Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 28, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | MACKINAC FINANCIAL CORP /MI/ | ||
Entity Central Index Key | 36,506 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 30,554 | ||
Entity Common Stock, Shares Outstanding | 6,236,250 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and due from banks | $ 25,005 | $ 21,947 |
Federal funds sold | 3 | |
Cash and cash equivalents | 25,008 | 21,947 |
Interest-bearing deposits in other financial institutions | 5,089 | 5,797 |
Securities available for sale | 53,728 | 65,832 |
Federal Home Loan Bank stock | 2,169 | 2,973 |
Loans: | ||
Commercial | 450,275 | 433,566 |
Mortgage | 152,272 | 148,984 |
Consumer | 15,847 | 18,385 |
Total Loans | 618,394 | 600,935 |
Allowance for loan losses | (5,004) | (5,140) |
Net loans | 613,390 | 595,795 |
Premises and equipment | 12,524 | 12,658 |
Other real estate held for sale | 2,324 | 3,010 |
Deferred tax asset | 9,213 | 11,498 |
Deposit based intangibles | 1,076 | 1,196 |
Goodwill | 3,805 | 3,805 |
Other assets | 10,943 | 19,274 |
TOTAL ASSETS | 739,269 | 743,785 |
Deposits: | ||
Noninterest bearing deposits | 122,775 | 95,498 |
NOW, money market, interest checking | 202,784 | 212,565 |
Savings | 30,882 | 28,015 |
CDs less than $250,000 | 124,084 | 158,657 |
CDs more than $250,000 | 8,532 | 6,610 |
Brokered | 121,266 | 105,628 |
Total deposits | 610,323 | 606,973 |
Borrowings | 45,754 | 49,846 |
Other liabilities | 6,590 | 12,970 |
Total liabilities | $ 662,667 | $ 669,789 |
SHAREHOLDERS' EQUITY: | ||
Preferred stock - No par value: Authorized - 500,000 shares, Issued and outstanding - none | ||
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares, Issued and outstanding - 6,217,620 and 6,266,756 respectively | $ 61,133 | $ 61,679 |
Retained earnings | 15,221 | 11,804 |
Accumulated other comprehensive income | ||
Unrealized gains on available for sale securities | 297 | 562 |
Minimum pension liability | (49) | (49) |
Total shareholders' equity | 76,602 | 73,996 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 739,269 | $ 743,785 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, Authorized shares | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 6,217,620 | 6,266,756 |
Common stock, Shares outstanding | 6,217,620 | 6,266,756 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Interest and fees on loans: | |||
Taxable | $ 32,034 | $ 26,461 | $ 24,295 |
Tax-exempt | 13 | 30 | 105 |
Interest on securities: | |||
Taxable | 1,095 | 962 | 961 |
Tax-exempt | 162 | 64 | 34 |
Other interest income | 209 | 152 | 128 |
Total interest income | 33,513 | 27,669 | 25,523 |
INTEREST EXPENSE: | |||
Deposits | 3,251 | 3,218 | 3,468 |
Borrowings | 1,142 | 924 | 656 |
Total interest expense | 4,393 | 4,142 | 4,124 |
Net interest income | 29,120 | 23,527 | 21,399 |
Provision for loan losses | 1,204 | 1,200 | 1,675 |
Net interest income after provision for loan losses | 27,916 | 22,327 | 19,724 |
OTHER INCOME: | |||
Deposit service fees | 836 | 701 | 667 |
Income from loans sold on the secondary market | 1,071 | 637 | 1,028 |
SBA/USDA loan sale gains | 610 | 757 | 951 |
Mortgage servicing income | 547 | 675 | 790 |
Net security gains | 455 | 54 | 73 |
Other | 370 | 288 | 429 |
Total other income | 3,889 | 3,112 | 3,938 |
OTHER EXPENSE: | |||
Salaries and employee benefits | 12,449 | 10,303 | 9,351 |
Occupancy | 2,424 | 2,129 | 1,481 |
Furniture and equipment | 1,551 | 1,268 | 1,102 |
Data processing | 1,381 | 1,150 | 1,071 |
Advertising | 507 | 449 | 436 |
Professional service fees | 1,270 | 1,163 | 1,069 |
Loan and deposit | 955 | 699 | 617 |
Writedowns and losses on other real estate held for sale | 332 | 280 | 265 |
FDIC insurance assessment | 506 | 362 | 385 |
Telephone | 455 | 327 | 303 |
Nonrecurring transaction related expenses | 2,475 | ||
Other | 2,046 | 2,005 | 2,048 |
Total other expenses | 23,876 | 22,610 | 18,128 |
Income before provision for income taxes | 7,929 | 2,829 | 5,534 |
Provision for (benefit of) income taxes | 2,333 | 1,129 | (403) |
NET INCOME | 5,596 | 1,700 | 5,937 |
Preferred dividend and accretion of discount | 308 | ||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 5,596 | $ 1,700 | $ 5,629 |
INCOME PER COMMON SHARE: | |||
Basic (in dollars per share) | $ 0.90 | $ 0.30 | $ 1.01 |
Diluted (in dollars per share) | $ 0.89 | $ 0.30 | $ 1 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statement of Comprehensive Income | |||
Net income | $ 5,596 | $ 1,700 | $ 5,937 |
Other comprehensive income change in securities available for sale: | |||
Unrealized (losses) gains arising during the period | (24) | 578 | (999) |
Reclassification adjustment for securities gains included in net income | (455) | (54) | (73) |
Tax effect | 214 | (178) | 364 |
Unrealized (losses) gains on available for sale securities | (265) | 346 | (708) |
Defined benefit pension plans: | |||
Net unrealized actuarial loss on defined benefit pension obligation | (74) | ||
Tax effect | 25 | ||
Changes from defined benefit pension plans | (49) | ||
Other comprehensive (loss) income, net of tax | (265) | 297 | (708) |
Total comprehensive income | $ 5,331 | $ 1,997 | $ 5,229 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Shares of Common Stock | Preferred Stock Series A | Common Stock and Additional Paid in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income | Total |
Balance, beginning of period at Dec. 31, 2012 | $ 11,000 | $ 53,797 | $ 6,727 | $ 924 | $ 72,448 | |
Balance (in shares) at Dec. 31, 2012 | 5,559,859 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 5,937 | 5,937 | ||||
Other comprehensive income (loss): | ||||||
Net change in unrealized gain on securities available for sale | (708) | (708) | ||||
Total comprehensive income | 5,229 | |||||
Stock compensation | 333 | 333 | ||||
Issuance of common stock (in shares) | 37,125 | |||||
Repurchase of common stock | (509) | (509) | ||||
Repurchase of common stock (in shares) | (55,594) | |||||
Dividend on common stock | (944) | (944) | ||||
Dividend on preferred stock | (308) | (308) | ||||
Redemption of Preferred Series A | $ (11,000) | (11,000) | ||||
Balance, end 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 | 1,700 | 1,700 | ||||
Other comprehensive income (loss): | ||||||
Net change in unrealized gain on securities available for sale | 346 | 346 | ||||
Actuarial loss on defined benefit pension obligation | (49) | (49) | ||||
Total comprehensive income | 297 | 1,997 | ||||
Stock compensation | 429 | 429 | ||||
Acquisition - Peninsula Financial Corp | 7,804 | 7,804 | ||||
Acquisition - Peninsula Financial Corp (in shares) | 695,361 | |||||
Stock option exercise | (32) | $ (32) | ||||
Stock option exercise (in shares) | 6,580 | 70,502 | ||||
Restricted stock award vesting (in shares) | 37,125 | |||||
Issuance of common stock | 7,772 | $ 7,772 | ||||
Issuance of common stock (in shares) | 739,066 | |||||
Repurchase of common stock | (143) | (143) | ||||
Repurchase of common stock (in shares) | (13,700) | |||||
Dividend on common stock | (1,308) | (1,308) | ||||
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 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net income | 5,596 | 5,596 | ||||
Other comprehensive income (loss): | ||||||
Net change in unrealized gain on securities available for sale | (265) | (265) | ||||
Total comprehensive income | (265) | 5,331 | ||||
Stock compensation | 576 | 576 | ||||
Restricted stock award vesting (in shares) | 53,319 | |||||
Repurchase of common stock | (1,122) | (1,122) | ||||
Repurchase of common stock (in shares) | (102,455) | |||||
Dividend on common stock | (2,179) | (2,179) | ||||
Balance, end of period at Dec. 31, 2015 | $ 61,133 | $ 15,221 | $ 248 | $ 76,602 | ||
Balance (in shares) at Dec. 31, 2015 | 6,217,620 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows from Operating Activities: | |||
Net income | $ 5,596 | $ 1,700 | $ 5,937 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,670 | 1,503 | 1,657 |
Provision for loan losses | 1,204 | 1,200 | 1,675 |
Deferred income taxes, net | 2,333 | 1,129 | (403) |
(Gain) on sales/calls of securities | (455) | (54) | (73) |
(Gain) on sale of loans sold in the secondary market | (873) | (493) | (794) |
Origination of loans held for sale in the secondary market | (53,229) | (29,871) | (55,973) |
Proceeds from sale of loans in the secondary market | 54,102 | 30,364 | 56,767 |
Loss on sale of premises, equipment, and other real estate held for sale | 65 | 81 | 304 |
Writedown of other real estate held for sale | 295 | 228 | 231 |
Stock compensation | 576 | 429 | 333 |
Change in other assets | 8,188 | (4,112) | (710) |
Change in other liabilities | (6,380) | 6,337 | 350 |
Net cash provided by operating activities | 13,092 | 8,441 | 9,301 |
Cash Flows from Investing Activities: | |||
Net increase in loans | (19,321) | (50,969) | (37,853) |
Net increase (decrease) in interest-bearing deposits in other financial institutions | 708 | (225) | |
Purchase of securities available for sale | (23,894) | (8,317) | (15,709) |
Proceeds from maturities, sales, calls or paydowns of securities available for sale | 35,091 | 9,449 | 13,698 |
Capital expenditures | (1,341) | (1,433) | (1,497) |
Proceeds from life insurance | 263 | ||
Net cash used in Peninsula acquisition | (4,484) | ||
Proceeds from sale of premises, equipment, and other real estate | 1,702 | 912 | 2,410 |
Redemption of FHLB stock | 804 | 87 | |
Net cash (used in) investing activities | (5,988) | (54,980) | (38,951) |
Cash Flows from Financing Activities: | |||
Net increase in deposits | 3,350 | 39,724 | 31,742 |
Net activity on lines of credit | (3,367) | 9,367 | 2,000 |
Repurchase of common stock | (1,122) | (143) | (509) |
Dividend on common stock | (2,179) | (1,308) | (944) |
Redemption of Series A Preferred Stock | (11,000) | ||
Dividend on preferred stock | (308) | ||
Proceeds from term borrowings | 3,000 | ||
Principal payments on borrowings | (725) | (373) | (73) |
Net cash provided by financing activities | (4,043) | 50,267 | 20,908 |
Net increase (decrease) in cash and cash equivalents | 3,061 | 3,728 | (8,742) |
Cash and cash equivalents at beginning of period | 21,947 | 18,219 | 26,961 |
Cash and cash equivalents at end of period | 25,008 | 21,947 | 18,219 |
Cash paid during the year for: | |||
Interest | 4,423 | 4,119 | 4,157 |
Income taxes | 150 | 100 | 149 |
Business Combination | |||
Fair value of tangible assets acquired (noncash) | 105,265 | ||
Goodwill and identifiable intangible assets acquired | 5,011 | ||
Liabilities assumed | 104,151 | ||
Common stock issued | 695,361 | ||
Noncash Investing and Financing Activities: | |||
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale (net of adjustments made through the allowance for loan losses) | $ 1,376 | $ 588 | $ 932 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Mackinac Financial Corporation (the “Corporation”) and Subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. Significant accounting policies are summarized below. Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, mBank (the “Bank”) and other minor subsidiaries, after elimination of intercompany transactions and accounts. Mackinac Commercial Credit, LLC was included as a subsidiary at December 31, 2014, but was merged into the Bank in 2015. Nature of Operations The Corporation’s and the Bank’s revenues and assets are derived primarily from banking activities. The Bank’s primary market area is the Upper Peninsula, the northern portion of the Lower Peninsula of Michigan, and Oakland County in Lower Michigan. The Bank provides to its customers commercial, real estate, agricultural, and consumer loans, as well as a variety of traditional deposit products. Less than 1.0% of the Corporation’s business activity is with Canadian customers and denominated in Canadian dollars. While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s banking operations are considered by management to be aggregated in one reportable operating segment. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 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, mortgage servicing rights, and the assessment of goodwill for impairment. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing deposits in correspondent banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Securities The Corporation’s securities are classified and accounted for as securities available for sale. These securities are stated at fair value. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Unrealized holding gains and losses on securities available for sale are reported as accumulated other comprehensive income within shareholders’ equity until realized. When it is determined that securities or other investments are impaired and the impairment is other than temporary, an impairment loss is recognized in earnings and a new basis in the affected security is established. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method. Federal Home Loan Bank Stock As a member of the Federal Home Loan Bank (FHLB) system, the Bank is required to hold stock in the FHLB based on the anticipated level of borrowings to be advanced. This stock is recorded at cost, which approximates fair value. Transfer of the stock is substantially restricted. Interest Income and Fees on Loans Interest income on loans is reported on the level-yield method and includes amortization of deferred loan fees and costs over the loan term. Net loan commitment fees or costs for commitment periods greater than one year are deferred and amortized into fee income or other expense on a straight-line basis over the commitment period. The accrual of interest on loans is discontinued when, in the opinion of management, it is probable that the borrower may be unable to meet payments as they become due as well as when required by regulatory provisions. Upon such discontinuance, all unpaid accrued interest is reversed. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest income on impaired and nonaccrual loans is recorded on a cash basis. 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, we continue 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. We evaluate 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, recognized 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 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. Servicing Rights Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based on the fair value of the rights compared to amortized cost. Impairment is determined by using prices for similar assets with similar characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based on discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. Allowance for Loan Losses The allowance for loan losses includes specific allowances related to commercial loans which 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 also has 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 probable 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 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. Troubled Debt Restructuring Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructure (TDR). A loan is a TDR when the Corporation, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Corporation would not otherwise consider. To make this determination, the Corporation must determine whether (a) the borrower is experiencing financial difficulties and (b) the Corporation granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Other Real Estate Held for Sale Other real estate held for sale consists of assets acquired through, or in lieu of, foreclosure and other long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. Other real estate held for sale is initially recorded at the lower of cost or fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management, and the assets’ carrying values are adjusted to the lower of cost basis or fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-downs. Net revenue and expenses from operations of other real estate held for sale are included in other expense. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Goodwill and Other Intangible Assets 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. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life, ten years. Stock Compensation Plans On May 22, 2012, the Corporation’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 Corporation’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. The Corporation’s Compensation Committee recommends awards for the executive officers, which are subsequently approved by the Board of Directors. Awards are made to certain other senior officers at the discretion of the Corporation’s management. Compensation cost equal to the fair value of the award is recognized over the vesting period. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is composed of unrealized gains and losses on securities available for sale, and unrecognized actuarial gains and losses in the defined benefit pension plan, arising during the period. These gains and losses for the period are shown as a component of other comprehensive income. The accumulated gains and losses are reported as a component of equity, net of any tax effect. At December 31, 2015, the balance in accumulated other comprehensive income consisted of a change in the unrealized gain on available for sales securities of $.265 million and no change to the actuarial losses on the defined benefit pension obligation of $.049 million. At December 31, 2014, the balance in accumulated other comprehensive income consisted of a change in the unrealized gain on available for sale securities of $.346 million and actuarial losses on the defined benefit pension obligation of $.049 million. Earnings per Common Share Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options and warrants 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 year ended December 31, 2015, 2014 and 2013 (dollars in thousands, except per share data): Year Ended December 31, 2015 2014 2013 Net income $ $ $ Preferred stock dividends and accretion of discount — — Net income available to common shareholders $ $ $ Weighted average shares outstanding Effect of dilutive stock options, and vesting of restricted stock units Diluted weighted average shares outstanding Income per common share: Basic $ .90 $ .30 $ Diluted $ .89 $ .30 $ Income Taxes Deferred income taxes have been provided under the liability method. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected to reverse. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred asset will not be realized. Off-Balance-Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. For letters of credit, the Corporation recognizes a liability for the fair market value of the obligations it assumes under that guarantee. Recent Developments In May 2014, the Financial Accounting Standards Board (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. In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 amends current guidance by requiring companies to recognize changes in fair value for equity investments that have a readily determinable fair value through net income rather than through other comprehensive income. Under ASU 2016-01, equity investments that do not have a readily determinable fair value will either be accounted for the same as equity investments that have a readily determinable fair value, with changes in fair value recognized through net income or carried at cost, adjusted for changes in observable prices based on orderly transactions for identical or similar investments issued by the same issuer and further adjusted for impairment, if applicable. ASU 2016-01 also requires a qualitative assessment of impairment indicators each reporting period. If this assessment indicates that impairment exists, companies must adjust the investment to fair value and recognize an impairment loss in net income, even if the impairment is determined to be temporary. ASU 2016-01 is effective for public companies for interim and annual periods beginning after December 15, 2017. The Corporation’s adoption of ASU 2016-01 is not expected to have a material impact on the Corporation’s consolidated financial condition or results of operations. In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize an asset with right of use and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease guidance will be effective for the Corporation’s year ending December 31, 2019 and will be applied using modified retrospective transition method to the beginning of the earliest period presented. The effect of applying the new lease guidance on the financial statements has not yet been determined. Reclassifications Certain amounts in the 2014 and 2013 consolidated financial statements have been reclassified to conform to the 2015 presentation. |
RESTRICTIONS ON CASH AND CASH E
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | 12 Months Ended |
Dec. 31, 2015 | |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | NOTE 2 — RESTRICTIONS ON CASH AND CASH EQUIVALENTS Cash and cash equivalents in the amount of $11.291 million were restricted on December 31, 2015 to meet the reserve requirements of the Federal Reserve System. In the normal course of business, the Corporation maintains cash and due from bank balances with correspondent banks. Balances in these accounts may exceed the Federal Deposit Insurance Corporation’s insured limit of $250,000. Management believes that these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal. |
SECURITIES AVAILABLE FOR SALE
SECURITIES AVAILABLE FOR SALE | 12 Months Ended |
Dec. 31, 2015 | |
INVESTMENT SECURITIES | |
SECURITIES AVAILABLE FOR SALE | NOTE 3 — SECURITIES AVAILABLE FOR SALE The carrying value and estimated fair value of securities available for sale are as follows (dollars in thousands): Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2015 Corporate $ $ — $ ) $ US Agencies ) US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ December 31, 2014 US Treasury $ $ $ ) $ Corporate — US Agencies ) US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ At December 31, 2015 and 2014, the mortgage backed securities portfolio was $3.759 million (7.00 %) and $13.688 million (20.79%), respectively, of the securities portfolio. At December 31, 2015, the entire mortgage backed securities portfolio consisted of securities issued and guaranteed by either the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC), United States government-sponsored agencies. During 2015, the Corporation restructured its securities portfolio and sold several mortgage backed securities and reallocated the funds elsewhere in the portfolio for better overall returns and improved risk profile. Following is information pertaining to securities with gross unrealized losses at December 31, 2015 and 2014 aggregated by investment category and length of time these individual securities have been in a loss position (dollars in thousands): Less Than Twelve Months Over Twelve Months Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value December 31, 2015 Corporate $ ) $ $ — $ — US Agencies ) — — US Agencies - MBS ) — — Obligations of states and political subdivisions ) — — Total securities available for sale $ ) $ $ — $ — December 31, 2014 US Treasury $ ) $ $ — $ — Corporate — — — — US Agencies ) ) US Agencies - MBS ) — — Obligations of states and political subdivisions ) — — Total securities available for sale $ ) $ $ ) $ There were 13 securities in an unrealized loss position in 2015 and 17 in 2014. The gross unrealized losses in the current portfolio are considered temporary in nature and related to interest rate fluctuations. The Corporation has both the ability and intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses. Following is a summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses for the years ended December 31 (dollars in thousands): 2015 2014 2013 Proceeds from sales and calls $ $ $ Gross gains on sales and calls Gross (losses) on sales and calls — — — The carrying value and estimated fair value of securities available for sale at December 31, 2015, by contractual maturity, are shown below (dollars in thousands): Amortized Cost Estimated Fair Value Due in one year or less $ $ Due after one year through five years Due after five years through ten years Due after ten years Subtotal US Agencies - MBS Total $ $ Contractual maturities may differ from expected maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. See Note 10 for information on securities pledged to secure borrowings from the Federal Home Loan Bank. |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2015 | |
LOANS | |
LOANS | NOTE 4 - LOANS The composition of loans at December 31 is as follows (dollars in thousands): 2015 2014 Commercial real estate $ $ Commercial, financial, and agricultural Commercial construction One to four family residential real estate Consumer Consumer construction 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 2015, the Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of approximately $.578 million of the accretable interest. The positive resolution was the result of receipt of full payoff on the loans through refinancing at another institution. For the period of December 5, 2014 to December 31, 2014, recorded interest compared to accretable interest on acquired impaired loans was immaterial and no significant payments of principal were recorded. The table below details the outstanding balances of the acquired portfolio and the remaining balance of the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ $ $ Nonaccretable difference ) — ) Expected cash flows Accretable yield ) ) ) Carrying balance at acquisition date $ $ $ The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Balance, December 31, 2014 $ $ $ Accretion ) ) ) Reclassification from nonaccretable difference — Balance at December 31, 2015 $ $ $ An analysis of the allowance for loan losses for the years ended December 31 is as follows (dollars in thousands): 2015 2014 2013 Balance, January 1 $ $ $ Recoveries on loans previously charged off Loans charged off ) ) ) Provision Balance, December 31 $ $ $ In 2015, net charge off activity was $1.340 million, or .22% of average loans outstanding compared to net charge-offs of $.721 million, or .14% of average loans, in the same period in 2014 and $2.232 million, or .48% of average loans, in 2013. During 2015, a provision of $1.204 million was made to increase the allowance. This provision was made in accordance with the Corporation’s allowance for loan loss reserve policy, which 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 December 31, 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 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 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. 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 (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 $2.409 million and $3.251 million at December 31, 2015, and 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 December 31, 2015 (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 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 $ $ $ $ $ — $ $ — $ $ 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 year ended December 31, 2015 was $.795 million. There was no interest income recognized during impairment in 2014 and 2013. Additional interest income that would have been recognized during these periods was $1.125 million, $.130 million and $.228 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 general result in a provision for loan losses. Subsequent increase in expected cash flows will results 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 $.578 million due to the positive resolution of acquired nonperforming loans in 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): Interest Income Interest Income Nonaccrual Accrual Average Related Recognized on Basis Basis Investment Valuation Reserve During Impairment Accrual Basis December 31, 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 $ $ $ $ $ $ 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 $ $ $ $ $ — $ A summary of past due loans at December 31, is as follows (dollars in thousands): 2015 2014 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due/ Past Due Past Due/ (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 during the year ended December 31, 2015 (dollars in thousands): Commercial, One to four Commercial Real Estate Financial and Agricultural Commercial Construction family residential real estate Consumer Construction Consumer Total NON ACCRUAL Beginning balance $ $ $ $ $ $ — $ Principal payments ) ) — ) ) ) ) Charge-offs ) ) ) ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — Acquired impaired loans — — — — — — — Other — ) ) ) ) ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual 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 NON ACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Acquired impaired loans — — Other — — — Ending balance $ $ $ $ $ $ — $ Loans accounted for under ASC 310-30 accrue interest as any nonpayment of contractual principal or interest is considered in the periodic re-estimation of expected cash flows and is included in the resulting recognition of current period loan loss provision or prospective yield adjustments. 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. There were no troubled debt restructurings that occurred during the years ended December 31 2015, and December 31, 2014. A roll-forward of troubled debt restructuring during the year ended December 31, 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 $ $ $ $ $ — $ Acquired restructured — — Principal payments ) ) ) ) — ) Charge-offs — — — — — — Transferred out of TDR — — — ) — ) Transferred from nonaccrual — — — Transfers to nonaccrual — — — — — — Ending Balance $ $ $ $ $ — $ NON ACCRUAL Beginning balance $ — $ — $ — $ — $ — $ — Acquired restructured — — Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — Transfers to accruing ) — — ) — ) Transfers from accruing — — — — — — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Acquired restructured — Principal payments ) ) ) ) — ) Charge-offs — — — — — — Transferred out of TDR — — — ) — ) Transfers to accruing — — — Tansfers to nonaccrual — — — — — — Transfers to accruing ) — — ) — ) Transfers 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 $ $ $ $ $ — $ 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): 2015 2014 Loans outstanding, January 1 $ $ New loans — Net activity on revolving lines of credit Repayment ) ) Loans outstanding, December 31 $ $ There were no loans to related-parties classified substandard as of December 31, 2015 and 2014. In addition to the outstanding balances above, there were unfunded commitments of $2.565 million to related parties at December 31, 2015. |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
PREMISES AND EQUIPMENT | |
PREMISES AND EQUIPMENT | NOTE 5 — PREMISES AND EQUIPMENT Details of premises and equipment at December 31 are as follows (dollars in thousands): 2015 2014 Land $ $ Buildings and improvements Furniture, fixtures, and equipment Construction in progress Total cost basis Less - accumulated depreciation Net book value $ $ Depreciation of premises and equipment charged to operating expenses amounted to $1.457 million in 2015, $1.337 million in 2014, and $1.231 million in 2013. |
OTHER REAL ESTATE HELD FOR SALE
OTHER REAL ESTATE HELD FOR SALE | 12 Months Ended |
Dec. 31, 2015 | |
OTHER REAL ESTATE HELD FOR SALE | |
OTHER REAL ESTATE HELD FOR SALE | NOTE 6 — OTHER REAL ESTATE HELD FOR SALE An analysis of other real estate held for sale for the years ended December 31 is as follows (dollars in thousands): 2015 2014 Balance, January 1 $ $ Other real estate transferred from loans due to foreclosure Other real estate acquired, net of purchase accounting — Other real estate sold ) ) Writedowns of other real estate held for sale ) ) Loss on sale of other real estate held for sale ) ) Total other real estate held for sale $ $ Foreclosed residential real estate property of $1.327 million is included in foreclosed assets as of December 31, 2015. The recorded investment in consumer mortgage loans secured by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdictions was $.151 million as of December 31, 2015. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
DEPOSITS | |
DEPOSITS | NOTE 7 — DEPOSITS The distribution of deposits at December 31 is as follows (dollars in thousands): 2015 2014 Noninterest bearing deposits $ $ NOW, money market, interest checking Savings CDs <$250,000 CDs >$250,000 Brokered Total deposits $ $ The aggregate amount of time deposits that meet or exceed the $250,000 FDIC insurance limit was $8.532 million and $6.610 million at December 31, 2015 and 2014, respectively. Maturities of non-brokered time deposits outstanding at December 31, 2015 are as follows (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 8 — 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 Peninsula. 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 an accelerated cash flow 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 $1.076 million at December 31, 2015, compared to $1.196 million at December 31, 2014. Amortization expense in 2015 is $.121 million, compared to $.010 million in 2014. Amortization expense for the next five years is expected to be at $.121 million per year. |
SERVICING RIGHTS
SERVICING RIGHTS | 12 Months Ended |
Dec. 31, 2015 | |
SERVICING RIGHTS | |
SERVICING RIGHTS | NOTE 9 — SERVICING RIGHTS Mortgage Loans Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of December 31, 2015, the Corporation had obligations to service $224.612 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 9.45% and a discount rate of 8.97% for December 31, 2015. The following summarizes the fair value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands): December 31, December 31, 2015 2014 Balance at beginning of period $ $ Additions from loans sold with servicing retained MSRs acquired in Peninsula transaction — Amortization ) ) Book value of MSRs at end of period $ $ Balance of loan servicing portfolio $ $ Mortgage servicing rights as % of portfolio .87 % .90 % 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 December 31, 2015 and December 31, 2014 was approximately $63 million and $46 million, respectively. The Corporation valued these servicing rights at $.170 million as of December 31, 2015 and $.198 million at December 31, 2014. This valuation was established in consideration of the discounted cash flow of expected servicing income over the life of the loans. |
BORROWINGS
BORROWINGS | 12 Months Ended |
Dec. 31, 2015 | |
BORROWINGS | |
BORROWINGS | NOTE 10 — BORROWINGS Borrowings consist of the following at December 31 (dollars in thousands): 2015 2014 Federal Home Loan Bank fixed rate advances at December 31, 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 December 31, 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 $36.470 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $7.888 million and $7.972 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 December 31, 2015. The USDA Rural Development borrowing is collateralized by loans totaling $.114 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 $.657 million, and guaranteed by the Corporation. The Corporation currently has one banking borrowing relationship. The 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 Bank stock. Maturities and principal payments of borrowings outstanding at December 31, 2015 are as follows (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 — INCOME TAXES The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands): 2015 2014 2013 Current tax expense (benefit) $ — $ — $ — Change in valuation allowance ) — ) Deferred tax expense (benefit) Provision for (benefit of) income taxes $ $ $ ) A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands): 2015 2014 2013 Tax expense at statutory rate $ $ $ Increase (decrease) in taxes resulting from: Tax-exempt interest ) ) ) Change in valuation allowance ) — ) Expiration of deferred tax assets — — Nondeductible transaction expenses — — Other Provision for (benefit of) income taxes, as reported $ $ $ ) Deferred income taxes are provided for the temporary differences between the financial reporting and tax bases of the Corporation’s assets and liabilities. The major components of net deferred tax assets at December 31 are as follows (dollars in thousands): 2015 2014 Deferred tax assets: NOL carryforward $ $ Allowance for loan losses Alternative Minimum Tax Credit OREO Tax basis > book basis Tax credit carryovers Deferred compensation Pension liability Stock compensation Purchase accounting adjustments Other Total deferred tax assets Valuation allowance $ — $ ) Deferred tax liabilities: Core deposit premium ) ) FHLB stock dividend ) ) Depreciation ) ) Unrealized gain on securities ) ) Mortgage servicing rights ) ) Other ) ) Total deferred tax liabilities ) ) Net deferred tax asset $ $ 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 Corporation, as of December 31, 2015 had a net operating loss and tax credit carryforwards for tax purposes of approximately $12.738 million, and $2.336 million, respectively. The Corporation evaluated the future benefits from these carryforwards as of December 31, 2015 and determined that it was “more likely than not” that they would be utilized prior to expiration and recognized the additional benefits totaling $.322 million. It was also determined that the remaining valuation allowance should be eliminated in conjunction with the expiration of various tax credits before they could be utilized. This “write-off” of deferred tax assets pertaining to expired credits was approximately $.429 million. 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 credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code. The annual limitation is $1.404 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 recognized a deferred tax expense of approximately $2.333 million for the year ended December 31, 2015 and a deferred tax expense of $1.129 million for the year ended December 31, 2014. In December 2013, the Corporation reduced the valuation by $2.250 million. After a thorough review of projected earnings and the composition and sustainability of those earnings over the projected tax carryover period, an analysis substantiated the ability to utilize these deferred tax assets. 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. |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2015 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 12 — OPERATING LEASES The Corporation currently maintains seven operating leases for office locations. The first operating lease, for the Corporation’s location in Birmingham, was originated in September 2005 and had an original term of 66 months with an option to renew for an additional five-year period. The original term of this was extended during 2011 for an additional three-year term and again in 2014 for an additional three year term. The second operating lease, for a second location in Manistique, was executed in April 2010, the terms of which began at that time. The original term of this lease expired in 2013, and the second of the four consecutive renewal terms in place. The third operating lease, for a loan production office in Traverse City, was executed in May 2012, the terms of which began in August 2012. The original term of this lease expired in 2015, with the first of two consecutive renewal terms is currently in place. The fourth operating lease was initiated in December 2013 as the Corporation consolidated its banking offices in Marquette. The original term of this lease is 15 years with options for two consecutive renewal terms of four years each. With the acquisition of PFC, the Corporation acquired three additional operating leases for office locations. The first, for an additional location in Marquette, was executed in February 2011 with a term of five years and will expire in 2016. The second, for the location in Negaunee was executed in September 2012 with an initial term of five years, expiring in 2017, with option to renew for one additional term of five years. The final, for a location in Ishpeming was executed in April 2008 for an initial term of five years. This lease was renewed in May 2013 for an additional five years. Future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements, consist of the following (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ Rent expense for all operating leases amounted to $.985 million in 2015, $.885 million in 2014, and $.280 million in 2013. |
RETIREMENT PLAN
RETIREMENT PLAN | 12 Months Ended |
Dec. 31, 2015 | |
RETIREMENT PLAN | |
RETIREMENT PLAN | NOTE 13 — RETIREMENT PLAN The Corporation has established a 401(k) profit sharing plan. Employees who have completed three months of service and attained the age of 18 are eligible to participate in the plan. Eligible employees can elect to have a portion, not to exceed 80%, of their annual compensation paid into the plan. In addition, the Corporation may make discretionary contributions into the plan. Retirement plan contributions charged to operations totaled $288,000, $214,000, and $198,000 in 2015, 2014, and 2013, respectively. |
DEFINED BENEFIT PENSION PLAN
DEFINED BENEFIT PENSION PLAN | 12 Months Ended |
Dec. 31, 2015 | |
RETIREMENT PLAN | |
DEFINED BENEFIT PENSION PLAN | NOTE 14 — 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 2016 are $.063 million. The anticipated distributions over the next five years and through December 31, 2015 are detailed in the table below (dollars in thousands): 2016 $ 2017 2018 2019 2020 2021-2025 Total $ The following table sets forth the plan’s funded status and amounts recognized in the Corporation’s balance sheets and the activity from date of acquisition (dollars in thousands): 2015 2014 Change in benefit obligation: Benefit obligation, beginning of year $ $ Service cost — — Interest cost Actuarial (loss) gain ) Benefits paid ) — Benefit obligation at end of year Change in plan assets: Fair value of plan assets, beginning of year Actual return on plan assets ) ) Employer contributions — Benefits paid ) — Fair value of plan assets at end of year Funded status ) ) Unrecognized net actuarial loss — — Accrued pension expense, included with other liabilities $ ) $ ) The accumulated benefit obligation at December 31, 2015 was $3.180 million and was $3.290 million at December 31, 2014. Net pension costs included in the Corporation’s results of operations was immaterial. Assumptions in the actuarial valuation were: 2015 2014 Weighted average discount rate % % Rate of increase in future compensation levels N/A 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, which was in place at both December 31, 2015 and December 31, 2014: Target Actual Allocation Allocation Equity securities 50% to 70% % Fixed income securities 30% to 50% % |
DEFERRED COMPENSATION PLAN
DEFERRED COMPENSATION PLAN | 12 Months Ended |
Dec. 31, 2015 | |
DEFERRED COMPENSATION PLAN | |
DEFERRED COMPENSATION PLAN | NOTE 15 — DEFERRED COMPENSATION PLAN Prior to the recapitalization in 2004, as an incentive to retain key members of management and directors, the Corporation established a deferred compensation plan, with benefits based on the number of years the individuals have served the Corporation. This plan was discontinued and no longer applies to current officers and directors. A liability was recorded on a present value basis and discounted using the rates in effect at the time the deferred compensation agreement was entered into. The liability may change depending upon changes in long-term interest rates. The liability at December 31, 2015 and 2014, for vested benefits under this plan, was $.273 million and $.362 million, respectively. These benefits were originally contracted to be paid over a ten to fifteen-year period. The final payment is scheduled to occur in 2023. The deferred compensation plan is unfunded; however, the Bank maintains life insurance policies on the majority of the plan participants. The cash surrender value of the policies was $1.545 million and $1.572 million at December 31, 2015 and 2014, respectively. Deferred compensation expense for the plan was $27,000, $16,000, and $25,000 for 2015, 2014, and 2013, respectively. Peninsula Financial Corporation, acquired by the Corporation in December 2014, also had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2015 and 2014, for vested benefits under this plan was $1.219 million and $1.340 million, respectively. The bank owned life insurance policy as of December 31, 2015 and 2014 had cash surrender values of $1.692 million and $1.666 million, respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation. |
REGULATORY MATTERS
REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2015 | |
REGULATORY MATTERS | |
REGULATORY MATTERS | NOTE 16 — REGULATORY MATTERS The Corporation is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Corporation to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Management has determined that, as of December 31, 2015, the Corporation is well capitalized. Effective January 1, 2015, the Corporation was subject to new capital requirements due to the Basel III regulation, including: · A new minimum ratio of Common Equity Tier I Capital to risk-weighted assets of 4.5%; · An increase in the minimum required amount of Additional Tier 1 Capital to 6% of risk-weighted assets; · A continuation of the current minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and · A minimum leverage ratio of Tier I Capital to total assets equal to 4% in all circumstances. In order to be “well-capitalized” under the new guidelines, a depository institution must maintain a Common Equity Tier 1 Capital ratio of 6.5% or more; an Additional Tier 1 Capital ratio of 8% or more; a Total Capital ratio of 10% or more; and a leverage ratio of 5% or more. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2015 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ % > $ > 8.0 % > $ > % mBank $ % > $ > 8.0 % > $ > % Tier 1 capital to risk weighted assets: Consolidated $ % > $ > 6.0 % > $ > % mBank $ % > $ > 6.0 % > $ > % Common equity Tier 1 capital to risk weighted assets Consolidated $ % > $ > 4.5 % > $ > % mBank $ % > $ > 4.5 % > $ > % Tier 1 capital to average assets: Consolidated $ % > $ > 4.0 % > $ > % mBank $ % > $ > 4.0 % > $ > % The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2014 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ % > $ > 8.0 % > $ % mBank $ % > $ > 8.0 % > $ % Tier 1 capital to risk weighted assets: Consolidated $ % > $ > 6.0 % > $ % mBank $ % > $ > 6.0 % > $ % Tier 1 capital to average assets: Consolidated $ % > $ > 4.0 % > $ % mBank $ % > $ > 4.0 % > $ % |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2015 | |
STOCK COMPENSATION PLANS | |
STOCK COMPENSATION PLANS | NOTE 17 — STOCK COMPENSATION PLANS On May 22, 2012, the Corporation’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 Corporation’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. The Corporation’s Compensation Committee recommends awards for the executive officers, which are subsequently approved by the Board of Directors. Awards are made to certain other senior officers at the discretion of the Corporation’s 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 for each of the three awards 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, at a market value of $10.77 per share, which were immediately vested and issued. A summary of changes in our nonvested shares for the year follows: Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2015 $ Granted during the year Vested during the year ) Nonvested balance at December 31, 2015 $ As of December 31, 2015, unrecognized compensation expense was $.915 million. The Corporation also has outstanding stock options. A summary of stock option transactions for the years ended December 31 is as follows: 2015 2014 Outstanding shares at beginning of year Granted during the year — — Exercised during the year — ) Expired during the year ) ) Outstanding shares at end of year Exercisable shares at end of year Weighted average exercise price per share at end of year $ $ Shares available for grant at end of year — — Following is a summary of the options outstanding and exercisable at December 31, 2015: Weighted Average Exercise Number Remaining Price Outstanding Exercisable Unvested Options Contractual Life-Years $ — |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
SHAREHOLDER'S EQUITY | |
SHAREHOLDER'S EQUITY | NOTE 18 — SHAREHOLDERS’ EQUITY In December 2014, the Corporation consummated the acquisition of Peninsula Financial Corporation (“PFC”) with a combination of cash and Mackinac Financial Corporation common 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 102,455 shares in 2015, 13,700 shares in 2014 and 55,594 shares in 2013. The share repurchases were conducted under Board authorizations made and publicly 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. As of December 31, 2015, $.176 million of the total authorization was available for future purchases. |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | |
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | NOTE 19 - 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 at December 31 are as follows (dollars in thousands): 2015 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 At December 31, 2015, there were no pending material legal proceedings to which the Corporation is a party or to which any of its property was subject, except for proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of the Corporation. 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 December 31, 2015 represents $102.620 million, or 22.79%, compared to $107.835 million, or 26.47%, of the commercial loan portfolio on December 31, 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. |
FAIR VALUE
FAIR VALUE | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE | NOTE 20 - FAIR VALUE 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 December 31 (dollars in thousands): December 31, 2015 December 31, 2014 Level in Fair Value Hierarchy Carrying Amount Estimated Fair Value Carrying Amount Estimated 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 December 31, 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 December 31, 2015 and December 31, 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 3 — Investment Securities.” The Corporation had no Level 3 assets or liabilities on a recurring basis as of December 31, 2015 or December 31, 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 loans and other real estate held for sale. 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 December 31, 2015 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, 2015 (Level 1) (Level 2) (Level 3) December 31, 2015 Assets Impaired loans $ $ — $ — $ $ Other real estate held for sale — — $ 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 held for sale — — $ 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). |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations | |
BUSINESS COMBINATIONS | NOTE 21 — BUSINESS COMBINATIONS The Corporation completed its acquisition of PFC and its wholly owned subsidiary, The Peninsula Bank in December 2014. PFC had six branch offices and $126 million in assets of December 5, 2014. The results of operations due to the merger have been included in the Corporation’s results since the acquisition date. The merger was effected by a combination of cash and the issuance of shares of the Corporation’s common stock to PFC shareholders. Each share of PFC’s 288,000 shares of common stock was converted into the right to receive 3.64 shares of the Corporation’s common stock, with cash paid in lieu of fractional shares. PFC shareholders also had the option to receive cash at $46.13 per share of common stock. The conversion of PFC’s shares resulted in the issuance of 695,361 shares of the Corporation’s common stock and $4.484 million in total for all shares exchanged for cash. The table below highlights the allocation of the purchase price: Purchase Price: Peninsula shares outstanding at December 5, 2014 Price per share /Cash Price $ Aggregate value of Mackinac stock issued, 695,361 shares, at a market value of $11.41 in exch for 190,800 shares $ Cash consideration $46.13 for 97,200 shares Cash for partial shares Total purchase price $ Net assets acquired: Cash and cash equivalents $ Securities available for sale Federal Home Loan Bank stock Loans Premises and equipment Other real estate owned Deposit based intangible Other assets Total assets Non-interest bearing deposits Interest bearing deposits Total deposits Other liabilities Total liabilities Net assets acquired Goodwill $ The results of operations for the twelve months ended December 31, 2014, include the operating results of the acquired assets and assumed liabilities for the 26 days subsequent to the acquisition date. PFC’s results of operations prior to the acquisition date are not included in the Corporation’s consolidated statement of comprehensive income. The Corporation recorded merger related expenses of $1.622 million after tax during the twelve months ended December 31, 2014. These expenses were for professional services such as legal, accounting and contractual arrangements for consulting services and data processing termination fees. The following table provides the unaudited pro forma information for the results of operations for the twelve months ended December 31, 2014, as if the acquisition had occurred on January 1. These adjustments reflect the impact of certain purchase accounting fair value measurements, primarily on the loan and deposit portfolios of PFC. In addition, the merger-related costs noted above are excluded from the 2014 results of operations, for comparative purposes. Further operating cost savings are expected along with additional business synergies as a result of the merger which are not presented in the pro forma amounts. These unaudited pro forma results are presented for illustrative purposes only and are not intended to represent or be indicative of the actual results of operations of the combined banking organization that would have been achieved had the merger occurred at the beginning of the period presented, nor are they intended to represent or be indicative of future results of the Corporation. 2014 2013 Net interest income $ $ Noninterest income Net income Net income per diluted share $ $ In most instances, determining the fair value of the acquired assets and assumed liabilities required the Corporation to estimate the cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations is related to the valuation of acquired loans. For such loans, the excess cash flows expected at merger over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at merger and the cash flows expected to be collected at merger reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of PFC’s previously established allowance for loan losses. 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 the criteria, which are accounted for under ASC 310-20 (“acquired non-impaired”). In addition, the loans are further categorized into different pools based primarily on the type and purpose of the loan. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2015 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | NOTE 22 — SUBSEQUENT EVENT On January 19, 2016, the Corporation announced the signing of a definitive agreement to acquire The First National Bank of Eagle River (“Eagle River”). Eagle River is headquartered in Vilas County, Wisconsin, and as of September 30, 2015 had assets of approximately $140 million and three banking offices. The consummation of this transaction is expected to occur in the second quarter of 2016. Under the terms of the stock purchase agreement, the Corporation will acquire all of the outstanding stock of Eagle River in an all cash transaction for a fixed price of $12.500 million. Eagle River is expected to maintain a minimum of $12.800 million of tangible capital equity at closing. Completion of the acquisition is subject to regulatory approval in addition to satisfaction of other customary closing conditions. |
PARENT COMPANY ONLY FINANCIAL S
PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2015 | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | NOTE 23 - PARENT COMPANY ONLY FINANCIAL STATEMENTS BALANCE SHEETS December 31, 2015 and 2014 (Dollars in Thousands) 2015 2014 ASSETS Cash and cash equivalents $ $ Investment in subsidiaries Other assets TOTAL ASSETS $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Line of Credit $ $ Other borrowing Other liabilities Total liabilities Shareholders’ equity: Preferred stock - no par value: Authorized 500,000 shares, Issued and outstanding - none — — Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 6,217,620 and 6,266,756 shares respectively Retained earnings Accumulated other comprehensive income ) Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ $ STATEMENTS OF OPERATIONS Years Ended December 31, 2015, 2014, and 2013 (Dollars in Thousands) 2015 2014 2013 INCOME: Interest income $ — $ — $ Total income $ — $ — $ EXPENSES: Interest expense on borrowings — Salaries and benefits Professional service fees Nonrecurring transaction related expenses — — Other Total expenses Loss before income taxes and equity in undistributed net income of subsidiaries ) ) ) (Benefit of) income taxes ) ) ) Loss before equity in undistributed net income of subsidiaries ) ) ) Equity in undistributed net income of subsidiaries Net income Preferred dividend and accretion of discount — — NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ $ $ STATEMENTS OF CASH FLOWS Years Ended December 31, 2015, 2014, and 2013 (Dollars in Thousands) 2015 2014 2013 Cash Flows from Operating Activities: Net income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net (income) of subsidiaries ) ) ) Increase in capital from stock compensation Change in other assets ) Change in other liabilities ) ) Net cash provided by (used in) operating activities ) Cash Flows from Investing Activities: Investments in subsidiaries ) ) Net cash paid for acquisition of PFC — ) — Net cash (used in) investing activities ) ) Cash Flows from Financing Activities: Increase on term borrowing — — Principal payments on borrowings ) ) — Net activity on line of credit ) Repurchase of common stock ) ) ) Dividend on common stock ) ) ) Dividend on preferred stock — — ) Redemption of Series A Preferred Stock — — ) Net cash provided by (used in) financing activities ) ) Net increase (decrease) in cash and cash equivalents ) ) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN31
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, mBank (the “Bank”) and other minor subsidiaries, after elimination of intercompany transactions and accounts. Mackinac Commercial Credit, LLC was included as a subsidiary at December 31, 2014, but was merged into the Bank in 2015. |
Nature of Operations | Nature of Operations The Corporation’s and the Bank’s revenues and assets are derived primarily from banking activities. The Bank’s primary market area is the Upper Peninsula, the northern portion of the Lower Peninsula of Michigan, and Oakland County in Lower Michigan. The Bank provides to its customers commercial, real estate, agricultural, and consumer loans, as well as a variety of traditional deposit products. Less than 1.0% of the Corporation’s business activity is with Canadian customers and denominated in Canadian dollars. While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s banking operations are considered by management to be aggregated in one reportable operating segment. |
Use of Estimates in Preparation of Financial Statements | Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 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, mortgage servicing rights, and the assessment of goodwill for impairment. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing deposits in correspondent banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. |
Securities | Securities The Corporation’s securities are classified and accounted for as securities available for sale. These securities are stated at fair value. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Unrealized holding gains and losses on securities available for sale are reported as accumulated other comprehensive income within shareholders’ equity until realized. When it is determined that securities or other investments are impaired and the impairment is other than temporary, an impairment loss is recognized in earnings and a new basis in the affected security is established. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method. |
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock As a member of the Federal Home Loan Bank (FHLB) system, the Bank is required to hold stock in the FHLB based on the anticipated level of borrowings to be advanced. This stock is recorded at cost, which approximates fair value. Transfer of the stock is substantially restricted. |
Interest Income and Fees on Loans | Interest Income and Fees on Loans Interest income on loans is reported on the level-yield method and includes amortization of deferred loan fees and costs over the loan term. Net loan commitment fees or costs for commitment periods greater than one year are deferred and amortized into fee income or other expense on a straight-line basis over the commitment period. The accrual of interest on loans is discontinued when, in the opinion of management, it is probable that the borrower may be unable to meet payments as they become due as well as when required by regulatory provisions. Upon such discontinuance, all unpaid accrued interest is reversed. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest income on impaired and nonaccrual loans is recorded on a cash basis. |
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, we continue 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. We evaluate 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, recognized 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 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. |
Servicing Rights | Servicing Rights Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based on the fair value of the rights compared to amortized cost. Impairment is determined by using prices for similar assets with similar characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based on discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses includes specific allowances related to commercial loans which 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 also has 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 probable 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 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. |
Troubled Debt Restructuring | Troubled Debt Restructuring Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructure (TDR). A loan is a TDR when the Corporation, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Corporation would not otherwise consider. To make this determination, the Corporation must determine whether (a) the borrower is experiencing financial difficulties and (b) the Corporation granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. |
Other Real Estate Held for Sale | Other Real Estate Held for Sale Other real estate held for sale consists of assets acquired through, or in lieu of, foreclosure and other long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. Other real estate held for sale is initially recorded at the lower of cost or fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management, and the assets’ carrying values are adjusted to the lower of cost basis or fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-downs. Net revenue and expenses from operations of other real estate held for sale are included in other expense. |
Premises and Equipment | Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets 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. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life, ten years. |
Stock Compensation Plans | Stock Compensation Plans On May 22, 2012, the Corporation’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 Corporation’s common stock issuable under the plan is 575,000, which included 392,152 option shares outstanding at that time. The Corporation’s Compensation Committee recommends awards for the executive officers, which are subsequently approved by the Board of Directors. Awards are made to certain other senior officers at the discretion of the Corporation’s management. Compensation cost equal to the fair value of the award is recognized over the vesting period. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is composed of unrealized gains and losses on securities available for sale, and unrecognized actuarial gains and losses in the defined benefit pension plan, arising during the period. These gains and losses for the period are shown as a component of other comprehensive income. The accumulated gains and losses are reported as a component of equity, net of any tax effect. At December 31, 2015, the balance in accumulated other comprehensive income consisted of a change in the unrealized gain on available for sales securities of $.265 million and no change to the actuarial losses on the defined benefit pension obligation of $.049 million. At December 31, 2014, the balance in accumulated other comprehensive income consisted of a change in the unrealized gain on available for sale securities of $.346 million and actuarial losses on the defined benefit pension obligation of $.049 million. |
Earnings per Common Share | Earnings per Common Share Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options and warrants 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 year ended December 31, 2015, 2014 and 2013 (dollars in thousands, except per share data): Year Ended December 31, 2015 2014 2013 Net income $ $ $ Preferred stock dividends and accretion of discount — — Net income available to common shareholders $ $ $ Weighted average shares outstanding Effect of dilutive stock options, and vesting of restricted stock units Diluted weighted average shares outstanding Income per common share: Basic $ .90 $ .30 $ Diluted $ .89 $ .30 $ |
Income Taxes | Income Taxes Deferred income taxes have been provided under the liability method. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected to reverse. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred asset will not be realized. |
Off-Balance-Sheet Financial Instruments | Off-Balance-Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. For letters of credit, the Corporation recognizes a liability for the fair market value of the obligations it assumes under that guarantee. |
Recent Developments | Recent Developments In May 2014, the Financial Accounting Standards Board (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. In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 amends current guidance by requiring companies to recognize changes in fair value for equity investments that have a readily determinable fair value through net income rather than through other comprehensive income. Under ASU 2016-01, equity investments that do not have a readily determinable fair value will either be accounted for the same as equity investments that have a readily determinable fair value, with changes in fair value recognized through net income or carried at cost, adjusted for changes in observable prices based on orderly transactions for identical or similar investments issued by the same issuer and further adjusted for impairment, if applicable. ASU 2016-01 also requires a qualitative assessment of impairment indicators each reporting period. If this assessment indicates that impairment exists, companies must adjust the investment to fair value and recognize an impairment loss in net income, even if the impairment is determined to be temporary. ASU 2016-01 is effective for public companies for interim and annual periods beginning after December 15, 2017. The Corporation’s adoption of ASU 2016-01 is not expected to have a material impact on the Corporation’s consolidated financial condition or results of operations. In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize an asset with right of use and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease guidance will be effective for the Corporation’s year ending December 31, 2019 and will be applied using modified retrospective transition method to the beginning of the earliest period presented. The effect of applying the new lease guidance on the financial statements has not yet been determined. |
Reclassifications | Reclassifications Certain amounts in the 2014 and 2013 consolidated financial statements have been reclassified to conform to the 2015 presentation. |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
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 year ended December 31, 2015, 2014 and 2013 (dollars in thousands, except per share data): Year Ended December 31, 2015 2014 2013 Net income $ $ $ Preferred stock dividends and accretion of discount — — Net income available to common shareholders $ $ $ Weighted average shares outstanding Effect of dilutive stock options, and vesting of restricted stock units Diluted weighted average shares outstanding Income per common share: Basic $ .90 $ .30 $ Diluted $ .89 $ .30 $ |
SECURITIES AVAILABLE FOR SALE (
SECURITIES AVAILABLE FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INVESTMENT SECURITIES | |
Schedule of carrying value and estimated fair value of securities available for sale | The carrying value and estimated fair value of securities available for sale are as follows (dollars in thousands): Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2015 Corporate $ $ — $ ) $ US Agencies ) US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ December 31, 2014 US Treasury $ $ $ ) $ Corporate — US Agencies ) US Agencies - MBS ) Obligations of states and political subdivisions ) Total securities available for sale $ $ $ ) $ |
Schedule of securities with gross unrealized losses aggregated by investment category and length of time these individual securities have been in a loss position | Following is information pertaining to securities with gross unrealized losses at December 31, 2015 and 2014 aggregated by investment category and length of time these individual securities have been in a loss position (dollars in thousands): Less Than Twelve Months Over Twelve Months Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value December 31, 2015 Corporate $ ) $ $ — $ — US Agencies ) — — US Agencies - MBS ) — — Obligations of states and political subdivisions ) — — Total securities available for sale $ ) $ $ — $ — December 31, 2014 US Treasury $ ) $ $ — $ — Corporate — — — — US Agencies ) ) US Agencies - MBS ) — — Obligations of states and political subdivisions ) — — Total securities available for sale $ ) $ $ ) $ |
Summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses | Following is a summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses for the years ended December 31 (dollars in thousands): 2015 2014 2013 Proceeds from sales and calls $ $ $ Gross gains on sales and calls Gross (losses) on sales and calls — — — |
Schedule of carrying value and estimated fair value of securities available for sale by contractual maturity | The carrying value and estimated fair value of securities available for sale at December 31, 2015, by contractual maturity, are shown below (dollars in thousands): Amortized Cost Estimated Fair Value Due in one year or less $ $ Due after one year through five years Due after five years through ten years Due after ten years Subtotal US Agencies - MBS Total $ $ |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LOANS | |
Schedule of composition of loans | The composition of loans at December 31 is as follows (dollars in thousands): 2015 2014 Commercial real estate $ $ Commercial, financial, and agricultural Commercial construction One to four family residential real estate Consumer Consumer construction Total loans $ $ |
Schedule of outstanding balances of the acquired portfolio and the remaining balance of the acquisition fair value adjustments at acquisition date | The table below details the outstanding balances of the acquired portfolio and the remaining balance of the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ $ $ Nonaccretable difference ) — ) Expected cash flows Accretable yield ) ) ) Carrying balance at acquisition date $ $ $ |
Schedule of the accretable yield by acquisition | The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2015 (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Balance, December 31, 2014 $ $ $ Accretion ) ) ) Reclassification from nonaccretable difference — Balance at December 31, 2015 $ $ $ |
Schedule of the allowance for loan losses | An analysis of the allowance for loan losses for the years ended December 31 is as follows (dollars in thousands): 2015 2014 2013 Balance, January 1 $ $ $ Recoveries on loans previously charged off Loans charged off ) ) ) Provision Balance, December 31 $ $ $ |
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 December 31, 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 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 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 $ $ $ $ $ $ $ — $ |
Schedule of breakdown of loans by risk category | Below is a breakdown of loans by risk category as of December 31, 2015 (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 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 $ $ $ $ $ — $ $ — $ $ |
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): Interest Income Interest Income Nonaccrual Accrual Average Related Recognized on Basis Basis Investment Valuation Reserve During Impairment Accrual Basis December 31, 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 $ $ $ $ $ $ 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 $ $ $ $ $ — $ |
Summary of past due loans | A summary of past due loans at December 31, is as follows (dollars in thousands): 2015 2014 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due/ Past Due Past Due/ (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 during the year ended December 31, 2015 (dollars in thousands): Commercial, One to four Commercial Real Estate Financial and Agricultural Commercial Construction family residential real estate Consumer Construction Consumer Total NON ACCRUAL Beginning balance $ $ $ $ $ $ — $ Principal payments ) ) — ) ) ) ) Charge-offs ) ) ) ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing ) ) — ) — — ) Transfers from accruing — Acquired impaired loans — — — — — — — Other — ) ) ) ) ) Ending balance $ $ $ — $ $ $ $ A roll-forward of nonaccrual 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 NON ACCRUAL Beginning balance $ $ $ — $ $ — $ $ Principal payments ) ) — ) — ) ) Charge-offs ) ) — ) — ) ) Advances — — — — — — — Transfers to OREO ) — — ) — — ) Transfers to accruing — ) — ) — — ) Transfers from accruing — — — Acquired impaired loans — — Other — — — Ending balance $ $ $ $ $ $ — $ |
Schedule of roll-forward of troubled debt restructurings | A roll-forward of troubled debt restructuring during the year ended December 31, 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 $ $ $ $ $ — $ Acquired restructured — — Principal payments ) ) ) ) — ) Charge-offs — — — — — — Transferred out of TDR — — — ) — ) Transferred from nonaccrual — — — Transfers to nonaccrual — — — — — — Ending Balance $ $ $ $ $ — $ NON ACCRUAL Beginning balance $ — $ — $ — $ — $ — $ — Acquired restructured — — Principal payments ) — ) ) — ) Charge-offs — — — — — — Advances — — — — — — Transfers to accruing ) — — ) — ) Transfers from accruing — — — — — — Ending Balance $ $ — $ — $ $ — $ TOTALS Beginning balance $ $ $ $ $ — $ Acquired restructured — Principal payments ) ) ) ) — ) Charge-offs — — — — — — Transferred out of TDR — — — ) — ) Transfers to accruing — — — Tansfers to nonaccrual — — — — — — Transfers to accruing ) — — ) — ) Transfers 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 | Activity in such loans is summarized below (dollars in thousands): 2015 2014 Loans outstanding, January 1 $ $ New loans — Net activity on revolving lines of credit Repayment ) ) Loans outstanding, December 31 $ $ |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PREMISES AND EQUIPMENT | |
Schedule of details of premises and equipment | Details of premises and equipment at December 31 are as follows (dollars in thousands): 2015 2014 Land $ $ Buildings and improvements Furniture, fixtures, and equipment Construction in progress Total cost basis Less - accumulated depreciation Net book value $ $ |
OTHER REAL ESTATE HELD FOR SA36
OTHER REAL ESTATE HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
OTHER REAL ESTATE HELD FOR SALE | |
Schedule of analysis of other real estate held for sale | An analysis of other real estate held for sale for the years ended December 31 is as follows (dollars in thousands): 2015 2014 Balance, January 1 $ $ Other real estate transferred from loans due to foreclosure Other real estate acquired, net of purchase accounting — Other real estate sold ) ) Writedowns of other real estate held for sale ) ) Loss on sale of other real estate held for sale ) ) Total other real estate held for sale $ $ |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DEPOSITS | |
Schedule of distribution of deposits | The distribution of deposits at December 31 is as follows (dollars in thousands): 2015 2014 Noninterest bearing deposits $ $ NOW, money market, interest checking Savings CDs <$250,000 CDs >$250,000 Brokered Total deposits $ $ |
Schedule of maturities of non-brokered time deposits outstanding | Maturities of non-brokered time deposits outstanding at December 31, 2015 are as follows (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
SERVICING RIGHTS (Tables)
SERVICING RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SERVICING RIGHTS | |
Summary of mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances | There was no valuation allowance required (dollars in thousands): December 31, December 31, 2015 2014 Balance at beginning of period $ $ Additions from loans sold with servicing retained MSRs acquired in Peninsula transaction — Amortization ) ) Book value of MSRs at end of period $ $ Balance of loan servicing portfolio $ $ Mortgage servicing rights as % of portfolio .87 % .90 % |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
BORROWINGS | |
Schedule of borrowings | Borrowings consist of the following at December 31 (dollars in thousands): 2015 2014 Federal Home Loan Bank fixed rate advances at December 31, 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% $ $ |
Schedule of maturities and principal payments of borrowings outstanding | Maturities and principal payments of borrowings outstanding at December 31, 2015 are as follows (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
Schedule of components of the federal income tax provision (credit) | The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands): 2015 2014 2013 Current tax expense (benefit) $ — $ — $ — Change in valuation allowance ) — ) Deferred tax expense (benefit) Provision for (benefit of) income taxes $ $ $ ) |
Summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes | A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands): 2015 2014 2013 Tax expense at statutory rate $ $ $ Increase (decrease) in taxes resulting from: Tax-exempt interest ) ) ) Change in valuation allowance ) — ) Expiration of deferred tax assets — — Nondeductible transaction expenses — — Other Provision for (benefit of) income taxes, as reported $ $ $ ) |
Schedule of major components of net deferred tax assets | The major components of net deferred tax assets at December 31 are as follows (dollars in thousands): 2015 2014 Deferred tax assets: NOL carryforward $ $ Allowance for loan losses Alternative Minimum Tax Credit OREO Tax basis > book basis Tax credit carryovers Deferred compensation Pension liability Stock compensation Purchase accounting adjustments Other Total deferred tax assets Valuation allowance $ — $ ) Deferred tax liabilities: Core deposit premium ) ) FHLB stock dividend ) ) Depreciation ) ) Unrealized gain on securities ) ) Mortgage servicing rights ) ) Other ) ) Total deferred tax liabilities ) ) Net deferred tax asset $ $ |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
OPERATING LEASES | |
Schedule of future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements | Future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements, consist of the following (dollars in thousands): 2016 $ 2017 2018 2019 2020 Thereafter Total $ |
DEFINED BENEFIT PENSION PLAN (T
DEFINED BENEFIT PENSION PLAN (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
RETIREMENT PLAN | |
Schedule of anticipated distributions over the next five years | The anticipated distributions over the next five years and through December 31, 2015 are detailed in the table below (dollars in thousands): 2016 $ 2017 2018 2019 2020 2021-2025 Total $ |
Schedule of funded status, amounts recognized in the balance sheets and activity from the date of acquisition | The following table sets forth the plan’s funded status and amounts recognized in the Corporation’s balance sheets and the activity from date of acquisition (dollars in thousands): 2015 2014 Change in benefit obligation: Benefit obligation, beginning of year $ $ Service cost — — Interest cost Actuarial (loss) gain ) Benefits paid ) — Benefit obligation at end of year Change in plan assets: Fair value of plan assets, beginning of year Actual return on plan assets ) ) Employer contributions — Benefits paid ) — Fair value of plan assets at end of year Funded status ) ) Unrecognized net actuarial loss — — Accrued pension expense, included with other liabilities $ ) $ ) |
Schedule of assumptions in the actuarial valuation | 2015 2014 Weighted average discount rate % % Rate of increase in future compensation levels N/A N/A Expected long-term rate of return on plan assets % % |
Schedule of asset allocation | The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation, which was in place at both December 31, 2015 and December 31, 2014: Target Actual Allocation Allocation Equity securities 50% to 70% % Fixed income securities 30% to 50% % |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
REGULATORY MATTERS | |
Schedule of the Corporation's and the Bank's actual and capital amounts and ratios compared to generally applicable regulatory requirements | The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2015 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ % > $ > 8.0 % > $ > % mBank $ % > $ > 8.0 % > $ > % Tier 1 capital to risk weighted assets: Consolidated $ % > $ > 6.0 % > $ > % mBank $ % > $ > 6.0 % > $ > % Common equity Tier 1 capital to risk weighted assets Consolidated $ % > $ > 4.5 % > $ > % mBank $ % > $ > 4.5 % > $ > % Tier 1 capital to average assets: Consolidated $ % > $ > 4.0 % > $ > % mBank $ % > $ > 4.0 % > $ > % The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2014 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ % > $ > 8.0 % > $ % mBank $ % > $ > 8.0 % > $ % Tier 1 capital to risk weighted assets: Consolidated $ % > $ > 6.0 % > $ % mBank $ % > $ > 6.0 % > $ % Tier 1 capital to average assets: Consolidated $ % > $ > 4.0 % > $ % mBank $ % > $ > 4.0 % > $ % |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 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 year Vested during the year ) Nonvested balance at December 31, 2015 $ |
Summary of stock option transactions | 2015 2014 Outstanding shares at beginning of year Granted during the year — — Exercised during the year — ) Expired during the year ) ) Outstanding shares at end of year Exercisable shares at end of year Weighted average exercise price per share at end of year $ $ Shares available for grant at end of year — — |
Summary of the options outstanding and exercisable | Weighted Average Exercise Number Remaining Price Outstanding Exercisable Unvested Options Contractual Life-Years $ — |
COMMITMENTS, CONTINGENCIES, A45
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK | |
Schedule of commitments | These commitments at December 31 are as follows (dollars in thousands): 2015 2014 Commitments to extend credit: Variable rate $ $ Fixed rate Standby letters of credit - Variable rate Credit card commitments - Fixed rate $ $ |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule presenting information for financial instruments | The following table presents information for financial instruments at December 31 (dollars in thousands): December 31, 2015 December 31, 2014 Level in Fair Value Hierarchy Carrying Amount Estimated Fair Value Carrying Amount Estimated 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 | 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, 2015 (Level 1) (Level 2) (Level 3) December 31, 2015 Assets Impaired loans $ $ — $ — $ $ Other real estate held for sale — — $ 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 held for sale — — $ |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations | |
Schedule of purchase price | Purchase Price: Peninsula shares outstanding at December 5, 2014 Price per share /Cash Price $ Aggregate value of Mackinac stock issued, 695,361 shares, at a market value of $11.41 in exch for 190,800 shares $ Cash consideration $46.13 for 97,200 shares Cash for partial shares Total purchase price $ |
Schedule of net assets acquired | Net assets acquired: Cash and cash equivalents $ Securities available for sale Federal Home Loan Bank stock Loans Premises and equipment Other real estate owned Deposit based intangible Other assets Total assets Non-interest bearing deposits Interest bearing deposits Total deposits Other liabilities Total liabilities Net assets acquired Goodwill $ |
Schedule of unaudited proforma results | 2014 2013 Net interest income $ $ Noninterest income Net income Net income per diluted share $ $ |
PARENT COMPANY ONLY FINANCIAL48
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables) - PARENT COMPANY | 12 Months Ended |
Dec. 31, 2015 | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
Balance sheet | BALANCE SHEETS December 31, 2015 and 2014 (Dollars in Thousands) 2015 2014 ASSETS Cash and cash equivalents $ $ Investment in subsidiaries Other assets TOTAL ASSETS $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Line of Credit $ $ Other borrowing Other liabilities Total liabilities Shareholders’ equity: Preferred stock - no par value: Authorized 500,000 shares, Issued and outstanding - none — — Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 6,217,620 and 6,266,756 shares respectively Retained earnings Accumulated other comprehensive income ) Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ $ |
Statements of operations | STATEMENTS OF OPERATIONS Years Ended December 31, 2015, 2014, and 2013 (Dollars in Thousands) 2015 2014 2013 INCOME: Interest income $ — $ — $ Total income $ — $ — $ EXPENSES: Interest expense on borrowings — Salaries and benefits Professional service fees Nonrecurring transaction related expenses — — Other Total expenses Loss before income taxes and equity in undistributed net income of subsidiaries ) ) ) (Benefit of) income taxes ) ) ) Loss before equity in undistributed net income of subsidiaries ) ) ) Equity in undistributed net income of subsidiaries Net income Preferred dividend and accretion of discount — — NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ $ $ |
Statements of cash flows | STATEMENTS OF CASH FLOWS Years Ended December 31, 2015, 2014, and 2013 (Dollars in Thousands) 2015 2014 2013 Cash Flows from Operating Activities: Net income $ $ $ Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net (income) of subsidiaries ) ) ) Increase in capital from stock compensation Change in other assets ) Change in other liabilities ) ) Net cash provided by (used in) operating activities ) Cash Flows from Investing Activities: Investments in subsidiaries ) ) Net cash paid for acquisition of PFC — ) — Net cash (used in) investing activities ) ) Cash Flows from Financing Activities: Increase on term borrowing — — Principal payments on borrowings ) ) — Net activity on line of credit ) Repurchase of common stock ) ) ) Dividend on common stock ) ) ) Dividend on preferred stock — — ) Redemption of Series A Preferred Stock — — ) Net cash provided by (used in) financing activities ) ) Net increase (decrease) in cash and cash equivalents ) ) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015USD ($)item$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)$ / sharesshares | May. 22, 2012shares | |
Nature of Operations | ||||
Maximum percentage of the entity's business activity with Canadian customers denominated in Canadian dollars | 1.00% | |||
Number of reportable operating segments | item | 1 | |||
Cash and Cash Equivalents | ||||
Number of days for which federal funds are purchased and sold | 1 day | |||
Interest Income and Fees on Loans | ||||
Minimum commitment period required before loan commitment fees or costs are deferred | 1 year | |||
Goodwill and Other Intangible Assets | ||||
Core deposit estimated useful life | 10 years | |||
Comprehensive Income (Loss) | ||||
Unrealized gains (losses) on available for sale securities | $ (265) | $ 346 | $ (708) | |
Change from defined benefit plans | 49 | |||
Unrealized gains on available for sale securities | 297 | 562 | ||
Minimum pension liability | 49 | 49 | ||
Computation of basic and diluted earnings per share | ||||
Net income (in dollars) | 5,596 | 1,700 | 5,937 | |
Preferred dividend and accretion of discount | 308 | |||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 5,596 | $ 1,700 | $ 5,629 | |
Weighted average shares outstanding | shares | 6,241,921,000 | 5,592,738,000 | 5,558,313,000 | |
Effect of dilutive stock options and vesting of restricted stock units | shares | 31,400,000 | 61,073,000 | 91,745,000 | |
Diluted weighted average shares outstanding | shares | 6,273,321,000 | 5,653,811,000 | 5,650,058,000 | |
Income per common share: | ||||
Basic (in dollars per share) | $ / shares | $ 0.90 | $ 0.30 | $ 1.01 | |
Diluted (in dollars per share) | $ / shares | $ 0.89 | $ 0.30 | $ 1 | |
PARENT COMPANY | ||||
Computation of basic and diluted earnings per share | ||||
Net income (in dollars) | $ 5,596 | $ 1,700 | $ 5,937 | |
Preferred dividend and accretion of discount | 308 | |||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 5,596 | $ 1,700 | $ 5,629 | |
2012 Incentive Compensation Plan | ||||
Stock Compensation Plans | ||||
Total authorized share balance | shares | 575,000 | |||
2012 Incentive Compensation Plan | Stock Options | ||||
Stock Compensation Plans | ||||
Total authorized share balance | shares | 392,152 |
RESTRICTIONS ON CASH AND CASH50
RESTRICTIONS ON CASH AND CASH EQUIVALENTS (Details) $ in Thousands | Dec. 31, 2015USD ($) |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | |
Restricted cash and cash equivalents | $ 11,291 |
SECURITIES AVAILABLE FOR SALE51
SECURITIES AVAILABLE FOR SALE (Details) $ in Thousands | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item |
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | $ 53,278 | $ 64,903 |
Gross Unrealized Gains | 685 | 1,210 |
Gross Unrealized Losses | (235) | (281) |
Estimated Fair Value | 53,728 | 65,832 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | (235) | (196) |
Less Than Twelve Months, Fair Value | $ 29,480 | 10,349 |
Twelve Months or Longer, Gross Unrealized Losses | (85) | |
Twelve Months or Longer, Fair Value | $ 7,411 | |
Number of securities in an unrealized loss position | item | 13 | 17 |
US Treasury | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | $ 5,287 | |
Gross Unrealized Gains | 3 | |
Gross Unrealized Losses | (10) | |
Estimated Fair Value | 5,280 | |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | (10) | |
Less Than Twelve Months, Fair Value | 3,958 | |
Corporate Bonds | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | $ 12,710 | 12,558 |
Gross Unrealized Gains | 116 | |
Gross Unrealized Losses | (64) | |
Estimated Fair Value | 12,646 | 12,674 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | (64) | |
Less Than Twelve Months, Fair Value | 11,299 | |
US Agencies | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | 27,358 | 22,667 |
Gross Unrealized Gains | 62 | 144 |
Gross Unrealized Losses | (43) | (94) |
Estimated Fair Value | 27,377 | 22,717 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | (43) | (9) |
Less Than Twelve Months, Fair Value | 15,957 | 1,494 |
Twelve Months or Longer, Gross Unrealized Losses | (85) | |
Twelve Months or Longer, Fair Value | 7,411 | |
US Agencies - MBS | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | 3,738 | 13,461 |
Gross Unrealized Gains | 31 | 262 |
Gross Unrealized Losses | (10) | (35) |
Estimated Fair Value | $ 3,759 | $ 13,688 |
Securities as a percentage of the total portfolio | 7.00% | 20.79% |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | $ (10) | $ (35) |
Less Than Twelve Months, Fair Value | 1,651 | 4,511 |
Obligations of states and political subdivisions | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized Cost | 9,472 | 10,930 |
Gross Unrealized Gains | 592 | 685 |
Gross Unrealized Losses | (118) | (142) |
Estimated Fair Value | 9,946 | 11,473 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Less Than Twelve Months, Gross Unrealized Losses | (118) | (142) |
Less Than Twelve Months, Fair Value | $ 573 | $ 386 |
SECURITIES AVAILABLE FOR SALE52
SECURITIES AVAILABLE FOR SALE (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses | |||
Proceeds from sales and calls | $ 25,628 | $ 5,200 | $ 10,156 |
Gross gains on sales and calls | 455 | 54 | $ 73 |
Amortized Cost | |||
Due in one year or less | 2,281 | ||
Due after one year through five years | 40,996 | ||
Due after five years through ten years | 3,387 | ||
Due after ten years | 2,876 | ||
Subtotal | 49,540 | ||
US Agencies - MBS | 3,738 | ||
Total amortized cost | 53,278 | ||
Estimated Fair Value | |||
Due in one year or less | 2,292 | ||
Due after one year through five years | 41,021 | ||
Due after five years through ten years | 3,616 | ||
Due after ten years | 3,040 | ||
Subtotal | 49,969 | ||
US Agencies - MBS | 3,759 | ||
Estimated Fair Value | $ 53,728 | $ 65,832 |
LOANS (Details)
LOANS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 05, 2014 | |
Insider Loans | ||||
Total loans | $ 618,394 | $ 600,935 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 5,140 | 4,661 | $ 5,218 | |
Recoveries on loans previously charged off | 690 | 325 | 200 | |
Loans charged off | (2,030) | (1,046) | (2,432) | |
Provision | 1,204 | 1,200 | 1,675 | |
Balance at end of period | 5,004 | 5,140 | 4,661 | |
Net charge off activity | $ 1,340 | $ 721 | $ 2,232 | |
Net charge off activity as percentage of average loans outstanding | 0.22% | 0.14% | 0.48% | |
Peninsula Financial Corporation | ||||
Acquired portfolio | ||||
Loans acquired - contractual payments | $ 67,139 | |||
Nonaccretable difference | (2,234) | |||
Expected cash flows | 64,905 | |||
Accretable yield | (2,844) | |||
Carrying balance at acquisition date | 62,061 | |||
Balance at the beginning of period | 2,786 | |||
Accretion | (1,278) | |||
Reclassification from nonaccretable difference | 260 | |||
Balance at the end of period | 1,768 | $ 2,786 | ||
Commercial real estate loans | ||||
Insider Loans | ||||
Total loans | 312,805 | 315,387 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 2,813 | 1,849 | ||
Recoveries on loans previously charged off | 588 | 131 | ||
Loans charged off | (52) | (19) | ||
Provision | (1,738) | 852 | ||
Balance at end of period | 1,611 | 2,813 | $ 1,849 | |
Commercial, financial, and agricultural | ||||
Insider Loans | ||||
Total loans | 122,140 | 101,895 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 1,539 | 1,378 | ||
Recoveries on loans previously charged off | 22 | 78 | ||
Loans charged off | (1,749) | (663) | ||
Provision | 833 | 746 | ||
Balance at end of period | 645 | 1,539 | 1,378 | |
Commercial construction | ||||
Insider Loans | ||||
Total loans | 15,330 | 16,284 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 142 | 80 | ||
Recoveries on loans previously charged off | 52 | 50 | ||
Provision | (115) | 12 | ||
Balance at end of period | 79 | 142 | 80 | |
One to four family residential real estate | ||||
Insider Loans | ||||
Total loans | 140,502 | 139,553 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 285 | 516 | ||
Recoveries on loans previously charged off | 2 | 22 | ||
Loans charged off | (142) | (290) | ||
Provision | 129 | 37 | ||
Balance at end of period | 274 | 285 | 516 | |
Consumer | ||||
Insider Loans | ||||
Total loans | 15,847 | 18,385 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 13 | 148 | ||
Recoveries on loans previously charged off | 26 | 44 | ||
Loans charged off | (87) | (74) | ||
Provision | 112 | (105) | ||
Balance at end of period | 64 | 13 | 148 | |
Consumer construction | ||||
Insider Loans | ||||
Total loans | 11,770 | 9,431 | ||
Changes in the allowance for loan losses | ||||
Balance at beginning of period | 6 | 25 | ||
Provision | 1 | (19) | ||
Balance at end of period | 7 | 6 | $ 25 | |
Acquired impaired | Peninsula Financial Corporation | ||||
Acquired portfolio | ||||
Loans acquired - contractual payments | 13,290 | $ 10,312 | ||
Nonaccretable difference | (2,234) | |||
Expected cash flows | 11,056 | |||
Accretable yield | (744) | |||
Carrying balance at acquisition date | 10,312 | |||
Balance at the beginning of period | 744 | |||
Accretion | (578) | |||
Reclassification from nonaccretable difference | 260 | |||
Balance at the end of period | 426 | 744 | ||
Acquired Non-impaired | Peninsula Financial Corporation | ||||
Acquired portfolio | ||||
Loans acquired - contractual payments | 53,849 | |||
Expected cash flows | 53,849 | |||
Accretable yield | (2,100) | |||
Carrying balance at acquisition date | 51,749 | |||
Balance at the beginning of period | 2,042 | |||
Accretion | (700) | |||
Balance at the end of period | $ 1,342 | $ 2,042 |
LOANS (Details 2)
LOANS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for loan loss reserve: | |||||
Balance at beginning of period | $ 5,140 | $ 4,661 | $ 5,218 | ||
Charge-offs | (2,030) | (1,046) | (2,432) | ||
Recoveries | 690 | 325 | 200 | ||
Provision | 1,204 | 1,200 | 1,675 | ||
Balance at end of period | 5,004 | 5,140 | 4,661 | ||
Loans: | |||||
Ending balance | $ 618,394 | $ 600,935 | |||
Ending balance ALLR | (5,140) | (4,661) | (5,218) | (5,004) | (5,140) |
Net loans | 613,390 | 595,795 | |||
Ending balance ALLR: | |||||
Individually evaluated | 727 | 1,216 | |||
Collectively evaluated | 4,277 | 3,924 | |||
Total | 5,140 | 4,661 | 5,218 | 5,004 | 5,140 |
Ending balance Loans: | |||||
Individually evaluated | 2,111 | 3,077 | |||
Collectively evaluated | 608,482 | 587,546 | |||
Acquired with deteriorated credit quality | 7,801 | 10,312 | |||
Total Loans | 618,394 | 600,935 | |||
Commercial real estate loans | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 2,813 | 1,849 | |||
Charge-offs | (52) | (19) | |||
Recoveries | 588 | 131 | |||
Provision | (1,738) | 852 | |||
Balance at end of period | 1,611 | 2,813 | 1,849 | ||
Loans: | |||||
Ending balance | 312,805 | 315,387 | |||
Ending balance ALLR | (2,813) | (1,849) | (1,849) | (1,611) | (2,813) |
Net loans | 311,194 | 312,574 | |||
Ending balance ALLR: | |||||
Individually evaluated | 420 | 704 | |||
Collectively evaluated | 1,191 | 2,109 | |||
Total | 2,813 | 1,849 | 1,849 | 1,611 | 2,813 |
Ending balance Loans: | |||||
Individually evaluated | 1,086 | 1,374 | |||
Collectively evaluated | 307,336 | 308,661 | |||
Acquired with deteriorated credit quality | 4,383 | 5,352 | |||
Total Loans | 312,805 | 315,387 | |||
Commercial, financial, and agricultural | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 1,539 | 1,378 | |||
Charge-offs | (1,749) | (663) | |||
Recoveries | 22 | 78 | |||
Provision | 833 | 746 | |||
Balance at end of period | 645 | 1,539 | 1,378 | ||
Loans: | |||||
Ending balance | 122,140 | 101,895 | |||
Ending balance ALLR | (1,539) | (1,378) | (1,378) | (645) | (1,539) |
Net loans | 121,495 | 100,356 | |||
Ending balance ALLR: | |||||
Individually evaluated | 192 | 492 | |||
Collectively evaluated | 453 | 1,047 | |||
Total | 1,539 | 1,378 | 1,378 | 645 | 1,539 |
Ending balance Loans: | |||||
Individually evaluated | 617 | 863 | |||
Collectively evaluated | 121,345 | 100,330 | |||
Acquired with deteriorated credit quality | 178 | 702 | |||
Total Loans | 122,140 | 101,895 | |||
Commercial construction | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 142 | 80 | |||
Recoveries | 52 | 50 | |||
Provision | (115) | 12 | |||
Balance at end of period | 79 | 142 | 80 | ||
Loans: | |||||
Ending balance | 15,330 | 16,284 | |||
Ending balance ALLR | (142) | (80) | (80) | (79) | (142) |
Net loans | 15,251 | 16,142 | |||
Ending balance ALLR: | |||||
Collectively evaluated | 79 | 142 | |||
Total | 142 | 80 | 80 | 79 | 142 |
Ending balance Loans: | |||||
Collectively evaluated | 15,330 | 16,126 | |||
Acquired with deteriorated credit quality | 158 | ||||
Total Loans | 15,330 | 16,284 | |||
One to four family residential real estate | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 285 | 516 | |||
Charge-offs | (142) | (290) | |||
Recoveries | 2 | 22 | |||
Provision | 129 | 37 | |||
Balance at end of period | 274 | 285 | 516 | ||
Loans: | |||||
Ending balance | 140,502 | 139,553 | |||
Ending balance ALLR | (285) | (516) | (516) | (274) | (285) |
Net loans | 140,228 | 139,268 | |||
Ending balance ALLR: | |||||
Individually evaluated | 60 | 19 | |||
Collectively evaluated | 214 | 266 | |||
Total | 285 | 516 | 516 | 274 | 285 |
Ending balance Loans: | |||||
Individually evaluated | 325 | 768 | |||
Collectively evaluated | 136,940 | 134,908 | |||
Acquired with deteriorated credit quality | 3,237 | 3,877 | |||
Total Loans | 140,502 | 139,553 | |||
Consumer construction | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 6 | 25 | |||
Provision | 1 | (19) | |||
Balance at end of period | 7 | 6 | 25 | ||
Loans: | |||||
Ending balance | 11,770 | 9,431 | |||
Ending balance ALLR | (6) | (25) | (25) | (7) | (6) |
Net loans | 11,763 | 9,425 | |||
Ending balance ALLR: | |||||
Collectively evaluated | 7 | 6 | |||
Total | 6 | 25 | 25 | 7 | 6 |
Ending balance Loans: | |||||
Individually evaluated | 83 | ||||
Collectively evaluated | 11,686 | 9,216 | |||
Acquired with deteriorated credit quality | 1 | 215 | |||
Total Loans | 11,770 | 9,431 | |||
Consumer | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 13 | 148 | |||
Charge-offs | (87) | (74) | |||
Recoveries | 26 | 44 | |||
Provision | 112 | (105) | |||
Balance at end of period | 64 | 13 | 148 | ||
Loans: | |||||
Ending balance | 15,847 | 18,385 | |||
Ending balance ALLR | (13) | (148) | (148) | (64) | (13) |
Net loans | 15,783 | 18,372 | |||
Ending balance ALLR: | |||||
Individually evaluated | 55 | 1 | |||
Collectively evaluated | 9 | 12 | |||
Total | 13 | 148 | 148 | 64 | 13 |
Ending balance Loans: | |||||
Individually evaluated | 72 | ||||
Collectively evaluated | 15,845 | 18,305 | |||
Acquired with deteriorated credit quality | 2 | 8 | |||
Total Loans | 15,847 | 18,385 | |||
Unallocated | |||||
Allowance for loan loss reserve: | |||||
Balance at beginning of period | 342 | 665 | |||
Provision | 1,982 | (323) | |||
Balance at end of period | 2,324 | 342 | 665 | ||
Loans: | |||||
Ending balance ALLR | (342) | (665) | (665) | (2,324) | (342) |
Net loans | (2,324) | (342) | |||
Ending balance ALLR: | |||||
Collectively evaluated | 2,324 | 342 | |||
Total | $ 342 | $ 665 | $ 665 | $ 2,324 | $ 342 |
LOANS (Details 3)
LOANS (Details 3) $ in Thousands | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) |
Breakdown of loans by risk category | ||
Total loans | $ 618,394 | $ 600,935 |
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 | $ 312,805 | 315,387 |
Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 122,140 | 101,895 |
Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 15,330 | 16,284 |
One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 140,502 | 139,553 |
Consumer construction | ||
Breakdown of loans by risk category | ||
Total loans | 11,770 | 9,431 |
Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 15,847 | 18,385 |
Strong (1) | ||
Breakdown of loans by risk category | ||
Total loans | 15,754 | 4,516 |
Strong (1) | Commercial real estate loans | ||
Breakdown of loans by risk category | ||
Total loans | 2,072 | 859 |
Strong (1) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 13,067 | 3,227 |
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 | 591 | 297 |
Strong (1) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 24 | 53 |
Good (2) | ||
Breakdown of loans by risk category | ||
Total loans | 33,773 | 34,832 |
Good (2) | Commercial real estate loans | ||
Breakdown of loans by risk category | ||
Total loans | 26,197 | 28,740 |
Good (2) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 5,954 | 4,577 |
Good (2) | Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 400 | 441 |
Good (2) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 1,222 | 1,074 |
Average (3) | ||
Breakdown of loans by risk category | ||
Total loans | 168,122 | 169,077 |
Average (3) | Commercial real estate loans | ||
Breakdown of loans by risk category | ||
Total loans | 113,868 | 129,791 |
Average (3) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 47,194 | 33,794 |
Average (3) | Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 3,869 | 2,282 |
Average (3) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 3,172 | 3,207 |
Average (3) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 19 | 3 |
Acceptable/Acceptable Watch (4) | ||
Breakdown of loans by risk category | ||
Total loans | 231,080 | 220,135 |
Acceptable/Acceptable Watch (4) | Commercial real estate loans | ||
Breakdown of loans by risk category | ||
Total loans | 164,954 | 147,624 |
Acceptable/Acceptable Watch (4) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 53,791 | 57,295 |
Acceptable/Acceptable Watch (4) | Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 8,257 | 9,324 |
Acceptable/Acceptable Watch (4) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 4,078 | 5,882 |
Acceptable/Acceptable Watch (4) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 10 | |
Substandard (6) | ||
Breakdown of loans by risk category | ||
Total loans | 12,397 | 18,037 |
Substandard (6) | Commercial real estate loans | ||
Breakdown of loans by risk category | ||
Total loans | 5,714 | 8,373 |
Substandard (6) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 2,134 | 3,002 |
Substandard (6) | Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 395 | 906 |
Substandard (6) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 4,093 | 5,745 |
Substandard (6) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 61 | 11 |
Rating Unassigned | ||
Breakdown of loans by risk category | ||
Total loans | 157,268 | 154,338 |
Rating Unassigned | Commercial construction | ||
Breakdown of loans by risk category | ||
Total loans | 2,409 | 3,251 |
Rating Unassigned | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 127,346 | 123,348 |
Rating Unassigned | Consumer construction | ||
Breakdown of loans by risk category | ||
Total loans | 11,770 | 9,431 |
Rating Unassigned | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | $ 15,743 | $ 18,308 |
LOANS (Details 4)
LOANS (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Impaired Loans | |||
Number of days past due to be considered as nonperforming loans | 90 days | ||
Non performing loans | $ 2,978 | ||
Average investment | |||
Total | 18,869 | $ 3,354 | |
Related Valuation Reserve | 251 | 720 | |
Interest Income Recognized During Impairment | |||
Total | 795 | 0 | $ 0 |
Interest Income on Accrual Basis | |||
Total | 1,125 | 130 | $ 228 |
Nonaccrual Basis | |||
Recorded investment | |||
Total | 2,507 | 3,939 | |
Accrual Basis | |||
Recorded investment | |||
Total | 8,217 | 10,312 | |
Commercial real estate loans | |||
Average investment | |||
With no valuation reserve | 7,205 | 532 | |
With a valuation reserve | 229 | ||
Total | 7,205 | 761 | |
Related Valuation Reserve | 227 | ||
Interest Income Recognized During Impairment | |||
With no valuation reserve | 576 | ||
Total | 576 | ||
Interest Income on Accrual Basis | |||
With no valuation reserve | 655 | 7 | |
With a valuation reserve | 18 | ||
Total | 655 | 25 | |
Commercial real estate loans | Nonaccrual Basis | |||
Recorded investment | |||
With no valuation reserve | 471 | 632 | |
With a valuation reserve | 227 | ||
Total | 471 | 859 | |
Commercial real estate loans | Accrual Basis | |||
Recorded investment | |||
With no valuation reserve | 4,051 | 5,352 | |
Total | 4,051 | 5,352 | |
Commercial, financial, and agricultural | |||
Average investment | |||
With no valuation reserve | 4,849 | 685 | |
With a valuation reserve | 699 | 1,109 | |
Total | 5,548 | 1,794 | |
Related Valuation Reserve | 192 | 484 | |
Interest Income Recognized During Impairment | |||
With no valuation reserve | 78 | ||
Total | 78 | ||
Interest Income on Accrual Basis | |||
With no valuation reserve | 214 | 27 | |
With a valuation reserve | 36 | 45 | |
Total | 250 | 72 | |
Commercial, financial, and agricultural | Nonaccrual Basis | |||
Recorded investment | |||
With no valuation reserve | 74 | ||
With a valuation reserve | 460 | 774 | |
Total | 460 | 848 | |
Commercial, financial, and agricultural | Accrual Basis | |||
Recorded investment | |||
With no valuation reserve | 1,778 | 702 | |
Total | 1,778 | 702 | |
Commercial construction | |||
Average investment | |||
With no valuation reserve | 260 | 11 | |
Total | 260 | 11 | |
Interest Income Recognized During Impairment | |||
With no valuation reserve | 3 | ||
Total | 3 | ||
Interest Income on Accrual Basis | |||
With no valuation reserve | 6 | ||
Total | 6 | ||
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 | 5,413 | 656 | |
With a valuation reserve | 232 | 116 | |
Total | 5,645 | 772 | |
Related Valuation Reserve | 58 | 9 | |
Interest Income Recognized During Impairment | |||
With no valuation reserve | 137 | ||
Total | 137 | ||
Interest Income on Accrual Basis | |||
With no valuation reserve | 205 | 25 | |
With a valuation reserve | 6 | 7 | |
Total | 211 | 32 | |
One to four family residential real estate | Nonaccrual Basis | |||
Recorded investment | |||
With no valuation reserve | 1,267 | 1,844 | |
With a valuation reserve | 229 | 114 | |
Total | 1,496 | 1,958 | |
One to four family residential real estate | Accrual Basis | |||
Recorded investment | |||
With no valuation reserve | 2,385 | 3,877 | |
Total | 2,385 | 3,877 | |
Consumer construction | |||
Average investment | |||
With no valuation reserve | 99 | 15 | |
Total | 99 | 15 | |
Interest Income on Accrual Basis | |||
With no valuation reserve | 1 | ||
Total | 1 | ||
Consumer construction | Nonaccrual Basis | |||
Recorded investment | |||
With no valuation reserve | 20 | 274 | |
Total | 20 | 274 | |
Consumer construction | Accrual Basis | |||
Recorded investment | |||
With no valuation reserve | 2 | 215 | |
Total | 2 | 215 | |
Consumer | |||
Average investment | |||
With no valuation reserve | 102 | 1 | |
With a valuation reserve | 10 | ||
Total | 112 | 1 | |
Related Valuation Reserve | 1 | ||
Interest Income Recognized During Impairment | |||
With no valuation reserve | 1 | ||
Total | 1 | ||
Interest Income on Accrual Basis | |||
With no valuation reserve | 2 | 1 | |
Total | 2 | 1 | |
Consumer | Nonaccrual Basis | |||
Recorded investment | |||
With no valuation reserve | 50 | ||
With a valuation reserve | 10 | ||
Total | 60 | ||
Consumer | Accrual Basis | |||
Recorded investment | |||
With no valuation reserve | 1 | 8 | |
Total | $ 1 | $ 8 |
LOANS (Details 5)
LOANS (Details 5) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Past due loans | |||
90+ days Past Due/Nonaccrual | $ 2,507 | $ 3,939 | $ 2,024 |
Total | 4,489 | 7,438 | |
30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 1,950 | 3,499 | |
90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 2,539 | 3,939 | |
Commercial real estate loans | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 471 | 859 | 572 |
Total | 992 | 2,716 | |
Commercial real estate loans | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 521 | 1,857 | |
Commercial real estate loans | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 471 | 859 | |
Commercial, financial, and agricultural | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 460 | 848 | 811 |
Total | 682 | 952 | |
Commercial, financial, and agricultural | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 222 | 104 | |
Commercial, financial, and agricultural | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 460 | 848 | |
Commercial construction | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 250 | ||
Total | 270 | 250 | |
Commercial construction | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 270 | ||
Commercial construction | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 250 | ||
One to four family residential real estate | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 1,496 | 1,958 | 611 |
Total | 2,335 | 3,370 | |
One to four family residential real estate | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 807 | 1,412 | |
One to four family residential real estate | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 1,528 | 1,958 | |
Consumer construction | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 20 | 24 | |
Total | 20 | 62 | |
Consumer construction | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 38 | ||
Consumer construction | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 20 | 24 | |
Consumer | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | 60 | $ 30 | |
Total | 190 | 88 | |
Consumer | 30-89 days Past Due | |||
Past due loans | |||
30-89 days Past Due (accruing) | 130 | $ 88 | |
Consumer | 90+ days Past Due | |||
Past due loans | |||
90+ days Past Due/Nonaccrual | $ 60 |
LOANS (Details 6)
LOANS (Details 6) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Roll-forward of nonaccrual activity | ||
Beginning balance | $ 3,939 | $ 2,024 |
Principal payments | (6,558) | (835) |
Charge-offs | (2,030) | (691) |
Transfers to OREO | (912) | (590) |
Transfers to accruing | (1,605) | (137) |
Transfers from accruing | 9,997 | 1,858 |
Acquired impaired loans | 2,281 | |
Other | (324) | 29 |
Ending balance | 2,507 | 3,939 |
Commercial real estate loans | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 859 | 572 |
Principal payments | (1,239) | (104) |
Charge-offs | (52) | (18) |
Transfers to OREO | (371) | (233) |
Transfers to accruing | (1,291) | |
Transfers from accruing | 2,490 | |
Acquired impaired loans | 632 | |
Other | 75 | 10 |
Ending balance | 471 | 859 |
Commercial, financial, and agricultural | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 848 | 811 |
Principal payments | (4,761) | (692) |
Charge-offs | (1,744) | (435) |
Transfers to accruing | (88) | (10) |
Transfers from accruing | 6,205 | 1,167 |
Other | 7 | |
Ending balance | 460 | 848 |
Commercial construction | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 250 | |
Charge-offs | (10) | |
Transfers from accruing | 104 | |
Acquired impaired loans | 250 | |
Other | (344) | |
Ending balance | 250 | |
One to four family residential real estate | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 1,958 | 611 |
Principal payments | (531) | (35) |
Charge-offs | (186) | (206) |
Transfers to OREO | (541) | (357) |
Transfers to accruing | (226) | (127) |
Transfers from accruing | 1,068 | 685 |
Acquired impaired loans | 1,375 | |
Other | (46) | 12 |
Ending balance | 1,496 | 1,958 |
Consumer construction | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 24 | |
Principal payments | (3) | |
Acquired impaired loans | 24 | |
Other | (1) | |
Ending balance | 20 | 24 |
Consumer | ||
Roll-forward of nonaccrual activity | ||
Beginning balance | 30 | |
Principal payments | (24) | (4) |
Charge-offs | (38) | (32) |
Transfers from accruing | 130 | $ 6 |
Other | (8) | |
Ending balance | $ 60 |
LOANS (Details 7)
LOANS (Details 7) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in troubled debt restructuring | ||
Beginning balance | $ 3,105 | $ 6,277 |
Acquired restructured | 3,164 | |
Principal payments | (716) | (2,842) |
Charge-offs | (278) | |
Transferred out of TDRs | (60) | 91 |
Transfers to nonaccrual | (89) | |
Transfers to foreclosed properties | (550) | (143) |
Transfer from nonaccrual | 550 | |
Transfers from accruing | 89 | |
Ending balance | 5,493 | 3,105 |
Accrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 3,105 | 5,663 |
Acquired restructured | 2,158 | |
Principal payments | (414) | (2,523) |
Charge-offs | (37) | |
Transferred out of TDRs | (60) | 91 |
Transfers to nonaccrual | (89) | |
Transfer from nonaccrual | 550 | |
Ending balance | 5,339 | 3,105 |
Nonaccrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 614 | |
Acquired restructured | 1,006 | |
Principal payments | (302) | (319) |
Charge-offs | (241) | |
Transfers to foreclosed properties | (143) | |
Transfers to accruing | (550) | |
Transfers from accruing | 89 | |
Ending balance | 154 | |
Commercial real estate loans | ||
Changes in troubled debt restructuring | ||
Beginning balance | 1,007 | 3,520 |
Acquired restructured | 1,092 | |
Principal payments | (320) | (2,513) |
Transfer from nonaccrual | 419 | |
Transfers to accruing | (419) | |
Ending balance | 1,779 | 1,007 |
Commercial real estate loans | Accrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 1,007 | 3,520 |
Acquired restructured | 647 | |
Principal payments | (307) | (2,513) |
Transfer from nonaccrual | (419) | |
Ending balance | 1,766 | 1,007 |
Commercial real estate loans | Nonaccrual Basis | ||
Changes in troubled debt restructuring | ||
Acquired restructured | 445 | |
Principal payments | (13) | |
Transfers to accruing | (419) | |
Ending balance | 13 | |
Commercial, financial, and agricultural | ||
Changes in troubled debt restructuring | ||
Beginning balance | 1,186 | 1,709 |
Acquired restructured | 268 | |
Principal payments | (38) | (319) |
Charge-offs | (204) | |
Ending balance | 1,416 | 1,186 |
Commercial, financial, and agricultural | Accrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 1,186 | 1,186 |
Acquired restructured | 268 | |
Principal payments | (38) | |
Ending balance | 1,416 | 1,186 |
Commercial, financial, and agricultural | Nonaccrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 523 | |
Principal payments | (319) | |
Charge-offs | (204) | |
Commercial construction | ||
Changes in troubled debt restructuring | ||
Beginning balance | 852 | 858 |
Acquired restructured | 266 | |
Principal payments | (284) | (6) |
Ending balance | 834 | 852 |
Commercial construction | Accrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 852 | 858 |
Principal payments | (18) | (6) |
Ending balance | 834 | 852 |
Commercial construction | Nonaccrual Basis | ||
Changes in troubled debt restructuring | ||
Acquired restructured | 266 | |
Principal payments | (266) | |
One to four family residential real estate | ||
Changes in troubled debt restructuring | ||
Beginning balance | 60 | 190 |
Acquired restructured | 1,538 | |
Principal payments | (74) | (4) |
Charge-offs | (74) | |
Transferred out of TDRs | (60) | 91 |
Transfers to nonaccrual | (89) | |
Transfers to foreclosed properties | (131) | (143) |
Transfer from nonaccrual | 131 | |
Transfers from accruing | 89 | |
Ending balance | 1,464 | 60 |
One to four family residential real estate | Accrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | 60 | 99 |
Acquired restructured | 1,243 | |
Principal payments | (51) | (4) |
Charge-offs | (37) | |
Transferred out of TDRs | (60) | 91 |
Transfers to nonaccrual | (89) | |
Transfer from nonaccrual | (131) | |
Ending balance | 1,323 | 60 |
One to four family residential real estate | Nonaccrual Basis | ||
Changes in troubled debt restructuring | ||
Beginning balance | (91) | |
Acquired restructured | 295 | |
Principal payments | (23) | |
Charge-offs | (37) | |
Transfers to foreclosed properties | (143) | |
Transfers to accruing | (131) | |
Transfers from accruing | $ 89 | |
Ending balance | $ 141 |
LOANS (Details 8)
LOANS (Details 8) - Bank - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | 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 |
New loans | 33 | |
Net activity on revolving lines of credit | 778 | 1,390 |
Principal payments | (2,680) | (1,677) |
Loans outstanding, end of period | 6,887 | 8,789 |
Unfunded commitments | 2,565 | |
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 |
PREMISES AND EQUIPMENT (Details
PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Premises and Equipment | |||
Total cost basis | $ 26,018 | $ 24,860 | |
Less - accumulated depreciation | 13,494 | 12,202 | |
Net book value | 12,524 | 12,658 | |
Depreciation charged to operating expenses | 1,457 | 1,337 | $ 1,231 |
Land | |||
Premises and Equipment | |||
Total cost basis | 1,812 | 1,812 | |
Buildings and improvements | |||
Premises and Equipment | |||
Total cost basis | 15,497 | 15,069 | |
Furniture Fixtures And Equipment | |||
Premises and Equipment | |||
Total cost basis | 8,567 | 7,892 | |
Construction in progress | |||
Premises and Equipment | |||
Total cost basis | $ 142 | $ 87 |
OTHER REAL ESTATE HELD FOR SA62
OTHER REAL ESTATE HELD FOR SALE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in other real estate held for sale | ||
Balance at the beginning of the period | $ 3,010 | $ 1,884 |
Other real estate transferred from loans due to foreclosure | 1,376 | 588 |
Other real estate acquired, net of purchase accounting | 1,193 | |
Other real estate sold | (1,702) | (375) |
Writedowns of other real estate held for sale | (295) | (228) |
Loss on sale of other real estate held for sale | (65) | (52) |
Balance at the end of the period | 2,324 | $ 3,010 |
Foreclosed residential real estate property | 1,327 | |
Mortgage loans secured by residential real estate property in process of foreclosure | $ 151 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Distribution of deposits | ||
Noninterest bearing deposits | $ 122,775 | $ 95,498 |
NOW, money market, interest checking | 202,784 | 212,565 |
Savings | 30,882 | 28,015 |
CDs less than $250,000 | 124,084 | 158,657 |
CDs more than $250,000 | 8,532 | 6,610 |
Brokered | 121,266 | 105,628 |
Total deposits | 610,323 | 606,973 |
Deposits that meet or exceed $250,000 FDIC insurance limit | 8,532 | $ 6,610 |
Maturities of non-brokered time deposits outstanding | ||
2,016 | 92,905 | |
2,017 | 25,100 | |
2,018 | 7,014 | |
2,019 | 4,913 | |
2,020 | 2,541 | |
Thereafter | 143 | |
Total | $ 132,616 |
GOODWILL AND OTHER INTANGIBLE64
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 05, 2014 | |
Goodwill | $ 3,805 | $ 3,805 | |
Deposit based intangible assets | $ 1,076 | 1,196 | |
Estimated life | 10 years | ||
Amortization of Intangible Assets | $ 121 | 10 | |
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 | $ 3,805,000 | |
Deposit based intangible assets | $ 1,206 | ||
Estimated life | 10 years |
SERVICING RIGHTS (Details)
SERVICING RIGHTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances | ||
Valuation allowance | $ 0 | |
Commercial loans | ||
Commercial Loans | ||
Commercial Loans | 63,000 | $ 46,000 |
Servicing rights | $ 170 | 198 |
Mortgage loans | ||
Mortgage Loans | ||
Annual constant prepayment speed (as a percent) | 9.45% | |
Discount rate (as a percent) | 8.97% | |
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 |
Additions from loans sold with servicing retained | 585 | 636 |
MSRs acquired in Peninsula transaction | 539 | |
Amortization | (614) | (310) |
Balance at end of period | 1,965 | 1,994 |
Balance of loan servicing portfolio | $ 224,612 | $ 222,704 |
Mortgage servicing rights as % of portfolio | 0.87% | 0.90% |
BORROWINGS (Details)
BORROWINGS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
BORROWINGS | ||
Borrowings | $ 45,754,000 | $ 49,846,000 |
Federal Home Loan Bank borrowings | ||
BORROWINGS | ||
Borrowings | $ 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 | $ 7,888,000 | |
Securities pledged as collateral, fair value | 7,972,000 | |
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 | 36,470,000 | |
Line of Credit | ||
BORROWINGS | ||
Borrowings | $ 7,750,000 | 8,000,000 |
Variable rate basis | 90 days LIBOR | |
Floor rate (as a percent) | 4.00% | |
LOC term | 1 year | |
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 | 3,367,000 | |
Correspondent bank term note, current floor rate of 4%, maturing December 28, 2017 | ||
BORROWINGS | ||
Borrowings | $ 2,300,000 | 2,700,000 |
Interest rate on note (as a percent) | 4.00% | |
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 |
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 | $ 114,000 | |
Demand deposit account pledged as collateral | $ 657,000 |
BORROWINGS (Details 2)
BORROWINGS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Maturities and principal payments of borrowings outstanding | ||
2,016 | $ 15,475 | |
2,017 | 9,726 | |
2,018 | 10,077 | |
2,019 | 10,077 | |
2,020 | 78 | |
Thereafter | 321 | |
Borrowings | $ 45,754 | $ 49,846 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of the federal income tax provision (credit) | |||
Change in valuation allowance | $ (760) | $ (2,250) | |
Deferred tax expense (benefit) | 3,093 | $ 1,129 | 1,847 |
Provision for (benefit of) income taxes | 2,333 | 1,129 | (403) |
Source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes | |||
Tax expense at statutory rate | 2,695 | 962 | 1,882 |
Increase (decrease) in taxes resulting from: Tax-exempt interest | (60) | (25) | (47) |
Change in valuation allowance | (760) | (2,250) | |
Expiration of deferred tax assets | 429 | ||
Nondeductible transaction expenses | 176 | ||
Other | 29 | 16 | 12 |
Provision for (benefit of) income taxes | 2,333 | 1,129 | (403) |
Deferred tax assets: | |||
NOL carryforward | 4,331 | 5,500 | |
Allowance for loan losses | 1,705 | 2,194 | |
Alternative Minimum Tax Credit | 1,999 | 1,586 | |
OREO Tax basis greater than book basis | 162 | 474 | |
Tax credit carryovers | 338 | 767 | |
Deferred compensation | 517 | 576 | |
Pension Liability | 384 | 475 | |
Stock compensation | 141 | 247 | |
Purchase accounting adjustments | 955 | 2,095 | |
Other | 141 | 33 | |
Total deferred tax assets | 10,673 | 13,947 | |
Valuation allowance | (760) | ||
Deferred tax liabilities: | |||
Core deposit premium | (366) | (407) | |
FHLB stock dividend | (100) | (103) | |
Depreciation | (113) | (88) | |
Unrealized gain on securities | (153) | (363) | |
Mortgage servicing rights | (667) | (658) | |
Other | (61) | (70) | |
Total deferred tax liabilities | (1,460) | (1,689) | |
Net deferred tax asset | 9,213 | $ 11,498 | |
INCOME TAXES | |||
Net operating loss (NOL) carryforwards | 12,738 | ||
Tax credit carryforwards | 2,336 | ||
Operating loss carry forward utilized prior to expiration and recognition of additional benefits | $ 322 | ||
Expiration period from date of origination for net operating loss carryforwards | 20 years | ||
Annual limitation for usage of NOL | $ 1,404 | ||
Annual limitation for usage of tax credits | 476 | ||
Reduction in valuation allowance | $ 760 | $ 2,250 |
OPERATING LEASES (Details)
OPERATING LEASES (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2013item | May. 31, 2013 | Sep. 30, 2012item | Aug. 31, 2012item | Feb. 28, 2011 | Apr. 30, 2010item | Apr. 30, 2008 | Sep. 30, 2005 | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2011 | |
OPERATING LEASES | ||||||||||||
Number of operating leases | item | 7 | |||||||||||
Additional number of operating leases acquired | item | 3 | |||||||||||
Future minimum payments, by year and in the aggregate, under the initial terms of the operating lease agreements | ||||||||||||
2,016 | $ 723 | |||||||||||
2,017 | 605 | |||||||||||
2,018 | 471 | |||||||||||
2,019 | 458 | |||||||||||
2,020 | 467 | |||||||||||
Thereafter | 3,766 | |||||||||||
Total | 6,490 | |||||||||||
Rent Expenses | ||||||||||||
Rent expense for all operating leases | $ 985 | $ 885 | $ 280 | |||||||||
Birmingham | ||||||||||||
OPERATING LEASES | ||||||||||||
Operating lease term | 66 months | |||||||||||
Option to renew additional lease term | 5 years | |||||||||||
Additional period for operating lease | 3 years | 3 years | ||||||||||
Manistique | ||||||||||||
OPERATING LEASES | ||||||||||||
Maximum number of additional lease terms for which the lease may be extended | item | 4 | |||||||||||
Traverse City | ||||||||||||
OPERATING LEASES | ||||||||||||
Maximum number of additional lease terms for which the lease may be extended | item | 2 | |||||||||||
Marquette | ||||||||||||
OPERATING LEASES | ||||||||||||
Operating lease term | 15 years | 5 years | ||||||||||
Additional period for operating lease | 4 years | |||||||||||
Maximum number of additional lease terms for which the lease may be extended | item | 2 | |||||||||||
Negaunee | ||||||||||||
OPERATING LEASES | ||||||||||||
Operating lease term | 5 years | |||||||||||
Additional period for operating lease | 5 years | |||||||||||
Maximum number of additional lease terms for which the lease may be extended | item | 1 | |||||||||||
Ishpeming | ||||||||||||
OPERATING LEASES | ||||||||||||
Operating lease term | 5 years | |||||||||||
Option to renew additional lease term | 5 years |
RETIREMENT PLAN (Details)
RETIREMENT PLAN (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
RETIREMENT PLAN | |||
Minimum period of service to be completed in order to participate in the retirement plan | 3 months | ||
Minimum age to be attained in order to participate in the retirement plan | 18 years | ||
Employee's contribution limit as a percentage of annual compensation under the 401 (k) profit sharing plan | 80.00% | ||
Retirement plan contributions charged to operations | $ 288,000 | $ 214,000 | $ 198,000 |
DEFINED BENEFIT PENSION PLAN (D
DEFINED BENEFIT PENSION PLAN (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Defined Benefit Pension Plan | ||
Expected contributions to the plan | $ 63 | |
Number of years over which anticipated pension distributions disclosed | item | 5 | |
Anticipated distributions from the plan | ||
2,016 | $ 134 | |
2,017 | 132 | |
2,018 | 129 | |
2,019 | 126 | |
2,020 | 125 | |
Thereafter | 690 | |
Total | 1,336 | |
Peninsula Financial Corporation noncontributory defined benefit pension plan | ||
Change in benefit obligation: | ||
Benefit obligation, beginning of year | 3,290 | $ 3,229 |
Interest cost | 127 | 9 |
Actuarial (loss) gain | (103) | 52 |
Benefits paid | (134) | |
Benefit obligation at end of year | 3,180 | 3,290 |
Change in plan assets | ||
Fair value of plan assets, beginning of year | 2,107 | 2,118 |
Actual return on plan assets | (8) | (11) |
Employer contributions | 68 | |
Benefits paid | (134) | |
Fair value of plan assets at end of year | 2,033 | 2,107 |
Funded status | (1,147) | (1,183) |
Accrued pension expense, included with other assets or liabilities | (1,147) | (1,183) |
Accumulated benefit obligation | $ 3,180 | $ 3,290 |
Assumptions in the actuarial valuation | ||
Weighted average discount rate | 3.99% | 3.98% |
Expected long-term rate of return on plan assets | 8.00% | 8.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | ||
Plan assets | ||
Target Allocation, minimum | 50.00% | |
Target Allocation, maximum | 70.00% | |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | ||
Plan assets | ||
Actual Allocation | 60.00% | |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | ||
Plan assets | ||
Target Allocation, minimum | 30.00% | |
Target Allocation, maximum | 50.00% | |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | ||
Plan assets | ||
Actual Allocation | 40.00% |
DEFERRED COMPENSATION PLAN (Det
DEFERRED COMPENSATION PLAN (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
DEFERRED COMPENSATION PLAN | |||
Liability for vested benefits under the plan | $ 273,000 | $ 362,000 | |
Cash surrender value of life insurance policies of the plan participants | 1,545,000 | 1,572,000 | |
Deferred compensation expense | $ 27,000 | 16,000 | $ 25,000 |
Minimum | |||
DEFERRED COMPENSATION PLAN | |||
Original contractual term | 10 years | ||
Maximum | |||
DEFERRED COMPENSATION PLAN | |||
Original contractual term | 15 years | ||
Peninsula Financial Corporation | |||
DEFERRED COMPENSATION PLAN | |||
Liability for vested benefits under the plan | $ 1,219,000 | 1,340,000 | |
Cash surrender value of life insurance policies of the plan participants | $ 1,692,000 | $ 1,666,000 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Minimum | New Rule | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 8.00% | |
Total capital to risk weighted assets, Action Provisions Ratio (as a percent) | 10.00% | |
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 4.50% | |
Tier 1 capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 4.00% | |
Tier 1 capital to risk weighted assets, Action Provisions Ratio (as a percent) | 6.50% | |
Tier 1 capital to average assets, Action Provisions Ratio (as a percent) | 5.00% | |
Increase in minimum required amount of Additional Tier 1 Capital | 6.00% | |
Additional Tier 1 Capital ratio | 8.00% | |
Consolidated | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Actual Amount | $ 75,122 | $ 67,427 |
Total capital to risk weighted assets, Actual Ratio (as a percent) | 11.80% | 11.10% |
Tier 1 capital to risk weighted assets, Actual Amount | $ 70,118 | $ 62,287 |
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 11.00% | 10.20% |
Common equity Tier 1 capital to risk weighted assets, Actual Amount | $ 70,118 | |
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 11.00% | |
Tier 1 capital to average assets, Actual Amount | $ 70,118 | $ 62,287 |
Tier 1 capital to average assets, Actual Ratio (as a percent) | 9.70% | 8.60% |
Consolidated | Minimum | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Adequacy Purposes Amount | $ 51,017 | $ 48,717 |
Total capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% |
Total capital to risk weighted assets, Action Provisions Amount | $ 63,772 | $ 60,896 |
Total capital to risk weighted assets, Action Provisions Ratio (as a percent) | 10.00% | 10.00% |
Tier 1 capital to risk weighted assets, Adequacy Purposes Amount | $ 38,263 | $ 36,538 |
Tier 1 capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 6.00% | 6.00% |
Tier 1 capital to risk weighted assets, Action Provisions Amount | $ 51,017 | $ 36,538 |
Tier 1 capital to risk weighted assets, Action Provisions Ratio (as a percent) | 8.00% | 6.00% |
Common equity Tier 1 capital to risk weighted assets, Adequacy Purpose Amount | $ 28,697 | |
Common equity Tier 1 capital to risk weighted assets, Adequacy Purpose Ratio (as a percent) | 4.50% | |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Amount | $ 41,451 | |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Ratio (as a percent) | 6.50% | |
Tier 1 capital to average assets, Adequacy Purposes Amount | $ 29,000 | $ 29,065 |
Tier 1 capital to average assets, Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% |
Tier 1 capital to average assets, Action Provisions Amount | $ 36,251 | $ 36,332 |
Tier 1 capital to average assets, Action Provisions Ratio (as a percent) | 5.00% | 5.00% |
Bank | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Actual Amount | $ 82,217 | $ 70,320 |
Total capital to risk weighted assets, Actual Ratio (as a percent) | 13.00% | 11.80% |
Tier 1 capital to risk weighted assets, Actual Amount | $ 77,254 | $ 65,355 |
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 12.20% | 11.00% |
Common equity Tier 1 capital to risk weighted assets, Actual Amount | $ 77,254 | |
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 12.20% | |
Tier 1 capital to average assets, Actual Amount | $ 77,254 | $ 65,355 |
Tier 1 capital to average assets, Actual Ratio (as a percent) | 10.60% | 9.10% |
Bank | Minimum | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Adequacy Purposes Amount | $ 50,763 | $ 47,611 |
Total capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 8.00% | 8.00% |
Total capital to risk weighted assets, Action Provisions Amount | $ 63,454 | $ 59,513 |
Total capital to risk weighted assets, Action Provisions Ratio (as a percent) | 10.00% | 10.00% |
Tier 1 capital to risk weighted assets, Adequacy Purposes Amount | $ 38,072 | $ 35,708 |
Tier 1 capital to risk weighted assets, Adequacy Purposes Ratio (as a percent) | 6.00% | 6.00% |
Tier 1 capital to risk weighted assets, Action Provisions Amount | $ 50,763 | $ 35,708 |
Tier 1 capital to risk weighted assets, Action Provisions Ratio (as a percent) | 8.00% | 6.00% |
Common equity Tier 1 capital to risk weighted assets, Adequacy Purpose Amount | $ 28,554 | |
Common equity Tier 1 capital to risk weighted assets, Adequacy Purpose Ratio (as a percent) | 4.50% | |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Amount | $ 41,245 | |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Ratio (as a percent) | 6.50% | |
Tier 1 capital to average assets, Adequacy Purposes Amount | $ 29,528 | $ 28,680 |
Tier 1 capital to average assets, Adequacy Purposes Ratio (as a percent) | 4.00% | 4.00% |
Tier 1 capital to average assets, Action Provisions Amount | $ 36,572 | $ 35,850 |
Tier 1 capital to average assets, Action Provisions Ratio (as a percent) | 5.00% | 5.00% |
STOCK COMPENSATION PLANS (Detai
STOCK COMPENSATION PLANS (Details) - USD ($) | Aug. 31, 2012 | Aug. 31, 2015 | May. 31, 2015 | Mar. 31, 2015 | Aug. 31, 2014 | Mar. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | May. 22, 2012 |
Stock Compensation Plans | |||||||||||||
Number of RSUs unvested (in shares) | 127,024 | 127,024 | 114,435 | 127,024 | |||||||||
Market value of granted stock (in dollars per unit) | $ 11.15 | ||||||||||||
Summary of nonvested shares | |||||||||||||
Nonvested beginning balance (in shares) | 127,024 | ||||||||||||
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 | ||||||||||||
Granted during the year (in dollars per share) | 11.15 | ||||||||||||
Vested during the year (in dollars per share) | 9.34 | ||||||||||||
Nonvested ending balance (in dollars per share) | $ 10.72 | ||||||||||||
Stock option transactions | |||||||||||||
Outstanding shares at beginning of year | 20,000 | 237,152 | |||||||||||
Granted during the year (in shares) | 40,730 | ||||||||||||
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 | 20,000 | |||||||||||
Exercisable shares at end of year | 2,000 | 4,000 | |||||||||||
Weighted average exercise price per share at end of year (in dollars per share) | $ 12 | $ 11.33 | |||||||||||
RSUs | |||||||||||||
Stock Compensation Plans | |||||||||||||
Number of RSUs granted (in shares) | 37,730 | 52,774 | 148,500 | ||||||||||
Share price (in dollars per share) | $ 7.91 | $ 10.77 | $ 7.91 | ||||||||||
Stock issued for vested restricted stocks | 37,125 | 3,000 | 13,194 | 37,125 | 37,125 | ||||||||
Cost to the employee | $ 0 | ||||||||||||
Vesting period | 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 | $ 1,175,000 | $ 421,000 | $ 683,000 | |||||||||
Market value of granted stock (in dollars per unit) | $ 11.15 | $ 12.95 | |||||||||||
Summary of nonvested shares | |||||||||||||
Granted during the period (in shares) | 37,730 | 52,774 | 148,500 | ||||||||||
Weighted Average Grant Date Fair Value | |||||||||||||
Granted during the year (in dollars per share) | $ 11.15 | $ 12.95 | |||||||||||
Bank | |||||||||||||
Stock Compensation Plans | |||||||||||||
Compensation cost to be recognized | $ 915,000 | ||||||||||||
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 |
STOCK COMPENSATION PLANS (Det75
STOCK COMPENSATION PLANS (Details 2) - $10.65 | Dec. 31, 2015$ / sharesshares |
Stock option plans | |
Exercise Price (in dollars per share) | $ / shares | $ 12 |
Number of Shares, Outstanding | 10,000 |
Number of Shares, Exercisable | 2,000 |
Number of Shares, Unvested Options | 8,000 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | Dec. 05, 2014USD ($)shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($)itemshares | Dec. 31, 2013shares | Apr. 28, 2015USD ($) | Dec. 17, 2013USD ($) | Feb. 27, 2013USD ($) |
Participation in the TARP Capital Purchase Program | |||||||
Increase in shareholders equity as a result of common stock issued | $ 7,804,000 | ||||||
Stock Repurchase Program, Authorized Amount | $ 176,000 | $ 600,000 | |||||
Stock Repurchase Program Additional Authorized Amount | $ 750,000 | $ 600,000 | |||||
Shares of Common Stock | |||||||
Participation in the TARP Capital Purchase Program | |||||||
Stock Repurchased During Period, Shares | shares | 102,455 | 13,700 | 55,594 | ||||
Peninsula Financial Corporation | |||||||
Participation in the TARP Capital Purchase Program | |||||||
Number of branches | item | 6 | ||||||
Purchase price of acquisition | $ 12,420,000,000 | $ 12,420,000 | |||||
Common stock issued | shares | 695,361 | 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, A77
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Financial Instruments with Off-Balance-Sheet Risk | ||
Commitments | $ 90,611 | $ 77,664 |
Number of pending material legal proceedings | item | 0 | |
Commitments to extend credit | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Commitments, variable rate | $ 53,628 | 44,134 |
Commitments, fixed rate | 26,846 | 24,191 |
Standby letters of credit | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Commitments, variable rate | $ 6,390 | 6,072 |
Percentage collateralization on financial instruments allowed under commitments | 100.00% | |
Credit card commitments | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Commitments, fixed rate | $ 3,747 | $ 3,267 |
COMMITMENTS, CONTINGENCIES, A78
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration of Credit Risk | ||
Loan portfolio | $ 613,390 | $ 595,795 |
Commercial real estate loans | ||
Concentration of Credit Risk | ||
Loan portfolio | 311,194 | 312,574 |
Bank | Commercial real estate loans | Commercial loan portfolio | Credit risk concentration | ||
Concentration of Credit Risk | ||
Loan portfolio | $ 102,620 | $ 107,835 |
Percentage of concentration risk under a specified benchmark | 22.79% | 26.47% |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 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 |
Securities available for sale | 53,728 | 65,832 |
Carrying Amount | ||
Financial assets: | ||
Total financial assets | 700,800 | 694,024 |
Financial liabilities: | ||
Total financial liabilities | 656,251 | 657,024 |
Estimated Fair Value | ||
Financial assets: | ||
Total financial assets | 701,597 | 694,658 |
Financial liabilities: | ||
Total financial liabilities | 653,799 | 657,019 |
Level 1 | Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 25,008 | 21,947 |
Level 1 | Estimated Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 25,008 | 21,947 |
Level 2 | Carrying Amount | ||
Financial assets: | ||
Interest-bearing deposits | 5,089 | 5,797 |
Securities available for sale | 53,728 | 65,832 |
Federal Home Loan Bank stock | 2,169 | 2,973 |
Financial liabilities: | ||
Deposits | 610,323 | 606,973 |
Borrowings | 45,754 | 49,846 |
Level 2 | Estimated Fair Value | ||
Financial assets: | ||
Interest-bearing deposits | 5,089 | 5,797 |
Securities available for sale | 53,728 | 65,832 |
Federal Home Loan Bank stock | 2,169 | 2,973 |
Financial liabilities: | ||
Deposits | 607,636 | 606,534 |
Borrowings | 45,989 | 50,280 |
Significant Unobservable Inputs (Level 3) | Carrying Amount | ||
Financial assets: | ||
Net loans | 613,390 | 595,795 |
Accrued interest receivable | 1,416 | 1,680 |
Financial liabilities: | ||
Accrued interest payable | 174 | 205 |
Significant Unobservable Inputs (Level 3) | Estimated Fair Value | ||
Financial assets: | ||
Net loans | 614,187 | 596,429 |
Accrued interest receivable | 1,416 | 1,680 |
Financial liabilities: | ||
Accrued interest payable | $ 174 | $ 205 |
FAIR VALUE (Details 2)
FAIR VALUE (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair value measurements | |||
Other real estate owned | $ 2,324 | $ 3,010 | $ 1,884 |
Nonrecurring | |||
Fair value measurements | |||
Impaired loans | 10,724 | 1,658 | |
Other real estate owned | 2,324 | 3,010 | |
Nonrecurring | Significant Unobservable Inputs (Level 3) | |||
Fair value measurements | |||
Impaired loans | 10,724 | 1,658 | |
Other real estate owned | 2,324 | $ 3,010 | |
Recurring | |||
Fair value measurements | |||
Other assets | 0 | ||
Other liabilities | 0 | ||
Recurring | Significant Unobservable Inputs (Level 3) | |||
Fair value measurements | |||
Assets | 0 | ||
Liabilities | $ 0 |
FAIR VALUE (Details 3)
FAIR VALUE (Details 3) - Nonrecurring - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair value | |||
Total Losses | $ 2,184 | $ 1,137 | |
Investments | $ 0 | ||
Impaired loans | |||
Fair value | |||
Total Losses | 1,852 | 857 | |
Other real estate owned | |||
Fair value | |||
Total Losses | $ 332 | $ 280 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) $ / shares in Units, $ in Thousands | Dec. 05, 2014USD ($)item$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)$ / shares | Dec. 31, 2015USD ($)shares |
Business Acquisition [Line Items] | ||||
Assets | $ 743,785 | $ 739,269 | ||
Subsequent Days To Acquisition Date | 26 | |||
Purchase Price: | ||||
Peninsula shares outstanding (in Shares) | shares | 6,266,756 | 6,217,620 | ||
Cash consideration $46.13 for 97,200 shares | $ 4,484 | |||
Net assets acquired: | ||||
Goodwill | $ 3,805 | $ 3,805 | ||
Peninsula Financial Corporation | ||||
Business Acquisition [Line Items] | ||||
Number of banking offices | item | 6 | |||
Assets | $ 126,000 | |||
Conversion of Stock per share (in shares) | shares | 3.64 | |||
Number of stock to be issued | shares | 695,361 | 695,361 | ||
After tax merger related expenses | $ 1,622 | |||
Purchase Price: | ||||
Peninsula shares outstanding (in Shares) | shares | 288,000,000 | |||
Price per share / Cash Price | $ / shares | $ 46.13 | |||
Aggregate value of Mackinac stock to be issued, 695,361 shares, at a market value of $11.41 in exchange for 190,800 shares | $ 7,934 | |||
Cash consideration $46.13 for 97,200 shares | 4,484 | |||
Cash for partial shares | 2 | |||
Total purchase price | $ 12,420,000 | $ 12,420 | ||
Number of stock to be issued | shares | 695,361 | 695,361 | ||
Share price | $ / shares | $ 11.41 | |||
Number of shares outstanding for entity's stock to be issued | shares | 190,800 | |||
Net assets acquired: | ||||
Cash and cash equivalents | $ 6,295 | |||
Securities available for sale | 27,768 | |||
Federal Home Loan Bank stock | 394 | |||
Loans | 67,139 | $ 67,139 | ||
Premises and equipment | 2,918 | |||
Other real estate owned | 1,011 | |||
Deposit based intangible | 1,206 | |||
Other assets | 6,035 | |||
Total assets | 112,766 | 112,766 | ||
Non-interest bearing deposits | 10,250 | |||
Interest bearing deposits | 90,700 | |||
Total deposits | 100,950 | 100,950 | ||
Other liabilities | 3,201 | |||
Total liabilities | 104,151 | |||
Net assets acquired | 8,615,000 | |||
Goodwill | $ 3,805,000 | 3,805 | ||
Unaudited proforma results | ||||
Net interest income | 27,952 | $ 26,387 | ||
Noninterest income | 4,647 | 4,733 | ||
Net income | $ 7,740 | $ 6,706 | ||
Net income per diluted share | $ / shares | $ 1.22 | $ 1.06 | ||
PARENT COMPANY | ||||
Business Acquisition [Line Items] | ||||
Assets | $ 90,803 | $ 87,753 | ||
Purchase Price: | ||||
Peninsula shares outstanding (in Shares) | shares | 6,266,756 | 6,217,620 | ||
Cash consideration $46.13 for 97,200 shares | $ 4,484 |
SEBSEQUENT EVENT (Details)
SEBSEQUENT EVENT (Details) - Subsequent Event - Eagle - Forecast | Jan. 19, 2016USD ($) |
Subsequent Event | |
Total assets | $ 140,000,000 |
Number of banking offices acquired | 3 |
Fixed price | 12,500,000 |
Minimum | |
Subsequent Event | |
Tangible capital equity at closing | $ 12,800,000 |
PARENT COMPANY ONLY FINANCIAL84
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
ASSETS | ||||
Cash and cash equivalents | $ 25,008 | $ 21,947 | $ 18,219 | $ 26,961 |
Other assets | 10,943 | 19,274 | ||
TOTAL ASSETS | 739,269 | 743,785 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Other liabilities | 6,590 | 12,970 | ||
Total liabilities | $ 662,667 | $ 669,789 | ||
Shareholders' equity: | ||||
Preferred stock - no par value: Authorized 500,000 shares, issued and outstanding- none | ||||
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 6,217,620 and 6,266,756 shares respectively | $ 61,133 | $ 61,679 | ||
Retained earnings | 15,221 | 11,804 | ||
Total shareholders' equity | 76,602 | 73,996 | 65,249 | 72,448 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 739,269 | 743,785 | ||
PARENT COMPANY | ||||
ASSETS | ||||
Cash and cash equivalents | 986 | 1,693 | $ 1,301 | $ 12,943 |
Investment in subsidiaries | 83,786 | 83,226 | ||
Other assets | 2,981 | 5,884 | ||
TOTAL ASSETS | 87,753 | 90,803 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Line of Credit | 7,750 | 8,000 | ||
Other borrowing | 2,300 | 2,700 | ||
Other liabilities | 1,101 | 6,107 | ||
Total liabilities | 11,151 | 16,807 | ||
Shareholders' equity: | ||||
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 6,217,620 and 6,266,756 shares respectively | 61,133 | 62,410 | ||
Retained earnings | 15,221 | 11,804 | ||
Accumulated other comprehensive income | 248 | (218) | ||
Total shareholders' equity | 76,602 | 73,996 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 87,753 | $ 90,803 |
PARENT COMPANY ONLY FINANCIAL85
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 2) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
BALANCE SHEET | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, Authorized shares | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 6,217,620 | 6,266,756 |
Common stock, Shares outstanding | 6,217,620 | 6,266,756 |
PARENT COMPANY | ||
BALANCE SHEET | ||
Preferred stock, Authorized shares | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 6,217,620 | 6,266,756 |
Common stock, Shares outstanding | 6,217,620 | 6,266,756 |
PARENT COMPANY ONLY FINANCIAL86
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME: | |||
Interest income | $ 33,513 | $ 27,669 | $ 25,523 |
EXPENSES: | |||
Interest expense on borrowings | 1,142 | 924 | 656 |
Salaries and benefits | 12,449 | 10,303 | 9,351 |
Professional service fees | 1,270 | 1,163 | 1,069 |
Nonrecurring transaction related expenses | 2,475 | ||
Other | 2,046 | 2,005 | 2,048 |
Total other expenses | 23,876 | 22,610 | 18,128 |
Loss before income taxes and equity in undistributed net income of subsidiaries | 7,929 | 2,829 | 5,534 |
Provision for (benefit of) income taxes | 2,333 | 1,129 | (403) |
NET INCOME | 5,596 | 1,700 | 5,937 |
Preferred dividend and accretion of discount | 308 | ||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | 5,596 | 1,700 | 5,629 |
PARENT COMPANY | |||
INCOME: | |||
Interest income | 1 | ||
Total income | 1 | ||
EXPENSES: | |||
Interest expense on borrowings | 453 | 210 | |
Salaries and benefits | 876 | 609 | 482 |
Professional service fees | 256 | 247 | 208 |
Nonrecurring transaction related expenses | 1,284 | ||
Other | 184 | 304 | 520 |
Total other expenses | 1,769 | 2,654 | 1,210 |
Loss before income taxes and equity in undistributed net income of subsidiaries | (1,769) | (2,654) | (1,209) |
Provision for (benefit of) income taxes | (602) | (726) | (411) |
Loss before equity in undistributed net income of subsidiaries | (1,167) | (1,928) | (798) |
Equity in undistributed net income of subsidiaries | 6,763 | 3,628 | 6,735 |
NET INCOME | 5,596 | 1,700 | 5,937 |
Preferred dividend and accretion of discount | 308 | ||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ 5,596 | $ 1,700 | $ 5,629 |
PARENT COMPANY ONLY FINANCIAL87
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows from Operating Activities: | |||
Net income | $ 5,596 | $ 1,700 | $ 5,937 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Increase in capital from stock compensation | 576 | 429 | 333 |
Change in other assets | 8,188 | (4,112) | (710) |
Change in other liabilities | (6,380) | 6,337 | 350 |
Net cash provided by operating activities | 13,092 | 8,441 | 9,301 |
Cash Flows from Investing Activities: | |||
Net cash paid for acquisition of PFC | (4,484) | ||
Net cash (used in) investing activities | (5,988) | (54,980) | (38,951) |
Cash Flows from Financing Activities: | |||
Increase on term borrowings | 3,000 | ||
Principal payments on borrowings | (725) | (373) | (73) |
Net activity on lines of credit | (3,367) | 9,367 | 2,000 |
Repurchase of common stock | (1,122) | (143) | (509) |
Dividend on common stock | 2,179 | 1,308 | 944 |
Dividend on preferred stock | (308) | ||
Redemption of Series A Preferred Stock | (11,000) | ||
Net cash provided by financing activities | (4,043) | 50,267 | 20,908 |
Net increase (decrease) in cash and cash equivalents | 3,061 | 3,728 | (8,742) |
Cash and cash equivalents at beginning of period | 21,947 | 18,219 | 26,961 |
Cash and cash equivalents at end of period | 25,008 | 21,947 | 18,219 |
PARENT COMPANY | |||
Cash Flows from Operating Activities: | |||
Net income | 5,596 | 1,700 | 5,937 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in undistributed net (income) of subsidiaries | (6,763) | (3,628) | (6,735) |
Increase in capital from stock compensation | 576 | 429 | 333 |
Change in other assets | 2,903 | (5,664) | 2,587 |
Change in other liabilities | (5,026) | 8,603 | (3) |
Net cash provided by operating activities | (2,714) | 1,440 | 2,119 |
Cash Flows from Investing Activities: | |||
Investments in subsidiaries | 5,839 | (4,000) | (3,000) |
Net cash paid for acquisition of PFC | (4,484) | ||
Net cash (used in) investing activities | 5,839 | (8,484) | (3,000) |
Cash Flows from Financing Activities: | |||
Increase on term borrowings | 3,000 | ||
Principal payments on borrowings | (100) | (300) | |
Net activity on lines of credit | (550) | 6,000 | 2,000 |
Repurchase of common stock | (1,123) | (143) | (509) |
Dividend on common stock | (2,059) | (1,121) | (944) |
Dividend on preferred stock | (308) | ||
Redemption of Series A Preferred Stock | (11,000) | ||
Net cash provided by financing activities | (3,832) | 7,436 | (10,761) |
Net increase (decrease) in cash and cash equivalents | (707) | 392 | (11,642) |
Cash and cash equivalents at beginning of period | 1,693 | 1,301 | 12,943 |
Cash and cash equivalents at end of period | $ 986 | $ 1,693 | $ 1,301 |