars per share) | $ / shares | $ 10.65 |
Number of Shares, Outstanding | 10,000 |
Number of Shares, Exercisable | 2,000 |
Number of Shares, Unvested Options | 8,000 |
Weighted Average Remaining Contractual Life-Years | 1 year 2 months 16 days |
Minimum | |
Stock option plans | |
Vesting period | 2 years |
Maximum | |
Stock option plans | |
Vesting period | 5 years |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
INCOME TAXES | |||
Expiration period from date of origination for net operating loss carryforwards | 20 years | ||
Annual limitation for usage of NOL | $ 1,400 | ||
Annual limitation for usage of tax credits | 476 | ||
Deferred tax assets, net of valuation allowance | 9,326 | $ 11,498 | $ 8,681 |
Valuation allowance | 760 | ||
Adjustment warranted to the valuation | $ 0 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
FAIR VALUE MEASUREMENTS | |||
Blended interest rate for determining fair value of nonaccrual loans (as a percent) | 0.00% | ||
Fair value of commitments | $ 0 | ||
Financial assets: | |||
Interest-bearing deposits | 5,089 | $ 5,797 | $ 235 |
Securities available for sale | 54,432 | 65,832 | 48,742 |
Carrying Amount | |||
Financial assets: | |||
Total financial assets | 716,219 | 694,024 | 588,989 |
Financial liabilities: | |||
Total financial liabilities | 672,149 | 657,024 | 536,299 |
Estimated Fair Value | |||
Financial assets: | |||
Total financial assets | 716,838 | 694,658 | 589,012 |
Financial liabilities: | |||
Total financial liabilities | 672,424 | 657,019 | 537,381 |
Level 1 | Carrying Amount | |||
Financial assets: | |||
Cash and cash equivalents | 38,581 | 21,947 | 22,401 |
Level 1 | Estimated Fair Value | |||
Financial assets: | |||
Cash and cash equivalents | 38,581 | 21,947 | 22,401 |
Level 2 | Carrying Amount | |||
Financial assets: | |||
Interest-bearing deposits | 5,089 | 5,797 | 235 |
Securities available for sale | 54,432 | 65,832 | 48,742 |
Federal Home Loan Bank stock | 2,169 | 2,973 | 3,060 |
Financial liabilities: | |||
Deposits | 622,334 | 606,973 | 491,206 |
Borrowings | 49,593 | 49,846 | 44,909 |
Level 2 | Estimated Fair Value | |||
Financial assets: | |||
Interest-bearing deposits | 5,089 | 5,797 | 235 |
Securities available for sale | 54,432 | 65,832 | 48,742 |
Federal Home Loan Bank stock | 2,169 | 2,973 | 3,060 |
Financial liabilities: | |||
Deposits | 621,944 | 606,534 | 491,912 |
Borrowings | 50,258 | 50,280 | 45,285 |
Significant Unobservable Inputs (Level 3) | Carrying Amount | |||
Financial assets: | |||
Net loans | 614,127 | 595,795 | 513,094 |
Accrued interest receivable | 1,821 | 1,680 | 1,457 |
Financial liabilities: | |||
Accrued interest payable | 222 | 205 | 184 |
Significant Unobservable Inputs (Level 3) | Estimated Fair Value | |||
Financial assets: | |||
Net loans | 614,746 | 596,429 | 513,117 |
Accrued interest receivable | 1,821 | 1,680 | 1,457 |
Financial liabilities: | |||
Accrued interest payable | $ 222 | $ 205 | $ 184 |
FAIR VALUE MEASUREMENTS (Deta52
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 |
Fair value measurements | |||
Other real estate owned | $ 2,296 | $ 3,010 | $ 1,843 |
Nonrecurring | |||
Fair value measurements | |||
Impaired loans | 14,774 | 1,658 | 2,695 |
Other real estate owned | 2,296 | 3,010 | 1,843 |
Nonrecurring | Significant Unobservable Inputs (Level 3) | |||
Fair value measurements | |||
Impaired loans | 14,774 | 1,658 | 2,695 |
Other real estate owned | 2,296 | 3,010 | 1,843 |
Recurring | |||
Fair value measurements | |||
Other assets | 0 | 0 | 0 |
Other liabilities | 0 | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | |||
Fair value measurements | |||
Assets | 0 | 0 | 0 |
Liabilities | $ 0 | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Deta53
FAIR VALUE MEASUREMENTS (Details 3) - Nonrecurring - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Fair value | |||||
Total Losses | $ 221 | $ 186 | $ 400 | $ 630 | $ 1,137 |
Investments | 0 | 0 | |||
Impaired loans | |||||
Fair value | |||||
Total Losses | 117 | 10 | 259 | 440 | 857 |
Other real estate owned | |||||
Fair value | |||||
Total Losses | $ (104) | $ 176 | $ 141 | $ 190 | $ 280 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2014USD ($)itemshares | Sep. 30, 2015shares | Sep. 30, 2015shares | Sep. 30, 2014shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013shares | Apr. 28, 2015USD ($) | Dec. 17, 2013USD ($) | Feb. 27, 2013USD ($) | |
Participation in the TARP Capital Purchase Program | |||||||||
Stock Repurchase Program, Authorized Amount | $ 600,000 | $ 600,000 | |||||||
Stock Repurchase Program Additional Authorized Amount | $ 750,000,000 | ||||||||
Shares of Common Stock | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Stock Repurchased During Period, Shares | shares | 26,780 | 70,480 | 13,700 | 13,700 | 55,594 | ||||
Peninsula Financial Corporation | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Number of branches | item | 6 | ||||||||
Purchase price of acquisition | $ 12,420,000 | ||||||||
Common stock issued | shares | 695,361 | ||||||||
Increase in shareholders equity as a result of common stock issued | $ 7,804,000 | ||||||||
Issuance cost | 130,000 | ||||||||
Fair value of assets acquired | 112,766,000 | $ 112,766,000 | |||||||
Amount of loans related to acquisition transaction | 67,139,000 | 67,139,000 | |||||||
Amount of deposit related to acquisition transaction | $ 100,950,000 | $ 100,950,000 |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |
Financial Instruments with Off-Balance-Sheet Risk | |||
Commitments | $ 78,909 | $ 77,664 | $ 83,070 |
Commitments to extend credit | |||
Financial Instruments with Off-Balance-Sheet Risk | |||
Commitments, variable rate | 46,732 | 44,134 | 54,962 |
Commitments, fixed rate | 24,546 | 24,191 | 19,092 |
Standby letters of credit | |||
Financial Instruments with Off-Balance-Sheet Risk | |||
Commitments, variable rate | $ 4,061 | 6,072 | 5,730 |
Percentage collateralization on financial instruments allowed under commitments | 100.00% | ||
Credit card commitments | |||
Financial Instruments with Off-Balance-Sheet Risk | |||
Commitments, fixed rate | $ 3,570 | $ 3,267 | $ 3,286 |
COMMITMENTS, CONTINGENCIES, A56
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details 2) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Concentration of Credit Risk | |||
Loan portfolio | $ 614,127 | $ 513,094 | $ 595,795 |
Commercial real estate loans | |||
Concentration of Credit Risk | |||
Loan portfolio | 307,720 | 271,161 | $ 312,574 |
Bank | Commercial real estate loans | Commercial loan portfolio | Credit risk concentration | |||
Concentration of Credit Risk | |||
Loan portfolio | $ 102,897 | $ 100,912 | |
Percentage of concentration risk under a specified benchmark | 23.05% | 26.30% |