Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 13, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Community Bancorp /VT | ||
Entity Central Index Key | 718,413 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 84,372,870 | ||
Entity Common Stock, Shares Outstanding | 5,112,518 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and due from banks | $ 10,690,396 | $ 10,943,344 |
Federal funds sold and overnight deposits | 31,963,105 | 18,670,942 |
Total cash and cash equivalents | 42,653,501 | 29,614,286 |
Securities held-to-maturity (HTM) (fair value $48,796,000 at December 31, 2017 and $51,035,000 at December 31, 2016) | 48,824,965 | 49,886,631 |
Securities available-for-sale (AFS) | 38,450,653 | 33,715,051 |
Restricted equity securities, at cost | 1,703,650 | 2,755,850 |
Loans held-for-sale | 1,037,287 | 0 |
Loans | 502,864,651 | 487,249,226 |
Allowance for loan losses (ALL) | (5,438,099) | (5,278,445) |
Deferred net loan costs | 318,651 | 310,130 |
Net loans | 497,745,203 | 482,280,911 |
Bank premises and equipment, net | 10,344,177 | 10,830,556 |
Accrued interest receivable | 2,051,918 | 1,818,510 |
Bank owned life insurance (BOLI) | 4,721,782 | 4,625,406 |
Core deposit intangible | 0 | 272,691 |
Goodwill | 11,574,269 | 11,574,269 |
Other real estate owned (OREO) | 284,235 | 394,000 |
Other assets | 7,653,955 | 9,885,504 |
Total assets | 667,045,595 | 637,653,665 |
Deposits: | ||
Demand, non-interest bearing | 117,245,565 | 104,472,268 |
Interest-bearing transaction accounts | 132,633,533 | 118,053,360 |
Money market funds | 93,392,005 | 79,042,619 |
Savings | 97,516,284 | 86,776,856 |
Time deposits, $250,000 and over | 18,909,898 | 19,274,880 |
Other time deposits | 100,937,695 | 97,115,049 |
Total deposits | 560,634,980 | 504,735,032 |
Borrowed funds | 3,550,000 | 31,550,000 |
Repurchase agreements | 28,647,848 | 30,423,195 |
Capital lease obligations | 381,807 | 483,161 |
Junior subordinated debentures | 12,887,000 | 12,887,000 |
Accrued interest and other liabilities | 3,008,106 | 3,123,760 |
Total liabilities | 609,109,741 | 583,202,148 |
Shareholders' Equity | ||
Preferred stock, 1,000,000 shares authorized, 25 shares issued and outstanding ($100,000 liquidation value) | 2,500,000 | 2,500,000 |
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,322,320 and 5,269,053 shares issued at December 31, 2017 and 2016, respectively (including 13,039 and 15,022 shares issued February 1, 2018 and 2017, respectively) | 13,305,800 | 13,172,633 |
Additional paid-in capital | 31,639,189 | 30,825,658 |
Retained earnings | 13,387,739 | 10,666,782 |
Accumulated other comprehensive loss | (274,097) | (90,779) |
Less: treasury stock, at cost; 210,101 shares at December 31, 2017 and 2016 | (2,622,777) | (2,622,777) |
Total shareholders' equity | 57,935,854 | 54,451,517 |
Total liabilities and shareholders' equity | $ 667,045,595 | $ 637,653,665 |
Book value per common share outstanding | $ 10.84 | $ 10.27 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Securities held-to-maturity, fair value | $ 48,796,000 | $ 51,035,000 |
Shareholder's Equity | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 25 | 25 |
Preferred stock, shares outstanding (in shares) | 25 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,322,320 | 5,269,053 |
Treasury stock (in shares) | 210,101 | 210,101 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Interest income | ||
Interest and fees on loans | $ 24,103,281 | $ 22,293,558 |
Interest on debt securities | ||
Taxable | 676,352 | 511,339 |
Tax-exempt | 1,328,488 | 1,283,021 |
Dividends | 172,473 | 138,362 |
Interest on federal funds sold and overnight deposits | 160,355 | 21,834 |
Total interest income | 26,440,949 | 24,248,114 |
Interest expense | ||
Interest on deposits | 2,355,847 | 2,025,713 |
Interest on borrowed funds | 100,532 | 136,987 |
Interest on repurchase agreements | 87,315 | 76,457 |
Interest on junior subordinated debentures | 524,696 | 460,142 |
Total interest expense | 3,068,390 | 2,699,299 |
Net interest income | 23,372,559 | 21,548,815 |
Provision for loan losses | 650,000 | 500,000 |
Net interest income after provision for loan losses | 22,722,559 | 21,048,815 |
Non-interest income | ||
Service fees | 3,076,567 | 2,741,692 |
Income from sold loans | 730,019 | 891,538 |
Other income from loans | 846,392 | 839,269 |
Net realized gain on sale of securities AFS | 3,384 | 0 |
Other income | 928,030 | 1,029,400 |
Total non-interest income | 5,584,392 | 5,501,899 |
Non-interest expense | ||
Salaries and wages | 6,772,373 | 7,051,820 |
Employee benefits | 2,648,060 | 2,838,726 |
Occupancy expenses, net | 2,549,455 | 2,466,628 |
Other expenses | 7,196,435 | 6,785,350 |
Total non-interest expense | 19,166,323 | 19,142,524 |
Income before income taxes | 9,140,628 | 7,408,190 |
Income tax expense | 2,909,330 | 1,923,912 |
Net income | $ 6,231,298 | $ 5,484,278 |
Earnings per common share | $ 1.21 | $ 1.07 |
Weighted average number of common shares used in computing earnings per share | 5,084,102 | 5,024,270 |
Dividends declared per common share | $ 0.68 | $ 0.64 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 6,231,298 | $ 5,484,278 |
Other comprehensive loss, net of tax: | ||
Unrealized holding loss on securities AFS arising during the period | (206,027) | (68,765) |
Reclassification adjustment for gain realized in income | (3,384) | 0 |
Unrealized loss during the year | (209,411) | (68,765) |
Tax effect | 71,199 | 23,380 |
Other comprehensive loss, net of tax | (138,212) | (45,385) |
Total comprehensive income | $ 6,093,086 | $ 5,438,893 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity - USD ($) | Common Stock | Preferred Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 5,204,517 | 25 | |||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 13,011,293 | $ 2,500,000 | $ 30,089,438 | $ 8,482,096 | $ (45,394) | $ (2,622,777) | $ 51,414,656 |
Comprehensive income | |||||||
Net income | 0 | 0 | 0 | 5,484,278 | 0 | 0 | 5,484,278 |
Other comprehensive loss | 0 | 0 | 0 | 0 | (45,385) | 0 | (45,385) |
Total comprehensive income | 5,438,893 | ||||||
Cash dividends declared - common stock | 0 | 0 | 0 | (3,212,092) | 0 | 0 | (3,212,092) |
Cash dividends declared - preferred stock | $ 0 | $ 0 | 0 | (87,500) | 0 | 0 | (87,500) |
Issuance of common stock, shares | 64,536 | 0 | |||||
Issuance of common stock, amount | $ 161,340 | $ 0 | 736,220 | 0 | 0 | 0 | 897,560 |
Ending Balance, Shares at Dec. 31, 2016 | 5,269,053 | 25 | |||||
Ending Balance, Amount at Dec. 31, 2016 | $ 13,172,633 | $ 2,500,000 | 30,825,658 | 10,666,782 | (90,779) | (2,622,777) | 54,451,517 |
Comprehensive income | |||||||
Net income | 0 | 0 | 0 | 6,231,298 | 0 | 0 | 6,231,298 |
Other comprehensive loss | 0 | 0 | 0 | 0 | (138,212) | 0 | (138,212) |
Total comprehensive income | 6,093,086 | ||||||
Reclassification adjustment for effect of enacted tax law changes | 0 | 0 | 0 | 45,106 | (45,106) | 0 | 0 |
Cash dividends declared - common stock | 0 | 0 | 0 | (3,453,884) | 0 | 0 | (3,453,884) |
Cash dividends declared - preferred stock | $ 0 | $ 0 | 0 | (101,563) | 0 | 0 | (101,563) |
Issuance of common stock, shares | 53,267 | 0 | |||||
Issuance of common stock, amount | $ 133,167 | $ 0 | 813,531 | 0 | 0 | 0 | 946,698 |
Ending Balance, Shares at Dec. 31, 2017 | 5,322,320 | 25 | |||||
Ending Balance, Amount at Dec. 31, 2017 | $ 13,305,800 | $ 2,500,000 | $ 31,639,189 | $ 13,387,739 | $ (274,097) | $ (2,622,777) | $ 57,935,854 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 6,231,298 | $ 5,484,278 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization, bank premises and equipment | 1,032,418 | 1,041,985 |
Provision for loan losses | 650,000 | 500,000 |
Deferred income tax | 784,331 | (172,562) |
Gain on sale of securities AFS | (3,384) | 0 |
Gain on sale of loans | (317,432) | (429,480) |
Loss on sale of bank premises and equipment | 29,029 | 39,644 |
(Gain) loss on sale of OREO | (143) | 4,965 |
Income from CFSG Partners (see Note 7) | (415,561) | (429,008) |
Amortization of bond premium, net | 126,863 | 117,821 |
Write down of OREO | 40,000 | 41,000 |
Proceeds from sales of loans held for sale | 14,152,736 | 21,691,034 |
Originations of loans held for sale | (14,872,591) | (20,062,154) |
Increase (decrease) in taxes payable | 475,048 | (187,908) |
Increase in interest receivable | (233,408) | (185,297) |
Decrease in mortgage servicing rights | 127,409 | 82,384 |
Decrease in other assets | 98,223 | 332,930 |
Increase in cash surrender value of BOLI | (96,376) | (104,920) |
Amortization of core deposit intangible | 272,691 | 272,695 |
Amortization of limited liability entities | 617,233 | 909,386 |
(Increase) decrease in unamortized loan costs | (8,521) | 6,361 |
Increase in interest payable | 28,021 | 19,930 |
Increase in accrued expenses | 86,309 | 142,323 |
(Decrease) increase in other liabilities | (738,549) | 193,055 |
Net cash provided by operating activities | 8,065,644 | 9,308,462 |
Investments - HTM | ||
Maturities and pay downs | 37,344,426 | 44,317,216 |
Purchases | (36,282,760) | (50,849,428) |
Investments - AFS | ||
Maturities, calls, pay downs and sales | 11,497,241 | 6,166,383 |
Purchases | (16,565,733) | (13,597,620) |
Proceeds from redemption of restricted equity securities | 1,055,800 | 1,866,400 |
Purchases of restricted equity securities | (3,600) | (2,180,600) |
Increase (decrease) in limited partnership contributions payable | 459,250 | (948,000) |
Investments in limited liability entities | (486,750) | 0 |
Proceeds from other investments – supplemental employee retirement plan | 1,102,815 | 0 |
Increase in loans, net | (16,589,721) | (29,833,467) |
Capital expenditures for bank premises and equipment | (575,068) | (451,978) |
Proceeds from sales of OREO | 462,063 | 217,143 |
Recoveries of loans charged off | 91,795 | 75,129 |
Net cash used in investing activities | (18,490,242) | (45,218,822) |
Cash Flows from Financing Activities: | ||
Net increase (decrease) in demand and interest-bearing transaction accounts | 27,353,470 | (1,735,228) |
Net increase in money market and savings accounts | 25,088,814 | 2,157,297 |
Net increase in time deposits | 3,457,664 | 8,827,401 |
Net (decrease) increase in repurchase agreements | (1,775,347) | 8,349,957 |
Net (decrease) increase in short-term borrowings | (30,000,000) | 21,000,000 |
Proceeds from long-term borrowings | 2,000,000 | 550,000 |
Decrease in capital lease obligations | (101,354) | (75,204) |
Dividends paid on preferred stock | (101,563) | (87,500) |
Dividends paid on common stock | (2,457,871) | (2,313,967) |
Net cash provided by financing activities | 23,463,813 | 36,672,756 |
Net increase in cash and cash equivalents | 13,039,215 | 762,396 |
Cash and cash equivalents: | ||
Beginning | 29,614,286 | 28,851,890 |
Ending | 42,653,501 | 29,614,286 |
Supplemental Schedule of Cash Paid (Received) During the Period: | ||
Interest | 3,040,369 | 2,679,369 |
Income taxes, net of refunds | 1,032,720 | 1,375,000 |
Supplemental Schedule of Noncash Investing and Financing Activities: | ||
Change in unrealized loss on securities AFS | (209,411) | (68,765) |
Loans transferred to OREO | 392,155 | 395,108 |
Common Shares Dividends Paid: | ||
Dividends declared | 3,453,884 | 3,212,092 |
Increase in dividends payable attributable to dividends declared | (49,315) | (565) |
Dividends reinvested | (946,698) | (897,560) |
Total | $ 2,457,871 | $ 2,313,967 |
1. Significant Accounting Polic
1. Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Note 1. Significant Accounting Policies | The accounting policies of Community Bancorp. and Subsidiary (Company) are in conformity, in all material respects, with accounting principles generally accepted in the United States of America (US GAAP) and general practices within the banking industry. The following is a description of the Company’s significant accounting policies. Basis of presentation and consolidation The consolidated financial statements include the accounts of Community Bancorp. and its wholly-owned subsidiary, Community National Bank (Bank). All significant intercompany accounts and transactions have been eliminated. In prior years, the Company was considered a “smaller reporting company” under applicable disclosure rules of the Securities and Exchange Commission and accordingly, elected to provide its audited consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two year, rather than a three year, period. At December 31, 2017, the Company was considered an accelerated filer for its Annual Report, and beginning with the first quarter 2018 interim report, will be required to provide the above referenced financial information for a three year period. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation”, in part, addresses limited purpose trusts formed to issue trust preferred securities. It also establishes the criteria used to identify variable interest entities (VIE) and to determine whether or not to consolidate a VIE. In general, ASC Topic 810 provides that the enterprise with the controlling financial interest, known as the primary beneficiary, consolidates the VIE. In 2007, the Company formed CMTV Statutory Trust I for the purposes of issuing trust preferred securities to unaffiliated parties and investing the proceeds from the issuance thereof and the common securities of the trust in junior subordinated debentures issued by the Company. The Company is not the primary beneficiary of CMTV Statutory Trust I; accordingly, the trust is not consolidated with the Company for financial reporting purposes. CMTV Statutory Trust I is considered an affiliate of the Company (see Note 10). In December 2011, the Company formed a limited liability company (LLC) to facilitate its purchase of federal New Markets Tax Credits (NMTC) under an investment structure designed by a local community development entity. Management has evaluated the Company’s interest in the LLC under the ASC guidance relating to VIEs in light of the overall structure and purpose of the NMTC financing transaction and has concluded that the LLC should not be consolidated in the Company’s financial statements for financial reporting purposes, as the Company is not the primary beneficiary of the NMTC structure, does not exercise control within the overall structure and is not obligated to absorb a majority of any losses of the NMTC structure (see Note 7). Nature of operations The Company provides a variety of deposit and lending services to individuals, municipalities, and business customers through its branches, ATMs and telephone, mobile and internet banking capabilities in northern and central Vermont, which is primarily a small business and agricultural area. The Company's primary deposit products are checking and savings accounts and certificates of deposit. Its primary lending products are commercial, real estate, municipal and consumer loans. Concentration of risk The Company's operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic concentration of its deposit taking and lending activities. Management attempts to manage interest rate risk through various asset/liability management techniques designed to match maturities and repricing of assets and liabilities. Loan policies and administration are designed to provide assurance that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors inherent in management’s estimate of credit risk and factors beyond the control of the Company. While the Company has a diversified loan portfolio by loan type, most of its lending activities are conducted within the geographic area where its banking offices are located. As a result, the Company and its borrowers may be especially vulnerable to the consequences of changes in the local economy in northern and central Vermont. In addition, a substantial portion of the Company's loans are secured by real estate, which is susceptible to a decline in value, especially during times of adverse economic conditions. Use of estimates The preparation of consolidated financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. These estimates and assumptions involve inherent uncertainties. Accordingly, actual results could differ from those estimates and those differences could be material. Material estimates that are particularly susceptible to significant change relate to the determination of the ALL and the valuation of OREO. In connection with evaluating loans for impairment or assigning the carrying value of OREO, management generally obtains independent evaluations or appraisals for significant properties. While the ALL and the carrying value of OREO are determined using management's best estimate of probable loan and OREO losses, respectively, as of the balance sheet date, the ultimate collectibility of a substantial portion of the Company's loan portfolio and the recovery of a substantial portion of the fair value of OREO are susceptible to uncertainties and changes in a number of factors, especially local real estate market conditions. The amount of the change that is reasonably possible cannot be estimated. While management uses available information to recognize losses on loans and OREO, future additions to the allowance or write-downs of OREO may be necessary based on changes in local economic conditions or other relevant factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for losses on loans and the carrying value of OREO. Such agencies may require the Company to recognize additions to the allowance or write-downs of OREO based on their judgment about information available to them at the time of their examination. Mortgage servicing rights (MRSs) associated with loans originated and sold in the secondary market, where servicing is retained, are capitalized and included in other assets in the consolidated balance sheets. MSRs are amortized against non-interest income in proportion to, and over the period of, estimated future net servicing income of the underlying loans. The value of capitalized servicing rights represents the present estimated value of the future servicing fees arising from the right to service loans for third parties. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of estimated fair value as compared to amortized cost, and impairment, if any, is recognized through a valuation allowance and is recorded as a write down. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to determine the valuation of MSRs requires the development and use of estimates, including anticipated principal amortization and prepayments. Events that may significantly affect the estimates used are changes in interest rates and the payment performance of the underlying loans. Management uses a third party consultant to assist in analyzing the fair value of the Company’s MSRs. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to various factors, including the length of time and the extent to which the fair value has been less than cost; the nature of the issuer and its financial condition and near-term prospects; and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The evaluation of these factors is a subjective process and involves estimates and assumptions about matters that are inherently uncertain. Should actual factors and conditions differ materially from those used by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements. Accounting for a business combination that was completed prior to 2009 requires the application of the purchase method of accounting. Under the purchase method, the Company was required to record the assets and liabilities acquired through the LyndonBank merger in 2007 at fair market value, with the excess of the purchase price over the fair value of the net assets recorded as goodwill and evaluated annually for impairment. Management uses various assumptions in evaluating goodwill for impairment. Management utilizes numerous techniques to estimate the carrying value of various other assets held by the Company, including, but not limited to, bank premises and equipment and deferred taxes. The assumptions considered in making these estimates are based on historical experience and on various other factors that are believed by management to be reasonable under the circumstances. Management acknowledges that the use of different estimates or assumptions could produce different estimates of carrying values. Presentation of cash flows For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents includes cash on hand, amounts due from banks (including cash items in process of clearing), federal funds sold (generally purchased and sold for one day periods) and overnight deposits. Investment securities Securities the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity (HTM) and reported at amortized cost. Debt and equity securities not classified as HTM are classified as available-for-sale (AFS). Investments classified as AFS are carried at fair value, with unrealized gains and losses, net of tax and reclassification adjustments, reflected as a net amount in the shareholders’ equity section of the consolidated balance sheets and in the statements of changes in shareholders’ equity. Investment securities transactions are accounted for on a trade date basis. The specific identification method is used to determine realized gains and losses on sales of securities AFS. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or call date. The Company does not hold any securities purchased for the purpose of selling in the near term and classified as trading. Declines in the fair value of individual equity securities that are deemed to be other than temporary are reflected in earnings when identified. For individual debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in the fair value of the debt security related to (1) credit loss is recognized in earnings and (2) other factors is recognized in other comprehensive income or loss. Credit loss is deemed to exist if the present value of expected future cash flows using the interest rates at acquisition is less than the amortized cost basis of the debt security. For individual debt securities where the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the security’s cost basis and its fair value at the balance sheet date. Other investments In December 2011, the Company made an equity investment in a NMTC financing structure (see Note 7). The Company’s investment in the NMTC is amortized using the effective yield method. From time to time, the Company acquires partnership interests in limited partnerships for low income housing projects. New investments in limited partnerships are amortized using the proportional amortization method. All investments made before January 1, 2015 are amortized using the effective yield method. The Company has a one-third ownership interest in Community Financial Services Group, LLC (CFSG), a non-depository trust company (see Note 7). The Company's investment in CFSG is accounted for under the equity method of accounting. Restricted equity securities Restricted equity securities comprise Federal Reserve Bank stock and Federal Home Loan Bank stock. These securities are carried at cost. As a member of the Federal Reserve Bank of Boston (FRBB), the Company is required to invest in FRBB stock in an amount equal to 6% of the Bank's capital stock and surplus. As a member of the Federal Home Loan Bank of Boston (FHLBB), the Company is required to invest in $100 par value stock of the FHLBB in an amount that approximates 1% of unpaid principal balances on qualifying loans, plus an additional amount to satisfy an activity based requirement. The stock is nonmarketable and redeemable at par value, subject to the FHLBB’s right to temporarily suspend such redemptions. Members are subject to capital calls in some circumstances to ensure compliance with the FHLBB’s capital plan. Loans held-for-sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Loans Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, adjusted for any charge-offs, the ALL, loan premiums or discounts for acquired loans and any unearned fees or costs on originated loans. Loan interest income is accrued daily on the outstanding balances. For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is considered by management to be remote. Interest payments received on impaired loans are generally applied as a reduction of the loan principal balance. Loans are returned to accrual status when principal and interest payments are brought current and the customer has demonstrated the intent and ability to make future payments on a timely basis. Loans are written down or charged off when collection of principal is considered doubtful. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount is amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life of the loans. Loan premiums and discounts on loans acquired in the merger with LyndonBank are amortized as an adjustment to yield over the life of the loans. Allowance for loan losses The ALL is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is probable. Subsequent recoveries, if any, are credited to the allowance. Unsecured loans, primarily consumer loans, are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on impaired loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. Value of the collateral is determined in accordance with the Company’s appraisal policy. The unsecured portion of an impaired real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due. As described below, the allowance consists of general, specific and unallocated components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of specific, general and unallocated components considered in determining the amount of the allowance. General component The general component of the ALL is based on historical loss experience and various qualitative factors and is stratified by the following loan segments: commercial and industrial, commercial real estate, residential real estate 1st lien, residential real estate Jr lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes. Loss ratios are calculated by loan segment for one year, two year, three year, four year and five year look back periods. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment in the current economic climate. During periods of economic stability, a relatively longer period (e.g., five years) may be appropriate. During periods of significant expansion or contraction, the Company may appropriately shorten the historical time period. The Company is currently using an extended look back period of five years. Qualitative factors include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of commercial real estate loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available. The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows: Commercial & Industrial – Commercial Real Estate – Residential Real Estate - 1st Lien – Residential Real Estate – Jr Lien – Consumer – Specific component The specific component of the ALL relates to loans that are impaired. Impaired loans are loan(s) to a borrower that in the aggregate are greater than $100,000 and that are in non-accrual status or are troubled debt restructurings (TDR) regardless of amount. A specific allowance is established for an impaired loan when its estimated impaired basis is less than the carrying value of the loan. For all loan segments, except consumer loans, a loan is considered impaired when, based on current information and events, in management’s estimation it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant or temporary payment delays and payment shortfalls generally are not classified as impaired. Management evaluates the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and frequency of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans also include troubled loans that are restructured. A TDR occurs when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would otherwise not be granted. TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loan’s terms, or a combination of the two. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, unless such loans are subject to a restructuring agreement. Unallocated component An unallocated component of the ALL is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component reflects management’s estimate of the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. ALL methodology changes implemented as of June 30, 2017 During the second quarter of 2017, the Company transitioned to a software solution for preparing the ALL calculation and related reports, replacing previously used Excel spreadsheets. The software solution provides the Company with stronger data integrity, ease and efficiency in ALL preparation, and helps ready the Company for the future transition to the Current Expected Credit Loss (CECL) model. During the implementation and testing of the software, several changes to the underlying ALL methodology were made. Those changes included (i) removing the government guaranteed balances from the calculation of the ALL for both the pooled loans and impaired loans, (ii) treating all TDRs as impaired regardless of amount, and (iii) using a fixed look back period for historical losses based on loss history and economic conditions versus applying the highest look back period of the last 5 years. The Company has a solid history of collection of government guarantees. The impact of not reserving for government guaranteed balances reduced required reserves by approximately $207,000. The change to the historical loss methodology saw required reserves fall by approximately $151,000. Management expects this change will reduce the likelihood of sharp increases or decreases in loss ratios brought on by isolated losses rolling into or out of the look back period and is more reflective of the Company’s loss history during a period of economic stability. At the time of implementation, the inclusion of all TDRs in the impaired calculation required the individual analysis of fifty-seven loans versus eleven loans under the prior method, with nineteen of the additional loans requiring specific reserves ranging from $400 to $30,000, increasing required reserves by approximately $111,000. Loans individually evaluated for impairment under the new method, which would not have been individually evaluated under the old method, amounted to $4,493,655 at June 30, 2017. The ability to individually analyze a greater number of loans is facilitated by the new software. The net impact of the foregoing methodology changes reduced required reserves by approximately $247,000 for the quarter ended June 30, 2017, the quarter during which the changes were first implemented. Bank premises and equipment Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The cost of assets sold or otherwise disposed of, and the related accumulated depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the consolidated statements of income. Maintenance and repairs are charged to current expense as incurred and the cost of major renewals and betterments is capitalized. Other real estate owned Real estate properties acquired through or in lieu of loan foreclosure or properties no longer used for bank operations are initially recorded at fair value less estimated selling cost at the date of acquisition, foreclosure or transfer. Fair value is determined, as appropriate, either by obtaining a current appraisal or evaluation prepared by an independent, qualified appraiser, by obtaining a broker’s market value analysis, and finally, if the Company has limited exposure and limited risk of loss, by the opinion of management as supported by an inspection of the property and its most recent tax valuation. During periods of declining market values, the Company will generally obtain a new appraisal or evaluation. Any write-down based on the asset's fair value at the date of acquisition or institution of foreclosure is charged to the ALL. After acquisition through or in lieu of foreclosure, these assets are carried at the lower of their new cost basis or fair value. Costs of significant property improvements are capitalized, whereas costs relating to holding the property are expensed as incurred. Appraisals by an independent, qualified appraiser are performed periodically on properties that management deems significant, or evaluations may be performed by management or a qualified third party on properties in the portfolio that are deemed less significant or less vulnerable to market conditions. Subsequent write-downs are recorded as a charge to other expense. Gains or losses on the sale of such properties are included in income when the properties are sold. Intangible assets Intangible assets include the excess of the purchase price over the fair value of net assets acquired (goodwill) in the 2007 acquisition of LyndonBank, as well as a core deposit intangible related to the deposits acquired from LyndonBank (see Note 6). The core deposit intangible is amortized on an accelerated basis over 10 years to approximate the pattern of economic benefit to the Company. The core deposit intangible was fully amortized as of December 31, 2017. Goodwill is reviewed for impairment annually, or more frequently as events or circumstances warrant. Income taxes The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled. Adjustments to the Company's deferred tax assets are recognized as deferred income tax expense or benefit based on management's judgments relating to the realizability of such asset. Mortgage servicing Servicing assets are recognized as separate assets when rights are acquired through purchase or retained upon the sale of loans. Capitalized servicing rights are reported in other assets and initially recorded at fair value, and are amortized against non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are periodically evaluated for impairment, based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying the rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and is recorded as amortization of other assets, to the extent that estimated fair value is less than the capitalized amount at the valuation date. Subsequent improvement, if any, in the estimated fair value of impaired MSRs is reflected in a positive valuation adjustment and is recognized in other income up to (but not in excess of) the amount of the prior impairment. Pension costs Pension costs are charged to salaries and employee benefits expense and accrued over the active service period. Advertising costs The Company expenses advertising costs as incurred. Comprehensive income US GAAP generally requires recognized revenue, expenses, gains and losses to be included in net income. Certain changes in assets and liabilities, such as the after-tax effect of unrealized gains and losses on available-for-sale securities, are not reflected in the consolidated statement of income, but the cumulative effect of such items from period-to-period is reflected as a separate component of the shareholders’ equity section of the consolidated balance sheet (accumulated other comprehensive income or loss). Other comprehensive income or loss, along with net income, comprises the Company's total comprehensive income. Preferred stock The Company has outstanding 25 shares of fixed-to-floating rate non-cumulative perpetual preferred stock, without par value and with a liquidation preference of $100,000 per share, issued in December 2007. Under the terms of the preferred stock, the Company pays non-cumulative cash dividends quarterly, when, as and if declared by the Board of Directors. Dividends are payable at a variable dividend rate equal to the Wall Street Journal Prime Rate in effect on the first business day of each quarterly dividend period. A variable rate of 3.50% was in effect during most of 2016, with an increase to 3.75% during the last quarter of 2016, and then almost quarterly rate increases during 2017 to a rate of 4.50% in the fourth quarter of 2017. The variable rate of 4.50% will remain in effect for the dividend payment due in the first quarter of 2018. A partial redemption of five shares of preferred stock at a redemption price per share of $101,125 (including accrued dividend) is scheduled to occur on March 31, 2018. Earnings per common share Earnings per common share amounts are computed based on the weighted average number of shares of common stock issued during the period, including Dividend Reinvestment Plan (DRIP) shares issuable upon reinvestment of dividends (retroactively adjusted for stock splits and stock dividends, if any) and reduced for shares held in treasury. The following table illustrates the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock: Years Ended December 31, 2017 2016 Net income, as reported $ 6,231,298 $ 5,484,278 Less: dividends to preferred shareholders 101,563 87,500 Net income available to common shareholders $ 6,129,735 $ 5,396,778 Weighted average number of common shares used in calculating earnings per share 5,084,102 5,024,270 Earnings per common share $ 1.21 $ 1.07 Off-balance-sheet financial instruments In the ordinary course of business, the Company is a party to off-balance-sheet financial instruments consisting of commitments to extend credit, commercial and municipal letters of credit, standby letters of credit, and risk-sharing commitments on residential mortgage loans sold through the FHLBB’s Mortgage Partnership Finance (MPF) program. Such financial instruments are recorded in the consolidated financial statements when they are funded. Transfers of financial assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred a |
2. Investment Securities
2. Investment Securities | 12 Months Ended |
Dec. 31, 2017 | |
Investment Securities | |
Note 2. Investment Securities | Securities AFS and HTM consist of the following: Gross Gross Amortized Unrealized Unrealized Fair Securities AFS Cost Gains Losses Value December 31, 2017 U.S. Government sponsored enterprise (GSE) debt securities $ 17,308,229 $ 0 $ 149,487 $ 17,158,742 Agency mortgage-backed securities (Agency MBS) 16,782,380 11,144 180,187 16,613,337 Other investments 4,707,000 165 28,591 4,678,574 $ 38,797,609 $ 11,309 $ 358,265 $ 38,450,653 December 31, 2016 U.S. GSE debt securities $ 17,365,805 $ 24,854 $ 73,331 $ 17,317,328 Agency MBS 13,265,790 3,896 115,458 13,154,228 Other investments 3,221,000 24,947 2,452 3,243,495 $ 33,852,595 $ 53,697 $ 191,241 $ 33,715,051 Gross Gross Amortized Unrealized Unrealized Fair Securities HTM Cost Gains Losses Value* December 31, 2017 States and political subdivisions $ 48,824,965 $ 0 $ 28,965 $ 48,796,000 December 31, 2016 States and political subdivisions $ 49,886,631 $ 1,148,369 $ 0 $ 51,035,000 *Method used to determine fair value rounds values to nearest thousand. The entire balance under “Securities HTM - States and political subdivisions" consists of securities of local municipalities which are attributable to municipal financing transactions directly with the Company. The reported fair value of these securities is an estimate based on an analysis that takes into account future maturities and scheduled future repricing. The Company anticipates no losses on these securities and expects to hold them until their maturity. Investments pledged as collateral for larger dollar repurchase agreement accounts and for other purposes as required or permitted by law consisted of U.S. GSE debt securities, Agency MBS securities and certificates of deposit (CDs). These repurchase agreements mature daily. These investments as of the balance sheet dates were as follows: Amortized Fair Cost Value December 31, 2017 $ 38,797,609 $ 38,450,653 December 31, 2016 33,604,595 33,469,254 Proceeds from sales of securities AFS were $9,015,961 in 2017 with gains of $8,387 and losses of $5,003. There were no sales of securities AFS during 2016. The carrying amount and estimated fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties, pursuant to contractual terms. Because the actual maturities of Agency MBS usually differ from their contractual maturities due to the right of borrowers to prepay the underlying mortgage loans, usually without penalty, those securities are not presented in the table by contractual maturity date. The scheduled maturities of debt securities AFS at December 31, 2017 were as follows: Amortized Fair Cost Value Due in one year or less $ 3,749,956 $ 3,739,512 Due from one to five years 11,275,824 11,168,065 Due from five to ten years 6,989,449 6,929,739 Agency MBS 16,782,380 16,613,337 $ 38,797,609 $ 38,450,653 The scheduled maturities of debt securities HTM at December 31, 2017 were as follows: Amortized Fair Cost Value* Due in one year or less $ 24,817,334 $ 24,817,000 Due from one to five years 4,494,343 4,487,000 Due from five to ten years 4,338,246 4,331,000 Due after ten years 15,175,042 15,161,000 $ 48,824,965 $ 48,796,000 *Method used to determine fair value rounds values to nearest thousand. The fair value of the Company’s portfolio of debt securities HTM is lower than the book value due to rising rates and extension of the duration of the portfolio. Debt securities with unrealized losses as of the balance sheet dates are presented in the tables below. There were no debt securities with unrealized losses of 12 months or more as of December 31, 2016. Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Number of Fair Unrealized Value Loss Value Loss Securities Value Loss December 31, 2017 U.S. GSE debt securities $ 13,223,739 $ 84,490 $ 3,935,003 $ 64,997 15 $ 17,158,742 $ 149,487 Agency MBS 9,251,323 105,063 4,542,446 75,124 21 13,793,769 180,187 Other investments 3,692,571 25,429 244,838 3,162 16 3,937,409 28,591 State and political subdivisions 22,530,141 28,965 0 0 79 22,530,141 28,965 $ 48,697,774 $ 243,947 $ 8,722,287 $ 143,283 131 $ 57,420,061 $ 387,230 December 31, 2016 U.S. GSE debt securities $ 5,176,669 $ 73,331 $ 0 $ 0 4 $ 5,176,669 $ 73,331 Agency MBS 10,704,717 115,458 0 0 15 10,704,717 115,458 Other investments 493,548 2,452 0 0 2 493,548 2,452 $ 16,374,934 $ 191,241 $ 0 $ 0 21 $ 16,374,934 $ 191,241 Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions, or adverse developments relating to the issuer, warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition. As the Company has the ability to hold its debt securities until maturity, or for the foreseeable future if classified as AFS, and it is more likely than not that the Company will not have to sell such securities before recovery of their cost basis, no declines in such securities were deemed to be other-than-temporary at December 31, 2017 and 2016. The Bank is a member of the FHLBB. The FHLBB is a cooperatively owned wholesale bank for housing and finance in the six New England States. Its mission is to support the residential mortgage and community-development lending activities of its members, which include over 450 financial institutions across New England. The Company obtains much of its wholesale funding from the FHLBB. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on the Bank’s level of borrowings from the FHLBB. As a result of the Bank’s level of borrowings during 2017 and 2016, the Bank was required to purchase additional FHLBB stock in aggregate totaling $3,600 and $2,180,600, respectively. As a member of the FHLBB, the Company is also subject to future capital calls by the FHLBB in order to maintain compliance with its capital plan. During 2017 and 2016, FHLBB exercised capital call options totaling $1,055,800 and $1,866,400, respectively, on the Company’s portfolio of FHLBB stock. As of December 31, 2017 and 2016, the Company’s investment in FHLBB stock was $1,115,500 and $2,167,700, respectively. The Company periodically evaluates its investment in FHLBB stock for impairment based on, among other factors, the capital adequacy of the FHLBB and its overall financial condition. No impairment losses have been recorded through December 31, 2017. The Company’s investment in FRBB Stock was $588,150 at December 31, 2017 and 2016. |
3. Loans, Allowance for Loan Lo
3. Loans, Allowance for Loan Losses and Credit Quality | 12 Months Ended |
Dec. 31, 2017 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Note 3. Loans, Allowance for Loan Losses and Credit Quality | The composition of net loans as of the balance sheet dates was as follows: December 31, 2017 2016 Commercial & industrial $ 77,110,747 $ 68,730,573 Commercial real estate 207,044,227 201,728,280 Residential real estate - 1st lien 168,184,135 166,691,962 Residential real estate - Junior (Jr) lien 45,256,862 42,927,335 Consumer 5,268,680 7,171,076 Gross Loans 502,864,651 487,249,226 Deduct (add): Allowance for loan losses 5,438,099 5,278,445 Deferred net loan costs (318,651 ) (310,130 ) Net Loans $ 497,745,203 $ 482,280,911 The following is an age analysis of loans (including non-accrual), by portfolio segment: 90 Days or 90 Days Total Non-Accrual More and December 31, 2017 30-89 Days or More Past Due Current Total Loans Loans Accruing Commercial & industrial $ 308,712 $ 0 $ 308,712 $ 76,802,035 $ 77,110,747 $ 98,806 $ 0 Commercial real estate 1,482,982 418,255 1,901,237 205,142,990 207,044,227 1,065,385 0 Residential real estate - 1st lien 4,238,933 2,011,419 6,250,352 161,933,783 168,184,135 1,585,473 1,249,241 - Jr lien 156,101 168,517 324,618 44,932,244 45,256,862 346,912 0 Consumer 80,384 1,484 81,868 5,186,812 5,268,680 0 1,484 $ 6,267,112 $ 2,599,675 $ 8,866,787 $ 493,997,864 $ 502,864,651 $ 3,096,576 $ 1,250,725 90 Days or 90 Days Total Non-Accrual More and December 31, 2016 30-89 Days or More Past Due Current Total Loans Loans Accruing Commercial & industrial $ 328,684 $ 26,042 $ 354,726 $ 68,375,847 $ 68,730,573 $ 143,128 $ 26,042 Commercial real estate 824,836 222,738 1,047,574 200,680,706 201,728,280 765,584 0 Residential real estate - 1st lien 4,881,496 1,723,688 6,605,184 160,086,778 166,691,962 1,227,220 1,068,083 - Jr lien 984,849 116,849 1,101,698 41,825,637 42,927,335 338,602 27,905 Consumer 53,972 2,176 56,148 7,114,928 7,171,076 0 2,176 $ 7,073,837 $ 2,091,493 $ 9,165,330 $ 478,083,896 $ 487,249,226 $ 2,474,534 $ 1,124,206 For all loan segments, loans over 30 days are considered delinquent. As of the balance sheet dates presented, residential mortgage loans in process of foreclosure consisted of the following: Number of loans Current Balance December 31, 2017 10 $ 791,944 December 31, 2016 8 322,663 The following summarizes changes in the ALL and select loan information, by portfolio segment: As of or for the year ended December 31, 2017 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Charge-offs (20,000 ) (160,207 ) (159,533 ) (118,359 ) (124,042 ) 0 (582,141 ) Recoveries 27,051 230 26,826 465 37,223 0 91,795 Provision (credit) (58,212 ) 337,921 223,497 63,700 46,149 36,945 650,000 Ending balance $ 675,687 $ 2,674,029 $ 1,460,547 $ 316,982 $ 43,303 $ 267,551 $ 5,438,099 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 69,015 $ 125,305 $ 26,353 $ 0 $ 0 $ 220,673 Collectively 675,687 2,605,014 1,335,242 290,629 43,303 267,551 5,217,426 $ 675,687 $ 2,674,029 $ 1,460,547 $ 316,982 $ 43,303 $ 267,551 $ 5,438,099 Loans evaluated for impairment Individually $ 98,806 $ 1,306,057 $ 4,075,666 $ 300,759 $ 0 $ 5,781,288 Collectively 77,011,941 205,738,170 164,108,469 44,956,103 5,268,680 497,083,363 $ 77,110,747 $ 207,044,227 $ 168,184,135 $ 45,256,862 $ 5,268,680 $ 502,864,651 As of or for the year ended December 31, 2016 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 712,902 $ 2,152,678 $ 1,368,028 $ 422,822 $ 75,689 $ 279,759 $ 5,011,878 Charge-offs (12,194 ) 0 (244,149 ) 0 (52,219 ) 0 (308,562 ) Recoveries 24,954 0 23,712 240 26,223 0 75,129 Provision (credit) 26,923 343,407 222,166 (51,886 ) 8,543 (49,153 ) 500,000 Ending balance $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 86,400 $ 6,200 $ 114,800 $ 0 $ 0 $ 207,400 Collectively 726,848 2,409,685 1,363,557 256,376 83,973 230,606 5,071,045 $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Loans evaluated for impairment Individually $ 48,385 $ 687,495 $ 946,809 $ 224,053 $ 0 $ 1,906,742 Collectively 68,682,188 201,040,785 165,745,153 42,703,282 7,171,076 485,342,484 $ 68,730,573 $ 201,728,280 $ 166,691,962 $ 42,927,335 $ 7,171,076 $ 487,249,226 Impaired loans by portfolio segment were as follows: As of December 31, 2017 2017 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Related allowance recorded Commercial real estate $ 204,645 $ 225,681 $ 69,015 $ 210,890 $ 0 Residential real estate - 1st lien 798,226 837,766 125,305 646,799 29,262 - Jr lien 146,654 293,351 26,353 220,274 400 1,149,525 1,356,798 220,673 1,077,963 29,662 No related allowance recorded Commercial & industrial 98,806 136,590 75,868 72,426 Commercial real estate 1,102,859 1,226,040 1,105,030 237,792 Residential real estate - 1st lien 3,300,175 3,641,627 1,930,108 133,732 - Jr lien 154,116 154,423 116,519 16,574 4,655,956 5,158,680 3,227,525 460,524 $ 5,805,481 $ 6,515,478 $ 220,673 $ 4,305,488 $ 490,186 In the table above, recorded investment of impaired loans as of December 31, 2017 includes accrued interest receivable and deferred net loan costs of $24,193. As of December 31, 2016 2016 Unpaid Average Recorded Principal Related Recorded Investment Balance Allowance Investment With an allowance recorded Commercial real estate $ 220,257 $ 232,073 $ 86,400 $ 89,664 Residential real estate - 1st lien 271,962 275,118 6,200 350,709 - Jr lien 224,053 284,342 114,800 241,965 716,272 791,533 207,400 682,338 With no related allowance recorded Commercial & industrial 48,385 62,498 183,925 Commercial real estate 467,238 521,991 1,059,542 Residential real estate - 1st lien 674,847 893,741 877,237 - Jr lien 0 0 15,888 1,190,470 1,478,230 2,136,592 $ 1,906,742 $ 2,269,763 $ 207,400 $ 2,818,930 Interest income recognized on impaired loans is immaterial for 2016. Credit Quality Grouping In developing the ALL, management uses credit quality grouping to help evaluate trends in credit quality. The Company groups credit risk into Groups A, B and C. The manner the Company utilizes to assign risk grouping is driven by loan purpose. Commercial purpose loans are individually risk graded while the retail portion of the portfolio is generally grouped by delinquency pool. Group A loans - Acceptable Risk Group B loans – Management Involved Group C loans – Unacceptable Risk Commercial purpose loan ratings are assigned by the commercial account officer; for larger and more complex commercial loans, the credit rating is a collaborative assignment by the lender and the credit analyst. The credit risk rating is based on the borrower's expected performance, i.e., the likelihood that the borrower will be able to service its obligations in accordance with the loan terms. Credit risk ratings are meant to measure risk versus simply record history. Assessment of expected future payment performance requires consideration of numerous factors. While past performance is part of the overall evaluation, expected performance is based on an analysis of the borrower's financial strength, and historical and projected factors such as size and financing alternatives, capacity and cash flow, balance sheet and income statement trends, the quality and timeliness of financial reporting, and the quality of the borrower’s management. Other factors influencing the credit risk rating to a lesser degree include collateral coverage and control, guarantor strength and commitment, documentation, structure and covenants and industry conditions. There are uncertainties inherent in this process. Credit risk ratings are dynamic and require updating whenever relevant information is received. The risk ratings of larger or more complex loans, and Group B and C rated loans, are assessed at the time of their respective annual reviews, during quarterly updates, in action plans or at any other time that relevant information warrants update. Lenders are required to make immediate disclosure to the Chief Credit Officer of any known increase in loan risk, even if considered temporary in nature. The risk ratings within the loan portfolio, by segment, as of the balance sheet dates were as follows: As of December 31, 2017 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 73,352,768 $ 194,066,034 $ 165,089,999 $ 44,687,951 $ 5,267,196 $ 482,463,948 Group B 617,526 4,609,847 282,671 37,598 0 5,547,642 Group C 3,140,453 8,368,346 2,811,465 531,313 1,484 14,853,061 $ 77,110,747 $ 207,044,227 $ 168,184,135 $ 45,256,862 $ 5,268,680 $ 502,864,651 As of December 31, 2016 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 67,297,983 $ 191,755,393 $ 164,708,778 $ 42,289,062 $ 7,168,901 $ 473,220,117 Group B 512,329 2,971,364 0 169,054 0 3,652,747 Group C 920,261 7,001,523 1,983,184 469,219 2,175 10,376,362 $ 68,730,573 $ 201,728,280 $ 166,691,962 $ 42,927,335 $ 7,171,076 $ 487,249,226 Modifications of Loans and TDRs A loan is classified as a TDR if, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. The Company is deemed to have granted such a concession if it has modified a troubled loan in any of the following ways: ● Reduced accrued interest; ● Reduced the original contractual interest rate to a rate that is below the current market rate for the borrower; ● Converted a variable-rate loan to a fixed-rate loan; ● Extended the term of the loan beyond an insignificant delay; ● Deferred or forgiven principal in an amount greater than three months of payments; or ● Performed a refinancing and deferred or forgiven principal on the original loan. An insignificant delay or insignificant shortfall in the amount of payments typically would not require the loan to be accounted for as a TDR. However, pursuant to regulatory guidance, any payment delay longer than three months is generally not considered insignificant. Management’s assessment of whether a concession has been granted also takes into account payments expected to be received from third parties, including third-party guarantors, provided that the third party has the ability to perform on the guarantee. The Company’s TDRs are principally a result of extending loan repayment terms to relieve cash flow difficulties. The Company has only, on a limited basis, reduced interest rates for borrowers below the current market rate for the borrower. The Company has not forgiven principal or reduced accrued interest within the terms of original restructurings, nor has it converted variable rate terms to fixed rate terms. However, the Company evaluates each TDR situation on its own merits and does not foreclose the granting of any particular type of concession. New TDRs, by portfolio segment, for the periods presented were as follows: Year ended December 31, 2017 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded Contracts Investment Investment Residential real estate - 1st lien 4 $ 256,353 $ 287,385 Year ended December 31, 2016 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded Contracts Investment Investment Residential real estate - 1st lien 8 $ 572,418 $ 598,030 Residential real estate - Jr lien 2 62,819 64,977 10 $ 635,237 $ 663,007 The TDRs for which there was a payment default during the twelve month periods presented were as follows: Year ended December 31, 2017 Number of Recorded Contracts Investment Residential real estate - 1st lien 1 $ 87,696 Year ended December 31, 2016 Number of Recorded Contracts Investment Residential real estate - 1st lien 2 $ 93,230 Residential real estate - Jr lien 1 54,557 3 $ 147,787 TDRs are treated as other impaired loans and carry individual specific reserves with respect to the calculation of the ALL. These loans are categorized as non-performing, may be past due, and are generally adversely risk rated. The TDRs that have defaulted under their restructured terms are generally in collection status and their reserve is typically calculated using the fair value of collateral method. The specific allowances related to TDRs as of the balance sheet dates presented were as follows: 2017 2016 Specific Allowance $ 197,605 $ 92,600 As of the balance sheet dates, the Company evaluates whether it is contractually committed to lend additional funds to debtors with impaired, non-accrual or modified loans. The Company is contractually committed to lend under one Small Business Administration guaranteed line of credit to a borrower whose lending relationship was previously restructured. |
4. Loan Servicing
4. Loan Servicing | 12 Months Ended |
Dec. 31, 2017 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Note 4. Loan Servicing | Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others were $185,757,658 and $193,858,201 at December 31, 2017 and 2016, respectively. Net gain realized on the sale of loans was $317,432 and $429,480 for the years ended December 31, 2017 and 2016, respectively. The following table summarizes changes in MSRs for the years ended December 31, 2017 2016 Balance at beginning of year $ 1,210,695 $ 1,293,079 MSRs capitalized 109,297 176,705 MSRs amortized (236,706 ) (266,603 ) Change in valuation allowance 0 7,514 Balance at end of year $ 1,083,286 $ 1,210,695 |
5. Bank Premises and Equipment
5. Bank Premises and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Note 5. Bank Premises and Equipment | The major classes of bank premises and equipment and accumulated depreciation and amortization at December 31 were as follows: 2017 2016 Buildings and improvements $ 11,148,715 $ 11,213,737 Land and land improvements 2,433,971 2,433,971 Furniture and equipment 6,127,897 9,277,592 Leasehold improvements 1,155,284 1,117,085 Capital lease 991,014 991,014 Other prepaid assets 0 125,584 21,856,881 25,158,983 Less accumulated depreciation and amortization (11,512,704 ) (14,328,427 ) $ 10,344,177 $ 10,830,556 The Company is obligated under non-cancelable operating leases for bank premises expiring in various years through 2026, with options to renew. Minimum future rental payments for these leases with original terms in excess of one year as of December 31, 2017 for each of the next five years and in aggregate are: 2018 $ 233,706 2019 206,470 2020 179,581 2021 97,800 2022 66,000 Subsequent to 2022 264,000 $ 1,047,557 Total rental expense amounted to $242,726 and $204,324 for the years ended December 31, 2017 and 2016, respectively. Capital lease obligations The following is a schedule by years of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of December 31, 2017: 2018 $ 141,460 2019 141,460 2020 110,460 2021 39,117 Total minimum lease payments 432,497 Less amount representing interest (50,690 ) Present value of net minimum lease payments $ 381,807 |
6. Goodwill and Other Intangibl
6. Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Note 6. Goodwill and Other Intangible Assets | As a result of the acquisition of LyndonBank on December 31, 2007, the Company recorded goodwill amounting to $11,574,269. The goodwill is not amortizable and is not deductible for tax purposes. Management evaluated goodwill for impairment at December 31, 2017 and 2016 and concluded that no impairment existed as of such dates. In connection with the acquisition, the Company also recorded $4,161,000 of acquired identified intangible assets as of December 31, 2007, representing the core deposit intangible, which was subject to amortization as a non-interest expense over a ten year period. This core deposit intangible was fully amortized as of December 31, 2017, with accumulated amortization expense of $4,161,000 and $3,888,309 as of December 31, 2017 and 2016, respectively. |
7. Other Investments
7. Other Investments | 12 Months Ended |
Dec. 31, 2017 | |
Other Investments [Abstract] | |
Note 7. Other Investments | In 2011, the Company established a single-member LLC to facilitate the purchase of federal NMTC through an investment structure designed by a local community development entity. The LLC does not conduct any business apart from its role in the NMTC financing structure. The NMTC equity investment generated federal income tax credits of $204,900 for each of the years ended December 31, 2017 and 2016, with amortization expense of $195,572 and $177,938, respectively. The carrying value of the NMTC equity investment was $1,000 and $196,572 at December 31, 2017 and 2016, respectively, and is included in other assets in the consolidated balance sheets. The Company purchases from time to time interests in various limited partnerships established to acquire, own and rent residential housing for low and moderate income residents of northeastern and central Vermont. The tax credits from these investments were $414,663 and $448,290 for the years ended December 31, 2017 and 2016, respectively. Additionally, the Company recognized a one-time rehabilitation credit on one limited partnership amounting to $273,843 for 2016. Expenses related to amortization of the investments in the limited partnerships are recognized as a component of income tax expense, and were $421,661 and $731,448 for 2017 and 2016, respectively. The carrying values of the limited partnership investments were $1,796,573 and $1,731,484 at December 31, 2017 and 2016, respectively, and are included in other assets. The Bank has a one-third ownership interest in a non-depository trust company, CFSG, based in Newport, Vermont, which is held indirectly through Community Financial Services Partners, LLC (CFSG Partners), a Vermont LLC that owns 100% of the LLC equity interests of CFSG. The Bank accounts for its investment in CFSG Partners under the equity method of accounting. The Company's investment in CFSG Partners, included in other assets, amounted to $2,432,346 and $2,016,785 as of December 31, 2017 and 2016, respectively. The Company recognized income of $415,561 and $429,008 for 2017 and 2016, respectively, through CFSG Partners from the operations of CFSG. |
8. Deposits
8. Deposits | 12 Months Ended |
Dec. 31, 2017 | |
Maturities of Time Deposits [Abstract] | |
Note 8. Deposits | The following is a maturity distribution of time deposits at December 31, 2017: 2018 $ 71,257,675 2019 19,422,194 2020 8,639,592 2021 11,160,503 2022 9,367,629 Total time certificates of deposit $ 119,847,593 Total deposits in excess of the Federal Deposit Insurance Corporation (FDIC) insurance level amounted to $173,000,181 as of December 31, 2017. |
9. Borrowed Funds
9. Borrowed Funds | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Note 9. Borrowed Funds | Outstanding advances for the Company as of the balance sheet dates presented were as follows: 2017 2016 Long-Term Advances(1) FHLBB term advance, 0.00%, due February 26, 2021 $ 350,000 $ 350,000 FHLBB term advance, 0.00%, due November 22, 2021 1,000,000 1,000,000 FHLBB term advance, 0.00%, due June 9, 2022 2,000,000 0 FHLBB term advance, 0.00%, due September 22, 2023 200,000 200,000 3,550,000 1,550,000 Short-Term Advances FHLBB term advance 0.77% fixed rate, due February 8, 2017 0 10,000,000 FHLBB term advance 0.77% fixed rate, due February 24, 2017 0 10,000,000 FHLBB term advance 0.92% fixed rate, due June 14, 2017 0 10,000,000 0 30,000,000 $ 3,550,000 $ 31,550,000 (1) The Company has borrowed a total of $3,550,000 and $1,550,000, respectively, at December 31, 2017 and 2016, under the FHLBB’s Jobs for New England (JNE) program, a program dedicated to supporting job growth and economic development throughout New England. The FHLBB is providing a subsidy, funded by the FHLBB’s earnings, to write down interest rates to zero percent on JNE advances that finance qualifying loans to small businesses. JNE advances must support lending to small businesses in New England that create and/or retain jobs, or otherwise contribute to overall economic development activities. Borrowings from the FHLBB are secured by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by 1-4 family residential properties. Qualified collateral for these borrowings totaled $154,324,420 and $94,744,189 as of December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company's gross potential borrowing capacity under this arrangement was $109,726,508 and $68,163,543, respectively, before reduction for outstanding advances and collateral pledges. Under a separate agreement with the FHLBB, the Company has the authority to collateralize public unit deposits, up to its available borrowing capacity, with letters of credit issued by the FHLBB. At December 31, 2017, $59,850,000 in FHLBB letters of credit was utilized as collateral for these deposits compared to $21,225,000 at December 31, 2016. Total fees paid by the Company in connection with issuance of these letters of credit were $34,601 for 2017 and $25,967 for 2016. The Company also maintained a $500,000 IDEAL Way Line of Credit with the FHLBB at December 31, 2017 and 2016, with no outstanding advances under this line at either year-end date. Interest on these borrowings is at a rate determined daily by the FHLBB and payable monthly. The Company also has a line of credit with the FRBB, which is intended to be used as a contingency funding source. For this Borrower-in-Custody arrangement, the Company pledged eligible commercial and industrial loans, commercial real estate loans and home equity loans, resulting in an available line of $45,305,894 and $47,079,117 as of December 31, 2017 and 2016, respectively. Credit advances in the FRBB lending program are overnight advances with interest chargeable at the primary credit rate (generally referred to as the discount rate), which was 200 basis points as of December 31, 2017. As of December 31, 2017 and 2016, the Company had no outstanding advances against this line. The Company has unsecured lines of credit with three correspondent banks with available borrowing capacity totaling $12,500,000 at December 31, 2017 and 2016. The Company had no outstanding advances against these lines for the periods presented. |
10. Junior Subordinated Debentu
10. Junior Subordinated Debentures | 12 Months Ended |
Dec. 31, 2017 | |
Junior Subordinated Notes [Abstract] | |
Note 10. Junior Subordinated Debentures | As of December 31, 2017 and 2016, the Company had outstanding $12,887,000 principal amount of Junior Subordinated Debentures due in 2037 (the Debentures). The Debentures bear a floating rate equal to the 3-month London Interbank Offered Rate plus 2.85%. During 2017, the floating rate averaged 4.02% per quarter compared to 3.51% for 2016. The Debentures mature on December 15, 2037 and are subordinated and junior in right of payment to all senior indebtedness of the Company, as defined in the Indenture dated as of October 31, 2007 between the Company and Wilmington Trust Company, as Trustee. The Debentures first became redeemable, in whole or in part, by the Company on December 15, 2012. Interest paid on the Debentures for 2017 and 2016 was $524,696 and $460,142, respectively, and is deductible for tax purposes. The Debentures were issued and sold to CMTV Statutory Trust I (the Trust). The Trust is a special purpose trust funded by a capital contribution of $387,000 from the Company, in exchange for 100% of the Trust’s common equity. The Trust was formed for the purpose of issuing corporation-obligated mandatorily redeemable Capital Securities (Capital Securities) in the principal amount of $12.5 million to third-party investors and using the proceeds from the sale of such Capital Securities and the Company’s initial capital contribution to purchase the Debentures. The Debentures are the sole asset of the Trust. Distributions on the Capital Securities issued by the Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Trust on the Debentures. The Capital Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Debentures. The Company has entered into an agreement which, taken collectively, fully and unconditionally guarantees the payments on the Capital Securities, subject to the terms of the guarantee. The Debentures are currently includable in the Company’s Tier 1 capital up to 25% of core capital elements (see Note 20). |
11. Repurchase Agreements
11. Repurchase Agreements | 12 Months Ended |
Dec. 31, 2017 | |
Securities Sold under Agreements to Repurchase [Abstract] | |
Note 11. Repurchase Agreements | Securities sold under agreements to repurchase mature daily and carried a weighted average interest rate of 0.30% during 2017 and 2016, and consisted of the following: December 31, 2017 2016 Current balance $ 28,647,848 $ 30,423,195 Average balance 28,949,820 25,888,496 Highest month-end balance 31,745,206 30,423,195 Book Value – Pledged investments (1) 38,797,609 33,604,595 Fair Value – Pledged investments (1) 38,450,653 33,469,254 (1) U.S. GSE securities, Agency MBS securities and certificates of deposit were pledged as collateral for the periods presented. |
12. Income Taxes
12. Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Note 12. Income Taxes | The Company prepares its federal income tax return on a consolidated basis. Federal income taxes are allocated to members of the consolidated group based on taxable income. As a result of the Tax Cuts and Jobs Act signed into law on December 22, 2017, the federal corporate income tax rate decreased from 35% to 21% effective January 1, 2018. Deferred tax expense and total income tax expense were impacted by a one-time charge of $410,304 for the revaluation of the Company’s net deferred tax asset to reflect the 21% enacted tax rate in future periods. Federal income tax expense for the years ended December 31 was as follows: 2017 2016 Currently paid or payable $ 2,124,999 $ 2,096,474 Deferred expense (benefit) 784,331 (172,562 ) Total income tax expense $ 2,909,330 $ 1,923,912 Total income tax expense differed from the amounts computed at the statutory federal income tax rate of 34 percent primarily due to the following for the years ended December 31: 2017 2016 Computed expense at statutory rates $ 3,107,813 $ 2,518,785 Tax exempt interest and BOLI (484,454 ) (471,900 ) Disallowed interest 13,867 13,053 Partnership rehabilitation and tax credits (549,897 ) (857,359 ) Low income housing investment amortization expense 278,296 482,755 NMTC amortization expense 129,078 117,439 Deferred tax asset revaluation to enacted tax rates 410,304 0 Other 4,323 121,139 $ 2,909,330 $ 1,923,912 The deferred income tax expense (benefit) consisted of the following items for the years ended December 31: 2017 2016 Depreciation $ 12,377 $ 64,758 Mortgage servicing rights (184,146 ) (28,011 ) Deferred compensation 281,886 (58,194 ) Bad debts 652,671 (90,633 ) Limited partnership amortization (15,573 ) 7,865 Investment in CFSG Partners (39,644 ) 13,187 Core deposit intangible (92,715 ) (92,716 ) Loan fair value (13,531 ) (7,514 ) OREO write down 80 6,460 Prepaid expenses 80,325 0 Revaluation effect of unrealized loss on securities AFS 45,106 0 Other 57,495 12,236 Deferred tax expense (benefit) $ 784,331 $ (172,562 ) Listed below are the significant components of the net deferred tax asset at December 31: 2017 2016 Components of the deferred tax asset: Bad debts $ 1,142,001 $ 1,794,672 Deferred compensation 20,280 302,166 Contingent liability - MPF program 17,793 45,042 OREO write down 13,860 13,940 Capital lease 32,609 63,228 Unrealized loss on securities AFS 72,859 46,765 Other 23,210 22,837 Total deferred tax asset $ 1,322,612 $ 2,288,650 Components of the deferred tax liability: Depreciation 231,681 219,304 Limited partnerships 36,536 52,109 Mortgage servicing rights 227,490 411,636 Investment in CFSG Partners 75,391 115,035 Core deposit intangible 0 92,715 Prepaid expenses 80,325 0 Fair value adjustment on acquired loans 8,399 21,930 Total deferred tax liability 659,822 912,729 Net deferred tax asset $ 662,790 $ 1,375,921 US GAAP provides for the recognition and measurement of deductible temporary differences (including general valuation allowances) to the extent that it is more likely than not that the deferred tax asset will be realized. The net deferred tax asset is included in other assets in the consolidated balance sheets. ASC Topic 740, Income Taxes |
13. 401(k) and Profit-Sharing P
13. 401(k) and Profit-Sharing Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Note 13. 401(k) and Profit-Sharing Plan | The Company has a defined contribution plan covering all employees who meet certain age and service requirements. The pension expense was $572,310 and $652,078 for 2017 and 2016, respectively. These amounts represent discretionary matching contributions of a portion of the voluntary employee salary deferrals under the 401(k) plan and discretionary profit-sharing contributions under the plan. |
14. Deferred Compensation and S
14. Deferred Compensation and Supplemental Employee Retirement Plans | 12 Months Ended |
Dec. 31, 2017 | |
Compensation Related Costs [Abstract] | |
Note 14. Deferred Compensation and Supplemental Employee Retirement Plans | The Company maintains a directors’ deferred compensation plan and, prior to 2005, maintained a retirement plan for its directors. Participants are general unsecured creditors of the Company with respect to these benefits. The benefits accrued under these plans were $96,572 and $114,014 at December 31, 2017 and 2016, respectively. Expenses associated with these plans were $558 and $723 for the years ended December 31, 2017 and 2016, respectively. During 2017 and prior years, the Company maintained a supplemental employee retirement plan (SERP) for certain key employees of the Company. Benefits accrued under this plan were $774,713 at December 31, 2016 and the final payment of SERP benefits to the last participant was made on July 1, 2017. The expense associated with this plan was $0 and $199,004 for the years ended December 31, 2017 and 2016, respectively. The SERP was terminated following the final benefit payment on July 1, 2017. |
15. Financial Instruments with
15. Financial Instruments with Off-Balance-Sheet Risk | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments With Off-balance-sheet Risk | |
Note 15. Financial Instruments with Off-Balance-Sheet Risk | The Company 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 and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees, commitments to sell loans and risk-sharing commitments on certain sold loans. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the maximum extent of involvement the Company has in particular classes of financial instruments. The Company's maximum 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 and financial guarantees written is represented by the contractual notional amount of those instruments. The Company applies the same credit policies and underwriting criteria in making commitments and conditional obligations as it does for on-balance-sheet instruments. The Company generally requires collateral or other security to support financial instruments with credit risk. At December 31, the following off-balance-sheet financial instruments representing credit risk were outstanding: Contract or Notional Amount 2017 2016 Unused portions of home equity lines of credit $ 29,529,411 $ 25,535,104 Residential construction lines of credit 3,767,168 3,676,176 Commercial real estate and other construction lines of credit 27,315,198 25,951,345 Commercial and industrial commitments 38,369,010 36,227,213 Other commitments to extend credit 48,233,850 42,459,454 Standby letters of credit and commercial letters of credit 1,939,759 2,009,788 Recourse on sale of credit card portfolio 302,775 258,555 MPF credit enhancement obligation, net (See Note 16) 634,340 748,239 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 funding requirements. At December 31, 2017 and 2016, the Company had binding loan commitments to sell residential mortgages at fixed rates totaling $1,789,453 and $832,000, respectively (see Note 16). The recourse provision under the terms of the sale of the Company’s credit card portfolio in 2007 is based on total lines, not balances outstanding. Based on historical losses, the Company does not expect any significant losses from this commitment. The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit, or a commitment to extend credit, is based on management's credit evaluation of the counter-party. Collateral or other security held varies but may include real estate, accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The fair value of standby letters of credit has not been included in the balance sheets as the fair value is immaterial. In connection with its 2007 trust preferred securities financing, the Company guaranteed the payment obligations under the $12,500,000 of capital securities of its subsidiary, the Trust. The source of funds for payments by the Trust on its capital trust securities is payments made by the Company on its debentures issued to the Trust. The Company's obligation under those debentures is fully reflected in the Company's consolidated balance sheet, in the gross amount of $12,887,000 as of the dates presented, of which $12,500,000 represents external financing through the issuance to investors of capital securities by the Trust (see Note 10). |
16. Contingent Liability
16. Contingent Liability | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 16. Contingent Liability | The Company sells first lien 1-4 family residential mortgage loans under the MPF program with the FHLBB. Under this program the Company shares in the credit risk of each mortgage loan, while receiving fee income in return. The Company is responsible for a Credit Enhancement Obligation (CEO) based on the credit quality of these loans. FHLBB funds a First Loss Account (FLA) based on the Company's outstanding MPF mortgage balances. This creates a laddered approach to sharing in any losses. In the event of default, homeowner's equity and private mortgage insurance, if any, are the first sources of repayment; the FHLBB's FLA funds are then utilized, followed by the participant’s CEO, with the balance of losses absorbed by FHLBB. These loans must meet specific underwriting standards of the FHLBB. As of December 31, 2017 and 2016, the Company had $43,006,299 and $48,058,235, respectively, in loans sold through the MPF program and on which the Company had a CEO. As of December 31, 2017, the notional amount of the maximum CEO related to this program was $719,067 compared to $870,664 as of December 31, 2016. The Company had accrued a contingent liability for this CEO in the amount of $84,727 and $122,425 as of December 31, 2017 and 2016, respectively, which is calculated by management based on the methodology used in calculating the ALL, adjusted to reflect the risk sharing arrangements with the FHLBB. |
17. Legal Proceedings
17. Legal Proceedings | 12 Months Ended |
Dec. 31, 2017 | |
Legal Proceedings | |
Note 17. Legal Proceedings | In the normal course of business, the Company is involved in various claims and legal proceedings. In the opinion of the Company's management, any liabilities resulting from such proceedings are not expected to be material to the Company's consolidated financial condition or results of operations. |
18. Transactions with Related P
18. Transactions with Related Parties | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Note 18. Transactions with Related Parties | Aggregate loan transactions of the Company with directors, principal officers, their immediate families and affiliated companies in which they are principal owners (commonly referred to as related parties) as of December 31 were as follows: 2017 2016 Balance, beginning of year $ 14,121,486 $ 14,017,551 New loans to existing Principal Officers/Directors 6,181,507 11,862,375 Retirement/Resignation of Director (6,876,144 ) 0 Repayment (6,069,943 ) (11,758,440 ) Balance, end of year $ 7,356,906 $ 14,121,486 Total funds of related parties on deposit with the Company were $5,679,969 and $7,938,810 at December 31, 2017 and 2016, respectively. The Company leases 2,253 square feet of condominium space in the state office building on Main Street in Newport, Vermont to its trust company affiliate, CFSG, for its principal offices. CFSG also leases offices in the Company’s Barre and Lyndonville branches. The amount of rental income received from CFSG for the years ended December 31, 2017 and 2016 was $62,092 and $60,660, respectively. The Company utilizes the services of CFSG as an investment advisor for the Company’s 401(k) plan. The Human Resources committee of the Board of Directors is the Trustee of the plan, and CFSG provides investment advice for the plan. CFSG also acts as custodian of the retirement funds and makes investments on behalf of the plan and its participants. In addition, CFSG serves as investment advisor and custodian of funds under the Company’s SERP. The Company pays monthly management fees to CFSG for its services to the 401(k) plan and the SERP based on the market value of the total assets under management. The amount paid to CFSG for the years ended December 31, 2017 and 2016 was $48,943 and $44,065, respectively, for services related to the 401(k) plan and $1,412 and $2,442, respectively, for services related to the SERP. |
19. Restrictions on Cash and Du
19. Restrictions on Cash and Due From Banks | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Note 19. Restrictions on Cash and Due From Banks | In the ordinary course of business, the Company may, from time to time, maintain amounts due from correspondent banks that exceed federally insured limits. However, no losses have occurred in these accounts and the Company believes it is not exposed to any significant risk with respect to such accounts. The Company was required to maintain contracted balances with other correspondent banks of $462,500 at December 31, 2017 and 2016. Of the $462,500 balance, $262,500 was a separate agreed upon “impressed” balance to avoid monthly charges on the Company’s current federal funds liquidity line. |
20. Regulatory Capital Requirem
20. Regulatory Capital Requirements | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Capital Requirements [Abstract] | |
Note 20. Regulatory Capital Requirements | The Company (on a consolidated basis) and the Bank are 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 Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Additional prompt corrective action capital requirements are applicable to banks, but not to bank holding companies. The Company and the Bank are required to maintain minimum amounts and ratios (set forth in the table on the following page) of Common equity tier 1, Tier 1 and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). The Company’s non-cumulative Series A preferred stock ($2.5 million liquidation preference) is includable without limitation in its Common equity tier 1 and Tier 1 capital. The Company is allowed to include in Common equity tier 1 and Tier 1 capital an amount of trust preferred securities equal to no more than 25% of the sum of all core capital elements, which is generally defined as shareholders’ equity, less certain intangibles, including goodwill and the core deposit intangible, net of any related deferred income tax liability, with the balance includable in Tier 2 capital. Management believes that, as of December 31, 2017, the Company and the Bank met all capital adequacy requirements to which they are currently subject. Beginning in 2016, an additional capital conservation buffer was added to the minimum requirements for capital adequacy purposes, subject to a three year phase-in period. The capital conservation buffer will be fully phased-in on January 1, 2019 at 2.5% of risk-weighted assets. A banking organization with a conservation buffer of less than 2.5% (or the required phase-in amount in years prior to 2019) is subject to limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The Company’s and the Bank’s capital conservation buffer was 5.93% and 5.82%, respectively, at December 31, 2017 compared to 5.52% and 5.42%, respectively, at December 31, 2016. As of December 31, 2017, both the Company and the Bank exceeded the required capital conservation buffer of 1.25% and on a pro forma basis would be compliant with the fully phased-in capital conservation buffer requirement. As of December 31, 2017, the Bank was considered well capitalized under the regulatory capital framework for Prompt Corrective Action and the Company exceeded applicable consolidated regulatory guidelines for capital adequacy. The following table shows the regulatory capital ratios for the Company and the Bank as of December 31: Minimum Minimum To Be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes: Action Provisions(1): Amount Ratio Amount Ratio Amount Ratio (Dollars in Thousands) December 31, 2017 Common equity tier 1 capital (to risk-weighted assets) Company $ 59,523 12.75 % $ 21,003 4.50 % N/A N/A Bank $ 58,920 12.64 % $ 20,972 4.50 % $ 30,293 6.50 % Tier 1 capital (to risk-weighted assets) Company $ 59,523 12.75 % $ 28,004 6.00 % N/A N/A Bank $ 58,920 12.64 % $ 27,963 6.00 % $ 37,284 8.00 % Total capital (to risk-weighted assets) Company $ 65,005 13.93 % $ 37,338 8.00 % N/A N/A Bank $ 64,401 13.82 % $ 37,284 8.00 % $ 46,605 10.00 % Tier 1 capital (to average assets) Company $ 59,523 9.05 % $ 26,304 4.00 % N/A N/A Bank $ 58,920 8.97 % $ 26,279 4.00 % $ 32,849 5.00 % December 31, 2016: Common equity tier 1 capital (to risk-weighted assets) Company $ 55,690 12.34 % $ 20,304 4.50 % N/A N/A Bank $ 55,120 12.23 % $ 20,274 4.50 % $ 29,285 6.50 % Tier 1 capital (to risk-weighted assets) Company $ 55,690 12.34 % $ 27,072 6.00 % N/A N/A Bank $ 55,120 12.23 % $ 27,032 6.00 % $ 36,043 8.00 % Total capital (to risk-weighted assets) Company $ 61,012 13.52 % $ 36,096 8.00 % N/A N/A Bank $ 60,443 13.42 % $ 36,043 8.00 % $ 45,054 10.00 % Tier 1 capital (to average assets) Company $ 55,690 9.17 % $ 24,305 4.00 % N/A N/A Bank $ 55,120 9.08 % $ 24,281 4.00 % $ 30,351 5.00 % (1) Applicable to banks, but not bank holding companies. The Company's ability to pay dividends to its shareholders is largely dependent on the Bank's ability to pay dividends to the Company. The Bank is restricted by law as to the amount of dividends that can be paid. Dividends declared by national banks that exceed net income for the current and preceding two years must be approved by the Bank’s primary banking regulator, the Office of the Comptroller of the Currency. Regardless of formal regulatory restrictions, the Bank may not pay dividends that would result in its capital levels being reduced below the minimum requirements shown above. |
21. Fair Value
21. Fair Value | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Note 21. Fair Value | Certain assets and liabilities are recorded at fair value to provide additional insight into the Company’s quality of earnings. The fair values of some of these assets and liabilities are measured on a recurring basis while others are measured on a non-recurring basis, with the determination based upon applicable existing accounting pronouncements. For example, securities available-for-sale are recorded at fair value on a recurring basis. Other assets, such as MSRs, loans held-for-sale, impaired loans, and OREO are recorded at fair value on a non-recurring basis using the lower of cost or market methodology to determine impairment of individual assets. The Company groups assets and liabilities which are recorded at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement (with Level 1 considered highest and Level 3 considered lowest). A brief description of each level follows. Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasury, other U.S. Government debt securities that are highly liquid and are actively traded in over-the-counter markets. Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes MSRs, impaired loans and OREO. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. The following methods and assumptions were used by the Company in estimating its fair value measurements and disclosures: Cash and cash equivalents: Securities AFS and HTM: Restricted equity securities: Loans and loans held-for-sale: The fair value of loans held-for-sale is based upon an actual purchase and sale agreement between the Company and an independent market participant. The sale is executed within a reasonable period following quarter end at the stated fair value. MSRs: OREO: Deposits, repurchase agreements and borrowed funds: Capital lease obligations: Junior subordinated debentures: Accrued interest: Off-balance-sheet credit related instruments: FASB ASC Topic 825, “Financial Instruments”, requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet, if the fair values can be reasonably determined. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques using observable inputs when available. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Assets Recorded at Fair Value on a Recurring Basis Assets measured at fair value on a recurring basis and reflected in the consolidated balance sheets at the dates presented, segregated by fair value hierarchy, are summarized below: December 31, 2017 Level 2 Assets: (market approach) U.S. GSE debt securities $ 17,158,742 Agency MBS 16,613,337 Other investments 4,678,574 Total $ 38,450,653 December 31, 2016 Level 2 Assets: (market approach) U.S. GSE debt securities $ 17,317,328 Agency MBS 13,154,228 Other investments 3,243,495 $ 33,715,051 There were no Level 1 or Level 3 assets or liabilities measured on a recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between Levels during either 2017 or 2016. Assets Recorded at Fair Value on a Non-Recurring Basis The following table includes assets measured at fair value on a non-recurring basis that have had a fair value adjustment since their initial recognition. Impaired loans measured at fair value only include impaired loans with a related specific ALL and are presented net of specific allowances as disclosed in Note 3. Assets measured at fair value on a non-recurring basis and reflected in the consolidated balance sheets at the dates presented, segregated by fair value hierarchy, are summarized below: December 31, 2017 Level 2 Assets: (market approach) MSRs(1) $ 1,083,286 Impaired loans, net of related allowance 135,630 OREO 284,235 December 31, 2016 Assets: (market approach) MSRs(1) $ 1,210,695 Impaired loans, net of related allowance 508,872 OREO 394,000 (1) Represents MSRs at lower of cost or fair value, including MSRs deemed to be impaired and for which a valuation allowance was established to carry at fair value at December 31, 2017 and 2016. There were no Level 1 or Level 3 assets or liabilities measured on a non-recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between Levels during either 2017 or 2016. The carrying amounts and estimated fair values of the Company's financial instruments were as follows: December 31, 2017 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 42,654 $ 42,654 $ 0 $ 0 $ 42,654 Securities HTM 48,825 0 48,796 0 48,796 Securities AFS 38,451 0 38,451 0 38,451 Restricted equity securities 1,704 0 1,704 0 1,704 Loans and loans held-for-sale, net of ALL Commercial & industrial 76,394 0 0 76,799 76,799 Commercial real estate 204,260 0 136 204,697 204,833 Residential real estate - 1st lien 167,671 0 0 169,205 169,205 Residential real estate - Jr lien 44,916 0 0 45,207 45,207 Consumer 5,223 0 0 5,425 5,425 MSRs (1) 1,083 0 1,337 0 1,337 Accrued interest receivable 2,052 0 2,052 0 2,052 Financial liabilities: Deposits Other deposits 509,686 0 508,407 0 508,407 Brokered deposits 50,949 0 50,926 0 50,926 Long-term borrowings 3,550 0 3,191 0 3,191 Repurchase agreements 28,648 0 28,648 0 28,648 Capital lease obligations 382 0 382 0 382 Subordinated debentures 12,887 0 12,832 0 12,832 Accrued interest payable 101 0 101 0 101 (1) Reported fair value represents all MSRs serviced by the Company at December 31, 2017, regardless of carrying amount. December 31, 2016 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 29,614 $ 29,614 $ 0 $ 0 $ 29,614 Securities HTM 49,887 0 51,035 0 51,035 Securities AFS 33,715 0 33,715 0 33,715 Restricted equity securities 2,756 0 2,756 0 2,756 Loans and loans held-for-sale, net of ALL Commercial & industrial 67,972 0 48 68,727 68,775 Commercial real estate 199,136 0 601 201,560 202,161 Residential real estate - 1st lien 165,243 0 941 166,858 167,799 Residential real estate - Jr lien 42,536 0 109 42,948 43,057 Consumer 7,084 0 0 7,371 7,371 MSRs(1) 1,211 0 1,302 0 1,302 Accrued interest receivable 1,819 0 1,819 0 1,819 Financial liabilities: Deposits Other deposits 470,002 0 469,323 0 469,323 Brokered deposits 34,733 0 34,745 0 34,745 Short-term borrowings 30,000 0 30,000 0 30,000 Long-term borrowings 1,550 0 1,376 0 1,376 Repurchase agreements 30,423 0 30,423 0 30,423 Capital lease obligations 483 0 483 0 483 Subordinated debentures 12,887 0 12,849 0 12,849 Accrued interest payable 73 0 73 0 73 (1) Reported fair value represents all MSRs serviced by the Company at December 31, 2016, regardless of carrying amount. The estimated fair values of commitments to extend credit and letters of credit were immaterial at December 31, 2017 and 2016. |
22. Condensed Financial Informa
22. Condensed Financial Information (Parent Company Only) | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Note 22. Condensed Financial Information (Parent Company Only) | The following condensed financial statements are for Community Bancorp. (Parent Company Only), and should be read in conjunction with the consolidated financial statements of Community Bancorp. and Subsidiary. Community Bancorp. (Parent Company Only) December 31, December 31, Balance Sheets 2017 2016 Assets Cash $ 556,392 $ 494,086 Investment in subsidiary - Community National Bank 70,219,699 66,769,241 Investment in Capital Trust 387,000 387,000 Income taxes receivable 290,224 269,335 Total assets $ 71,453,315 $ 67,919,662 Liabilities and Shareholders' Equity Liabilities Junior subordinated debentures $ 12,887,000 $ 12,887,000 Dividends payable 630,461 581,145 Total liabilities 13,517,461 13,468,145 Shareholders' Equity Preferred stock, 1,000,000 shares authorized, 25 shares issued and outstanding ($100,000 liquidation value) 2,500,000 2,500,000 Common stock - $2.50 par value; 15,000,000 shares authorized, 5,322,320 and 5,269,053 shares issued at December 31, 2017 and 2016, respectively (including 13,039 and 15,022 shares issued February 1, 2018 and 2017, respectively) 13,305,800 13,172,633 Additional paid-in capital 31,639,189 30,825,658 Retained earnings 13,387,739 10,666,782 Accumulated other comprehensive loss (274,097 ) (90,779 ) Less: treasury stock, at cost; 210,101 shares at December 31, 2017 and 2016 (2,622,777 ) (2,622,777 ) Total shareholders' equity 57,935,854 54,451,517 Total liabilities and shareholders' equity $ 71,453,315 $ 67,919,662 The investment in the subsidiary bank is carried under the equity method of accounting. The investment and cash, which is on deposit with the Bank, have been eliminated in consolidation. Community Bancorp. (Parent Company Only) Years Ended December 31, Condensed Statements of Income 2017 2016 Income Bank subsidiary distributions $ 3,206,000 $ 2,940,000 Dividends on Capital Trust 15,757 13,818 Total income 3,221,757 2,953,818 Expense Interest on junior subordinated debentures 524,696 460,142 Administrative and other 344,657 345,842 Total expense 869,353 805,984 Income before applicable income tax benefit and equity in undistributed net income of subsidiary 2,352,404 2,147,834 Income tax benefit 290,224 269,335 Income before equity in undistributed net income of subsidiary 2,642,628 2,417,169 Equity in undistributed net income of subsidiary 3,588,670 3,067,109 Net income $ 6,231,298 $ 5,484,278 Community Bancorp. (Parent Company Only) Years Ended December 31, Condensed Statements of Cash Flows 2017 2016 Cash Flows from Operating Activities Net income $ 6,231,298 $ 5,484,278 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed net income of subsidiary (3,588,670 ) (3,067,109 ) Increase in income taxes receivable (20,888 ) (29,941 ) Net cash provided by operating activities 2,621,740 2,387,228 Cash Flows from Financing Activities Dividends paid on preferred stock (101,563 ) (87,500 ) Dividends paid on common stock (2,457,871 ) (2,313,967 ) Net cash used in financing activities (2,559,434 ) (2,401,467 ) Net (decrease) increase in cash 62,306 (14,239 ) Cash Beginning 494,086 508,325 Ending $ 556,392 $ 494,086 Cash Received for Income Taxes $ 269,335 $ 239,394 Cash Paid for Interest $ 524,696 $ 460,142 Dividends paid: Dividends declared $ 3,453,884 $ 3,212,092 Increase in dividends payable attributable to dividends declared (49,315 ) (565 ) Dividends reinvested (946,698 ) (897,560 ) $ 2,457,871 $ 2,313,967 |
23. Quarterly Financial Data (U
23. Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Note 23. Quarterly Financial Data (Unaudited) | A summary of financial data for the four quarters of 2017 and 2016 is presented below: 2017 March 31, June 30, September 30, December 31, Interest income $ 6,156,393 $ 6,444,837 $ 6,820,165 $ 7,019,554 Interest expense 734,411 749,504 796,192 788,283 Provision for loan losses 150,000 150,000 150,000 200,000 Non-interest income 1,370,218 1,381,731 1,449,247 1,383,196 Non-interest expense 4,731,119 4,892,568 4,842,116 4,700,520 Net income 1,414,216 1,499,513 1,792,949 1,524,620 Earnings per common share 0.27 0.29 0.35 0.30 2016 March 31, June 30, September 30, December 31, Interest income $ 5,818,254 $ 5,963,378 $ 6,254,098 $ 6,212,384 Interest expense 663,262 676,995 691,743 667,299 Provision for loan losses 100,000 150,000 150,000 100,000 Non-interest income 1,237,851 1,318,699 1,483,520 1,461,829 Non-interest expense 4,682,291 4,675,180 4,790,503 4,994,550 Net income 1,169,494 1,295,199 1,515,900 1,503,685 Earnings per common share 0.23 0.25 0.30 0.29 |
24. Other Income and Other Expe
24. Other Income and Other Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Note 24. Other Income and Other Expenses | The components of other income and other expenses which are in excess of one percent of total revenues in either of the two years disclosed are as follows: 2017 2016 Income Income from investment in CFSG Partners $ 415,561 $ 429,008 Expenses Outsourcing expense $ 538,359 $ 509,345 Service contracts - administration 447,374 389,971 Marketing 484,330 380,753 State deposit tax 590,728 568,549 ATM fees 417,067 382,227 Telephone 278,998 318,059 FDIC Insurance 288,388 306,249 |
25. Subsequent Events
25. Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Note 25. Subsequent Events | In February, 2018, the Board approved the sale of a condominium office space unit to CFSG, a related party. The sale is expected to occur in 2018. Declaration of Cash Dividend On December 15, 2017, the Company declared a cash dividend of $0.17 per share payable February 1, 2018 to shareholders of record as of January 15, 2018. On March 14, 2018, the Company declared a cash dividend of $0.17 per share payable May 1, 2018 to shareholders of record as of April 15, 2018. These dividends have been recorded as of each declaration date, including shares issuable under the DRIP. For purposes of accrual or disclosure in these financial statements, the Company has evaluated subsequent events through the date of issuance of these financial statements. |
1. Significant Accounting Pol33
1. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | The consolidated financial statements include the accounts of Community Bancorp. and its wholly-owned subsidiary, Community National Bank (Bank). All significant intercompany accounts and transactions have been eliminated. In prior years, the Company was considered a “smaller reporting company” under applicable disclosure rules of the Securities and Exchange Commission and accordingly, elected to provide its audited consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two year, rather than a three year, period. At December 31, 2017, the Company was considered an accelerated filer for its Annual Report, and beginning with the first quarter 2018 interim report, will be required to provide the above referenced financial information for a three year period. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidation”, in part, addresses limited purpose trusts formed to issue trust preferred securities. It also establishes the criteria used to identify variable interest entities (VIE) and to determine whether or not to consolidate a VIE. In general, ASC Topic 810 provides that the enterprise with the controlling financial interest, known as the primary beneficiary, consolidates the VIE. In 2007, the Company formed CMTV Statutory Trust I for the purposes of issuing trust preferred securities to unaffiliated parties and investing the proceeds from the issuance thereof and the common securities of the trust in junior subordinated debentures issued by the Company. The Company is not the primary beneficiary of CMTV Statutory Trust I; accordingly, the trust is not consolidated with the Company for financial reporting purposes. CMTV Statutory Trust I is considered an affiliate of the Company (see Note 10). In December 2011, the Company formed a limited liability company (LLC) to facilitate its purchase of federal New Markets Tax Credits (NMTC) under an investment structure designed by a local community development entity. Management has evaluated the Company’s interest in the LLC under the ASC guidance relating to VIEs in light of the overall structure and purpose of the NMTC financing transaction and has concluded that the LLC should not be consolidated in the Company’s financial statements for financial reporting purposes, as the Company is not the primary beneficiary of the NMTC structure, does not exercise control within the overall structure and is not obligated to absorb a majority of any losses of the NMTC structure (see Note 7). |
Nature of operations | The Company provides a variety of deposit and lending services to individuals, municipalities, and business customers through its branches, ATMs and telephone, mobile and internet banking capabilities in northern and central Vermont, which is primarily a small business and agricultural area. The Company's primary deposit products are checking and savings accounts and certificates of deposit. Its primary lending products are commercial, real estate, municipal and consumer loans. |
Concentration of risk | The Company's operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic concentration of its deposit taking and lending activities. Management attempts to manage interest rate risk through various asset/liability management techniques designed to match maturities and repricing of assets and liabilities. Loan policies and administration are designed to provide assurance that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors inherent in management’s estimate of credit risk and factors beyond the control of the Company. While the Company has a diversified loan portfolio by loan type, most of its lending activities are conducted within the geographic area where its banking offices are located. As a result, the Company and its borrowers may be especially vulnerable to the consequences of changes in the local economy in northern and central Vermont. In addition, a substantial portion of the Company's loans are secured by real estate, which is susceptible to a decline in value, especially during times of adverse economic conditions. |
Use of estimates | The preparation of consolidated financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. These estimates and assumptions involve inherent uncertainties. Accordingly, actual results could differ from those estimates and those differences could be material. Material estimates that are particularly susceptible to significant change relate to the determination of the ALL and the valuation of OREO. In connection with evaluating loans for impairment or assigning the carrying value of OREO, management generally obtains independent evaluations or appraisals for significant properties. While the ALL and the carrying value of OREO are determined using management's best estimate of probable loan and OREO losses, respectively, as of the balance sheet date, the ultimate collectibility of a substantial portion of the Company's loan portfolio and the recovery of a substantial portion of the fair value of OREO are susceptible to uncertainties and changes in a number of factors, especially local real estate market conditions. The amount of the change that is reasonably possible cannot be estimated. While management uses available information to recognize losses on loans and OREO, future additions to the allowance or write-downs of OREO may be necessary based on changes in local economic conditions or other relevant factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for losses on loans and the carrying value of OREO. Such agencies may require the Company to recognize additions to the allowance or write-downs of OREO based on their judgment about information available to them at the time of their examination. Mortgage servicing rights (MRSs) associated with loans originated and sold in the secondary market, where servicing is retained, are capitalized and included in other assets in the consolidated balance sheets. MSRs are amortized against non-interest income in proportion to, and over the period of, estimated future net servicing income of the underlying loans. The value of capitalized servicing rights represents the present estimated value of the future servicing fees arising from the right to service loans for third parties. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of estimated fair value as compared to amortized cost, and impairment, if any, is recognized through a valuation allowance and is recorded as a write down. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to determine the valuation of MSRs requires the development and use of estimates, including anticipated principal amortization and prepayments. Events that may significantly affect the estimates used are changes in interest rates and the payment performance of the underlying loans. Management uses a third party consultant to assist in analyzing the fair value of the Company’s MSRs. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to various factors, including the length of time and the extent to which the fair value has been less than cost; the nature of the issuer and its financial condition and near-term prospects; and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The evaluation of these factors is a subjective process and involves estimates and assumptions about matters that are inherently uncertain. Should actual factors and conditions differ materially from those used by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements. Accounting for a business combination that was completed prior to 2009 requires the application of the purchase method of accounting. Under the purchase method, the Company was required to record the assets and liabilities acquired through the LyndonBank merger in 2007 at fair market value, with the excess of the purchase price over the fair value of the net assets recorded as goodwill and evaluated annually for impairment. Management uses various assumptions in evaluating goodwill for impairment. Management utilizes numerous techniques to estimate the carrying value of various other assets held by the Company, including, but not limited to, bank premises and equipment and deferred taxes. The assumptions considered in making these estimates are based on historical experience and on various other factors that are believed by management to be reasonable under the circumstances. Management acknowledges that the use of different estimates or assumptions could produce different estimates of carrying values. |
Presentation of cash flows | For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents includes cash on hand, amounts due from banks (including cash items in process of clearing), federal funds sold (generally purchased and sold for one day periods) and overnight deposits. |
Investment securities | Securities the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity (HTM) and reported at amortized cost. Debt and equity securities not classified as HTM are classified as available-for-sale (AFS). Investments classified as AFS are carried at fair value, with unrealized gains and losses, net of tax and reclassification adjustments, reflected as a net amount in the shareholders’ equity section of the consolidated balance sheets and in the statements of changes in shareholders’ equity. Investment securities transactions are accounted for on a trade date basis. The specific identification method is used to determine realized gains and losses on sales of securities AFS. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or call date. The Company does not hold any securities purchased for the purpose of selling in the near term and classified as trading. Declines in the fair value of individual equity securities that are deemed to be other than temporary are reflected in earnings when identified. For individual debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in the fair value of the debt security related to (1) credit loss is recognized in earnings and (2) other factors is recognized in other comprehensive income or loss. Credit loss is deemed to exist if the present value of expected future cash flows using the interest rates at acquisition is less than the amortized cost basis of the debt security. For individual debt securities where the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the security’s cost basis and its fair value at the balance sheet date. |
Other investments | In December 2011, the Company made an equity investment in a NMTC financing structure (see Note 7). The Company’s investment in the NMTC is amortized using the effective yield method. From time to time, the Company acquires partnership interests in limited partnerships for low income housing projects. New investments in limited partnerships are amortized using the proportional amortization method. All investments made before January 1, 2015 are amortized using the effective yield method. The Company has a one-third ownership interest in Community Financial Services Group, LLC (CFSG), a non-depository trust company (see Note 7). The Company's investment in CFSG is accounted for under the equity method of accounting. |
Restricted equity securities | Restricted equity securities comprise Federal Reserve Bank stock and Federal Home Loan Bank stock. These securities are carried at cost. As a member of the Federal Reserve Bank of Boston (FRBB), the Company is required to invest in FRBB stock in an amount equal to 6% of the Bank's capital stock and surplus. As a member of the Federal Home Loan Bank of Boston (FHLBB), the Company is required to invest in $100 par value stock of the FHLBB in an amount that approximates 1% of unpaid principal balances on qualifying loans, plus an additional amount to satisfy an activity based requirement. The stock is nonmarketable and redeemable at par value, subject to the FHLBB’s right to temporarily suspend such redemptions. Members are subject to capital calls in some circumstances to ensure compliance with the FHLBB’s capital plan. |
Loans held-for-sale | Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. |
Loans | Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, adjusted for any charge-offs, the ALL, loan premiums or discounts for acquired loans and any unearned fees or costs on originated loans. Loan interest income is accrued daily on the outstanding balances. For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is considered by management to be remote. Interest payments received on impaired loans are generally applied as a reduction of the loan principal balance. Loans are returned to accrual status when principal and interest payments are brought current and the customer has demonstrated the intent and ability to make future payments on a timely basis. Loans are written down or charged off when collection of principal is considered doubtful. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount is amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life of the loans. Loan premiums and discounts on loans acquired in the merger with LyndonBank are amortized as an adjustment to yield over the life of the loans. Allowance for loan losses The ALL is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is probable. Subsequent recoveries, if any, are credited to the allowance. Unsecured loans, primarily consumer loans, are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on impaired loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. Value of the collateral is determined in accordance with the Company’s appraisal policy. The unsecured portion of an impaired real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due. As described below, the allowance consists of general, specific and unallocated components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of specific, general and unallocated components considered in determining the amount of the allowance. General component The general component of the ALL is based on historical loss experience and various qualitative factors and is stratified by the following loan segments: commercial and industrial, commercial real estate, residential real estate 1st lien, residential real estate Jr lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes. Loss ratios are calculated by loan segment for one year, two year, three year, four year and five year look back periods. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment in the current economic climate. During periods of economic stability, a relatively longer period (e.g., five years) may be appropriate. During periods of significant expansion or contraction, the Company may appropriately shorten the historical time period. The Company is currently using an extended look back period of five years. Qualitative factors include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of commercial real estate loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available. The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows: Commercial & Industrial – Commercial Real Estate – Residential Real Estate - 1st Lien – Residential Real Estate – Jr Lien – Consumer – Specific component The specific component of the ALL relates to loans that are impaired. Impaired loans are loan(s) to a borrower that in the aggregate are greater than $100,000 and that are in non-accrual status or are troubled debt restructurings (TDR) regardless of amount. A specific allowance is established for an impaired loan when its estimated impaired basis is less than the carrying value of the loan. For all loan segments, except consumer loans, a loan is considered impaired when, based on current information and events, in management’s estimation it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant or temporary payment delays and payment shortfalls generally are not classified as impaired. Management evaluates the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and frequency of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Impaired loans also include troubled loans that are restructured. A TDR occurs when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would otherwise not be granted. TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loan’s terms, or a combination of the two. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, unless such loans are subject to a restructuring agreement. Unallocated component An unallocated component of the ALL is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component reflects management’s estimate of the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. ALL methodology changes implemented as of June 30, 2017 During the second quarter of 2017, the Company transitioned to a software solution for preparing the ALL calculation and related reports, replacing previously used Excel spreadsheets. The software solution provides the Company with stronger data integrity, ease and efficiency in ALL preparation, and helps ready the Company for the future transition to the Current Expected Credit Loss (CECL) model. During the implementation and testing of the software, several changes to the underlying ALL methodology were made. Those changes included (i) removing the government guaranteed balances from the calculation of the ALL for both the pooled loans and impaired loans, (ii) treating all TDRs as impaired regardless of amount, and (iii) using a fixed look back period for historical losses based on loss history and economic conditions versus applying the highest look back period of the last 5 years. The Company has a solid history of collection of government guarantees. The impact of not reserving for government guaranteed balances reduced required reserves by approximately $207,000. The change to the historical loss methodology saw required reserves fall by approximately $151,000. Management expects this change will reduce the likelihood of sharp increases or decreases in loss ratios brought on by isolated losses rolling into or out of the look back period and is more reflective of the Company’s loss history during a period of economic stability. At the time of implementation, the inclusion of all TDRs in the impaired calculation required the individual analysis of fifty-seven loans versus eleven loans under the prior method, with nineteen of the additional loans requiring specific reserves ranging from $400 to $30,000, increasing required reserves by approximately $111,000. Loans individually evaluated for impairment under the new method, which would not have been individually evaluated under the old method, amounted to $4,493,655 at June 30, 2017. The ability to individually analyze a greater number of loans is facilitated by the new software. The net impact of the foregoing methodology changes reduced required reserves by approximately $247,000 for the quarter ended June 30, 2017, the quarter during which the changes were first implemented. |
Bank premises and equipment | Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The cost of assets sold or otherwise disposed of, and the related accumulated depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the consolidated statements of income. Maintenance and repairs are charged to current expense as incurred and the cost of major renewals and betterments is capitalized. |
Other real estate owned | Real estate properties acquired through or in lieu of loan foreclosure or properties no longer used for bank operations are initially recorded at fair value less estimated selling cost at the date of acquisition, foreclosure or transfer. Fair value is determined, as appropriate, either by obtaining a current appraisal or evaluation prepared by an independent, qualified appraiser, by obtaining a broker’s market value analysis, and finally, if the Company has limited exposure and limited risk of loss, by the opinion of management as supported by an inspection of the property and its most recent tax valuation. During periods of declining market values, the Company will generally obtain a new appraisal or evaluation. Any write-down based on the asset's fair value at the date of acquisition or institution of foreclosure is charged to the ALL. After acquisition through or in lieu of foreclosure, these assets are carried at the lower of their new cost basis or fair value. Costs of significant property improvements are capitalized, whereas costs relating to holding the property are expensed as incurred. Appraisals by an independent, qualified appraiser are performed periodically on properties that management deems significant, or evaluations may be performed by management or a qualified third party on properties in the portfolio that are deemed less significant or less vulnerable to market conditions. Subsequent write-downs are recorded as a charge to other expense. Gains or losses on the sale of such properties are included in income when the properties are sold. |
Intangible assets | Intangible assets include the excess of the purchase price over the fair value of net assets acquired (goodwill) in the 2007 acquisition of LyndonBank, as well as a core deposit intangible related to the deposits acquired from LyndonBank (see Note 6). The core deposit intangible is amortized on an accelerated basis over 10 years to approximate the pattern of economic benefit to the Company. The core deposit intangible was fully amortized as of December 31, 2017. Goodwill is reviewed for impairment annually, or more frequently as events or circumstances warrant. |
Income taxes | The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled. Adjustments to the Company's deferred tax assets are recognized as deferred income tax expense or benefit based on management's judgments relating to the realizability of such asset. |
Mortgage servicing | Servicing assets are recognized as separate assets when rights are acquired through purchase or retained upon the sale of loans. Capitalized servicing rights are reported in other assets and initially recorded at fair value, and are amortized against non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are periodically evaluated for impairment, based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying the rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and is recorded as amortization of other assets, to the extent that estimated fair value is less than the capitalized amount at the valuation date. Subsequent improvement, if any, in the estimated fair value of impaired MSRs is reflected in a positive valuation adjustment and is recognized in other income up to (but not in excess of) the amount of the prior impairment. |
Pension costs | Pension costs are charged to salaries and employee benefits expense and accrued over the active service period. |
Advertising costs | The Company expenses advertising costs as incurred. |
Comprehensive income | US GAAP generally requires recognized revenue, expenses, gains and losses to be included in net income. Certain changes in assets and liabilities, such as the after-tax effect of unrealized gains and losses on available-for-sale securities, are not reflected in the consolidated statement of income, but the cumulative effect of such items from period-to-period is reflected as a separate component of the shareholders’ equity section of the consolidated balance sheet (accumulated other comprehensive income or loss). Other comprehensive income or loss, along with net income, comprises the Company's total comprehensive income. |
Preferred stock | The Company has outstanding 25 shares of fixed-to-floating rate non-cumulative perpetual preferred stock, without par value and with a liquidation preference of $100,000 per share, issued in December 2007. Under the terms of the preferred stock, the Company pays non-cumulative cash dividends quarterly, when, as and if declared by the Board of Directors. Dividends are payable at a variable dividend rate equal to the Wall Street Journal Prime Rate in effect on the first business day of each quarterly dividend period. A variable rate of 3.50% was in effect during most of 2016, with an increase to 3.75% during the last quarter of 2016, and then almost quarterly rate increases during 2017 to a rate of 4.50% in the fourth quarter of 2017. The variable rate of 4.50% will remain in effect for the dividend payment due in the first quarter of 2018. A partial redemption of five shares of preferred stock at a redemption price per share of $101,125 (including accrued dividend) is scheduled to occur on March 31, 2018. |
Earnings per common share | Earnings per common share amounts are computed based on the weighted average number of shares of common stock issued during the period, including Dividend Reinvestment Plan (DRIP) shares issuable upon reinvestment of dividends (retroactively adjusted for stock splits and stock dividends, if any) and reduced for shares held in treasury. The following table illustrates the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock: Years Ended December 31, 2017 2016 Net income, as reported $ 6,231,298 $ 5,484,278 Less: dividends to preferred shareholders 101,563 87,500 Net income available to common shareholders $ 6,129,735 $ 5,396,778 Weighted average number of common shares used in calculating earnings per share 5,084,102 5,024,270 Earnings per common share $ 1.21 $ 1.07 |
Off-balance-sheet financial instruments | In the ordinary course of business, the Company is a party to off-balance-sheet financial instruments consisting of commitments to extend credit, commercial and municipal letters of credit, standby letters of credit, and risk-sharing commitments on residential mortgage loans sold through the FHLBB’s Mortgage Partnership Finance (MPF) program. Such financial instruments are recorded in the consolidated financial statements when they are funded. |
Transfers of financial assets | Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
Impact of recently issued accounting standards | In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments of the ASU on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The Company has goodwill from its acquisition of LyndonBank in 2007 and performs an impairment test annually or more frequently if circumstances warrant (see Note 6). The Company is currently evaluating the impact of the adoption of the ASU on its consolidated financial statements, but does not anticipate any material impact at this time. The FASB issued ASU No. 2014-09, Revenue from Contracts with Customers FASB formed a Transition Resource Group to assist it in identifying implementation issues that may require further clarification or amendment to ASU No. 2014-09. As a result of that group’s deliberations, FASB has issued several amendments, which will be effective concurrently with ASU No. 2014-09, including ASU No. 2016-08, Principal versus Agent Considerations In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging In February 2018, FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. |
1. Significant Accounting Pol34
1. Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Schedule Of Earnings Per Share | Years Ended December 31, 2017 2016 Net income, as reported $ 6,231,298 $ 5,484,278 Less: dividends to preferred shareholders 101,563 87,500 Net income available to common shareholders $ 6,129,735 $ 5,396,778 Weighted average number of common shares used in calculating earnings per share 5,084,102 5,024,270 Earnings per common share $ 1.21 $ 1.07 |
2. Investment Securities (Table
2. Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investment Securities | |
Schedule Of Available For Sale Securities | Gross Gross Amortized Unrealized Unrealized Fair Securities AFS Cost Gains Losses Value December 31, 2017 U.S. Government sponsored enterprise (GSE) debt securities $ 17,308,229 $ 0 $ 149,487 $ 17,158,742 Agency mortgage-backed securities (Agency MBS) 16,782,380 11,144 180,187 16,613,337 Other investments 4,707,000 165 28,591 4,678,574 $ 38,797,609 $ 11,309 $ 358,265 $ 38,450,653 December 31, 2016 U.S. GSE debt securities $ 17,365,805 $ 24,854 $ 73,331 $ 17,317,328 Agency MBS 13,265,790 3,896 115,458 13,154,228 Other investments 3,221,000 24,947 2,452 3,243,495 $ 33,852,595 $ 53,697 $ 191,241 $ 33,715,051 |
Schedule Of Held to Maturity Securities | Gross Gross Amortized Unrealized Unrealized Fair Securities HTM Cost Gains Losses Value* December 31, 2017 States and political subdivisions $ 48,824,965 $ 0 $ 28,965 $ 48,796,000 December 31, 2016 States and political subdivisions $ 49,886,631 $ 1,148,369 $ 0 $ 51,035,000 *Method used to determine fair value rounds values to nearest thousand. |
Schedule of Investments Pledged as Collateral | Amortized Fair Cost Value December 31, 2017 $ 38,797,609 $ 38,450,653 December 31, 2016 33,604,595 33,469,254 |
Schedule of Maturities of Debt Securities Available for Sale | Amortized Fair Cost Value Due in one year or less $ 3,749,956 $ 3,739,512 Due from one to five years 11,275,824 11,168,065 Due from five to ten years 6,989,449 6,929,739 Agency MBS 16,782,380 16,613,337 $ 38,797,609 $ 38,450,653 |
Schedule Of Maturities of Debt Securities Held to Maturity | Amortized Fair Cost Value* Due in one year or less $ 24,817,334 $ 24,817,000 Due from one to five years 4,494,343 4,487,000 Due from five to ten years 4,338,246 4,331,000 Due after ten years 15,175,042 15,161,000 $ 48,824,965 $ 48,796,000 *Method used to determine fair value rounds values to nearest thousand. |
Schedule Of Unrealized Loss | Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Number of Fair Unrealized Value Loss Value Loss Securities Value Loss December 31, 2017 U.S. GSE debt securities $ 13,223,739 $ 84,490 $ 3,935,003 $ 64,997 15 $ 17,158,742 $ 149,487 Agency MBS 9,251,323 105,063 4,542,446 75,124 21 13,793,769 180,187 Other investments 3,692,571 25,429 244,838 3,162 16 3,937,409 28,591 State and political subdivisions 22,530,141 28,965 0 0 79 22,530,141 28,965 $ 48,697,774 $ 243,947 $ 8,722,287 $ 143,283 131 $ 57,420,061 $ 387,230 December 31, 2016 U.S. GSE debt securities $ 5,176,669 $ 73,331 $ 0 $ 0 4 $ 5,176,669 $ 73,331 Agency MBS 10,704,717 115,458 0 0 15 10,704,717 115,458 Other investments 493,548 2,452 0 0 2 493,548 2,452 $ 16,374,934 $ 191,241 $ 0 $ 0 21 $ 16,374,934 $ 191,241 |
3. Loans, Allowance for Loan 36
3. Loans, Allowance for Loan Losses and Credit Quality (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
Composition of net loans | December 31, 2017 2016 Commercial & industrial $ 77,110,747 $ 68,730,573 Commercial real estate 207,044,227 201,728,280 Residential real estate - 1st lien 168,184,135 166,691,962 Residential real estate - Junior (Jr) lien 45,256,862 42,927,335 Consumer 5,268,680 7,171,076 Gross Loans 502,864,651 487,249,226 Deduct (add): Allowance for loan losses 5,438,099 5,278,445 Deferred net loan costs (318,651 ) (310,130 ) Net Loans $ 497,745,203 $ 482,280,911 |
Past due loans by segment | 90 Days or 90 Days Total Non-Accrual More and December 31, 2017 30-89 Days or More Past Due Current Total Loans Loans Accruing Commercial & industrial $ 308,712 $ 0 $ 308,712 $ 76,802,035 $ 77,110,747 $ 98,806 $ 0 Commercial real estate 1,482,982 418,255 1,901,237 205,142,990 207,044,227 1,065,385 0 Residential real estate - 1st lien 4,238,933 2,011,419 6,250,352 161,933,783 168,184,135 1,585,473 1,249,241 - Jr lien 156,101 168,517 324,618 44,932,244 45,256,862 346,912 0 Consumer 80,384 1,484 81,868 5,186,812 5,268,680 0 1,484 $ 6,267,112 $ 2,599,675 $ 8,866,787 $ 493,997,864 $ 502,864,651 $ 3,096,576 $ 1,250,725 90 Days or 90 Days Total Non-Accrual More and December 31, 2016 30-89 Days or More Past Due Current Total Loans Loans Accruing Commercial & industrial $ 328,684 $ 26,042 $ 354,726 $ 68,375,847 $ 68,730,573 $ 143,128 $ 26,042 Commercial real estate 824,836 222,738 1,047,574 200,680,706 201,728,280 765,584 0 Residential real estate - 1st lien 4,881,496 1,723,688 6,605,184 160,086,778 166,691,962 1,227,220 1,068,083 - Jr lien 984,849 116,849 1,101,698 41,825,637 42,927,335 338,602 27,905 Consumer 53,972 2,176 56,148 7,114,928 7,171,076 0 2,176 $ 7,073,837 $ 2,091,493 $ 9,165,330 $ 478,083,896 $ 487,249,226 $ 2,474,534 $ 1,124,206 |
Residential mortgage loans in process of foreclosure | Number of loans Current Balance December 31, 2017 10 $ 791,944 December 31, 2016 8 322,663 |
Changes in the allowance for loan losses | As of or for the year ended December 31, 2017 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Charge-offs (20,000 ) (160,207 ) (159,533 ) (118,359 ) (124,042 ) 0 (582,141 ) Recoveries 27,051 230 26,826 465 37,223 0 91,795 Provision (credit) (58,212 ) 337,921 223,497 63,700 46,149 36,945 650,000 Ending balance $ 675,687 $ 2,674,029 $ 1,460,547 $ 316,982 $ 43,303 $ 267,551 $ 5,438,099 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 69,015 $ 125,305 $ 26,353 $ 0 $ 0 $ 220,673 Collectively 675,687 2,605,014 1,335,242 290,629 43,303 267,551 5,217,426 $ 675,687 $ 2,674,029 $ 1,460,547 $ 316,982 $ 43,303 $ 267,551 $ 5,438,099 Loans evaluated for impairment Individually $ 98,806 $ 1,306,057 $ 4,075,666 $ 300,759 $ 0 $ 5,781,288 Collectively 77,011,941 205,738,170 164,108,469 44,956,103 5,268,680 497,083,363 $ 77,110,747 $ 207,044,227 $ 168,184,135 $ 45,256,862 $ 5,268,680 $ 502,864,651 As of or for the year ended December 31, 2016 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Unallocated Total Allowance for loan losses Beginning balance $ 712,902 $ 2,152,678 $ 1,368,028 $ 422,822 $ 75,689 $ 279,759 $ 5,011,878 Charge-offs (12,194 ) 0 (244,149 ) 0 (52,219 ) 0 (308,562 ) Recoveries 24,954 0 23,712 240 26,223 0 75,129 Provision (credit) 26,923 343,407 222,166 (51,886 ) 8,543 (49,153 ) 500,000 Ending balance $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Allowance for loan losses Evaluated for impairment Individually $ 0 $ 86,400 $ 6,200 $ 114,800 $ 0 $ 0 $ 207,400 Collectively 726,848 2,409,685 1,363,557 256,376 83,973 230,606 5,071,045 $ 726,848 $ 2,496,085 $ 1,369,757 $ 371,176 $ 83,973 $ 230,606 $ 5,278,445 Loans evaluated for impairment Individually $ 48,385 $ 687,495 $ 946,809 $ 224,053 $ 0 $ 1,906,742 Collectively 68,682,188 201,040,785 165,745,153 42,703,282 7,171,076 485,342,484 $ 68,730,573 $ 201,728,280 $ 166,691,962 $ 42,927,335 $ 7,171,076 $ 487,249,226 |
Impaired loans by segment | As of December 31, 2017 2017 Unpaid Average Interest Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Related allowance recorded Commercial real estate $ 204,645 $ 225,681 $ 69,015 $ 210,890 $ 0 Residential real estate - 1st lien 798,226 837,766 125,305 646,799 29,262 - Jr lien 146,654 293,351 26,353 220,274 400 1,149,525 1,356,798 220,673 1,077,963 29,662 No related allowance recorded Commercial & industrial 98,806 136,590 75,868 72,426 Commercial real estate 1,102,859 1,226,040 1,105,030 237,792 Residential real estate - 1st lien 3,300,175 3,641,627 1,930,108 133,732 - Jr lien 154,116 154,423 116,519 16,574 4,655,956 5,158,680 3,227,525 460,524 $ 5,805,481 $ 6,515,478 $ 220,673 $ 4,305,488 $ 490,186 As of December 31, 2016 2016 Unpaid Average Recorded Principal Related Recorded Investment Balance Allowance Investment With an allowance recorded Commercial real estate $ 220,257 $ 232,073 $ 86,400 $ 89,664 Residential real estate - 1st lien 271,962 275,118 6,200 350,709 - Jr lien 224,053 284,342 114,800 241,965 716,272 791,533 207,400 682,338 With no related allowance recorded Commercial & industrial 48,385 62,498 183,925 Commercial real estate 467,238 521,991 1,059,542 Residential real estate - 1st lien 674,847 893,741 877,237 - Jr lien 0 0 15,888 1,190,470 1,478,230 2,136,592 $ 1,906,742 $ 2,269,763 $ 207,400 $ 2,818,930 |
Risk ratings | As of December 31, 2017 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 73,352,768 $ 194,066,034 $ 165,089,999 $ 44,687,951 $ 5,267,196 $ 482,463,948 Group B 617,526 4,609,847 282,671 37,598 0 5,547,642 Group C 3,140,453 8,368,346 2,811,465 531,313 1,484 14,853,061 $ 77,110,747 $ 207,044,227 $ 168,184,135 $ 45,256,862 $ 5,268,680 $ 502,864,651 As of December 31, 2016 Residential Residential Commercial Commercial Real Estate Real Estate & Industrial Real Estate 1st Lien Jr Lien Consumer Total Group A $ 67,297,983 $ 191,755,393 $ 164,708,778 $ 42,289,062 $ 7,168,901 $ 473,220,117 Group B 512,329 2,971,364 0 169,054 0 3,652,747 Group C 920,261 7,001,523 1,983,184 469,219 2,175 10,376,362 $ 68,730,573 $ 201,728,280 $ 166,691,962 $ 42,927,335 $ 7,171,076 $ 487,249,226 |
Loans modified as TDRs | Year ended December 31, 2017 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded Contracts Investment Investment Residential real estate - 1st lien 4 $ 256,353 $ 287,385 Year ended December 31, 2016 Pre- Post- Modification Modification Outstanding Outstanding Number of Recorded Recorded Contracts Investment Investment Residential real estate - 1st lien 8 $ 572,418 $ 598,030 Residential real estate - Jr lien 2 62,819 64,977 10 $ 635,237 $ 663,007 |
TDRs payment default | Year ended December 31, 2017 Number of Recorded Contracts Investment Residential real estate - 1st lien 1 $ 87,696 Year ended December 31, 2016 Number of Recorded Contracts Investment Residential real estate - 1st lien 2 $ 93,230 Residential real estate - Jr lien 1 54,557 3 $ 147,787 |
Specific allowances | 2017 2016 Specific Allowance $ 197,605 $ 92,600 |
4. Loan Servicing (Tables)
4. Loan Servicing (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Schedule Of Mortgage Servicing Rights | 2017 2016 Balance at beginning of year $ 1,210,695 $ 1,293,079 MSRs capitalized 109,297 176,705 MSRs amortized (236,706 ) (266,603 ) Change in valuation allowance 0 7,514 Balance at end of year $ 1,083,286 $ 1,210,695 |
5. Bank Premises and Equipment
5. Bank Premises and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Major classes of bank premises and equipment | 2017 2016 Buildings and improvements $ 11,148,715 $ 11,213,737 Land and land improvements 2,433,971 2,433,971 Furniture and equipment 6,127,897 9,277,592 Leasehold improvements 1,155,284 1,117,085 Capital lease 991,014 991,014 Other prepaid assets 0 125,584 21,856,881 25,158,983 Less accumulated depreciation and amortization (11,512,704 ) (14,328,427 ) $ 10,344,177 $ 10,830,556 |
Minimum future rental payments | 2018 $ 233,706 2019 206,470 2020 179,581 2021 97,800 2022 66,000 Subsequent to 2022 264,000 $ 1,047,557 |
Future Minimum Lease Payments for Capital Leases | 2018 $ 141,460 2019 141,460 2020 110,460 2021 39,117 Total minimum lease payments 432,497 Less amount representing interest (50,690 ) Present value of net minimum lease payments $ 381,807 |
8. Deposits (Tables)
8. Deposits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Maturities of Time Deposits [Abstract] | |
Maturity distribution of time deposits | 2018 $ 71,257,675 2019 19,422,194 2020 8,639,592 2021 11,160,503 2022 9,367,629 Total time certificates of deposit $ 119,847,593 |
9. Borrowed Funds (Tables)
9. Borrowed Funds (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Borrowed Funds Tables | |
Outstanding advances | 2017 2016 Long-Term Advances(1) FHLBB term advance, 0.00%, due February 26, 2021 $ 350,000 $ 350,000 FHLBB term advance, 0.00%, due November 22, 2021 1,000,000 1,000,000 FHLBB term advance, 0.00%, due June 9, 2022 2,000,000 0 FHLBB term advance, 0.00%, due September 22, 2023 200,000 200,000 3,550,000 1,550,000 Short-Term Advances FHLBB term advance 0.77% fixed rate, due February 8, 2017 0 10,000,000 FHLBB term advance 0.77% fixed rate, due February 24, 2017 0 10,000,000 FHLBB term advance 0.92% fixed rate, due June 14, 2017 0 10,000,000 0 30,000,000 $ 3,550,000 $ 31,550,000 (1) The Company has borrowed a total of $3,550,000 and $1,550,000, respectively, at December 31, 2017 and 2016, under the FHLBB’s Jobs for New England (JNE) program, a program dedicated to supporting job growth and economic development throughout New England. The FHLBB is providing a subsidy, funded by the FHLBB’s earnings, to write down interest rates to zero percent on JNE advances that finance qualifying loans to small businesses. JNE advances must support lending to small businesses in New England that create and/or retain jobs, or otherwise contribute to overall economic development activities. |
11. Repurchase Agreements (Tabl
11. Repurchase Agreements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Repurchase Agreements Tables | |
Securities sold under repurchase agreements | December 31, 2017 2016 Current balance $ 28,647,848 $ 30,423,195 Average balance 28,949,820 25,888,496 Highest month-end balance 31,745,206 30,423,195 Book Value – Pledged investments (1) 38,797,609 33,604,595 Fair Value – Pledged investments (1) 38,450,653 33,469,254 (1) U.S. GSE securities, Agency MBS securities and certificates of deposit were pledged as collateral for the periods presented. |
12. Income Taxes (Tables)
12. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | 2017 2016 Currently paid or payable $ 2,124,999 $ 2,096,474 Deferred expense (benefit) 784,331 (172,562 ) Total income tax expense $ 2,909,330 $ 1,923,912 |
Schedule of Effective Income Tax Rate Reconciliation | 2017 2016 Computed expense at statutory rates $ 3,107,813 $ 2,518,785 Tax exempt interest and BOLI (484,454 ) (471,900 ) Disallowed interest 13,867 13,053 Partnership rehabilitation and tax credits (549,897 ) (857,359 ) Low income housing investment amortization expense 278,296 482,755 NMTC amortization expense 129,078 117,439 Deferred tax asset revaluation to enacted tax rates 410,304 0 Other 4,323 121,139 $ 2,909,330 $ 1,923,912 |
Deferred income tax expense (benefit) | 2017 2016 Depreciation $ 12,377 $ 64,758 Mortgage servicing rights (184,146 ) (28,011 ) Deferred compensation 281,886 (58,194 ) Bad debts 652,671 (90,633 ) Limited partnership amortization (15,573 ) 7,865 Investment in CFSG Partners (39,644 ) 13,187 Core deposit intangible (92,715 ) (92,716 ) Loan fair value (13,531 ) (7,514 ) OREO write down 80 6,460 Prepaid expenses 80,325 0 Revaluation effect of unrealized loss on securities AFS 45,106 0 Other 57,495 12,236 Deferred tax expense (benefit) $ 784,331 $ (172,562 ) |
Components of the net deferred tax asset | 2017 2016 Components of the deferred tax asset: Bad debts $ 1,142,001 $ 1,794,672 Deferred compensation 20,280 302,166 Contingent liability - MPF program 17,793 45,042 OREO write down 13,860 13,940 Capital lease 32,609 63,228 Unrealized loss on securities AFS 72,859 46,765 Other 23,210 22,837 Total deferred tax asset $ 1,322,612 $ 2,288,650 Components of the deferred tax liability: Depreciation 231,681 219,304 Limited partnerships 36,536 52,109 Mortgage servicing rights 227,490 411,636 Investment in CFSG Partners 75,391 115,035 Core deposit intangible 0 92,715 Prepaid expenses 80,325 0 Fair value adjustment on acquired loans 8,399 21,930 Total deferred tax liability 659,822 912,729 Net deferred tax asset $ 662,790 $ 1,375,921 |
15. Financial Instruments wit43
15. Financial Instruments with Off-Balance-Sheet Risk (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | |
Off balance sheet financial instruments risk | Contract or Notional Amount 2017 2016 Unused portions of home equity lines of credit $ 29,529,411 $ 25,535,104 Residential construction lines of credit 3,767,168 3,676,176 Commercial real estate and other construction lines of credit 27,315,198 25,951,345 Commercial and industrial commitments 38,369,010 36,227,213 Other commitments to extend credit 48,233,850 42,459,454 Standby letters of credit and commercial letters of credit 1,939,759 2,009,788 Recourse on sale of credit card portfolio 302,775 258,555 MPF credit enhancement obligation, net (See Note 16) 634,340 748,239 |
18. Transactions with Related44
18. Transactions with Related Parties (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | 2017 2016 Balance, beginning of year $ 14,121,486 $ 14,017,551 New loans to existing Principal Officers/Directors 6,181,507 11,862,375 Retirement/Resignation of Director (6,876,144 ) 0 Repayment (6,069,943 ) (11,758,440 ) Balance, end of year $ 7,356,906 $ 14,121,486 |
20. Regulatory Capital Requir45
20. Regulatory Capital Requirements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Capital Requirements [Abstract] | |
Regulatory capital ratios | Minimum Minimum To Be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes: Action Provisions(1): Amount Ratio Amount Ratio Amount Ratio (Dollars in Thousands) December 31, 2017 Common equity tier 1 capital (to risk-weighted assets) Company $ 59,523 12.75 % $ 21,003 4.50 % N/A N/A Bank $ 58,920 12.64 % $ 20,972 4.50 % $ 30,293 6.50 % Tier 1 capital (to risk-weighted assets) Company $ 59,523 12.75 % $ 28,004 6.00 % N/A N/A Bank $ 58,920 12.64 % $ 27,963 6.00 % $ 37,284 8.00 % Total capital (to risk-weighted assets) Company $ 65,005 13.93 % $ 37,338 8.00 % N/A N/A Bank $ 64,401 13.82 % $ 37,284 8.00 % $ 46,605 10.00 % Tier 1 capital (to average assets) Company $ 59,523 9.05 % $ 26,304 4.00 % N/A N/A Bank $ 58,920 8.97 % $ 26,279 4.00 % $ 32,849 5.00 % December 31, 2016: Common equity tier 1 capital (to risk-weighted assets) Company $ 55,690 12.34 % $ 20,304 4.50 % N/A N/A Bank $ 55,120 12.23 % $ 20,274 4.50 % $ 29,285 6.50 % Tier 1 capital (to risk-weighted assets) Company $ 55,690 12.34 % $ 27,072 6.00 % N/A N/A Bank $ 55,120 12.23 % $ 27,032 6.00 % $ 36,043 8.00 % Total capital (to risk-weighted assets) Company $ 61,012 13.52 % $ 36,096 8.00 % N/A N/A Bank $ 60,443 13.42 % $ 36,043 8.00 % $ 45,054 10.00 % Tier 1 capital (to average assets) Company $ 55,690 9.17 % $ 24,305 4.00 % N/A N/A Bank $ 55,120 9.08 % $ 24,281 4.00 % $ 30,351 5.00 % (1) Applicable to banks, but not bank holding companies. |
21. Fair Value (Tables)
21. Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule Of Fair Value Assets On Recurring Basis | December 31, 2017 Level 2 Assets: (market approach) U.S. GSE debt securities $ 17,158,742 Agency MBS 16,613,337 Other investments 4,678,574 Total $ 38,450,653 December 31, 2016 Level 2 Assets: (market approach) U.S. GSE debt securities $ 17,317,328 Agency MBS 13,154,228 Other investments 3,243,495 $ 33,715,051 |
Schedule of Fair Value Assets Nonrecurring Basis | December 31, 2017 Level 2 Assets: (market approach) MSRs(1) $ 1,083,286 Impaired loans, net of related allowance 135,630 OREO 284,235 December 31, 2016 Assets: (market approach) MSRs(1) $ 1,210,695 Impaired loans, net of related allowance 508,872 OREO 394,000 (1) Represents MSRs at lower of cost or fair value, including MSRs deemed to be impaired and for which a valuation allowance was established to carry at fair value at December 31, 2017 and 2016. |
Schedule Of Estimated Fair Values Of Financial Instruments | December 31, 2017 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 42,654 $ 42,654 $ 0 $ 0 $ 42,654 Securities HTM 48,825 0 48,796 0 48,796 Securities AFS 38,451 0 38,451 0 38,451 Restricted equity securities 1,704 0 1,704 0 1,704 Loans and loans held-for-sale, net of ALL Commercial & industrial 76,394 0 0 76,799 76,799 Commercial real estate 204,260 0 136 204,697 204,833 Residential real estate - 1st lien 167,671 0 0 169,205 169,205 Residential real estate - Jr lien 44,916 0 0 45,207 45,207 Consumer 5,223 0 0 5,425 5,425 MSRs (1) 1,083 0 1,337 0 1,337 Accrued interest receivable 2,052 0 2,052 0 2,052 Financial liabilities: Deposits Other deposits 509,686 0 508,407 0 508,407 Brokered deposits 50,949 0 50,926 0 50,926 Long-term borrowings 3,550 0 3,191 0 3,191 Repurchase agreements 28,648 0 28,648 0 28,648 Capital lease obligations 382 0 382 0 382 Subordinated debentures 12,887 0 12,832 0 12,832 Accrued interest payable 101 0 101 0 101 (1) Reported fair value represents all MSRs serviced by the Company at December 31, 2017, regardless of carrying amount. December 31, 2016 Fair Fair Fair Fair Carrying Value Value Value Value Amount Level 1 Level 2 Level 3 Total (Dollars in Thousands) Financial assets: Cash and cash equivalents $ 29,614 $ 29,614 $ 0 $ 0 $ 29,614 Securities HTM 49,887 0 51,035 0 51,035 Securities AFS 33,715 0 33,715 0 33,715 Restricted equity securities 2,756 0 2,756 0 2,756 Loans and loans held-for-sale, net of ALL Commercial & industrial 67,972 0 48 68,727 68,775 Commercial real estate 199,136 0 601 201,560 202,161 Residential real estate - 1st lien 165,243 0 941 166,858 167,799 Residential real estate - Jr lien 42,536 0 109 42,948 43,057 Consumer 7,084 0 0 7,371 7,371 MSRs(1) 1,211 0 1,302 0 1,302 Accrued interest receivable 1,819 0 1,819 0 1,819 Financial liabilities: Deposits Other deposits 470,002 0 469,323 0 469,323 Brokered deposits 34,733 0 34,745 0 34,745 Short-term borrowings 30,000 0 30,000 0 30,000 Long-term borrowings 1,550 0 1,376 0 1,376 Repurchase agreements 30,423 0 30,423 0 30,423 Capital lease obligations 483 0 483 0 483 Subordinated debentures 12,887 0 12,849 0 12,849 Accrued interest payable 73 0 73 0 73 (1) Reported fair value represents all MSRs serviced by the Company at December 31, 2016, regardless of carrying amount. |
22. Condensed Financial Infor47
22. Condensed Financial Information (Parent Company Only) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Balance Sheets | Community Bancorp. (Parent Company Only) December 31, December 31, Balance Sheets 2017 2016 Assets Cash $ 556,392 $ 494,086 Investment in subsidiary - Community National Bank 70,219,699 66,769,241 Investment in Capital Trust 387,000 387,000 Income taxes receivable 290,224 269,335 Total assets $ 71,453,315 $ 67,919,662 Liabilities and Shareholders' Equity Liabilities Junior subordinated debentures $ 12,887,000 $ 12,887,000 Dividends payable 630,461 581,145 Total liabilities 13,517,461 13,468,145 Shareholders' Equity Preferred stock, 1,000,000 shares authorized, 25 shares issued and outstanding ($100,000 liquidation value) 2,500,000 2,500,000 Common stock - $2.50 par value; 15,000,000 shares authorized, 5,322,320 and 5,269,053 shares issued at December 31, 2017 and 2016, respectively (including 13,039 and 15,022 shares issued February 1, 2018 and 2017, respectively) 13,305,800 13,172,633 Additional paid-in capital 31,639,189 30,825,658 Retained earnings 13,387,739 10,666,782 Accumulated other comprehensive loss (274,097 ) (90,779 ) Less: treasury stock, at cost; 210,101 shares at December 31, 2017 and 2016 (2,622,777 ) (2,622,777 ) Total shareholders' equity 57,935,854 54,451,517 Total liabilities and shareholders' equity $ 71,453,315 $ 67,919,662 |
Condensed Statements of Income | Community Bancorp. (Parent Company Only) Years Ended December 31, Condensed Statements of Income 2017 2016 Income Bank subsidiary distributions $ 3,206,000 $ 2,940,000 Dividends on Capital Trust 15,757 13,818 Total income 3,221,757 2,953,818 Expense Interest on junior subordinated debentures 524,696 460,142 Administrative and other 344,657 345,842 Total expense 869,353 805,984 Income before applicable income tax benefit and equity in undistributed net income of subsidiary 2,352,404 2,147,834 Income tax benefit 290,224 269,335 Income before equity in undistributed net income of subsidiary 2,642,628 2,417,169 Equity in undistributed net income of subsidiary 3,588,670 3,067,109 Net income $ 6,231,298 $ 5,484,278 |
Condensed Statements of Cash Flows | Community Bancorp. (Parent Company Only) Years Ended December 31, Condensed Statements of Cash Flows 2017 2016 Cash Flows from Operating Activities Net income $ 6,231,298 $ 5,484,278 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed net income of subsidiary (3,588,670 ) (3,067,109 ) Increase in income taxes receivable (20,888 ) (29,941 ) Net cash provided by operating activities 2,621,740 2,387,228 Cash Flows from Financing Activities Dividends paid on preferred stock (101,563 ) (87,500 ) Dividends paid on common stock (2,457,871 ) (2,313,967 ) Net cash used in financing activities (2,559,434 ) (2,401,467 ) Net (decrease) increase in cash 62,306 (14,239 ) Cash Beginning 494,086 508,325 Ending $ 556,392 $ 494,086 Cash Received for Income Taxes $ 269,335 $ 239,394 Cash Paid for Interest $ 524,696 $ 460,142 Dividends paid: Dividends declared $ 3,453,884 $ 3,212,092 Increase in dividends payable attributable to dividends declared (49,315 ) (565 ) Dividends reinvested (946,698 ) (897,560 ) $ 2,457,871 $ 2,313,967 |
23. Quarterly Financial Data (T
23. Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | 2017 March 31, June 30, September 30, December 31, Interest income $ 6,156,393 $ 6,444,837 $ 6,820,165 $ 7,019,554 Interest expense 734,411 749,504 796,192 788,283 Provision for loan losses 150,000 150,000 150,000 200,000 Non-interest income 1,370,218 1,381,731 1,449,247 1,383,196 Non-interest expense 4,731,119 4,892,568 4,842,116 4,700,520 Net income 1,414,216 1,499,513 1,792,949 1,524,620 Earnings per common share 0.27 0.29 0.35 0.30 2016 March 31, June 30, September 30, December 31, Interest income $ 5,818,254 $ 5,963,378 $ 6,254,098 $ 6,212,384 Interest expense 663,262 676,995 691,743 667,299 Provision for loan losses 100,000 150,000 150,000 100,000 Non-interest income 1,237,851 1,318,699 1,483,520 1,461,829 Non-interest expense 4,682,291 4,675,180 4,790,503 4,994,550 Net income 1,169,494 1,295,199 1,515,900 1,503,685 Earnings per common share 0.23 0.25 0.30 0.29 |
24. Other Income and Other Ex49
24. Other Income and Other Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Income and Expenses [Abstract] | |
Components of other income and other expenses | 2017 2016 Income Income from investment in CFSG Partners $ 415,561 $ 429,008 Expenses Outsourcing expense $ 538,359 $ 509,345 Service contracts - administration 447,374 389,971 Marketing 484,330 380,753 State deposit tax 590,728 568,549 ATM fees 417,067 382,227 Telephone 278,998 318,059 FDIC Insurance 288,388 306,249 |
1. Significant Accounting Pol50
1. Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||||||||||
Net income, as reported | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 1,503,685 | $ 1,515,900 | $ 1,295,199 | $ 1,169,494 | $ 6,231,298 | $ 5,484,278 |
Less: dividends to preferred shareholders | 101,563 | 87,500 | ||||||||
Net income available to common shareholders | $ 6,129,735 | $ 5,396,778 | ||||||||
Weighted average number of common shares used in calculating earnings per share | 5,084,102 | 5,024,270 | ||||||||
Earnings per common share | $ .30 | $ 0.35 | $ 0.29 | $ 0.27 | $ 0.29 | $ .30 | $ 0.25 | $ 0.23 | $ 1.21 | $ 1.07 |
2. Investment Securities (Detai
2. Investment Securities (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Available for sale Securities | |||
Amortized Cost - Available for sale Securities | $ 38,797,609 | $ 33,852,595 | |
Gross Unrealized Gains - Available for sale Securities | 11,309 | 53,697 | |
Gross Unrealized Losses - Available for sale Securities | 358,265 | 191,241 | |
Fair Value - Available for sale Securities | 38,450,653 | 33,715,051 | |
Held-to-Maturity Securities | |||
Amortized Cost - Held-to-Maturity | 48,824,965 | 49,886,631 | |
Gross Unrealized Gains - Held-to-Maturity | 0 | 1,148,369 | |
Gross Unrealized Losses - Held-to-Maturity | 28,965 | 0 | |
Fair Value - Held-to-Maturity | 48,796,000 | 51,035,000 | |
U.S. GSE debt securities | |||
Available for sale Securities | |||
Amortized Cost - Available for sale Securities | 17,308,229 | 17,365,805 | |
Gross Unrealized Gains - Available for sale Securities | 0 | 24,854 | |
Gross Unrealized Losses - Available for sale Securities | 149,487 | 73,331 | |
Fair Value - Available for sale Securities | 17,158,742 | 17,317,328 | |
Agency mortgage-backed securities (Agency MBS) | |||
Available for sale Securities | |||
Amortized Cost - Available for sale Securities | 16,782,380 | 13,265,790 | |
Gross Unrealized Gains - Available for sale Securities | 11,144 | 3,896 | |
Gross Unrealized Losses - Available for sale Securities | 180,187 | 115,458 | |
Fair Value - Available for sale Securities | 16,613,337 | 13,154,228 | |
Other investments | |||
Available for sale Securities | |||
Amortized Cost - Available for sale Securities | 4,707,000 | 3,221,000 | |
Gross Unrealized Gains - Available for sale Securities | 165 | 24,947 | |
Gross Unrealized Losses - Available for sale Securities | 28,591 | 2,452 | |
Fair Value - Available for sale Securities | 4,678,574 | 3,243,495 | |
US States and Political Subdivisions Debt Securities [Member] | |||
Held-to-Maturity Securities | |||
Amortized Cost - Held-to-Maturity | 48,824,965 | 49,886,631 | |
Gross Unrealized Gains - Held-to-Maturity | 0 | 1,148,369 | |
Gross Unrealized Losses - Held-to-Maturity | 28,965 | 0 | |
Fair Value - Held-to-Maturity | [1] | $ 48,796,000 | $ 51,035,000 |
[1] | Method used to determine fair value rounds values to nearest thousand. |
2. Investment Securities (Det52
2. Investment Securities (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Investment Securities Details 1 | ||
Book value of available for sale securities, pledged as collateral for repurchase agreements | $ 38,797,609 | $ 33,604,595 |
Fair value of available for sale securities, pledged as collateral for repurchase agreements | $ 38,450,653 | $ 33,469,254 |
2. Investment Securities (Det53
2. Investment Securities (Details 2) | Dec. 31, 2017USD ($) | |
Available for sale Securities | ||
Amortized Cost | ||
Due in one year or less, Amortized Cost | $ 3,749,956 | |
Due from one to five years, Amortized Cost | 11,275,824 | |
Due from five to ten years | 6,989,449 | |
Agency MBS | 16,782,380 | |
Amortization Cost of Debt | 38,797,609 | |
Fair Value | ||
Due in one year or less, fair value | 3,739,512 | |
Due from one to five years, fair value | 11,168,065 | |
Due from five to ten years | 6,929,739 | |
Agency MBS | 16,613,337 | |
Fair value of debt | 38,450,653 | |
Held to maturity Securities | ||
Amortized Cost | ||
Due in one year or less, Amortized Cost | 24,817,334 | |
Due from one to five years, Amortized Cost | 4,494,343 | |
Due from five to ten years | 4,338,246 | |
Due after ten years, Amortized Cost | 15,175,042 | |
Amortization Cost of Debt | 48,824,965 | |
Fair Value | ||
Due in one year or less, fair value | 24,817,000 | [1] |
Due from one to five years, fair value | 4,487,000 | [1] |
Due from five to ten years | 4,331,000 | [1] |
Due after ten years, fair value | 15,161,000 | [1] |
Fair value of debt | $ 48,796,000 | [1] |
[1] | Method used to determine fair value rounds values to nearest thousand. |
2. Investment Securities (Det54
2. Investment Securities (Details 3) | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Fair Value Less than 12 months | $ 48,697,774 | $ 16,374,934 |
Unrealized Loss Less than 12 months | 243,947 | 191,241 |
Fair Value 12 months or more | 8,722,287 | 0 |
Unrealized Loss 12 months or more | $ 143,283 | $ 0 |
Number of securities | 131 | 21 |
Fair Value | $ 57,420,061 | $ 16,374,934 |
Unrealized Loss | 387,230 | 191,241 |
U.S. GSE debt securities | ||
Fair Value Less than 12 months | 13,223,739 | 5,176,669 |
Unrealized Loss Less than 12 months | 84,490 | 73,331 |
Fair Value 12 months or more | 3,935,003 | 0 |
Unrealized Loss 12 months or more | $ 64,997 | $ 0 |
Number of securities | 15 | 4 |
Fair Value | $ 17,158,742 | $ 5,176,669 |
Unrealized Loss | 149,487 | 73,331 |
Agency MBS | ||
Fair Value Less than 12 months | 9,251,323 | 10,704,717 |
Unrealized Loss Less than 12 months | 105,063 | 115,458 |
Fair Value 12 months or more | 4,542,446 | 0 |
Unrealized Loss 12 months or more | $ 75,124 | $ 0 |
Number of securities | 21 | 15 |
Fair Value | $ 13,793,769 | $ 10,704,717 |
Unrealized Loss | 180,187 | 115,458 |
Other investments | ||
Fair Value Less than 12 months | 3,692,571 | 493,548 |
Unrealized Loss Less than 12 months | 25,429 | 2,452 |
Fair Value 12 months or more | 244,838 | 0 |
Unrealized Loss 12 months or more | $ 3,162 | $ 0 |
Number of securities | 16 | 2 |
Fair Value | $ 3,937,409 | $ 493,548 |
Unrealized Loss | 28,591 | $ 2,452 |
US States and Political Subdivisions Debt Securities [Member] | ||
Fair Value Less than 12 months | 22,530,141 | |
Unrealized Loss Less than 12 months | 28,965 | |
Fair Value 12 months or more | 0 | |
Unrealized Loss 12 months or more | $ 0 | |
Number of securities | 79 | |
Fair Value | $ 22,530,141 | |
Unrealized Loss | $ 28,965 |
2. Investment Securities (Det55
2. Investment Securities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Investment Securities Details Narrative | ||
Proceeds from sales of securities | $ 9,015,961 | |
Gains from sales of securities | 8,387 | |
Loss from sales of securities | 5,003 | |
Investment in FHLBB stock | 1,115,500 | $ 2,167,700 |
Investment in FRBB stock | $ 588,150 | $ 588,150 |
3. Loans, Allowance for Loan 56
3. Loans, Allowance for Loan Losses and Credit Quality (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Loans and Leases Receivable Disclosure [Abstract] | |||
Commercial & industrial | $ 77,110,747 | $ 68,730,573 | |
Commercial real estate | 207,044,227 | 201,728,280 | |
Residential real estate - 1st lien | 168,184,135 | 166,691,962 | |
Residential real estate - Junior (Jr) lien | 45,256,862 | 42,927,335 | |
Consumer | 5,268,680 | 7,171,076 | |
Gross Loans | 502,864,651 | 487,249,226 | |
Allowance for loan losses | 5,438,099 | 5,278,445 | $ 5,011,878 |
Deferred net loan costs | (318,651) | (310,130) | |
Net loans | $ 497,745,203 | $ 482,280,911 |
3. Loans, Allowance for Loan 57
3. Loans, Allowance for Loan Losses and Credit Quality (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
30-89 Days | $ 6,267,112 | $ 7,073,837 |
90 Days or more | 2,599,675 | 2,091,493 |
Total Past Due | 8,866,787 | 9,165,330 |
Current | 493,997,864 | 478,083,896 |
Total Loans | 502,864,651 | 487,249,226 |
Non-Accrual Loans | 3,096,576 | 2,474,534 |
90 Days or More and Accruing | 1,250,725 | 1,124,206 |
Commercial and industrial | ||
30-89 Days | 308,712 | 328,684 |
90 Days or more | 0 | 26,042 |
Total Past Due | 308,712 | 354,726 |
Current | 76,802,035 | 68,375,847 |
Total Loans | 77,110,747 | 68,730,573 |
Non-Accrual Loans | 98,806 | 143,128 |
90 Days or More and Accruing | 0 | 26,042 |
Commercial Real Estate | ||
30-89 Days | 1,482,982 | 824,836 |
90 Days or more | 418,255 | 222,738 |
Total Past Due | 1,901,237 | 1,047,574 |
Current | 205,142,990 | 200,680,706 |
Total Loans | 207,044,227 | 201,728,280 |
Non-Accrual Loans | 1,065,385 | 765,584 |
90 Days or More and Accruing | 0 | 0 |
Residential real estate - 1st lien | ||
30-89 Days | 4,238,933 | 4,881,496 |
90 Days or more | 2,011,419 | 1,723,688 |
Total Past Due | 6,250,352 | 6,605,184 |
Current | 161,933,783 | 160,086,778 |
Total Loans | 168,184,135 | 166,691,962 |
Non-Accrual Loans | 1,585,473 | 1,227,220 |
90 Days or More and Accruing | 1,249,241 | 1,068,083 |
Residential real estate - Jr lien | ||
30-89 Days | 156,101 | 984,849 |
90 Days or more | 168,517 | 116,849 |
Total Past Due | 324,618 | 1,101,698 |
Current | 44,932,244 | 41,825,637 |
Total Loans | 45,256,862 | 42,927,335 |
Non-Accrual Loans | 346,912 | 338,602 |
90 Days or More and Accruing | 0 | 27,905 |
Consumer | ||
30-89 Days | 80,384 | 53,972 |
90 Days or more | 1,484 | 2,176 |
Total Past Due | 81,868 | 56,148 |
Current | 5,186,812 | 7,114,928 |
Total Loans | 5,268,680 | 7,171,076 |
Non-Accrual Loans | 0 | 0 |
90 Days or More and Accruing | $ 1,484 | $ 2,176 |
3. Loans, Allowance for Loan 58
3. Loans, Allowance for Loan Losses and Credit Quality (Details 2) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Loans Allowance For Loan Losses And Credit Quality Details 2 | ||
Residential mortgage loans in process of foreclosure, number of loans | 10 | 8 |
Residential mortgage loans in process of foreclosure, current balance | $ 791,944 | $ 322,663 |
3. Loans, Allowance for Loan 59
3. Loans, Allowance for Loan Losses and Credit Quality (Details 3) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for loan losses, Beginning balance | $ 5,278,445 | $ 5,011,878 | $ 5,278,445 | $ 5,011,878 | ||||||||
Charge-offs | (582,141) | (308,562) | ||||||||||
Recoveries | 91,795 | 75,129 | ||||||||||
Provision (credit) | $ 200,000 | $ 150,000 | $ 150,000 | 150,000 | $ 100,000 | $ 150,000 | $ 150,000 | 100,000 | 650,000 | 500,000 | ||
Allowance for loan losses, Ending balance | 5,438,099 | 5,278,445 | 5,438,099 | 5,278,445 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | $ 220,673 | $ 207,400 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 5,217,426 | 5,071,045 | ||||||||||
Allowance for loan losses | 5,438,099 | 5,278,445 | 5,278,445 | 5,011,878 | 5,438,099 | 5,278,445 | 5,438,099 | 5,278,445 | ||||
Loans evaluated for impairment, Individually | 5,781,288 | 1,906,742 | ||||||||||
Loans evaluated for impairment, Collectively | 497,083,363 | 485,342,484 | ||||||||||
Total Loans | 502,864,651 | 487,249,226 | ||||||||||
Commercial and industrial | ||||||||||||
Allowance for loan losses, Beginning balance | 726,848 | 712,902 | 726,848 | 712,902 | ||||||||
Charge-offs | (20,000) | (12,194) | ||||||||||
Recoveries | 27,051 | 24,954 | ||||||||||
Provision (credit) | (58,212) | 26,923 | ||||||||||
Allowance for loan losses, Ending balance | 675,687 | 726,848 | 675,687 | 726,848 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 675,687 | 726,848 | ||||||||||
Allowance for loan losses | 675,687 | 726,848 | 726,848 | 712,902 | 675,687 | 712,902 | 675,687 | 726,848 | ||||
Loans evaluated for impairment, Individually | 98,806 | 48,385 | ||||||||||
Loans evaluated for impairment, Collectively | 77,011,941 | 68,682,188 | ||||||||||
Total Loans | 77,110,747 | 68,730,573 | ||||||||||
Commercial Real Estate | ||||||||||||
Allowance for loan losses, Beginning balance | 2,496,085 | 2,152,678 | 2,496,085 | 2,152,678 | ||||||||
Charge-offs | (160,207) | 0 | ||||||||||
Recoveries | 230 | 0 | ||||||||||
Provision (credit) | 337,921 | 343,407 | ||||||||||
Allowance for loan losses, Ending balance | 2,674,029 | 2,496,085 | 2,674,029 | 2,496,085 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 69,015 | 86,400 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 2,605,014 | 2,409,685 | ||||||||||
Allowance for loan losses | 2,674,029 | 2,496,085 | 2,496,085 | 2,152,678 | 2,674,029 | 2,152,678 | 2,674,029 | 2,496,085 | ||||
Loans evaluated for impairment, Individually | 1,306,057 | 687,495 | ||||||||||
Loans evaluated for impairment, Collectively | 205,738,170 | 201,040,785 | ||||||||||
Total Loans | 207,044,227 | 201,728,280 | ||||||||||
Residential Real Estate 1st Lien | ||||||||||||
Allowance for loan losses, Beginning balance | 1,369,757 | 1,368,028 | 1,369,757 | 1,368,028 | ||||||||
Charge-offs | (159,533) | (244,149) | ||||||||||
Recoveries | 26,826 | 23,712 | ||||||||||
Provision (credit) | 223,497 | 222,166 | ||||||||||
Allowance for loan losses, Ending balance | 1,460,547 | 1,369,757 | 1,460,547 | 1,369,757 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 125,305 | 6,200 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 1,335,242 | 1,363,557 | ||||||||||
Allowance for loan losses | 1,460,547 | 1,369,757 | 1,369,757 | 1,368,028 | 1,460,547 | 1,368,028 | 1,460,547 | 1,369,757 | ||||
Loans evaluated for impairment, Individually | 4,075,666 | 946,809 | ||||||||||
Loans evaluated for impairment, Collectively | 164,108,469 | 165,745,153 | ||||||||||
Total Loans | 168,184,135 | 166,691,962 | ||||||||||
Residential Real Estate Jr Lien | ||||||||||||
Allowance for loan losses, Beginning balance | 371,176 | 422,822 | 371,176 | 422,822 | ||||||||
Charge-offs | (118,359) | 0 | ||||||||||
Recoveries | 465 | 240 | ||||||||||
Provision (credit) | 63,700 | (51,886) | ||||||||||
Allowance for loan losses, Ending balance | 316,982 | 371,176 | 316,982 | 371,176 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 26,353 | 114,800 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 290,629 | 256,376 | ||||||||||
Allowance for loan losses | 316,982 | 371,176 | 371,176 | 422,822 | 316,982 | 422,822 | 316,982 | 371,176 | ||||
Loans evaluated for impairment, Individually | 300,759 | 224,053 | ||||||||||
Loans evaluated for impairment, Collectively | 44,956,103 | 42,703,282 | ||||||||||
Total Loans | 45,256,862 | 42,927,335 | ||||||||||
Consumer | ||||||||||||
Allowance for loan losses, Beginning balance | 83,973 | 75,689 | 83,973 | 75,689 | ||||||||
Charge-offs | (124,042) | (52,219) | ||||||||||
Recoveries | 37,223 | 26,223 | ||||||||||
Provision (credit) | 46,149 | 8,543 | ||||||||||
Allowance for loan losses, Ending balance | 43,303 | 83,973 | 43,303 | 83,973 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 43,303 | 83,973 | ||||||||||
Allowance for loan losses | 43,303 | 83,973 | 83,973 | 75,689 | 43,303 | 75,689 | 43,303 | 83,973 | ||||
Loans evaluated for impairment, Individually | 0 | 0 | ||||||||||
Loans evaluated for impairment, Collectively | 5,268,680 | 7,171,076 | ||||||||||
Total Loans | 5,268,680 | 7,171,076 | ||||||||||
Unallocated | ||||||||||||
Allowance for loan losses, Beginning balance | 230,606 | 279,759 | 230,606 | 279,759 | ||||||||
Charge-offs | 0 | 0 | ||||||||||
Recoveries | 0 | 0 | ||||||||||
Provision (credit) | 36,945 | (49,153) | ||||||||||
Allowance for loan losses, Ending balance | 267,551 | 230,606 | 267,551 | 230,606 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 267,551 | 230,606 | ||||||||||
Allowance for loan losses | $ 267,551 | $ 230,606 | $ 230,606 | $ 279,759 | $ 267,551 | $ 279,759 | $ 267,551 | $ 230,606 |
3. Loans, Allowance for Loan 60
3. Loans, Allowance for Loan Losses and Credit Quality (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Recorded Investment With no related allowance recorded | $ 4,655,956 | $ 1,190,470 |
Unpaid Principal Balance With no related allowance recorded | 5,158,680 | 1,478,230 |
Average Recorded Investment With no related allowance recorded | 3,227,525 | 2,136,592 |
Interest income recognized With no related allowance recorded | 460,524 | |
Recorded Investment With an allowance recorded | 1,149,525 | 716,272 |
Unpaid Principal Balance With an allowance recorded | 1,356,798 | 791,533 |
Related Allowance With an allowance recorded | 220,673 | 207,400 |
Average Recorded Investment With an allowance recorded | 1,077,963 | 682,338 |
Interest income recognized With an allowance recorded | 29,662 | |
Recorded Investment allowance recorded | 5,805,481 | 1,906,742 |
Unpaid Principal Balance allowance recorded | 6,515,478 | 2,269,763 |
Related Allowance recorded | 220,673 | 207,400 |
Average Recorded Investment Allowance recorded | 4,305,488 | 2,818,930 |
Interest income recognized | 490,186 | |
Commercial and industrial | ||
Recorded Investment With no related allowance recorded | 98,806 | 48,385 |
Unpaid Principal Balance With no related allowance recorded | 136,590 | 62,498 |
Average Recorded Investment With no related allowance recorded | 75,868 | 183,925 |
Interest income recognized With no related allowance recorded | 72,426 | |
Commercial Real Estate | ||
Recorded Investment With no related allowance recorded | 1,102,859 | 467,238 |
Unpaid Principal Balance With no related allowance recorded | 1,226,040 | 521,991 |
Average Recorded Investment With no related allowance recorded | 1,105,030 | 1,059,542 |
Interest income recognized With no related allowance recorded | 237,792 | |
Recorded Investment With an allowance recorded | 204,645 | 220,257 |
Unpaid Principal Balance With an allowance recorded | 225,681 | 232,073 |
Related Allowance With an allowance recorded | 69,015 | 86,400 |
Average Recorded Investment With an allowance recorded | 210,890 | 89,664 |
Interest income recognized With an allowance recorded | 0 | |
Related Allowance recorded | 69,015 | 86,400 |
Residential real estate - 1st lien | ||
Recorded Investment With no related allowance recorded | 3,300,175 | 674,847 |
Unpaid Principal Balance With no related allowance recorded | 3,641,627 | 893,741 |
Average Recorded Investment With no related allowance recorded | 1,930,108 | 877,237 |
Interest income recognized With no related allowance recorded | 133,732 | |
Recorded Investment With an allowance recorded | 798,226 | 271,962 |
Unpaid Principal Balance With an allowance recorded | 837,766 | 275,118 |
Related Allowance With an allowance recorded | 125,305 | 6,200 |
Average Recorded Investment With an allowance recorded | 646,799 | 350,709 |
Interest income recognized With an allowance recorded | 29,262 | |
Related Allowance recorded | 125,305 | 6,200 |
Residential real estate - Jr lien | ||
Recorded Investment With no related allowance recorded | 154,116 | 0 |
Unpaid Principal Balance With no related allowance recorded | 154,423 | 0 |
Average Recorded Investment With no related allowance recorded | 116,519 | 15,888 |
Interest income recognized With no related allowance recorded | 16,574 | |
Recorded Investment With an allowance recorded | 146,654 | 224,053 |
Unpaid Principal Balance With an allowance recorded | 293,351 | 284,342 |
Related Allowance With an allowance recorded | 26,353 | 114,800 |
Average Recorded Investment With an allowance recorded | 220,274 | 241,965 |
Interest income recognized With an allowance recorded | 400 | |
Related Allowance recorded | $ 26,353 | $ 114,800 |
3. Loans, Allowance for Loan 61
3. Loans, Allowance for Loan Losses and Credit Quality (Details 5) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Group A | $ 482,463,948 | $ 473,220,117 |
Group B | 5,547,642 | 3,652,747 |
Group C | 14,853,061 | 10,376,362 |
Total Loans | 502,864,651 | 487,249,226 |
Commercial and industrial | ||
Group A | 73,352,768 | 67,297,983 |
Group B | 617,526 | 512,329 |
Group C | 3,140,453 | 920,261 |
Total Loans | 77,110,747 | 68,730,573 |
Commercial Real Estate | ||
Group A | 194,066,034 | 191,755,393 |
Group B | 4,609,847 | 2,971,364 |
Group C | 8,368,346 | 7,001,523 |
Total Loans | 207,044,227 | 201,728,280 |
Residential real estate - 1st lien | ||
Group A | 165,089,999 | 164,708,778 |
Group B | 282,671 | 0 |
Group C | 2,811,465 | 1,983,184 |
Total Loans | 168,184,135 | 166,691,962 |
Residential real estate - Jr lien | ||
Group A | 44,687,951 | 42,289,062 |
Group B | 37,598 | 169,054 |
Group C | 531,313 | 469,219 |
Total Loans | 45,256,862 | 42,927,335 |
Consumer | ||
Group A | 5,267,196 | 7,168,901 |
Group B | 0 | 0 |
Group C | 1,484 | 2,175 |
Total Loans | $ 5,268,680 | $ 7,171,076 |
3. Loans, Allowance for Loan 62
3. Loans, Allowance for Loan Losses and Credit Quality (Details 6) | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Number of Contracts modified as TDRs | 4 | 10 |
Pre-Modification Outstanding Recorded Investment | $ 256,353 | $ 635,237 |
Post- Modification Outstanding Recorded Investment | $ 287,385 | $ 663,007 |
Residential real estate - 1st lien | ||
Number of Contracts modified as TDRs | 4 | 8 |
Pre-Modification Outstanding Recorded Investment | $ 256,353 | $ 572,418 |
Post- Modification Outstanding Recorded Investment | $ 287,385 | $ 598,030 |
Residential Real Estate Jr Lien | ||
Number of Contracts modified as TDRs | 2 | |
Pre-Modification Outstanding Recorded Investment | $ 62,819 | |
Post- Modification Outstanding Recorded Investment | $ 64,977 |
3. Loans, Allowance for Loan 63
3. Loans, Allowance for Loan Losses and Credit Quality (Details 7) | 12 Months Ended | |
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Number of contracts | 1 | 3 |
Recorded Investment | $ 87,696 | $ 147,787 |
Residential real estate - 1st lien | ||
Number of contracts | 1 | 2 |
Recorded Investment | $ 87,696 | $ 93,230 |
Residential Real Estate Jr Lien | ||
Number of contracts | 1 | |
Recorded Investment | $ 54,557 |
3. Loans, Allowance for Loan 64
3. Loans, Allowance for Loan Losses and Credit Quality (Details 8) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | ||
Allowance related to TDRs | $ 197,605 | $ 92,600 |
4. Loan Servicing (Details)
4. Loan Servicing (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Transfers and Servicing of Financial Assets [Abstract] | ||
Balance at beginning of year | $ 1,210,695 | $ 1,293,079 |
Mortgage servicing rights capitalized | 109,297 | 176,705 |
Mortgage servicing rights amortized | (236,706) | (266,603) |
Change in valuation allowance | 0 | 7,514 |
Balance at end of year | $ 1,083,286 | $ 1,210,695 |
4. Loan Servicing (Details Narr
4. Loan Servicing (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Loan Servicing Details Narrative | ||
Unpaid principal balances of mortgage loans serviced for others | $ 185,757,658 | $ 193,858,201 |
Net gain realized on the sale of loans | $ 317,432 | $ 429,480 |
5. Bank Premises and Equipmen67
5. Bank Premises and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | ||
Buildings and improvements | $ 11,148,715 | $ 11,213,737 |
Land and land improvements | 2,433,971 | 2,433,971 |
Furniture and equipment | 6,127,897 | 9,277,592 |
Leasehold improvements | 1,155,284 | 1,117,085 |
Capital lease | 991,014 | 991,014 |
Other prepaid assets | 0 | 125,584 |
Bank premises and equipment, gross | 21,856,881 | 25,158,983 |
Less accumulated depreciation and amortization | (11,512,704) | (14,328,427) |
Bank premises and equipment, net | $ 10,344,177 | $ 10,830,556 |
5. Bank Premises and Equipmen68
5. Bank Premises and Equipment (Details 1) | Dec. 31, 2017USD ($) |
Property, Plant and Equipment [Abstract] | |
2,018 | $ 233,706 |
2,019 | 206,470 |
2,020 | 179,581 |
2,021 | 97,800 |
2,022 | 66,000 |
Subsequent to 2022 | 264,000 |
Operating lease due | $ 1,047,557 |
5. Bank Premises and Equipmen69
5. Bank Premises and Equipment (Details 2) | Dec. 31, 2017USD ($) |
Property, Plant and Equipment [Abstract] | |
2,018 | $ 141,460 |
2,019 | 141,460 |
2,020 | 110,460 |
2,021 | 39,117 |
Total minimum lease payments | 432,497 |
Less amount representing interest | (50,690) |
Present value of net minimum lease payments | $ 381,807 |
5. Bank Premises and Equipmen70
5. Bank Premises and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Total rental expense | $ 242,726 | $ 204,324 |
6. Goodwill and Other Intangi71
6. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 11,574,269 | $ 11,574,269 |
Accumulated amortization expense | 4,161,000 | $ 3,888,309 |
Intangible Assets Acquired | $ 4,161,000 |
7. Other Investments (Details N
7. Other Investments (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
NMTC [Member] | ||
Equity investment generated tax credits | $ 204,900 | $ 204,900 |
Amortization expense | 195,572 | 177,938 |
Carrying value of equity investment | 1,000 | 196,572 |
LimitedPartnership [Member] | ||
Amortization expense | 421,661 | 731,448 |
Carrying Value Limited Partnerships Investment | 1,796,573 | 1,731,484 |
Tax credits | 414,663 | 448,290 |
CFSG [Member] | ||
Other assets | 2,432,346 | 2,016,785 |
Income | $ 415,561 | $ 429,008 |
8. Deposits (Details)
8. Deposits (Details) | Dec. 31, 2017USD ($) |
Time Deposits [Line Items] | |
2,018 | $ 71,257,675 |
2,019 | 19,422,194 |
2,020 | 8,639,592 |
2,021 | 11,160,503 |
2,022 | 9,367,629 |
Total time certificates of deposit | $ 119,847,593 |
8. Deposits (Details Narrative)
8. Deposits (Details Narrative) | Dec. 31, 2017USD ($) |
Deposits Details Narrative | |
Total deposits in excess of the FDIC insurance | $ 173,000,181 |
9. Borrowed Funds (Details)
9. Borrowed Funds (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Long-term advances | [1] | $ 3,550,000 | $ 1,550,000 |
Short-term advances | 0 | 30,000,000 | |
Advances | 3,550,000 | 31,550,000 | |
FHLBB term advance One | |||
Long-term advances | [1] | 350,000 | 350,000 |
FHLBB term advance Two | |||
Long-term advances | [1] | 1,000,000 | 1,000,000 |
FHLBB term advance Three | |||
Long-term advances | [1] | 2,000,000 | 0 |
FHLBB term advance Four | |||
Long-term advances | [1] | 200,000 | 200,000 |
FHLBB term advance Five | |||
Short-term advances | 0 | 10,000,000 | |
FHLBB term advance Six | |||
Short-term advances | 0 | 10,000,000 | |
FHLBB term advance Seven | |||
Short-term advances | $ 0 | $ 10,000,000 | |
[1] | The Company has borrowed a total of $3,550,000 and $1,550,000, respectively, at December 31, 2017 and 2016, under the FHLBB's Jobs for New England (JNE) program, a program dedicated to supporting job growth and economic development throughout New England. The FHLBB is providing a subsidy, funded by the FHLBB's earnings, to write down interest rates to zero percent on JNE advances that finance qualifying loans to small businesses. JNE advances must support lending to small businesses in New England that create and/or retain jobs, or otherwise contribute to overall economic development activities. |
9. Borrowed Funds (Details Narr
9. Borrowed Funds (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Qualified collateral borrowing | $ 154,324,420 | $ 94,744,189 |
Potential borrowing capacity | 109,726,508 | 68,163,543 |
Letters of credit collateral deposits | 59,850,000 | 21,225,000 |
Fees paid for issuance of letters of credit | $ 34,601 | $ 25,967 |
Primary credit rate value | 200 basis points | 125 basis points |
Line of credit with correspondent bank | $ 12,500,000 | $ 12,500,000 |
FHLBB | ||
Line of credit with correspondent bank | $ 500,000 | $ 500,000 |
10. Junior Subordinated Deben77
10. Junior Subordinated Debentures (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Junior Subordinated Notes [Abstract] | ||
Junior Subordinated Debentures | $ 12,887,000 | $ 12,887,000 |
Interest paid on the Debentures | $ 524,696 | $ 460,142 |
Floating rate | 4.02% | 3.51% |
11. Repurchase Agreements (Deta
11. Repurchase Agreements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Disclosure of Repurchase Agreements [Abstract] | |||
Current balance | $ 28,647,848 | $ 30,423,195 | |
Average balance | 28,949,820 | 25,888,496 | |
Highest month-end balance | 31,745,206 | 30,423,195 | |
Book Value – Pledged investments | [1] | 38,797,609 | 33,604,595 |
Fair Value – Pledged investments | [1] | $ 38,450,653 | $ 33,469,254 |
Weighted average interest rate on repurchase agreement | 0.30% | 0.30% | |
[1] | U.S. GSE securities, Agency MBS securities and certificates of deposit were pledged as collateral for the periods presented. |
12. Income Taxes (Details)
12. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Currently paid or payable | $ 2,124,999 | $ 2,096,474 |
Deferred expense (benefit) | 784,331 | (172,562) |
Total income tax expense | $ 2,909,330 | $ 1,923,912 |
12. Income Taxes (Details 1)
12. Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Computed expense at statutory rates | $ 3,107,813 | $ 2,518,785 |
Tax exempt interest & BOLI | (484,454) | (471,900) |
Disallowed interest | 13,867 | 13,053 |
Partnership rehabilitation and tax credits | (549,897) | (857,359) |
Low income housing investment amortization expense | 278,296 | 482,756 |
New markets tax credit amortization expense | 129,078 | 117,439 |
Deferred tax asset revaluation to enacted tax rates | 410,304 | 0 |
Other | 4,323 | 121,139 |
Total income tax expense | $ 2,909,330 | $ 1,923,912 |
12. Income Taxes (Details 2)
12. Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax expense (benefit) | $ 784,331 | $ (172,562) |
Deferred Income Tax Charges [Member] | ||
Depreciation | 12,377 | 64,758 |
Mortgage servicing rights | (184,146) | (28,011) |
Deferred compensation | 281,886 | (58,194) |
Bad debts | 652,671 | (90,633) |
Limited partnership amortization | (15,573) | 7,865 |
Investment in CFSG Partners | (39,644) | 13,187 |
Core deposit intangible | (92,715) | (92,716) |
Loan fair value | (13,531) | (7,514) |
OREO write down | 80 | 6,460 |
Prepaid expenses | 80,325 | 0 |
Revaluation effect of unrealized loss on securities AFS | 45,106 | 0 |
Other | 57,495 | 12,236 |
Deferred tax expense (benefit) | $ 784,331 | $ (172,562) |
12. Income Taxes (Details 3)
12. Income Taxes (Details 3) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Components of the deferred tax asset: | ||
Bad debts | $ 1,142,001 | $ 1,794,672 |
Deferred compensation | 20,280 | 302,166 |
Contingent liability - MPF program | 17,793 | 45,042 |
OREO write down | 13,860 | 13,940 |
Capital lease | 32,609 | 63,228 |
Unrealized loss on securities AFS | 72,859 | 46,765 |
Other | 23,210 | 22,837 |
Total deferred tax asset | 1,322,612 | 2,288,650 |
Components of the deferred tax liability: | ||
Depreciation | 231,681 | 219,304 |
Limited partnerships | 36,536 | 52,109 |
Mortgage servicing rights | 227,490 | 411,636 |
Investment in CFSG Partners | 75,391 | 115,035 |
Core deposit intangible | 0 | 92,715 |
Prepaid expenses | 80,325 | 0 |
Fair value adjustment on acquired loans | 8,399 | 21,930 |
Total deferred tax liability | 659,822 | 912,729 |
Net deferred tax asset | $ 662,790 | $ 1,375,921 |
13. 401(k) and Profit-Sharing83
13. 401(k) and Profit-Sharing Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Pension expense | $ 572,310 | $ 652,078 |
14. Deferred Compensation and84
14. Deferred Compensation and Supplemental Employee Retirement Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Directors Deferred Compensation Plan | ||
Benefits accrued with the plan | $ 96,572 | $ 114,014 |
Expenses associated with the plan | 558 | 723 |
Supplemental Employee Retirement Plan | ||
Benefits accrued with the plan | 774,713 | |
Expenses associated with the plan | $ 0 | $ 199,004 |
15. Financial Instruments wit85
15. Financial Instruments with Off-Balance-Sheet Risk (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Unused portions of home equity lines of credit | $ 29,529,411 | $ 25,535,104 |
Residential construction lines of credit | 3,767,168 | 3,676,176 |
Commercial real estate and other construction lines of credit | 27,315,198 | 25,951,345 |
Commercial and industrial commitments | 38,369,010 | 36,227,213 |
Other commitments to extend credit | 48,233,850 | 42,459,454 |
Standby letters of credit and commercial letters of credit | 1,939,759 | 2,009,788 |
Recourse on sale of credit card portfolio | 302,775 | 258,555 |
MPF credit enhancement obligation, net (See Note 16) | $ 634,340 | $ 748,239 |
15. Financial Instruments wit86
15. Financial Instruments with Off-Balance-Sheet Risk (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Binding loan commitments to sell residential mortgages | $ 1,789,453 | $ 832,000 |
Junior subordinated debentures | 12,887,000 | 12,887,000 |
External financing | $ 12,500,000 | $ 12,500,000 |
16. Contingent Liability (Detai
16. Contingent Liability (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loans sold through the MPF program | $ 43,006,299 | $ 48,058,235 |
Notional amount of the maximum CEO | 719,067 | 870,664 |
Accrued contingent liability | $ 84,727 | $ 122,425 |
18. Transactions with Related88
18. Transactions with Related Parties (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Balance, beginning of year | $ 14,121,486 | $ 14,017,551 |
New loans to existing Principal Officers/Directors | 6,181,507 | 11,862,375 |
Retirement/Resignation of Director | (6,876,144) | 0 |
Repayment | (6,069,943) | (11,758,440) |
Balance, end of year | $ 7,356,906 | $ 14,121,486 |
18. Transactions with Related89
18. Transactions with Related Parties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Total deposits with related parties | $ 5,679,969 | $ 7,938,810 |
Amount of rental income received | 62,092 | 60,660 |
Amount paid to CFSG | 48,943 | 44,065 |
Amount paid to SERP | $ 1,412 | $ 2,442 |
19. Restrictions on Cash and 90
19. Restrictions on Cash and Due From Banks (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Contracted balances with other correspondent banks | $ 462,500 | $ 462,500 |
Balance to avoid monthly charges on the Company current federal funds liquidity line | $ 262,500 | $ 262,500 |
20. Regulatory Capital Requir91
20. Regulatory Capital Requirements (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Company [Member] | |||
Common equity tier 1 capital to risk-weighted assets amount | $ 59,523 | $ 55,690 | |
Common equity tier 1 capital to risk-weighted assets ratio | 12.75% | 12.34% | |
Tier I capital to risk-weighted assets amount | $ 59,523 | $ 55,690 | |
Tier I capital to risk-weighted assets ratio | 12.75% | 12.34% | |
Total capital to risk-weighted assets amount | $ 65,005 | $ 61,012 | |
Total capital to risk-weighted assets ratio | 13.93% | 13.52% | |
Tier I capital to average assets amount | $ 59,523 | $ 55,690 | |
Tier I capital to average assets ratio | 9.05% | 9.17% | |
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 21,003 | $ 20,304 | |
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 4.50% | 4.50% | |
Tier I capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 28,004 | $ 27,072 | |
Tier I capital to risk-weighted assets minimum for capital adequacy purposes ratio | 6.00% | 6.00% | |
Total capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 37,338 | $ 36,096 | |
Total capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 8.00% | 8.00% | |
Tier I capital to average assets Minimum for capital adequacy purposes amount | $ 26,304 | $ 24,305 | |
Tier I capital to average assets minimum for capital adequacy purposes ratio | 4.00% | 4.00% | |
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | |||
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | |||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | |||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | |||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | |||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | |||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions amount | |||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions ratio | |||
Bank | |||
Common equity tier 1 capital to risk-weighted assets amount | $ 58,920 | $ 55,120 | |
Common equity tier 1 capital to risk-weighted assets ratio | 12.64% | 12.23% | |
Tier I capital to risk-weighted assets amount | $ 58,920 | $ 55,120 | |
Tier I capital to risk-weighted assets ratio | 12.64% | 12.23% | |
Total capital to risk-weighted assets amount | $ 64,401 | $ 60,443 | |
Total capital to risk-weighted assets ratio | 13.82% | 13.42% | |
Tier I capital to average assets amount | $ 58,920 | $ 55,120 | |
Tier I capital to average assets ratio | 8.97% | 9.08% | |
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 20,972 | $ 20,274 | |
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 4.50% | 4.50% | |
Tier I capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 27,963 | $ 27,032 | |
Tier I capital to risk-weighted assets minimum for capital adequacy purposes ratio | 6.00% | 6.00% | |
Total capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 37,284 | $ 36,043 | |
Total capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 8.00% | 8.00% | |
Tier I capital to average assets Minimum for capital adequacy purposes amount | $ 26,279 | $ 24,281 | |
Tier I capital to average assets minimum for capital adequacy purposes ratio | 4.00% | 4.00% | |
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 30,293 | $ 29,285 |
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 6.50% | 6.50% |
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 37,284 | $ 36,043 |
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 8.00% | 8.00% |
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 46,605 | $ 45,054 |
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 10.00% | 10.00% |
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 32,849 | $ 30,351 |
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 5.00% | 5.00% |
[1] | Applicable to banks, but not bank holding companies. |
20. Regulatory Capital Requir92
20. Regulatory Capital Requirements (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Conservation buffer | 5.93% | 5.52% |
Bank | ||
Conservation buffer | 5.82% | 5.42% |
21. Fair Value (Details)
21. Fair Value (Details) - Fair Value Level 2 - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: (market approach) | ||
Assets Recorded at Fair Value on a Recurring Basis | $ 38,450,653 | $ 33,715,051 |
U.S. GSE debt securities | ||
Assets: (market approach) | ||
Assets Recorded at Fair Value on a Recurring Basis | 17,158,742 | 17,317,328 |
Agency MBS | ||
Assets: (market approach) | ||
Assets Recorded at Fair Value on a Recurring Basis | 16,613,337 | 13,154,228 |
Other investments | ||
Assets: (market approach) | ||
Assets Recorded at Fair Value on a Recurring Basis | $ 4,678,574 | $ 3,243,495 |
21. Fair Value (Details 1)
21. Fair Value (Details 1) - Fair Value Level 2 - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Assets: (market approach) | |||
MSRs | [1] | $ 1,083,286 | $ 1,210,695 |
Impaired loans, net of related allowance | 135,630 | 508,872 | |
OREO | $ 284,235 | $ 394,000 | |
[1] | Represents MSRs at lower of cost or fair value, including MSRs deemed to be impaired and for which a valuation allowance was established to carry at fair value at December 31, 2017 and 2016. |
21. Fair Value (Details 2)
21. Fair Value (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Carrying Amount | |||
Financial assets: (in thousands) | |||
Cash and cash equivalents | $ 42,654 | $ 29,614 | |
Securities held-to-maturity | 48,825 | 49,887 | |
Securities available-for-sale | 38,451 | 33,715 | |
Restricted equity securities | 1,704 | 2,756 | |
Loans and loans held-for-sale | |||
Commercial & Industrial | 76,394 | 67,972 | |
Commercial real estate | 204,260 | 199,136 | |
Residential real estate - 1st lien | 167,671 | 165,243 | |
Residential real estate - Jr. lien | 44,916 | 42,536 | |
Consumer | 5,223 | 7,084 | |
Mortgage servicing rights | [1] | 1,083 | 1,211 |
Accrued interest receivable | 2,052 | 1,819 | |
Financial liabilities: | |||
Deposits, Other deposits | 509,686 | 470,002 | |
Deposits, Brokered deposits | 50,949 | 34,733 | |
Short-term borrowings | 30,000 | ||
Long-term borrowings | 3,550 | 1,550 | |
Repurchase agreements | 28,648 | 30,423 | |
Capital lease obligations | 382 | 483 | |
Subordinated debentures | 12,887 | 12,887 | |
Accrued interest payable | 101 | 73 | |
Fair Value Level 1 | |||
Financial assets: (in thousands) | |||
Cash and cash equivalents | 42,654 | 29,614 | |
Securities held-to-maturity | 0 | 0 | |
Securities available-for-sale | 0 | 0 | |
Restricted equity securities | 0 | 0 | |
Loans and loans held-for-sale | |||
Commercial & Industrial | 0 | 0 | |
Commercial real estate | 0 | 0 | |
Residential real estate - 1st lien | 0 | 0 | |
Residential real estate - Jr. lien | 0 | 0 | |
Consumer | 0 | 0 | |
Mortgage servicing rights | [1] | 0 | 0 |
Accrued interest receivable | 0 | 0 | |
Financial liabilities: | |||
Deposits, Other deposits | 0 | 0 | |
Deposits, Brokered deposits | 0 | 0 | |
Short-term borrowings | 0 | ||
Long-term borrowings | 0 | 0 | |
Repurchase agreements | 0 | 0 | |
Capital lease obligations | 0 | 0 | |
Subordinated debentures | 0 | 0 | |
Accrued interest payable | 0 | 0 | |
Fair Value Level 2 | |||
Financial assets: (in thousands) | |||
Cash and cash equivalents | 0 | 0 | |
Securities held-to-maturity | 48,796 | 51,035 | |
Securities available-for-sale | 38,451 | 33,715 | |
Restricted equity securities | 1,704 | 2,756 | |
Loans and loans held-for-sale | |||
Commercial & Industrial | 0 | 48 | |
Commercial real estate | 136 | 601 | |
Residential real estate - 1st lien | 0 | 941 | |
Residential real estate - Jr. lien | 0 | 109 | |
Consumer | 0 | 0 | |
Mortgage servicing rights | [1] | 1,337 | 1,302 |
Accrued interest receivable | 2,052 | 1,819 | |
Financial liabilities: | |||
Deposits, Other deposits | 508,407 | 469,323 | |
Deposits, Brokered deposits | 50,926 | 34,745 | |
Short-term borrowings | 30,000 | ||
Long-term borrowings | 3,191 | 1,376 | |
Repurchase agreements | 28,648 | 30,423 | |
Capital lease obligations | 382 | 483 | |
Subordinated debentures | 12,832 | 12,849 | |
Accrued interest payable | 101 | 73 | |
Fair Value Level 3 | |||
Financial assets: (in thousands) | |||
Cash and cash equivalents | 0 | 0 | |
Securities held-to-maturity | 0 | 0 | |
Securities available-for-sale | 0 | 0 | |
Restricted equity securities | 0 | 0 | |
Loans and loans held-for-sale | |||
Commercial & Industrial | 76,799 | 68,727 | |
Commercial real estate | 204,697 | 201,560 | |
Residential real estate - 1st lien | 169,205 | 166,858 | |
Residential real estate - Jr. lien | 45,207 | 42,948 | |
Consumer | 5,425 | 7,371 | |
Mortgage servicing rights | [1] | 0 | 0 |
Accrued interest receivable | 0 | 0 | |
Financial liabilities: | |||
Deposits, Other deposits | 0 | 0 | |
Deposits, Brokered deposits | 0 | 0 | |
Short-term borrowings | 0 | ||
Long-term borrowings | 0 | 0 | |
Repurchase agreements | 0 | 0 | |
Capital lease obligations | 0 | 0 | |
Subordinated debentures | 0 | 0 | |
Accrued interest payable | 0 | 0 | |
Fair Value | |||
Financial assets: (in thousands) | |||
Cash and cash equivalents | 42,654 | 29,614 | |
Securities held-to-maturity | 48,796 | 51,035 | |
Securities available-for-sale | 38,451 | 33,715 | |
Restricted equity securities | 1,704 | 2,756 | |
Loans and loans held-for-sale | |||
Commercial & Industrial | 76,799 | 68,775 | |
Commercial real estate | 204,833 | 202,161 | |
Residential real estate - 1st lien | 169,205 | 167,799 | |
Residential real estate - Jr. lien | 45,207 | 43,057 | |
Consumer | 5,425 | 7,371 | |
Mortgage servicing rights | [1] | 1,337 | 1,302 |
Accrued interest receivable | 2,052 | 1,819 | |
Financial liabilities: | |||
Deposits, Other deposits | 508,407 | 469,323 | |
Deposits, Brokered deposits | 50,926 | 34,745 | |
Short-term borrowings | 30,000 | ||
Long-term borrowings | 3,191 | 1,376 | |
Repurchase agreements | 28,648 | 30,423 | |
Capital lease obligations | 382 | 483 | |
Subordinated debentures | 12,832 | 12,849 | |
Accrued interest payable | $ 101 | $ 73 | |
[1] | Reported fair value represents all MSRs serviced by the Company at December 31, 2017, regardless of carrying amount. |
22. Condensed Financial Infor96
22. Condensed Financial Information (Parent Company Only) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | |||
Total assets | $ 667,045,595 | $ 637,653,665 | |
Liabilities | |||
Junior subordinated debentures | 12,887,000 | 12,887,000 | |
Total liabilities | 609,109,741 | 583,202,148 | |
Shareholders' Equity | |||
Preferred stock, 1,000,000 shares authorized, 25 shares issued and outstanding ($100,000 liquidation value) | 2,500,000 | 2,500,000 | |
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,322,320 and 5,269,053 shares issued at December 31, 2017 and 2016, respectively (including 13,039 and 15,022 shares issued February 1, 2018 and 2017, respectively) | 13,305,800 | 13,172,633 | |
Additional paid-in capital | 31,639,189 | 30,825,658 | |
Retained earnings | 13,387,739 | 10,666,782 | |
Accumulated other comprehensive loss | (274,097) | (90,779) | |
Less: treasury stock, at cost; 210,101 shares at December 31, 2017 and 2016 | (2,622,777) | (2,622,777) | |
Total shareholders' equity | 57,935,854 | 54,451,517 | $ 51,414,656 |
Total liabilities and shareholders' equity | 667,045,595 | 637,653,665 | |
Parent Company [Member] | |||
Assets | |||
Cash | 556,392 | 494,086 | $ 508,325 |
Investment in subsidiary - Community National Bank | 70,219,699 | 66,769,241 | |
Investment in Capital Trust | 387,000 | 387,000 | |
Income taxes receivable | 290,224 | 269,335 | |
Total assets | 71,453,315 | 67,919,662 | |
Liabilities | |||
Junior subordinated debentures | 12,887,000 | 12,887,000 | |
Dividends payable | 630,461 | 581,145 | |
Total liabilities | 13,517,461 | 13,468,145 | |
Shareholders' Equity | |||
Preferred stock, 1,000,000 shares authorized, 25 shares issued and outstanding ($100,000 liquidation value) | 2,500,000 | 2,500,000 | |
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,322,320 and 5,269,053 shares issued at December 31, 2017 and 2016, respectively (including 13,039 and 15,022 shares issued February 1, 2018 and 2017, respectively) | 13,305,800 | 13,172,633 | |
Additional paid-in capital | 31,639,189 | 30,825,658 | |
Retained earnings | 13,387,739 | 10,666,782 | |
Accumulated other comprehensive loss | (274,097) | (90,779) | |
Less: treasury stock, at cost; 210,101 shares at December 31, 2017 and 2016 | (2,622,777) | (2,622,777) | |
Total shareholders' equity | 57,935,854 | 54,451,517 | |
Total liabilities and shareholders' equity | $ 71,453,315 | $ 67,919,662 |
22. Condensed Financial Infor97
22. Condensed Financial Information (Parent Company Only) (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Expense | ||||||||||
Interest on junior subordinated debentures | $ 524,696 | $ 460,142 | ||||||||
Income tax benefit | 2,909,330 | 1,923,912 | ||||||||
Net income | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 1,503,685 | $ 1,515,900 | $ 1,295,199 | $ 1,169,494 | 6,231,298 | 5,484,278 |
Parent Company [Member] | ||||||||||
Income | ||||||||||
Bank subsidiary distributions | 3,206,000 | 2,940,000 | ||||||||
Dividends on Capital Trust | 15,757 | 13,818 | ||||||||
Total income | 3,221,757 | 2,953,818 | ||||||||
Expense | ||||||||||
Interest on junior subordinated debentures | 524,696 | 460,142 | ||||||||
Administrative and other | 344,657 | 345,842 | ||||||||
Total expense | 869,353 | 805,984 | ||||||||
Income before applicable income tax benefit and equity in undistributed net income of subsidiary | 2,352,404 | 2,147,834 | ||||||||
Income tax benefit | 290,224 | 269,335 | ||||||||
Income before equity in undistributed net income of subsidiary | 2,642,628 | 2,417,169 | ||||||||
Equity in undistributed net income of subsidiary | 3,588,670 | 3,067,109 | ||||||||
Net income | $ 6,231,298 | $ 5,484,278 |
22. Condensed Financial Infor98
22. Condensed Financial Information (Parent Company Only) (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities | ||||||||||
Net income | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 1,503,685 | $ 1,515,900 | $ 1,295,199 | $ 1,169,494 | $ 6,231,298 | $ 5,484,278 |
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
Net cash provided by operating activities | 8,065,644 | 9,308,462 | ||||||||
Cash Flows from Financing Activities | ||||||||||
Dividends paid on preferred stock | (101,563) | (87,500) | ||||||||
Dividends paid on common stock | (2,457,871) | (2,313,967) | ||||||||
Net cash used in financing activities | 23,463,813 | 36,672,756 | ||||||||
Net increase (decrease) in cash | 13,039,215 | 762,396 | ||||||||
Cash Paid for Interest | 3,040,369 | 2,679,369 | ||||||||
Dividends paid: | ||||||||||
Dividends declared | (3,453,884) | (3,212,092) | ||||||||
Increase in dividends payable attributable to dividends declared | (49,315) | (565) | ||||||||
Dividends reinvested | (946,698) | (897,560) | ||||||||
Parent Company [Member] | ||||||||||
Cash Flows from Operating Activities | ||||||||||
Net income | 6,231,298 | 5,484,278 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
Equity in undistributed net income of subsidiary | (3,588,670) | (3,067,109) | ||||||||
Increase in income taxes receivable | (20,888) | (29,941) | ||||||||
Net cash provided by operating activities | 2,621,740 | 2,387,228 | ||||||||
Cash Flows from Financing Activities | ||||||||||
Dividends paid on preferred stock | (101,563) | (87,500) | ||||||||
Dividends paid on common stock | (2,457,871) | (2,313,967) | ||||||||
Net cash used in financing activities | (2,559,434) | (2,401,467) | ||||||||
Net increase (decrease) in cash | 62,306 | (14,239) | ||||||||
Cash Beginning | $ 494,086 | $ 508,325 | 494,086 | 508,325 | ||||||
Cash Ending | $ 556,392 | $ 494,086 | 556,392 | 494,086 | ||||||
Cash Received for Income Taxes | 269,335 | 239,394 | ||||||||
Cash Paid for Interest | 524,696 | 460,142 | ||||||||
Dividends paid: | ||||||||||
Dividends declared | 3,453,884 | 3,212,092 | ||||||||
Increase in dividends payable attributable to dividends declared | (49,315) | (565) | ||||||||
Dividends reinvested | (946,698) | (897,560) | ||||||||
Total common shares dividends paid | $ 2,457,871 | $ 2,313,967 |
22. Condensed Financial Infor99
22. Condensed Financial Information (Parent Company Only) (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 25 | 25 |
Preferred stock, shares outstanding (in shares) | 25 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,322,320 | 5,269,053 |
Treasury stock (in shares) | 210,101 | 210,101 |
Parent Company [Member] | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 25 | 25 |
Preferred stock, shares outstanding (in shares) | 25 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,322,320 | 5,269,053 |
Treasury stock (in shares) | 210,101 | 210,101 |
23. Quarterly Financial Data100
23. Quarterly Financial Data (Unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Interest income | $ 7,019,554 | $ 6,820,165 | $ 6,444,837 | $ 6,156,393 | $ 6,212,384 | $ 6,254,098 | $ 5,963,378 | $ 5,818,254 | $ 26,440,949 | $ 24,248,114 |
Interest expense | 788,283 | 796,192 | 749,504 | 734,411 | 667,299 | 691,743 | 676,995 | 663,262 | 3,068,390 | 2,699,299 |
Provision for loan losses | 200,000 | 150,000 | 150,000 | 150,000 | 100,000 | 150,000 | 150,000 | 100,000 | 650,000 | 500,000 |
Non-interest income | 1,383,196 | 1,449,247 | 1,381,731 | 1,370,218 | 1,461,829 | 1,483,520 | 1,318,699 | 1,237,851 | 5,584,392 | 5,501,899 |
Non-interest expense | 4,700,520 | 4,842,116 | 4,892,568 | 4,731,119 | 4,994,550 | 4,790,503 | 4,675,180 | 4,682,291 | 19,166,323 | 19,142,524 |
Net income | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 1,503,685 | $ 1,515,900 | $ 1,295,199 | $ 1,169,494 | $ 6,231,298 | $ 5,484,278 |
Earnings per common share | $ .30 | $ 0.35 | $ 0.29 | $ 0.27 | $ 0.29 | $ .30 | $ 0.25 | $ 0.23 | $ 1.21 | $ 1.07 |
24. Other Income and Other E101
24. Other Income and Other Expenses (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income | ||
Income from investment in CFSG Partners | $ 415,561 | $ 429,008 |
Expenses | ||
Outsourcing expense | 538,359 | 509,345 |
Service contracts - administration | 447,374 | 389,971 |
Marketing | 484,330 | 380,753 |
State deposit tax | 590,728 | 568,549 |
ATM fees | 417,067 | 382,227 |
Telephone | 278,998 | 318,059 |
FDIC Insurance | $ 288,388 | $ 306,249 |