Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 10, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 0-20167 | ||
Entity Registrant Name | MACKINAC FINANCIAL CORP /MI/ | ||
Entity Incorporation, State or Country Code | MI | ||
Entity Tax Identification Number | 38-2062816 | ||
Entity Address, Address Line One | 130 South Cedar Street | ||
Entity Address, City or Town | Manistique | ||
Entity Address, State or Province | MI | ||
Entity Address, Postal Zip Code | 49854 | ||
City Area Code | 888 | ||
Local Phone Number | 343-8147 | ||
Title of 12(b) Security | Common Stock, no par value | ||
Trading Symbol | MFNC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 10,550,393 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 109,233 | ||
Entity Central Index Key | 0000036506 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 218,901 | $ 49,794 |
Federal funds sold | 76 | 32 |
Cash and cash equivalents | 218,977 | 49,826 |
Interest-bearing deposits in other financial institutions | 2,917 | 10,295 |
Securities available for sale | 111,836 | 107,972 |
Federal Home Loan Bank stock | 4,924 | 4,924 |
Loans: | ||
Commercial | 819,907 | 765,524 |
Mortgage | 238,705 | 272,014 |
Consumer | 18,980 | 21,238 |
Total Loans | 1,077,592 | 1,058,776 |
Allowance for loan losses | (5,816) | (5,308) |
Net loans | 1,071,776 | 1,053,468 |
Premises and equipment | 25,518 | 23,608 |
Other real estate held for sale | 1,752 | 2,194 |
Deferred tax asset | 3,303 | 3,732 |
Deposit based intangibles | 4,368 | 5,043 |
Goodwill | 19,574 | 19,574 |
Other assets | 36,785 | 39,433 |
TOTAL ASSETS | 1,501,730 | 1,320,069 |
Deposits: | ||
Noninterest bearing deposits | 414,804 | 287,611 |
NOW, money market, interest checking | 450,556 | 373,165 |
Savings | 130,755 | 109,548 |
CDs less than $250,000 | 202,266 | 233,956 |
CDs more than $250,000 | 15,224 | 12,775 |
Brokered | 45,171 | 58,622 |
Total deposits | 1,258,776 | 1,075,677 |
Federal funds purchased | 6,225 | |
Borrowings | 63,479 | 64,551 |
Other liabilities | 11,611 | 11,697 |
Total liabilities | 1,333,866 | 1,158,150 |
SHAREHOLDERS' EQUITY: | ||
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,500,758 and 10,748,712 respectively | 127,164 | 129,564 |
Retained earnings | 39,318 | 31,740 |
Accumulated other comprehensive income | ||
Unrealized gains on available for sale securities | 1,965 | 1,025 |
Minimum pension liability | (583) | (410) |
Total shareholders' equity | 167,864 | 161,919 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,501,730 | $ 1,320,069 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 10,500,758 | 10,748,712 |
Common stock, Shares outstanding | 10,500,758 | 10,748,712 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Interest and fees on loans: | ||
Taxable | $ 58,412 | $ 59,673 |
Tax-exempt | 201 | 187 |
Interest on securities: | ||
Taxable | 2,255 | 2,708 |
Tax-exempt | 535 | 343 |
Other interest income | 626 | 1,473 |
Total interest income | 62,029 | 64,384 |
INTEREST EXPENSE: | ||
Deposits | 6,052 | 9,436 |
Borrowings | 1,171 | 1,041 |
Total interest expense | 7,223 | 10,477 |
Net interest income | 54,806 | 53,907 |
Provision for loan losses | 1,000 | 385 |
Net interest income after provision for loan losses | 53,806 | 53,522 |
OTHER INCOME: | ||
Deposit service fees | $ 1,133 | $ 1,586 |
Revenue, Product and Service [Extensible List] | us-gaap:DepositAccountMember | us-gaap:DepositAccountMember |
Income from mortgage loans sold on the secondary market | $ 5,935 | $ 1,889 |
SBA/USDA loan sale gains | 1,729 | 908 |
Net mortgage servicing fees | 838 | 693 |
Realized security gains | 2 | 208 |
Other | 562 | 669 |
Total other income | 10,199 | 5,953 |
OTHER EXPENSE: | ||
Salaries and employee benefits | 26,081 | 22,743 |
Occupancy | 4,370 | 4,069 |
Furniture and equipment | 3,347 | 3,000 |
Data processing | 3,093 | 2,717 |
Advertising | 912 | 889 |
Professional service fees | 1,842 | 2,100 |
Loan origination expenses and deposit and card related fees | 1,965 | 1,546 |
Writedowns and (gains) losses on other real estate held for sale | (22) | 212 |
FDIC insurance assessment | 578 | 70 |
Communications | 935 | 885 |
Other | 3,848 | 3,534 |
Total other expenses | 46,949 | 41,765 |
Income before provision for income taxes | 17,056 | 17,710 |
Provision for income taxes | 3,583 | 3,860 |
NET INCOME | $ 13,473 | $ 13,850 |
INCOME PER COMMON SHARE: | ||
Basic (in dollars per share) | $ 1.27 | $ 1.29 |
Diluted (in dollars per share) | $ 1.27 | $ 1.29 |
CONSOLIDATED STATEMENTS COMPREH
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME | ||
Net income | $ 13,473 | $ 13,850 |
Other comprehensive income | ||
Unrealized gains arising during the period | 1,192 | 1,816 |
Reclassification adjustment for securities gains included in net income | (2) | (208) |
Tax effect | (250) | (338) |
Net change in unrealized gains on available for sale securities | 940 | 1,270 |
Defined benefit pension plan: | ||
Net unrealized actuarial gain (loss) on defined benefit pension obligation | (219) | (243) |
Tax effect | 46 | 51 |
Changes from defined benefit pension plan | (173) | (192) |
Other comprehensive loss, net of tax | 767 | 1,078 |
Total comprehensive income | $ 14,240 | $ 14,928 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Shares of Common Stock | Common Stock and Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance, beginning of period at Dec. 31, 2018 | $ 129,066 | $ 23,466 | $ (463) | $ 152,069 | |
Balance (in shares) at Dec. 31, 2018 | 10,712,745 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 13,850 | 13,850 | |||
Other comprehensive income (loss): | |||||
Net change in unrealized gain on securities available for sale | 1,270 | 1,270 | |||
Actuarial loss on defined benefit pension obligation | (192) | (192) | |||
Total comprehensive income | 1,078 | 14,928 | |||
Stock compensation | 498 | 498 | |||
Restricted stock award vesting (in shares) | 35,967 | ||||
Dividend on common stock | (5,576) | (5,576) | |||
Balance, end of period at Dec. 31, 2019 | 129,564 | 31,740 | 615 | 161,919 | |
Balance (in shares) at Dec. 31, 2019 | 10,748,712 | ||||
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 13,473 | 13,473 | |||
Other comprehensive income (loss): | |||||
Net change in unrealized gain on securities available for sale | 940 | 940 | |||
Actuarial loss on defined benefit pension obligation | (173) | (173) | |||
Total comprehensive income | 767 | 14,240 | |||
Stock compensation | 878 | 878 | |||
Restricted stock award vesting (in shares) | 35,825 | ||||
Repurchased of common stock | (3,278) | (3,278) | |||
Repurchased of common stock (in shares) | (283,779) | ||||
Dividend on common stock | (5,895) | (5,895) | |||
Balance, end of period at Dec. 31, 2020 | $ 127,164 | $ 39,318 | $ 1,382 | $ 167,864 | |
Balance (in shares) at Dec. 31, 2020 | 10,500,758 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net income | $ 13,473 | $ 13,850 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,897 | 2,880 |
Provision for loan losses | 1,000 | 385 |
Deferred tax expense | 629 | 1,347 |
Net realized security gains | (2) | (208) |
(Gain) on sale of loans sold in the secondary market | (5,205) | (1,544) |
Origination of loans held for sale in secondary market | (205,398) | (89,546) |
Proceeds from sale of loans in the secondary market | 208,677 | 86,926 |
(Gain) loss on sale other real estate held for sale and fixed assets | (161) | 31 |
Writedown of other real estate held for sale | 65 | 181 |
Stock compensation | 878 | 498 |
Change in other assets | 1,575 | (10,907) |
Change in other liabilities | (86) | 3,704 |
Net cash provided by operating activities | 18,342 | 7,597 |
Cash Flows from Investing Activities: | ||
Net increase in loans | (16,508) | (17,649) |
Net decrease in interest-bearing deposits in other financial institutions | 7,378 | 3,157 |
Purchase of securities available for sale | (40,180) | (18,839) |
Proceeds from maturities, sales, calls or paydowns of securities available for sale | 37,391 | 29,374 |
Capital expenditures | (5,063) | (2,737) |
Proceeds from sale of premises, equipment, and other real estate | 1,162 | 1,867 |
Net cash used in investing activities | (15,820) | (4,827) |
Cash Flows from Financing Activities: | ||
Net increase (decrease) increase in deposits | 183,099 | (21,860) |
(Decrease) increase in fed funds purchased | (6,225) | 3,320 |
Repurchase of common stock | (3,278) | |
Dividend on common stock | (5,895) | (5,576) |
Proceeds from FHLB borrowing | 25,000 | |
Proceeds from term borrowing | 100,281 | |
Principal payments on borrowings | (101,353) | (17,985) |
Net cash provided by (used in) financing activities | 166,629 | (17,101) |
Net (decrease) increase in cash and cash equivalents | 169,151 | (14,331) |
Cash and cash equivalents at beginning of period | 49,826 | 64,157 |
Cash and cash equivalents at end of period | 218,977 | 49,826 |
Cash paid during the year for: | ||
Interest | 7,329 | 10,320 |
Income taxes | 1,700 | 1,500 |
Noncash Investing and Financing Activities: | ||
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale | $ 874 | 1,629 |
Transfers of Other Real Estate Held for Sale to Fixed Assets | $ 1,013 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
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. 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, Northeastern Wisconsin 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, 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 debt 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. During 2020, the Corporation funded loans under the Small Business Administration's (SBA) Paycheck Protection Program (PPP) to provide liquidity to small businesses during the COVID-19 pandemic. The loans are guaranteed by the SBA and loan proceeds to borrowers are forgivable by the SBA if certain criteria are met. The Corporation originated PPP loans totaling $152.506 during the year. PPP processing fees received from the SBA totaling $5.18 were deferred along with loan origination costs and recognized as interest income using the effective yield method. Upon forgiveness of a loan and resulting repayment by the SBA, any unrecognized net fee for a given loan is recognized as interest income. Fees of $4.030 were recognized in 2020. 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 based on the present value of amounts expected to be received, which incorporates assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, collateral values, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. 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 ASC 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 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 fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management or a third party, 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 ASC 350, amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill is annually tested for impairment and between annual tests in certain circumstances. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life of 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 awards (“RSAs”), or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000 . 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, 2020, the balance in accumulated other comprehensive income consisted of unrealized gains on available for sales securities of $1.965 million (net of income tax of $.522 million) and actuarial losses on the defined benefit pension obligation of $.583 million (net of income tax of $.139 million). At December 31, 2019, the balance in accumulated other comprehensive income consisted of unrealized losses on available for sale securities of $1.025 million (net of income tax of $.273 million) and actuarial losses on the defined benefit pension obligation of $.410 million (net of income tax of $.147 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 years ended December 31, 2020 and 2019 (dollars in thousands, except per share data): Year Ended December 31, 2020 2019 (Numerator): Net income $ 13,473 $ 13,850 (Denominator): Weighted average shares outstanding 10,580,044 10,737,653 Effect of restricted stock awards — 19,854 Diluted weighted average shares outstanding 10,580,044 10,757,507 Income per common share: Basic $ 1.27 $ 1.29 Diluted $ 1.27 $ 1.29 Income Taxes Deferred income taxes have been provided under the balance sheet 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 September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote. ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance. ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice. New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Coporation’s consolidated financial condition and result of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission). As the Corporation qualifies as a smaller reporting company, management plans to delay the implementation of CECL beyond 2021 and adjust the timetable of the various CECL implementation tasks. Management believes that the Corporation will benefit from additional time to parallel testing and refine credit loss estimation models. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard provides optional guidance for a limited period of time to ease the potential burden in accounting for and recognizing the effects of reference rate reform on financial reporting by offering expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform under certain criteria. The updated guidance is effective as of March 12, 2020 through December 31, 2022. The Corporation is currently assessing the impact this new standard will have on its financial statements. Reclassifications Certain amounts in the 2019 consolidated financial statements have been reclassified to conform to the 2020 presentation. |
RESTRICTIONS ON CASH AND CASH E
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | 12 Months Ended |
Dec. 31, 2020 | |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | NOTE 2 — RESTRICTIONS ON CASH AND CASH EQUIVALENTS Effective March 24, 2020, the Federal Reserve announced the reduction of reserve requirement ratios to zero percent in an effort to free up liquidity in the banking system to support lending to households and businesses. As such, as of December 31, 2020, the Corporation had no restrictions on cash and cash equivalents. 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, 2020 | |
SECURITIES AVAILABLE FOR SALE | |
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, 2020 Corporate $ 27,815 $ 247 $ (19) $ 28,043 US Agencies 6,480 109 — 6,589 US Agencies - MBS 33,372 914 (6) 34,280 Obligations of states and political subdivisions 41,682 1,242 — 42,924 Total securities available for sale $ 109,349 $ 2,512 $ (25) $ 111,836 December 31, 2019 Corporate $ 20,779 $ 160 $ (1) $ 20,938 US Agencies 14,450 47 (1) 14,496 US Agencies - MBS 34,063 492 (29) 34,526 Obligations of states and political subdivisions 37,382 630 — 38,012 Total securities available for sale $ 106,674 $ 1,329 $ (31) $ 107,972 Following is information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 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, 2020 Corporate $ (19) $ 9,293 $ — $ — US Agencies — — — — US Agencies - MBS (2) 83 (4) 123 Obligations of states and political subdivisions — — — — Total securities available for sale $ (21) $ 9,376 $ (4) $ 123 December 31, 2019 Corporate (1) 2,502 — — US Agencies — — (1) 500 US Agencies - MBS (9) 6,966 (20) 1,233 Obligations of states and political subdivisions — — — — Total securities available for sale $ (10) $ 9,468 $ (21) $ 1,733 There were 10 securities in an unrealized loss position in 2020 and 26 in 2019. 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): 2020 2019 Proceeds from sales and calls $ 9,560 $ 5,805 Gross gains on sales and calls 2 208 The carrying value and estimated fair value of securities available for sale at December 31, 2020, by contractual maturity, are shown below (dollars in thousands): Amortized Estimated Cost Fair Value Due in one year or less $ 15,645 $ 15,820 Due after one year through five years 22,554 23,201 Due after five years through ten years 24,965 25,261 Due after ten years 12,813 13,274 Subtotal 75,977 77,556 US Agencies - MBS 33,372 34,280 Total $ 109,349 $ 111,836 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. Securities with a market value of $22.438 million are pledged as collateral to the Federal Home Loan Bank and $3.752 million are pledged to certain customer relationships. See Note 10 for information on securities pledged to secure borrowings from the Federal Home Loan Bank. The following is information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 (dollars in thousands): Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2020 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 4 $ 9,293 $ (19) — $ — $ — 4 $ 9,293 $ (19) US Agencies — — — — — — — — — US Agencies - MBS 4 83 (2) 2 123 (4) 6 206 (6) Obligations of states and political subdivisions — — — — — — — — — Total 8 $ 9,376 $ (21) 2 $ 123 $ (4) 10 $ 9,499 $ (25) Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2019 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 1 $ 2,502 $ (1) — $ — $ — 1 $ 2,502 $ (1) US Agencies — — — 1 500 (1) 1 500 (1) US Agencies - MBS 10 6,966 (9) 13 1,233 (20) 23 8,199 (29) Obligations of states and political subdivisions — — — 1 115 — 1 115 — Total 11 $ 9,468 $ (10) 15 $ 1,848 $ (21) 26 $ 11,316 $ (31) |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2020 | |
LOANS | |
LOANS | NOTE 4 — LOANS The composition of loans at December 31 is as follows (dollars in thousands): December 31, December 31, 2020 2019 Commercial real estate $ 498,450 $ 514,394 Commercial, financial, and agricultural 273,759 211,023 Commercial construction 47,698 40,107 One to four family residential real estate 227,044 253,918 Consumer 18,980 21,238 Consumer construction 11,661 18,096 Total loans $ 1,077,592 $ 1,058,776 The Corporation completed the acquisition of Peninsula Financial Corporation, (“PFC”), on December 5, 2014, The First National Bank of Eagle River (“Eagle River”) on April 29, 2016, Niagara Bancorporation (“Niagara”) on August 31, 2016, First Federal of Northern Michigan Bancorp, Inc. (“FFNM”) on May 18, 2018, and Lincoln Community Bank (“Lincoln”) on October 1, 2018. The PFC acquired impaired loans totaled million. The FFNM impaired loans totaled million. In 2020, the Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of accretable interest of approximately The table below details the outstanding balances of the PFC acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 13,290 $ 53,849 $ 67,139 Nonaccretable difference (2,234) — (2,234) Expected cash flows 11,056 53,849 64,905 Accretable yield (744) (2,100) (2,844) Carrying balance at acquisition date $ 10,312 $ 51,749 $ 62,061 Loans acquired with deteriorated credit quality in the PFC transaction carried a balance of $.793 million at December 31, 2020 and $1.718 million at December 31, 2019. The table below details the outstanding balances of the Eagle River acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 3,401 $ 80,737 $ 84,138 Nonaccretable difference (1,172) — (1,172) Expected cash flows 2,229 80,737 82,966 Accretable yield (391) (1,700) (2,091) Carrying balance at acquisition date $ 1,838 $ 79,037 $ 80,875 Loans acquired with deteriorated credit quality in the Eagle River transaction carried a balance of $1.273 million at December 31, 2020 and $1.716 million at December 31, 2019. The table below details the outstanding balances of the Niagara acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 2,105 $ 30,555 $ 32,660 Nonaccretable difference (265) — (265) Expected cash flows 1,840 30,555 32,395 Accretable yield (88) (600) (688) Carrying balance at acquisition date $ 1,752 $ 29,955 $ 31,707 Loans acquired with deteriorated credit quality in the Niagara transaction carried a balance of $.048 million at December 31, 2020 and $.075 million at December 31, 2019. The table below details the outstanding balances of the FFNM acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 5,440 $ 187,302 $ 192,742 Nonaccretable difference (2,100) — (2,100) Expected cash flows 3,340 187,302 190,642 Accretable yield (700) (4,498) (5,198) Carrying balance at acquisition date $ 2,640 $ 182,804 $ 185,444 Loans acquired with deteriorated credit quality in the FFNM transaction carried a balance of $3.369 million at December 31, 2020 and $5.119 million at December 31, 2019. The table below details the outstanding balances of the Lincoln acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 1,901 $ 37,700 $ 39,601 Nonaccretable difference (421) — (421) Expected cash flows 1,480 37,700 39,180 Accretable yield (140) (493) (633) Carrying balance at acquisition date $ 1,340 $ 37,207 $ 38,547 Loans acquired with deteriorated credit quality in the Lincoln transaction carried a balance of $.548 million at December 31, 2020 and $.897 million at December 31, 2019. The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2020 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Accretion (207) — (207) (104) — (104) Reclassification from nonaccretable difference 155 — 155 78 — 78 Balance, December 31, 2020 $ 53 $ — $ 53 $ 183 $ — $ 183 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Accretion (27) — (27) (903) (1,085) (1,988) Reclassification from nonaccretable difference 20 — 20 677 1 678 Balance, December 31, 2020 $ 12 $ — $ 12 $ 292 $ 869 $ 1,161 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 Accretion (95) (134) (229) (1,336) (1,219) (2,555) Reclassification from nonaccretable difference 72 — 72 1,002 1 1,003 Balance, December 31, 2020 $ 85 $ 130 $ 215 $ 625 $ 999 $ 1,624 The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2019 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Accretion (90) — (90) (17) (16) (33) Reclassification from nonaccretable difference 67 — 67 13 — 13 Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Accretion (30) (69) (99) (214) (1,493) (1,707) Reclassification from nonaccretable difference 23 — 23 161 — 161 Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051 Accretion (128) (178) (306) (479) (1,756) (2,235) Reclassification from nonaccretable difference 96 — 96 360 — 360 Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2020 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 $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Charge-offs (17) (500) (8) (117) — (117) — (759) Recoveries 105 1 81 19 — 61 — 267 Provision 1,706 1,036 65 555 (6) 51 (2,407) 1,000 Ending balance ALLR $ 2,983 $ 1,734 $ 209 $ 605 $ 5 $ 8 $ 272 $ 5,816 Loans: Ending balance $ 498,450 $ 273,759 $ 47,698 $ 227,044 $ 11,661 $ 18,980 $ — $ 1,077,592 Ending balance ALLR (2,983) (1,734) (209) (605) (5) (8) (272) (5,816) Net loans $ 495,467 $ 272,025 $ 47,489 $ 226,439 $ 11,656 $ 18,972 $ (272) $ 1,071,776 Ending balance ALLR: Individually evaluated $ 476 $ 703 $ — $ — $ — $ — $ — $ 1,179 Collectively evaluated 2,507 1,031 209 605 5 8 272 4,637 Total $ 2,983 $ 1,734 $ 209 $ 605 $ 5 $ 8 $ 272 $ 5,816 Ending balance Loans: Individually evaluated $ 2,396 $ 3,633 $ 362 $ — $ — $ — $ — $ 6,391 Collectively evaluated 494,890 269,891 47,161 226,175 11,661 18,964 — 1,068,742 Acquired with deteriorated credit quality 1,164 235 175 869 — 16 — 2,459 Total $ 498,450 $ 273,759 $ 47,698 $ 227,044 $ 11,661 $ 18,980 $ — $ 1,077,592 Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2019 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 $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Charge-offs (27) (103) — (152) — (228) — (510) Recoveries 159 4 2 49 — 36 — 250 Provision (625) 648 (32) 52 5 197 140 385 Ending balance ALLR $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Loans: Ending balance $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Ending balance ALLR (1,189) (1,197) (71) (148) (11) (13) (2,679) (5,308) Net loans $ 513,205 $ 209,826 $ 40,036 $ 253,770 $ 18,085 $ 21,225 $ (2,679) $ 1,053,468 Ending balance ALLR: Individually evaluated $ 497 $ 770 $ — $ — $ — $ — $ — $ 1,267 Collectively evaluated 692 427 71 148 11 13 2,679 4,041 Total $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Ending balance Loans: Individually evaluated $ 2,374 $ 1,475 $ — $ — $ — $ — $ — $ 3,849 Collectively evaluated 507,702 207,194 39,734 251,998 18,096 21,229 — 1,045,953 Acquired with deteriorated credit quality 4,318 2,354 373 1,920 — 9 — 8,974 Total $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 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. Acceptable Watch (44) 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. Acceptable watch 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 44 or better and any loans with a risk rating of 6 or 7 not considered impaired, 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 $10.939 million and $3.525 million at December 31, 2020, and 2019, 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, 2020 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 7,425 $ 10,521 $ 223,875 $ 249,159 $ 3,352 $ 4,118 $ — $ — $ 498,450 Commercial, financial and agricultural 116,107 6,760 51,150 94,743 656 4,343 — — 273,759 Commercial construction — 40 19,063 16,671 600 385 — 10,939 47,698 One-to-four family residential real estate — 3,139 5,614 18,864 369 1,814 — 197,244 227,044 Consumer construction — — — — — — — 11,661 11,661 Consumer — 79 128 1,141 — 67 — 17,565 18,980 Total loans $ 123,532 $ 20,539 $ 299,830 $ 380,578 $ 4,977 $ 10,727 $ — $ 237,409 $ 1,077,592 At December 31, 2020, $105.492 million of Paycheck Protection Program (“PPP”) loans are included with a risk rating of “1” in the Commercial, financial and agricultural category. Below is a breakdown of loans by risk category as of December 31, 2019 (dollars in thousands) (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,979 $ 17,516 $ 228,962 $ 248,177 $ 4,468 $ 5,292 $ — $ — $ 514,394 Commercial, financial and agricultural 15,126 4,510 70,748 115,229 930 4,480 — — 211,023 Commercial construction — 292 6,390 28,893 400 607 — 3,525 40,107 One-to-four family residential real estate 40 2,145 4,937 15,168 634 2,632 — 228,362 253,918 Consumer construction — — — — — — — 18,096 18,096 Consumer — 158 250 640 — 41 — 20,149 21,238 Total loans $ 25,145 $ 24,621 $ 311,287 $ 408,107 $ 6,432 $ 13,052 $ — $ 270,132 $ 1,058,776 Impaired Loans Impaired 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. 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. The following is a summary of impaired loans and their effect on interest income (dollars in thousands): Impaired Loans Impaired Loans Total Unpaid Related with No Related with Related Impaired Principal Allowance for Allowance Allowance Loans Balance Loan Losses December 31, 2020 Commercial real estate $ 1,251 $ 2,309 $ 3,560 $ 5,786 $ 476 Commercial, financial and agricultural 2,423 1,445 3,868 3,946 679 Commercial construction 537 — 537 678 — One to four family residential real estate 869 — 869 1,993 — Consumer construction — — — — — Consumer 16 — 16 19 — Total $ 5,096 $ 3,754 $ 8,850 $ 12,422 $ 1,155 December 31, 2019 Commercial real estate $ 4,318 $ 2,374 $ 6,692 $ 7,937 $ 497 Commercial, financial and agricultural 2,354 1,475 3,829 4,892 770 Commercial construction 373 — 373 386 — One to four family residential real estate 1,920 — 1,920 2,881 — Consumer construction — — — — — Consumer 9 — 9 33 — Total $ 8,974 $ 3,849 $ 12,823 $ 16,129 $ 1,267 Individually Evaluated Impaired Loans December 31, 2020 December 31, 2019 Average Interest Income Average Interest Income Balance for Recognized for Balance for Recognized for the Period the Period the Period the Period Commercial real estate $ 6,860 $ 270 $ 8,374 $ 301 Commercial, financial and agricultural 1,204 13 1,144 2 Commercial construction 541 27 396 — One to four family residential real estate 3,064 135 3,508 219 Consumer construction — — — — Consumer 37 1 44 2 Total $ 11,706 $ 446 $ 13,466 $ 524 A summary of past due loans at December 31, is as follows (dollars in thousands): December 31, December 31, 2020 2019 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due Past Due Past Due (accruing) (accruing) Nonaccrual Total (accruing) (accruing) Nonaccrual Total Commercial real estate $ 24 $ — $ 1,481 $ 1,505 $ 1,055 $ — $ 671 $ 1,726 Commercial, financial and agricultural 42 — 478 520 829 — 527 1,356 Commercial construction — — 79 79 59 — 105 164 One to four family residential real estate 1,925 — 3,371 5,296 4,357 11 3,850 8,218 Consumer construction — — — — — — — — Consumer 78 — 49 127 83 — 19 102 Total past due loans $ 2,069 $ — $ 5,458 $ 7,527 $ 6,383 $ 11 $ 5,172 $ 11,566 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. More recent regulatory guidelines and accounting standards indicate that loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs. COVID-19 loan modifications resided at a nominal $2.4 million, or .25 % of total loans with no commercial loans remaining in total payment deferral at December 31, 2020. This is compared to peak levels of $201 million in the second quarter of 2020. Subsequent to the end of 2020, the bank has modified an additional $16 million of commercial loans under the COVID framework. All modifications still require interest payments and there were no changes to interest rate. The modification period of the loans is expected to be completed before the end of the first quarter of 2021. 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 four new troubled debt restructuring that occurred during the year ended December 31, 2020 with a balance of $.535 million, and four new troubled debt restructurings for the year ended December 31, 2019 with a balance of $1.952 million. There are no existing troubled debt restructurings that have defaulted as of December 31, 2020 and 2019. The four TDRs are not COVID-19 related. 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): Year Ended Year Ended December 31, December 31, 2020 2019 Loans outstanding, January 1 $ 12,196 $ 9,817 New loans 500 1,872 Net activity on revolving lines of credit (764) 1,200 Change in status of insiders — (289) Repayment (154) (404) Loans outstanding at end of period $ 11,778 $ 12,196 There were no loans to related-parties classified substandard as of December 31, 2020 and 2019. In addition to the outstanding balances above, there were unfunded commitments of $.500 million to related parties at December 31, 2020. |
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2020 | |
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): 2020 2019 Land $ 4,286 $ 4,349 Buildings and improvements 30,637 26,711 Furniture, fixtures, and equipment 17,230 15,483 Construction in progress 186 1,555 Total cost basis 52,339 48,098 Less - accumulated depreciation 26,821 24,490 Net book value $ 25,518 $ 23,608 Depreciation of premises and equipment charged to operating expenses amounted to $2.798 million in 2020 and $2.684 million in 2019. |
OTHER REAL ESTATE HELD FOR SALE
OTHER REAL ESTATE HELD FOR SALE | 12 Months Ended |
Dec. 31, 2020 | |
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): 2020 2019 Balance, January 1 $ 2,194 $ 3,119 Other real estate transferred from loans due to foreclosure 874 1,629 Proceeds from other real estate sold (1,338) (1,329) Transfer to premise and equipment — (1,013) Writedowns of other real estate held for sale (65) (347) Gain on sale of other real estate held for sale 87 135 Total other real estate held for sale $ 1,752 $ 2,194 Foreclosed residential real estate property of $.453 million is included in other real estate as of December 31, 2020. 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 |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2020 | |
DEPOSITS | |
DEPOSITS | NOTE 7 — DEPOSITS The distribution of deposits at December 31 is as follows (dollars in thousands): 2020 2019 Noninterest bearing deposits $ 414,804 $ 287,611 NOW, money market, interest checking 450,556 373,165 Savings 130,755 109,548 CDs <$250,000 202,266 233,956 CDs >$250,000 15,224 12,775 Brokered 45,171 58,622 Total deposits $ 1,258,776 $ 1,075,677 Maturities of non-brokered time deposits outstanding at December 31, 2020 are as follows (dollars in thousands): 2021 $ 137,497 2022 48,023 2023 14,759 2024 11,260 2025 5,251 Thereafter 700 Total $ 217,490 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS The Corporation through the acquisition of Peninsula in 2014, Eagle River and Niagara in 2016, and FFNM and Lincoln in 2018, has recorded goodwill and core deposit intangibles as presented below (dollars in thousands). During 2019, the Corporation recorded period adjustments to both FFNM and Lincoln goodwill as it concluded its business combination and purchase accounting. Adjustments for the FFNM transaction resulted in an increase in the deferred tax asset of $1.950 million, an increase to MSRs of $.500 million and a decrease in goodwill of $2.450 million. Adjustments for the Lincoln transaction resulted in a decrease in the deferred tax liability of $.163 million, and a corresponding decrease in goodwill. Deposit Based Amortization Expense Intangible for the Future Annual December 31, 2020 year ended Amortization Balance December 31, 2020 Expense Peninsula $ 473 $ 121 $ 121 Eagle River 529 99 99 Niagara 170 30 30 FFNM 2,147 290 290 Lincoln 1,049 135 135 Total $ 4,368 $ 675 $ 675 Deposit Based Intangible 2019 December 31, 2019 Amortization Balance Expense Peninsula $ 594 $ 121 Eagle River 629 99 Niagara 200 30 FFNM 2,436 299 Lincoln 1,184 128 Total $ 5,043 $ 677 The deposit based intangible is reported net of accumulated amortization at $4.368 million at December 31, 2020, compared to $5.043 million at December 31, 2019. Amortization expense in 2020 is $.675 million compared to $.677 million in 2019. Amortization expense for the next five years is expected to be at $.675 million per year. The Corporation, in accordance with GAAP, evaluates goodwill annually for impairment. The Corporation has determined no impairment to goodwill exists. |
SERVICING RIGHTS
SERVICING RIGHTS | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020, the Corporation had rights to service $204.548 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 key economic assumptions used in determining the fair value of the mortgage servicing rights include an annual constant prepayment speed of 19.01% and a discount rate of 7.75% for December 31, 2020, which resulted in a fair value of $1.436 million. In 2019, the fair value was $2.159 million. The following summarizes the fair value and net present value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands): December 31, December 31, 2020 2019 Balance at beginning of period $ 1,499 $ 1,144 Final purchase accounting entry for FFNM — 500 Additions from loans sold with servicing retained — 95 Amortization (140) (240) Balance at end of period $ 1,359 $ 1,499 Balance of loan servicing portfolio $ 204,548 $ 255,757 Mortgage servicing rights as % of portfolio .66% .59% Fair value of servicing rights 1,436 2,159 Commercial Loans The Corporation also retains the servicing on commercial loans that have been sold that 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, 2020 and December 31, 2019 was approximately $53 million and $41 million, respectively. The Corporation valued these servicing rights at $311,000 as of December 31, 2020 and $218,000 at December 31, 2019. 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, 2020 | |
BORROWINGS | |
BORROWINGS | NOTE 10 — BORROWINGS Borrowings consist of the following at December 31 (dollars in thousands): December 31, December 31, 2020 2019 Federal Home Loan Bank fixed rate advances $ 63,155 $ 64,148 USDA Rural Development note 324 403 $ 63,479 $ 64,551 The Federal Home Loan Bank borrowings bear a weighted average rate of 1.67 % and mature in 2021, 2023, 2024, and 2026. They are collateralized at December 31, 2020 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $73.005 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $21.840 million and $22.438 million, respectively; and Federal Home Loan Bank stock owned by the Bank totaling $4.924 million. Prepayment of the advances is subject to the provisions and conditions of the credit policies of the Federal Home Loan Bank of Indianapolis in effect as of December 31, 2020. The Corporation currently has one correspondent banking borrowing relationship. The relationship consists of a $15.0 million revolving line of credit, which had no outstanding balance at December 31, 2020 and December 31, 2019. The line of credit bears interest at a rate of LIBOR plus 2.00%, with a floor rate of 3.00% and a ceiling of 22%. The line of credit expires on April 30, 2022. LIBOR was 0.24 % at December 31, 2020. The relationship is secured by all of the outstanding common stock of mBank. The USDA Rural Development borrowing bears an interest rate of 1.00 % and matures in August, 2024. It is collateralized by loans totaling $.324 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 $.374 million, and guaranteed by the Corporation. Maturities and principal payments of borrowings outstanding at December 31, 2020 are as follows (dollars in thousands): 2021 $ 35,082 2022 80 2023 236 2024 25,081 2025 — Thereafter 3,000 Total $ 63,479 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
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): 2020 2019 Current tax expense $ 2,954 $ 2,513 Deferred tax expense 629 1,347 Provision for income taxes $ 3,583 $ 3,860 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): 2020 2019 Tax expense at statutory rate $ 3,357 $ 3,719 Increase (decrease) in taxes resulting from: Tax-exempt interest (154) (110) Nondeductible expenses 249 251 Wisconsin income tax expense, net of federal impact 131 — Provision for income taxes, as reported $ 3,583 $ 3,860 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): 2020 2019 Deferred tax assets: NOL carryforward $ 1,671 $ 2,147 Allowance for loan losses 1,277 1,144 OREO 157 177 Deferred compensation 198 253 Pension liability 139 147 Stock compensation 159 75 Purchase accounting adjustments 832 1,507 Lease liability 928 980 Other 785 442 Total deferred tax assets 6,146 6,872 Deferred tax liabilities: Core deposit premium (959) (1,108) FHLB stock dividend (73) (73) Right of use asset (928) (980) Unrealized gain on securities (522) (273) Other (361) (706) Total deferred tax liabilities (2,843) (3,140) Net deferred tax asset $ 3,303 $ 3,732 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, 2020 had a net operating loss carryforwards for tax purposes of approximately $8.0 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 $2.0 million for the NOL and the equivalent value of tax credits, which is approximately $.420 million. These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004. 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. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2020 | |
LEASES | |
LEASES | NOTE 12 — LEASES The Corporation currently maintains four operating leases for branch locations in Birmingham, Marquette, Negaunee and Traverse City. 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): Years Ending Related Party Unrelated Party December 31 Amount Amount 2021 $ 477 $ 359 2022 486 202 2023 496 — 2024 506 — 2025 516 — Thereafter 1,564 — Subtotal $ 4,045 $ 561 Less: imputed interest (374) (7) Net lease liabilities $ 3,671 $ 554 Rent expense for all operating leases amounted to $1.062 million in amortization of the right-of-use asset and $.102 million of interest on the lease liability in 2020. In 2019, the amortization of the right-of-use asset was $1.021 million and the interest on the lease liability was $.111 million. |
RETIREMENT PLAN
RETIREMENT PLAN | 12 Months Ended |
Dec. 31, 2020 | |
DEFINED BENEFIT PENSION 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 $.469 million and $.370 million in 2020 and 2019 respectively. |
DEFINED BENEFIT PENSION PLAN
DEFINED BENEFIT PENSION PLAN | 12 Months Ended |
Dec. 31, 2020 | |
DEFINED BENEFIT PENSION 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 2021 are $57,000. The anticipated distributions over the next five years and through December 31, 2030 are detailed in the table below (dollars in thousands): 2021 $ 133 2022 140 2023 144 2024 142 2025 157 2026-2030 901 Total $ 1,617 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): 2020 2019 Change in benefit obligation: Benefit obligation, beginning of year $ 3,447 $ 2,991 Interest cost 99 117 Actuarial (gain) loss 220 469 Benefits paid (132) (130) Benefit obligation at end of year 3,634 3,447 Change in plan assets: Fair value of plan assets, beginning of year 2,259 1,987 Actual return on plan assets 29 381 Employer contributions 108 22 Benefits paid (132) (131) Fair value of plan assets at end of year 2,264 2,259 Funded status, included with other liabilities $ (1,370) $ (1,188) Net pension costs included in the Corporation’s results of operations was immaterial. Assumptions in the actuarial valuation were: 2020 2019 Weighted average discount rate 2.45% 2.92% Rate of increase in future compensation levels N/A N/A Expected long-term rate of return on plan assets 2.00% 8.00% 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, 2020 and December 31, 2019: Target Actual Allocation Allocation Equity securities 50% to 70% 0% Fixed income securities 30% to 50% 100% |
DEFERRED COMPENSATION PLAN
DEFERRED COMPENSATION PLAN | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020 and 2019, for vested benefits under this plan, was $27,000 and $51,000 , 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 $1.554 million and $1.498 million at December 31, 2020 and 2019, 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, 2020 and 2019, for vested benefits under this plan was $.605 million and $.757 million, respectively. The bank owned life insurance policy as of December 31, 2020 and 2019 had cash surrender values of $1.781 million and $1.773 million, respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation. First Federal of Northern Michigan, acquired in May 2018 had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2020 and December 31, 2019, for vested benefits under this plan was $.272 million and $.343 million respectively. The bank owned life insurance policy as of December 31, 2020 and December 31, 2019 had a cash surrender value of $5.441 million and $5.320 million respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation. Deferred compensation expense for the three plans was $84,000 and $99,000 for 2020 and 2019 respectively. |
REGULATORY MATTERS
REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020, the Corporation is well capitalized. The tables below do not include the 2.5% capital conservation buffer requirement. A bank with a capital conservation buffer greater than 2.5% of risk-weighted assets would not be restricted by payout limitations. However, if the 2.5% threshold is not met, the Bank would be subject to increasing limitations on capital distributions and discretionary bonus payments to executive officers as the capital conservation buffer approaches zero. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2020 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 145,054 14.8% > $ 78,577 > 8.0% > N/A N/A mBank $ 139,844 14.2% > $ 78,530 > 8.0% > $ 98,163 10.0% Tier 1 capital to risk weighted assets: Consolidated $ 139,238 14.2% > $ 58,933 > 6.0% > N/A N/A mBank $ 134,069 13.7% > $ 58,898 > 6.0% > $ 78,530 8.0% Common equity Tier 1 capital to risk weighted assets Consolidated $ 139,238 14.2% > $ 44,199 > 4.5% > N/A N/A mBank $ 134,069 13.7% > $ 44,173 > 4.5% > $ 63,806 6.5% Tier 1 capital to average assets: Consolidated $ 139,238 9.4% > $ 59,048 > 4.0% > N/A N/A mBank $ 134,069 9.1% > $ 58,787 > 4.0% > $ 73,483 5.0% The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2019 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 138,263 13.2% > $ 83,696 > 8.0% > N/A N/A mBank $ 136,578 13.1% > $ 83,681 > 8.0% > $ 104,601 10.0% Tier 1 capital to risk weighted assets: Consolidated $ 132,955 12.7% > $ 62,772 > 6.0% > N/A N/A mBank $ 131,311 12.6% > $ 62,761 > 6.0% > $ 83,681 8.0% Common equity Tier 1 capital to risk weighted assets Consolidated $ 132,955 12.7% > $ 47,079 > 4.5% > N/A N/A mBank $ 131,311 12.6% > $ 47,071 > 4.5% > $ 67,991 6.5% Tier 1 capital to average assets: Consolidated $ 132,955 10.1% > $ 52,724 > 4.0% > N/A N/A mBank $ 131,311 10.0% > $ 52,728 > 4.0% > $ 65,910 5.0% |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2020 | |
STOCK COMPENSATION PLANS | |
STOCK COMPENSATION PLANS | NOTE 17 — STOCK COMPENSATION PLANS Restricted Stock Awards The Corporation’s restricted stock awards (“RSAs”) 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 has historically granted RSAs to members of the Board of Directors and management. Awards granted are set to vest equally over their award terms and are issued at no cost to the recipient. The table below summarizes each of the grant awards. Market Value at Date of Award Units Granted grant date Vesting Term February, 2017 28,427 13.39 4 years February, 2018 18,643 16.30 4 years April, 2018 8,000 16.00 Immediate February, 2019 27,790 15.70 4 years October, 2019 8,000 15.40 Immediate February, 2020 132,000 15.46 4 years October, 2020 8,000 9.46 Immediate In 2019, the Corporation issued 35,967 shares for vested RSAs. In 2020, the Corporation issued 35,825 shares for vested RSAs. The Corporation recognized annual compensation expense of $.878 million in 2020 and $.498 million in 2019. Unrecognized compensation expense at the end of 2020 was $1.914 million. A summary of changes in our nonvested awards for the year follows: Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2020 69,145 $ 14.52 Granted during the period 140,000 15.12 Forfeited during the period (3,167) 15.46 Vested during the period (35,825) 14.99 Nonvested balance at December 31, 2020 170,153 $ 14.90 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 18 — SHAREHOLDERS’ EQUITY The Corporation currently has one active share repurchase program and one repurchase plan that has since expired. All share repurchase programs are conducted under authorizations by the Board of Directors. Under the now expired program, the Corporation repurchased 1,661 shares in 2020, 14,000 shares in 2016, 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 million on February 27, 2013, $.600 million on December 17, 2013 and an additional $750,000 on April 28, 2015. On August 28, 2019, the Corporation, under the authorization of the Board of Directors announced a new common stock repurchase program. Under the Repurchase Program, the Company is authorized to repurchase up to approximately 5 % of the Company’s outstanding common stock, and has no expiration date. During 2020, the Corporation repurchased 283,779 shares under this plan. |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | 12 Months Ended |
Dec. 31, 2020 | |
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): December 31, December 31, 2020 2019 Commitments to extend credit: Variable rate $ 114,458 $ 106,278 Fixed rate 58,175 50,796 Standby letters of credit - Variable rate 8,781 5,441 Credit card commitments - Fixed rate 7,136 5,841 $ 188,550 $ 168,356 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, 2020, 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 and Northeastern Wisconsin. 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, 2020 represents $138.992 million, or 16.95%, compared to $141.965 million, or 18.54 %, of the commercial loan portfolio on December 31, 2019. The remainder of the commercial loan portfolio is diversified in such categories as hospitality and tourism, real estate agents and managers, new car dealers, gas stations and convenience stores, 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, 2020 | |
FAIR VALUE | |
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 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 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 using an exit notion. 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 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, 2020 December 31, 2019 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 218,977 $ 218,977 $ 49,826 $ 49,826 Interest-bearing deposits Level 2 2,917 2,917 10,295 10,295 Securities available for sale Level 2 110,505 110,505 106,569 106,569 Securities available for sale Level 3 1,331 1,331 1,403 1,403 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,071,776 1,072,770 1,053,468 1,055,985 Accrued interest receivable Level 3 4,310 4,310 3,751 3,751 Total financial assets $ 1,414,740 $ 1,415,734 $ 1,230,236 $ 1,232,753 Financial liabilities: Deposits Level 2 $ 1,258,776 $ 1,262,930 $ 1,075,677 $ 1,044,267 Borrowings Level 2 63,479 61,975 64,551 64,403 Accrued interest payable Level 3 453 453 569 569 Total financial liabilities $ 1,322,708 $ 1,325,358 $ 1,140,797 $ 1,109,239 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, 2020 and the valuation techniques used by the Corporation to determine those fair values. Level 1: 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, 2020 and 2019 were based on level 2 and level 3 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 table below shows investment securities measured at fair value on a recurring basis (dollars in thousands): Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2020 (Level 1) (Level 2) (Level 3) December 31, 2020 Assets Corporate $ 28,043 $ — $ 27,543 $ 500 $ — US Agencies 6,589 — 6,589 — — US Agencies - MBS 34,280 — 34,280 — — Obligations of state and political subdivisions 42,924 — 42,093 831 2 $ 111,836 $ 2 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, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Corporate $ 20,938 $ — $ 20,438 $ 500 $ 35 US Agencies 14,496 — 14,496 — 9 US Agencies - MBS 34,526 — 34,526 — — Obligations of state and political subdivisions 38,012 — 37,109 903 164 $ 107,972 $ The Corporation had no other Level 3 assets or liabilities on a recurring basis as of December 31, 2020. 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. The table below shows the activity in level three assets for the years ended, December 31, 2020 and 2019 (dollars in thousands): Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2020 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 903 — — (72) — — 831 Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2019 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 988 — — (85) — — 903 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2020 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2020 (Level 1) (Level 2) (Level 3) December 31, 2020 Assets Impaired loans $ 8,850 $ — $ — $ 8,850 $ 186 Other real estate held for sale 1,752 — — 1,752 (22) $ 164 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2019 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, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Impaired loans $ 12,823 $ — $ — $ 12,823 $ 280 Other real estate held for sale 2,194 — — 2,194 212 $ 492 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 or collateral values 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). |
PARENT COMPANY ONLY FINANCIAL S
PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2020 | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | NOTE 21 — PARENT COMPANY ONLY FINANCIAL STATEMENTS BALANCE SHEETS December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 ASSETS Cash and cash equivalents $ 4,226 $ 490 Investment in subsidiaries 161,438 157,156 Other assets 3,727 5,764 TOTAL ASSETS $ 169,391 $ 163,410 LIABILITIES AND SHAREHOLDERS’ EQUITY Other liabilities 1,527 1,491 Total liabilities 1,527 1,491 Shareholders’ equity: Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued outstanding 10,500,758 shares respectively 127,164 129,564 Retained earnings 39,318 31,740 Accumulated other comprehensive income 1,382 615 Total shareholders’ equity 167,864 161,919 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 169,391 $ 163,410 STATEMENTS OF OPERATIONS Years Ended December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 INCOME: Interest income $ — $ — Miscellaneous income 1 1 Total income $ 1 $ 1 EXPENSES: Interest expense on borrowings 7 — Salaries and benefits 1,298 858 Professional service fees 289 301 Other 355 376 Total expenses 1,949 1,535 Loss before income taxes and equity in net income of subsidiaries (1,948) (1,534) Provision for (benefit of) income taxes (409) (322) Loss before equity in net income of subsidiaries (1,539) (1,212) Equity in net income of subsidiaries 15,012 15,062 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 13,473 $ 13,850 STATEMENTS OF CASH FLOWS Years Ended December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 Cash Flows from Operating Activities: Net income $ 13,473 $ 13,850 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net (income) of subsidiaries (15,012) (15,062) Increase in capital from stock based compensation 878 498 Change in other assets 2,035 (1,458) Change in other liabilities 36 268 Net cash provided by (used in) operating activities 1,410 (1,904) Cash Flows from Investing Activities: Investments in subsidiaries 11,500 5,500 Net cash provided by used in investing activities 11,500 5,500 Cash Flows from Financing Activities: Repurchase of common stock (3,279) — Dividend on common stock (5,895) (5,576) Net cash (used in) financing activities (9,174) (5,576) Net increase (decrease) in cash and cash equivalents 3,736 (1,980) Cash and cash equivalents at beginning of period 490 2,470 Cash and cash equivalents at end of period $ 4,226 $ 490 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | 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 | 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. |
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, Northeastern Wisconsin 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, 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 debt 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. During 2020, the Corporation funded loans under the Small Business Administration's (SBA) Paycheck Protection Program (PPP) to provide liquidity to small businesses during the COVID-19 pandemic. The loans are guaranteed by the SBA and loan proceeds to borrowers are forgivable by the SBA if certain criteria are met. The Corporation originated PPP loans totaling $152.506 during the year. PPP processing fees received from the SBA totaling $5.18 were deferred along with loan origination costs and recognized as interest income using the effective yield method. Upon forgiveness of a loan and resulting repayment by the SBA, any unrecognized net fee for a given loan is recognized as interest income. Fees of $4.030 were recognized in 2020. |
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 based on the present value of amounts expected to be received, which incorporates assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, collateral values, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. 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 ASC 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 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 fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management or a third party, 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 ASC 350, amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill is annually tested for impairment and between annual tests in certain circumstances. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life of 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 awards (“RSAs”), or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000 . 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, 2020, the balance in accumulated other comprehensive income consisted of unrealized gains on available for sales securities of $1.965 million (net of income tax of $.522 million) and actuarial losses on the defined benefit pension obligation of $.583 million (net of income tax of $.139 million). At December 31, 2019, the balance in accumulated other comprehensive income consisted of unrealized losses on available for sale securities of $1.025 million (net of income tax of $.273 million) and actuarial losses on the defined benefit pension obligation of $.410 million (net of income tax of $.147 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 years ended December 31, 2020 and 2019 (dollars in thousands, except per share data): Year Ended December 31, 2020 2019 (Numerator): Net income $ 13,473 $ 13,850 (Denominator): Weighted average shares outstanding 10,580,044 10,737,653 Effect of restricted stock awards — 19,854 Diluted weighted average shares outstanding 10,580,044 10,757,507 Income per common share: Basic $ 1.27 $ 1.29 Diluted $ 1.27 $ 1.29 |
Income Taxes | Income Taxes Deferred income taxes have been provided under the balance sheet 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 September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote. ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance. ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice. New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Coporation’s consolidated financial condition and result of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission). As the Corporation qualifies as a smaller reporting company, management plans to delay the implementation of CECL beyond 2021 and adjust the timetable of the various CECL implementation tasks. Management believes that the Corporation will benefit from additional time to parallel testing and refine credit loss estimation models. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard provides optional guidance for a limited period of time to ease the potential burden in accounting for and recognizing the effects of reference rate reform on financial reporting by offering expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform under certain criteria. The updated guidance is effective as of March 12, 2020 through December 31, 2022. The Corporation is currently assessing the impact this new standard will have on its financial statements. |
Reclassifications | Reclassifications Certain amounts in the 2019 consolidated financial statements have been reclassified to conform to the 2020 presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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 years ended December 31, 2020 and 2019 (dollars in thousands, except per share data): Year Ended December 31, 2020 2019 (Numerator): Net income $ 13,473 $ 13,850 (Denominator): Weighted average shares outstanding 10,580,044 10,737,653 Effect of restricted stock awards — 19,854 Diluted weighted average shares outstanding 10,580,044 10,757,507 Income per common share: Basic $ 1.27 $ 1.29 Diluted $ 1.27 $ 1.29 |
SECURITIES AVAILABLE FOR SALE (
SECURITIES AVAILABLE FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SECURITIES AVAILABLE FOR SALE | |
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, 2020 Corporate $ 27,815 $ 247 $ (19) $ 28,043 US Agencies 6,480 109 — 6,589 US Agencies - MBS 33,372 914 (6) 34,280 Obligations of states and political subdivisions 41,682 1,242 — 42,924 Total securities available for sale $ 109,349 $ 2,512 $ (25) $ 111,836 December 31, 2019 Corporate $ 20,779 $ 160 $ (1) $ 20,938 US Agencies 14,450 47 (1) 14,496 US Agencies - MBS 34,063 492 (29) 34,526 Obligations of states and political subdivisions 37,382 630 — 38,012 Total securities available for sale $ 106,674 $ 1,329 $ (31) $ 107,972 |
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, 2020 and 2019 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, 2020 Corporate $ (19) $ 9,293 $ — $ — US Agencies — — — — US Agencies - MBS (2) 83 (4) 123 Obligations of states and political subdivisions — — — — Total securities available for sale $ (21) $ 9,376 $ (4) $ 123 December 31, 2019 Corporate (1) 2,502 — — US Agencies — — (1) 500 US Agencies - MBS (9) 6,966 (20) 1,233 Obligations of states and political subdivisions — — — — Total securities available for sale $ (10) $ 9,468 $ (21) $ 1,733 The following is information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 (dollars in thousands): Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2020 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 4 $ 9,293 $ (19) — $ — $ — 4 $ 9,293 $ (19) US Agencies — — — — — — — — — US Agencies - MBS 4 83 (2) 2 123 (4) 6 206 (6) Obligations of states and political subdivisions — — — — — — — — — Total 8 $ 9,376 $ (21) 2 $ 123 $ (4) 10 $ 9,499 $ (25) Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2019 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 1 $ 2,502 $ (1) — $ — $ — 1 $ 2,502 $ (1) US Agencies — — — 1 500 (1) 1 500 (1) US Agencies - MBS 10 6,966 (9) 13 1,233 (20) 23 8,199 (29) Obligations of states and political subdivisions — — — 1 115 — 1 115 — Total 11 $ 9,468 $ (10) 15 $ 1,848 $ (21) 26 $ 11,316 $ (31) |
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): 2020 2019 Proceeds from sales and calls $ 9,560 $ 5,805 Gross gains on sales and calls 2 208 |
Schedule of amortized cost and estimated fair value sore investment securities by contractual maturity | The carrying value and estimated fair value of securities available for sale at December 31, 2020, by contractual maturity, are shown below (dollars in thousands): Amortized Estimated Cost Fair Value Due in one year or less $ 15,645 $ 15,820 Due after one year through five years 22,554 23,201 Due after five years through ten years 24,965 25,261 Due after ten years 12,813 13,274 Subtotal 75,977 77,556 US Agencies - MBS 33,372 34,280 Total $ 109,349 $ 111,836 |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of composition of loans | The composition of loans at December 31 is as follows (dollars in thousands): December 31, December 31, 2020 2019 Commercial real estate $ 498,450 $ 514,394 Commercial, financial, and agricultural 273,759 211,023 Commercial construction 47,698 40,107 One to four family residential real estate 227,044 253,918 Consumer 18,980 21,238 Consumer construction 11,661 18,096 Total loans $ 1,077,592 $ 1,058,776 |
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, 2020 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Accretion (207) — (207) (104) — (104) Reclassification from nonaccretable difference 155 — 155 78 — 78 Balance, December 31, 2020 $ 53 $ — $ 53 $ 183 $ — $ 183 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Accretion (27) — (27) (903) (1,085) (1,988) Reclassification from nonaccretable difference 20 — 20 677 1 678 Balance, December 31, 2020 $ 12 $ — $ 12 $ 292 $ 869 $ 1,161 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 Accretion (95) (134) (229) (1,336) (1,219) (2,555) Reclassification from nonaccretable difference 72 — 72 1,002 1 1,003 Balance, December 31, 2020 $ 85 $ 130 $ 215 $ 625 $ 999 $ 1,624 The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2019 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Accretion (90) — (90) (17) (16) (33) Reclassification from nonaccretable difference 67 — 67 13 — 13 Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Accretion (30) (69) (99) (214) (1,493) (1,707) Reclassification from nonaccretable difference 23 — 23 161 — 161 Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051 Accretion (128) (178) (306) (479) (1,756) (2,235) Reclassification from nonaccretable difference 96 — 96 360 — 360 Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 |
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, 2020 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 $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Charge-offs (17) (500) (8) (117) — (117) — (759) Recoveries 105 1 81 19 — 61 — 267 Provision 1,706 1,036 65 555 (6) 51 (2,407) 1,000 Ending balance ALLR $ 2,983 $ 1,734 $ 209 $ 605 $ 5 $ 8 $ 272 $ 5,816 Loans: Ending balance $ 498,450 $ 273,759 $ 47,698 $ 227,044 $ 11,661 $ 18,980 $ — $ 1,077,592 Ending balance ALLR (2,983) (1,734) (209) (605) (5) (8) (272) (5,816) Net loans $ 495,467 $ 272,025 $ 47,489 $ 226,439 $ 11,656 $ 18,972 $ (272) $ 1,071,776 Ending balance ALLR: Individually evaluated $ 476 $ 703 $ — $ — $ — $ — $ — $ 1,179 Collectively evaluated 2,507 1,031 209 605 5 8 272 4,637 Total $ 2,983 $ 1,734 $ 209 $ 605 $ 5 $ 8 $ 272 $ 5,816 Ending balance Loans: Individually evaluated $ 2,396 $ 3,633 $ 362 $ — $ — $ — $ — $ 6,391 Collectively evaluated 494,890 269,891 47,161 226,175 11,661 18,964 — 1,068,742 Acquired with deteriorated credit quality 1,164 235 175 869 — 16 — 2,459 Total $ 498,450 $ 273,759 $ 47,698 $ 227,044 $ 11,661 $ 18,980 $ — $ 1,077,592 Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2019 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 $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Charge-offs (27) (103) — (152) — (228) — (510) Recoveries 159 4 2 49 — 36 — 250 Provision (625) 648 (32) 52 5 197 140 385 Ending balance ALLR $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Loans: Ending balance $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Ending balance ALLR (1,189) (1,197) (71) (148) (11) (13) (2,679) (5,308) Net loans $ 513,205 $ 209,826 $ 40,036 $ 253,770 $ 18,085 $ 21,225 $ (2,679) $ 1,053,468 Ending balance ALLR: Individually evaluated $ 497 $ 770 $ — $ — $ — $ — $ — $ 1,267 Collectively evaluated 692 427 71 148 11 13 2,679 4,041 Total $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Ending balance Loans: Individually evaluated $ 2,374 $ 1,475 $ — $ — $ — $ — $ — $ 3,849 Collectively evaluated 507,702 207,194 39,734 251,998 18,096 21,229 — 1,045,953 Acquired with deteriorated credit quality 4,318 2,354 373 1,920 — 9 — 8,974 Total $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 |
Schedule of breakdown of loans by risk category | Below is a breakdown of loans by risk category as of December 31, 2020 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 7,425 $ 10,521 $ 223,875 $ 249,159 $ 3,352 $ 4,118 $ — $ — $ 498,450 Commercial, financial and agricultural 116,107 6,760 51,150 94,743 656 4,343 — — 273,759 Commercial construction — 40 19,063 16,671 600 385 — 10,939 47,698 One-to-four family residential real estate — 3,139 5,614 18,864 369 1,814 — 197,244 227,044 Consumer construction — — — — — — — 11,661 11,661 Consumer — 79 128 1,141 — 67 — 17,565 18,980 Total loans $ 123,532 $ 20,539 $ 299,830 $ 380,578 $ 4,977 $ 10,727 $ — $ 237,409 $ 1,077,592 At December 31, 2020, $105.492 million of Paycheck Protection Program (“PPP”) loans are included with a risk rating of “1” in the Commercial, financial and agricultural category. Below is a breakdown of loans by risk category as of December 31, 2019 (dollars in thousands) (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,979 $ 17,516 $ 228,962 $ 248,177 $ 4,468 $ 5,292 $ — $ — $ 514,394 Commercial, financial and agricultural 15,126 4,510 70,748 115,229 930 4,480 — — 211,023 Commercial construction — 292 6,390 28,893 400 607 — 3,525 40,107 One-to-four family residential real estate 40 2,145 4,937 15,168 634 2,632 — 228,362 253,918 Consumer construction — — — — — — — 18,096 18,096 Consumer — 158 250 640 — 41 — 20,149 21,238 Total loans $ 25,145 $ 24,621 $ 311,287 $ 408,107 $ 6,432 $ 13,052 $ — $ 270,132 $ 1,058,776 |
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): Impaired Loans Impaired Loans Total Unpaid Related with No Related with Related Impaired Principal Allowance for Allowance Allowance Loans Balance Loan Losses December 31, 2020 Commercial real estate $ 1,251 $ 2,309 $ 3,560 $ 5,786 $ 476 Commercial, financial and agricultural 2,423 1,445 3,868 3,946 679 Commercial construction 537 — 537 678 — One to four family residential real estate 869 — 869 1,993 — Consumer construction — — — — — Consumer 16 — 16 19 — Total $ 5,096 $ 3,754 $ 8,850 $ 12,422 $ 1,155 December 31, 2019 Commercial real estate $ 4,318 $ 2,374 $ 6,692 $ 7,937 $ 497 Commercial, financial and agricultural 2,354 1,475 3,829 4,892 770 Commercial construction 373 — 373 386 — One to four family residential real estate 1,920 — 1,920 2,881 — Consumer construction — — — — — Consumer 9 — 9 33 — Total $ 8,974 $ 3,849 $ 12,823 $ 16,129 $ 1,267 Individually Evaluated Impaired Loans December 31, 2020 December 31, 2019 Average Interest Income Average Interest Income Balance for Recognized for Balance for Recognized for the Period the Period the Period the Period Commercial real estate $ 6,860 $ 270 $ 8,374 $ 301 Commercial, financial and agricultural 1,204 13 1,144 2 Commercial construction 541 27 396 — One to four family residential real estate 3,064 135 3,508 219 Consumer construction — — — — Consumer 37 1 44 2 Total $ 11,706 $ 446 $ 13,466 $ 524 |
Summary of past due loans | A summary of past due loans at December 31, is as follows (dollars in thousands): December 31, December 31, 2020 2019 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due Past Due Past Due (accruing) (accruing) Nonaccrual Total (accruing) (accruing) Nonaccrual Total Commercial real estate $ 24 $ — $ 1,481 $ 1,505 $ 1,055 $ — $ 671 $ 1,726 Commercial, financial and agricultural 42 — 478 520 829 — 527 1,356 Commercial construction — — 79 79 59 — 105 164 One to four family residential real estate 1,925 — 3,371 5,296 4,357 11 3,850 8,218 Consumer construction — — — — — — — — Consumer 78 — 49 127 83 — 19 102 Total past due loans $ 2,069 $ — $ 5,458 $ 7,527 $ 6,383 $ 11 $ 5,172 $ 11,566 |
Schedule of activity in insider loans granted to the entity's executive officers and directors, including their families and firms | Year Ended Year Ended December 31, December 31, 2020 2019 Loans outstanding, January 1 $ 12,196 $ 9,817 New loans 500 1,872 Net activity on revolving lines of credit (764) 1,200 Change in status of insiders — (289) Repayment (154) (404) Loans outstanding at end of period $ 11,778 $ 12,196 |
PFC | |
Schedule of acquired portfolio at acquisition date | The table below details the outstanding balances of the PFC acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 13,290 $ 53,849 $ 67,139 Nonaccretable difference (2,234) — (2,234) Expected cash flows 11,056 53,849 64,905 Accretable yield (744) (2,100) (2,844) Carrying balance at acquisition date $ 10,312 $ 51,749 $ 62,061 |
Eagle River | |
Schedule of acquired portfolio at acquisition date | The table below details the outstanding balances of the Eagle River acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 3,401 $ 80,737 $ 84,138 Nonaccretable difference (1,172) — (1,172) Expected cash flows 2,229 80,737 82,966 Accretable yield (391) (1,700) (2,091) Carrying balance at acquisition date $ 1,838 $ 79,037 $ 80,875 |
Niagara Bancorporation | |
Schedule of acquired portfolio at acquisition date | The table below details the outstanding balances of the Niagara acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 2,105 $ 30,555 $ 32,660 Nonaccretable difference (265) — (265) Expected cash flows 1,840 30,555 32,395 Accretable yield (88) (600) (688) Carrying balance at acquisition date $ 1,752 $ 29,955 $ 31,707 |
FFNM | |
Schedule of acquired portfolio at acquisition date | The table below details the outstanding balances of the FFNM acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 5,440 $ 187,302 $ 192,742 Nonaccretable difference (2,100) — (2,100) Expected cash flows 3,340 187,302 190,642 Accretable yield (700) (4,498) (5,198) Carrying balance at acquisition date $ 2,640 $ 182,804 $ 185,444 |
Lincoln Community Bank | |
Schedule of acquired portfolio at acquisition date | The table below details the outstanding balances of the Lincoln acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 1,901 $ 37,700 $ 39,601 Nonaccretable difference (421) — (421) Expected cash flows 1,480 37,700 39,180 Accretable yield (140) (493) (633) Carrying balance at acquisition date $ 1,340 $ 37,207 $ 38,547 |
PREMISES AND EQUIPMENT (Tables)
PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PREMISES AND EQUIPMENT | |
Schedule of details of premises and equipment | Details of premises and equipment at December 31 are as follows (dollars in thousands): 2020 2019 Land $ 4,286 $ 4,349 Buildings and improvements 30,637 26,711 Furniture, fixtures, and equipment 17,230 15,483 Construction in progress 186 1,555 Total cost basis 52,339 48,098 Less - accumulated depreciation 26,821 24,490 Net book value $ 25,518 $ 23,608 |
OTHER REAL ESTATE HELD FOR SA_2
OTHER REAL ESTATE HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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): 2020 2019 Balance, January 1 $ 2,194 $ 3,119 Other real estate transferred from loans due to foreclosure 874 1,629 Proceeds from other real estate sold (1,338) (1,329) Transfer to premise and equipment — (1,013) Writedowns of other real estate held for sale (65) (347) Gain on sale of other real estate held for sale 87 135 Total other real estate held for sale $ 1,752 $ 2,194 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEPOSITS | |
Schedule of distribution of deposits | The distribution of deposits at December 31 is as follows (dollars in thousands): 2020 2019 Noninterest bearing deposits $ 414,804 $ 287,611 NOW, money market, interest checking 450,556 373,165 Savings 130,755 109,548 CDs <$250,000 202,266 233,956 CDs >$250,000 15,224 12,775 Brokered 45,171 58,622 Total deposits $ 1,258,776 $ 1,075,677 |
Schedule of maturities of non-brokered time deposits outstanding | Maturities of non-brokered time deposits outstanding at December 31, 2020 are as follows (dollars in thousands): 2021 $ 137,497 2022 48,023 2023 14,759 2024 11,260 2025 5,251 Thereafter 700 Total $ 217,490 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of deposit based intangible asset amortization | Deposit Based Amortization Expense Intangible for the Future Annual December 31, 2020 year ended Amortization Balance December 31, 2020 Expense Peninsula $ 473 $ 121 $ 121 Eagle River 529 99 99 Niagara 170 30 30 FFNM 2,147 290 290 Lincoln 1,049 135 135 Total $ 4,368 $ 675 $ 675 Deposit Based Intangible 2019 December 31, 2019 Amortization Balance Expense Peninsula $ 594 $ 121 Eagle River 629 99 Niagara 200 30 FFNM 2,436 299 Lincoln 1,184 128 Total $ 5,043 $ 677 |
SERVICING RIGHTS (Tables)
SERVICING RIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SERVICING RIGHTS | |
Summary of mortgage servicing rights capitalized and amortized | The following summarizes the fair value and net present value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands): December 31, December 31, 2020 2019 Balance at beginning of period $ 1,499 $ 1,144 Final purchase accounting entry for FFNM — 500 Additions from loans sold with servicing retained — 95 Amortization (140) (240) Balance at end of period $ 1,359 $ 1,499 Balance of loan servicing portfolio $ 204,548 $ 255,757 Mortgage servicing rights as % of portfolio .66% .59% Fair value of servicing rights 1,436 2,159 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
BORROWINGS | |
Schedule of borrowings | Borrowings consist of the following at December 31 (dollars in thousands): December 31, December 31, 2020 2019 Federal Home Loan Bank fixed rate advances $ 63,155 $ 64,148 USDA Rural Development note 324 403 $ 63,479 $ 64,551 |
Schedule of maturities and principal payments of borrowings outstanding | Maturities and principal payments of borrowings outstanding at December 31, 2020 are as follows (dollars in thousands): 2021 $ 35,082 2022 80 2023 236 2024 25,081 2025 — Thereafter 3,000 Total $ 63,479 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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): 2020 2019 Current tax expense $ 2,954 $ 2,513 Deferred tax expense 629 1,347 Provision for income taxes $ 3,583 $ 3,860 |
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): 2020 2019 Tax expense at statutory rate $ 3,357 $ 3,719 Increase (decrease) in taxes resulting from: Tax-exempt interest (154) (110) Nondeductible expenses 249 251 Wisconsin income tax expense, net of federal impact 131 — Provision for income taxes, as reported $ 3,583 $ 3,860 |
Schedule of major components of net deferred tax assets | 2020 2019 Deferred tax assets: NOL carryforward $ 1,671 $ 2,147 Allowance for loan losses 1,277 1,144 OREO 157 177 Deferred compensation 198 253 Pension liability 139 147 Stock compensation 159 75 Purchase accounting adjustments 832 1,507 Lease liability 928 980 Other 785 442 Total deferred tax assets 6,146 6,872 Deferred tax liabilities: Core deposit premium (959) (1,108) FHLB stock dividend (73) (73) Right of use asset (928) (980) Unrealized gain on securities (522) (273) Other (361) (706) Total deferred tax liabilities (2,843) (3,140) Net deferred tax asset $ 3,303 $ 3,732 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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): Years Ending Related Party Unrelated Party December 31 Amount Amount 2021 $ 477 $ 359 2022 486 202 2023 496 — 2024 506 — 2025 516 — Thereafter 1,564 — Subtotal $ 4,045 $ 561 Less: imputed interest (374) (7) Net lease liabilities $ 3,671 $ 554 |
DEFINED BENEFIT PENSION PLAN (T
DEFINED BENEFIT PENSION PLAN (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
DEFINED BENEFIT PENSION PLAN | |
Schedule of anticipated distributions over the next five years | The anticipated distributions over the next five years and through December 31, 2030 are detailed in the table below (dollars in thousands): 2021 $ 133 2022 140 2023 144 2024 142 2025 157 2026-2030 901 Total $ 1,617 |
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): 2020 2019 Change in benefit obligation: Benefit obligation, beginning of year $ 3,447 $ 2,991 Interest cost 99 117 Actuarial (gain) loss 220 469 Benefits paid (132) (130) Benefit obligation at end of year 3,634 3,447 Change in plan assets: Fair value of plan assets, beginning of year 2,259 1,987 Actual return on plan assets 29 381 Employer contributions 108 22 Benefits paid (132) (131) Fair value of plan assets at end of year 2,264 2,259 Funded status, included with other liabilities $ (1,370) $ (1,188) |
Schedule of assumptions in the actuarial valuation | 2020 2019 Weighted average discount rate 2.45% 2.92% Rate of increase in future compensation levels N/A N/A Expected long-term rate of return on plan assets 2.00% 8.00% |
Schedule of asset allocation | Target Actual Allocation Allocation Equity securities 50% to 70% 0% Fixed income securities 30% to 50% 100% |
REGULATORY MATTERS (Tables)
REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
REGULATORY MATTERS | |
Schedule of the Corporation's and the Bank's actual and capital amounts and ratios compared to generally applicable regulatory requirements | The tables below do not include the 2.5% capital conservation buffer requirement. A bank with a capital conservation buffer greater than 2.5% of risk-weighted assets would not be restricted by payout limitations. However, if the 2.5% threshold is not met, the Bank would be subject to increasing limitations on capital distributions and discretionary bonus payments to executive officers as the capital conservation buffer approaches zero. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2020 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 145,054 14.8% > $ 78,577 > 8.0% > N/A N/A mBank $ 139,844 14.2% > $ 78,530 > 8.0% > $ 98,163 10.0% Tier 1 capital to risk weighted assets: Consolidated $ 139,238 14.2% > $ 58,933 > 6.0% > N/A N/A mBank $ 134,069 13.7% > $ 58,898 > 6.0% > $ 78,530 8.0% Common equity Tier 1 capital to risk weighted assets Consolidated $ 139,238 14.2% > $ 44,199 > 4.5% > N/A N/A mBank $ 134,069 13.7% > $ 44,173 > 4.5% > $ 63,806 6.5% Tier 1 capital to average assets: Consolidated $ 139,238 9.4% > $ 59,048 > 4.0% > N/A N/A mBank $ 134,069 9.1% > $ 58,787 > 4.0% > $ 73,483 5.0% The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2019 are as follows (dollars in thousands): Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 138,263 13.2% > $ 83,696 > 8.0% > N/A N/A mBank $ 136,578 13.1% > $ 83,681 > 8.0% > $ 104,601 10.0% Tier 1 capital to risk weighted assets: Consolidated $ 132,955 12.7% > $ 62,772 > 6.0% > N/A N/A mBank $ 131,311 12.6% > $ 62,761 > 6.0% > $ 83,681 8.0% Common equity Tier 1 capital to risk weighted assets Consolidated $ 132,955 12.7% > $ 47,079 > 4.5% > N/A N/A mBank $ 131,311 12.6% > $ 47,071 > 4.5% > $ 67,991 6.5% Tier 1 capital to average assets: Consolidated $ 132,955 10.1% > $ 52,724 > 4.0% > N/A N/A mBank $ 131,311 10.0% > $ 52,728 > 4.0% > $ 65,910 5.0% |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
STOCK COMPENSATION PLANS | |
Summary of restricted stock units awards granted | Market Value at Date of Award Units Granted grant date Vesting Term February, 2017 28,427 13.39 4 years February, 2018 18,643 16.30 4 years April, 2018 8,000 16.00 Immediate February, 2019 27,790 15.70 4 years October, 2019 8,000 15.40 Immediate February, 2020 132,000 15.46 4 years October, 2020 8,000 9.46 Immediate |
Summary of changes in nonvested shares | Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2020 69,145 $ 14.52 Granted during the period 140,000 15.12 Forfeited during the period (3,167) 15.46 Vested during the period (35,825) 14.99 Nonvested balance at December 31, 2020 170,153 $ 14.90 |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
COMMITMENTS, CONTINGENCIES AND CREDIT RISK | |
Schedule of commitments | December 31, December 31, 2020 2019 Commitments to extend credit: Variable rate $ 114,458 $ 106,278 Fixed rate 58,175 50,796 Standby letters of credit - Variable rate 8,781 5,441 Credit card commitments - Fixed rate 7,136 5,841 $ 188,550 $ 168,356 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
FAIR VALUE | |
Schedule presenting information for financial instruments | The following table presents information for financial instruments at December 31 (dollars in thousands): December 31, 2020 December 31, 2019 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 218,977 $ 218,977 $ 49,826 $ 49,826 Interest-bearing deposits Level 2 2,917 2,917 10,295 10,295 Securities available for sale Level 2 110,505 110,505 106,569 106,569 Securities available for sale Level 3 1,331 1,331 1,403 1,403 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,071,776 1,072,770 1,053,468 1,055,985 Accrued interest receivable Level 3 4,310 4,310 3,751 3,751 Total financial assets $ 1,414,740 $ 1,415,734 $ 1,230,236 $ 1,232,753 Financial liabilities: Deposits Level 2 $ 1,258,776 $ 1,262,930 $ 1,075,677 $ 1,044,267 Borrowings Level 2 63,479 61,975 64,551 64,403 Accrued interest payable Level 3 453 453 569 569 Total financial liabilities $ 1,322,708 $ 1,325,358 $ 1,140,797 $ 1,109,239 |
Schedule of investment securities measured at fair value on a recurring basis | Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2020 (Level 1) (Level 2) (Level 3) December 31, 2020 Assets Corporate $ 28,043 $ — $ 27,543 $ 500 $ — US Agencies 6,589 — 6,589 — — US Agencies - MBS 34,280 — 34,280 — — Obligations of state and political subdivisions 42,924 — 42,093 831 2 $ 111,836 $ 2 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, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Corporate $ 20,938 $ — $ 20,438 $ 500 $ 35 US Agencies 14,496 — 14,496 — 9 US Agencies - MBS 34,526 — 34,526 — — Obligations of state and political subdivisions 38,012 — 37,109 903 164 $ 107,972 $ |
Schedule of activity in level three assets | Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2020 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 903 — — (72) — — 831 Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2019 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 988 — — (85) — — 903 |
Schedule of assets measured at fair value on a non-recurring basis | Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2020 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2020 (Level 1) (Level 2) (Level 3) December 31, 2020 Assets Impaired loans $ 8,850 $ — $ — $ 8,850 $ 186 Other real estate held for sale 1,752 — — 1,752 (22) $ 164 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2019 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, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Impaired loans $ 12,823 $ — $ — $ 12,823 $ 280 Other real estate held for sale 2,194 — — 2,194 212 $ 492 |
PARENT COMPANY ONLY FINANCIAL_2
PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PARENT COMPANY ONLY FINANCIAL STATEMENTS | |
Balance sheet | BALANCE SHEETS December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 ASSETS Cash and cash equivalents $ 4,226 $ 490 Investment in subsidiaries 161,438 157,156 Other assets 3,727 5,764 TOTAL ASSETS $ 169,391 $ 163,410 LIABILITIES AND SHAREHOLDERS’ EQUITY Other liabilities 1,527 1,491 Total liabilities 1,527 1,491 Shareholders’ equity: Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued outstanding 10,500,758 shares respectively 127,164 129,564 Retained earnings 39,318 31,740 Accumulated other comprehensive income 1,382 615 Total shareholders’ equity 167,864 161,919 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 169,391 $ 163,410 |
Statements of operations | STATEMENTS OF OPERATIONS Years Ended December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 INCOME: Interest income $ — $ — Miscellaneous income 1 1 Total income $ 1 $ 1 EXPENSES: Interest expense on borrowings 7 — Salaries and benefits 1,298 858 Professional service fees 289 301 Other 355 376 Total expenses 1,949 1,535 Loss before income taxes and equity in net income of subsidiaries (1,948) (1,534) Provision for (benefit of) income taxes (409) (322) Loss before equity in net income of subsidiaries (1,539) (1,212) Equity in net income of subsidiaries 15,012 15,062 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 13,473 $ 13,850 |
Statements of cash flows | STATEMENTS OF CASH FLOWS Years Ended December 31, 2020 and 2019 (Dollars in Thousands) 2020 2019 Cash Flows from Operating Activities: Net income $ 13,473 $ 13,850 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net (income) of subsidiaries (15,012) (15,062) Increase in capital from stock based compensation 878 498 Change in other assets 2,035 (1,458) Change in other liabilities 36 268 Net cash provided by (used in) operating activities 1,410 (1,904) Cash Flows from Investing Activities: Investments in subsidiaries 11,500 5,500 Net cash provided by used in investing activities 11,500 5,500 Cash Flows from Financing Activities: Repurchase of common stock (3,279) — Dividend on common stock (5,895) (5,576) Net cash (used in) financing activities (9,174) (5,576) Net increase (decrease) in cash and cash equivalents 3,736 (1,980) Cash and cash equivalents at beginning of period 490 2,470 Cash and cash equivalents at end of period $ 4,226 $ 490 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)segment$ / sharesshares | Dec. 31, 2019USD ($)$ / 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 | segment | 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 | ||
PPP loans total | $ 1,071,776 | $ 1,053,468 | |
Goodwill and Other Intangible Assets | |||
Core deposit estimated useful life | 10 years | ||
Comprehensive Income (Loss) | |||
Unrealized gains (losses) on available for sale securities | $ 1,965 | 1,025 | |
Minimum pension liability | 583 | 410 | |
Amount of tax on unrealized gains on available for sales securities | 522 | 273 | |
Amount of tax on actuarial losses on the defined benefit pension obligation | 139 | 147 | |
Computation of basic and diluted earnings per share | |||
Net income | $ 13,473 | $ 13,850 | |
(Denominator): | |||
Weighted average shares outstanding | shares | 10,580,044 | 10,737,653 | |
Effect of restricted stock awards | shares | 19,854 | ||
Diluted weighted average shares outstanding | shares | 10,580,044 | 10,757,507 | |
Income per common share: | |||
Basic (in dollars per share) | $ / shares | $ 1.27 | $ 1.29 | |
Diluted (in dollars per share) | $ / shares | $ 1.27 | $ 1.29 | |
Recent Developments | |||
Lease liabilities | $ 554 | ||
Paycheck Protection Program Loan | |||
Interest Income and Fees on Loans | |||
PPP loans total | 152,506 | ||
SBA totaling | 5,180 | ||
Fees recognized | $ 4,030 | ||
2012 Incentive Compensation Plan | |||
Stock Compensation Plans | |||
Total authorized share balance | shares | 575,000 |
RESTRICTIONS ON CASH AND CASH_2
RESTRICTIONS ON CASH AND CASH EQUIVALENTS (Details) - USD ($) | Mar. 24, 2020 | Dec. 31, 2020 |
RESTRICTIONS ON CASH AND CASH EQUIVALENTS | ||
Reduction of reserve ratio | 0.00% | |
Restricted cash and cash equivalents | $ 0 | |
Federal Deposit Insurance Limit | $ 250,000 |
SECURITIES AVAILABLE FOR SALE_2
SECURITIES AVAILABLE FOR SALE (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | $ 109,349 | |
Estimated Fair Value | 111,836 | |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Gross Unrealized Loss, Less Than Twelve Months | (21) | $ (10) |
Fair Value, Less Than Twelve Months | 9,376 | 9,468 |
Gross Unrealized Loss, Over Twelve Months | (4) | (21) |
Fair Value, Over Twelve Months | 123 | 1,848 |
Available-for-sale Securities | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | 109,349 | 106,674 |
Unrealized Gains | 2,512 | 1,329 |
Unrealized Losses | (25) | (31) |
Estimated Fair Value | 111,836 | 107,972 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Gross Unrealized Loss, Less Than Twelve Months | (21) | (10) |
Fair Value, Less Than Twelve Months | 9,376 | 9,468 |
Gross Unrealized Loss, Over Twelve Months | (4) | (21) |
Fair Value, Over Twelve Months | 123 | 1,733 |
Corporate | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | 27,815 | 20,779 |
Unrealized Gains | 247 | 160 |
Unrealized Losses | (19) | (1) |
Estimated Fair Value | 28,043 | 20,938 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Gross Unrealized Loss, Less Than Twelve Months | (19) | (1) |
Fair Value, Less Than Twelve Months | 9,293 | 2,502 |
US Agencies | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | 6,480 | 14,450 |
Unrealized Gains | 109 | 47 |
Unrealized Losses | (1) | |
Estimated Fair Value | 6,589 | 14,496 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Gross Unrealized Loss, Over Twelve Months | (1) | |
Fair Value, Over Twelve Months | 500 | |
US Agencies - MBS | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | 33,372 | 34,063 |
Unrealized Gains | 914 | 492 |
Unrealized Losses | (6) | (29) |
Estimated Fair Value | 34,280 | 34,526 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Gross Unrealized Loss, Less Than Twelve Months | (2) | (9) |
Fair Value, Less Than Twelve Months | 83 | 6,966 |
Gross Unrealized Loss, Over Twelve Months | (4) | (20) |
Fair Value, Over Twelve Months | 123 | 1,233 |
Obligations of states and political subdivisions | ||
SECURITIES AVAILABLE FOR SALE | ||
Amortized cost | 41,682 | 37,382 |
Unrealized Gains | 1,242 | 630 |
Estimated Fair Value | $ 42,924 | 38,012 |
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position | ||
Fair Value, Over Twelve Months | $ 115 |
SECURITIES AVAILABLE FOR SALE -
SECURITIES AVAILABLE FOR SALE - BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
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 | $ 9,560 | $ 5,805 |
Gross gains on sales and calls | 2 | $ 208 |
Amortized Cost | ||
Due in one year or less | 15,645 | |
Due after one year through five years | 22,554 | |
Due after five years through ten years | 24,965 | |
Due after ten years | 12,813 | |
Subtotal | 75,977 | |
US Agencies - MBS | 33,372 | |
Amortized cost | 109,349 | |
Estimated Fair Value | ||
Due in one year or less | 15,820 | |
Due after one year through five years | 23,201 | |
Due after five years through ten years | 25,261 | |
Due after ten years | 13,274 | |
Subtotal | 77,556 | |
US Agencies - MBS | 34,280 | |
Estimated Fair Value | 111,836 | |
FHLB | ||
Estimated Fair Value | ||
Securities held as collateral at fair value | 22,438 | |
Customer Relationship | ||
Estimated Fair Value | ||
Securities held as collateral at fair value | $ 3,752 |
SECURITIES AVAILABLE FOR SALE_3
SECURITIES AVAILABLE FOR SALE - GROSS UNREALIZED LOSSES AND LENGTH OF TIME IN LOSS POSITION (Details) $ in Thousands | Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item |
Number of Securities | ||
Number of Securities, Less Than Twelve Months | 8 | 11 |
Number of Securities, Over Twelve Months | 2 | 15 |
Total Number of Securities | 10 | 26 |
Fair Value | ||
Fair Value, Less Than Twelve Months | $ 9,376 | $ 9,468 |
Fair Value, Over Twelve Months | 123 | 1,848 |
Total Fair Value | 9,499 | 11,316 |
Gross Unrealized Loss | ||
Gross Unrealized Loss, Less Than Twelve Months | (21) | (10) |
Gross Unrealized Loss, Over Twelve Months | (4) | (21) |
Total Gross Unrealized Loss | $ (25) | $ (31) |
Available-for-sale Securities | ||
Number of Securities | ||
Total Number of Securities | item | 10 | 26 |
Fair Value | ||
Fair Value, Less Than Twelve Months | $ 9,376 | $ 9,468 |
Fair Value, Over Twelve Months | 123 | 1,733 |
Gross Unrealized Loss | ||
Gross Unrealized Loss, Less Than Twelve Months | (21) | (10) |
Gross Unrealized Loss, Over Twelve Months | $ (4) | $ (21) |
Corporate | ||
Number of Securities | ||
Number of Securities, Less Than Twelve Months | 4 | 1 |
Total Number of Securities | 4 | 1 |
Fair Value | ||
Fair Value, Less Than Twelve Months | $ 9,293 | $ 2,502 |
Total Fair Value | 9,293 | 2,502 |
Gross Unrealized Loss | ||
Gross Unrealized Loss, Less Than Twelve Months | (19) | (1) |
Total Gross Unrealized Loss | $ (19) | $ (1) |
US Agencies | ||
Number of Securities | ||
Number of Securities, Over Twelve Months | 1 | |
Total Number of Securities | 1 | |
Fair Value | ||
Fair Value, Over Twelve Months | $ 500 | |
Total Fair Value | 500 | |
Gross Unrealized Loss | ||
Gross Unrealized Loss, Over Twelve Months | (1) | |
Total Gross Unrealized Loss | $ (1) | |
US Agencies - MBS | ||
Number of Securities | ||
Number of Securities, Less Than Twelve Months | 4 | 10 |
Number of Securities, Over Twelve Months | 2 | 13 |
Total Number of Securities | 6 | 23 |
Fair Value | ||
Fair Value, Less Than Twelve Months | $ 83 | $ 6,966 |
Fair Value, Over Twelve Months | 123 | 1,233 |
Total Fair Value | 206 | 8,199 |
Gross Unrealized Loss | ||
Gross Unrealized Loss, Less Than Twelve Months | (2) | (9) |
Gross Unrealized Loss, Over Twelve Months | (4) | (20) |
Total Gross Unrealized Loss | $ (6) | $ (29) |
Obligations of states and political subdivisions | ||
Number of Securities | ||
Number of Securities, Over Twelve Months | 1 | |
Total Number of Securities | 1 | |
Fair Value | ||
Fair Value, Over Twelve Months | $ 115 | |
Total Fair Value | $ 115 |
LOANS (Details)
LOANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2020 | Dec. 31, 2019 | Oct. 01, 2018 | May 18, 2018 | Aug. 31, 2016 | Apr. 29, 2016 | Dec. 05, 2014 | |
Loans | |||||||
Total loans | $ 1,077,592 | $ 1,058,776 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 2,459 | 8,974 | |||||
Balance at the beginning of period | 3,176 | 5,051 | |||||
Accretion | (2,555) | (2,235) | |||||
Reclassification from nonaccretable difference | 1,003 | 360 | |||||
Balance at the end of period | 1,624 | 3,176 | |||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 1,000 | 385 | |||||
PFC | |||||||
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 | ||||||
Acquired with deteriorated credit quality | 793 | 1,718 | |||||
Balance at the beginning of period | 105 | 128 | |||||
Accretion | (207) | (90) | |||||
Reclassification from nonaccretable difference | 155 | 67 | |||||
Balance at the end of period | 53 | 105 | |||||
Eagle River | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 84,138 | ||||||
Nonaccretable difference | (1,172) | ||||||
Expected cash flows | 82,966 | ||||||
Accretable yield | (2,091) | ||||||
Carrying balance at acquisition date | 80,875 | ||||||
Acquired with deteriorated credit quality | 1,273 | 1,716 | |||||
Balance at the beginning of period | 209 | 229 | |||||
Accretion | (104) | (33) | |||||
Reclassification from nonaccretable difference | 78 | 13 | |||||
Balance at the end of period | 183 | 209 | |||||
Niagara Bancorporation | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 32,660 | ||||||
Nonaccretable difference | (265) | ||||||
Expected cash flows | 32,395 | ||||||
Accretable yield | (688) | ||||||
Carrying balance at acquisition date | 31,707 | ||||||
Acquired with deteriorated credit quality | 48 | 75 | |||||
Balance at the beginning of period | 19 | 95 | |||||
Accretion | (27) | (99) | |||||
Reclassification from nonaccretable difference | 20 | 23 | |||||
Balance at the end of period | 12 | 19 | |||||
FFNM | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 192,742 | ||||||
Nonaccretable difference | (2,100) | ||||||
Expected cash flows | 190,642 | ||||||
Accretable yield | (5,198) | ||||||
Carrying balance at acquisition date | 185,444 | ||||||
Acquired with deteriorated credit quality | 3,369 | 5,119 | |||||
Balance at the beginning of period | 2,471 | 4,017 | |||||
Accretion | (1,988) | (1,707) | |||||
Reclassification from nonaccretable difference | 678 | 161 | |||||
Balance at the end of period | 1,161 | 2,471 | |||||
Lincoln Community Bank | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 39,601 | ||||||
Nonaccretable difference | (421) | ||||||
Expected cash flows | 39,180 | ||||||
Accretable yield | (633) | ||||||
Carrying balance at acquisition date | 38,547 | ||||||
Acquired with deteriorated credit quality | 548 | 897 | |||||
Balance at the beginning of period | 372 | 582 | |||||
Accretion | (229) | (306) | |||||
Reclassification from nonaccretable difference | 72 | 96 | |||||
Balance at the end of period | 215 | 372 | |||||
Commercial real estate | |||||||
Loans | |||||||
Total loans | 514,394 | ||||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 4,318 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | (625) | ||||||
Commercial real estate | Commercial Real Estate Portfolio Segment [Member] | |||||||
Loans | |||||||
Total loans | 498,450 | 514,394 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 1,164 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 1,706 | ||||||
Commercial, financial, and agricultural | |||||||
Loans | |||||||
Total loans | 211,023 | ||||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 2,354 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 648 | ||||||
Commercial, financial, and agricultural | Commercial loan portfolio | |||||||
Loans | |||||||
Total loans | 273,759 | 211,023 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 235 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 1,036 | ||||||
Commercial construction loan receivables [Member] | |||||||
Loans | |||||||
Total loans | 40,107 | ||||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 373 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | (32) | ||||||
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | |||||||
Loans | |||||||
Total loans | 47,698 | 40,107 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 175 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 65 | ||||||
One to four family residential real estate | |||||||
Loans | |||||||
Total loans | 253,918 | ||||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 1,920 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 52 | ||||||
One to four family residential real estate | Residential Portfolio Segment [Member] | |||||||
Loans | |||||||
Total loans | 227,044 | 253,918 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 869 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 555 | ||||||
Consumer | |||||||
Loans | |||||||
Total loans | 21,238 | ||||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 9 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 197 | ||||||
Consumer | Consumer Portfolio Segment [Member] | |||||||
Loans | |||||||
Total loans | 18,980 | 21,238 | |||||
Acquired portfolio | |||||||
Acquired with deteriorated credit quality | 16 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 51 | ||||||
Consumer construction | |||||||
Loans | |||||||
Total loans | 18,096 | ||||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | 5 | ||||||
Consumer construction | Consumer construction | |||||||
Loans | |||||||
Total loans | 11,661 | 18,096 | |||||
Changes in the allowance for loan losses | |||||||
Provision for loan losses | (6) | ||||||
Acquired Impaired | |||||||
Acquired portfolio | |||||||
Balance at the beginning of period | 959 | 1,078 | |||||
Accretion | (1,336) | (479) | |||||
Reclassification from nonaccretable difference | 1,002 | 360 | |||||
Balance at the end of period | 625 | 959 | |||||
Acquired Impaired | PFC | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 13,290 | $ 13,290 | |||||
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 | 105 | 128 | |||||
Accretion | (207) | (90) | |||||
Reclassification from nonaccretable difference | 155 | 67 | |||||
Balance at the end of period | 53 | 105 | |||||
Acquired Impaired | Eagle River | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 3,401 | $ 3,401 | |||||
Nonaccretable difference | (1,172) | ||||||
Expected cash flows | 2,229 | ||||||
Accretable yield | (391) | ||||||
Carrying balance at acquisition date | 1,838 | ||||||
Balance at the beginning of period | 209 | 213 | |||||
Accretion | (104) | (17) | |||||
Reclassification from nonaccretable difference | 78 | 13 | |||||
Balance at the end of period | 183 | 209 | |||||
Acquired Impaired | Niagara Bancorporation | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 2,105 | $ 2,105 | |||||
Nonaccretable difference | (265) | ||||||
Expected cash flows | 1,840 | ||||||
Accretable yield | (88) | ||||||
Carrying balance at acquisition date | 1,752 | ||||||
Balance at the beginning of period | 19 | 26 | |||||
Accretion | (27) | (30) | |||||
Reclassification from nonaccretable difference | 20 | 23 | |||||
Balance at the end of period | 12 | 19 | |||||
Acquired Impaired | FFNM | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 5,440 | ||||||
Nonaccretable difference | (2,100) | ||||||
Expected cash flows | 3,340 | ||||||
Accretable yield | (700) | ||||||
Carrying balance at acquisition date | 2,640 | ||||||
Balance at the beginning of period | 518 | 571 | |||||
Accretion | (903) | (214) | |||||
Reclassification from nonaccretable difference | 677 | 161 | |||||
Balance at the end of period | 292 | 518 | |||||
Acquired Impaired | Lincoln Community Bank | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 1,901 | ||||||
Nonaccretable difference | (421) | ||||||
Expected cash flows | 1,480 | ||||||
Accretable yield | (140) | ||||||
Carrying balance at acquisition date | 1,340 | ||||||
Balance at the beginning of period | 108 | 140 | |||||
Accretion | (95) | (128) | |||||
Reclassification from nonaccretable difference | 72 | 96 | |||||
Balance at the end of period | 85 | 108 | |||||
Acquired Non-impaired | |||||||
Acquired portfolio | |||||||
Balance at the beginning of period | 2,217 | 3,973 | |||||
Accretion | (1,219) | (1,756) | |||||
Reclassification from nonaccretable difference | 1 | ||||||
Balance at the end of period | 999 | 2,217 | |||||
Acquired Non-impaired | PFC | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 53,849 | ||||||
Expected cash flows | 53,849 | ||||||
Accretable yield | (2,100) | ||||||
Carrying balance at acquisition date | 51,749 | ||||||
Acquired Non-impaired | Eagle River | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 80,737 | ||||||
Expected cash flows | 80,737 | ||||||
Accretable yield | (1,700) | ||||||
Carrying balance at acquisition date | 79,037 | ||||||
Balance at the beginning of period | 16 | ||||||
Accretion | (16) | ||||||
Acquired Non-impaired | Niagara Bancorporation | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 30,555 | ||||||
Expected cash flows | 30,555 | ||||||
Accretable yield | (600) | ||||||
Carrying balance at acquisition date | 29,955 | ||||||
Balance at the beginning of period | 69 | ||||||
Accretion | (69) | ||||||
Acquired Non-impaired | FFNM | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 187,302 | ||||||
Expected cash flows | 187,302 | ||||||
Accretable yield | (4,498) | ||||||
Carrying balance at acquisition date | 182,804 | ||||||
Balance at the beginning of period | 1,953 | 3,446 | |||||
Accretion | (1,085) | (1,493) | |||||
Reclassification from nonaccretable difference | 1 | ||||||
Balance at the end of period | 869 | 1,953 | |||||
Acquired Non-impaired | Lincoln Community Bank | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | 37,700 | ||||||
Expected cash flows | 37,700 | ||||||
Accretable yield | (493) | ||||||
Carrying balance at acquisition date | 37,207 | ||||||
Balance at the beginning of period | 264 | 442 | |||||
Accretion | (134) | (178) | |||||
Balance at the end of period | 130 | 264 | |||||
Receivables Acquired with Deteriorated Credit Quality | |||||||
Acquired portfolio | |||||||
Accretion | $ (1,006) | ||||||
Receivables Acquired with Deteriorated Credit Quality | FFNM | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | $ 5,440 | ||||||
Receivables Acquired with Deteriorated Credit Quality | Lincoln Community Bank | |||||||
Acquired portfolio | |||||||
Loans acquired - contractual payments | $ 1,901 | ||||||
Receivables Acquired with Deteriorated Credit Quality | Acquired Impaired | |||||||
Acquired portfolio | |||||||
Accretion | $ (404) |
LOANS - ALLOWANCE (Details)
LOANS - ALLOWANCE (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for loan loss reserve: | ||||
Balance at beginning of period | $ 5,308 | $ 5,183 | ||
Charge-offs | (759) | (510) | ||
Recoveries | 267 | 250 | ||
Provision | 1,000 | 385 | ||
Balance at end of period | 5,816 | 5,308 | ||
Loans: | ||||
Ending balance | $ 1,077,592 | $ 1,058,776 | ||
Ending balance ALLR | (5,308) | (5,183) | (5,816) | (5,308) |
Net loans | 1,071,776 | 1,053,468 | ||
Ending balance ALLR: | ||||
Individually evaluated | 1,179 | 1,267 | ||
Collectively evaluated | 4,637 | 4,041 | ||
Total | 5,308 | 5,183 | 5,816 | 5,308 |
Ending balance Loans: | ||||
Individually evaluated | 6,391 | 3,849 | ||
Collectively evaluated | 1,068,742 | 1,045,953 | ||
Acquired with deteriorated credit quality | 2,459 | 8,974 | ||
Total Loans | 1,077,592 | 1,058,776 | ||
Commercial real estate | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 1,189 | 1,682 | ||
Charge-offs | (27) | |||
Recoveries | 159 | |||
Provision | (625) | |||
Balance at end of period | 1,189 | |||
Loans: | ||||
Ending balance | 514,394 | |||
Ending balance ALLR | (1,189) | (1,189) | (1,189) | |
Net loans | 513,205 | |||
Ending balance ALLR: | ||||
Individually evaluated | 497 | |||
Collectively evaluated | 692 | |||
Total | 1,189 | 1,189 | 1,189 | |
Ending balance Loans: | ||||
Individually evaluated | 2,374 | |||
Collectively evaluated | 507,702 | |||
Acquired with deteriorated credit quality | 4,318 | |||
Total Loans | 514,394 | |||
Commercial, financial, and agricultural | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 1,197 | 648 | ||
Charge-offs | (103) | |||
Recoveries | 4 | |||
Provision | 648 | |||
Balance at end of period | 1,197 | |||
Loans: | ||||
Ending balance | 211,023 | |||
Ending balance ALLR | (1,197) | (1,197) | (1,197) | |
Net loans | 209,826 | |||
Ending balance ALLR: | ||||
Individually evaluated | 770 | |||
Collectively evaluated | 427 | |||
Total | 1,197 | 1,197 | 1,197 | |
Ending balance Loans: | ||||
Individually evaluated | 1,475 | |||
Collectively evaluated | 207,194 | |||
Acquired with deteriorated credit quality | 2,354 | |||
Total Loans | 211,023 | |||
Commercial construction loan receivables [Member] | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 71 | 101 | ||
Recoveries | 2 | |||
Provision | (32) | |||
Balance at end of period | 71 | |||
Loans: | ||||
Ending balance | 40,107 | |||
Ending balance ALLR | (71) | (71) | (71) | |
Net loans | 40,036 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 71 | |||
Total | 71 | 71 | 71 | |
Ending balance Loans: | ||||
Collectively evaluated | 39,734 | |||
Acquired with deteriorated credit quality | 373 | |||
Total Loans | 40,107 | |||
One to four family residential real estate | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 148 | 199 | ||
Charge-offs | (152) | |||
Recoveries | 49 | |||
Provision | 52 | |||
Balance at end of period | 148 | |||
Loans: | ||||
Ending balance | 253,918 | |||
Ending balance ALLR | (148) | (148) | (148) | |
Net loans | 253,770 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 148 | |||
Total | 148 | 148 | 148 | |
Ending balance Loans: | ||||
Collectively evaluated | 251,998 | |||
Acquired with deteriorated credit quality | 1,920 | |||
Total Loans | 253,918 | |||
Consumer construction | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 11 | 6 | ||
Provision | 5 | |||
Balance at end of period | 11 | |||
Loans: | ||||
Ending balance | 18,096 | |||
Ending balance ALLR | (11) | (11) | (11) | |
Net loans | 18,085 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 11 | |||
Total | 11 | 11 | 11 | |
Ending balance Loans: | ||||
Collectively evaluated | 18,096 | |||
Total Loans | 18,096 | |||
Consumer | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 13 | 8 | ||
Charge-offs | (228) | |||
Recoveries | 36 | |||
Provision | 197 | |||
Balance at end of period | 13 | |||
Loans: | ||||
Ending balance | 21,238 | |||
Ending balance ALLR | (13) | (13) | (13) | |
Net loans | 21,225 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 13 | |||
Total | 13 | 13 | 13 | |
Ending balance Loans: | ||||
Collectively evaluated | 21,229 | |||
Acquired with deteriorated credit quality | 9 | |||
Total Loans | 21,238 | |||
Unallocated | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 2,679 | 2,539 | ||
Provision | (2,407) | 140 | ||
Balance at end of period | 272 | 2,679 | ||
Loans: | ||||
Ending balance ALLR | (272) | (2,539) | (272) | (2,679) |
Net loans | (272) | (2,679) | ||
Ending balance ALLR: | ||||
Collectively evaluated | 272 | 2,679 | ||
Total | 272 | 2,539 | 272 | 2,679 |
Commercial Real Estate Portfolio Segment [Member] | Commercial real estate | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 1,189 | |||
Charge-offs | (17) | |||
Recoveries | 105 | |||
Provision | 1,706 | |||
Balance at end of period | 2,983 | 1,189 | ||
Loans: | ||||
Ending balance | 498,450 | 514,394 | ||
Ending balance ALLR | (2,983) | (1,189) | (2,983) | (1,189) |
Net loans | 495,467 | |||
Ending balance ALLR: | ||||
Individually evaluated | 476 | |||
Collectively evaluated | 2,507 | |||
Total | 2,983 | 1,189 | 2,983 | 1,189 |
Ending balance Loans: | ||||
Individually evaluated | 2,396 | |||
Collectively evaluated | 494,890 | |||
Acquired with deteriorated credit quality | 1,164 | |||
Total Loans | 498,450 | 514,394 | ||
Commercial loan portfolio | Commercial, financial, and agricultural | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 1,197 | |||
Charge-offs | (500) | |||
Recoveries | 1 | |||
Provision | 1,036 | |||
Balance at end of period | 1,734 | 1,197 | ||
Loans: | ||||
Ending balance | 273,759 | 211,023 | ||
Ending balance ALLR | (1,734) | (1,197) | (1,734) | (1,197) |
Net loans | 272,025 | |||
Ending balance ALLR: | ||||
Individually evaluated | 703 | |||
Collectively evaluated | 1,031 | |||
Total | 1,734 | 1,197 | 1,734 | 1,197 |
Ending balance Loans: | ||||
Individually evaluated | 3,633 | |||
Collectively evaluated | 269,891 | |||
Acquired with deteriorated credit quality | 235 | |||
Total Loans | 273,759 | 211,023 | ||
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 71 | |||
Charge-offs | (8) | |||
Recoveries | 81 | |||
Provision | 65 | |||
Balance at end of period | 209 | 71 | ||
Loans: | ||||
Ending balance | 47,698 | 40,107 | ||
Ending balance ALLR | (209) | (71) | (209) | (71) |
Net loans | 47,489 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 209 | |||
Total | 209 | 71 | 209 | 71 |
Ending balance Loans: | ||||
Individually evaluated | 362 | |||
Collectively evaluated | 47,161 | |||
Acquired with deteriorated credit quality | 175 | |||
Total Loans | 47,698 | 40,107 | ||
Residential Portfolio Segment [Member] | One to four family residential real estate | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 148 | |||
Charge-offs | (117) | |||
Recoveries | 19 | |||
Provision | 555 | |||
Balance at end of period | 605 | 148 | ||
Loans: | ||||
Ending balance | 227,044 | 253,918 | ||
Ending balance ALLR | (605) | (148) | (605) | (148) |
Net loans | 226,439 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 605 | |||
Total | 605 | 148 | 605 | 148 |
Ending balance Loans: | ||||
Collectively evaluated | 226,175 | |||
Acquired with deteriorated credit quality | 869 | |||
Total Loans | 227,044 | 253,918 | ||
Consumer Portfolio Segment [Member] | Consumer | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 13 | |||
Charge-offs | (117) | |||
Recoveries | 61 | |||
Provision | 51 | |||
Balance at end of period | 8 | 13 | ||
Loans: | ||||
Ending balance | 18,980 | 21,238 | ||
Ending balance ALLR | (8) | (13) | (8) | (13) |
Net loans | 18,972 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 8 | |||
Total | 8 | 13 | 8 | 13 |
Ending balance Loans: | ||||
Collectively evaluated | 18,964 | |||
Acquired with deteriorated credit quality | 16 | |||
Total Loans | 18,980 | 21,238 | ||
Consumer construction | Consumer construction | ||||
Allowance for loan loss reserve: | ||||
Balance at beginning of period | 11 | |||
Provision | (6) | |||
Balance at end of period | 5 | 11 | ||
Loans: | ||||
Ending balance | 11,661 | 18,096 | ||
Ending balance ALLR | (5) | (11) | (5) | (11) |
Net loans | 11,656 | |||
Ending balance ALLR: | ||||
Collectively evaluated | 5 | |||
Total | $ 5 | $ 11 | 5 | 11 |
Ending balance Loans: | ||||
Collectively evaluated | 11,661 | |||
Total Loans | $ 11,661 | $ 18,096 |
LOANS - LOANS BY RISK CATEGORY
LOANS - LOANS BY RISK CATEGORY (Details) $ in Thousands | Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) |
Breakdown of loans by risk category | ||
Total loans | $ 1,077,592 | $ 1,058,776 |
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 | 44 | |
Credit risk rating for which reserves are established if no specific reserves made | item | 7 | |
Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 514,394 | |
Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 211,023 | |
Paycheck Protection Program ("PPP") loans | $ 105,492 | |
Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 40,107 | |
One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 253,918 | |
Consumer construction | ||
Breakdown of loans by risk category | ||
Total loans | 18,096 | |
Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 21,238 | |
Strong (1) | ||
Breakdown of loans by risk category | ||
Total loans | 123,532 | 25,145 |
Good (2) | ||
Breakdown of loans by risk category | ||
Total loans | 20,539 | 24,621 |
Average (3) | ||
Breakdown of loans by risk category | ||
Total loans | 299,830 | 311,287 |
Acceptable | ||
Breakdown of loans by risk category | ||
Total loans | 380,578 | 408,107 |
Acceptable Watch | ||
Breakdown of loans by risk category | ||
Total loans | 4,977 | 6,432 |
Substandard (6) | ||
Breakdown of loans by risk category | ||
Total loans | 10,727 | 13,052 |
Rating Unassigned | ||
Breakdown of loans by risk category | ||
Total loans | 237,409 | 270,132 |
Rating Unassigned | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 10,939 | 3,525 |
Commercial Real Estate Portfolio Segment [Member] | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 498,450 | 514,394 |
Commercial Real Estate Portfolio Segment [Member] | Strong (1) | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 7,425 | 9,979 |
Commercial Real Estate Portfolio Segment [Member] | Good (2) | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 10,521 | 17,516 |
Commercial Real Estate Portfolio Segment [Member] | Average (3) | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 223,875 | 228,962 |
Commercial Real Estate Portfolio Segment [Member] | Acceptable | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 249,159 | 248,177 |
Commercial Real Estate Portfolio Segment [Member] | Acceptable Watch | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 3,352 | 4,468 |
Commercial Real Estate Portfolio Segment [Member] | Substandard (6) | Commercial real estate | ||
Breakdown of loans by risk category | ||
Total loans | 4,118 | 5,292 |
Commercial loan portfolio | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 273,759 | 211,023 |
Commercial loan portfolio | Strong (1) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 116,107 | 15,126 |
Commercial loan portfolio | Good (2) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 6,760 | 4,510 |
Commercial loan portfolio | Average (3) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 51,150 | 70,748 |
Commercial loan portfolio | Acceptable | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 94,743 | 115,229 |
Commercial loan portfolio | Acceptable Watch | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 656 | 930 |
Commercial loan portfolio | Substandard (6) | Commercial, financial, and agricultural | ||
Breakdown of loans by risk category | ||
Total loans | 4,343 | 4,480 |
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 47,698 | 40,107 |
Commercial construction loan receivables [Member] | Good (2) | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 40 | 292 |
Commercial construction loan receivables [Member] | Average (3) | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 19,063 | 6,390 |
Commercial construction loan receivables [Member] | Acceptable | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 16,671 | 28,893 |
Commercial construction loan receivables [Member] | Acceptable Watch | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 600 | 400 |
Commercial construction loan receivables [Member] | Substandard (6) | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 385 | 607 |
Commercial construction loan receivables [Member] | Rating Unassigned | Commercial construction loan receivables [Member] | ||
Breakdown of loans by risk category | ||
Total loans | 10,939 | 3,525 |
Residential Portfolio Segment [Member] | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 227,044 | 253,918 |
Residential Portfolio Segment [Member] | Strong (1) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 40 | |
Residential Portfolio Segment [Member] | Good (2) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 3,139 | 2,145 |
Residential Portfolio Segment [Member] | Average (3) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 5,614 | 4,937 |
Residential Portfolio Segment [Member] | Acceptable | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 18,864 | 15,168 |
Residential Portfolio Segment [Member] | Acceptable Watch | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 369 | 634 |
Residential Portfolio Segment [Member] | Substandard (6) | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 1,814 | 2,632 |
Residential Portfolio Segment [Member] | Rating Unassigned | One to four family residential real estate | ||
Breakdown of loans by risk category | ||
Total loans | 197,244 | 228,362 |
Consumer construction | Consumer construction | ||
Breakdown of loans by risk category | ||
Total loans | 11,661 | 18,096 |
Consumer construction | Rating Unassigned | Consumer construction | ||
Breakdown of loans by risk category | ||
Total loans | 11,661 | 18,096 |
Consumer Portfolio Segment [Member] | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 18,980 | 21,238 |
Consumer Portfolio Segment [Member] | Good (2) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 79 | 158 |
Consumer Portfolio Segment [Member] | Average (3) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 128 | 250 |
Consumer Portfolio Segment [Member] | Acceptable | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 1,141 | 640 |
Consumer Portfolio Segment [Member] | Substandard (6) | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | 67 | 41 |
Consumer Portfolio Segment [Member] | Rating Unassigned | Consumer | ||
Breakdown of loans by risk category | ||
Total loans | $ 17,565 | $ 20,149 |
LOANS - IMPAIRED LOANS AND EFFE
LOANS - IMPAIRED LOANS AND EFFECT ON INTEREST INCOME (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Impaired Loans | ||
Number of days past due to be considered as nonperforming loans | 90 days | |
Recorded investment | ||
With no valuation reserve | $ 5,096 | $ 8,974 |
With a valuation reserve | 3,754 | 3,849 |
Total | 8,850 | 12,823 |
Unpaid Principal Balance | 12,422 | 16,129 |
Related Allowance for Loan Losses | 1,155 | 1,267 |
Average investment | ||
Average Balance for the Period | 11,706 | 13,466 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | 446 | 524 |
Commercial Real Estate Portfolio Segment [Member] | Commercial real estate | ||
Recorded investment | ||
With no valuation reserve | 1,251 | 4,318 |
With a valuation reserve | 2,309 | 2,374 |
Total | 3,560 | 6,692 |
Unpaid Principal Balance | 5,786 | 7,937 |
Related Allowance for Loan Losses | 476 | 497 |
Average investment | ||
Average Balance for the Period | 6,860 | 8,374 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | 270 | 301 |
Commercial loan portfolio | Commercial, financial, and agricultural | ||
Recorded investment | ||
With no valuation reserve | 2,423 | 2,354 |
With a valuation reserve | 1,445 | 1,475 |
Total | 3,868 | 3,829 |
Unpaid Principal Balance | 3,946 | 4,892 |
Related Allowance for Loan Losses | 679 | 770 |
Average investment | ||
Average Balance for the Period | 1,204 | 1,144 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | 13 | 2 |
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | ||
Recorded investment | ||
With no valuation reserve | 537 | 373 |
Total | 537 | 373 |
Unpaid Principal Balance | 678 | 386 |
Average investment | ||
Average Balance for the Period | 541 | 396 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | 27 | |
Residential Portfolio Segment [Member] | One to four family residential real estate | ||
Recorded investment | ||
With no valuation reserve | 869 | 1,920 |
Total | 869 | 1,920 |
Unpaid Principal Balance | 1,993 | 2,881 |
Average investment | ||
Average Balance for the Period | 3,064 | 3,508 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | 135 | 219 |
Consumer Portfolio Segment [Member] | Consumer | ||
Recorded investment | ||
With no valuation reserve | 16 | 9 |
Total | 16 | 9 |
Unpaid Principal Balance | 19 | 33 |
Average investment | ||
Average Balance for the Period | 37 | 44 |
Interest Income Recognized During Impairment | ||
Interest Income Recognized for the Period | $ 1 | $ 2 |
LOANS - PAST DUE (Details)
LOANS - PAST DUE (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Past due loans | ||
Nonaccrual | $ 5,458 | $ 5,172 |
Total | 7,527 | 11,566 |
30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | 2,069 | 6,383 |
90+ days Past Due | ||
Past due loans | ||
90+ days Past Due | 11 | |
Commercial Real Estate Portfolio Segment [Member] | Commercial real estate | ||
Past due loans | ||
Nonaccrual | 1,481 | 671 |
Total | 1,505 | 1,726 |
Commercial Real Estate Portfolio Segment [Member] | Commercial real estate | 30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | 24 | 1,055 |
Commercial loan portfolio | Commercial, financial, and agricultural | ||
Past due loans | ||
Nonaccrual | 478 | 527 |
Total | 520 | 1,356 |
Commercial loan portfolio | Commercial, financial, and agricultural | 30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | 42 | 829 |
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | ||
Past due loans | ||
Nonaccrual | 79 | 105 |
Total | 79 | 164 |
Commercial construction loan receivables [Member] | Commercial construction loan receivables [Member] | 30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | 59 | |
Residential Portfolio Segment [Member] | One to four family residential real estate | ||
Past due loans | ||
Nonaccrual | 3,371 | 3,850 |
Total | 5,296 | 8,218 |
Residential Portfolio Segment [Member] | One to four family residential real estate | 30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | 1,925 | 4,357 |
Residential Portfolio Segment [Member] | One to four family residential real estate | 90+ days Past Due | ||
Past due loans | ||
90+ days Past Due | 11 | |
Consumer Portfolio Segment [Member] | Consumer | ||
Past due loans | ||
Nonaccrual | 49 | 19 |
Total | 127 | 102 |
Consumer Portfolio Segment [Member] | Consumer | 30-89 days Past Due | ||
Past due loans | ||
30-89 days Past Due (accruing) | $ 78 | $ 83 |
LOANS - TROUBLED DEBT RESTRUCTU
LOANS - TROUBLED DEBT RESTRUCTURING (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020USD ($)loanitem | Dec. 31, 2019USD ($)itemloan | Mar. 31, 2021USD ($) | Jun. 30, 2020USD ($) | |
Troubled Debt Restructuring | ||||
Number of consecutive timely payments before being considered return to accruing status | item | 6 | |||
Restructured loans | $ 535 | $ 1,952 | ||
Number of TDR's | item | 4 | 4 | ||
Number of troubled debt restructurings that have defaulted | loan | 0 | 0 | ||
Paycheck Protection Program Loan | ||||
Troubled Debt Restructuring | ||||
Restructured loans | $ 2,400 | $ 201,000 | ||
Percentage of total loans (as percent) | 25.00% | |||
Commercial loan portfolio | ||||
Troubled Debt Restructuring | ||||
Restructured loans | $ 16,000 |
LOANS - INSIDER LOANS (Details)
LOANS - INSIDER LOANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | |
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms | |||
Loans outstanding, beginning of period | $ 12,196 | $ 9,817 | |
New loans | 500 | 1,872 | |
Net activity on revolving lines of credit | (764) | 1,200 | |
Change in status of insiders | (289) | ||
Repayment | (154) | (404) | |
Loans outstanding, end of period | 11,778 | 12,196 | |
Loans outstanding | 11,778 | 9,817 | $ 11,778 |
Bank | |||
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms | |||
Unfunded commitments | 500 | ||
Bank | 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 | |
Loans outstanding | $ 0 | $ 0 | $ 0 |
PREMISES AND EQUIPMENT (Details
PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Premises and Equipment | ||
Total cost basis | $ 52,339 | $ 48,098 |
Less - accumulated depreciation | 26,821 | 24,490 |
Net book value | 25,518 | 23,608 |
Depreciation charged to operating expenses | 2,798 | 2,684 |
Land | ||
Premises and Equipment | ||
Total cost basis | 4,286 | 4,349 |
Buildings and improvements | ||
Premises and Equipment | ||
Total cost basis | 30,637 | 26,711 |
Furniture, fixtures, and equipment | ||
Premises and Equipment | ||
Total cost basis | 17,230 | 15,483 |
Construction in progress | ||
Premises and Equipment | ||
Total cost basis | $ 186 | $ 1,555 |
OTHER REAL ESTATE HELD FOR SA_3
OTHER REAL ESTATE HELD FOR SALE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Changes in other real estate held for sale | ||
Balance, January 1 | $ 2,194 | $ 3,119 |
Other real estate transferred from loans due to foreclosure | 874 | 1,629 |
Proceeds from other real estate sold | (1,338) | (1,329) |
Transfer to premise and equipment | (1,013) | |
Writedowns of other real estate held for sale | (65) | (347) |
(Gain) loss on sale of other real estate held for sale | 87 | 135 |
Total other real estate held for sale | 1,752 | 2,194 |
Foreclosed residential real estate property | $ 453 | |
Mortgage loans secured by residential real estate property in process of foreclosure | $ 151 |
DEPOSITS (Details)
DEPOSITS (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Distribution of deposits | ||
Noninterest bearing deposits | $ 414,804 | $ 287,611 |
NOW, money market, interest checking | 450,556 | 373,165 |
Savings | 130,755 | 109,548 |
CDs less than $250,000 | 202,266 | 233,956 |
CDs more than $250,000 | 15,224 | 12,775 |
Brokered | 45,171 | 58,622 |
Total deposits | 1,258,776 | $ 1,075,677 |
Maturities of non-brokered time deposits outstanding | ||
2021 | 137,497 | |
2022 | 48,023 | |
2023 | 14,759 | |
2024 | 11,260 | |
2025 | 5,251 | |
Thereafter | 700 | |
Total | $ 217,490 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill | $ 19,574,000 | $ 19,574,000 |
Deposit based intangible assets | 4,368,000 | 5,043,000 |
Amortization expense | 675,000 | 677,000 |
Future Amortization Expense | 675,000 | |
Amortization expense year one | 675,000 | |
Amortization expense year two | 675,000 | |
Amortization expense year three | 675,000 | |
Amortization expense year four | 675,000 | |
Amortization expense year five | 675,000 | |
Goodwill impairment | 0 | |
PFC | ||
Deposit based intangible assets | 473,000 | 594,000 |
Amortization expense | 121,000 | 121,000 |
Future Amortization Expense | 121,000 | |
Eagle River | ||
Deposit based intangible assets | 529,000 | 629,000 |
Amortization expense | 99,000 | 99,000 |
Future Amortization Expense | 99,000 | |
Niagara Bancorporation | ||
Deposit based intangible assets | 170,000 | 200,000 |
Amortization expense | 30,000 | 30,000 |
Future Amortization Expense | 30,000 | |
FFNM | ||
Increase deferred tax asset | 1,950,000 | |
Increase to MSRs | 500,000 | |
Decrease Goodwill | 2,450,000 | |
Deposit based intangible assets | 2,147,000 | 2,436,000 |
Amortization expense | 290,000 | 299,000 |
Future Amortization Expense | 290,000 | |
Lincoln Community Bank | ||
Decrease deferred tax liability | 163,000 | |
Decrease Goodwill | 163,000 | |
Deposit based intangible assets | 1,049,000 | 1,184,000 |
Amortization expense | 135,000 | $ 128,000 |
Future Amortization Expense | $ 135,000 |
SERVICING RIGHTS (Details)
SERVICING RIGHTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
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 | 53,000,000 | $ 41,000,000 |
Servicing rights | $ 311,000 | 218,000 |
Mortgage loans | ||
Mortgage Loans | ||
Annual constant prepayment speed (as a percent) | 19.01% | |
Discount rate (as a percent) | 7.75% | |
Changes in mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances | ||
Balance at beginning of period | $ 1,499,000 | 1,144,000 |
Final purchase accounting entry for FFNM | 500,000 | |
Additions from loans sold with servicing retained | 95,000 | |
Amortization | (140,000) | (240,000) |
Balance at end of period | 1,359,000 | 1,499,000 |
Balance of loan servicing portfolio | $ 204,548,000 | $ 255,757,000 |
Mortgage servicing rights as % of portfolio | 0.66% | 0.59% |
Fair value of servicing rights | $ 1,436,000 | $ 2,159,000 |
BORROWINGS (Details)
BORROWINGS (Details) | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
BORROWINGS | ||
Borrowings | $ 63,479,000 | $ 64,551,000 |
Federal Home Loan Bank borrowings | ||
BORROWINGS | ||
Borrowings | $ 63,155,000 | 64,148,000 |
Federal Home Loan Bank Borrowing Weighted Average Interest Rate | 1.67% | |
Federal Home Loan Bank borrowings | Mortgage related and municipal securities | Collateral Pledged | ||
BORROWINGS | ||
Available for sale equity securities | $ 21,840,000 | |
Amortized cost estimated fair value | 22,438,000 | |
Federal Home Loan Bank borrowings | FHLB stock | ||
BORROWINGS | ||
Stock owned and pledged as collateral | 4,924,000 | |
Federal Home Loan Bank borrowings | One to four family residential real estate | ||
BORROWINGS | ||
Loans pledged as collateral | $ 73,005,000 | |
Correspondent bank line of credit | ||
BORROWINGS | ||
Number of banking borrowing relationships | item | 1 | |
Correspondent bank line of credit | LIBOR | ||
BORROWINGS | ||
Variable rate basis | LIBOR | |
Variable rate (as a percent) | 2.00% | |
Correspondent bank line of credit | LIBOR | Minimum | ||
BORROWINGS | ||
Floor rate (as a percent) | 3.00% | |
Correspondent bank line of credit | LIBOR | Maximum | ||
BORROWINGS | ||
Floor rate (as a percent) | 22.00% | |
USDA Rural Development note | ||
BORROWINGS | ||
Borrowings | $ 324,000 | 403,000 |
Interest rate on note (as a percent) | 1.00% | |
USDA Rural Development note | First Rural Relending | ||
BORROWINGS | ||
Loans pledged as collateral | $ 324,000 | |
Demand deposit account pledged as collateral | 374,000 | |
Revolving Credit Facility | ||
BORROWINGS | ||
Maximum borrowing capacity | 15,000,000 | |
Line of Credit | $ 0 | $ 0 |
Revolving Credit Facility | LIBOR | ||
BORROWINGS | ||
LIBOR rate at point of time | 0.24% |
BORROWINGS - MATURITIES (Detail
BORROWINGS - MATURITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Maturities and principal payments of borrowings outstanding | ||
2021 | $ 35,082 | |
2022 | 80 | |
2023 | 236 | |
2024 | 25,081 | |
Thereafter | 3,000 | |
Borrowings | $ 63,479 | $ 64,551 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Components of the federal income tax provision (credit) | ||
Current tax expense | $ 2,954 | $ 2,513 |
Deferred tax expense | 629 | 1,347 |
Provision for income taxes | 3,583 | 3,860 |
Source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes | ||
Tax expense at statutory rate | 3,357 | 3,719 |
Tax-exempt interest | (154) | (110) |
Nondeductible expenses | 249 | 251 |
Wisconsin income tax expense, net of federal impact | 131 | |
Provision for income taxes | 3,583 | 3,860 |
Deferred tax assets: | ||
NOL carryforward | 1,671 | 2,147 |
Allowance for loan losses | 1,277 | 1,144 |
OREO | 157 | 177 |
Deferred compensation | 198 | 253 |
Pension Liability | 139 | 147 |
Stock compensation | 159 | 75 |
Purchase accounting adjustments | 832 | 1,507 |
Lease liability | 928 | 980 |
Other | 785 | 442 |
Total deferred tax assets | 6,146 | 6,872 |
Deferred tax liabilities: | ||
Core deposit premium | (959) | (1,108) |
FHLB stock dividend | (73) | (73) |
Right of use assets | (928) | (980) |
Unrealized gain on securities | (522) | (273) |
Other | (361) | (706) |
Total deferred tax liabilities | (2,843) | (3,140) |
Net deferred tax asset | 3,303 | $ 3,732 |
INCOME TAXES | ||
Net operating loss (NOL) carryforwards | $ 8,000 | |
Expiration period from date of origination for net operating loss carryforwards | 20 years | |
Annual limitation for usage of NOL | $ 2,000 | |
Annual limitation for usage of tax credits | $ 420 |
LEASES (Details)
LEASES (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
OPERATING LEASES | ||
Number of operating leases | item | 4 | |
Future minimum payments, by year and in the aggregate, under the initial terms of the operating lease agreements | ||
2021 | $ 359 | |
2022 | 202 | |
Subtotal | 561 | |
Less: imputed interest | (7) | |
Net lease liabilities | $ 554 | |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities | |
Rent Expenses | ||
Interest on the lease liability | $ 102 | $ 111 |
Amortization of the right-of-use asset | 1,062 | $ 1,021 |
Related Party | ||
Future minimum payments, by year and in the aggregate, under the initial terms of the operating lease agreements | ||
2021 | 477 | |
2022 | 486 | |
2023 | 496 | |
2024 | 506 | |
2025 | 516 | |
Thereafter | 1,564 | |
Subtotal | 4,045 | |
Less: imputed interest | (374) | |
Net lease liabilities | $ 3,671 |
RETIREMENT PLAN (Details)
RETIREMENT PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
DEFINED BENEFIT PENSION 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 | $ 469 | $ 370 |
DEFINED BENEFIT PENSION PLAN (D
DEFINED BENEFIT PENSION PLAN (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Defined Benefit Pension Plan | ||
Number of years over which anticipated pension distributions disclosed | item | 5 | |
Anticipated distributions from the plan | ||
2021 | $ 133 | |
2022 | 140 | |
2023 | 144 | |
2024 | 142 | |
2025 | 157 | |
2026-2030 | 901 | |
Total | 1,617 | |
Peninsula Financial Corporation noncontributory defined benefit pension plan | ||
Defined Benefit Pension Plan | ||
Expected contributions to the plan next fiscal year | 57 | |
Change in benefit obligation: | ||
Benefit obligation, beginning of year | 3,447 | $ 2,991 |
Interest cost | 99 | 117 |
Actuarial (gain) loss | 220 | 469 |
Benefits paid | (132) | (130) |
Benefit obligation at end of year | 3,634 | 3,447 |
Change in plan assets | ||
Fair value of plan assets, beginning of year | 2,259 | 1,987 |
Actual return on plan assets | 29 | 381 |
Employer contributions | 108 | 22 |
Benefits paid | (132) | (131) |
Fair value of plan assets at end of year | 2,264 | 2,259 |
Funded status, included with other liabilities | $ (1,370) | $ (1,188) |
Assumptions in the actuarial valuation | ||
Weighted average discount rate | 2.45% | 2.92% |
Expected long-term rate of return on plan assets | 2.00% | 8.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | ||
Plan assets | ||
Actual Allocation | 0.00% | 0.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | Minimum | ||
Plan assets | ||
Target Allocation | 50.00% | 50.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | Maximum | ||
Plan assets | ||
Target Allocation | 70.00% | 70.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | ||
Plan assets | ||
Actual Allocation | 100.00% | 100.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | Minimum | ||
Plan assets | ||
Target Allocation | 30.00% | 30.00% |
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | Maximum | ||
Plan assets | ||
Target Allocation | 50.00% | 50.00% |
DEFERRED COMPENSATION PLAN (Det
DEFERRED COMPENSATION PLAN (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
DEFERRED COMPENSATION PLAN | ||
Liability for vested benefits under the plan | $ 27,000 | $ 51,000 |
Cash surrender value of life insurance policies of the plan participants | 1,554,000 | 1,498,000 |
Deferred compensation expense | $ 84,000 | 99,000 |
Minimum | ||
DEFERRED COMPENSATION PLAN | ||
Original contractual term | 10 years | |
Maximum | ||
DEFERRED COMPENSATION PLAN | ||
Original contractual term | 15 years | |
PFC | ||
DEFERRED COMPENSATION PLAN | ||
Liability for vested benefits under the plan | $ 605,000 | 757,000 |
Cash surrender value of life insurance policies of the plan participants | 1,781,000 | 1,773,000 |
FFNM | ||
DEFERRED COMPENSATION PLAN | ||
Liability for vested benefits under the plan | 272,000 | 343,000 |
Cash surrender value of life insurance policies of the plan participants | $ 5,441,000 | $ 5,320,000 |
REGULATORY MATTERS (Details)
REGULATORY MATTERS (Details) $ in Thousands | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Consolidated | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Actual Amount | $ 145,054 | $ 138,263 |
Total capital to risk weighted assets, Actual Ratio (as a percent) | 14.8 | 13.2 |
Tier 1 capital to risk weighted assets, Actual Amount | $ 139,238 | $ 132,955 |
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 14.2 | 12.7 |
Common equity Tier 1 capital to risk weighted assets, Actual Amount | $ 139,238 | $ 132,955 |
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 14.20% | 12.70% |
Tier 1 capital to average assets, Actual Amount | $ 139,238 | $ 132,955 |
Tier 1 capital to average assets, Actual Ratio (as a percent) | 9.4 | 10.1 |
Consolidated | Minimum | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 78,577 | $ 83,696 |
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 8 | 8 |
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 58,933 | $ 62,772 |
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 6 | 6 |
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital,Adequacy Purpose Amount | $ 44,199 | $ 47,079 |
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Adequacy Purpose Ratio (as a percent) | 4.50% | 4.50% |
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Amount | $ 59,048 | $ 52,724 |
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 4 | 4 |
Bank | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Actual Amount | $ 139,844 | $ 136,578 |
Total capital to risk weighted assets, Actual Ratio (as a percent) | 14.2 | 13.1 |
Tier 1 capital to risk weighted assets, Actual Amount | $ 134,069 | $ 131,311 |
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 13.7 | 12.6 |
Common equity Tier 1 capital to risk weighted assets, Actual Amount | $ 134,069 | $ 131,311 |
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent) | 13.70% | 12.60% |
Tier 1 capital to average assets, Actual Amount | $ 134,069 | $ 131,311 |
Tier 1 capital to average assets, Actual Ratio (as a percent) | 9.1 | 10 |
Bank | Minimum | ||
Corporation's and the Bank's actual and required capital amounts and ratios | ||
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 78,530 | $ 83,681 |
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 8 | 0.080 |
Total capital to risk weighted assets, Action Provisions Amount | $ 98,163 | $ 104,601 |
Total capital to risk weighted assets, Action Provisions Ratio (as a percent) | 10 | 10 |
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount | $ 58,898 | $ 62,761 |
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 6 | 6 |
Tier 1 capital to risk weighted assets, Action Provisions Amount | $ 78,530 | $ 83,681 |
Tier 1 capital to risk weighted assets, Action Provisions Ratio (as a percent) | 8 | 8 |
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital,Adequacy Purpose Amount | $ 44,173 | $ 47,071 |
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Adequacy Purpose Ratio (as a percent) | 4.50% | 4.50% |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Amount | $ 63,806 | $ 67,991 |
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Ratio (as a percent) | 6.50% | 6.50% |
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Amount | $ 58,787 | $ 52,728 |
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Ratio (as a percent) | 4 | 4 |
Tier 1 capital to average assets, Action Provisions Amount | $ 73,483 | $ 65,910 |
Tier 1 capital to average assets, Action Provisions Ratio (as a percent) | 5 | 5 |
STOCK COMPENSATION PLANS (Detai
STOCK COMPENSATION PLANS (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Oct. 31, 2020 | Feb. 29, 2020 | Oct. 31, 2019 | Feb. 28, 2019 | Apr. 30, 2018 | Feb. 28, 2018 | Feb. 28, 2017 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Compensation Plans | ||||||||||
Granted during the period (in shares) | 140,000 | |||||||||
Annual Compensation cost | $ 498 | $ 878 | ||||||||
Unrecognized compensation expenses | $ 1,914 | |||||||||
Summary of nonvested shares | ||||||||||
Nonvested beginning balance (in shares) | 69,145 | |||||||||
Granted during the period (in shares) | 140,000 | |||||||||
Forfeited during the period (in shares) | (3,167) | |||||||||
Vested during the period (in shares) | (35,825) | |||||||||
Nonvested ending balance (in shares) | 69,145 | 170,153 | 69,145 | |||||||
Weighted Average Grant Date Fair Value | ||||||||||
Nonvested beginning balance (in dollars per share) | $ 14.52 | |||||||||
Granted during the period (in dollars per share) | 15.12 | |||||||||
Forfeited during the period (in dollars per share) | 15.46 | |||||||||
Vested during the period (in dollars per share) | 14.99 | |||||||||
Nonvested ending balance (in dollars per share) | $ 14.52 | $ 14.90 | $ 14.52 | |||||||
RSUs | ||||||||||
Stock Compensation Plans | ||||||||||
Vesting period | 4 years | 4 years | 4 years | 4 years | 4 years | |||||
Granted during the period (in shares) | 8,000 | 132,000 | 8,000 | 27,790 | 8,000 | 18,643 | 28,427 | |||
Market value at grant date (in dollars per share) | $ 9.46 | $ 15.46 | $ 15.40 | $ 15.70 | $ 16 | $ 16.30 | $ 13.39 | |||
Stock issued for vested restricted stocks | 35,825 | 35,967 | ||||||||
Summary of nonvested shares | ||||||||||
Granted during the period (in shares) | 8,000 | 132,000 | 8,000 | 27,790 | 8,000 | 18,643 | 28,427 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | Aug. 28, 2019 | Dec. 31, 2020Programshares | Dec. 31, 2016shares | Dec. 31, 2015shares | Dec. 31, 2014shares | Dec. 31, 2013shares | Apr. 28, 2015USD ($) | Dec. 17, 2013USD ($) | Feb. 27, 2013USD ($) |
Participation in the TARP Capital Purchase Program | |||||||||
Number of share repurchase programs | Program | 1 | ||||||||
Number of share repurchase program expired | Program | 1 | ||||||||
Share Repurchase Program Expired | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Amount authorized to be repurchased | $ | $ 600,000 | $ 600,000 | |||||||
Additional amount authorized to be repurchased | $ | $ 750,000 | ||||||||
Share Repurchase Program Two | Maximum | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Percentage of outstanding common stock authorized to repurchase | 5.00% | ||||||||
Shares of Common Stock | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Number of shares repurchased | (283,779) | ||||||||
Shares of Common Stock | Share Repurchase Program Expired | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Number of shares repurchased | 1,661 | 14,000 | 102,455 | 13,700 | 55,594 | ||||
Shares of Common Stock | Share Repurchase Program Two | |||||||||
Participation in the TARP Capital Purchase Program | |||||||||
Number of shares repurchased | 283,779 |
COMMITMENTS, CONTINGENCIES, A_2
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($)item | |
Financial Instruments with Off-Balance-Sheet Risk | ||
Commitments | $ 188,550 | $ 168,356 |
Number of pending material legal proceedings | item | 0 | |
Commitments to extend credit | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Variable rate | 114,458 | $ 106,278 |
Fixed rate | 58,175 | 50,796 |
Standby letters of credit | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Variable rate | $ 8,781 | 5,441 |
Percentage collateralization on financial instruments allowed under commitments | 100.00% | |
Credit card commitments | ||
Financial Instruments with Off-Balance-Sheet Risk | ||
Fixed rate | $ 7,136 | $ 5,841 |
COMMITMENTS, CONTINGENCIES, A_3
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK - CREDIT RISK (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration of Credit Risk | ||
Loan portfolio | $ 1,071,776 | $ 1,053,468 |
Commercial real estate | ||
Concentration of Credit Risk | ||
Loan portfolio | 513,205 | |
Bank | Commercial real estate | Commercial loan portfolio | Credit risk concentration | ||
Concentration of Credit Risk | ||
Loan portfolio | $ 138,992 | $ 141,965 |
Percentage of concentration risk under a specified benchmark | 16.95% | 18.54% |
FAIR VALUE (Details)
FAIR VALUE (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
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 | 2,917 | $ 10,295 |
Marketable Securities | 111,836 | |
Carrying Amount | ||
Financial assets: | ||
Total financial assets | 1,414,740 | 1,230,236 |
Financial liabilities: | ||
Total financial liabilities | 1,322,708 | 1,140,797 |
Estimated Fair Value | ||
Financial assets: | ||
Total financial assets | 1,415,734 | 1,232,753 |
Financial liabilities: | ||
Total financial liabilities | 1,325,358 | 1,109,239 |
Level 1 | Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 218,977 | 49,826 |
Level 1 | Estimated Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 218,977 | 49,826 |
Level 2 | Carrying Amount | ||
Financial assets: | ||
Interest-bearing deposits | 2,917 | 10,295 |
Federal Home Loan Bank stock | 4,924 | 4,924 |
Financial liabilities: | ||
Deposits | 1,258,776 | 1,075,677 |
Borrowings | 63,479 | 64,551 |
Level 2 | Estimated Fair Value | ||
Financial assets: | ||
Interest-bearing deposits | 2,917 | 10,295 |
Federal Home Loan Bank stock | 4,924 | 4,924 |
Financial liabilities: | ||
Deposits | 1,262,930 | 1,044,267 |
Borrowings | 61,975 | 64,403 |
Level 3 | Carrying Amount | ||
Financial assets: | ||
Net loans | 1,071,776 | 1,053,468 |
Accrued interest receivable | 4,310 | 3,751 |
Financial liabilities: | ||
Accrued interest payable | 453 | 569 |
Level 3 | Estimated Fair Value | ||
Financial assets: | ||
Net loans | 1,072,770 | 1,055,985 |
Accrued interest receivable | 4,310 | 3,751 |
Financial liabilities: | ||
Accrued interest payable | 453 | 569 |
Available-for-sale Securities | ||
Financial assets: | ||
Marketable Securities | 111,836 | 107,972 |
Available-for-sale Securities | Level 2 | Carrying Amount | ||
Financial assets: | ||
Marketable Securities | 110,505 | 106,569 |
Available-for-sale Securities | Level 2 | Estimated Fair Value | ||
Financial assets: | ||
Marketable Securities | 110,505 | 106,569 |
Available-for-sale Securities | Level 3 | Carrying Amount | ||
Financial assets: | ||
Marketable Securities | 1,331 | 1,403 |
Available-for-sale Securities | Level 3 | Estimated Fair Value | ||
Financial assets: | ||
Marketable Securities | 1,331 | 1,403 |
Corporate | ||
Financial assets: | ||
Marketable Securities | 28,043 | 20,938 |
US Agencies | ||
Financial assets: | ||
Marketable Securities | 6,589 | 14,496 |
US Agencies - MBS | ||
Financial assets: | ||
Marketable Securities | 34,280 | 34,526 |
Obligations of states and political subdivisions | ||
Financial assets: | ||
Marketable Securities | $ 42,924 | $ 38,012 |
FAIR VALUE - OTHER ASSETS AND O
FAIR VALUE - OTHER ASSETS AND OTHER LIABILITIES (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fair value measurements | ||
Other liabilities | $ 0 | $ 0 |
Other assets | 0 | $ 0 |
Level 3 | ||
Fair value measurements | ||
Other liabilities | 0 | |
Other assets | $ 0 |
FAIR VALUE - RECURRING (Details
FAIR VALUE - RECURRING (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Marketable Securities | $ 111,836 | |
Total (Gains) Losses | 2 | |
Recurring | ||
Marketable Securities | 111,836 | $ 107,972 |
Total (Gains) Losses | 208 | |
Available-for-sale Securities | ||
Marketable Securities | 111,836 | 107,972 |
Corporate | ||
Marketable Securities | 28,043 | 20,938 |
Corporate | Recurring | ||
Marketable Securities | 28,043 | 20,938 |
Total (Gains) Losses | 35 | |
Corporate | Level 2 | Recurring | ||
Marketable Securities | 27,543 | 20,438 |
Corporate | Level 3 | Recurring | ||
Marketable Securities | 500 | 500 |
US Agencies | ||
Marketable Securities | 6,589 | 14,496 |
US Agencies | Recurring | ||
Marketable Securities | 6,589 | 14,496 |
Total (Gains) Losses | 9 | |
US Agencies | Level 2 | Recurring | ||
Marketable Securities | 6,589 | 14,496 |
US Agencies - MBS | ||
Marketable Securities | 34,280 | 34,526 |
US Agencies - MBS | Recurring | ||
Marketable Securities | 34,280 | 34,526 |
US Agencies - MBS | Level 2 | Recurring | ||
Marketable Securities | 34,280 | 34,526 |
Obligations of states and political subdivisions | ||
Marketable Securities | 42,924 | 38,012 |
Total (Gains) Losses | 2 | |
Obligations of states and political subdivisions | Recurring | ||
Marketable Securities | 42,924 | 38,012 |
Total (Gains) Losses | 164 | |
Obligations of states and political subdivisions | Level 2 | Recurring | ||
Marketable Securities | 42,093 | 37,109 |
Obligations of states and political subdivisions | Level 3 | Recurring | ||
Marketable Securities | $ 831 | $ 903 |
FAIR VALUE - LEVEL 3 ACTIVITIES
FAIR VALUE - LEVEL 3 ACTIVITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections | ||
Balance at the beginning | $ 107,972 | |
Balance at the end | 111,836 | $ 107,972 |
Level 3 | Corporate | ||
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections | ||
Balance at the beginning | 500 | 500 |
Realized net gain (losses) | 0 | 0 |
Balance at the end | 500 | 500 |
Level 3 | US Agencies - MBS | ||
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections | ||
Balance at the beginning | 903 | 988 |
Realized net gain (losses) | 0 | |
Transfers in (out) of level 3 | (85) | |
Balance at the end | 903 | |
Level 3 | Obligations of states and political subdivisions | ||
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections | ||
Balance at the beginning | 903 | |
Realized net gain (losses) | 0 | |
Transfers in (out) of level 3 | (72) | |
Balance at the end | $ 831 | $ 903 |
FAIR VALUE - NONRECURRING BASIS
FAIR VALUE - NONRECURRING BASIS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair value | |||
Impaired loans | $ 8,850 | $ 12,823 | |
Other real estate owned | 1,752 | 2,194 | $ 3,119 |
Total (Gains) Losses | 2 | ||
Nonrecurring | |||
Fair value | |||
Total (Gains) Losses | 164 | 492 | |
Investments | 0 | ||
Nonrecurring | Impaired loans | |||
Fair value | |||
Impaired loans | 8,850 | 12,823 | |
Total (Gains) Losses | 186 | 280 | |
Nonrecurring | Other real estate owned | |||
Fair value | |||
Other real estate owned | 1,752 | 2,194 | |
Total (Gains) Losses | (22) | 212 | |
Nonrecurring | Level 3 | Impaired loans | |||
Fair value | |||
Impaired loans | 8,850 | 12,823 | |
Nonrecurring | Level 3 | Other real estate owned | |||
Fair value | |||
Other real estate owned | $ 1,752 | $ 2,194 |
PARENT COMPANY ONLY FINANCIAL_3
PARENT COMPANY ONLY FINANCIAL STATEMENTS - BALANCE SHEETS (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | |||
Other assets | $ 36,785 | $ 39,433 | |
TOTAL ASSETS | 1,501,730 | 1,320,069 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Other liabilities | 11,611 | 11,697 | |
Total liabilities | 1,333,866 | 1,158,150 | |
Shareholders' equity: | |||
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,500,758 and 10,748,712 shares respectively | 127,164 | 129,564 | |
Retained earnings | 39,318 | 31,740 | |
Total shareholders' equity | 167,864 | 161,919 | $ 152,069 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 1,501,730 | 1,320,069 | |
PARENT COMPANY | |||
ASSETS | |||
Cash and cash equivalents | 4,226 | 490 | |
Investment in subsidiaries | 161,438 | 157,156 | |
Other assets | 3,727 | 5,764 | |
TOTAL ASSETS | 169,391 | 163,410 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Other liabilities | 1,527 | 1,491 | |
Total liabilities | 1,527 | 1,491 | |
Shareholders' equity: | |||
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,500,758 and 10,748,712 shares respectively | 127,164 | 129,564 | |
Retained earnings | 39,318 | 31,740 | |
Accumulated other comprehensive income | 1,382 | 615 | |
Total shareholders' equity | 167,864 | 161,919 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 169,391 | $ 163,410 |
PARENT COMPANY ONLY FINANCIAL_4
PARENT COMPANY ONLY FINANCIAL STATEMENTS - BALANCE SHEETS (Parenthetical) (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
BALANCE SHEET | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 10,500,758 | 10,748,712 |
Common stock, Shares outstanding | 10,500,758 | 10,748,712 |
PARENT COMPANY | ||
BALANCE SHEET | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, Authorized shares | 18,000,000 | 18,000,000 |
Common stock, Shares issued | 10,500,758 | 10,748,712 |
Common stock, Shares outstanding | 10,500,758 | 10,748,712 |
PARENT COMPANY ONLY FINANCIAL_5
PARENT COMPANY ONLY FINANCIAL STATEMENTS - STATEMENT OF OPERATIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
INCOME: | ||
Interest income | $ 62,029 | $ 64,384 |
EXPENSES: | ||
Interest expense on borrowings | 1,171 | 1,041 |
Salaries and benefits | 26,081 | 22,743 |
Professional service fees | 1,842 | 2,100 |
Other | 3,848 | 3,534 |
Total other expenses | 46,949 | 41,765 |
Loss before income taxes and equity in net income of subsidiaries | 17,056 | 17,710 |
Provision for (benefit of) income taxes | 3,583 | 3,860 |
NET INCOME | 13,473 | 13,850 |
PARENT COMPANY | ||
INCOME: | ||
Miscellaneous income | 1 | 1 |
Total income | 1 | 1 |
EXPENSES: | ||
Interest expense on borrowings | 7 | |
Salaries and benefits | 1,298 | 858 |
Professional service fees | 289 | 301 |
Other | 355 | 376 |
Total other expenses | 1,949 | 1,535 |
Loss before income taxes and equity in net income of subsidiaries | (1,948) | (1,534) |
Provision for (benefit of) income taxes | (409) | (322) |
Loss before equity in net income of subsidiaries | (1,539) | (1,212) |
Equity in net income of subsidiaries | 15,012 | 15,062 |
NET INCOME | $ 13,473 | $ 13,850 |
PARENT COMPANY ONLY FINANCIAL_6
PARENT COMPANY ONLY FINANCIAL STATEMENTS - CASH FLOWS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net income | $ 13,473 | $ 13,850 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Increase in capital from stock compensation | 878 | 498 |
Change in other assets | 1,575 | (10,907) |
Change in other liabilities | (86) | 3,704 |
Net cash provided by operating activities | 18,342 | 7,597 |
Cash Flows from Investing Activities: | ||
Net cash used in investing activities | (15,820) | (4,827) |
Cash Flows from Financing Activities: | ||
Principal payments on term borrowings | (101,353) | (17,985) |
Repurchase of common stock | (3,278) | |
Dividend on common stock | 5,895 | 5,576 |
Net cash provided by (used in) financing activities | 166,629 | (17,101) |
Net (decrease) increase in cash and cash equivalents | 169,151 | (14,331) |
Cash and cash equivalents at beginning of period | 49,826 | 64,157 |
Cash and cash equivalents at end of period | 218,977 | 49,826 |
PARENT COMPANY | ||
Cash Flows from Operating Activities: | ||
Net income | 13,473 | 13,850 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity in net (income) of subsidiaries | (15,012) | (15,062) |
Increase in capital from stock compensation | 878 | 498 |
Change in other assets | 2,035 | (1,458) |
Change in other liabilities | 36 | 268 |
Net cash provided by operating activities | 1,410 | (1,904) |
Cash Flows from Investing Activities: | ||
Investments in subsidiaries | 11,500 | 5,500 |
Net cash used in investing activities | 11,500 | 5,500 |
Cash Flows from Financing Activities: | ||
Repurchase of common stock | (3,279) | |
Dividend on common stock | (5,895) | (5,576) |
Net cash provided by (used in) financing activities | (9,174) | (5,576) |
Net (decrease) increase in cash and cash equivalents | 3,736 | (1,980) |
Cash and cash equivalents at beginning of period | 490 | 2,470 |
Cash and cash equivalents at end of period | $ 4,226 | $ 490 |