Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 21, 2016 | Jun. 30, 2015 | |
Employee Benefits Tables | |||
Entity Registrant Name | F&M BANK CORP | ||
Entity Central Index Key | 740,806 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
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? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 3,298,983 | ||
Entity Public Float | $ 66,066,952 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and due from banks (notes 3 and 15) | $ 6,923,065 | $ 6,241,016 |
Money market funds | 1,596,382 | 910,527 |
Federal funds sold | 0 | 16,051,000 |
Cash and cash equivalents | 8,519,447 | 23,202,543 |
Securities: | ||
Held to maturity - fair value of $125,043 and $125,150 in 2015 and 2014, respectively (note 4) | 125,043 | 125,150 |
Available for sale (note 4) | 13,046,945 | 13,215,112 |
Other investments (note 4) | 12,157,115 | 8,964,640 |
Loans held for sale | 57,805,529 | 13,381,941 |
Loans held for investment (notes 5) | 544,053,477 | 518,201,574 |
Less: allowance for loan losses (note 6) | (8,781,453) | (8,724,731) |
Net loans held for investment | 535,272,024 | 509,476,843 |
Other real estate owned (note 9) | 2,127,685 | 3,507,153 |
Bank premises and equipment, net (note 8) | 7,542,078 | 6,458,254 |
Interest receivable | 1,708,617 | 1,674,846 |
Goodwill (note 23) | 2,669,517 | 2,669,517 |
Bank owned life insurance (note 24) | 13,046,111 | 12,581,210 |
Other assets | 11,336,735 | 10,050,893 |
Total assets | 665,356,846 | 605,308,102 |
Deposits: (note 10) | ||
Noninterest bearing | 134,786,875 | 112,197,722 |
Interest bearing: | ||
Demand | 81,491,760 | 93,693,468 |
Money market accounts | 26,967,837 | 25,900,061 |
Savings | 90,383,486 | 64,249,199 |
Time deposits over $100,000 | 53,624,554 | 79,812,757 |
All other time deposits | 107,415,244 | 115,651,329 |
Total deposits | 494,669,756 | 491,504,536 |
Short-term debt (note 11) | 24,954,051 | 14,358,492 |
Accrued liabilities | 14,621,913 | 11,771,671 |
Federal Home Loan Bank debt (note 12) | 48,160,714 | 9,875,000 |
Total liabilities | $ 582,406,434 | $ 527,509,699 |
Commitments and Contingencies (notes 4 and 16) | ||
Stockholders' Equity (Note 22) | ||
Preferred Stock $5 par value, 400,000 shares authorized, issued and outstanding for 2015 | $ 9,425,123 | $ 9,425,123 |
Common stock $5 par value, 6,000,000 shares authorized, 3,285,404 and 3,291,766 shares issued and outstanding at December 31, 2015 and 2014, respectively | 16,427,020 | 16,458,830 |
Additional paid in capital - common stock | 11,149,104 | 11,259,995 |
Retained earnings (note 19) | 48,056,300 | 42,554,421 |
Noncontrolling interest | 572,680 | 426,365 |
Accumulated other comprehensive loss | (2,679,815) | (2,326,331) |
Total stockholders' equity | 82,950,412 | 77,798,403 |
Total liabilities and stockholders' equity | $ 665,356,846 | $ 605,308,102 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Held to maturity - fair value | $ 125,043 | $ 125,150 |
Time deposits | $ 100,000 | $ 100,000 |
STOCKHOLDERS EQUITY: | ||
Preferred Stock,par value | $ 5 | $ 5 |
Preferred Stock,shares authorized | 400,000 | 400,000 |
Preferred Stock,shares issued | 400,000 | 400,000 |
Preferred Stock,shares outstanding | 400,000 | 400,000 |
Common stock, par value | $ 5 | $ 5 |
Common stock shares authorized | 6,000,000 | 6,000,000 |
Common stock shares issued | 3,285,404 | 3,291,766 |
Common stock shares outstanding | 3,285,404 | 3,291,766 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Interest and Dividend Income | |||
Interest and fees on loans held for investment | $ 27,930,151 | $ 26,210,609 | $ 25,070,039 |
Interest from loans held for sale | 1,099,419 | 312,364 | 647,622 |
Interest from deposits and federal funds sold | 20,990 | 44,435 | 54,679 |
Interest from debt securities | 302,117 | 204,649 | 193,244 |
Total Interest and Dividend Income | 29,352,677 | 26,772,057 | 25,965,584 |
Interest Expense | |||
Interest from demand deposits | 539,469 | 663,618 | 791,245 |
Interest from savings deposits | 212,186 | 121,808 | 119,020 |
Interest from time deposits over $100,000 | 485,285 | 589,673 | 781,950 |
Interest from all other time deposits | 916,219 | 1,114,470 | 1,549,273 |
Total interest on deposits | 2,153,159 | 2,489,569 | 3,241,488 |
Interest from short-term debt | 69,179 | 9,437 | 23,956 |
Interest from long-term debt | 653,271 | 1,148,716 | 1,507,299 |
Total interest expense | 2,875,609 | 3,647,722 | 4,772,743 |
Net Interest Income | 26,477,068 | 23,124,335 | 21,192,841 |
Provision for Loan and Lease losses (note 6) | 300,000 | 2,250,000 | 3,775,000 |
Net Interest Income After Provision for Loan Losses | 26,177,068 | 20,874,335 | 17,417,841 |
Noninterest Income | |||
Service charges on deposit accounts | 963,459 | 1,033,959 | 1,117,910 |
Insurance and other commissions | 1,058,281 | 635,543 | 868,464 |
Other operating income | 781,628 | 785,537 | 681,870 |
Income from bank owned life insurance | 473,098 | 466,936 | 508,658 |
Total Noninterest Income | 3,276,466 | 2,921,975 | 3,176,902 |
Noninterest Expenses | |||
Salaries | 7,816,214 | 6,898,400 | 6,524,515 |
Employee benefits (note 14) | 2,239,258 | 1,911,250 | 2,146,871 |
Occupancy expense | 678,799 | 621,855 | 606,935 |
Equipment expense | 651,113 | 589,919 | 547,948 |
FDIC insurance assessment | 587,000 | 690,000 | 704,103 |
Other real estate owned expenses | 566,147 | 407,219 | 214,832 |
Other operating expenses | 5,447,347 | 4,537,269 | 3,974,791 |
Total Noninterest Expenses | 17,985,878 | 15,655,912 | 14,719,995 |
Income before Income Taxes | 11,467,656 | 8,140,398 | 5,874,748 |
Income Tax Expense (note 13) | 2,886,072 | 2,293,136 | 1,051,770 |
Consolidated Net Income - F & M Bank Corp. | 8,581,584 | 5,847,262 | 4,822,978 |
Net Income attributed to Noncontrolling interest | (164,575) | (45,653) | (107,185) |
Net Income-F & M Bank Corp. | 8,417,009 | 5,801,609 | 4,715,793 |
Dividends paid/accumulated on preferred stock | 510,000 | 127,500 | 0 |
Net Income available to common stockholders | $ 7,907,009 | $ 5,674,109 | $ 4,715,793 |
Per Common Share Data | |||
Net Income - basic | $ 2.40 | $ 1.82 | $ 1.88 |
Net Income - diluted | 2.25 | 1.80 | 1.88 |
Cash dividends on common stock | $ 0.73 | $ 0.68 | $ 0.68 |
Weighted average common shares outstanding - basic | 3,290,812 | 3,119,333 | 2,504,015 |
Weighted average common shares outstanding - diluted | 3,735,212 | 3,229,942 | 2,504,015 |
Consolidated Statements of Inc5
Consolidated Statements of Income (Parenthetical) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Statement [Abstract] | |
Deposits | $ 100,000 |
Consolidated Statements of Com
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net Income: | |||
Net Income - F & M Bank Corp | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
Net Income attributable to noncontrolling interest | 164,575 | 45,653 | 107,185 |
Total net income | 8,581,584 | 5,847,262 | 4,822,978 |
Other comprehensive income (loss): | |||
Pension plan adjustment | (537,005) | (2,145,868) | 2,314,274 |
Tax effect | 182,582 | 729,595 | (786,853) |
Pension plan adjustment, net of tax | (354,423) | (1,416,273) | 1,527,421 |
Unrealized holding gains (losses) on available-for-sale securities | 1,423 | 22,386 | (75,127) |
Tax effect | (484) | (7,611) | 25,543 |
Unrealized holding gain (losses), net of tax | 939 | 14,775 | (49,584) |
Other comprehensive income | (353,484) | (1,401,498) | 1,477,837 |
Total comprehensive income | $ 8,228,100 | $ 4,445,764 | $ 6,300,815 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid In Capital | Retained Earnings | Noncontrolling Interest | Accumulated Other comprehensive Income (Loss) | Total |
Begining balance, Amount at Dec. 31, 2012 | $ 12,497,720 | $ 2,951,967 | $ 35,974,812 | $ 362,131 | $ (2,402,670) | $ 49,383,960 | |
Net income consolidated | $ 4,715,793 | $ 107,185 | 4,822,978 | ||||
Other comprehensive income (loss) | $ 1,477,837 | 1,477,837 | |||||
Minority Interest Contributed Capital (Distributions) | $ (51,088) | (51,088) | |||||
Dividends on preferred stock | 0 | ||||||
Dividends on common stock | $ (1,705,881) | (1,705,881) | |||||
Common stock repurchased | 0 | ||||||
Common Stock issued | $ 60,955 | $ 152,474 | 213,429 | ||||
Ending balance, Amount at Dec. 31, 2013 | $ 12,558,675 | $ 3,104,441 | $ 38,984,724 | $ 418,228 | $ (924,833) | 54,141,235 | |
Net income consolidated | $ 5,801,609 | $ 45,653 | 5,847,262 | ||||
Other comprehensive income (loss) | $ (1,401,498) | (1,401,498) | |||||
Minority Interest Contributed Capital (Distributions) | $ (37,516) | (37,516) | |||||
Dividends on preferred stock | $ (127,500) | (127,500) | |||||
Dividends on common stock | $ (2,104,412) | (2,104,412) | |||||
Preferred stock issued | $ 9,425,123 | 9,425,123 | |||||
Common stock repurchased | 0 | ||||||
Common Stock issued | $ 3,900,155 | $ 8,155,554 | 12,055,709 | ||||
Ending balance, Amount at Dec. 31, 2014 | $ 9,425,123 | $ 16,458,830 | $ 11,259,995 | $ 42,554,421 | $ 426,365 | $ (2,326,331) | 77,798,403 |
Net income consolidated | $ 8,417,009 | $ 164,575 | 8,581,584 | ||||
Other comprehensive income (loss) | $ (353,484) | (353,484) | |||||
Minority Interest Contributed Capital (Distributions) | $ (18,260) | (18,260) | |||||
Dividends on preferred stock | $ (510,000) | (510,000) | |||||
Dividends on common stock | $ (2,405,130) | (2,405,130) | |||||
Common stock repurchased | $ (66,390) | $ (222,729) | (289,119) | ||||
Common Stock issued | 34,580 | 111,838 | 146,418 | ||||
Ending balance, Amount at Dec. 31, 2015 | $ 9,425,123 | $ 16,427,020 | $ 11,149,104 | $ 48,056,300 | $ 572,680 | $ (2,679,815) | $ 82,950,412 |
Consolidated Statements of Cha8
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Stockholders' Equity [Abstract] | |||
Preferred stock issued | 400,000 | ||
Common Stock issued | 6,916 | 780,031 | 12,141 |
Common stock repurchased | 13,277 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | |||
Net income | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Depreciation | 709,237 | 612,116 | 581,625 |
Amortization of securities | 147,407 | 76,057 | 45,416 |
Sale of loans held for sale originated | 75,364,878 | 56,210,640 | 79,778,381 |
Loans held for sale originated | (77,151,936) | (56,044,669) | (71,169,362) |
Provision for loan losses | 300,000 | 2,250,000 | 3,775,000 |
Benefit (expense) for deferred taxes | 340,941 | (515,538) | (568,858) |
(Increase) decrease in interest receivable | (33,771) | (176,734) | 204,735 |
Increase in other assets | (457,010) | (1,473,634) | (967,516) |
Increase in accrued expenses | 1,480,074 | 1,159,913 | 1,731,973 |
Amortization of limited partnership investments | 627,326 | 608,360 | 581,737 |
Loss on sale and valuation adjustments of other real estate owned | 488,583 | 318,714 | 97,155 |
Income from life insurance investment | (473,098) | (466,936) | (508,658) |
Net Cash Provided by Operating Activities | 9,759,640 | 8,359,898 | 18,297,421 |
Cash flows from investing activities | |||
Decrease in interest bearing bank deposits | 0 | 0 | 248,000 |
Proceeds from maturities of securities available for sale | 8,242,751 | 27,495,319 | 10,712,508 |
Proceeds from maturities of securities held to maturity | 0 | 106,000 | |
Purchases of securities available for sale | (12,040,262) | (11,957,235) | (31,093,384) |
Purchases of securities held to maturity | 0 | (125,250) | |
Net increase in loans held for investment | (25,892,052) | (43,642,033) | (17,149,156) |
Net (increase) decrease in loans held for sale participations | (42,636,530) | (9,743,487) | 64,793,073 |
Net purchase of property and equipment | (1,793,061) | (545,313) | (661,621) |
Proceeds from sale of other real estate owned | 687,756 | 986,373 | 928,897 |
Net cash provided by (used in) investing activities | (73,431,398) | (37,425,626) | 27,778,317 |
Cash flows from financing activities | |||
Net change in demand and savings deposits | 37,589,508 | 27,894,981 | 15,867,944 |
Net change in time deposits | (34,424,288) | (539,689) | (5,514,239) |
Net change in short-term debt | 10,595,559 | 10,935,414 | (31,174,274) |
Dividends paid in cash | (2,915,130) | (2,231,912) | (1,705,881) |
Proceeds from long-term debt | 40,000,000 | 10,000,000 | 0 |
Proceeds from issuance of preferred stock | 0 | 6,831,123 | 0 |
Proceeds from issuance of common stock | 146,418 | 12,055,709 | 213,429 |
Repurchase of common stock | (289,119) | 0 | 0 |
Repayments of long-term debt | (1,714,286) | (19,222,000) | (26,214,286) |
Net cash provided by (used in) financing activities | 48,988,662 | 45,723,626 | (48,527,307) |
Net Increase (Decrease) in Cash and Cash Equivalents | (14,683,096) | 16,657,898 | (2,451,569) |
Cash and Cash Equivalents, Beginning of Year | 23,202,543 | 6,544,645 | 8,996,214 |
Cash and Cash Equivalents, End of Year | 8,519,447 | 23,202,543 | 6,544,645 |
Supplemental Disclosure: | |||
Interest expense | 2,854,119 | 3,703,190 | 6,500,592 |
Income taxes | 1,500,000 | 1,607,000 | 800,000 |
Transfers from loans to other real estate owned | 125,000 | 2,914,958 | 1,337,890 |
Loans originated for the sale of other real estate owned | (328,129) | (780,097) | $ (569,245) |
Conversion of subordinated debt to preferred stock | $ 0 | $ 2,594,000 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2015 | |
Nature Of Operations | |
NOTE 1. NATURE OF OPERATIONS | F & M Bank Corp. (the “Company”), through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers located mainly in Rockingham, Shenandoah, Page and Augusta Counties in Virginia, and the adjacent county of Hardy, West Virginia. Services are provided at eleven branch offices, a Dealer Finance Division and a loan production office. The Company offers insurance, mortgage lending and financial services through its subsidiaries, TEB Life Insurance, Inc., Farmers & Merchants Financial Services, Inc, and VBS Mortgage, LLC. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The accounting and reporting policies of the Company and its subsidiaries conform to generally accepted accounting principles and to accepted practice within the banking industry. The following is a summary of the more significant policies: Principles of Consolidation The consolidated financial statements include the accounts of Farmers and Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc. and VBS Mortgage, LLC, (net of minority interest). Significant inter-company accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts in those statements; actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, which is sensitive to changes in local and national economic conditions, and the other than temporary impairment of investments in the investment portfolio. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits at other financial institutions whose initial maturity is ninety days or less and Federal funds sold. Investment Securities Management reviews the securities portfolio and classifies all securities as either held to maturity or available for sale at the date of acquisition. Securities that the Company has both the positive intent and ability to hold to maturity (at time of purchase) are classified as held to maturity securities. All other securities are classified as available for sale. Securities held to maturity are carried at historical cost and adjusted for amortization of premiums and accretion of discounts, using the effective interest method. Securities available for sale are carried at fair value with any valuation adjustments reported, net of deferred taxes, as a part of other accumulated comprehensive income. Interest, amortization of premiums and accretion of discounts on securities are reported as interest income using the effective interest method. Gains (losses) realized on sales and calls of securities are determined on the specific identification method. Accounting for Historic Rehabilitation and Low Income Housing Partnerships The Company periodically invests in low income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership (usually 15 years). In addition, state and federal historic rehabilitation credits are generated from some of the partnerships. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. The effective yield method is used to record the income statement effects of these investments. Income Taxes Amounts provided for income tax expense are based on income reported for financial statement purposes rather than amounts currently payable under income tax laws. Deferred taxes, which arise principally from temporary differences between the period in which certain income and expenses are recognized for financial accounting purposes and the period in which they affect taxable income, are included in the amounts provided for income taxes. Loans Held for Investment Loans are carried on the balance sheet net of any unearned interest and the allowance for loan losses. Interest income on loans is determined using the effective interest method on the daily amount of principal outstanding except where serious doubt exists as to collectability of the loan, in which case the accrual of income is discontinued. Loans Held for Sale These loans consists of fixed rate loans made through its subsidiary, VBS Mortgage and loans purchased from Gateway Savings Bank, Oakland, CA and Northpointe Bank, Grand Rapids, MI. VBS Mortgage originates conforming mortgage loans for sale in the secondary market. The bank (VBS) gives the customer a rate commitment at the time the rate is locked. The bank then immediately gets a rate lock-in from the investor that will be buying the loan upon closing. Both the rate lock and the purchase commitments (which is a blanket agreement) are best effort agreements, subject to final approval and underwriting. Because either party can walk away from these agreements prior to closing, neither the rate lock commitment nor the purchase commitment is considered a derivative contract. The bank provides a warehouse line for the Mortgage subsidiary after closing, until the loan is purchased by the investor. The average time on the line is two or three weeks. Gateway Savings Bank (“Gateway”) loans are originated by a network of mortgage loan originators throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Gateway arrangement has been used since 2003 as a higher yielding alternative to federal funds sold or investment securities. These loans are short-term, residential real estate loans that have an average life in our portfolio of approximately two weeks. The Bank holds these loans during the period of time between loan closing and when the loan is paid off by the ultimate secondary market purchaser. Gateway Savings Bank discontinued the loan participation program in December of 2014 and the Company became a participant with Northpointe Bank which obtained the Gateway Savings Bank program and incorporated it into their existing program. The Northpointe Bank program and procedures are the same as described above for Gateway. Allowance for Loan and Lease Losses The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance that management considers adequate to absorb potential losses in the portfolio. Loans are charged against the allowance when management believes the collectability of the principal is unlikely. Recoveries of amounts previously charged-off are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans 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. Other Real Estate Owned (OREO) As of December 31, 2015, the Bank had $2.1 million classified as OREO on the balance sheet, compared to $3.5 million as of December 31, 2014. The table in Note 9 reflects the OREO activity in 2015. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or market. Values are reviewed periodically and additional losses are recognized if warranted based on market conditions. Nonaccrual Loans Loans are placed on nonaccrual status when they become ninety days or more past due, unless there is an expectation that the loan will either be brought current or paid in full in a reasonable period of time. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. The ranges of the useful lives of the premises and equipment are as follows: Buildings and Improvements 10 - 40 years Furniture and Fixtures 5 - 20 years Maintenance, repairs, and minor improvements are charged to operations as incurred. Gains and losses on dispositions are reflected in other income or expense. Goodwill The Company accounts for goodwill and intangible assets under ASC 805, “Business Combination” and ASC 350 “Intangibles”, respectively. Goodwill totaled $2,669,517 at December 31, 2015 and 2014. The goodwill is no longer amortized, but instead tested for impairment at least annually. Based on the testing, there were no impairment charges for 2015, 2014 or 2013. Pension Plans The Bank has a qualified noncontributory defined benefit pension plan which covers all full time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company complies with ASC 325-960 “Defined Benefit Pension Plans” which requires recognition of the over-funded or under-funded status of pension and other postretirement benefit plans on the balance sheet. Under ASC 325-960, gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. Advertising Costs The Company follows the policy of charging the cost of advertising to expense as incurred. Total advertising costs included in other operating expenses for 2015, 2014, and 2013 were $401,138, $317,780, and $278,555, respectively. Comprehensive Income Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities and changes in pension plan funding status, such as unrealized gains and losses on available-for-sale securities and gains or losses on certain derivative contracts, are reported as a separate component of the equity section of the balance sheet. Such items, along with operating net income, are components of comprehensive income. Derivative Financial Instruments and Change in Accounting Principle On January 1, 2001, the Company adopted ASC 815 “Derivative and Hedging Investments” (formerly SFAS No. 133). This statement requires that all derivatives be recognized as assets or liabilities in the balance sheet and measured at fair value. Under ASC 815, the gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedging item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period. The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk. Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as trading activities and would be recorded at fair value with changes in fair value recorded in income. Derivative hedge contracts must meet specific effectiveness tests (i.e., over time the change in their fair values due to the designated hedge risk must be within 80 to 125 percent of the opposite change in the fair value of the hedged assets or liabilities). Changes in fair value of the derivative financial instruments must be effective at offsetting changes in the fair value of the hedging items due to the designated hedge risk during the term of the hedge. Further, if the underlying financial instrument differs from the hedged asset or liability, there must be a clear economic relationship between the prices of the two financial instruments. If periodic assessment indicates derivatives no longer provide an effective hedge, the derivatives contracts would be closed out and settled or classified as a trading activity. Earnings per Share Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended December 31, 2015 December 31, 2014 Earnings Available to Common Stockholders: Net Income $ 8,581,584 $ 5,847,262 Minority interest $ 164,575 $ 45,653 Preferred Stock Dividends 510,000 127,500 Net Income Available to Common Stockholders $ 7,907,009 $ 5,674,109 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended 12/31/2015 12/31/2014 Income Shares Per Share Amounts Income Shares Per Share Amounts Basic EPS $ 7,907,009 3,735,212 $ 2.40 $ 5,674,109 3,229,942 $ 1.82 Effect of Dilutive Securities: Convertible Preferred Stock 510,000 444,400 (0.15 ) 127,500 110,631 (0.02 ) Diluted EPS $ 8,417,009 3,290,812 $ 2.25 $ 5,801,609 3,119,311 $ 1.80 There were no dilutive securities for the years ended December 31, 2013. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements. The Company does not expect these amendments to have a material effect on its financial statements. In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance which provides a practical expedient that permits the Company to measure defined benefit plan assets and obligations using the month-end that is closest to the Company’s fiscal year-end. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance which provides guidance to customers about whether a cloud computing arrangement includes a software license. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In June 2015, the FASB issued amendments to clarify the Accounting Standards Codification (“ASC”), correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. In September 2015, the FASB amended the Business Combinations topic of the Accounting Standards Codification to simplify the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted for financial statements that have not been issued. All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date. The Company does not expect these amendments to have a material effect on its financial statements. In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments will be effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting. Standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. Subsequent Events In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. |
3. CASH AND DUE FROM BANKS
3. CASH AND DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
NOTE 3. CASH AND DUE FROM BANKS | The Bank is required to maintain average reserve balances based on a percentage of deposits. The average balance of cash, which the Federal Reserve Bank requires to be on reserve, was $25,000 for the years ended December 31, 2015 and 2014. |
4. INVESTMENT SECURITIES
4. INVESTMENT SECURITIES | 12 Months Ended |
Dec. 31, 2015 | |
Investment Securities | |
NOTE 4. INVESTMENT SECURITIES | The amortized cost and fair value of securities held to maturity are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U. S. Treasuries $ 125,043 $ - $ - $ 125,043 December 31, 2014 U. S. Treasuries $ 125,150 $ - $ - $ 125,150 The amortized cost and fair value of securities available for sale are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U. S. Treasuries $ 4,015,440 $ 5,840 $ - $ 4,021,280 Government sponsored enterprises 8,080,540 3,780 10,600 8,073,720 Mortgage-backed obligations of federal agencies 810,802 6,143 - 816,945 Marketable equities 135,000 - - 135,000 Total Securities Available for Sale $ 13,041,782 $ 15,763 $ 10,600 $ 13,046,945 December 31, 2014 U. S. Treasuries $ 4,025,740 $ - $ 6,100 $ 4,019,640 Government sponsored enterprises 8,039,540 8,940 9,880 8,038,600 Mortgage-backed obligations of federal agencies 1,011,092 10,780 - 1,021,872 Marketable equities 135,000 - - 135,000 Total Securities Available for Sale $ 13,211,372 $ 19,720 $ 15,980 $ 13,215,112 The amortized cost and fair value of securities at December 31, 2015, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125,043 $ 125,043 $ 4,015,440 $ 4,021,280 Due after one year through five years - - 8,080,540 8,073,720 Due after five years - - 945,802 951,945 Total $ 125,043 $ 125,043 $ 13,041,782 $ 13,046,945 There were no sales of debt or equity securities during 2015, 2014 or 2013. The carrying value (which approximates fair value) of securities pledged by the Bank to secure deposits and for other purposes amounted to $12,912,000 at December 31, 2015 and $13,080,000 at December 31, 2014. Other investments consist of investments in nineteen low-income housing and historic equity partnerships (carrying basis of $7,213,000), stock in the Federal Home Loan Bank (carrying basis of $3,441,000), and various other investments (carrying basis of $1,503,000). The interests in the low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks are restricted as to sales. The market values of these securities are estimated to approximate their carrying value as of December 31, 2015. At December 31, 2015, the Company was committed to invest an additional $4,358,041 in eight low-income housing limited partnerships. These funds will be paid as requested by the general partner to complete the projects. This additional investment has been reflected in the above carrying basis and in accrued liabilities on the balance sheet. The primary purpose of the investment portfolio is to generate income and meet liquidity needs of the Company through readily saleable financial instruments. The portfolio includes fixed rate bonds, whose prices move inversely with rates and variable rate bonds. At the end of any accounting period, the investment portfolio has unrealized gains and losses. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes and credit risk changes, to see if adjustments are needed. The primary concern in a loss situation is the credit quality of the business behind the instrument. Bonds deteriorate in value due to credit quality of the individual issuer and changes in market conditions. These losses relate to market conditions and the timing of purchases. A summary of these losses (in thousands) is as follows: Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 2015 U. S. Treasuries $ - $ - $ - $ - $ - $ - Government sponsored enterprises 6,056 (11 ) - - 6,056 (11 ) Mortgage-backed obligations - - - - - - Total $ 6,056 $ (11 ) $ - $ - $ 6,056 $ (11 ) 2014 U. S. Treasuries $ 4,020 $ (6 ) $ - $ - $ 4,020 $ (6 ) Government sponsored enterprises 2,004 (2 ) 1,991 (8 ) 3,995 (10 ) Mortgage-backed obligations - - - - - - Total $ 6,024 $ (8 ) $ 1,991 $ (8 ) $ 8,015 $ (16 ) 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 (1) the length of time and the extent to which the fair value has been less than the 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 of fair value. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. The Company did not recognize any other-than-temporary impairment losses in 2015, 2014 or 2013. |
5. LOANS
5. LOANS | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
NOTE 5. LOANS | Loans held for investment as of December 31: 2015 2014 Construction/Land Development $ 69,759,401 $ 67,180,467 Farmland 13,377,740 12,507,446 Real Estate 166,586,877 162,248,606 Multi-Family 7,558,460 11,775,205 Commercial Real Estate 128,031,686 122,305,417 Home Equity – closed end 9,135,433 9,393,805 Home Equity – open end 56,599,337 52,181,679 Commercial & Industrial – Non-Real Estate 27,954,171 28,160,584 Consumer 8,219,391 9,109,994 Dealer Finance 54,085,791 40,633,086 Credit Cards 2,745,190 2,745,190 Total $ 544,053,477 $ 518,201,574 The Company has pledged loans as collateral for borrowings with the Federal Home Loan Bank of Atlanta totaling $182,312,000 and $183,483,000 as of December 31, 2015 and 2014, respectively. The Company maintains a blanket lien on its entire residential real estate portfolio and also began pledges commercial and home equity loans. The following is a summary of information pertaining to impaired loans (in thousands): Unpaid Average Interest December 31, 2015 Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 1,361 $ 1,499 $ - $ 3,622 $ 73 Farmland - - - - - Real Estate 1,097 1,097 - 734 58 Multi-Family - - - - - Commercial Real Estate 307 307 - 874 17 Home Equity – closed end - - - - - Home Equity – open end 1,159 1,159 - 1,513 82 Commercial & Industrial – Non-Real Estate 181 181 - 186 10 Consumer 18 18 - 7 - Credit Cards - - - - - Dealer Finance 4 4 - 1 4 4,127 4,265 - 6,937 244 Impaired loans with a valuation allowance Construction/Land Development 11,534 11,534 2,373 12,884 299 Farmland - - - - - Real Estate 324 324 238 699 46 Multi-Family - - - - - Commercial Real Estate 890 890 18 900 15 Home Equity – closed end - - - - - Home Equity – open end 1,414 1,414 269 613 75 Commercial & Industrial – Non-Real Estate - - - - - Consumer - - - - - Credit cards - - - - - Dealer Finance 68 68 17 38 5 14,230 14,230 2,915 15,134 440 Total impaired loans $ 18,357 $ 18,495 $ 2,915 $ 22,071 $ 684 The following is a summary of information pertaining to impaired loans (in thousands): The Recorded Investment is defined as the principal balance less principal payments and charge-offs. Unpaid Average Interest December 31, 2014 Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 4,982 $ 5,402 $ - $ 5,412 $ 251 Farmland - - - 1,163 - Real Estate 141 141 - 85 5 Multi-Family - - - - - Commercial Real Estate 1,159 1,459 - 1,450 66 Home Equity – closed end - - - 123 - Home Equity – open end 1,649 1,649 - 330 57 Commercial & Industrial – Non-Real Estate 191 191 - 237 11 Consumer - - - - - Credit cards - - - - - Dealer Finance - - - - - 8,122 8,842 - 8,800 390 Impaired loans with a valuation allowance Construction/Land Development 12,976 14,749 1,469 12,056 326 Farmland - - - - - Real Estate 926 926 101 988 105 Multi-Family - - - - - Commercial Real Estate 938 938 47 1,030 4 Home Equity – closed end - - - 72 - Home Equity – open end - - - 40 - Commercial & Industrial – Non-Real Estate - - - - - Consumer - - - - - Credit cards - - - - - Dealer Finance - - - - - 14,840 16,613 1,617 14,186 435 Total impaired loans $ 22,962 $ 25,455 $ 1,617 $ 22,986 $ 825 Loans held for sale consists of loans originated by VBS Mortgage and the Bank’s commitment to purchase residential mortgage loan participations from Gateway Bank and Northpointe Bank. The volume of loans purchased fluctuates due to a number of factors including changes in secondary market rates, which affects demand for mortgage loans; the number of participating banks involved in the program; the number of mortgage loan originators selling loans to the lead bank and the funding capabilities of the lead bank. Loans held for sale as of December 31, 2015 and 2014 were $57,805,529 and $13,381,941, respectively. |
6. ALLOWANCE FOR LOAN LOSSES
6. ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 6. ALLOWANCE FOR LOAN LOSSES | A summary of changes in the allowance for loan losses is shown in the following schedule: December 31, 2015 (in thousands) Beginning Balance Charge-offs Recoveries Provision Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,738 $ 156 $ 85 $ (225 ) $ 4,442 $ 2,373 $ 2,069 Farmland - - - 95 95 - 95 Real Estate 623 25 37 171 806 238 568 Multi-Family - - - 71 71 - 71 Commercial Real Estate 126 - 65 254 445 18 427 Home Equity – closed end 188 26 6 6 174 - 174 Home Equity – open end 154 51 - 531 634 269 365 Commercial & Industrial – Non-Real Estate 1,211 - 62 (218 ) 1,055 - 1,055 Consumer 214 32 32 (106 ) 108 - 108 Dealer Finance 1,336 251 24 (273 ) 836 17 819 Credit Cards 135 60 46 (6 ) 115 - 115 Total $ 8,725 $ 601 $ 357 $ 300 $ 8,781 $ 2,915 $ 5,866 A summary of changes in the allowance for loan losses is shown in the following schedule: December 31, 2014 (in thousands) Beginning Balance Charge-offs Recoveries Provision Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,007 $ 1,611 $ 223 $ 2,119 $ 4,738 $ 1,469 $ 3,269 Farmland (2 ) - - 2 - - - Real Estate 400 208 - 431 623 101 522 Multi-Family - - - - - - - Commercial Real Estate 777 - 108 (759 ) 126 47 79 Home Equity – closed end 157 - - 31 188 - 188 Home Equity – open end 476 80 - (242 ) 154 - 154 Commercial & Industrial – Non-Real Estate 1,464 385 356 (224 ) 1,211 - 1,211 Consumer 156 33 33 58 214 - 214 Dealer Finance 628 107 6 809 1,336 - 1,336 Credit Cards 121 46 35 25 135 - 135 Total $ 8,184 $ 2,470 $ 761 $ 2,250 $ 8,725 $ 1,617 $ 7,108 Recorded Investment in Loan Receivables (in thousands): December 31, 2015 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 69,759 $ 12,895 $ 56,864 Farmland 13,378 - 13,378 Real Estate 166,587 1,421 165,167 Multi-Family 7,559 - 7,559 Commercial Real Estate 128,032 1,197 126,835 Home Equity – closed end 9,135 - 9,135 Home Equity –open end 56,599 2,573 54,026 Commercial & Industrial – Non-Real Estate 27,954 181 27,773 Consumer 8,219 18 8,201 Dealer Finance 54,086 72 54,013 Credit Cards 2,745 - 2,745 $ 544,053 $ 18,357 $ 525,696 Total December 31, 2014 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 67,181 $ 17,958 $ 49,223 Farmland 12,507 - 12,507 Real Estate 162,249 1,067 161,182 Multi-Family 11,775 - 11,775 Commercial Real Estate 122,305 2,097 120,208 Home Equity – closed end 9,394 - 9,394 Home Equity –open end 52,182 1,649 50,533 Commercial & Industrial – Non-Real Estate 28,161 191 27,970 Consumer 9,110 - 9,110 Dealer Finance 40,633 40,633 Credit Cards 2,705 - 2,705 $ 518,202 $ 22,962 $ 495,240 Total Aging of Past Due Loans Receivable (in thousands) 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days (excluding non-accrual) Non-Accrual Loans Total Past Due Current Total Loan Receivable December 31, 2015 Construction/Land Development $ 104 $ - $ - $ 4,688 $ 4,792 $ 64,967 $ 69,759 Farmland - - - - - 13,378 13,378 Real Estate 2,684 1,332 272 1,010 5,298 161,289 166,587 Multi-Family - - - - - 7,559 7,559 Commercial Real Estate 340 241 - - 581 127,451 128,032 Home Equity – closed end 41 7 - - 48 9,087 9,135 Home Equity – open end 918 46 107 40 1,111 55,488 56,599 Commercial & Industrial – Non- Real Estate 114 3 25 109 251 27,703 27,954 Consumer 120 10 - - 130 8,089 8,219 Dealer Finance 905 183 152 108 1,348 52,738 54,086 Credit Cards 10 13 15 - 38 2,707 2,745 Total $ 5,236 $ 1,835 $ 571 $ 5,955 $ 13,597 $ 530,456 $ 544,053 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days (excluding non-accrual) Non-Accrual Loans Total Past Due Current Total Loan Receivable December 31, 2014 Construction/Land Development $ 205 $ 166 $ - $ 4,508 $ 4,879 $ 62,302 $ 67,181 Farmland - - - - - 12,507 12,507 Real Estate 5,085 635 - 973 6,693 155,556 162,249 Multi-Family - - - - - 11,775 11,775 Commercial Real Estate 747 - - 1,165 1,912 120,393 122,305 Home Equity – closed end 162 15 - 10 187 9,207 9,394 Home Equity – open end 730 25 - 143 898 51,284 52,182 Commercial & Industrial – Non- Real Estate - - - 14 14 28,147 28,161 Consumer 290 9 - - 299 8,811 9,110 Dealer Finance 696 189 - 161 1,046 39,587 40,633 Credit Cards 36 - 1 - 37 2,668 2,705 Total $ 7,951 $ 1,039 $ 1 $ 6,974 $ 15,965 $ 502,237 $ 518,202 CREDIT QUALITY INDICATORS (in thousands) AS OF DECEMBER 31, 2015 Corporate Credit Exposure Credit Risk Profile by Creditworthiness Category Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 485 $ 8,410 $ 31,783 $ 14,260 $ 3,216 $ 11,605 $ - $ 69,759 Farmland 66 - 2,615 3,768 4,952 1,977 - - 13,378 Real Estate - 955 54,400 76,545 23,695 8,334 2,658 - 166,587 Multi-Family - 391 3,925 3,046 197 - - - 7,559 Commercial Real Estate - 2,087 25,889 74,337 20,271 4,149 1,299 - 128,032 Home Equity – closed end - - 3,549 3,792 1,661 114 19 - 9,135 Home Equity – open end - 1,657 15,043 31,455 4,827 398 3,219 - 56,599 Commercial & Industrial (Non-Real Estate) 896 646 6,423 17,053 2,281 517 138 - 27,954 Total $ 962 $ 6,221 $ 120,254 $ 241,779 $ 72,144 $ 18,705 $ 18,938 $ - $ 479,003 Consumer Credit Exposure Credit Risk Profile Based on Payment Activity Credit Cards Consumer Performing $ 2,730 $ 62,046 Non performing 15 259 Total $ 2,745 $ 62,305 CREDIT QUALITY INDICATORS (in thousands) AS OF DECEMBER 31, 2014 Corporate Credit Exposure Credit Risk Profile by Creditworthiness Category Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 165 $ 8,460 $ 24,227 $ 9,605 $ 3,815 $ 20,909 $ - $ 67,181 Farmland 68 - 1,640 3,451 5,228 - 2,120 - 12,507 Real Estate - 629 60,290 66,464 23,934 7,083 3,849 - 162,249 Multi-Family - 468 4,145 2,183 4,979 - - - 11,775 Commercial Real Estate - 1,687 22,800 65,653 19,058 10,571 2,536 - 122,305 Home Equity – closed end - - 4,327 3,090 1,812 154 11 - 9,394 Home Equity – open end - 1,555 13,433 28,425 4,309 1,936 2,524 - 52,182 Commercial & Industrial (Non-Real Estate) 643 74 4,692 18,039 3,948 735 30 - 28,161 Total $ 711 $ 4,578 $ 119,787 $ 211,532 $ 72,873 $ 24,294 $ 31,979 $ - $ 465,754 Consumer Credit Exposure Credit Risk Profile Based on Payment Activity Credit Cards Consumer Performing $ 2,704 $ 49,582 Non performing 1 161 Total $ 2,705 $ 49,743 Description of loan grades: Grade 1 – Minimal Risk Grade 2 – Modest Risk Grade 3 – Average Risk Grade 4 – Acceptable Risk Grade 5 – Marginally acceptable s Grade 6 – Watch Grade 7 – Substandard Grade 8 – Doubtful |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 7. TROUBLED DEBT RESTRUCTURING | In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans, which figure into the environmental factors associated with the allowance. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance calculation. Additionally, specific reserves may be established on restructured loans evaluated individually. During the twelve months ended December 31, 2015, the Bank modified 16 loans that were considered to be troubled debt restructurings. These modifications include rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof. December 31, 2015 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Commercial 1 $ 974 $ 974 Real Estate 5 1,408 1,408 Home Equity 4 1,414 1,414 Consumer 6 73 73 Total 16 $ 3,869 $ 3,869 As of December 31, 2015, there were no loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 90 days past due. During the twelve months ended December 31, 2014, the Bank modified 3 loans that were considered to be troubled debt restructurings. These modifications include rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof. December 31, 2014 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Number of Contracts Recorded Investment Recorded Investment Troubled Debt Restructurings Real Estate 2 $ 179 $ 179 Consumer 1 22 22 $ 201 $ 201 As of December 31, 2014, there was one loan restructured in the previous twelve months, in default. This was a real estate loan totaling $97,000. A restructured loan is considered in default when it becomes 90 days past due. |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 8. BANK PREMISES AND EQUIPMENT | Bank premises and equipment as of December 31 are summarized as follows: 2015 2014 Land $ 1,868,709 $ 1,418,003 Buildings and improvements 7,209,427 6,793,644 Furniture and equipment 7,397,173 6,479,815 16,475,309 14,691,462 Less - accumulated depreciation (8,933,231 ) (8,233,208 ) Net $ 7,542,078 $ 6,458,254 Provisions for depreciation of $709,237 in 2015, $612,116 in 2014, and $581,625 in 2013 were charged to operations. |
9. OTHER REAL ESTATE OWNED
9. OTHER REAL ESTATE OWNED | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 9. OTHER REAL ESTATE OWNED | The tables below reflect OREO activity for 2015 and 2014: Other Real Estate Owned 2015 2014 Balance as of January 1 $ 3,507,153 $ 2,628,418 Property acquired at foreclosure 125,000 2,914,958 Capital improvements on foreclosed property 98,929 48,961 Sale of other real estate owned financed by Bank (328,129 ) (780,097 ) Sales of foreclosed properties (737,663 ) (1,029,452 ) Write down of OREO (537,605 ) (275,635 ) Balance as of December 31 $ 2,127,685 $ 3,507,153 |
10. DEPOSITS
10. DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
Banking and Thrift [Abstract] | |
NOTE 10. DEPOSITS | The composition of deposits at December 31, 2015 and 2014 was as follows: December 31, 2015 2014 Noninterest bearing demand deposits $ 134,786,875 $ 112,197,722 Savings and interest bearing demand deposits: Interest checking accounts 108,459,597 119,593,529 Savings accounts 90,383,486 64,249,199 Time Deposits: Balances of less than $100,000 107,415,244 115,651,329 Balances of $100,000 and more 53,624,554 79,812,757 Total Deposits $ 494,669,756 $ 491,504,536 The CompanyÂ’s deposits over $250,000 were not readily available from their data processing system. At December 31, 2015, the scheduled maturities of time deposits are as follows: 2016 $ 68,800,143 2017 38,529,664 2018 27,310,066 2019 12,595,076 2020 and after 13,804,849 Total $ 161,039,798 |
11. SHORT-TERM DEBT
11. SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTE 11. SHORT-TERM DEBT | Short-term debt, all maturing within 12 months, information is summarized as follows: Maximum Weighted Outstanding Outstanding Average Average Year End at any at Balance Interest Interest Month End Year End Outstanding Rate Rate 2015 Federal funds purchased $ 8,843,000 $ 959,217 $ 833,907 .02 % .78 % FHLB short term 45,000 ,000 20,000,000 26,739,726 .16 % .19 % Securities sold under agreements to repurchase 4,697,341 3,994,834 4,443,753 .04 % .25 % Totals $ 24,954,051 $ 32,017,386 .21 % .22 % 2014 Federal funds purchased $ 491,000 $ - $ 7,704 .001 % .61 % FHLB short term 10,000 ,000 10,000,000 27,397 .001 % .17 % Securities sold under agreements to repurchase 5,066,238 4,358,492 3,837,612 .23 % .24 % Totals $ 14,358,492 $ 3,872,713 .23 % .23 % Repurchase agreements are secured transactions with customers and generally mature the day following the date sold. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB daily rate credit, which is secured by the loan portfolio, is a variable rate loan that acts as a line of credit to meet financing needs. As of December 31, 2015, the Company had unsecured lines of credit with correspondent banks totaling $26,000,000, which may be used in the management of short-term liquidity. |
12. LONG-TERM DEBT
12. LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTE 12. LONG-TERM DEBT | The Company borrowed $40,000,000 from the Federal Home Loan Bank of Atlanta (FHLB) in 2015 to fund loan growth and extend maturities of long term debt at lower rates. They borrowed $10,000,000 in 2014 and there were no new borrowings from FHLB in 2013. The interest rates on the notes payable are fixed at the time of the advance and range from 1.16% to 2.56%; the weighted average interest rate was 1.86% and 2.33% at December 31, 2015 and 2014, respectively. The balance of these obligations at December 31, 2015 and December 31, 2014 were $48,161,000 and $9,875,000, respectively. The long-term debt is secured by qualifying mortgage loans owned by the Company. The maturities of long-term Federal Home Loan Bank borrowings as of December 31, 2015 are as follows: 2016 $ 3,929,000 2017 3,929,000 2018 8,929,000 2019 6,429,000 2020 13,929,000 Thereafter 11,016,000 Total $ 48,161,000 |
13. INCOME TAX EXPENSE
13. INCOME TAX EXPENSE | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
NOTE 13. INCOME TAX EXPENSE | The components of the income tax expense are as follows: 2015 2014 2013 Current expense Federal $ 3,227,013 $ 1,777,598 $ 482,912 Deferred (benefit) expense Federal (340,941 ) 505,684 636,452 State - 9,854 (67,594 ) Total Deferred (benefit) expense (340,941 ) 515,538 568,858 Total Income Tax Expense $ 2,886,072 $ 2,293,136 $ 1,051,770 The components of the deferred taxes as of December 31 are as follows: Deferred Tax Assets: 2015 2014 Allowance for loan losses $ 2,564,214 $ 2,201,291 Split Dollar Life Insurance 4,440 4,440 Nonqualified deferred compensation 702,440 594,132 Low income housing partnerships losses 210,107 308,539 Core deposit amortization 176,605 72,188 Other real estate owned 269,610 3,746 Pension plan 1,382,268 1,199,686 Total Assets $ 5,309,684 $ 4,384,022 Deferred Tax Liabilities: 2015 2014 Unearned low income housing credits $ 418,416 $ 523,769 Depreciation 359,406 320,743 Pension 1,988,736 1,864,964 Goodwill tax amortization 901,340 853,880 Securities available for sale 1,757 1,272 Total Liabilities 3,669,655 3,564,628 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,640,029 $ 819,394 The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rates: 2015 2014 2013 Tax expense at federal statutory rates $ 3,843,048 $ 2,959,056 $ 2,251,851 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit 8,087 8,659 9,229 Partially tax-exempt income (46,348 ) (54,529 ) (44,676 ) Tax-exempt income (222,672 ) (190,192 ) (197,482 ) Prior year LIH credits (132,028 ) (21,787 ) (61,768 ) LIH and historic credits (568,854 ) (484,955 ) (611,795 ) Deferred Tax Asset Valuation Allowance - reversal - 396,440 - Other 4,840 (112,714 ) (2,710 ) Total Income Tax Expense $ 2,886,072 $ 2,293,136 $ 1,051,770 Management evaluated the likelihood of recognizing the CompanyÂ’s deferred tax asset. Based on the evidence supporting this asset, it was decided to record a partial valuation allowance against the asset on the CompanyÂ’s books in the amount of $582,778 for the years ended 2015 and 2014. A deferred tax asset is created from the difference between book income using Generally Accepted Accounting Principles and taxable income. The Corporation has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions in accordance with accounting guidance related to income taxes. The Corporation and its subsidiaries file federal income tax returns and state income tax returns. With few exceptions, the Corporation is no longer subject to federal or state income tax examinations by tax authorities for years before 2012. |
14. EMPLOYEE BENEFITS
14. EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 14. EMPLOYEE BENEFITS | Defined Benefit Pension Plan The Bank has a qualified noncontributory defined benefit pension plan which covers substantially all of its employees hired before April 1, 2012. The benefits are primarily based on years of service and earnings. The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets for 2015, 2014 and 2013: 2015 2014 2013 Change in Benefit Obligation Benefit obligation, beginning $ 10,777,415 $ 7,933,568 $ 8,931,940 Service cost 648,334 501,032 599,933 Interest cost 410,944 377,706 350,314 Actuarial gain (loss) (137,048 ) 2,030,583 (1,300,094 ) Benefits paid (754,987 ) (65,474 ) (648,525 ) Benefit obligation, ending $ 10,944,658 $ 10,777,415 $ 7,933,568 Change in Plan Assets Fair value of plan assets, beginning $ 11,683,845 $ 9,687,226 $ 8,123,437 Actual return on plan assets (640 ) 562,093 1,462,314 Employer contribution 750,000 1,500,000 750,000 Benefits paid (754,987 ) (65,474 ) (648,525 ) Fair value of plan assets, ending 11,678,218 11,683,845 9,687,226 Funded status at the end of the year $ 733,560 $ 906,430 $ 1,753,658 The fair value of plan assets is measured based on the fair value hierarchy as discussed in Note 21, “Fair Value Measurements” to the Consolidated Financial Statements. The valuations are based on third party data received as of the balance sheet date. All plan assets are considered Level 1 assets, as quoted prices exist in active markets for identical assets. 2015 2014 2013 Amount recognized in the Balance Sheet Accrued prepaid benefit cost $ 4,799,051 $ 4,434,917 $ 3,136,277 Unfunded pension benefit obligation under ASC 325-960 (4,065,491 ) (3,528,487 ) (1,382,619 ) Amount recognized in accumulated other comprehensive income Net Gain/(Loss) $ (4,137,855 ) $ (3,616,087 ) $ (1,485,455 ) Prior service cost 72,364 87,600 102,836 Amount recognized (4,065,491 ) (3,528,487 ) (1,382,619 ) Deferred Taxes 1,382,267 1,199,686 470,090 Amount recognized in accumulated comprehensive income $ (2,683,224 ) $ (2,328,801 ) $ (912,529 ) (Accrued) Prepaid benefit detail Benefit obligation $ (10,944,658 ) $ (10,777,415 ) $ (7,933,568 ) Fair value of assets 11,678,218 11,683,845 9,687,226 Unrecognized net actuarial loss 4,137,855 3,616,087 1,485,455 Unrecognized prior service cost (72,364 ) (87,600 ) (102,836 ) Prepaid (accrued) benefits $ 4,799,051 $ 4,434,917 $ 3,136,277 Components of net periodic benefit cost Service cost $ 648,334 $ 501,032 $ 599,933 Interest cost 410,944 377,706 350,314 Expected return on plan assets (838,818 ) (698,252 ) (636,081 ) Amortization of prior service cost (15,236 ) (15,236 ) (15,236 ) Recognized net actuarial (gain) loss 180,642 36,110 203,183 Net periodic benefit cost $ 385,866 $ 201,360 $ 502,113 Additional disclosure information Accumulated benefit obligation $ 7,601,249 $ 7,543,340 $ 5,474,048 Vested benefit obligation $ 7,539,365 $ 7,408,014 $ 5,388,808 Discount rate used for net pension cost 4.00 % 5.00 % 4.00 % Discount rate used for disclosure 4.25 % 4.00 % 5.00 % Expected return on plan assets 7.50 % 7.50 % 8.00 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 13 14 14 Funding Policy The Company’s contributions for 2015, 2014 and 2013 were $750,000, $1,500,000, and $750,000, respectively. Due to the current funding status of the plan, the Company will not make a contribution in 2016. The net periodic pension cost of the plan for 2016 will be approximately $438,000. Long-Term Rate of Return The plan sponsor selects the expected long-term rate of return on assets assumption in consultation with their advisors and the plan actuary, and with concurrence from their auditor. This rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (net of inflation) for the major asset classes held or anticipated to be held by the trust. Undue weight is not given to recent experience, which may not continue over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions. Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further – solely for this purpose the plan is assumed to continue in force and not terminate during the period during which the assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the trust, and expenses (both investment and non-investment) typically paid from plan assets (to the extent such expenses are not explicitly estimated within periodic cost). Asset Allocation The trust fund is sufficiently diversified to maintain a reasonable level of risk without imprudently sacrificing return, with a targeted asset allocation of 40% fixed income and 60% equity. The Investment Manager selects investment fund managers with demonstrated experience and expertise, and funds with demonstrated historical performance, for the implementation of the Plan’s investment strategy. The Investment Manager will consider both actively and passively managed investment strategies and will allocate funds across the asset classes to develop an efficient investment structure. The pension plan’s allocations as of December 31, 2015 and 2014 were 60% equity and 40% fixed and 61% equity and 39% fixed, respectively. Estimated Future Benefit Payments 2016 $ 582,606 2017 48,333 2018 1,249,321 2019 662,704 2020 543,814 2021-2025 4,568,645 $ 7,655,423 Employee Stock Ownership Plan (ESOP) The Company sponsors an ESOP which provides stock ownership to substantially all employees of the Bank. The Plan provides total vesting upon the attainment of five years of service. Contributions to the plan are made at the discretion of the Board of Directors and are allocated based on the compensation of each employee relative to total compensation paid by the Bank. All shares issued and held by the Plan are considered outstanding in the computation of earnings per share. Dividends on Company stock are allocated and paid to participants at least annually. Shares of Company stock, when distributed, have restrictions on transferability. The Company contributed $420,000 in 2015, $360,000 in 2014, and $360,000 in 2013 to the Plan and charged this expense to operations. The shares held by the ESOP totaled 188,596 and 188,396 at December 31, 2015 and 2014, respectively. 401(K) Plan The Company sponsors a 401(k) savings plan under which eligible employees may choose to save up to 20 percent of their salary on a pretax basis, subject to certain IRS limits. Under the Federal Safe Harbor rules employees are automatically enrolled at 3% (in the third year this increases by 1% per year up to 6%) of their salary unless elected otherwise. The Company matches a hundred percent of the first 1% contributed by the employee and fifty percent from 2% to 6% of employee contributions. Vesting in the contributions made by the Company is 100% after two years of service. Contributions under the plan amounted to $211,987, $190,057 and $183,468 in 2015, 2014 and 2013, respectively. Deferred Compensation Plan The Company has a nonqualified deferred compensation plan for several of its key employees and directors. The Company may make annual contributions to the plan, and the employee or director has the option to defer a portion of their salary or bonus based on qualifying annual elections. Contributions to the plan totaled $110,000 in 2015, $100,000 in 2014 and $90,000 in 2013. |
15. CONCENTRATIONS OF CREDIT
15. CONCENTRATIONS OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
NOTE 15. CONCENTRATIONS OF CREDIT | The Company had cash deposits in other commercial banks totaling $2,156,006 and $1,731,223 at December 31, 2015 and 2014, respectively. The Company grants commercial, residential real estate and consumer loans to customers located primarily in the northwestern portion of the State of Virginia. Loan concentration areas greater than 25% of capital include land development. Collateral required by the Company is determined on an individual basis depending on the purpose of the loan and the financial condition of the borrower. Approximately 83% of the loan portfolio is secured by real estate. |
16. COMMITMENTS
16. COMMITMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 16. COMMITMENTS | The Company makes commitments to extend credit in the normal course of business and issues standby letters of credit to meet the financing needs of its customers. The amount of the commitments represents the Company's exposure to credit loss that is not included in the balance sheet. As of the balance sheet dates, the Company had the following commitments outstanding: 2015 2014 Commitments to loan money $ 135,138,834 $ 120,922,771 Standby letters of credit 1,344,191 2,077,870 The Company uses the same credit policies in making commitments to lend money and issue standby letters of credit as it does for the loans reflected in the balance sheet. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. Collateral required, if any, upon extension of credit is based on management's credit evaluation of the borrowerÂ’s ability to pay. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment. The Bank leases four of its branch offices and both of its loan production offices under long term lease arrangements which had initial terms of either three, five or ten years. Lease expense was $164,294, $120,728 and $121,025 for 2015, 2014 and 2013, respectively. As of December 31, 2015, the required lease payments for the next five years are as follows: 2016 $ 160,882 2017 116,899 2018 73,226 2019 74,349 2020 75,500 |
17. ON BALANCE SHEET DERIVATIVE
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | Derivative Financial Instruments The Company has stand alone derivative financial instruments in the form of forward option contracts. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments, and the value of the derivative are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the CompanyÂ’s balance sheet as derivative assets and derivative liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail their obligations. The Company deals only with primary dealers. Derivative instruments are generally either negotiated OTC contracts or standardized contracts executed on a recognized exchange. Negotiated OTC derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity. The Company issues to customers certificates of deposit with an interest rate that is derived from the rate of return on the stock of the companies that comprise The Dow Jones Industrial Average. In order to manage the interest rate risk associated with this deposit product, the Company has purchased a series of forward option contracts. These contracts provide the Company with a rate of return commensurate with the return of The Dow Jones Industrial Average from the time of the contract until maturity of the related certificate of deposit. These contracts are accounted for as fair value hedges. Because the certificates of deposit can be redeemed by the customer at any time and the related forward options contracts cannot be cancelled by the Company, the hedge is not considered effective. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. At December 31, the information pertaining to the forward option contracts, included in other assets and other liabilities on the balance sheet, is as follows: 2015 2014 Notional amount $ 189,629 $ 87,782 Fair market value of contracts 15,162 32,795 |
18. TRANSACTIONS WITH RELATED P
18. TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 18. TRANSACTIONS WITH RELATED PARTIES | During the year, officers and directors (and companies controlled by them) were customers of and had transactions with the Company in the normal course of business. These transactions were made on substantially the same terms as those prevailing for other customers and did not involve any abnormal risk.. Loan transactions with related parties are shown in the following schedule: 2015 2014 Total loans, beginning of year $ 7,449,140 $ 7,786,058 New loans 5,226,432 5,249,565 Relationship change (44,948 ) - Repayments (5,450,520 ) (5,586,483 ) Total loans, end of year $ 7,180,104 $ 7,449,140 Deposit of executive officers and directors and their affiliates were $4,529,503 and $3,430,336 on December 31, 2015 and 2014 respectively. These deposits were made under the same terms available to other customers of the bank. |
19. DIVIDEND LIMITATIONS ON SUB
19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | The principal source of funds of F & M Bank Corp. is dividends paid by the Farmers and Merchants Bank. The Federal Reserve Act restricts the amount of dividends the Bank may pay. Approval by the Board of Governors of the Federal Reserve System is required if the dividends declared by a state member bank, in any year, exceed the sum of (1) net income of the current year and (2) income net of dividends for the preceding two years. As of January 1, 2015, approximately $10,494,000 was available for dividend distribution without permission of the Board of Governors. Dividends paid by the Bank to the Company totaled $2,500,000 in 2015, $1,300,000 in 2014 and $1,550,000 in 2013. |
20. DISCLOSURES ABOUT FAIR VALU
20. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 20. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | ASC 825 “Financial Instruments” (formerly SFAS 107) defines the fair value of a financial instrument as the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation or sale. As the majority of the Bank's financial instruments lack an available trading market, significant estimates, assumptions and present value calculations are required to determine estimated fair value. The following presents the carrying amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments as of December 31, 2015 and December 31, 2014. This table excludes financial instruments for which the carrying amount approximates the fair value, which would be Level 1; inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. All financial instruments below are considered Level 2 (except for impaired loans which are level 3); inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. 2015 2014 Estimated Carrying Estimated Carrying Fair Value Value Fair Value Value Financial Assets (in thousands) Loans $ 555,762 $ 544,053 $ 551,338 $ 518,202 Financial Liabilities Time deposits 162,524 161,040 196,826 195,464 Long-term debt 48,565 48,161 9,862 9,875 The carrying value of cash and cash equivalents, other investments, deposits with no stated maturities, short-term borrowings, and accrued interest approximate fair value. The fair value of securities was calculated using the most recent transaction price or a pricing model, which takes into consideration maturity, yields and quality. The remaining financial instruments were valued based on the present value of estimated future cash flows, discounted at various rates in effect for similar instruments entered into during the month of December of each year. |
21. FAIR VALUE MEASUREMENTS
21. FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
NOTE 21. FAIR VALUE MEASUREMENTS | Accounting Standards Codification (ASC 820), “Fair Value Measurement Disclosures” (formerly “FAS No. 157”), defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The following sections provide a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy: Securities: Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Loans Held for Sale: Loans held for sale are short-term loans purchased at par for resale to investors at the par value of the loan. These loans are generally repurchased within 15 days. Because of the short-term nature and fixed repurchased price, the book value of these loans approximates fair value. Impaired Loans: ASC 310 applies to loans measured for impairment using the practical expedients permitted by SFAS No. 114, “Accounting by Creditors for Impairment of a Loan,” including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral. Other Real Estate Owned: Certain assets such as other real estate owned (OREO) are initially measured at fair value less cost to sell. We believe that the fair value component in its valuation follows the provisions of ASC 310. For level 3 assets and liabilities measured at fair value on a recurring basis or non-recurring basis as of December 31, 2015 and 2014 significant unobservable inputs used in the fair value measurements were as follows: Fair Value at December 31, 2015 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 11,315 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Other Real Estate Owned $ 2,128 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Fair Value at December 31, 2014 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 13,223 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Other Real Estate Owned $ 3,507 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Assets and Liabilities Recorded at Fair Value on a Recurring Basis (in thousands) December 31, 2015 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 4,021 $ - $ 4,021 $ - Government sponsored enterprises 8,074 - 8,074 - Mortgage-backed obligations of federal agencies 817 - 817 - Marketable equities 135 - 135 - Investment securities available for sale 13,047 - 13,047 - Total assets at fair value $ 13,047 $ - $ 13,047 $ - Total liabilities at fair value $ - $ - $ - $ - Derivative financial instruments at fair value $ 15 $ - $ 15 $ - December 31, 2014 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 4,020 $ - $ 4,020 $ - Government sponsored enterprises 8,038 - 8,038 - Mortgage-backed obligations of federal agencies 1,022 - 1,022 - Marketable equities 135 - 135 - Investment securities available for sale 13,215 - 13,215 - Total assets at fair value $ 13,215 $ - $ 13,215 $ - Total liabilities at fair value $ - $ - $ - $ - Derivative financial instruments at fair value $ 33 $ - $ 33 $ - Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis (in thousands) December 31, 2015 Total Level 1 Level 2 Level 3 Other Real Estate Owned $ 2,128 - - $ 2,128 - - Construction/Land Development 9,161 - - 9,161 Farmland - - - - Real Estate 85 - - 85 Multi-Family - - - - Commercial Real Estate 872 - - 872 Home Equity – closed end - - - - Home Equity – open end 1,145 - - 1,145 Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance 52 - - 52 Impaired loans 11,315 - - 11,315 Total assets at fair value $ 13,443 - $ - $ 13,443 Total liabilities at fair value $ - $ - $ - $ - Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis (in thousands) The table below presents the recorded amount of assets and liabilities measured at fair value on a non-recurring basis. December 31, 2014 Total Level 1 Level 2 Level 3 Other Real Estate Owned $ 3,507 - - $ 3,507 - - Construction/Land Development 11,507 - - 11,507 Farmland - - - - Real Estate 825 - - 825 Multi-Family - - - - Commercial Real Estate 891 - - 891 Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance - - - - Impaired loans 13,223 - - 13,223 Total assets at fair value $ 16,730 - $ - $ 16,730 Total liabilities at fair value $ - $ - $ - $ - There were no significant transfers between levels 1 and 2. Level 3 assets consist of Other Real Estate Owned and Impaired loans. These assets have been valued based on Managements’ estimate. These estimates were derived from a review of appraisals, tax assessments and discussions with appraisers and realtors. |
22. REGULATORY MATTERS
22. REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 22. REGULATORY MATTERS | The Company and its subsidiary 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 CompanyÂ’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the CompanyÂ’s assets, liabilities, and certain off balance-sheet items as calculated under regulatory accounting practices. The CompanyÂ’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation, to ensure capital adequacy, require the Company to maintain minimum amounts and ratios. These ratios are defined in the regulations and the amounts are set forth in the table below. Management believes, as of December 31, 2015, that the Company and its subsidiary bank meet all capital adequacy requirements to which they are subject. As of the most recent notification from the Federal Reserve Bank Report of Examination (which was as of February 23, 2015), the subsidiary bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institutionÂ’s category. The CompanyÂ’s actual consolidated capital ratios are presented in the following table (dollars in thousands): Analysis of Capital Regulatory Requirements At December 31, Adequately Well 2015 2014 2013 Capitalized Capitalized Tier1 capital: Preferred stock $ 9,425 $ 9,425 $ - Common stock 16,427 16,459 12,559 Retained earnings 59,205 53,815 42,089 Intangible assets (2,670 ) (2,670 ) (2,670 ) Accumulated other comprehensive income (2,680 ) - - Total Tier 1 Capital $ 79,707 $ 77,029 $ 51,978 Tier 2 capital: Qualifying subordinated debt $ - $ - $ 8,487 Allowance for loan losses 7,073 6,018 5,389 Unrealized gains on AFS equity securities - - - Total risked based capital $ 86,780 $ 83,047 $ 65,854 Common Equity Tier 1 Capital (Tier 1 less preferred stock) $ 70,282 $ - $ - Risk-weighted assets $ 564,106 $ 478,725 $ 428,349 Capital ratios: Total risk-based ratio 15.38 % 17.35 % 15.37 % 8.00 % 10.00 % Tier 1 risk-based ratio 14.13 % 16.09 % 12.13 % 4.00 % 6.00 % Common equity tier 1 12.46 % 4.5 % 6.5 % Total assets leverage ratio 12.18 % 12.88 % 9.37 % 3.00 % 5.00 % The actual capital ratios for the subsidiary bank are presented in the following table (dollars in thousands): Analysis of Capital Regulatory Requirements At December 31, Adequately Well 2015 2014 2013 Capitalized Capitalized Common Equity Tier 1 capital: Common stock $ 500 $ 500 $ 500 Capital surplus 37,971 37,971 18,971 Retained earnings 45,855 40,114 35,361 Intangible assets (2,670 ) (2,670 ) (2,670 ) Accumulated other comprehensive income (2,680 ) - - Total Common Equity Tier 1 Capital $ 78,976 $ 75,915 $ 52,162 Tier 2 capital: Qualifying subordinated debt $ - $ - $ 8,487 Allowance for loan losses 7,077 6,006 5,384 Unrealized gains on AFS securities - - - Total risked based capital $ 86,053 $ 81,921 $ 66,033 Risk-weighted assets $ 564,469 $ 478,512 $ 427,957 Capital ratios: Total risk-based ratio 15.24 % 17.12 % 15.43 % 8.00 % 10.00 % Tier 1 risk-based ratio 13.99 % 15.86 % 12.19 % 4.00 % 6.00 % Common equity tier 1 13.99 % 4.5 % 6.5 % Total assets leverage ratio 12.06 % 12.70 % 9.41 % 3.00 % 5.00 % |
23. INTANGIBLES
23. INTANGIBLES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 23. INTANGIBLES | Goodwill associated with the purchase of the Edinburg and Woodstock branches and VBS Mortgage totaled $2,638,677 and $30,840, respectively, at the acquisition date. |
24. INVESTMENTS IN LIFE INSURAN
24. INVESTMENTS IN LIFE INSURANCE CONTRACTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 24. INVESTMENTS IN LIFE INSURANCE CONTRACTS | The Bank currently offers a variety of benefit plans to all full time employees. While the costs of these plans are generally tax deductible to the Bank, the cost has been escalating greatly in recent years. To help offset escalating benefit costs and to attract and retain qualified employees, the Bank purchased Bank Owned Life Insurance (BOLI) contracts that will provide benefits to employees during their lifetime. Dividends received on these policies are tax-deferred and the death benefits under the policies are tax exempt. Rates of return on a tax-equivalent basis are very favorable when compared to other long-term investments which the Bank might make. |
25. PARENT CORPORATION ONLY FIN
25. PARENT CORPORATION ONLY FINANCIAL STATEMENTSz | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 25. PARENT CORPORATION ONLY FINANCIAL STATEMENTS | Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash and cash equivalents $ 1,907,581 $ 1,214,140 Investment in subsidiaries 81,646,312 76,684,121 Securities available for sale 135,000 135,000 Income tax receivable (including due from subsidiary) - 453,585 Total Assets $ 83,688,893 $ 78,486,846 Liabilities Other liabilities $ - $ 137,977 Income tax payable (including due form subsidiary) 847,001 - Deferred income taxes 301,870 383,125 Demand obligations for low income housing investment 162,290 167,341 Total Liabilities $ 1,311,161 $ 688,443 StockholdersÂ’ Equity Preferred stock par value $5 per share, 400,000 shares authorized, issued and outstanding $ 9,425,123 $ 9,425,123 Common stock par value $5 per share, 6,000,000 shares authorized, 3,285,404 and 3,291,766 shares issued and outstanding for 2015 and 2014, respectively 16,427,020 16,458,830 Retained earnings 59,205,404 53,814,416 Noncontrolling interest - 426,365 Accumulated other comprehensive income (loss) (2,679,815 ) (2,326,331 ) Total Stockholders' Equity 82,377,732 77,798,403 Total Liabilities and Stockholders' Equity $ 83,688,893 $ 78,486,846 Statements of Net Income For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Income Dividends from affiliate $ 2,500,000 $ 1,300,000 $ 1,550,000 Interest Income - - 5 Net limited partnership income (loss) 4,792 - (65,165 ) Total Income 2,504,792 1,300,000 1,484,840 Expenses Other expense 21,316 7,100 - Administrative expenses - - 60,209 Total Expenses 21,316 7,100 60,209 Net income before income tax expense (benefit) and undistributed subsidiary net income 2,483,476 1,292,900 1,424,631 Income Tax Expense (Benefit) (191,494 ) 243,492 (239,908 ) Income before undistributed subsidiary net income 2,674,970 1,049,408 1,664,539 Undistributed subsidiary net income 5,742,039 4,752,201 3,051,254 Net Income F&M Bank Corp. $ 8,417,009 $ 5,801,609 $ 4,715,793 Statements of Cash Flows For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Cash Flows from Operating Activities Net income $ 8,417,009 $ 5,801,609 $ 4,715,793 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (5,742,039 ) (4,752,201 ) (3,051,254 ) Deferred tax (benefit) expense (81,256 ) 279,928 8,577 Decrease (increase) in other assets 1,300,586 (444,885 ) (174,367 ) Increase (decrease) in other liabilities (143,028 ) 137,817 (1,109,728 ) Net change in deferred tax credits - - (27,918 ) Amortization of limited partnership investments - - 65,165 Net Cash Provided by Operating Activities 3,751,272 1,022,268 426,268 Cash Flows from Investing Activities Change in loans receivable - - 1,000,000 Purchase of securities available for sale - (135,000 ) - Net Cash Provided by (Used in) Investing Activities - (135,000 ) 1,000,000 Cash Flows from Financing Activities Capital contributed to subsidiary - (19,000,000 ) - Proceeds from issuance of preferred stock - 9,425,123 Repurchase of common stock (289,119 ) Proceeds from issuance of common stock 146,418 12,055,709 213,429 Dividends paid in cash (2,915,130 ) (2,231,912 ) (1,705,881 ) Net Provided by (Cash Used) in Financing Activities (3,057,831 ) 248,920 (1,492,452 ) Net Increase (decreases) in Cash and Cash Equivalents 693,441 1,136,188 (66,184 ) Cash and Cash Equivalents, Beginning of Year 1,214,140 77,952 144,136 Cash and Cash Equivalents, End of Year $ 1,907,581 $ 1,214,140 $ 77,952 |
26. INVESTMENT IN VBS MORTGAGE,
26. INVESTMENT IN VBS MORTGAGE, LLC | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
NOTE 26. INVESTMENT IN VBS MORTGAGE, LLC | On November 3, 2008, the Bank acquired a 70% ownership interest in VBS Mortgage, LLC (formerly Valley Broker Services, DBA VBS Mortgage). VBS originates both conventional and government sponsored mortgages for sale in the secondary market. As of December 31, 2015 and 2014, VBSÂ’ summarized balance sheet and income statement were as follows: Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash and cash equivalents $ 1,071,293 $ 610,973 Loans Receivable 763,534 818,054 Property and equipment, net 79,038 45,600 Other Assets 266,073 162,304 Total Assets $ 2,179,938 $ 1,636,931 Liabilities Other liabilities 271,004 215,713 Total Liabilities $ 271,004 $ 215,713 Equity Capital 219,634 219,634 Retained earnings 1,689,300 1,201,584 Total Equity $ 1,908,934 $ 1,421,218 Total Liabilities and Equity $ 2,179,938 $ 1,636,931 Statements of Income For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Income Mortgage origination income $ 2,645,235 $ 1,907,804 $ 2,528,108 Other Income 51,175 53,528 42,092 Total Income 2,696,410 1,961,332 2,570,200 Expenses Salaries and employee benefits 1,413,107 1,105,902 1,461,797 Occupancy and equipment expense 212,858 177,014 164,717 Management and professional fees 290,102 321,053 301,558 Other 231,757 205,188 284,845 Total Expenses 2,147,824 1,809,157 2,212,917 Net income(loss) $ 548,586 $ 152,175 $ 357,283 |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Principles of Consolidation | The consolidated financial statements include the accounts of Farmers and Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc. and VBS Mortgage, LLC, (net of minority interest). Significant inter-company accounts and transactions have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts in those statements; actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, which is sensitive to changes in local and national economic conditions, and the other than temporary impairment of investments in the investment portfolio. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, deposits at other financial institutions whose initial maturity is ninety days or less and Federal funds sold. |
Investment Securities | Management reviews the securities portfolio and classifies all securities as either held to maturity or available for sale at the date of acquisition. Securities that the Company has both the positive intent and ability to hold to maturity (at time of purchase) are classified as held to maturity securities. All other securities are classified as available for sale. Securities held to maturity are carried at historical cost and adjusted for amortization of premiums and accretion of discounts, using the effective interest method. Securities available for sale are carried at fair value with any valuation adjustments reported, net of deferred taxes, as a part of other accumulated comprehensive income. Interest, amortization of premiums and accretion of discounts on securities are reported as interest income using the effective interest method. Gains (losses) realized on sales and calls of securities are determined on the specific identification method. |
Accounting for Historic Rehabilitation and Low Income Housing Partnerships | The Company periodically invests in low income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership (usually 15 years). In addition, state and federal historic rehabilitation credits are generated from some of the partnerships. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. The effective yield method is used to record the income statement effects of these investments. |
Income Taxes | Amounts provided for income tax expense are based on income reported for financial statement purposes rather than amounts currently payable under income tax laws. Deferred taxes, which arise principally from temporary differences between the period in which certain income and expenses are recognized for financial accounting purposes and the period in which they affect taxable income, are included in the amounts provided for income taxes. |
Loans Held for Investment | Loans are carried on the balance sheet net of any unearned interest and the allowance for loan losses. Interest income on loans is determined using the effective interest method on the daily amount of principal outstanding except where serious doubt exists as to collectability of the loan, in which case the accrual of income is discontinued. |
Loans Held for Sale | These loans consists of fixed rate loans made through its subsidiary, VBS Mortgage and loans purchased from Gateway Savings Bank, Oakland, CA and Northpointe Bank, Grand Rapids, MI. VBS Mortgage originates conforming mortgage loans for sale in the secondary market. The bank (VBS) gives the customer a rate commitment at the time the rate is locked. The bank then immediately gets a rate lock-in from the investor that will be buying the loan upon closing. Both the rate lock and the purchase commitments (which is a blanket agreement) are best effort agreements, subject to final approval and underwriting. Because either party can walk away from these agreements prior to closing, neither the rate lock commitment nor the purchase commitment is considered a derivative contract. The bank provides a warehouse line for the Mortgage subsidiary after closing, until the loan is purchased by the investor. The average time on the line is two or three weeks. Gateway Savings Bank (“Gateway”) loans are originated by a network of mortgage loan originators throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Gateway arrangement has been used since 2003 as a higher yielding alternative to federal funds sold or investment securities. These loans are short-term, residential real estate loans that have an average life in our portfolio of approximately two weeks. The Bank holds these loans during the period of time between loan closing and when the loan is paid off by the ultimate secondary market purchaser. Gateway Savings Bank discontinued the loan participation program in December of 2014 and the Company became a participant with Northpointe Bank which obtained the Gateway Savings Bank program and incorporated it into their existing program. The Northpointe Bank program and procedures are the same as described above for Gateway. |
Allowance for Loan and Lease Losses | The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance that management considers adequate to absorb potential losses in the portfolio. Loans are charged against the allowance when management believes the collectability of the principal is unlikely. Recoveries of amounts previously charged-off are credited to the allowance. ManagementÂ’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the CompanyÂ’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowerÂ’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 for commercial and construction loans by either the present value of expected future cash flows discounted at the loanÂ’s effective interest rate, the loanÂ’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. |
Other Real Estate Owned (OREO) | As of December 31, 2015, the Bank had $2.1 million classified as OREO on the balance sheet, compared to $3.5 million as of December 31, 2014. The table in Note 9 reflects the OREO activity in 2015. The CompanyÂ’s policy is to carry OREO on its balance sheet at the lower of cost or market. Values are reviewed periodically and additional losses are recognized if warranted based on market conditions. |
Nonaccrual Loans | Loans are placed on nonaccrual status when they become ninety days or more past due, unless there is an expectation that the loan will either be brought current or paid in full in a reasonable period of time. |
Bank Premises and Equipment | Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. The ranges of the useful lives of the premises and equipment are as follows: Buildings and Improvements 10 - 40 years Furniture and Fixtures 5 - 20 years Maintenance, repairs, and minor improvements are charged to operations as incurred. Gains and losses on dispositions are reflected in other income or expense. |
Goodwill | The Company accounts for goodwill and intangible assets under ASC 805, “Business Combination” and ASC 350 “Intangibles”, respectively. Goodwill totaled $2,669,517 at December 31, 2015 and 2014. The goodwill is no longer amortized, but instead tested for impairment at least annually. Based on the testing, there were no impairment charges for 2015, 2014 or 2013. |
Pension Plans | The Bank has a qualified noncontributory defined benefit pension plan which covers all full time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company complies with ASC 325-960 “Defined Benefit Pension Plans” which requires recognition of the over-funded or under-funded status of pension and other postretirement benefit plans on the balance sheet. Under ASC 325-960, gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. |
Advertising Costs | The Company follows the policy of charging the cost of advertising to expense as incurred. Total advertising costs included in other operating expenses for 2015, 2014, and 2013 were $401,138, $317,780, and $278,555, respectively. |
Comprehensive Income | Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities and changes in pension plan funding status, such as unrealized gains and losses on available-for-sale securities and gains or losses on certain derivative contracts, are reported as a separate component of the equity section of the balance sheet. Such items, along with operating net income, are components of comprehensive income. |
Derivative Financial Instruments and Change in Accounting Principle | On January 1, 2001, the Company adopted ASC 815 “Derivative and Hedging Investments” (formerly SFAS No. 133). This statement requires that all derivatives be recognized as assets or liabilities in the balance sheet and measured at fair value. Under ASC 815, the gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedging item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period. The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk. Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as trading activities and would be recorded at fair value with changes in fair value recorded in income. Derivative hedge contracts must meet specific effectiveness tests (i.e., over time the change in their fair values due to the designated hedge risk must be within 80 to 125 percent of the opposite change in the fair value of the hedged assets or liabilities). Changes in fair value of the derivative financial instruments must be effective at offsetting changes in the fair value of the hedging items due to the designated hedge risk during the term of the hedge. Further, if the underlying financial instrument differs from the hedged asset or liability, there must be a clear economic relationship between the prices of the two financial instruments. If periodic assessment indicates derivatives no longer provide an effective hedge, the derivatives contracts would be closed out and settled or classified as a trading activity. |
Earnings per Share | Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended December 31, 2015 December 31, 2014 Earnings Available to Common Stockholders: Net Income $ 8,581,584 $ 5,847,262 Minority interest $ 164,575 $ 45,653 Preferred Stock Dividends 510,000 127,500 Net Income Available to Common Stockholders $ 7,907,009 $ 5,674,109 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended 12/31/2015 12/31/2014 Income Shares Per Share Amounts Income Shares Per Share Amounts Basic EPS $ 7,907,009 3,735,212 $ 2.40 $ 5,674,109 3,229,942 $ 1.82 Effect of Dilutive Securities: Convertible Preferred Stock 510,000 444,400 ( 0.15 ) 127,500 110,631 (0.02 ) Diluted EPS $ 8,417,009 3,290,812 $ 2.25 $ 5,801,609 3,119,311 $ 1.80 There were no dilutive securities for the years ended December 31, 2013. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements. The Company does not expect these amendments to have a material effect on its financial statements. In January 2015, the FASB issued guidance to eliminate from U.S. GAAP the concept of an extraordinary item, which is an event or transaction that is both (1) unusual in nature and (2) infrequently occurring. Under the new guidance, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; or (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance which provides a practical expedient that permits the Company to measure defined benefit plan assets and obligations using the month-end that is closest to the Company’s fiscal year-end. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In April 2015, the FASB issued guidance which provides guidance to customers about whether a cloud computing arrangement includes a software license. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements. In June 2015, the FASB issued amendments to clarify the Accounting Standards Codification (“ASC”), correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (June 12, 2015) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company does not expect these amendments to have a material effect on its financial statements. In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. In September 2015, the FASB amended the Business Combinations topic of the Accounting Standards Codification to simplify the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to retrospectively account for those adjustments. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted for financial statements that have not been issued. All entities are required to apply the amendments prospectively to adjustments to provisional amounts that occur after the effective date. The Company does not expect these amendments to have a material effect on its financial statements. In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification simplify the presentation of deferred income taxes by requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments will be effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company will apply the guidance prospectively. The Company does not expect these amendments to have a material effect on its financial statements. In January 2016, the FASB amended the Financial Instruments topic of the Accounting Standards Codification to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements. In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangements longer than 12 months. Under this approach, a lessee will account for most existing capital/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the Company’s consolidated financial statements, including assessing changes that might be necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting. Standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. |
Subsequent Events | In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. |
2. SUMMARY OF SIGNIFICANT ACC37
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Tables | |
Earnings per Share | The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended December 31, 2015 December 31, 2014 Earnings Available to Common Stockholders: Net Income $ 8,581,584 $ 5,847,262 Minority interest $ 164,575 $ 45,653 Preferred Stock Dividends 510,000 127,500 Net Income Available to Common Stockholders $ 7,907,009 $ 5,674,109 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended 12/31/2015 12/31/2014 Income Shares Per Share Amounts Income Shares Per Share Amounts Basic EPS $ 7,907,009 3,735,212 $ 2.40 $ 5,674,109 3,229,942 $ 1.82 Effect of Dilutive Securities: Convertible Preferred Stock 510,000 444,400 ( 0.15 ) 127,500 110,631 (0.02 ) Diluted EPS $ 8,417,009 3,290,812 $ 2.25 $ 5,801,609 3,119,311 $ 1.80 |
4. INVESTMENT SECURITIES (Table
4. INVESTMENT SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Schedule Amortized Cost and Fair Value for Securities | The amortized cost and fair value of securities held to maturity are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U. S. Treasuries $ 125,043 $ - $ - $ 125,043 December 31, 2014 U. S. Treasuries $ 125,150 $ - $ - $ 125,150 |
Amortized cost and fair value of securities | The amortized cost and fair value of securities available for sale are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2015 U. S. Treasuries $ 4,015,440 $ 5,840 $ - $ 4,021,280 Government sponsored enterprises 8,080,540 3,780 10,600 8,073,720 Mortgage-backed obligations of federal agencies 810,802 6,143 - 816,945 Marketable equities 135,000 - - 135,000 Total Securities Available for Sale $ 13,041,782 $ 15,763 $ 10,600 $ 13,046,945 December 31, 2014 U. S. Treasuries $ 4,025,740 $ - $ 6,100 $ 4,019,640 Government sponsored enterprises 8,039,540 8,940 9,880 8,038,600 Mortgage-backed obligations of federal agencies 1,011,092 10,780 - 1,021,872 Marketable equities 135,000 - - 135,000 Total Securities Available for Sale $ 13,211,372 $ 19,720 $ 15,980 $ 13,215,112 |
Schedule of gain and losses on sales of debt and equity securities | Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125,043 $ 125,043 $ 4,015,440 $ 4,021,280 Due after one year through five years - - 8,080,540 8,073,720 Due after five years - - 945,802 951,945 Total $ 125,043 $ 125,043 $ 13,041,782 $ 13,046,945 |
Schedule of Securities with Unrealized Losses | A summary of these losses (in thousands) is as follows: Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses 2015 U. S. Treasuries $ - $ - $ - $ - $ - $ - Government sponsored enterprises 6,056 (11 ) - - 6,056 (11 ) Mortgage-backed obligations - - - - - - Total $ 6,056 $ (11 ) $ - $ - $ 6,056 $ (11 ) 2014 U. S. Treasuries $ 4,020 $ (6 ) $ - $ - $ 4,020 $ (6 ) Government sponsored enterprises 2,004 (2 ) 1,991 (8 ) 3,995 (10 ) Mortgage-backed obligations - - - - - - Total $ 6,024 $ (8 ) $ 1,991 $ (8 ) $ 8,015 $ (16 ) |
5. LOANS (Tables)
5. LOANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Schedule of Loans Outstanding | Loans held for investment as of December 31: 2015 2014 Construction/Land Development $ 69,759,401 $ 67,180,467 Farmland 13,377,740 12,507,446 Real Estate 166,586,877 162,248,606 Multi-Family 7,558,460 11,775,205 Commercial Real Estate 128,031,686 122,305,417 Home Equity – closed end 9,135,433 9,393,805 Home Equity – open end 56,599,337 52,181,679 Commercial & Industrial – Non-Real Estate 27,954,171 28,160,584 Consumer 8,219,391 9,109,994 Dealer Finance 54,085,791 40,633,086 Credit Cards 2,745,190 2,745,190 Total $ 544,053,477 $ 518,201,574 |
Schedule Impaired Loans | The following is a summary of information pertaining to impaired loans (in thousands): Unpaid Average Interest December 31, 2015 Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 1,361 $ 1,499 $ - $ 3,622 $ 73 Farmland - - - - - Real Estate 1,097 1,097 - 734 58 Multi-Family - - - - - Commercial Real Estate 307 307 - 874 17 Home Equity – closed end - - - - - Home Equity – open end 1,159 1,159 - 1,513 82 Commercial & Industrial – Non-Real Estate 181 181 - 186 10 Consumer 18 18 - 7 - Credit Cards - - - - - Dealer Finance 4 4 - 1 4 4,127 4,265 - 6,937 244 Impaired loans with a valuation allowance Construction/Land Development 11,534 11,534 2,373 12,884 299 Farmland - - - - - Real Estate 324 324 238 699 46 Multi-Family - - - - - Commercial Real Estate 890 890 18 900 15 Home Equity – closed end - - - - - Home Equity – open end 1,414 1,414 269 613 75 Commercial & Industrial – Non-Real Estate - - - - - Consumer - - - - - Credit cards - - - - - Dealer Finance 68 68 17 38 5 14,230 14,230 2,915 15,134 440 Total impaired loans $ 18,357 $ 18,495 $ 2,915 $ 22,071 $ 684 The Recorded Investment is defined as the principal balance less principal payments and charge-offs. Unpaid Average Interest December 31, 2014 Recorded Principal Related Recorded Income Investment Balance Allowance Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 4,982 $ 5,402 $ - $ 5,412 $ 251 Farmland - - - 1,163 - Real Estate 141 141 - 85 5 Multi-Family - - - - - Commercial Real Estate 1,159 1,459 - 1,450 66 Home Equity – closed end - - - 123 - Home Equity – open end 1,649 1,649 - 330 57 Commercial & Industrial – Non-Real Estate 191 191 - 237 11 Consumer - - - - - Credit cards - - - - - Dealer Finance - - - - - 8,122 8,842 - 8,800 390 Impaired loans with a valuation allowance Construction/Land Development 12,976 14,749 1,469 12,056 326 Farmland - - - - - Real Estate 926 926 101 988 105 Multi-Family - - - - - Commercial Real Estate 938 938 47 1,030 4 Home Equity – closed end - - - 72 - Home Equity – open end - - - 40 - Commercial & Industrial – Non-Real Estate - - - - - Consumer - - - - - Credit cards - - - - - Dealer Finance - - - - - 14,840 16,613 1,617 14,186 435 Total impaired loans $ 22,962 $ 25,455 $ 1,617 $ 22,986 $ 825 |
6. ALLOWANCE FOR LOAN LOSSES (T
6. ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Summary Loan Loss Allowance Transactions | A summary of changes in the allowance for loan losses is shown in the following schedule: December 31, 2015 (in thousands) Beginning Balance Charge-offs Recoveries Provision Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,738 $ 156 $ 85 $ (225 ) $ 4,442 $ 2,373 $ 2,069 Farmland - - - 95 95 - 95 Real Estate 623 25 37 171 806 238 568 Multi-Family - - - 71 71 - 71 Commercial Real Estate 126 - 65 254 445 18 427 Home Equity – closed end 188 26 6 6 174 - 174 Home Equity – open end 154 51 - 531 634 269 365 Commercial & Industrial – Non-Real Estate 1,211 - 62 (218 ) 1,055 - 1,055 Consumer 214 32 32 (106 ) 108 - 108 Dealer Finance 1,336 251 24 (273 ) 836 17 819 Credit Cards 135 60 46 (6 ) 115 - 115 Total $ 8,725 $ 601 $ 357 $ 300 $ 8,781 $ 2,915 $ 5,866 A summary of changes in the allowance for loan losses is shown in the following schedule: December 31, 2014 (in thousands) Beginning Balance Charge-offs Recoveries Provision Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,007 $ 1,611 $ 223 $ 2,119 $ 4,738 $ 1,469 $ 3,269 Farmland (2 ) - - 2 - - - Real Estate 400 208 - 431 623 101 522 Multi-Family - - - - - - - Commercial Real Estate 777 - 108 (759 ) 126 47 79 Home Equity – closed end 157 - - 31 188 - 188 Home Equity – open end 476 80 - (242 ) 154 - 154 Commercial & Industrial – Non-Real Estate 1,464 385 356 (224 ) 1,211 - 1,211 Consumer 156 33 33 58 214 - 214 Dealer Finance 628 107 6 809 1,336 - 1,336 Credit Cards 121 46 35 25 135 - 135 Total $ 8,184 $ 2,470 $ 761 $ 2,250 $ 8,725 $ 1,617 $ 7,108 |
Schedule of Aging of Past Due Receivables | Recorded Investment in Loan Receivables (in thousands): December 31, 2015 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 69,759 $ 12,895 $ 56,864 Farmland 13,378 - 13,378 Real Estate 166,587 1,421 165,167 Multi-Family 7,559 - 7,559 Commercial Real Estate 128,032 1,197 126,835 Home Equity – closed end 9,135 - 9,135 Home Equity –open end 56,599 2,573 54,026 Commercial & Industrial – Non-Real Estate 27,954 181 27,773 Consumer 8,219 18 8,201 Dealer Finance 54,086 72 54,013 Credit Cards 2,745 - 2,745 $ 544,053 $ 18,357 $ 525,696 Total December 31, 2014 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 67,181 $ 17,958 $ 49,223 Farmland 12,507 - 12,507 Real Estate 162,249 1,067 161,182 Multi-Family 11,775 - 11,775 Commercial Real Estate 122,305 2,097 120,208 Home Equity – closed end 9,394 - 9,394 Home Equity –open end 52,182 1,649 50,533 Commercial & Industrial – Non-Real Estate 28,161 191 27,970 Consumer 9,110 - 9,110 Dealer Finance 40,633 40,633 Credit Cards 2,705 - 2,705 $ 518,202 $ 22,962 $ 495,240 Total |
Consumer Credit Exposure | Aging of Past Due Loans Receivable (in thousands) 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days (excluding non-accrual) Non-Accrual Loans Total Past Due Current Total Loan Receivable December 31, 2015 Construction/Land Development $ 104 $ - $ - $ 4,688 $ 4,792 $ 64,967 $ 69,759 Farmland - - - - - 13,378 13,378 Real Estate 2,684 1,332 272 1,010 5,298 161,289 166,587 Multi-Family - - - - - 7,559 7,559 Commercial Real Estate 340 241 - - 581 127,451 128,032 Home Equity – closed end 41 7 - - 48 9,087 9,135 Home Equity – open end 918 46 107 40 1,111 55,488 56,599 Commercial & Industrial – Non- Real Estate 114 3 25 109 251 27,703 27,954 Consumer 120 10 - - 130 8,089 8,219 Dealer Finance 905 183 152 108 1,348 52,738 54,086 Credit Cards 10 13 15 - 38 2,707 2,745 Total $ 5,236 $ 1,835 $ 571 $ 5,955 $ 13,597 $ 530,456 $ 544,053 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days (excluding non-accrual) Non-Accrual Loans Total Past Due Current Total Loan Receivable December 31, 2014 Construction/Land Development $ 205 $ 166 $ - $ 4,508 $ 4,879 $ 62,302 $ 67,181 Farmland - - - - - 12,507 12,507 Real Estate 5,085 635 - 973 6,693 155,556 162,249 Multi-Family - - - - - 11,775 11,775 Commercial Real Estate 747 - - 1,165 1,912 120,393 122,305 Home Equity – closed end 162 15 - 10 187 9,207 9,394 Home Equity – open end 730 25 - 143 898 51,284 52,182 Commercial & Industrial – Non- Real Estate - - - 14 14 28,147 28,161 Consumer 290 9 - - 299 8,811 9,110 Dealer Finance 696 189 - 161 1,046 39,587 40,633 Credit Cards 36 - 1 - 37 2,668 2,705 Total $ 7,951 $ 1,039 $ 1 $ 6,974 $ 15,965 $ 502,237 $ 518,202 CREDIT QUALITY INDICATORS (in thousands) AS OF DECEMBER 31, 2015 Corporate Credit Exposure Credit Risk Profile by Creditworthiness Category Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 485 $ 8,410 $ 31,783 $ 14,260 $ 3,216 $ 11,605 $ - $ 69,759 Farmland 66 - 2,615 3,768 4,952 1,977 - - 13,378 Real Estate - 955 54,400 76,545 23,695 8,334 2,658 - 166,587 Multi-Family - 391 3,925 3,046 197 - - - 7,559 Commercial Real Estate - 2,087 25,889 74,337 20,271 4,149 1,299 - 128,032 Home Equity – closed end - - 3,549 3,792 1,661 114 19 - 9,135 Home Equity – open end - 1,657 15,043 31,455 4,827 398 3,219 - 56,599 Commercial & Industrial (Non-Real Estate) 896 646 6,423 17,053 2,281 517 138 - 27,954 Total $ 962 $ 6,221 $ 120,254 $ 241,779 $ 72,144 $ 18,705 $ 18,938 $ - $ 479,003 Consumer Credit Exposure Credit Risk Profile Based on Payment Activity Credit Cards Consumer Performing $ 2,730 $ 62,046 Non performing 15 259 Total $ 2,745 $ 62,305 CREDIT QUALITY INDICATORS (in thousands) AS OF DECEMBER 31, 2014 Corporate Credit Exposure Credit Risk Profile by Creditworthiness Category Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 165 $ 8,460 $ 24,227 $ 9,605 $ 3,815 $ 20,909 $ - $ 67,181 Farmland 68 - 1,640 3,451 5,228 - 2,120 - 12,507 Real Estate - 629 60,290 66,464 23,934 7,083 3,849 - 162,249 Multi-Family - 468 4,145 2,183 4,979 - - - 11,775 Commercial Real Estate - 1,687 22,800 65,653 19,058 10,571 2,536 - 122,305 Home Equity – closed end - - 4,327 3,090 1,812 154 11 - 9,394 Home Equity – open end - 1,555 13,433 28,425 4,309 1,936 2,524 - 52,182 Commercial & Industrial (Non-Real Estate) 643 74 4,692 18,039 3,948 735 30 - 28,161 Total $ 711 $ 4,578 $ 119,787 $ 211,532 $ 72,873 $ 24,294 $ 31,979 $ - $ 465,754 Consumer Credit Exposure Credit Risk Profile Based on Payment Activity Credit Cards Consumer Performing $ 2,704 $ 49,582 Non performing 1 161 Total $ 2,705 $ 49,743 |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Troubled Debt Restructuring Tables | |
Troubled Debt Restructurings | December 31, 2015 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Commercial 1 $ 974 $ 974 Real Estate 5 1,408 1,408 Home Equity 4 1,414 1,414 Consumer 6 73 73 Total 16 $ 3,869 $ 3,869 December 31, 2014 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Number of Contracts Recorded Investment Recorded Investment Troubled Debt Restructurings Real Estate 2 $ 179 $ 179 Consumer 1 22 22 $ 201 $ 201 |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Bank Premises And Equipment Tables | |
Bank premises and equipment | Bank premises and equipment as of December 31 are summarized as follows: 2015 2014 Land $ 1,868,709 $ 1,418,003 Buildings and improvements 7,209,427 6,793,644 Furniture and equipment 7,397,173 6,479,815 16,475,309 14,691,462 Less - accumulated depreciation (8,933,231 ) (8,233,208 ) Net $ 7,542,078 $ 6,458,254 |
9. OTHER REAL ESTATE OWNED (Tab
9. OTHER REAL ESTATE OWNED (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Real Estate Owned Tables | |
Other Real Estate Owned Activity | The tables below reflect OREO activity for 2015 and 2014: Other Real Estate Owned 2015 2014 Balance as of January 1 $ 3,507,153 $ 2,628,418 Property acquired at foreclosure 125,000 2,914,958 Capital improvements on foreclosed property 98,929 48,961 Sale of other real estate owned financed by Bank (328,129 ) (780,097 ) Sales of foreclosed properties (737,663 ) (1,029,452 ) Write down of OREO (537,605 ) (275,635 ) Balance as of December 31 $ 2,127,685 $ 3,507,153 |
10. DEPOSITS (Tables)
10. DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Deposits Tables | |
Composition of deposits | The composition of deposits at December 31, 2015 and 2014 was as follows: December 31, 2015 2014 Noninterest bearing demand deposits $ 134,786,875 $ 112,197,722 Savings and interest bearing demand deposits: Interest checking accounts 108,459,597 119,593,529 Savings accounts 90,383,486 64,249,199 Time Deposits: Balances of less than $100,000 107,415,244 115,651,329 Balances of $100,000 and more 53,624,554 79,812,757 Total Deposits $ 494,669,756 $ 491,504,536 |
Maturity of Deposits | At December 31, 2015, the scheduled maturities of time deposits are as follows: 2016 $ 68,800,143 2017 38,529,664 2018 27,310,066 2019 12,595,076 2020 and after 13,804,849 Total $ 161,039,798 |
11. SHORT-TERM DEBT (Tables)
11. SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Short-Term Debt Tables | |
Short-term debt | Short-term debt information is summarized as follows: Maximum Weighted Outstanding Outstanding Average Average Year End at any at Balance Interest Interest Month End Year End Outstanding Rate Rate 2015 Federal funds purchased $ 8,843,000 $ 959,217 $ 833,907 .02 % .78 % FHLB short term 45,000 ,000 20,000,000 26,739,726 .16 % .19 % Securities sold under agreements to repurchase 4,697,341 3,994,834 4,443,753 .04 % .25 % Totals $ 24,954,051 $ 32,017,386 .21 % .22 % 2014 Federal funds purchased $ 491,000 $ - $ 7,704 .001 % .61 % FHLB short term 10,000 ,000 10,000,000 27,397 .001 % .17 % Securities sold under agreements to repurchase 5,066,238 4,358,492 3,837,612 .23 % .24 % Totals $ 14,358,492 $ 3,872,713 .23 % .23 % |
12. LONG-TERM DEBT (Tables)
12. LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Long-Term Debt Tables | |
Maturities of long-term debt | The maturities of long-term Federal Home Loan Bank borrowings as of December 31, 2015 are as follows: 2016 $ 3,929,000 2017 3,929,000 2018 8,929,000 2019 6,429,000 2020 13,929,000 Thereafter 11,016,000 Total $ 48,161,000 |
13. INCOME TAX EXPENSE (Tables)
13. INCOME TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Expense Tables | |
Components of the income tax expense | The components of the income tax expense are as follows: 2015 2014 2013 Current expense Federal $ 3,227,013 $ 1,777,598 $ 482,912 Deferred (benefit) expense Federal (340,941 ) 505,684 636,452 State - 9,854 (67,594 ) Total Deferred (benefit) expense (340,941 ) 515,538 568,858 Total Income Tax Expense $ 2,886,072 $ 2,293,136 $ 1,051,770 |
Components of the deferred taxes | The components of the deferred taxes as of December 31 are as follows: Deferred Tax Assets: 2015 2014 Allowance for loan losses $ 2,564,214 $ 2,201,291 Split Dollar Life Insurance 4,440 4,440 Nonqualified deferred compensation 702,440 594,132 Low income housing partnerships losses 210,107 308,539 Core deposit amortization 176,605 72,188 Other real estate owned 269,610 3,746 Pension plan 1,382,268 1,199,686 Total Assets $ 5,309,684 $ 4,384,022 Deferred Tax Liabilities: 2015 2014 Unearned low income housing credits $ 418,416 $ 523,769 Depreciation 359,406 320,743 Pension 1,988,736 1,864,964 Goodwill tax amortization 901,340 853,880 Securities available for sale 1,757 1,272 Total Liabilities 3,669,655 3,564,628 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,640,029 $ 819,394 |
Differences in actual income tax expense and the amounts computed using the federal statutory tax rates | The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rates: 2015 2014 2013 Tax expense at federal statutory rates $ 3,843,048 $ 2,959,056 $ 2,251,851 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit 8,087 8,659 9,229 Partially tax-exempt income (46,348 ) (54,529 ) (44,676 ) Tax-exempt income (222,672 ) (190,192 ) (197,482 ) Prior year LIH credits (132,028 ) (21,787 ) (61,768 ) LIH and historic credits (568,854 ) (484,955 ) (611,795 ) Deferred Tax Asset Valuation Allowance - reversal - 396,440 - Other 4,840 (112,714 ) (2,710 ) Total Income Tax Expense $ 2,886,072 $ 2,293,136 $ 1,051,770 |
14. EMPLOYEE BENEFITS (Tables)
14. EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EmployeeBenefitsTablesAbstract | |
Reconciliation of the changes in the benefit obligations and fair value of plan assets | The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets for 2015, 2014 and 2013: 2015 2014 2013 Change in Benefit Obligation Benefit obligation, beginning $ 10,777,415 $ 7,933,568 $ 8,931,940 Service cost 648,334 501,032 599,933 Interest cost 410,944 377,706 350,314 Actuarial gain (loss) (137,048 ) 2,030,583 (1,300,094 ) Benefits paid (754,987 ) (65,474 ) (648,525 ) Benefit obligation, ending $ 10,944,658 $ 10,777,415 $ 7,933,568 Change in Plan Assets Fair value of plan assets, beginning $ 11,683,845 $ 9,687,226 $ 8,123,437 Actual return on plan assets (640 ) 562,093 1,462,314 Employer contribution 750,000 1,500,000 750,000 Benefits paid (754,987 ) (65,474 ) (648,525 ) Fair value of plan assets, ending 11,678,218 11,683,845 9,687,226 Funded status at the end of the year $ 733,560 $ 906,430 $ 1,753,658 |
Fair value of plan assets | The valuations are based on third party data received as of the balance sheet date. All plan assets are considered Level 1 assets, as quoted prices exist in active markets for identical assets. 2015 2014 2013 Amount recognized in the Balance Sheet Accrued prepaid benefit cost $ 4,799,051 $ 4,434,917 $ 3,136,277 Unfunded pension benefit obligation under ASC 325-960 (4,065,491 ) (3,528,487 ) (1,382,619 ) Amount recognized in accumulated other comprehensive income Net Gain/(Loss) $ (4,137,855 ) $ (3,616,087 ) $ (1,485,455 ) Prior service cost 72,364 87,600 102,836 Amount recognized (4,065,491 ) (3,528,487 ) (1,382,619 ) Deferred Taxes 1,382,267 1,199,686 470,090 Amount recognized in accumulated comprehensive income $ (2,683,224 ) $ (2,328,801 ) $ (912,529 ) (Accrued) Prepaid benefit detail Benefit obligation $ (10,944,658 ) $ (10,777,415 ) $ (7,933,568 ) Fair value of assets 11,678,218 11,683,845 9,687,226 Unrecognized net actuarial loss 4,137,855 3,616,087 1,485,455 Unrecognized prior service cost (72,364 ) (87,600 ) (102,836 ) Prepaid (accrued) benefits $ 4,799,051 $ 4,434,917 $ 3,136,277 Components of net periodic benefit cost Service cost $ 648,334 $ 501,032 $ 599,933 Interest cost 410,944 377,706 350,314 Expected return on plan assets (838,818 ) (698,252 ) (636,081 ) Amortization of prior service cost (15,236 ) (15,236 ) (15,236 ) Recognized net actuarial (gain) loss 180,642 36,110 203,183 Net periodic benefit cost $ 385,866 $ 201,360 $ 502,113 Additional disclosure information Accumulated benefit obligation $ 7,601,249 $ 7,543,340 $ 5,474,048 Vested benefit obligation $ 7,539,365 $ 7,408,014 $ 5,388,808 Discount rate used for net pension cost 4.00 % 5.00 % 4.00 % Discount rate used for disclosure 4.25 % 4.00 % 5.00 % Expected return on plan assets 7.50 % 7.50 % 8.00 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 13 14 14 |
Estimated Future Benefit Payments | Estimated Future Benefit Payments 2016 $ 582,606 2017 48,333 2018 1,249,321 2019 662,704 2020 543,814 2021-2025 4,568,645 $ 7,655,423 |
16. COMMITMENTS (Tables)
16. COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments Tables | |
Commitments outstanding | As of the balance sheet dates, the Company had the following commitments outstanding: 2015 2014 Commitments to loan money $ 135,138,834 $ 120,922,771 Standby letters of credit 1,344,191 2,077,870 |
Long term lease arrangements | As of December 31, 2015, the required lease payments for the next five years are as follows: 2016 $ 160,882 2017 116,899 2018 73,226 2019 74,349 2020 75,500 |
17. ON BALANCE SHEET DERIVATI50
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
On Balance Sheet Derivative Instruments And Hedging Activities Tables | |
Forward option contracts | At December 31, the information pertaining to the forward option contracts, included in other assets and other liabilities on the balance sheet, is as follows: 2015 2014 Notional amount $ 189,629 $ 87,782 Fair market value of contracts 15,162 32,795 |
18. TRANSACTIONS WITH RELATED51
18. TRANSACTIONS WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Transactions With Related Parties Tables | |
Loan transactions with related parties | Loan transactions with related parties are shown in the following schedule: 2015 2014 Total loans, beginning of year $ 7,449,140 $ 7,786,058 New loans 5,226,432 5,249,565 Relationship change (44,948 ) - Repayments (5,450,520 ) (5,586,483 ) Total loans, end of year $ 7,180,104 $ 7,449,140 |
20. DISCLOSURES ABOUT FAIR VA52
20. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
DisclosuresAboutFairValueOfFinancialInstrumentsTablesAbstract | |
Carrying Value and Estimated Fair Value for Financial Instruments | 2015 2014 Estimated Carrying Estimated Carrying Fair Value Value Fair Value Value Financial Assets (in thousands) Loans $ 555,762 $ 544,053 $ 551,338 $ 518,202 Financial Liabilities Time deposits 162,524 161,040 196,826 195,464 Long-term debt 48,565 48,161 9,862 9,875 |
21. FAIR VALUE MEASUREMENTS (Ta
21. FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements Tables | |
Fair value measurements | For level 3 assets and liabilities measured at fair value on a recurring basis or non-recurring basis as of December 31, 2014 significant unobservable inputs used in the fair value measurements were as follows: Fair Value at December 31, 2015 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 11,315 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Other Real Estate Owned $ 2,128 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Fair Value at December 31, 2014 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 13,223 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % Other Real Estate Owned $ 3,507 Discounted appraised value Discount for selling costs and age of appraisals 15%-55 % |
Assets and liabilities measured at fair value on a recurring basis | Assets and Liabilities Recorded at Fair Value on a Recurring Basis (in thousands) December 31, 2015 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 4,021 $ - $ 4,021 $ - Government sponsored enterprises 8,074 - 8,074 - Mortgage-backed obligations of federal agencies 817 - 817 - Marketable equities 135 - 135 - Investment securities available for sale 13,047 - 13,047 - Total assets at fair value $ 13,047 $ - $ 13,047 $ - Total liabilities at fair value $ - $ - $ - $ - Derivative financial instruments at fair value $ 15 $ - $ 15 $ - December 31, 2014 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 4,020 $ - $ 4,020 $ - Government sponsored enterprises 8,038 - 8,038 - Mortgage-backed obligations of federal agencies 1,022 - 1,022 - Marketable equities 135 - 135 - Investment securities available for sale 13,215 - 13,215 - Total assets at fair value $ 13,215 $ - $ 13,215 $ - Total liabilities at fair value $ - $ - $ - $ - Derivative financial instruments at fair value $ 33 $ - $ 33 $ - |
Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis | Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis (in thousands) December 31, 2015 Total Level 1 Level 2 Level 3 Other Real Estate Owned $ 2,128 - - $ 2,128 - - Construction/Land Development 9,161 - - 9,161 Farmland - - - - Real Estate 85 - - 85 Multi-Family - - - - Commercial Real Estate 872 - - 872 Home Equity – closed end - - - - Home Equity – open end 1,145 - - 1,145 Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance 52 - - 52 Impaired loans 11,315 - - 11,315 Total assets at fair value $ 13,443 - $ - $ 13,443 Total liabilities at fair value $ - $ - $ - $ - The table below presents the recorded amount of assets and liabilities measured at fair value on a non-recurring basis. December 31, 2014 Total Level 1 Level 2 Level 3 Other Real Estate Owned $ 3,507 - - $ 3,507 - - Construction/Land Development 11,507 - - 11,507 Farmland - - - - Real Estate 825 - - 825 Multi-Family - - - - Commercial Real Estate 891 - - 891 Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer - - - - Credit cards - - - - Dealer Finance - - - - Impaired loans 13,223 - - 13,223 Total assets at fair value $ 16,730 - $ - $ 16,730 Total liabilities at fair value $ - $ - $ - $ - |
22. REGULATORY MATTERS (Tables)
22. REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Regulatory Matters Tables | |
Actual consolidated capital ratios | The CompanyÂ’s actual consolidated capital ratios are presented in the following table (dollars in thousands): Analysis of Capital Regulatory Requirements At December 31, Adequately Well 2015 2014 2013 Capitalized Capitalized Tier1 capital: Preferred stock $ 9,425 $ 9,425 $ - Common stock 16,427 16,459 12,559 Retained earnings 59,205 53,815 42,089 Intangible assets (2,670 ) (2,670 ) (2,670 ) Accumulated other comprehensive income (2,680 ) - - Total Tier 1 Capital $ 79,707 $ 77,029 $ 51,978 Tier 2 capital: Qualifying subordinated debt $ - $ - $ 8,487 Allowance for loan losses 7,073 6,018 5,389 Unrealized gains on AFS equity securities - - - Total risked based capital $ 86,780 $ 83,047 $ 65,854 Common Equity Tier 1 Capital (Tier 1 less preferred stock) $ 70,282 $ - $ - Risk-weighted assets $ 564,106 $ 478,725 $ 428,349 Capital ratios: Total risk-based ratio 15.38 % 17.35 % 15.37 % 8.00 % 10.00 % Tier 1 risk-based ratio 14.13 % 16.09 % 12.13 % 4.00 % 6.00 % Common equity tier 1 12.46 % 4.5 % 6.5 % Total assets leverage ratio 12.18 % 12.88 % 9.37 % 3.00 % 5.00 % |
Actual capital ratios for the subsidiary bank | The actual capital ratios for the subsidiary bank are presented in the following table (dollars in thousands): Analysis of Capital Regulatory Requirements At December 31, Adequately Well 2015 2014 2013 Capitalized Capitalized Common Equity Tier 1 capital: Common stock $ 500 $ 500 $ 500 Capital surplus 37,971 37,971 18,971 Retained earnings 45,855 40,114 35,361 Intangible assets (2,670 ) (2,670 ) (2,670 ) Accumulated other comprehensive income (2,680 ) - - Total Common Equity Tier 1 Capital $ 78,976 $ 75,915 $ 52,162 Tier 2 capital: Qualifying subordinated debt $ - $ - $ 8,487 Allowance for loan losses 7,077 6,006 5,384 Unrealized gains on AFS securities - - - Total risked based capital $ 86,053 $ 81,921 $ 66,033 Risk-weighted assets $ 564,469 $ 478,512 $ 427,957 Capital ratios: Total risk-based ratio 15.24 % 17.12 % 15.43 % 8.00 % 10.00 % Tier 1 risk-based ratio 13.99 % 15.86 % 12.19 % 4.00 % 6.00 % Common equity tier 1 13.99 % 4.5 % 6.5 % Total assets leverage ratio 12.06 % 12.70 % 9.41 % 3.00 % 5.00 % |
25. PARENT CORPORATION ONLY F55
25. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Tables) - Parent [Member] | 12 Months Ended |
Dec. 31, 2015 | |
Balance Sheets | Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash and cash equivalents $ 1,907,581 $ 1,214,140 Investment in subsidiaries 81,646,312 76,684,121 Securities available for sale 135,000 135,000 Income tax receivable (including due from subsidiary) - 453,585 Total Assets $ 83,688,893 $ 78,486,846 Liabilities Other liabilities $ - $ 137,977 Income tax payable (including due form subsidiary) 847,001 - Deferred income taxes 301,870 383,125 Demand obligations for low income housing investment 162,290 167,341 Total Liabilities $ 1,311,161 $ 688,443 StockholdersÂ’ Equity Preferred stock par value $5 per share, 400,000 shares authorized, issued and outstanding $ 9,425,123 $ 9,425,123 Common stock par value $5 per share, 6,000,000 shares authorized, 3,285,404 and 3,291,766 shares issued and outstanding for 2015 and 2014, respectively 16,427,020 16,458,830 Retained earnings 59,205,404 53,814,416 Noncontrolling interest - 426,365 Accumulated other comprehensive income (loss) (2,679,815 ) (2,326,331 ) Total Stockholders' Equity 82,377,732 77,798,403 Total Liabilities and Stockholders' Equity $ 83,688,893 $ 78,486,846 |
Statements of Net Income and Retained Earnings | Statements of Net Income For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Income Dividends from affiliate $ 2,500,000 $ 1,300,000 $ 1,550,000 Interest Income - - 5 Net limited partnership income (loss) 4,792 - (65,165 ) Total Income 2,504,792 1,300,000 1,484,840 Expenses Other expense 21,316 7,100 - Administrative expenses - - 60,209 Total Expenses 21,316 7,100 60,209 Net income before income tax expense (benefit) and undistributed subsidiary net income 2,483,476 1,292,900 1,424,631 Income Tax Expense (Benefit) (191,494 ) 243,492 (239,908 ) Income before undistributed subsidiary net income 2,674,970 1,049,408 1,664,539 Undistributed subsidiary net income 5,742,039 4,752,201 3,051,254 Net Income F&M Bank Corp. $ 8,417,009 $ 5,801,609 $ 4,715,793 |
Statements of Cash Flows | Statements of Cash Flows For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Cash Flows from Operating Activities Net income $ 8,417,009 $ 5,801,609 $ 4,715,793 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (5,742,039 ) (4,752,201 ) (3,051,254 ) Deferred tax (benefit) expense (81,256 ) 279,928 8,577 Decrease (increase) in other assets 1,300,586 (444,885 ) (174,367 ) Increase (decrease) in other liabilities (143,028 ) 137,817 (1,109,728 ) Net change in deferred tax credits - - (27,918 ) Amortization of limited partnership investments - - 65,165 Net Cash Provided by Operating Activities 3,751,272 1,022,268 426,268 Cash Flows from Investing Activities Change in loans receivable - - 1,000,000 Purchase of securities available for sale - (135,000 ) - Net Cash Provided by (Used in) Investing Activities - (135,000 ) 1,000,000 Cash Flows from Financing Activities Capital contributed to subsidiary - (19,000,000 ) - Proceeds from issuance of preferred stock - 9,425,123 Repurchase of common stock (289,119 ) Proceeds from issuance of common stock 146,418 12,055,709 213,429 Dividends paid in cash (2,915,130 ) (2,231,912 ) (1,705,881 ) Net Provided by (Cash Used) in Financing Activities (3,057,831 ) 248,920 (1,492,452 ) Net Increase (decreases) in Cash and Cash Equivalents 693,441 1,136,188 (66,184 ) Cash and Cash Equivalents, Beginning of Year 1,214,140 77,952 144,136 Cash and Cash Equivalents, End of Year $ 1,907,581 $ 1,214,140 $ 77,952 |
26. INVESTMENT IN VBS MORTGAG56
26. INVESTMENT IN VBS MORTGAGE, LLC (Tables) - VBS MORTGAGE, LLC [Member] | 12 Months Ended |
Dec. 31, 2015 | |
Balance Sheets | Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash and cash equivalents $ 1,071,293 $ 610,973 Loans Receivable 763,534 818,054 Property and equipment, net 79,038 45,600 Other Assets 266,073 162,304 Total Assets $ 2,179,938 $ 1,636,931 Liabilities Other liabilities 271,004 215,713 Total Liabilities $ 271,004 $ 215,713 Equity Capital 219,634 219,634 Retained earnings 1,689,300 1,201,584 Total Equity $ 1,908,934 $ 1,421,218 Total Liabilities and Equity $ 2,179,938 $ 1,636,931 |
Statements of Income | Statements of Income For the years ended December 31, 2015, 2014 and 2013 2015 2014 2013 Income Mortgage origination income $ 2,645,235 $ 1,907,804 $ 2,528,108 Other Income 51,175 53,528 42,092 Total Income 2,696,410 1,961,332 2,570,200 Expenses Salaries and employee benefits 1,413,107 1,105,902 1,461,797 Occupancy and equipment expense 212,858 177,014 164,717 Management and professional fees 290,102 321,053 301,558 Other 231,757 205,188 284,845 Total Expenses 2,147,824 1,809,157 2,212,917 Net income(loss) $ 548,586 $ 152,175 $ 357,283 |
2. SUMMARY OF SIGNIFICANT ACC57
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Buildings and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 10 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 40 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 20 years |
2. SUMMARY OF SIGNIFICANT ACC58
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Available to Common Stockholders: | |||
Net Income | $ 8,581,584 | $ 5,847,262 | $ 4,822,978 |
Minority interest | 164,575 | 45,653 | |
Preferred Stock Dividends | 510,000 | 127,500 | 0 |
Net Income Available to Common Stockolders | $ 7,907,009 | $ 5,674,109 | $ 4,715,793 |
2. SUMMARY OF SIGNIFICANT ACC59
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | |||
Basic EPS, Income | $ 7,907,009 | $ 5,674,109 | $ 4,715,793 |
Effect of Dilutive Securities Convertible Preferred Stock, Income | 510,000 | 127,500 | 0 |
Diluted EPS Net income | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
Basic EPS, Shares | 3,735,212 | 3,229,942 | |
Effect of Dilutive Securities Convertible Preferred Stock, Shares | 444,400 | 110,631 | |
Diluted EPS, Shares | 3,290,812 | 3,119,311 | |
Basic EPS, Per Share Amounts | $ 2.40 | $ 1.82 | $ 1.88 |
Effect of Dilutive Securities Convertible Preferred Stock, Per Share Amounts | (0.15) | (0.02) | |
Diluted EPS, Per Share Amounts | $ 2.25 | $ 1.80 | $ 1.88 |
2. SUMMARY OF SIGNIFICANT ACC60
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details Narrative | |||
OREO on balance sheet | $ 2,127,685 | $ 3,507,153 | |
Goodwill | 2,669,517 | 2,669,517 | |
Advertising costs | $ 401,138 | $ 317,780 | $ 278,555 |
3. CASH AND DUE FROM BANKS (Det
3. CASH AND DUE FROM BANKS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash And Due From Banks Details Narrative | ||
Average balance of cash | $ 25,000 | $ 25,000 |
4. INVESTMENT SECURITIES (Detai
4. INVESTMENT SECURITIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Available-for-Sale Securities | ||
Amortized Cost | $ 13,041,782 | $ 13,211,372 |
Gross Unrealized Gains | 15,763 | 19,720 |
Gross Unrealized Losses | 10,600 | 15,980 |
Fair Value | 13,046,945 | 13,215,112 |
Mortgage Backed Obligations of Federal Agencies [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 810,802 | 1,011,092 |
Gross Unrealized Gains | 6,143 | 10,780 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 816,945 | 1,021,872 |
U. S. Treasuries [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 4,015,440 | 4,025,740 |
Gross Unrealized Gains | 5,840 | 0 |
Gross Unrealized Losses | 0 | 6,100 |
Fair Value | 4,021,280 | 4,019,640 |
Held-to-Maturity Securities | ||
Amortized Cost - Held-to-Maturity | 125,043 | 125,150 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value - Held-to-Maturity | 125,043 | 125,150 |
Government sponsored enterprises [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 8,080,540 | 8,039,540 |
Gross Unrealized Gains | 3,780 | 8,940 |
Gross Unrealized Losses | 10,600 | 9,880 |
Fair Value | 8,073,720 | 8,038,600 |
Marketable equities [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 135,000 | 135,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 135,000 | $ 135,000 |
4. INVESTMENT SECURITIES (Det63
4. INVESTMENT SECURITIES (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total, Amortized Cost | $ 125,043 | $ 125,150 |
Securities Held to Maturity [Member] | ||
Due in one year or less, Amortized Cost | 125,043 | |
Due in one year or less, Fair Value | 125,043 | |
Due after one year through five years, Amortized Cost | 0 | |
Due after one year through five years, Fair Value | 0 | |
Due after five years, Amortized Cost | 0 | |
Due after five years, Fair Value | 0 | |
Total, Amortized Cost | 125,043 | |
Total, Fair Value | 125,043 | |
Securities Available for Sale [Member] | ||
Due in one year or less, Amortized Cost | 4,015,440 | |
Due in one year or less, Fair Value | 4,021,280 | |
Due after one year through five years, Amortized Cost | 8,080,540 | |
Due after one year through five years, Fair Value | 8,073,720 | |
Due after five years, Amortized Cost | 945,802 | |
Due after five years, Fair Value | 951,945 | |
Total, Amortized Cost | 13,041,782 | |
Total, Fair Value | $ 13,046,945 |
4. INVESTMENT SECURITIES (Det64
4. INVESTMENT SECURITIES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value Less than 12 Months | $ 6,056,000 | $ 6,024,000 |
Unrealized Losses Less than 12 Months | (11,000) | (8,000) |
Fair Value More than 12 Months | 0 | 1,991,000 |
Unrealized Losses More than 12 Months | 0 | (8,000) |
Fair Value Total | 6,056,000 | 8,015,000 |
Unrealized Losses Total | (11,000) | (16,000) |
U. S. Treasuries [Member] | ||
Fair Value Less than 12 Months | 0 | 4,020,000 |
Unrealized Losses Less than 12 Months | 0 | (6,000) |
Fair Value More than 12 Months | 0 | 0 |
Unrealized Losses More than 12 Months | 0 | 0 |
Fair Value Total | 0 | 4,020,000 |
Unrealized Losses Total | 0 | (6,000) |
Government sponsored enterprises [Member] | ||
Fair Value Less than 12 Months | 6,056,000 | 2,004,000 |
Unrealized Losses Less than 12 Months | (11,000) | (2,000) |
Fair Value More than 12 Months | 0 | 1,991,000 |
Unrealized Losses More than 12 Months | 0 | (8,000) |
Fair Value Total | 6,056,000 | 3,995,000 |
Unrealized Losses Total | (11,000) | (10,000) |
Mortgage-backed obligations [Member] | ||
Fair Value Less than 12 Months | 0 | 0 |
Unrealized Losses Less than 12 Months | 0 | 0 |
Fair Value More than 12 Months | 0 | 0 |
Unrealized Losses More than 12 Months | 0 | 0 |
Fair Value Total | 0 | 0 |
Unrealized Losses Total | $ 0 | $ 0 |
4. INVESTMENT SECURITIES (Det65
4. INVESTMENT SECURITIES (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Investment Securities Details Narrative | ||
Carrying value of securities pledged by Bank | $ 12,912,000 | $ 13,080,000 |
Committment to invest eight low-income housing limited partnerships | $ 4,358,041 |
5. LOANS (Details)
5. LOANS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loans held for investment | $ 544,053,477 | $ 518,201,574 |
Construction/Land Development [Member] | ||
Loans held for investment | 69,759,401 | 67,180,467 |
Farmland [Member] | ||
Loans held for investment | 13,377,740 | 12,507,446 |
Real Estate [Member] | ||
Loans held for investment | 166,586,877 | 162,248,606 |
Multi-Family [Member] | ||
Loans held for investment | 7,558,460 | 11,775,205 |
Commercial Real Estate [Member] | ||
Loans held for investment | 128,031,686 | 122,305,417 |
Home Equity - Closed End [Member] | ||
Loans held for investment | 9,135,433 | 9,393,805 |
Home Equity - Open End [Member] | ||
Loans held for investment | 56,599,337 | 52,181,679 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loans held for investment | 27,954,171 | 28,160,584 |
Consumer [Member] | ||
Loans held for investment | 8,219,391 | 9,109,994 |
Dealer Finance [Member] | ||
Loans held for investment | 54,085,791 | 40,633,086 |
Credit Cards [Member] | ||
Loans held for investment | $ 2,745,190 | $ 2,745,190 |
5. LOANS (Details 1)
5. LOANS (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Impaired loans without a valuation allowance | ||
Recorded Investment | $ 4,127,000 | $ 8,122,000 |
Unpaid Principal Balance | 4,265,000 | 8,842,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 6,937,000 | 8,800,000 |
Interest Income Recognized | 244,000 | 390,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 14,230,000 | 14,840,000 |
Unpaid Principal Balance | 14,230,000 | 16,613,000 |
Related Allowance | 2,915,000 | 1,617,000 |
Average Recorded Investment | 15,134,000 | 14,186,000 |
Interest Income Recognized | 440,000 | 435,000 |
Impaired loans valuation allowance | ||
Recorded Investment | 18,357,000 | 22,962,000 |
Unpaid Principal Balance | 18,495,000 | 25,455,000 |
Related Allowance | 2,915,000 | 1,617,000 |
Average Recorded Investment | 22,071,000 | 22,986,000 |
Interest Income Recognized | 684,000 | 825,000 |
Construction/Land Development [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 1,361,000 | 4,982,000 |
Unpaid Principal Balance | 1,499,000 | 5,402,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 3,622,000 | 5,412,000 |
Interest Income Recognized | 73,000 | 251,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 11,534,000 | 12,976,000 |
Unpaid Principal Balance | 11,534,000 | 14,749,000 |
Related Allowance | 2,373,000 | 1,469,000 |
Average Recorded Investment | 12,884,000 | 12,056,000 |
Interest Income Recognized | 299,000 | 326,000 |
Farmland [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 1,163,000 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 1,097,000 | 141,000 |
Unpaid Principal Balance | 1,097,000 | 141,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 734,000 | 85,000 |
Interest Income Recognized | 58,000 | 5,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 324,000 | 926,000 |
Unpaid Principal Balance | 324,000 | 926,000 |
Related Allowance | 238,000 | 101,000 |
Average Recorded Investment | 699,000 | 988,000 |
Interest Income Recognized | 46,000 | 105,000 |
Multi-Family [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Commercial Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 307,000 | 1,159,000 |
Unpaid Principal Balance | 307,000 | 1,459,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 874,000 | 1,450,000 |
Interest Income Recognized | 17,000 | 66,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 890,000 | 938,000 |
Unpaid Principal Balance | 890,000 | 938,000 |
Related Allowance | 18,000 | 47,000 |
Average Recorded Investment | 900,000 | 1,030,000 |
Interest Income Recognized | 15,000 | 4,000 |
Home Equity - Closed End [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 123,000 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 72,000 |
Interest Income Recognized | 0 | 0 |
Home Equity - Open End [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 1,159,000 | 1,649,000 |
Unpaid Principal Balance | 1,159,000 | 1,649,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 1,513,000 | 330,000 |
Interest Income Recognized | 82,000 | 57,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 1,414,000 | 0 |
Unpaid Principal Balance | 1,414,000 | 0 |
Related Allowance | 269,000 | 0 |
Average Recorded Investment | 613,000 | 40,000 |
Interest Income Recognized | 75,000 | 0 |
Commercial and Industrial Non-Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 181,000 | 191,000 |
Unpaid Principal Balance | 181,000 | 191,000 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 186,000 | 237,000 |
Interest Income Recognized | 10,000 | 11,000 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Consumer [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 18,000 | 0 |
Unpaid Principal Balance | 18,000 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 7,000 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Credit Cards [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Dealer Finance [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 4,000 | 0 |
Unpaid Principal Balance | 4,000 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 1,000 | 0 |
Interest Income Recognized | 4,000 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 68,000 | 0 |
Unpaid Principal Balance | 68,000 | 0 |
Related Allowance | 17,000 | 0 |
Average Recorded Investment | 38,000 | 0 |
Interest Income Recognized | $ 5,000 | $ 0 |
5. LOANS (Details Narrative)
5. LOANS (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loans Details Narrative | ||
Federal Home Loan Bank of Atlanta | $ 182,312,000 | $ 183,483,000 |
Loans held for sale | $ 57,805,529 | $ 13,381,941 |
6. ALLOWANCE FOR LOAN LOSSES (D
6. ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Beginning Balance | $ 8,725,000 | $ 8,184,000 |
Charge-offs | 601,000 | 2,470,000 |
Recoveries | 357,000 | 761,000 |
Provision | 300,000 | 2,250,000 |
Ending Balance | 8,781,000 | 8,725,000 |
Individually Evaluated for Impairment | 2,915,000 | 1,617,000 |
Collectively Evaluated for Impairment | 5,866,000 | 7,108,000 |
Construction/Land Development [Member] | ||
Beginning Balance | 4,738,000 | 4,007,000 |
Charge-offs | 156,000 | 1,611,000 |
Recoveries | 85,000 | 223,000 |
Provision | (225,000) | 2,119,000 |
Ending Balance | 4,442,000 | 4,738,000 |
Individually Evaluated for Impairment | 2,373,000 | 1,469,000 |
Collectively Evaluated for Impairment | 2,069,000 | 3,269,000 |
Farmland [Member] | ||
Beginning Balance | 0 | (2,000) |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision | 95,000 | 2,000 |
Ending Balance | 95,000 | 0 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 95,000 | 0 |
Real Estate [Member] | ||
Beginning Balance | 623,000 | 400,000 |
Charge-offs | 25,000 | 208,000 |
Recoveries | 37,000 | 0 |
Provision | 171,000 | 431,000 |
Ending Balance | 806,000 | 623,000 |
Individually Evaluated for Impairment | 238,000 | 101,000 |
Collectively Evaluated for Impairment | 568,000 | 522,000 |
Multi-Family [Member] | ||
Beginning Balance | 0 | 0 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision | 71,000 | 0 |
Ending Balance | 71,000 | 0 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 71,000 | 0 |
Commercial Real Estate [Member] | ||
Beginning Balance | 126,000 | 777,000 |
Charge-offs | 0 | 0 |
Recoveries | 65,000 | 108,000 |
Provision | 254,000 | (759,000) |
Ending Balance | 445,000 | 126,000 |
Individually Evaluated for Impairment | 18,000 | 47,000 |
Collectively Evaluated for Impairment | 427,000 | 79,000 |
Home Equity - Closed End [Member] | ||
Beginning Balance | 188,000 | 157,000 |
Charge-offs | 26,000 | 0 |
Recoveries | 6,000 | 0 |
Provision | 6,000 | 31,000 |
Ending Balance | 174,000 | 188,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 174,000 | 188,000 |
Home Equity - Open End [Member] | ||
Beginning Balance | 154,000 | 476,000 |
Charge-offs | 51,000 | 80,000 |
Recoveries | 0 | 0 |
Provision | 531,000 | (242,000) |
Ending Balance | 634,000 | 154,000 |
Individually Evaluated for Impairment | 269,000 | 0 |
Collectively Evaluated for Impairment | 365,000 | 154,000 |
Commercial and Industrial Non-Real Estate [Member] | ||
Beginning Balance | 1,211,000 | 1,464,000 |
Charge-offs | 0 | 385,000 |
Recoveries | 62,000 | 356,000 |
Provision | (218,000) | (224,000) |
Ending Balance | 1,055,000 | 1,211,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 1,055,000 | 1,211,000 |
Consumer [Member] | ||
Beginning Balance | 214,000 | 156,000 |
Charge-offs | 32,000 | 33,000 |
Recoveries | 32,000 | 33,000 |
Provision | (106,000) | 58,000 |
Ending Balance | 108,000 | 214,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 108,000 | 214,000 |
Dealer Finance [Member] | ||
Beginning Balance | 1,336,000 | 628,000 |
Charge-offs | 251,000 | 107,000 |
Recoveries | 24,000 | 6,000 |
Provision | (273,000) | 809,000 |
Ending Balance | 836,000 | 1,336,000 |
Individually Evaluated for Impairment | 17,000 | 0 |
Collectively Evaluated for Impairment | 819,000 | 1,336,000 |
Credit Cards [Member] | ||
Beginning Balance | 135,000 | 121,000 |
Charge-offs | 60,000 | 46,000 |
Recoveries | 46,000 | 35,000 |
Provision | (6,000) | 25,000 |
Ending Balance | 115,000 | 135,000 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | $ 115,000 | $ 135,000 |
6. ALLOWANCE FOR LOAN LOSSES 70
6. ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loan Receivable | $ 544,053,000 | $ 518,202,000 |
Individually evaluated for impairment | 18,357,000 | 22,962,000 |
Collectively evaluated for impairment | 525,696,000 | 495,240,000 |
Construction/Land Development [Member] | ||
Loan Receivable | 69,759,000 | 67,181,000 |
Individually evaluated for impairment | 12,895,000 | 17,958,000 |
Collectively evaluated for impairment | 56,864,000 | 49,223,000 |
Farmland [Member] | ||
Loan Receivable | 13,378,000 | 12,507,000 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 13,378,000 | 12,507,000 |
Real Estate [Member] | ||
Loan Receivable | 166,587,000 | 162,249,000 |
Individually evaluated for impairment | 1,421,000 | 1,067,000 |
Collectively evaluated for impairment | 165,167,000 | 161,182,000 |
Multi-Family [Member] | ||
Loan Receivable | 7,559,000 | 11,775,000 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 7,559,000 | 11,775,000 |
Commercial Real Estate [Member] | ||
Loan Receivable | 128,032,000 | 122,305,000 |
Individually evaluated for impairment | 1,197,000 | 2,097,000 |
Collectively evaluated for impairment | 126,835,000 | 120,208,000 |
Home Equity - Closed End [Member] | ||
Loan Receivable | 9,135,000 | 9,394,000 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 9,135,000 | 9,394,000 |
Home Equity - Open End [Member] | ||
Loan Receivable | 56,599,000 | 52,182,000 |
Individually evaluated for impairment | 2,573,000 | 1,649,000 |
Collectively evaluated for impairment | 54,026,000 | 50,533,000 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loan Receivable | 27,954,000 | 28,161,000 |
Individually evaluated for impairment | 181,000 | 191,000 |
Collectively evaluated for impairment | 27,773,000 | 27,970,000 |
Consumer [Member] | ||
Loan Receivable | 8,219,000 | 9,110,000 |
Individually evaluated for impairment | 18,000 | 0 |
Collectively evaluated for impairment | 8,201,000 | 9,110,000 |
Dealer Finance [Member] | ||
Loan Receivable | 54,086,000 | 40,633,000 |
Individually evaluated for impairment | 72,000 | 0 |
Collectively evaluated for impairment | 54,013,000 | 40,633,000 |
Credit Cards [Member] | ||
Loan Receivable | 2,745,000 | 2,705,000 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | $ 2,745,000 | $ 2,705,000 |
6. ALLOWANCE FOR LOAN LOSSES 71
6. ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
30-59 Days Past due | $ 5,236,000 | $ 7,951,000 |
60-89 Days Past due | 1,835,000 | 1,039,000 |
Greater than 90 Days (excluding non-accrual) | 571,000 | 1,000 |
Non-Accrual Loans | 5,955,000 | 6,974,000 |
Total past due | 13,597,000 | 15,965,000 |
Current | 530,456,000 | 502,237,000 |
Total Loans Receivable | 544,053,000 | 518,202,000 |
Construction/Land Development [Member] | ||
30-59 Days Past due | 104,000 | 205,000 |
60-89 Days Past due | 0 | 166,000 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 4,688,000 | 4,508,000 |
Total past due | 4,792,000 | 4,879,000 |
Current | 64,967,000 | 62,302,000 |
Total Loans Receivable | 69,759,000 | 67,181,000 |
Farmland [Member] | ||
30-59 Days Past due | 0 | 0 |
60-89 Days Past due | 0 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 0 | 0 |
Total past due | 0 | 0 |
Current | 13,378,000 | 12,507,000 |
Total Loans Receivable | 13,378,000 | 12,507,000 |
Real Estate [Member] | ||
30-59 Days Past due | 2,684,000 | 5,085,000 |
60-89 Days Past due | 1,332,000 | $ 635,000 |
Greater than 90 Days (excluding non-accrual) | 272,000 | |
Non-Accrual Loans | 1,010,000 | $ 973,000 |
Total past due | 5,298,000 | 6,693,000 |
Current | 161,289,000 | 155,556,000 |
Total Loans Receivable | 166,587,000 | 162,249,000 |
Multi-Family [Member] | ||
30-59 Days Past due | 0 | 0 |
60-89 Days Past due | 0 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 0 | 0 |
Total past due | 0 | 0 |
Current | 7,559,000 | 11,775,000 |
Total Loans Receivable | 7,559,000 | 11,775,000 |
Commercial Real Estate [Member] | ||
30-59 Days Past due | 340,000 | 747,000 |
60-89 Days Past due | 241,000 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 0 | 1,165,000 |
Total past due | 581,000 | 1,912,000 |
Current | 127,451,000 | 120,393,000 |
Total Loans Receivable | 128,032,000 | 122,305,000 |
Home Equity - Closed End [Member] | ||
30-59 Days Past due | 41,000 | 162,000 |
60-89 Days Past due | 7,000 | 15,000 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 0 | 10,000 |
Total past due | 48,000 | 187,000 |
Current | 9,087,000 | 9,207,000 |
Total Loans Receivable | 9,135,000 | 9,394,000 |
Home Equity - Open End [Member] | ||
30-59 Days Past due | 918,000 | 730,000 |
60-89 Days Past due | 46,000 | 25,000 |
Greater than 90 Days (excluding non-accrual) | 107,000 | 0 |
Non-Accrual Loans | 40,000 | 143,000 |
Total past due | 1,111,000 | 898,000 |
Current | 55,488,000 | 51,284,000 |
Total Loans Receivable | 56,599,000 | 52,182,000 |
Commercial and Industrial Non-Real Estate [Member] | ||
30-59 Days Past due | 114,000 | 0 |
60-89 Days Past due | 3,000 | 0 |
Greater than 90 Days (excluding non-accrual) | 25,000 | 0 |
Non-Accrual Loans | 109,000 | 14,000 |
Total past due | 251,000 | 14,000 |
Current | 27,703,000 | 28,147,000 |
Total Loans Receivable | 27,954,000 | 28,161,000 |
Consumer [Member] | ||
30-59 Days Past due | 120,000 | 290,000 |
60-89 Days Past due | 10,000 | 9 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Non-Accrual Loans | 0 | 0 |
Total past due | 130,000 | 299,000 |
Current | 8,089,000 | 8,811,000 |
Total Loans Receivable | 8,219,000 | 9,110,000 |
Dealer Finance [Member] | ||
30-59 Days Past due | 905,000 | 696,000 |
60-89 Days Past due | 183,000 | 189,000 |
Greater than 90 Days (excluding non-accrual) | 152,000 | 0 |
Non-Accrual Loans | 108,000 | 161,000 |
Total past due | 1,348,000 | 1,046,000 |
Current | 52,738,000 | 39,587,000 |
Total Loans Receivable | 54,086,000 | 40,633,000 |
Credit Cards [Member] | ||
30-59 Days Past due | 10,000 | 36,000 |
60-89 Days Past due | 13,000 | 0 |
Greater than 90 Days (excluding non-accrual) | 15,000 | 1,000 |
Non-Accrual Loans | 0 | 0 |
Total past due | 38,000 | 37,000 |
Current | 2,707,000 | 2,668,000 |
Total Loans Receivable | $ 2,745,000 | $ 2,705,000 |
6. ALLOWANCE FOR LOAN LOSSES 72
6. ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Construction/Land Development | $ 69,759,000 | $ 67,181,000 |
Farmland | 13,378,000 | 12,507,000 |
Real Estate | 166,587,000 | 162,249,000 |
Multi-Family | 7,559,000 | 11,775,000 |
Commercial Real Estate | 128,032,000 | 122,305,000 |
Home Equity - closed end | 9,135,000 | 9,394,000 |
Home Equity - open end | 56,599,000 | 52,182,000 |
Commercial & Industrial (Non-Real Estate) | 27,954,000 | 28,161,000 |
Total | 479,003,000 | 465,754,000 |
Grade 1 Minimal Risk [Member] | ||
Construction/Land Development | 0 | 0 |
Farmland | 66,000 | 68,000 |
Real Estate | 0 | 0 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 0 | 0 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 0 | 0 |
Commercial & Industrial (Non-Real Estate) | 896,000 | 643,000 |
Total | 962,000 | 711,000 |
Grade 2 Modest Risk [Member] | ||
Construction/Land Development | 485,000 | 165,000 |
Farmland | 0 | 0 |
Real Estate | 955,000 | 629,000 |
Multi-Family | 391,000 | 468,000 |
Commercial Real Estate | 2,087,000 | 1,687,000 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 1,657,000 | 1,555,000 |
Commercial & Industrial (Non-Real Estate) | 646,000 | 74,000 |
Total | 6,221,000 | 4,578,000 |
Grade 3 Average Risk [Member] | ||
Construction/Land Development | 8,410,000 | 8,460,000 |
Farmland | 2,615,000 | 1,640,000 |
Real Estate | 54,400,000 | 60,290,000 |
Multi-Family | 3,925,000 | 4,145,000 |
Commercial Real Estate | 25,889,000 | 22,800,000 |
Home Equity - closed end | 3,549,000 | 4,327,000 |
Home Equity - open end | 15,043,000 | 13,433,000 |
Commercial & Industrial (Non-Real Estate) | 6,423,000 | 4,692,000 |
Total | 120,254,000 | 119,787,000 |
Grade 4 Acceptable Risk [Member] | ||
Construction/Land Development | 31,783,000 | 24,227,000 |
Farmland | 3,768,000 | 3,451,000 |
Real Estate | 76,545,000 | 66,464,000 |
Multi-Family | 3,046,000 | 2,183,000 |
Commercial Real Estate | 74,337,000 | 65,653,000 |
Home Equity - closed end | 3,792,000 | 3,090,000 |
Home Equity - open end | 31,455,000 | 28,425,000 |
Commercial & Industrial (Non-Real Estate) | 17,053,000 | 18,039,000 |
Total | 241,779,000 | 211,532,000 |
Grade 5 Marginally Acceptable [Member] | ||
Construction/Land Development | 14,260,000 | 9,605,000 |
Farmland | 4,952,000 | 5,228,000 |
Real Estate | 23,695,000 | 23,934,000 |
Multi-Family | 197,000 | 4,979,000 |
Commercial Real Estate | 20,271,000 | 19,058,000 |
Home Equity - closed end | 1,661,000 | 1,812,000 |
Home Equity - open end | 4,827,000 | 4,309,000 |
Commercial & Industrial (Non-Real Estate) | 2,281,000 | 3,948,000 |
Total | 72,144,000 | 72,873,000 |
Grade 6 Watch [Member] | ||
Construction/Land Development | 3,216,000 | 3,815,000 |
Farmland | 1,977,000 | 0 |
Real Estate | 8,334,000 | 7,083,000 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 4,149,000 | 10,571,000 |
Home Equity - closed end | 114,000 | 154,000 |
Home Equity - open end | 398,000 | 1,936,000 |
Commercial & Industrial (Non-Real Estate) | 517,000 | 735,000 |
Total | 18,705,000 | 24,294,000 |
Grade 7 Substandard [Member] | ||
Construction/Land Development | 11,605,000 | 20,909,000 |
Farmland | 0 | 2,120,000 |
Real Estate | 2,658,000 | 3,849,000 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 1,299,000 | 2,536,000 |
Home Equity - closed end | 19,000 | 11,000 |
Home Equity - open end | 3,219,000 | 2,524,000 |
Commercial & Industrial (Non-Real Estate) | 138,000 | 30,000 |
Total | 18,938,000 | 31,979,000 |
Grade 8 Doubtful [Member] | ||
Construction/Land Development | 0 | 0 |
Farmland | 0 | 0 |
Real Estate | 0 | 0 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 0 | 0 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 0 | 0 |
Commercial & Industrial (Non-Real Estate) | 0 | 0 |
Total | $ 0 | $ 0 |
6. ALLOWANCE FOR LOAN LOSSES 73
6. ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Credit cards | $ 2,745,000 | $ 2,705,000 |
Consumer | 62,305,000 | 49,743,000 |
Performing Financing Receivable [Member] | ||
Credit cards | 2,730,000 | 2,704,000 |
Consumer | 62,046,000 | 49,582,000 |
Nonperforming Financing Receivable [Member] | ||
Credit cards | 15,000 | 1,000 |
Consumer | $ 259,000 | $ 161,000 |
7. TROUBLED DEBT RESTRUCTURIN74
7. TROUBLED DEBT RESTRUCTURING (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Troubled Debt Restructurings | ||
Number of Contracts | 16 | 3 |
Pre-Modification Outstanding Recorded Investment | $ 3,869,000 | $ 201,000 |
Post-Modification Outstanding Recorded Investment | $ 3,869,000 | $ 201,000 |
Commercial Real Estate [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 974,000 | |
Post-Modification Outstanding Recorded Investment | $ 974,000 | |
Real Estate [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | 5 | 2 |
Pre-Modification Outstanding Recorded Investment | $ 1,408,000 | $ 179,000 |
Post-Modification Outstanding Recorded Investment | $ 1,408,000 | $ 179,000 |
Home Equity [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | 4 | |
Pre-Modification Outstanding Recorded Investment | $ 1,414,000 | |
Post-Modification Outstanding Recorded Investment | $ 1,414,000 | |
Consumer [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | 6 | 1 |
Pre-Modification Outstanding Recorded Investment | $ 73,000 | $ 22,000 |
Post-Modification Outstanding Recorded Investment | $ 73,000 | $ 22,000 |
7. TROUBLED DEBT RESTRUCTURIN75
7. TROUBLED DEBT RESTRUCTURING (Details Narrative) | Dec. 31, 2015USD ($) |
Notes to Financial Statements | |
Real estate loan | $ 97,000 |
8. BANK PREMISES AND EQUIPMEN76
8. BANK PREMISES AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Notes to Financial Statements | ||
Land | $ 1,868,709 | $ 1,418,003 |
Buildings and improvements | 7,209,427 | 6,793,644 |
Furniture and equipment | 7,397,173 | 6,479,815 |
Gross | 16,475,309 | 14,691,462 |
Less - accumulated depreciation | (8,933,231) | (8,233,208) |
Net | $ 7,542,078 | $ 6,458,254 |
8. BANK PREMISES AND EQUIPMEN77
8. BANK PREMISES AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | |||
Provisions for depreciation | $ 709,237 | $ 612,116 | $ 581,625 |
9. OTHER REAL ESTATE OWNED (Det
9. OTHER REAL ESTATE OWNED (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Real Estate Owned Details | ||
Balance as of January 1 | $ 3,507,153 | $ 2,628,418 |
Property acquired at foreclosure | 125,000 | 2,914,958 |
Capital improvements on foreclosed property | 98,929 | 48,961 |
Sale of other real estate owned financed by Bank | (328,129) | (780,097) |
Sales of foreclosed properties | (737,663) | (1,029,452) |
Write down of OREO | (537,605) | (275,635) |
Balance as of December 31 | $ 2,127,685 | $ 3,507,153 |
10. DEPOSITS (Details)
10. DEPOSITS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Banking and Thrift [Abstract] | ||
Noninterest bearing demand deposits | $ 134,786,875 | $ 112,197,722 |
Savings and interest bearing demand deposits: | ||
Interest checking accounts | 108,459,597 | 119,593,529 |
Savings accounts | 90,383,486 | 64,249,199 |
Time Deposits: | ||
Balances of less than $100,000 | 107,415,244 | 115,651,329 |
Balances of $100,000 and more | 53,624,554 | 79,812,757 |
Total Deposits | $ 494,669,756 | $ 491,504,536 |
10. DEPOSITS (Details 1)
10. DEPOSITS (Details 1) | Dec. 31, 2015USD ($) |
Banking and Thrift [Abstract] | |
2,016 | $ 68,800,143 |
2,017 | 38,529,664 |
2,018 | 27,310,066 |
2,019 | 12,595,076 |
2020 and after | 13,804,849 |
Total | $ 161,039,798 |
11. SHORT-TERM DEBT (Details)
11. SHORT-TERM DEBT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Outstanding at Year End | $ 24,954,051 | $ 14,358,492 |
Average Balance Outstanding | $ 32,017,386 | $ 3,872,713 |
Weighted Average Interest Rate | 0.21% | 0.23% |
Year End Interest Rate | 0.22% | 0.23% |
Federal funds purchased [Member] | ||
Maximum Outstanding at any Month End | $ 8,843,000 | $ 491,000 |
Outstanding at Year End | 959,217 | 0 |
Average Balance Outstanding | $ 833,907 | $ 7,704 |
Weighted Average Interest Rate | 0.02% | 0.001% |
Year End Interest Rate | 0.78% | 0.61% |
FHLB short term [Member] | ||
Maximum Outstanding at any Month End | $ 45,000,000 | $ 10,000,000 |
Outstanding at Year End | 20,000,000 | 10,000,000 |
Average Balance Outstanding | $ 26,739,726 | $ 27,397 |
Weighted Average Interest Rate | 0.16% | 0.001% |
Year End Interest Rate | 0.19% | 0.17% |
Securities sold under agreements to repurchase [Member] | ||
Maximum Outstanding at any Month End | $ 4,697,341 | $ 5,066,238 |
Outstanding at Year End | 3,994,834 | 4,358,492 |
Average Balance Outstanding | $ 4,443,753 | $ 3,837,612 |
Weighted Average Interest Rate | 0.04% | 0.23% |
Year End Interest Rate | 0.25% | 0.24% |
11. SHORT-TERM DEBT (Details Na
11. SHORT-TERM DEBT (Details Narrative) | Dec. 31, 2015USD ($) |
Debt Disclosure [Abstract] | |
Unsecured lines of credit | $ 26,000,000 |
12. LONG-TERM DEBT (Details)
12. LONG-TERM DEBT (Details) | Dec. 31, 2015USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 3,929,000 |
2,017 | 3,929,000 |
2,018 | 8,929,000 |
2,019 | 6,429,000 |
2,020 | 13,929,000 |
Thereafter | 11,016,000 |
Total | $ 48,161,000 |
12.LONG-TERM DEBT (Details Narr
12.LONG-TERM DEBT (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Debt Disclosure [Abstract] | |||
New borrowings from the Federal Home Loan Bank of Atlanta | $ 40,000,000 | $ 10,000,000 | $ 0 |
Interest rates on the notes payable | The interest rates on the notes payable range from 1.16% to 2.56% | ||
Weighted average interest | 1.86% | 2.33% | |
Balance of obligations | $ 48,161,000 | $ 9,875,000 |
13. INCOME TAX EXPENSE (Details
13. INCOME TAX EXPENSE (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current expense | |||
Federal | $ 3,227,013 | $ 1,777,598 | $ 482,912 |
Deferred (benefit) expense | |||
Federal | (340,941) | 505,684 | 636,452 |
State | 0 | 9,854 | (67,594) |
Total Deferred (benefit) expense | (340,941) | 515,538 | 568,858 |
Total Income Tax Expense | $ 2,886,072 | $ 2,293,136 | $ 1,051,770 |
13. INCOME TAX EXPENSE (Detai86
13. INCOME TAX EXPENSE (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred Tax Assets: | ||
Allowance for loan losses | $ 2,564,214 | $ 2,201,291 |
Split Dollar Life Insurance | 4,440 | 4,440 |
Nonqualified deferred compensation | 702,440 | 594,132 |
Low income housing partnerships losses | 210,107 | 308,539 |
Core deposit amortization | 176,605 | 72,188 |
Other real estate owned | 269,610 | 3,746 |
Pension plan | 1,382,268 | 1,199,686 |
Total Assets | 5,309,684 | 4,384,022 |
Deferred Tax Liabilities: | ||
Unearned low income housing credits | 418,416 | 523,769 |
Depreciation | 359,406 | 320,743 |
Pension | 1,988,736 | 1,864,964 |
Goodwill tax amortization | 901,340 | 853,880 |
Securities available for sale | 1,757 | 1,272 |
Total Liabilities | 3,669,655 | 3,564,628 |
Net Deferred Tax Asset (included in Other Assets on Balance Sheet) | $ 1,640,029 | $ 819,394 |
13. INCOME TAX EXPENSE (Detai87
13. INCOME TAX EXPENSE (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Tax expense at federal statutory rates | $ 3,843,048 | $ 2,959,056 | $ 2,251,851 |
Increases (decreases) in taxes resulting from: | |||
State income taxes, net of federal benefit | 8,087 | 8,659 | 9,229 |
Partially tax-exempt income | (46,348) | (54,529) | (44,676) |
Tax-exempt income | (222,672) | (190,192) | (197,482) |
Prior year LIH credits | (132,028) | (21,787) | (61,768) |
LIH and historic credits | (568,854) | (484,955) | (611,795) |
Deferred Tax Asset Valuation Allowance - reversal | 0 | 396,440 | 0 |
Other | 4,840 | (112,714) | (2,710) |
Total Income Tax Expense | $ 2,886,072 | $ 2,293,136 | $ 1,051,770 |
13. INCOME TAX EXPENSE (Detai88
13. INCOME TAX EXPENSE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Valuation allowance | $ 582,778 | $ 582,778 |
14. EMPLOYEE BENEFITS (Details)
14. EMPLOYEE BENEFITS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Change in Benefit Obligation | |||
Benefit obligation, beginning | $ 10,777,415 | $ 7,933,568 | $ 8,931,940 |
Service cost | 648,334 | 501,032 | 599,933 |
Interest cost | 410,944 | 377,706 | 350,314 |
Actuarial gain (loss) | (137,048) | 2,030,583 | (1,300,094) |
Benefits paid | (754,987) | (65,474) | (648,525) |
Benefit obligation, ending | 10,944,658 | 10,777,415 | 7,933,568 |
Change in Plan Assets | |||
Fair value of plan assets, beginning | 11,683,845 | 9,687,226 | 8,123,437 |
Actual return on plan assets | (640) | 562,093 | 1,462,314 |
Employer contribution | 750,000 | 1,500,000 | 750,000 |
Benefits paid | (754,987) | (65,474) | (648,525) |
Fair value of plan assets, ending | 11,678,218 | 11,683,845 | 9,687,226 |
Funded status at the end of the year | $ 733,560 | $ 906,430 | $ 1,753,658 |
14. EMPLOYEE BENEFITS (Details
14. EMPLOYEE BENEFITS (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Amount recognized in the Balance Sheet | |||
Accrued prepaid benefit cost | $ 4,799,051 | $ 4,434,917 | $ 3,136,277 |
Unfunded pension benefit obligation under ASC 325-960 | (4,065,491) | (3,528,487) | (1,382,619) |
Amount recognized in accumulated other comprehensive income | |||
Net Gain/(Loss) | (4,137,855) | (3,616,087) | (1,485,455) |
Prior service cost | 72,364 | 87,600 | 102,836 |
Amount recognized | (4,065,491) | (3,528,487) | (1,382,619) |
Deferred Taxes | 1,382,267 | 1,199,686 | 470,090 |
Amount recognized in accumulated comprehensive income | (2,683,224) | (2,328,801) | (912,529) |
(Accrued) Prepaid benefit detail | |||
Benefit obligation | (10,944,658) | (10,777,415) | (7,933,568) |
Fair value of assets | 11,678,218 | 11,683,845 | 9,687,226 |
Unrecognized net actuarial loss | 4,137,855 | 3,616,087 | 1,485,455 |
Unrecognized prior service cost | (72,364) | (87,600) | (102,836) |
Prepaid (accrued) benefits | 4,799,051 | 4,434,917 | 3,136,277 |
Components of net periodic benefit cost | |||
Service cost | 648,334 | 501,032 | 599,933 |
Interest cost | 410,944 | 377,706 | 350,314 |
Expected return on plan assets | (838,818) | (698,252) | (636,081) |
Amortization of prior service cost | (15,236) | (15,236) | (15,236) |
Recognized net acutuarial (gain)loss | 180,642 | 36,110 | 203,183 |
Net periodic benefit cost | 385,866 | 201,360 | 502,113 |
Additional disclosure information | |||
Accumulated benefit obligation | 7,601,249 | 7,543,340 | 5,474,048 |
Vested benefit obligation | $ 7,539,365 | $ 7,408,014 | $ 5,388,808 |
Discount rate used for net pension cost | 4.00% | 5.00% | 4.00% |
Discount rate used for disclosure | 4.25% | 4.00% | 5.00% |
Expected return on plan assets | 7.50% | 7.50% | 8.00% |
Rate of compensation increase | 3.00% | 3.00% | 3.00% |
Average remaining service -years) | 13 years | 14 years | 14 years |
14. EMPLOYEE BENEFITS (Detail91
14. EMPLOYEE BENEFITS (Details 2) | Dec. 31, 2015USD ($) |
Notes to Financial Statements | |
2,016 | $ 582,606 |
2,017 | 48,333 |
2,018 | 1,249,321 |
2,019 | 662,704 |
2,020 | 543,814 |
2021-2025 | 4,568,645 |
Total | $ 7,655,423 |
14. EMPLOYEE BENEFITS (Detail92
14. EMPLOYEE BENEFITS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Pension contributions | $ 750,000 | $ 1,500,000 | $ 750,000 |
Shares held by ESOP | 188,596 | 188,396 | |
Contributions under employee benefit plan - 401K Plan | $ 211,987 | $ 190,057 | 183,468 |
ESOP Contributions | $ 420,000 | 360,000 | 360,000 |
Pension plan's allocations | The pension plans allocations as of December 31, 2015 and 2014 were 60% equity and 40% fixed and 61% equity and 39% fixed, respectively. | ||
Deferred Compensation Plan [Member] | |||
Contributions to employee benefit plan - Deferred Compensation Plan | $ 110,000 | $ 100,000 | $ 90,000 |
15. CONCENTRATIONS OF CREDIT (D
15. CONCENTRATIONS OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Concentrations Of Credit Details Narrative | ||
Cash deposits in other commercial banks | $ 2,156,006 | $ 1,731,223 |
16. COMMITMENTS (Details)
16. COMMITMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Commitments Details | ||
Commitments to loan money | $ 135,138,834 | $ 120,922,771 |
Standby letters of credit | $ 1,344,191 | $ 2,077,870 |
16. COMMITMENTS (Details 1)
16. COMMITMENTS (Details 1) | Dec. 31, 2015USD ($) |
Operating Leases | |
2,016 | $ 160,882 |
2,017 | 116,899 |
2,018 | 73,226 |
2,019 | 74,349 |
2,020 | $ 75,500 |
16. COMMITMENTS (Details Narrat
16. COMMITMENTS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments Details Narrative | |||
Lease expense | $ 164,294 | $ 120,728 | $ 121,025 |
17. ON BALANCE SHEET DERIVATI97
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
On Balance Sheet Derivative Instruments And Hedging Activities Details | ||
Notional amount | $ 189,629 | $ 87,782 |
Fair market value of contracts | $ 15,162 | $ 32,795 |
18. TRANSACTIONS WITH RELATED98
18. TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Transactions With Related Parties Details | ||
Total loans, beginning of year | $ 7,449,140 | $ 7,786,058 |
New loans | 5,226,432 | 5,249,565 |
Relationship Change | (44,948) | 0 |
Repayments | (5,450,520) | (5,586,483) |
Total loans, end of year | $ 7,180,104 | $ 7,449,140 |
19. DIVIDEND LIMITATIONS ON S99
19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Dividend Limitations On Subsidiary Bank Details Narrative | |||
Dividends paid | $ 2,500,000 | $ 1,300,000 | $ 1,550,000 |
20. DISCLOSURES ABOUT FAIR V100
20. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Assets | ||
Loans, Estimated Fair Value | $ 555,762 | $ 551,338 |
Loans, Carrying value | 544,053 | 518,202 |
Financial Liabilities | ||
Time deposits, Estimated Fair Value | 162,524 | 196,826 |
Time deposits, Carrying Value | 161,040 | 195,464 |
Long-term debt, Estimated Fair Value | 48,565 | 9,862 |
Long-term debt, Carrying Value | $ 48,161 | $ 9,875 |
21. FAIR VALUE MEASUREMENTS (De
21. FAIR VALUE MEASUREMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Impaired loans | $ 11,315 | $ 13,223 |
Other Real Estate Owned Loans | $ 2,128 | $ 3,507 |
Fair Value Measurements, Valuation Techniques | Discounted appraised value | Discounted appraised value |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Asset Types | Discount for selling costs and age of appraisals | Discount for selling costs and age of appraisals |
Fair Value, Liabilities, Measured on Recurring Basis, Unobservable Input Reconciliation, by Liability Class | Discount for selling costs and age of appraisals | Discount for selling costs and age of appraisals |
Fair Value Inputs Level 3 [Member] | ||
Impaired loans | $ 11,315 | $ 13,223 |
Other Real Estate Owned Loans | $ 2,128 | $ 3,507 |
Fair Value Inputs Level 3 [Member] | Minimum [Member] | ||
Fair Value Measurements, Valuation range | 15.00% | 15.00% |
Valuation range, her Real Estate Owned | 15.00% | 15.00% |
Fair Value Inputs Level 3 [Member] | Maximum [Member] | ||
Fair Value Measurements, Valuation range | 55.00% | 55.00% |
Valuation range, her Real Estate Owned | 55.00% | 55.00% |
21. FAIR VALUE MEASUREMENTS 102
21. FAIR VALUE MEASUREMENTS (Details1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total assets at fair value | $ 13,047 | $ 13,215 |
Total liabilities at fair value | 0 | 0 |
Derivative financial instruments at fair value | 15 | 33 |
Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Derivative financial instruments at fair value | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 13,047 | 13,215 |
Total liabilities at fair value | 0 | 0 |
Derivative financial instruments at fair value | 15 | 33 |
Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Derivative financial instruments at fair value | 0 | 0 |
U. S. Treasuries [Member] | ||
Total assets at fair value | 4,021 | 4,020 |
U. S. Treasuries [Member] | Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | |
U. S. Treasuries [Member] | Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 4,021 | 4,020 |
U. S. Treasuries [Member] | Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | 0 | |
Government Sponsored Enterprises [Member] | ||
Total assets at fair value | 8,074 | 8,038 |
Government Sponsored Enterprises [Member] | Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | 0 |
Government Sponsored Enterprises [Member] | Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 8,074 | 8,038 |
Government Sponsored Enterprises [Member] | Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | 0 | 0 |
Mortgage Backed Obligations of Federal Agencies [Member] | ||
Total assets at fair value | 817 | 1,022 |
Mortgage Backed Obligations of Federal Agencies [Member] | Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | 0 |
Mortgage Backed Obligations of Federal Agencies [Member] | Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 817 | 1,022 |
Mortgage Backed Obligations of Federal Agencies [Member] | Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | 0 | 0 |
Securities Available for Sale [Member] | ||
Total assets at fair value | 13,047 | 135 |
Securities Available for Sale [Member] | Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | 0 |
Securities Available for Sale [Member] | Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 13,047 | 13,215 |
Securities Available for Sale [Member] | Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | 0 | $ 0 |
Marketable equities [Member] | ||
Total assets at fair value | 135 | |
Marketable equities [Member] | Fair Value Inputs Level 1 [Member] | ||
Total assets at fair value | 0 | |
Marketable equities [Member] | Fair Value Inputs Level 2 [Member] | ||
Total assets at fair value | 135 | |
Marketable equities [Member] | Fair Value Inputs Level 3 [Member] | ||
Total assets at fair value | $ 0 |
21. FAIR VALUE MEASUREMENTS 103
21. FAIR VALUE MEASUREMENTS (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Other Real Estate Owned Loans | $ 2,128 | $ 3,507 |
Impaired loans | 11,315 | 13,223 |
Assets Fair Value | 13,443 | 16,730 |
Liabilities Fair Value | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Other Real Estate Owned Loans | 2,128 | 3,507 |
Impaired loans | 11,315 | 13,223 |
Assets Fair Value | 13,443 | 16,730 |
Liabilities Fair Value | 0 | 0 |
Fair Value Inputs Level 1 [Member] | ||
Other Real Estate Owned Loans | 0 | |
Impaired loans | 0 | 0 |
Assets Fair Value | 0 | 0 |
Liabilities Fair Value | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Other Real Estate Owned Loans | 0 | |
Impaired loans | 0 | 0 |
Assets Fair Value | 0 | 0 |
Liabilities Fair Value | 0 | 0 |
Consumer Loan [Member] | ||
Impaired loans | 0 | |
Consumer Loan [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | |
Consumer Loan [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | |
Consumer Loan [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | |
Real Estate [Member] | ||
Impaired loans | 85 | 825 |
Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 85 | 825 |
Real Estate [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Real Estate [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Dealer Finance [Member] | ||
Impaired loans | 52 | 0 |
Dealer Finance [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 52 | 0 |
Dealer Finance [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Dealer Finance [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Credit Cards [Member] | ||
Other Real Estate Owned Loans | 0 | |
Credit Cards [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | 0 |
Credit Cards [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Credit Cards [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | ||
Impaired loans | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Open End [Member] | ||
Impaired loans | 1,145 | 0 |
Home Equity - Open End [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 1,145 | 0 |
Home Equity - Open End [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Open End [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Closed End [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Closed End [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Closed End [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Home Equity - Closed End [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Commercial Real Estate [Member] | ||
Impaired loans | 872 | 891 |
Commercial Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 872 | 891 |
Commercial Real Estate [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Commercial Real Estate [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Multi-Family [Member] | ||
Impaired loans | 0 | 0 |
Multi-Family [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | 0 |
Multi-Family [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Multi-Family [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Farmland [Member] | ||
Impaired loans | 0 | 0 |
Farmland [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | 0 |
Farmland [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Farmland [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Construction/Land Development [Member] | ||
Impaired loans | 9,161 | 11,507 |
Construction/Land Development [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 9,161 | 11,507 |
Construction/Land Development [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Construction/Land Development [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | $ 0 |
Consumer [Member] | ||
Impaired loans | 0 | |
Consumer [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 0 | |
Consumer [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | |
Consumer [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | $ 0 |
22. REGULATORY MATTERS (Details
22. REGULATORY MATTERS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred stock | $ 9,425,123 | $ 9,425,123 | |
Accumulated other comprehensive income | (2,679,815) | (2,326,331) | |
Allowance for loan losses | (8,781,453) | (8,724,731) | |
Risk-weighted assets | $ 564,469 | $ 478,512 | $ 427,957 |
Risk-based ratio regulatory requirements for adequately capitalized | 8.00% | ||
Risk-based ratio regulatory requirements for well capitalized | 10.00% | ||
Tier 1 risk-based ratio | 13.99% | 15.86% | 12.19% |
Risk based ratio regulatory requirements for adequately capitalized | 4.00% | ||
Risk based ratio regulatory requirements for well capitalized | 6.00% | ||
Common equity tier 1 | 13.99% | ||
Common equity tier 1 regulatory requirements adequately capitalized | 4.50% | ||
Common equity tier 1 regulatory requirements well capitalized | 6.50% | ||
Total assets leverage ratio | 12.06% | 12.70% | 9.41% |
Assets leverage ratio regulatory requirements adequately capitalized | 3.00% | ||
Assets leverage ratio regulatory requirements well capitalized | 5.00% | ||
Tier 1 [Member] | |||
Common stock | $ 500 | $ 500 | $ 500 |
Retained earnings | 45,855 | 40,114 | 35,361 |
Intangible assets | (2,670) | (2,670) | (2,670) |
Accumulated other comprehensive income | (2,680) | 0 | 0 |
Total Capital | 78,976 | 75,915 | 52,162 |
Tier 2 [Member] | |||
Qualifying subordinated debt | 0 | 0 | 8,487 |
Allowance for loan losses | 7,077 | 6,006 | 5,384 |
Unrealized gains on AFS equity securities | 0 | 0 | 0 |
Total risked based capital | 86,053 | 81,921 | 66,033 |
Consolidated [Member] | |||
Common Equity Tier 1 Capital (Tier 1 less preferred stock) | 70,282 | 0 | 0 |
Risk-weighted assets | $ 564,106 | $ 478,725 | $ 428,349 |
Total risk-based ratio | 15.38% | 17.35% | 15.37% |
Risk-based ratio regulatory requirements for adequately capitalized | 8.00% | ||
Risk-based ratio regulatory requirements for well capitalized | 10.00% | ||
Tier 1 risk-based ratio | 14.13% | 16.09% | 12.13% |
Risk based ratio regulatory requirements for adequately capitalized | 4.00% | ||
Risk based ratio regulatory requirements for well capitalized | 6.00% | ||
Common equity tier 1 | 12.46% | ||
Common equity tier 1 regulatory requirements adequately capitalized | 4.50% | ||
Common equity tier 1 regulatory requirements well capitalized | 6.50% | ||
Total assets leverage ratio | 12.18% | 12.88% | 9.37% |
Assets leverage ratio regulatory requirements adequately capitalized | 3.00% | ||
Assets leverage ratio regulatory requirements well capitalized | 5.00% | ||
Consolidated [Member] | Tier 1 [Member] | |||
Preferred stock | $ 9,425 | $ 9,425 | $ 0 |
Common stock | 16,427 | 16,459 | 12,559 |
Retained earnings | 59,205 | 53,815 | 42,089 |
Intangible assets | (2,670) | (2,670) | (2,670) |
Accumulated other comprehensive income | (2,680) | 0 | 0 |
Total Capital | $ 79,707 | 77,029 | 51,978 |
Risk based ratio regulatory requirements for adequately capitalized | 4.00% | ||
Risk based ratio regulatory requirements for well capitalized | 6.00% | ||
Consolidated [Member] | Tier 2 [Member] | |||
Qualifying subordinated debt | $ 0 | 0 | 8,487 |
Allowance for loan losses | 7,073 | 6,018 | 5,389 |
Unrealized gains on AFS equity securities | 0 | 0 | 0 |
Total risked based capital | $ 86,780 | $ 83,047 | $ 65,854 |
22. REGULATORY MATTERS (Deta105
22. REGULATORY MATTERS (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Accumulated other comprehensive income | $ (2,679,815) | $ (2,326,331) | |
Allowance for loan losses | (8,781,453) | (8,724,731) | |
Risk-weighted assets | $ 564,469 | $ 478,512 | $ 427,957 |
Total risk-based ratio | 15.24% | 17.12% | 15.43% |
Risk-based ratio regulatory requirements adequately capitalized | 8.00% | ||
Risk-based ratio regulatory requirements well capitalized | 10.00% | ||
Tier 1 risk-based ratio | 13.99% | 15.86% | 12.19% |
Risk based ratio regulatory requirements adequately capitalized | 4.00% | ||
Risk based ratio regulatory requirements well capitalized | 6.00% | ||
Common equity tier 1 | 13.99% | ||
Common equity tier 1 regulatory requirements adequately capitalized | 4.50% | ||
Common equity tier 1 regulatory requirements well capitalized | 6.50% | ||
Total assets leverage ratio | 12.06% | 12.70% | 9.41% |
Assets leverage ratio regulatory requirements adequately capitalized | 3.00% | ||
Assets leverage ratio regulatory requirements well capitalized | 5.00% | ||
Tier 1 [Member] | |||
Common stock | $ 500 | $ 500 | $ 500 |
Capital surplus | 37,971 | 37,971 | 18,971 |
Retained earnings | 45,855 | 40,114 | 35,361 |
Intangible assets | (2,670) | (2,670) | (2,670) |
Accumulated other comprehensive income | (2,680) | 0 | 0 |
Total Capital | 78,976 | 75,915 | 52,162 |
Tier 2 [Member] | |||
Qualifying subordinated debt | 0 | 0 | 8,487 |
Allowance for loan losses | 7,077 | 6,006 | 5,384 |
Unrealized gains on AFS equity securities | 0 | 0 | 0 |
Total risked based capital | $ 86,053 | $ 81,921 | $ 66,033 |
25. PARENT CORPORATION ONLY 106
25. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Assets | ||||
Cash and cash equivalents | $ 8,519,447 | $ 23,202,543 | ||
Total Assets | 665,356,846 | 605,308,102 | ||
Liabilities | ||||
Total Liabilities | 582,406,434 | 527,509,699 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $5 per share, 400,000 shares authorized, issued and outstanding | 9,425,123 | 9,425,123 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,285,404 and 3,291,766 shares issued and outstanding for 2015 and 2014, respectively | 16,427,020 | 16,458,830 | ||
Retained earnings | 48,056,300 | 42,554,421 | ||
Noncontrolling interest | 572,680 | 426,365 | ||
Accumulated other comprehensive income (loss) | (2,679,815) | (2,326,331) | ||
Total Stockholders' Equity | 82,950,412 | 77,798,403 | $ 54,141,235 | $ 49,383,960 |
Total Liabilities and Stockholders' Equity | 665,356,846 | 605,308,102 | ||
Parent [Member] | ||||
Assets | ||||
Cash and cash equivalents | 1,907,581 | 1,214,140 | ||
Investment in subsidiaries | 81,646,312 | 76,684,121 | ||
Securities available for sale | 135,000 | 135,000 | ||
Income tax receivable (including due from subsidiary) | 0 | 453,585 | ||
Total Assets | 83,688,893 | 78,486,846 | ||
Liabilities | ||||
Other liabilities | 0 | 137,977 | ||
Income tax payable (including due form subsidiary) | 847,001 | 0 | ||
Deferred income taxes | 301,870 | 383,125 | ||
Demand obligations for low income housing investment | 162,290 | 167,341 | ||
Total Liabilities | 1,311,161 | 688,443 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $5 per share, 400,000 shares authorized, issued and outstanding | 9,425,123 | 9,425,123 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,285,404 and 3,291,766 shares issued and outstanding for 2015 and 2014, respectively | 16,427,020 | 16,458,830 | ||
Retained earnings | 59,205,404 | 53,814,416 | ||
Noncontrolling interest | 0 | 426,365 | ||
Accumulated other comprehensive income (loss) | (2,679,815) | (2,326,331) | ||
Total Stockholders' Equity | 82,377,732 | 77,798,403 | ||
Total Liabilities and Stockholders' Equity | $ 83,688,893 | $ 78,486,846 |
25. PARENT CORPORATION ONLY 107
25. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income | |||
Interest Income | $ 302,117 | $ 204,649 | $ 193,244 |
Expenses | |||
Other expense | 2,875,609 | 3,647,722 | 4,772,743 |
Income Tax Expense (Benefit) | 2,886,072 | 2,293,136 | 1,051,770 |
Income before undistributed subsidiary net income | 8,581,584 | 5,847,262 | 4,822,978 |
Undistributed subsidiary net income | (164,575) | (45,653) | (107,185) |
Net income | 8,417,009 | 5,801,609 | 4,715,793 |
Parent [Member] | |||
Income | |||
Dividends from affiliate | 2,500,000 | 1,300,000 | 1,550,000 |
Interest Income | 0 | 0 | 5 |
Net limited partnership income (loss) | 4,792 | 0 | (65,165) |
Total Income | 2,504,792 | 1,300,000 | 1,484,840 |
Expenses | |||
Other expense | 21,316 | 7,100 | 0 |
Administrative expenses | 0 | 0 | 60,209 |
Total Expenses | 21,316 | 7,100 | 60,209 |
Net income before income tax expense (benefit) and undistributed subsidiary net income | 2,483,476 | 1,292,900 | 1,424,631 |
Income Tax Expense (Benefit) | (191,494) | 243,492 | (239,908) |
Income before undistributed subsidiary net income | 2,674,970 | 1,049,408 | 1,664,539 |
Undistributed subsidiary net income | 5,742,039 | 4,752,201 | 3,051,254 |
Net income | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
25. PARENT CORPORATION ONLY 108
25. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Details 2) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash Flows from Operating Activities | |||
Net income | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Decrease (increase) in other assets | 457,010 | 1,473,634 | 967,516 |
Amortization of limited partnership investments | 627,326 | 608,360 | 581,737 |
Net Cash Provided by Operating Activities | 9,759,640 | 8,359,898 | 18,297,421 |
Cash Flows from Investing Activities | |||
Net Cash Provided by (Used in) Investing Activities | (73,431,398) | (37,425,626) | 27,778,317 |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock | 146,418 | 12,055,709 | 213,429 |
Net Provided by (Cash Used) in Financing Activities | 48,988,662 | 45,723,626 | (48,527,307) |
Net Increase (decreases) in Cash and Cash Equivalents | (14,683,096) | 16,657,898 | (2,451,569) |
Cash and Cash Equivalents, Beginning of Year | 23,202,543 | 6,544,645 | 8,996,214 |
Cash and Cash Equivalents, End of Year | 8,519,447 | 23,202,543 | 6,544,645 |
Parent [Member] | |||
Cash Flows from Operating Activities | |||
Net income | 8,417,009 | 5,801,609 | 4,715,793 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Undistributed subsidiary income | (5,742,039) | (4,752,201) | (3,051,254) |
Deferred tax (benefit) expense | (81,256) | 279,928 | 8,577 |
Decrease (increase) in other assets | 1,300,586 | (444,885) | (174,367) |
Increase (decrease) in other liabilities | (143,028) | 137,817 | (1,109,728) |
Net change in deferred tax credits | 0 | 0 | (27,918) |
Amortization of limited partnership investments | 0 | 0 | 65,165 |
Net Cash Provided by Operating Activities | 3,751,272 | 1,022,268 | 426,268 |
Cash Flows from Investing Activities | |||
Change in loans receivable | 0 | 0 | 1,000,000 |
Purchase of securities available for sale | 0 | (135,000) | 0 |
Net Cash Provided by (Used in) Investing Activities | 0 | (135,000) | 1,000,000 |
Cash Flows from Financing Activities | |||
Capital contributed to subsidiary | 0 | (19,000,000) | 0 |
Proceeds from issuance of preferred stock | 0 | 9,425,123 | |
Repurchase of common stock | (289,119) | ||
Proceeds from issuance of common stock | 146,418 | 12,055,709 | 213,429 |
Dividends paid in cash | (2,915,130) | (2,231,912) | (1,705,881) |
Net Provided by (Cash Used) in Financing Activities | (3,057,831) | 248,920 | (1,492,452) |
Net Increase (decreases) in Cash and Cash Equivalents | 693,441 | 1,136,188 | (66,184) |
Cash and Cash Equivalents, Beginning of Year | 1,214,140 | 77,952 | 144,136 |
Cash and Cash Equivalents, End of Year | $ 1,907,581 | $ 1,214,140 | $ 77,952 |
26. INVESTMENT IN VBS MORTGA109
26. INVESTMENT IN VBS MORTGAGE, LLC (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Assets | ||||
Cash and cash equivalents | $ 8,519,447 | $ 23,202,543 | ||
Property and equipment, net | 7,542,078 | 6,458,254 | ||
Other Assets | 11,336,735 | 10,050,893 | ||
Total Assets | 665,356,846 | 605,308,102 | ||
Liabilities | ||||
Total Liabilities | 582,406,434 | 527,509,699 | ||
STOCKHOLDERS EQUITY: | ||||
Retained earnings | 48,056,300 | 42,554,421 | ||
Total Equity | 82,950,412 | 77,798,403 | $ 54,141,235 | $ 49,383,960 |
Total Liabilities and Equity | 665,356,846 | 605,308,102 | ||
VBS MORTGAGE, LLC [Member] | ||||
Assets | ||||
Cash and cash equivalents | 1,071,293 | 610,973 | ||
Loans Receivable | 763,534 | 818,054 | ||
Property and equipment, net | 79,038 | 45,600 | ||
Other Assets | 266,073 | 162,304 | ||
Total Assets | 2,179,938 | 1,636,931 | ||
Liabilities | ||||
Other liabilities | 271,004 | 215,713 | ||
Total Liabilities | 271,004 | 215,713 | ||
STOCKHOLDERS EQUITY: | ||||
Capital | 219,634 | 219,634 | ||
Retained earnings | 1,689,300 | 1,201,584 | ||
Total Equity | 1,908,934 | 1,421,218 | ||
Total Liabilities and Equity | $ 2,179,938 | $ 1,636,931 |
26. INVESTMENT IN VBS MORTGA110
26. INVESTMENT IN VBS MORTGAGE, LLC (Details 1) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Expenses | |||
Net income | $ 8,417,009 | $ 5,801,609 | $ 4,715,793 |
VBS MORTGAGE, LLC [Member] | |||
Income | |||
Mortgage origination income | 2,645,235 | 1,907,804 | 2,528,108 |
Other Income | 51,175 | 53,528 | 42,092 |
Total Income | 2,696,410 | 1,961,332 | 2,570,200 |
Expenses | |||
Salaries and employee benefits | 1,413,107 | 1,105,902 | 1,461,797 |
Occupancy and equipment expense | 212,858 | 177,014 | 164,717 |
Management and professional fees | 290,102 | 321,053 | 301,558 |
Other | 231,757 | 205,188 | 284,845 |
Total Expenses | 2,147,824 | 1,809,157 | 2,212,917 |
Net income | $ 548,586 | $ 152,175 | $ 357,283 |