Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 11, 2019 | Jun. 30, 2018 | |
Employee Benefits Tables | |||
Entity Registrant Name | F&M BANK CORP | ||
Entity Central Index Key | 0000740806 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
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 | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 3,210,562 | ||
Entity Public Float | $ 111,274,169 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and due from banks | $ 9,522 | $ 10,622 |
Money market funds | 1,390 | 1,285 |
Federal funds sold | 0 | 0 |
Cash and cash equivalents | 10,912 | 11,907 |
Securities: | ||
Held to maturity, at amortized cost - fair value of $123 and $125 in 2018 and 2017, respectively | 123 | 125 |
Available for sale, at fair value | 8,289 | 28,615 |
Other investments | 13,432 | 12,503 |
Loans held for sale | 55,910 | 39,775 |
Loans held for investment | 638,799 | 616,974 |
Less: allowance for loan losses | (5,240) | (6,044) |
Net loans held for investment | 633,559 | 610,930 |
Other real estate owned | 2,443 | 1,984 |
Bank premises and equipment, net | 17,766 | 15,894 |
Interest receivable | 2,078 | 2,007 |
Goodwill | 2,884 | 2,881 |
Bank owned life insurance | 19,464 | 13,950 |
Other assets | 13,393 | 12,699 |
Total assets | 780,253 | 753,270 |
Deposits: | ||
Noninterest bearing | 157,146 | 162,233 |
Interest bearing | 434,179 | 406,944 |
Total deposits | 591,325 | 569,177 |
Short-term debt | 40,116 | 25,296 |
Accrued liabilities | 16,683 | 17,789 |
Long-term debt | 40,218 | 49,733 |
Total liabilities | 688,342 | 661,995 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred Stock $25 par value, 400,000 shares authorized, 249,860 and 324,150 shares issued and outstanding at December 31, 2018 and 2017, respectively | 5,672 | 7,529 |
Common stock $5 par value, 6,000,000 shares authorized, 3,213,132 and 3,255,036 shares issued and outstanding at December 31, 2018 and 2017, respectively | 16,066 | 16,275 |
Additional paid in capital - common stock | 7,987 | 10,225 |
Retained earnings | 65,596 | 60,814 |
Noncontrolling interest in consolidated subsidiaries | 559 | 574 |
Accumulated other comprehensive loss | (3,969) | (4,142) |
Total stockholders' equity | 91,911 | 91,275 |
Total liabilities and stockholders' equity | $ 780,253 | $ 753,270 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Held to maturity - fair value | $ 123 | $ 125 |
Preferred Stock,par value | $ 25 | $ 25 |
Preferred Stock,shares authorized | 400,000 | 400,000 |
Preferred Stock,shares issued | 249,860 | 324,150 |
Preferred Stock,shares outstanding | 249,860 | 324,150 |
Common stock, par value | $ 5 | $ 5 |
Common stock shares authorized | 6,000,000 | 6,000,000 |
Common stock shares issued | 3,213,132 | 3,255,036 |
Common stock shares outstanding | 3,213,132 | 3,255,036 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Interest and Dividend Income | |||
Interest and fees on loans held for investment | $ 35,065 | $ 32,479 | $ 29,816 |
Interest from loans held for sale | 1,064 | 1,112 | 1,924 |
Interest from money market funds and federal funds sold | 120 | 166 | 38 |
Interest from debt securities - taxable | 459 | 338 | 372 |
Total interest and dividend income | 36,708 | 34,095 | 32,150 |
Interest Expense | |||
Total interest on deposits | 3,425 | 2,688 | 2,380 |
Interest from short-term debt | 456 | 63 | 55 |
Interest from long-term debt | 951 | 1,146 | 1,164 |
Total interest expense | 4,832 | 3,897 | 3,599 |
Net Interest Income | 31,876 | 30,198 | 28,551 |
Provision for Lease losses | 2,930 | 0 | 0 |
Net Interest Income After Provision for Loan Losses | 28,946 | 30,198 | 28,551 |
Non interest Income | |||
Service charges on deposit accounts | 1,496 | 1,360 | 1,174 |
Insurance, other commissions and mortgage banking, net | 4,505 | 4,137 | 3,006 |
Other operating income | 2,242 | 2,109 | 1,657 |
Income from bank owned life insurance | 527 | 449 | 476 |
Gain on prepayment of long term debt | 0 | 504 | 0 |
Loss on sale of other investments | 0 | (42) | 0 |
Low income housing partnership losses | (767) | (625) | (731) |
Total noninterest income | 8,003 | 7,892 | 5,582 |
Noninterest Expenses | |||
Salaries | 12,622 | 11,482 | 9,986 |
Employee benefits | 3,714 | 3,372 | 2,814 |
Occupancy expense | 1,116 | 1,035 | 868 |
Equipment expense | 1,044 | 836 | 735 |
FDIC insurance assessment | 294 | 190 | 388 |
Other real estate owned, net | (31) | 76 | 86 |
Directors fees | 468 | 517 | 486 |
Data processing expense | 2,197 | 2,176 | 2,151 |
Advertising expense | 622 | 509 | 604 |
Legal and professional fees | 597 | 356 | 400 |
Bank franchise tax | 522 | 657 | 651 |
Other operating expenses | 3,579 | 3,513 | 2,103 |
Total noninterest expenses | 26,744 | 24,719 | 21,272 |
Income before income taxes | 10,205 | 13,371 | 12,861 |
Income Tax Expense | 1,110 | 4,330 | 3,099 |
Net Income | 9,095 | 9,041 | 9,762 |
Net Income attributable to noncontrolling interests | (10) | (31) | (194) |
Net Income attributable to F & M Bank Corp. | 9,085 | 9,010 | 9,568 |
Dividends paid/accumulated on preferred stock | 413 | 415 | 487 |
Net income available to common stockholders | $ 8,672 | $ 8,595 | $ 9,081 |
Per Common Share Data | |||
Net income - basic | $ 2.68 | $ 2.63 | $ 2.77 |
Net income - diluted | 2.53 | 2.48 | 2.57 |
Cash dividends on common stock | $ 1.20 | $ 0.94 | $ .80 |
Weighted average common shares outstanding - basic | 3,238,177 | 3,269,713 | 3,282,335 |
Weighted average common shares outstanding - diluted | 3,596,017 | 3,631,984 | 3,716,591 |
Consolidated Statements of Com
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Other Comprehensive Income [Abstract] | |||
Net Income | $ 9,095 | $ 9,041 | $ 9,762 |
Other comprehensive income (loss): | |||
Pension plan adjustment | 313 | (414) | (738) |
Tax effect | (66) | 141 | 251 |
Pension plan adjustment, net of tax | 247 | (273) | (487) |
Unrealized holding gains (losses) on available-for-sale securities | (94) | (34) | 3 |
Tax effect | 20 | 12 | (1) |
Unrealized holding gains (losses), net of tax | (74) | (22) | 2 |
Total other comprehensive income (loss) | 173 | (295) | (485) |
Total comprehensive income | 9,268 | 8,746 | 9,277 |
Comprehensive income attributable to noncontrolling interest | (10) | (31) | (194) |
Comprehensive income attributable to F&M Bank Corp. | $ 9,258 | $ 8,715 | $ 9,083 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid In Capital | Retained Earnings | Noncontrolling Interest | Accumulated Other comprehensive Income (Loss) | Total |
Begining balance, Amount at Dec. 31, 2015 | $ 9,425 | $ 16,427 | $ 11,149 | $ 48,056 | $ 573 | $ (2,680) | $ 82,950 |
Net Income | 9,568 | 194 | 9,762 | ||||
Other comprehensive income (loss) | (485) | (485) | |||||
Distributions to noncontrolling interest | (74) | (74) | |||||
Dividends on preferred stock | (487) | (487) | |||||
Dividends on common stock | (2,628) | (2,628) | |||||
Common stock repurchased | (112) | (466) | (578) | ||||
Common stock issued | 37 | 146 | 183 | ||||
Preferred stock repurchased | (1,816) | (145) | (1,961) | ||||
Ending balance, Amount at Dec. 31, 2016 | 7,609 | 16,352 | 10,684 | 54,509 | 693 | (3,165) | 86,682 |
Net Income | 9,010 | 31 | 9,041 | ||||
Other comprehensive income (loss) | (295) | (295) | |||||
Distributions to noncontrolling interest | (150) | (150) | |||||
Dividends on preferred stock | (415) | (415) | |||||
Dividends on common stock | (2,972) | (2,972) | |||||
Common stock repurchased | (110) | (602) | (712) | ||||
Common stock issued | 33 | 164 | 197 | ||||
Preferred stock repurchased | (80) | (21) | (101) | ||||
Stranded tax effect of Tax Cuts and Jobs Act | 682 | (682) | |||||
Ending balance, Amount at Dec. 31, 2017 | 7,529 | 16,275 | 10,225 | 60,814 | 574 | (4,142) | 91,275 |
Net Income | 9,085 | 10 | 9,095 | ||||
Other comprehensive income (loss) | 173 | 173 | |||||
Distributions to noncontrolling interest | (25) | (25) | |||||
Dividends on preferred stock | (413) | (413) | |||||
Dividends on common stock | (3,890) | (3,890) | |||||
Common stock repurchased | (247) | (1,535) | (1,782) | ||||
Common stock issued | 38 | 228 | 266 | ||||
Preferred stock repurchased | (1,857) | (931) | (2,788) | ||||
Ending balance, Amount at Dec. 31, 2018 | $ 5,672 | $ 16,066 | $ 7,987 | $ 65,596 | $ 559 | $ (3,969) | $ 91,911 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Common Stock issued | 7,542 | 6,705 | 7,494 |
Common stock repurchased | 49,446 | 21,984 | 22,583 |
Preferred stock repurchased | 74,290 | 3,200 | 72,650 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net Income | $ 9,095 | $ 9,041 | $ 9,762 |
Depreciation | 1,137 | 930 | 827 |
Amortization of intangibles | 66 | 53 | 0 |
Amortization of securities | 2 | 0 | 109 |
Proceeds from sale of loans held for sale originated | 94,129 | 84,698 | 103,784 |
Gain on sale of loans held for sale originated | (2,222) | (2,331) | (2,778) |
Loans held for sale originated | (91,806) | (85,828) | (97,451) |
Provision for loan losses | 2,930 | 0 | 0 |
Benefit (expense) for deferred taxes | 55 | (222) | 9 |
(Increase) in interest receivable | (71) | (222) | (76) |
(Increase) in other assets | (772) | (1,025) | (564) |
(Decrease) increase in accrued liabilities | (797) | 1,498 | 1,690 |
Amortization of limited partnership investments | 767 | 625 | 731 |
Gain on sale of fixed assets | (9) | 0 | 0 |
Loss on sale of investments | 0 | 42 | 0 |
(Gain) loss on sale and valuation adjustments of other real estate owned | (94) | 44 | 19 |
Income from life insurance investment | (527) | (449) | (476) |
Net cash provided by operating activities | 11,883 | 6,854 | 15,586 |
Cash flows from investing activities | |||
Proceeds from maturities of securities available for sale | 21,897 | 86,741 | 32,218 |
Proceeds from sales of other investments | 0 | 55 | 0 |
Purchases of securities available for saleand other investments | (3,361) | (89,428) | (47,137) |
Capital improvements to other real estate owned | 0 | (2) | (24) |
Net increase in loans held for investment | (26,065) | (27,068) | (49,386) |
Net (increase) decrease in loans held for sale participations | (16,236) | 26,421 | (8,483) |
Net purchase of property and equipment | (3,000) | (6,484) | (3,553) |
Purchase of bank owned life insurance | (5,000) | 0 | 0 |
Purchase of title insurance company | (75) | (549) | 0 |
Proceeds from sale of other real estate owned | 141 | 281 | 623 |
Net cash used in investing activities | (31,699) | (10,033) | (75,742) |
Cash flows from financing activities | |||
Net change in deposits | 22,148 | 32,092 | 42,415 |
Net change in short-term debt | 14,820 | (14,704) | 15,046 |
Dividends paid in cash | (4,303) | (3,387) | (3,115) |
Proceeds from long-term debt | 0 | 0 | 20,000 |
Distributions to non-controlling interest | (25) | (150) | (74) |
Proceeds from issuance of common stock | 266 | 197 | 183 |
Repurchase of preferred stock | (2,788) | (712) | (1,961) |
Repurchase of common stock | (1,782) | (101) | (578) |
Repayments of long-term debt | (9,515) | (14,504) | (3,924) |
Net cash provided by (used in) financing activities | 18,821 | (1,269) | 67,992 |
Net (Decrease) Increase in Cash and Cash Equivalents | (995) | (4,448) | 7,836 |
Cash and Cash Equivalents, Beginning of Year | 11,907 | 16,355 | 8,519 |
Cash and Cash Equivalents, End of Year | 10,912 | 11,907 | 16,355 |
Supplemental Cash Flow information: | |||
Interest | 4,744 | 3,866 | 3,573 |
Income taxes | 1,957 | 4,460 | 2,300 |
Supplemental Disclosure: | |||
Transfers from loans to other real estate owned | 506 | 231 | 566 |
Unrealized gain (loss) on securities available for sale | (74) | (22) | 2 |
Minimum pension liability adjustment | $ 247 | $ (273) | $ (487) |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2018 | |
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. Services are provided at thirteen branch offices and a Dealer Finance Division loan production office. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance, Inc., Farmers & Merchants Financial Services, Inc, F&M Mortgage, LLC and VSTitle, LLC. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
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 & Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., F&M Mortgage, LLC, (net of noncontrolling interest) and VSTitle, LLC. Significant inter-company accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, goodwill and intangibles, fair value, the valuation of deferred tax assets and liabilities, pension accounting and the valuation of foreclosed real estate. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. Securities Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to held them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, the unrealized holding gains and losses are reported in other comprehensive income, net of tax. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, in any, plus or minus changes resulting from observable price changes in orderly transaction for the identical or a similar investment. The Company follows the accounting guidance related to recognition and presentation of other-than-temporary impairment. The guidance specifies that if (a) an entity does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that the entity will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired, unless there is a credit loss. When criteria (a) and (b) are met, the entity will recognize the credit component of other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security. For equity securities, when the Company has decided to sell an impaired available-for-sale security and the Company does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed other-than-temporarily impaired in the period in which the decision to sell is made. The Company recognizes an impairment loss when the impairment is deemed other than temporary even if a decision to sell has not been made. The Company had no other than temporary impairment in 2018, 2017 or 2016. Other Investments 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. Due to the nature and restrictions placed on the Company's investment in common stock of the Federal Home Loan Bank of Atlanta ("FHLB") and the Federal Reserve Bank of Richmond, these securities are considered restricted and carried at cost. On January 1, 2018, the Company adopted the new accounting standard for Financial Instruments, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. At December 31, 2018, equity securities of $135 are included in other investments on the Company’s consolidated balance sheet. These securities were included in the available for sale portfolio at December 31, 2017. Income Taxes Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The results for the year ended December 31, 2017 included the effect of the Tax Cuts and Jobs Act (the Tax Act), which was signed into law on December 22, 2017. Among other things, the Tax Act permanently lowered the federal corporate income tax rate to 21% from the maximum rate prior to the passage of the Tax Act of 35%, effective January 1, 2018. As a result of the reduction of the federal corporate tax rate, U.S. GAAP required companies to re-measure their deferred tax assets and deferred tax liabilities, including those accounted for in accumulated other comprehensive income (loss), as of the date of the Tax Act’s enactment and record the corresponding effects in income tax expense in the fourth quarter of 2018. The Company recognized a $811 reduction in the value of its net deferred tax asset and recorded a corresponding incremental income tax expense in the Company’s consolidated statement of income for 2017. The Company recognizes interest and penalties on income taxes as a component of income tax expense. Loans Held for Investment The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and any unearned income. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless secured and in process of collection. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. A loan is considered past due when a payment of principal or interest or both is due but not paid. Management closely monitors past due loans in timeframes of 30-59 days, 60-89 days, and 90 or more days past due. These policies apply to all loan portfolio segments. 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. Troubled debt restructurings are considered impaired loans. Loans Held for Sale These loans consist of fixed rate loans made through the Company’s subsidiary, F&M Mortgage, and loans purchased from Northpointe Bank, Grand Rapids, MI. F&M Mortgage originates conforming mortgage loans for sale in the secondary market. These loans consist primarily of fixed-rate, single-family residential mortgage loans which meet the underwriting characteristics of the investors. F&M Mortgage enters into mortgage loan commitments whereby the interest rate on the loan is determined prior to funding (rate lock commitments). The period of time between issuance of a loan commitment and sale of the loan generally ranges from two to three weeks. F&M Mortgage protects itself from changes in interest rates through the use of best efforts forward delivery contracts, by committing to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed the interest rate risk on the loan. As a result, the Company is not generally exposed to significant losses nor will it realize significant gains related to its rate lock commitments due to changes in interest rates. The correlation between the rate lock commitments and the best efforts contracts is very high due to their similarity. The market value of rate lock commitments and best efforts contracts is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. F&M Mortgage determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the estimated value of the underlying assets while taking into consideration the probability that the loan will be funded. The fair value of rate lock commitments and best efforts contracts was considered immaterial at December 31, 2018 and 2017. The average time on the line is two or three weeks. These loans are pre-sold with servicing released and no interest is retained after the loans are sold. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in 2018, 2017, or 2016. Gains on sales of loans and commission expense are recognized at the loan closing date and are included in mortgage banking income, net on the Company’s consolidated income statement. At December 31, 2018 and 2017, there was $3,544 and $3,645, respectively, of these loans included in loans held for sale on the Company’s consolidated balance sheet. The Bank participates in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation. Pursuant to the terms of a participation agreement, the Bank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage loan originators located throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Bank has participated in similar arrangements 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. As of December 31, 2018, and 2017, there were $52,366 and $36,130 million of these loans included in loans held for sale on the Company’s consolidated balance sheet. Troubled Debt Restructuring In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company has $8.03 million in loans classified as TDRs that are current and performing as of December 31, 2018, and $7.8 million as of December 31, 2017. Allowance for Loan and Losses The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, 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 evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Except for credit card and dealer finance loans, all loans are assigned an internal risk rating based on certain credit quality indicators. Credit card, consumer and dealer finance loans are monitored based on payment activity. Loss rates are amplified for loans with adverse risk ratings that are not considered impaired. In the general allowance, the historical loss rate is combined with the qualitative factors, resulting in an adjusted loss factor for each segment of loans. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Historical loss rates are combined with qualitative factors resulting in an adjusted loss factor for each segment. Specific allowances are established for individually-evaluated impaired loans based on the excess of the loan balance relative to the fair value of the collateral, if the loan is deemed collateral dependent. 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. Other Real Estate Owned (OREO) OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Bank Premises and Equipment Land is carried at cost and 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: Premises and Improvements 10 - 40 years Furniture and Equipment 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 and Intangible Assets The Company accounts for goodwill and intangible assets under ASC 805, “Business Combinations” and ASC 350, “Intangibles”, respectively. Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. Additionally, acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. The Company recorded goodwill and intangible assets in 2018 related to the purchase of VS Title which was valued by an independent third party. The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Impairment testing is performed annually, as well as when an event triggering impairment may have occurred. The Company performs its annual analysis as of December 31 each fiscal year. Accounting guidance permits preliminary assessment of qualitative factors to determine whether a more substantial impairment testing is required. The Company chose to bypass the preliminary assessment and utilized a two-step process for impairment testing of goodwill. The first step tests for impairment, while the second step, if necessary, measures the impairment. No indicators of impairment were identified during the years ended December 31, 2018, 2017, and 2016. 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 2018, 2017, and 2016 were $622, $509, and $604, respectively. Bank Owned Life Insurance The Company has purchased life insurance policies on certain employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Comprehensive Income Comprehensive income is shown in a two-statement approach, the first statement presents total net income and its components followed by a second statement that presents all the components of other comprehensive income such as unrealized gains and losses on available for sale securities and changes in the funded status of a defined benefit pension plan. Derivative Financial Instruments 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. 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. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the consolidated financial statements. Fair Value Measurements Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involved uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets of particular items. Changes in assumptions or in market conditions could significantly affect these estimates. Reclassifications Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income or earnings per share. 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 available to common stockholders 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 Doll |
3. CASH AND DUE FROM BANKS
3. CASH AND DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2018 | |
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. Due to the deposit reclassification procedures implemented by the Bank, there is no Federal Reserve Bank reserve requirement for the years ended December 31, 2018 and 2017. |
4. SECURITIES
4. SECURITIES | 12 Months Ended |
Dec. 31, 2018 | |
Securities | |
NOTE 4. SECURITIES | The amortized cost and fair value, with unrealized gains and losses, of securities held to maturity were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2018 U. S. Treasuries $ 123 $ - $ - $ 123 December 31, 2017 U. S. Treasuries $ 125 $ - $ - $ 125 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, 2018 U. S. Government sponsored enterprises $ 7,999 - 113 7,886 Mortgage-backed obligations of federal agencies 409 - 6 403 Total Securities Available for Sale $ 8,408 $ - $ 119 $ 8,289 December 31, 2017 U. S. Treasuries $ 19,998 $ - $ - $ 19,998 U. S. Government sponsored enterprises 7,999 - 19 7,980 Mortgage-backed obligations of federal agencies 508 - 6 502 Equity securities1 135 - - 135 Total Securities Available for Sale $ 28,640 $ 9 $ 25 $ 28,615 1 Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01 The amortized cost and fair value of securities at December 31, 2018, 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 $ - $ - $ - $ - Due after one year through five years 123 123 7,999 7,886 Due after five years through ten years - - 409 403 Due after ten years - - - - Total $ 123 $ 123 $ 8,408 $ 8,289 There were no sales of debt or equity securities during 2018, 2017 or 2016. There were no pledged securities at December 31, 2018 or 2017. Other investments consist of investments in twenty-one low-income housing and historic equity partnerships (carrying basis of $8,139), stock in the Federal Home Loan Bank (carrying basis of $3,688), and various other investments (carrying basis of $1,605). The interests in the low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks, except for $135, are restricted as to sales. The market values of these securities are estimated to approximate their carrying values as of December 31, 2018. At December 31, 2018, the Company was committed to invest an additional $4,327 in six 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 for other than temporary impairment. 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. A summary of unrealized losses (in thousands) and the length of time in a continuous loss position, by security type of December 31, 2018 were as follows: Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2018 U. S. Government sponsored enterprises $ - $ - $ 7,886 $ (113 ) $ 7,886 $ (113 ) Mortgage-backed obligations of federal agencies - - 403 (6 ) 403 (6 ) Total $ - $ - $ 8,289 $ (119 ) $ 8,289 $ (119 ) Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2017 U. S. Government sponsored enterprises $ 3,981 $ (19 ) $ - $ - $ 3,981 $ (19 ) Mortgage-backed obligations of federal agencies 502 (6 ) - - 502 (6 ) Total $ 4,483 $ (25 ) $ - $ - $ 4,483 $ (25 ) As of December 31, 2017, there were no securities in an unrealized loss position. 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. As of December 31, 2018, the Company had four agencies and a mortgage backed security that were temporarily impaired due to rising interest rates not the credit quality of the security. All of these securities had been in an unrealized loss position for exactly twelve months. The Company did not recognize any other-than-temporary impairment losses in 2018, 2017 or 2016. |
5. LOANS
5. LOANS | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
NOTE 5. LOANS | Loans held for investment as of December 31, 2018, and 2017 were as follows: 2018 2017 Construction/Land Development $ 61,659 $ 71,620 Farmland 17,030 13,606 Real Estate 192,278 184,546 Multi-Family 9,665 10,298 Commercial Real Estate 147,342 148,906 Home Equity – closed end 11,039 11,606 Home Equity – open end 53,197 54,739 Commercial & Industrial – Non-Real Estate 36,021 36,912 Consumer 9,861 6,633 Dealer Finance 97,523 75,169 Credit Cards 3,184 2,939 Total $ 638,799 $ 616,974 The Company has pledged loans held for investment as collateral for borrowings with the Federal Home Loan Bank of Atlanta totaling $186,673 and $218,323 as of December 31, 2018, and 2017, respectively. The Company maintains a blanket lien on its entire residential real estate portfolio and certain commercial and home equity loans. Loans held for sale consists of loans originated by F&M Mortgage for sale in the secondary market, and the Bank’s commitment to purchase residential mortgage loan participations from Northpointe Bank. The volume of loans purchased from Northpointe 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, 2018, and 2017 were $55,910 and $39,775, respectively. The following is a summary of information pertaining to impaired loans: December 31, 2018 December 31, 2017 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 2,414 $ 2,414 $ - $ 4,352 $ 5,269 $ - Farmland 1,941 1,941 - 1,984 1,984 - Real Estate 1,932 1,932 - 1,273 1,273 - Multi-Family - - - - - - Commercial Real Estate 6,176 6,176 - 6,229 6,229 - Home Equity – closed end - - - - - - Home Equity – open end - - - - 347 - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - 8 8 - Credit cards - - - - - - Dealer Finance 32 32 - 31 31 - 12,495 12,495 - 13,877 15,141 - Impaired loans with a valuation allowance Construction/Land Development 4,311 4,871 1,627 4,998 4,998 1,661 Farmland - - - - - - Real Estate 422 422 7 1,188 1,188 209 Multi-Family - - - - - - Commercial Real Estate - 1,500 - - - - Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer 8 8 2 - - - Credit cards - - - - - - Dealer Finance 194 194 10 47 47 12 4,935 6,995 1,646 6,233 6,233 1,882 Total impaired loans $ 17,430 $ 19,490 $ 1,646 $ 20,110 $ 21,374 $ 1,882 The Recorded Investment is defined as the principal balance less principal payments and charge-offs. The following is a summary of the average investment and interest income recognized for impaired loans (dollars in thousands): December 31, 2018 December 31, 2017 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 3,586 $ 89 $ 4,969 $ 382 Farmland 1,963 80 1,921 62 Real Estate 1,542 98 878 57 Multi-Family - - - - Commercial Real Estate 2,304 286 1,682 44 Home Equity – closed end - - - - Home Equity – open end - - 347 - Commercial & Industrial – Non-Real Estate - - 124 - Consumer - - 10 - Credit cards - - - - Dealer Finance 28 5 24 3 9,423 558 9,955 548 Impaired loans with a valuation allowance Construction/Land Development 6,352 91 5,911 258 Farmland - - - - Real Estate 554 23 1,194 49 Multi-Family - - - - Commercial Real Estate 4,167 - - - Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer 10 1 - - Credit cards - - - - Dealer Finance 206 14 56 3 11,289 129 7,161 310 Total impaired loans $ 20,712 $ 687 $ 17,116 $ 858 The following table presents the aging of the recorded investment of past due loans: 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2018 Construction/Land Development $ 290 $ - $ 1,767 $ 2,057 $ 59,602 $ 61,659 $ 2,327 $ - Farmland - - - - 17,030 17,030 - - Real Estate 3,074 677 1,729 5,480 186,798 192,278 1,477 726 Multi-Family - - - - 9,665 9,665 - - Commercial Real Estate 479 189 5,073 5,741 141,601 147,342 5,074 - Home Equity – closed end - - 12 12 11,027 11,039 - 12 Home Equity – open end 148 171 320 639 52,558 53,197 269 51 Commercial & Industrial – Non- Real Estate 40 22 80 142 35,879 36,021 98 - Consumer 89 26 3 118 9,743 9,861 5 2 Dealer Finance 2,763 337 96 3,196 94,327 97,523 155 9 Credit Cards 50 11 9 70 3,114 3,184 - - Total $ 6,933 $ 1,433 $ 9,089 $ 17,455 $ 621,344 $ 638,799 $ 9,405 $ 800 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2017 Construction/Land Development $ 167 $ 5,459 $ 3,908 $ 9,534 $ 62,086 $ 71,620 $ 3,908 $ - Farmland - - - - 13,606 13,606 - - Real Estate 2,858 1,954 560 5,372 179,174 184,546 1,720 143 Multi-Family 179 - - 179 10,119 10,298 - - Commercial Real Estate 544 - - 544 148,362 148,906 - - Home Equity – closed end - 25 - 25 11,581 11,606 3 - Home Equity – open end 454 165 268 887 53,852 54,739 448 - Commercial & Industrial – Non- Real Estate 108 36 595 739 36,173 36,912 599 - Consumer 43 5 - 48 6,585 6,633 - - Dealer Finance 1,300 252 189 1,741 73,428 75,169 226 54 Credit Cards 30 8 1 39 2,900 2,939 - 1 Total $ 5,683 $ 7,904 $ 5,521 $ 19,108 $ 597,866 $ 616,974 $ 6,904 $ 198 |
6. ALLOWANCE FOR LOAN LOSSES
6. ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 6. ALLOWANCE FOR LOAN LOSSES | A summary of changes in the allowance for loan losses (in thousands) for the years ended December 31, 2018 and 2017 is as follows: December 31, 2018 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 2,547 $ 489 $ 122 $ (86 ) $ 2,094 $ 1,627 $ 467 Farmland 25 - - (10 ) 15 - 15 Real Estate 719 99 12 (340 ) 292 7 285 Multi-Family 19 - - (9 ) 10 - 10 Commercial Real Estate 482 1,546 1 1,479 416 - 416 Home Equity – closed end 66 3 4 (54 ) 13 - 13 Home Equity – open end 209 - 8 (91 ) 126 - 126 Commercial & Industrial – Non-Real Estate 337 573 91 337 192 - 192 Consumer 148 51 41 (68 ) 70 2 68 Dealer Finance 1,440 2,083 861 1,756 1,974 10 1,964 Credit Cards 52 76 46 16 38 - 38 Total $ 6,044 $ 4,920 $ 1,186 $ 2,930 $ 5,240 $ 1,646 $ 3,594 December 31, 2017 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 3,381 $ 620 $ - $ (214 ) $ 2,547 $ 1,661 $ 886 Farmland 34 - - (9 ) 25 - 25 Real Estate 843 - 2 (126 ) 719 209 510 Multi-Family 23 - - (6 ) 19 - 19 Commercial Real Estate 705 - 13 (236 ) 482 - 482 Home Equity – closed end 75 7 25 (27 ) 66 - 66 Home Equity – open end 470 26 53 (288 ) 209 - 209 Commercial & Industrial – Non-Real Estate 586 179 72 (142 ) 337 - 337 Consumer 78 136 28 178 148 - 148 Dealer Finance 1,289 1,806 1,143 814 1,440 12 1,428 Credit Cards 59 98 37 54 52 - 52 Total $ 7,543 $ 2,872 $ 1,373 $ - $ 6,044 $ 1,882 $ 4,162 The following table presents the recorded investment in loans (in thousands) based on impairment method as of December 31, 2018 and 2017: December 31, 2018 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 61,659 $ 6,725 $ 54,934 Farmland 17,030 1,941 15,089 Real Estate 192,278 2,354 189,924 Multi-Family 9,665 - 9,665 Commercial Real Estate 147,342 6,176 141,166 Home Equity – closed end 11,039 - 11,039 Home Equity –open end 53,197 - 53,197 Commercial & Industrial – Non-Real Estate 36,021 - 36,021 Consumer 9,861 8 9,853 Dealer Finance 97,523 226 97,297 Credit Cards 3,184 - 3,184 Total $ 638,799 $ 17,430 $ 621,369 December 31, 2017 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 71,620 $ 9,350 $ 62,270 Farmland 13,606 1,984 11,622 Real Estate 184,546 2,461 182,085 Multi-Family 10,298 - 10,298 Commercial Real Estate 148,906 6,229 142,677 Home Equity – closed end 11,606 - 11,606 Home Equity –open end 54,739 - 54,739 Commercial & Industrial – Non-Real Estate 36,912 - 36,912 Consumer 6,633 8 6,625 Dealer Finance 75,169 78 75,091 Credit Cards 2,939 - 2,939 Total $ 616,974 $ 20,110 $ 596,864 The following table shows the Company’s loan portfolio broken down by internal loan grade (in thousands) as of December 31, 2018 and 2017: December 31, 2018 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 $ - $ 1,148 $ 15,857 $ 29,301 $ 9,353 $ - $ 6,000 $ - $ 61,659 Farmland 62 - 4,953 6,376 3,205 493 1,941 - 17,030 Real Estate - 1,644 55,429 106,387 22,679 1,531 4,608 - 192,278 Multi-Family - 2,895 6,604 166 - - - 9,665 Commercial Real Estate - 2,437 44,065 81,916 11,564 2,286 5,074 - 147,342 Home Equity – closed end - 31 3,245 5,842 1,909 - 12 - 11,039 Home Equity – open end 60 1,554 19,464 27,347 4,157 223 392 - 53,197 Commercial & Industrial (Non-Real Estate) 193 2,291 17,144 13,254 2,704 337 98 - 36,021 Consumer (excluding dealer) 27 190 2,648 5,192 1,800 - 4 - 9,861 Total $ 342 $ 9,295 $ 165,700 $ 282,219 $ 57,537 $ 4,870 $ 18,129 $ - $ 538,092 Credit Cards Dealer Finance Performing $ 3,175 $ 97,368 Non performing 9 155 Total $ 3,184 $ 97,523 December 31, 2017 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 $ - $ 690 $ 12,974 $ 30,197 $ 9,165 $ 3,520 $ 15,074 $ - $ 71,620 Farmland 63 - 3,153 4,120 3,793 494 1,983 - 13,606 Real Estate - 1,512 53,764 101,606 19,734 4,660 3,270 - 184,546 Multi-Family - 228 4,780 5,111 179 - - - 10,298 Commercial Real Estate - 3,525 45,384 89,195 9,012 634 1,156 - 148,906 Home Equity – closed end - - 3,535 5,410 1,279 1,379 3 - 11,606 Home Equity – open end 235 1,598 17,383 30,888 3,945 176 514 - 54,739 Commercial & Industrial (Non-Real Estate) 262 1,595 13,297 19,442 1,480 207 629 - 36,912 Consumer (excluding dealer) 34 490 2,226 88 1,065 2,254 476 - 6,633 Total $ 594 $ 9,638 $ 156,496 $ 286,057 $ 49,652 $ 13,324 $ 23,105 $ - $ 538,866 Credit Cards Dealer Finance Performing $ 2,938 $ 75,116 Non performing 1 53 Total $ 2,939 $ 75,169 Description of internal 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 Credit card and dealer finance loans are classified as performing or nonperforming. A loan is nonperforming when payments of principal and interest are past due 90 days or more. |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING | 12 Months Ended |
Dec. 31, 2018 | |
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 are considered in the qualitative factors within the allowance for loan loss methodology. 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 which are evaluated individually for impairment. During the twelve months ended December 31, 2018, the Bank modified 21 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, 2018 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 742 $ 742 Commercial 2 1,248 1,248 Consumer 18 $ 183 $ 183 Total 21 $ 2,173 $ 2,173 As of December 31, 2018, there were 5 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due. December 31, 2018 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 2 $ 142 $ 142 Consumer 3 12 12 Total 5 $ 154 $ 154 During the twelve months ended December 31, 2017, the Bank modified 6 loans that were considered to be troubled debt restructurings. These modifications included 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, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Consumer 3 $ 32 $ 32 Total 3 $ 32 $ 32 As of December 31, 2017, there were 3 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due. December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 67 $ 67 Construction/Land Development 2 1,502 1,502 Total 3 $ 1,569 $ 1,569 |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 8. BANK PREMISES AND EQUIPMENT | Bank premises and equipment as of December 31 are summarized as follows: 2018 2017 Land 3,887 $ 3,883 Buildings and improvements 14,370 12,384 Furniture and equipment 10,438 9,454 28,695 25,721 Less - accumulated depreciation (10,929 ) (9,827 ) Net $ 17,766 $ 15,894 Depreciation of $1,137 in 2018, $930 in 2017, and $827 in 2016 were charged to operations. |
9. OTHER REAL ESTATE OWNED
9. OTHER REAL ESTATE OWNED | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 9. OTHER REAL ESTATE OWNED | The table below reflects other real estate owned (OREO) activity for 2018 and 2017: Other Real Estate Owned 2018 2017 Balance as of January 1 $ 1,984 $ 2,076 Loans transferred to OREO 600 231 Capital improvements - 2 Sale of OREO (132 ) (281 ) Write down of OREO or losses on sale (9 ) (44 ) Balance as of December 31 $ 2,443 $ 1,984 Activity in the valuation allowance was as follows: 2018 2017 Balance as of January 1 $ 885 $ 885 Provision (recoveries) charged/(credited) to expense (23 ) - Reductions from sales of real estate owned (1 ) - Balance as of December 31 $ 861 $ 885 (Income) expenses related to foreclosed assets include: 2018 2017 2016 Net loss (gain) on sales $ 9 $ 44 $ 19 Gain on foreclosure (94 ) - - Provision/(recoveries) for unrealized losses (10 ) - - Operating expenses, net of rental income 64 32 67 (Income) expenses related to foreclosed assets $ (31 ) $ 76 $ 86 At December 31, 2018, the balance of real estate owned includes $375 of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property. At December 31, 2018, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure procedures are in process is $518. |
10. DEPOSITS
10. DEPOSITS | 12 Months Ended |
Dec. 31, 2018 | |
Banking and Thrift [Abstract] | |
NOTE 10. DEPOSITS | Time deposits that meet or exceed the FDIC insurance limit of $250 at year end 2018 and 2017 were $13,464 and $13,637. At December 31, 2018, the scheduled maturities of time deposits are as follows: 2018 $ 62,999 2019 50,775 2020 23,990 2021 7,174 2022 and after 10,928 Total $ 155,866 |
11. SHORT-TERM DEBT
11. SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTE 11. SHORT-TERM DEBT | Short-term debt, all maturing within 12 months, as of December 31, 2018 and 2017 is summarized as follows: Outstanding Average Maximum Outstanding At Balance at any Month End Year End Outstanding Yield 2018 Federal funds purchased $ 11,906 $ 10,116 $ 1,399 2.51 % FHLB short term 46,000 30,000 22,937 1.83 % Totals $ 40,116 $ 24,336 1.87 % 2017 Federal funds purchased $ 8,964 $ 5,296 $ 97 .17 % FHLB short term 50,000 20,000 20,301 .30 % Totals $ 25,296 $ 20,398 .31 % The Company utilizes short-term debt such as Federal funds purchased and Federal Home Loan Bank of Atlanta (FHLB) short term borrowings to support the loans held for sale participation program and provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short term debt, which is secured by the loan portfolio, can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the need of the Company. Securities sold under repurchase agreements are secured transactions with customers and generally mature the day following the date sold. This product was discontinued in 2017. As of December 31, 2018, the Company had unsecured lines of credit with correspondent banks totaling $41,000, which may be used in the management of short-term liquidity, on which $10,116 was outstanding. |
12. LONG-TERM DEBT
12. LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTE 12. LONG-TERM DEBT | The Company utilizes the FHLB advance program to fund loan growth and provide liquidity. The interest rates on long-term debt are fixed at the time of the advance and range from 1.27% to 2.56%; the weighted average interest rate was 1.96% and 1.86% at December 31, 2018 and December 31, 2017, respectively. The balance of these obligations at December 31, 2018 and 2017 were $40,125 and $49,554 respectively. The Company recognized a gain of $504 on prepayment of two FHLB advances totaling $10,000 during the first quarter of 2017 and there were no additional borrowings in 2018 or 2017. FHLB advances include a $6,000 letter of credit at FHLB that is pledged to the Commonwealth of Virginia to secure public funds. The maturities of long-term Federal Home Loan Bank long term debt as of December 31, 2018, were as follows: 2019 $ 6,928 2020 14,429 2021 5,929 2022 2,714 2023 7,000 Thereafter 3,125 Total $ 40,125 In addition, the Company has a note payable to purchase a lot adjacent to one of the Bank branches for $85 at December 31, 2018 that is payable in remaining annual payments on January 1, 2019. There was $170 outstanding on this note at December 31, 2017. VSTitle, LLC has a note payable for vehicle purchases with a balance of $8 and $9 at December 31, 2018 and 2017, respectively. |
13. INCOME TAX EXPENSE
13. INCOME TAX EXPENSE | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
NOTE 13. INCOME TAX EXPENSE | The components of income tax expense were as follows: 2018 2017 2016 Current expense $ 1,155 $ 3,671 $ 3,046 Deferred expense (benefit) (55 ) (152 ) 53 Adjustments to deferred tax asset due to change in federal tax rate - 811 - Total deferred (benefit) expense (55 ) 659 53 Total Income Tax Expense $ 1,110 $ 4,330 $ 3,099 The components of deferred taxes as of December 31, were as follows: 2018 2017 Deferred Tax Assets: Allowance for loan losses $ 1,096 $ 1,265 Split Dollar Life Insurance 3 3 Nonqualified deferred compensation 564 546 Low income housing partnerships losses 279 203 Core deposit amortization 13 108 Other real estate owned 173 173 Net unrealized loss on securities available for sale 25 5 Unfunded pension benefit obligation 1,030 1,096 Total Assets $ 3,183 $ 3,399 2018 2017 Deferred Tax Liabilities: Unearned low income housing credits $ 158 $ 180 Depreciation 403 340 Prepaid pension 849 1,010 Goodwill tax amortization 564 559 Total Liabilities 1,974 2 089 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,209 $ 1,310 The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rates: 2018 2017 2016 Tax expense at federal statutory rates $ 2,104 $ 4,511 $ 4,307 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit - - 6 Partially tax-exempt income (49 ) (59 ) (41 ) Tax-exempt income (146 ) (212 ) (217 ) LIH and historic credits (774 ) (633 ) (896 ) Deferred Tax Asset rate change - 811 - Other (25 ) (88 ) (60 ) Total Income Tax Expense $ 1,110 $ 4,330 $ 3,099 The Company 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 Company and its subsidiaries file federal income tax returns and state income tax returns. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for years before 2015. |
14. EMPLOYEE BENEFITS
14. EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 14. EMPLOYEE BENEFITS | Defined Benefit Pension Plan The Company 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 Company uses December 31st as the measurement date for the defined benefit pension plan. The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets for 2018, 2017 and 2016: 2018 2017 2016 Change in Benefit Obligation Benefit obligation, beginning $ 15,103 $ 12,475 $ 10,944 Service cost 768 696 632 Interest cost 497 487 453 Actuarial (gain) loss (1,562 ) 1,620 872 Benefits paid (587 ) (175 ) (426 ) Benefit obligation, ending $ 14,219 $ 15,103 $ 12,475 Change in Plan Assets Fair value of plan assets, beginning $ 13,645 $ 12,032 $ 11,678 Actual return on plan assets (613 ) 1,788 780 Employer contribution - - - Benefits paid (587 ) (175 ) (426 ) Fair value of plan assets, ending $ 12,445 $ 13,645 $ 12,032 Funded status at the end of the year $ (1,774 ) $ (1,458 ) $ (443 ) The fair value of plan assets is measured based on the fair value hierarchy as discussed in Note 20, “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. 2018 2017 2016 Amount recognized in the Consolidated Balance Sheet Prepaid benefit cost $ 3,131 $ 3,760 $ 4,361 Unfunded pension benefit obligation under ASC 325-960 (4,905 ) (5,218 ) (4,804 ) Deferred taxes 1,030 1,096 1,633 Amount recognized in accumulated other comprehensive income (loss) Net loss $ (4,932 ) $ (5,260 ) $ (4,861 ) Prior service cost 27 42 57 Amount recognized $ (4,905 ) (5,218 ) (4,804 ) Deferred taxes 1,030 1,096 1,633 Amount recognized in accumulated comprehensive income $ (3,875 ) $ (4,122 ) $ (3,171 ) Prepaid benefit detail Benefit obligation $ (14,219 ) $ (15,103 ) $ (12,475 ) Fair value of assets 12,445 13,645 12,032 Unrecognized net actuarial loss 4,932 5,260 4,861 Unrecognized prior service cost (27 ) (42 ) (57 ) Prepaid (accrued) benefits $ 3,131 $ 3,760 $ 4,361 Components of net periodic benefit cost Service cost $ 768 $ 696 $ 632 Interest cost 496 487 452 Expected return on plan assets (923 ) (851 ) (854 ) Amortization of prior service cost (15 ) (15 ) (15 ) Recognized net actuarial loss 303 284 223 Net periodic benefit cost $ 629 $ 601 $ 438 Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) Net loss $ (328 ) $ 399 $ 724 Amortization of prior service cost 15 15 15 Total recognized in other comprehensive income $ (313 ) $ 414 $ 739 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 316 $ 1,015 $ 1,177 Additional disclosure information Accumulated benefit obligation $ 10,992 $ 10,760 $ 8,789 Vested benefit obligation $ 10,983 $ 10,750 $ 8,780 Discount rate used for net pension cost 3.50 % 4.00 % 4.25 % Discount rate used for disclosure 4.25 % 3.50 % 4.00 % Expected return on plan assets 7.25 % 7.25 % 7.50 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 12 12 13 Funding Policy Due to the current funding status of the plan, the Company did not make a contribution in 2018, 2017 or 2016. The net periodic pension cost of the plan for 2019 will be approximately $745. Due to recent retirements, the Company expects to be obligated for payments to former employees that will result in the plan being subject to a settlement accounting charge in 2019. This amount is measured on a quarterly basis by plan actuaries and will change based on additional retirements that may occur as well as market values of the plan assets. While the total amount of the settlement accounting charge for 2019 is not known at this time, we expect that the amount will range between $600 and $800 as an additional pension expense in 2019. Long-Term Rate of Return The Company, as plan sponsor, selects the expected long-term rate of return on assets assumption in consultation with investment advisors and the plan actuary. 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, and 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 39% fixed income and 61% 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, 2018, and 2017 were 58% equity and 42% fixed and 61% equity and 39% fixed, respectively. Estimated Future Benefit Payments, which reflect expected future service, as appropriate, as of December 31, 2018, are as follows: 2019 $ 2,685 2020 604 2021 394 2022 1,542 2022 894 2024-2028 7,483 $ 13,602 Employee Stock Ownership Plan (ESOP) The Company sponsors an ESOP which provides stock ownership to substantially all employees of the Company. 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 Company. 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. For the plan year ending September 30, 2018 the Company contributed $443 in 2018, $430 in 2017, and $407 in 2016 to the Plan and charged this expense to operations. The shares held by the ESOP totaled 203,147 and 194,018 at December 31, 2018 and 2017, 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% (this increases by 1% per year up to 6%) of their salary unless elected otherwise. The Company matches one 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 $283, $263 and $242 in 2018, 2017 and 2016, 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 $125 in 2018, $125 in 2017 and $125 in 2016. A liability is accrued for the obligation under the plan and totaled $3,170 and $3,377 at December 31, 2018 and 2017, respectively. 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. The accrued liability related to the BOLI contracts was $466 and $443 for December 31, 2018 and 2017, respectively. |
15. CONCENTRATIONS OF CREDIT
15. CONCENTRATIONS OF CREDIT | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
NOTE 15. CONCENTRATIONS OF CREDIT | The Company had cash deposits in other commercial banks in excess of FDIC insurance limits totaling $2,195 and $1,798 at December 31, 2018 and 2017, respectively. The Company grants commercial, residential real estate and consumer loans to customers located primarily in the northwestern portion of the State of Virginia. There were no loan concentration areas greater than 25% of capital. 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. As of December 31, 2018, approximately 77% of the loan portfolio was secured by real estate. |
16. COMMITMENTS
16. COMMITMENTS | 12 Months Ended |
Dec. 31, 2018 | |
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 consolidated balance sheet. As of the December 31, 2018 and 2017, the Company had the following commitments outstanding: 2018 2017 Commitments to extend credit $ 169,863 $ 170,798 Standby letters of credit 2,119 1,533 The Company uses the same credit policies in making commitments to extend credit and issue standby letters of credit as it does for the loans reflected in the consolidated 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 borrower’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 its loan production office under long term lease arrangements which had initial terms of either three, five or ten years. F&M Mortgage leased its building until December of 2017 and therefore recorded lease expense in 2017 and 2016. VST leases three of its offices, the lease expense is included in the following disclosure as well as future lease payments. The North Augusta Branch and the Dealer Finance division office are leases with related parties. The Company considers these lease agreements to be arm’s length transactions. Lease expense was $249, $355 and $291 for 2018, 2017 and 2016, respectively. As of December 31, 2018, the required lease payments for the next five years were as follows: 2019 $ 155 2020 128 2021 110 2022 105 2023 93 Thereafter 114 Mortgage Banking Derivatives Commitments to fund certain mortgage loans originated by F&M Mortgage (rate lock commitments) to be sold into the secondary market and best efforts commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the practice of F&M Mortgage to enter into best efforts commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated hedge relationships. The fair value of the mortgage banking derivatives were estimated based on changes in interest rates from the date of the commitments and were considered immaterial at December 31, 2018 and 2017, and were not recorded on the Company’s balance sheet. |
17. ON BALANCE SHEET DERIVATIVE
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2018 | |
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 Company’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 Over-the-Counter (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 customer’s 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 certificates 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. There was no ineffective portion included in the consolidated income statement for the years ended December 31, 2018, 2017 and 2016. 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: 2018 2017 Notional amount $ 184 $ 184 Fair value of contracts, included in other assets 44 59 |
18. TRANSACTIONS WITH RELATED P
18. TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 18. TRANSACTIONS WITH RELATED PARTIES | During the year, executive officers and directors (and companies controlled by them) were customers of and had transactions with the Company in the normal course of business. Management believes 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: 2018 2017 Total loans, beginning of year $ 20,377 $ 7,486 New loans 5,785 6,803 Relationship change 169 10,403 Repayments (5,766 ) (4,315 ) Total loans, end of year $ 20,565 $ 20,377 Deposits of executive officers and directors and their affiliates were $4,110 and $7,757 on December 31, 2018 and 2017 respectively. Management believes 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, 2018 | |
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 & 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, 2019, approximately $8,140 was available for dividend distribution without permission of the Board of Governors. Dividends paid by the Bank to the Company totaled $8,874 in 2018, $5,000 in 2017 and $5,000 in 2016. |
20. FAIR VALUE MEASUREMENTS
20. FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
NOTE 20. FAIR VALUE MEASUREMENTS | Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements: 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, such as U. S. Treasuries. 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. The carrying value of restricted Federal Reserve Bank and Federal Home Loan Bank stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table. Derivatives The Company’s derivatives are recorded at fair value based on third party vendor supplied information using discounted cash flow analysis from observable-market based inputs, which are considered Level 2 inputs. The following tables present the balances of financial assets measured at fair value on a recurring basis as of December 31, 2018, and 2017 (dollars in thousands): December 31, 2018 Total Level 1 Level 2 Level 3 U.S. Government sponsored enterprises $ 7,886 - $ 7,886 - Mortgage-backed obligations of federal agencies 403 - 403 - Total securities available for sale $ 8,289 $ - $ 8,289 $ - Derivatives $ 44 $ - $ 44 $ - December 31, 2017 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 19,998 $ 19,998 $ - $ - U.S. Government sponsored enterprises 7,980 - 7,980 - Mortgage-backed obligations of federal agencies 502 - 502 - Equity securities1 135 - 135 - Total securities available for sale $ 28,615 $ 19,998 $ 8,617 $ - Derivatives $ 59 $ - $ 59 $ - 1 Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01 Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements: 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 and loans originated by F&M Mortgage for sale in the secondary market. Loan participations are generally repurchased within 15 days. Loans originated for sale by F&M Mortgage are recorded at lower of cost or market. No market adjustments were required at December 31, 2018 or 2017; therefore, loans held for sale were carried at cost. Because of the short-term nature and fixed repurchase price, the book value of these loans approximates fair value at December 31, 2018, and 2017. Impaired Loans Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. Troubled debt restructurings are impaired loans. Impaired loans are measured at fair value on a nonrecurring basis. If an individually-evaluated impaired loan’s balance exceeds fair value, the amount is allocated to the allowance for loan losses. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income. The fair value of an impaired loan and measurement of associated loss is based on one of three methods: the observable market price of the loan, the present value of projected cash flows, or the fair value of the collateral. The observable market price of a loan is categorized as a Level 1 input. The present value of projected cash flows method results in a Level 3 categorization because the calculation relies on the Company’s judgment to determine projected cash flows, which are then discounted at the current rate of the loan, or the rate prior to modification if the loan is a troubled debt restructure. Loans measured using the fair value of collateral method are categorized in Level 3. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Most collateral is real estate. The Company bases collateral method fair valuation upon the “as-is” value of independent appraisals or evaluations. The value of real estate collateral is determined by an independent appraisal utilizing an income or market valuation approach. The Company discounts appraised value by estimated selling costs to arrive at net fair value. Appraisals conducted by an independent, licensed appraiser outside of the Company using observable market data is categorized as Level 3. The value of business equipment is based upon an outside appraisal (Level 3) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). As of December 31, 2018, and 2017, the fair value measurements for impaired loans with specific allocations were primarily based upon the fair value of the collateral. The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis during the period (dollars in thousands): December 31, 2018 Total Level 1 Level 2 Level 3 Construction/Land Development $ 2,684 - - $ 2,684 Real Estate 415 - - 415 Consumer 6 6 Dealer Finance 184 - - 184 Impaired loans $ 3,289 - - $ 3,289 December 31, 2017 Total Level 1 Level 2 Level 3 Construction/Land Development $ 3,337 - - $ 3,337 Real Estate 979 - - 979 Dealer Finance 35 - - 35 Impaired loans $ 4,351 - - $ 4,351 The following table presents information about Level 3 Fair Value Measurements for December 31, 2018 and 2017: Fair Value at December 31, 2018 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 3,289 Discounted appraised value Discount for selling costs and marketability 2%-9% (Average 4.21%) Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 4,351 Discounted appraised value Discount for selling costs and marketability 3%-19% (Average 5.5%) Other Real Estate Owned Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. Valuation of other real estate owned is determined using current appraisals from independent parties, a level three input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor, estimated selling costs reduce the fair value, resulting in a valuation based on Level 3 inputs. The Company markets other real estate owned both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs. The following table summarizes the Company’s other real estate owned that were measured at fair value on a nonrecurring basis during the period. December 31, 2018 Total Level 1 Level 2 Level 3 Other real estate owned $ 2,443 - - $ 2,443 December 31, 2017 Total Level 1 Level 2 Level 3 Other real estate owned $ 1,984 - - $ 1,984 The following table presents information about Level 3 Fair Value Measurements for December 31, 2018 and 2017: Fair Value at December 31, 2018 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 2,443 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 1,984 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) 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, 2018 and 2017. For short-term financial assets such as cash and cash equivalents and short-term liabilities, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest bearing demand, interest bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity. Fair values for December 31, 2018 are estimated under the exit price notion in accordance with the prospective adoption of ASU 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities. Fair Value Measurements at December 31, 2018 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2018 Assets: Cash and cash equivalents $ 10,912 $ 10,912 $ - $ - $ 10,912 Securities 8,412 - 8,412 - 8,412 Loans held for sale 55,910 - 55,910 - 55,910 Loans held for investment, net 633,559 - - 613,717 613,717 Interest receivable 2,078 - 2,078 - 2,078 Bank owned life insurance 19,464 - 19,464 - 19,464 Total $ 730,335 $ 10,912 $ 85,864 $ 613,717 $ 710,493 Liabilities: Deposits $ 591,325 $ - $ 441,319 $ 153,848 $ 595,167 Short-term debt 40,116 - 40,116 - 40,116 Long-term debt 40,218 - - 39,609 39,609 Interest payable 348 - 348 - 348 Total $ 672,007 $ - $ 481,783 $ 193,457 $ 675,240 The estimated fair values, and related carrying amounts (in thousands), of the Company’s financial instruments are as follows: Fair Value Measurements at December 31, 2017 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2017 Assets: Cash and cash equivalents $ 11,907 $ 11,907 $ - $ - $ 11,907 Securities 28,740 19,998 8,742 - 28,740 Loans held for sale 39,775 - 39,775 - 39,775 Loans held for investment, net 610,930 - - 646,703 646,703 Interest receivable 2,007 - 2,007 - 2,007 Bank owned life insurance 13,950 - 13,950 - 13,950 Total $ 707,309 $ 31,905 $ 64,474 $ 646,703 $ 743,082 Liabilities: Deposits $ 569,177 $ - $ 403,907 $ 167,210 $ 571,117 Short-term debt 25,296 - 25,296 - 25,296 Long-term debt 49,733 - - 49,869 49, 869 Interest payable 260 - 260 - 260 Total $ 644,466 $ - $ 429,463 $ 217,079 $ 646,542 |
21. REGULATORY MATTERS
21. REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 21. REGULATORY MATTERS | The Company meets the eligibility criteria of a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding Company Policy Statement issued in February 2015 and is not obligated to report consolidated regulatory capital. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective January 1, 2015, with full compliance of all the requirements being phased in over a multi-year schedule and fully phased in on January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer was fully phased in at 2.50% January 1, 2019. The capital conservation buffer for 2018 was 1.875% and for 2017 was 1.25%. The net unrealized gain on securities available for sale and the unfunded pension liability are not included in computing regulatory capital. Quantitative measures established by regulation, to ensure capital adequacy, require the Bank 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, 2018 and 2017, that the Bank meets all capital adequacy requirements to which they are subject. As of the most recent notification from the Federal Reserve Bank Report of Examination, the subsidiary bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category. The actual capital ratios for the Bank are presented in the following table (dollars in thousands): Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2018 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,597 14.44 % $ 52,955 8.00 % $ 66,194 10.00 % Tier 1 risk-based ratio 90,357 13.65 % 39,717 6.00 % 52,955 8.00 % Common equity tier 1 90,357 13.65 % 29,787 4.50 % 43,026 6.50 % Total assets leverage ratio 90,357 11.79 % 30,659 4.00 % 38,324 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2017 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,563 15.41 % $ 49,614 8.00 % $ 62,018 10.00 % Tier 1 risk-based ratio 89,519 14.43 % 37,211 6.00 % 49,614 8.00 % Common equity tier 1 89,519 14.43 % 27,908 4.50 % 40,312 6.50 % Total assets leverage ratio 89,519 12.07 % 29,656 4.00 % 37,070 5.00 % |
22. BUSINESS SEGMENTS
22. BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Business Segments | |
NOTE 22. BUSINESS SEGMENTS | December 31, 2018 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 36,550 $ 139 $ 144 $ - $ - $ (125 ) $ 36,708 Service charges on deposits 1,496 - - - - - 1,496 Investment services and insurance income - - 918 - - (19 ) 899 Mortgage banking income, net - 2,348 - - - (36 ) 2,312 Title insurance income - - - 1,294 - - 1,294 Other operating income 2,002 - - - - - 2,002 Total income 40,048 2,487 1,062 1,294 - (180 ) 44,711 Expenses: Interest Expense 4,839 118 - - - (125 ) 4,832 Provision for loan losses 2,930 - - - - - 2,930 Salaries and benefits 13,153 1,783 578 922 - - 16,436 Other operating expenses 9,448 553 57 220 49 (19 ) 10,308 Total expense 30,370 2,454 635 1,142 49 (144 ) 34,506 Income before income taxes 9,678 33 427 152 (49 ) (36 ) 10,205 Income tax expense (benefit) 1,021 - 57 - 32 - 1,110 Net income $ 8,657 $ 33 $ 370 $ 152 $ (81 ) $ (36 ) $ 9,095 Net income attributable to noncontrolling interest - 10 - 36 - (36 ) 10 Net Income attributable to F & M Bank Corp. $ 8,657 $ 23 $ 370 $ 116 $ (81 ) $ - $ 9,085 Total Assets $ 782,782 $ 7,449 $ 7,237 $ 458 $ 91,582 $ (109,255 ) $ 780,253 Goodwill $ 2,670 $ 48 $ - $ 2 $ 164 $ - $ 2,884 December 31, 2017 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 33,904 $ 125 $ 148 $ - $ - $ (82 ) $ 34,095 Service charges on deposits 1,360 - - - - - 1,360 Investment services and insurance income 1 - 772 - - (18 ) 755 Mortgage banking income, net - 2,269 - - - (49 ) 2,220 Title insurance income - - - 1,162 - - 1,162 Gain on prepayment of long-term debt 504 - - - - - 504 Loss on investments - (40 ) (2 ) - - - (42 ) Other operating income 2,128 1 - - 162 (358 ) 1,933 Total income 37,897 2,355 918 1,162 162 (507 ) 41,987 Expenses: Interest Expense 3,904 75 - - - (82 ) 3,897 Provision for loan losses - - - - - - - Salaries and benefits 12,092 1,557 474 731 - - 14,854 Other operating expenses 8,942 618 51 226 46 (18 ) 9,865 Total expense 24,938 2,250 525 957 46 (100 ) 28,616 Income before income taxes 12,959 105 393 205 116 (407 ) 13,371 Income tax expense (benefit) 4,316 - 109 - (95 ) - 4,330 Net income $ 8,643 $ 105 $ 284 $ 205 $ 211 $ (407 ) $ 9,041 Net income attributable to noncontrolling interest - 31 - 49 - (49 ) 31 Net Income attributable to F & M Bank Corp. $ 8,643 $ 74 $ 284 $ 156 $ 211 $ (358 ) $ 9,010 Total Assets $ 754,375 $ 7,018 $ 6,749 $ 1,067 $ 90,964 $ (106,903 ) $ 753,270 Goodwill $ 2,670 $ 47 $ - $ - $ 164 $ - $ 2,881 December 31, 2016 F&M Bank VBS Mortgage TEB Life/FMFS Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 31,949 $ 55 $ 152 $ - $ (6 ) $ 32,150 Service charges on deposits 1,174 - - - - 1,174 Investment services and insurance income 1 - 470 - (30 ) 441 Mortgage banking income, net - 2,565 - - - 2,565 Other operating income 2,353 - - - (951 ) 1,402 Total income 35,477 2,620 622 - (987 ) 37,732 Expenses: Interest Expense 3,605 - - - (6 ) 3,599 Provision for loan losses - - - - - - Salaries and benefits 11,123 1,387 290 - - 12,800 Other operating expenses 8,139 586 66 1 (320 ) 8,472 Total expense 22,867 1,973 356 1 (326 ) 24,871 Income before income taxes 12,610 647 266 (1 ) (661 ) 12,861 Income tax expense (benefit) 3,290 - 58 (249 ) - 3,099 Net income $ 9,320 $ 647 $ 208 $ 248 $ (661 ) $ 9,762 Net income attributable to noncontrolling interest - 194 - - - 194 Net Income attributable to F & M Bank Corp. $ 9,320 $ 453 $ 208 $ 248 $ (661 ) $ 9,568 Total Assets $ 748,273 $ 7,487 $ 6,476 $ 87,449 $ (104,796 ) $ 744,889 Goodwill $ 2,670 $ - $ - $ - $ - $ 2,670 |
23. PARENT COMPANY ONLY FINANCI
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 23. PARENT COMPANY ONLY FINANCIAL STATEMENTS | Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash and cash equivalents $ 749 $ 917 Investment in subsidiaries 89,418 88,967 Other investments 135 135 Income tax receivable (including due from subsidiary) 946 565 Goodwill and intangibles 327 380 Total Assets $ 91,575 $ 90,964 Liabilities Deferred income taxes 151 177 Accrued expenses 72 86 Total Liabilities $ 223 $ 263 Stockholders’ Equity Preferred stock par value $25 per share, 400,000 shares authorized, 249,860 and 324,150 issued and outstanding at December 31, 2018 and 2017, respectively. $ 5,672 $ 7,529 Common stock par value $5 per share, 6,000,000 shares authorized, 3,213,132 and 3,255,036 shares issued and outstanding for 2018 and 2017, respectively 16,066 16,275 Additional paid in capital 7,987 10,225 Retained earnings 65,596 60,814 Accumulated other comprehensive loss (3,969 ) (4,142 ) Total Stockholders' Equity 91,352 90,701 Total Liabilities and Stockholders' Equity $ 91,575 $ 90,964 Statements of Income For the years ended December 31, 2018, 2017 and 2016 2018 2017 2016 Income Dividends from affiliate $ 8,874 $ 5,000 $ 5,000 Net limited partnership income (loss) - 162 - Total Income 8,874 5,162 5,000 Expenses Total Expenses 49 47 1 Net income before income tax expense (benefit) and undistributed subsidiary net income 8,825 5,115 4,999 Income Tax Expense (Benefit) 32 (95 ) (249 ) Income before undistributed subsidiary net income 8,793 5,210 5,248 Undistributed subsidiary net income 292 3,800 4,320 Net Income F&M Bank Corp. $ 9,085 $ 9,010 $ 9,568 Statements of Cash Flows For the years ended December 31, 2018, 2017 and 2016 2018 2017 2016 Cash Flows from Operating Activities Net income $ 9,085 $ 9,010 $ 9,568 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (292 ) (3,800 ) (4,320 ) Deferred tax (benefit) expense (3 ) (112 ) 5 Increase in other assets (328 ) (1,256 ) - Decrease in other liabilities (23 ) (77 ) (535 ) Net Cash Provided by Operating Activities 8,439 3,765 4,718 Cash Flows from Investing Activities Net Cash Used in Investing Activities - - - Cash Flows from Financing Activities Repurchase of preferred stock (2,788 ) (101 ) (1,961 ) Repurchase of common stock (1,782 ) (712 ) (577 ) Proceeds from issuance of common stock 266 197 183 Dividends paid in cash (4,303 ) (3,387 ) (3,115 ) Net Cash Used in Financing Activities (8,607 ) (4,003 ) (5,470 ) Net (decrease) increase in Cash and Cash Equivalents (168 ) (238 ) (752 ) Cash and Cash Equivalents, Beginning of Year 917 1,155 1,907 Cash and Cash Equivalents, End of Year $ 749 $ 917 $ 1,155 |
24. INVESTMENT IN F&M MORTGAGE,
24. INVESTMENT IN F&M MORTGAGE, LLC | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
NOTE 24. INVESTMENT IN F&M MORTGAGE, LLC | On November 3, 2008, the Bank acquired a 70% ownership interest in VBS Mortgage, LLC (DBA F&M Mortgage). F&M Mortgage originates both conventional and government sponsored mortgages for sale in the secondary market. Accordingly, the Company consolidated the assets, liabilities, revenues and expenses of F&M Mortgage and reflected the issued and outstanding interest not held by the Company in its consolidated financial statements as noncontrolling interest. |
25. INVESTMENT IN VS TITLE, LLC
25. INVESTMENT IN VS TITLE, LLC | 12 Months Ended |
Dec. 31, 2018 | |
Investment In Vs Title Llc | |
NOTE 25. INVESTMENT IN VS TITLE, LLC | On January 1, 2017, the Company acquired a 76% ownership interest in VSTitle, LLC (VST). VST provides title insurance services to the customers in our market area, including F&M Mortgage and the Bank. F&M Mortgage is the minority owner in VST and accordingly, the Company consolidated the assets, liabilities, revenues and expenses of VST, however there is no noncontrolling interest reflected as the 24% is included in VBS Mortgage’s income. January 1, 2018 VST purchased a small title company in Harrisonburg. |
26. ACCUMULATED OTHER COMPREHEN
26. ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2018 | |
Accumulated Other Comprehensive Loss | |
NOTE 26. ACCUMULATED OTHER COMPREHENSIVE LOSS | The balances in accumulated other comprehensive loss are shown in the following table: dollars in thousands Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December 31, 2015 4 (2,684 ) (2,680 ) Change in unrealized securities gains (losses), net of tax 2 - 2 Change in unfunded pension liability, net of tax - (487 ) (487 ) Balance at December 31, 2016 $ 6 $ (3,171 ) $ (3,165 ) Change in unrealized securities gains (losses), net of tax (26 ) - (26 ) Change in unfunded pension liability, net of tax - (951 ) (951 ) Balance at December 31, 2017 $ (20 ) $ (4,122 ) $ (4,142 ) Change in unrealized securities gains (losses), net of tax (74 ) - (74 ) Change in unfunded pension liability, net of tax - 247 247 Balance at December 31, 2018 $ (94 ) $ (3,875 ) $ (3,969 ) There were no reclassifications adjustments reported on the consolidated statements of income during 2016, 2017 or 2018. |
27. REVENUE RECOGNITION
27. REVENUE RECOGNITION | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition [Abstract] | |
NOTE 27. REVENUE RECOGNITION | On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also not in scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees, merchant income, and annuity and insurance commissions. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams in-scope of Topic 606 are discussed below. Service Charges on Deposit Accounts Service charges on deposit accounts consist of account analysis fees (i.e., net fees earned on analyzed business and public checking accounts), overdraft fees, monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. Investment Services and Insurance Income Investment services and insurance income primarily consists of commissions received on mutual funds and other investment sales. Commissions from the sale of mutual funds and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. Title Insurance Income VSTitle provides title insurance and real estate settlement services. Revenue is recognized at the time the real estate transaction is completed. ATM and Check Card Fees ATM and Check Card Fees are primarily comprised of debit and credit card income, ATM fees, merchant services income, and other service charges. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Other Other noninterest income consists of other recurring revenue streams such as safe deposit box rental fees, and other service charges. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Other service charges include revenue from processing wire transfers, online payment fees, cashier’s checks, mobile banking fees and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for December 31, 2018, 2017 and 2016. Noninterest income out-of-scope of Topic 606 in 2017 included onetime gains on prepayment of debt of $504. Nine Months Ended December 31, 2018 2017 2016 Noninterest Income In-scope of Topic 606: Service Charges on Deposits $ 1,496 $ 1,359 $ 1,174 Investment Services and Insurance Income 901 755 441 Title Insurance Income 1,293 1,161 2,565 ATM and check card fees 1,537 1,387 - Other 525 490 - Noninterest Income (in-scope of Topic 606) 5,752 5,153 4,180 Noninterest Income (out-of-scope of Topic 606) 2,251 2,739 1,402 Total Noninterest Income $ 8,003 $ 7,892 $ 5,582 Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of December 31, 2018 and 2017, the Company did not have any significant contract balances. Contract Acquisition Costs In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost. |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Principles of Consolidation | The consolidated financial statements include the accounts of Farmers & Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., F&M Mortgage, LLC, (net of noncontrolling interest) and VSTitle, LLC. Significant inter-company accounts and transactions have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, goodwill and intangibles, fair value, the valuation of deferred tax assets and liabilities, pension accounting and the valuation of foreclosed real estate. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. |
Securities | Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to held them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, the unrealized holding gains and losses are reported in other comprehensive income, net of tax. Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, in any, plus or minus changes resulting from observable price changes in orderly transaction for the identical or a similar investment. The Company follows the accounting guidance related to recognition and presentation of other-than-temporary impairment. The guidance specifies that if (a) an entity does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that the entity will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired, unless there is a credit loss. When criteria (a) and (b) are met, the entity will recognize the credit component of other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security. For equity securities, when the Company has decided to sell an impaired available-for-sale security and the Company does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed other-than-temporarily impaired in the period in which the decision to sell is made. The Company recognizes an impairment loss when the impairment is deemed other than temporary even if a decision to sell has not been made. The Company had no other than temporary impairment in 2018, 2017 or 2016. |
Other Investments | 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. Due to the nature and restrictions placed on the Company's investment in common stock of the Federal Home Loan Bank of Atlanta ("FHLB") and the Federal Reserve Bank of Richmond, these securities are considered restricted and carried at cost. On January 1, 2018, the Company adopted the new accounting standard for Financial Instruments, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. At December 31, 2018, equity securities of $135 are included in other investments on the Company’s consolidated balance sheet. These securities were included in the available for sale portfolio at December 31, 2017. |
Income Taxes | Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The results for the year ended December 31, 2017 included the effect of the Tax Cuts and Jobs Act (the Tax Act), which was signed into law on December 22, 2017. Among other things, the Tax Act permanently lowered the federal corporate income tax rate to 21% from the maximum rate prior to the passage of the Tax Act of 35%, effective January 1, 2018. As a result of the reduction of the federal corporate tax rate, U.S. GAAP required companies to re-measure their deferred tax assets and deferred tax liabilities, including those accounted for in accumulated other comprehensive income (loss), as of the date of the Tax Act’s enactment and record the corresponding effects in income tax expense in the fourth quarter of 2018. The Company recognized a $811 reduction in the value of its net deferred tax asset and recorded a corresponding incremental income tax expense in the Company’s consolidated statement of income for 2017. The Company recognizes interest and penalties on income taxes as a component of income tax expense. |
Loans Held for Investment | The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and any unearned income. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless secured and in process of collection. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. A loan is considered past due when a payment of principal or interest or both is due but not paid. Management closely monitors past due loans in timeframes of 30-59 days, 60-89 days, and 90 or more days past due. These policies apply to all loan portfolio segments. 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. Troubled debt restructurings are considered impaired loans. |
Loans Held for Sale | These loans consist of fixed rate loans made through the Company’s subsidiary, F&M Mortgage, and loans purchased from Northpointe Bank, Grand Rapids, MI. F&M Mortgage originates conforming mortgage loans for sale in the secondary market. These loans consist primarily of fixed-rate, single-family residential mortgage loans which meet the underwriting characteristics of the investors. F&M Mortgage enters into mortgage loan commitments whereby the interest rate on the loan is determined prior to funding (rate lock commitments). The period of time between issuance of a loan commitment and sale of the loan generally ranges from two to three weeks. F&M Mortgage protects itself from changes in interest rates through the use of best efforts forward delivery contracts, by committing to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed the interest rate risk on the loan. As a result, the Company is not generally exposed to significant losses nor will it realize significant gains related to its rate lock commitments due to changes in interest rates. The correlation between the rate lock commitments and the best efforts contracts is very high due to their similarity. The market value of rate lock commitments and best efforts contracts is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. F&M Mortgage determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the estimated value of the underlying assets while taking into consideration the probability that the loan will be funded. The fair value of rate lock commitments and best efforts contracts was considered immaterial at December 31, 2018 and 2017. The average time on the line is two or three weeks. These loans are pre-sold with servicing released and no interest is retained after the loans are sold. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in 2018, 2017, or 2016. Gains on sales of loans and commission expense are recognized at the loan closing date and are included in mortgage banking income, net on the Company’s consolidated income statement. At December 31, 2018 and 2017, there was $3,544 and $3,645, respectively, of these loans included in loans held for sale on the Company’s consolidated balance sheet. The Bank participates in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation. Pursuant to the terms of a participation agreement, the Bank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage loan originators located throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Bank has participated in similar arrangements 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. As of December 31, 2018, and 2017, there were $52,366 and $36,130 million of these loans included in loans held for sale on the Company’s consolidated balance sheet. |
Troubled Debt Restructuring | In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company has $8.03 million in loans classified as TDRs that are current and performing as of December 31, 2018, and $7.8 million as of December 31, 2017. |
Allowance for Loan and Losses | The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, 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 evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Except for credit card and dealer finance loans, all loans are assigned an internal risk rating based on certain credit quality indicators. Credit card, consumer and dealer finance loans are monitored based on payment activity. Loss rates are amplified for loans with adverse risk ratings that are not considered impaired. In the general allowance, the historical loss rate is combined with the qualitative factors, resulting in an adjusted loss factor for each segment of loans. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Historical loss rates are combined with qualitative factors resulting in an adjusted loss factor for each segment. Specific allowances are established for individually-evaluated impaired loans based on the excess of the loan balance relative to the fair value of the collateral, if the loan is deemed collateral dependent. 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. |
Other Real Estate Owned (OREO) | OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. |
Bank Premises and Equipment | Land is carried at cost and 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: Premises and Improvements 10 - 40 years Furniture and Equipment 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 and Intangible Assets | The Company accounts for goodwill and intangible assets under ASC 805, “Business Combinations” and ASC 350, “Intangibles”, respectively. Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. Additionally, acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. The Company recorded goodwill and intangible assets in 2018 related to the purchase of VS Title which was valued by an independent third party. The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Impairment testing is performed annually, as well as when an event triggering impairment may have occurred. The Company performs its annual analysis as of December 31 each fiscal year. Accounting guidance permits preliminary assessment of qualitative factors to determine whether a more substantial impairment testing is required. The Company chose to bypass the preliminary assessment and utilized a two-step process for impairment testing of goodwill. The first step tests for impairment, while the second step, if necessary, measures the impairment. No indicators of impairment were identified during the years ended December 31, 2018, 2017, and 2016. |
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 2018, 2017, and 2016 were $622, $509, and $604, respectively. |
Bank Owned Life Insurance | The Company has purchased life insurance policies on certain employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Transfers of Financial Assets | Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. |
Comprehensive Income | Comprehensive income is shown in a two-statement approach, the first statement presents total net income and its components followed by a second statement that presents all the components of other comprehensive income such as unrealized gains and losses on available for sale securities and changes in the funded status of a defined benefit pension plan. |
Derivative Financial Instruments | 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. 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. |
Loss Contingencies | Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the consolidated financial statements. |
Fair Value Measurements | Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involved uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets of particular items. Changes in assumptions or in market conditions could significantly affect these estimates. |
Reclassifications | Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year. These reclassifications had no impact on net income or earnings per share. |
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 available to common stockholders 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 Dollars in thousands December 31, 2018 December 31, 2017 December 31, 2016 Earnings Available to Common Stockholders: Net Income $ 9,095 $ 9,041 $ 9,762 Minority interest attributable to noncontrolling interest (10 ) (31 ) (194 ) Dividends paid/accumulated on preferred stock (413 ) (415 ) (487 ) Net Income Available to Common Stockholders $ 8,672 $ 8,595 $ 9,081 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended December 31, 2018 December 31, 2017 December 31, 2016 Dollars in thousands Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,672 3,238,177 $ 2.68 $ 8,595 3,269,713 $ 2.63 $ 9,081 3,282,335 $ 2.77 Effect of Dilutive Securities: Convertible Preferred Stock 413 357,841 (.15 ) 415 362,271 (0.15 ) 487 434,256 (0.20 ) Diluted EPS $ 9,085 3,596,017 $ 2.53 $ 9,010 3,631,984 $ 2.48 $ 9,568 3,716,591 $ 2.57 |
Recent Accounting Pronouncements | In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The FASB made subsequent amendments to Topic 842 in July 2018 through ASU 2018-10 (“Codification Improvements to Topic 842, Leases.”) and ASU 2018-11 (“Leases (Topic 842): Targeted Improvements.”) Among these amendments is the provision in ASU 2018-11 that provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases). The adoption of this standard on January 1, 2019 did not have a material effect on the Bank’s/Company’s consolidated financial statements or The effect of adopting this standard on January 1, 2019 was an approximate $1.03 million increase in assets and liabilities on our consolidated balance sheet. During June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company has chosen a vendor and is in the process of supplying data to the model and will run “shadow” in 2019 along with current allowance for loan loss model. During January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are U.S. Securities and Exchange Commission (SEC) filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements. During March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” The amendments in this ASU shorten the amortization period for certain callable debt securities purchased at a premium. Upon adoption of the standard, premiums on these qualifying callable debt securities will be amortized to the earliest call date. Discounts on purchased debt securities will continue to be accreted to maturity. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Upon transition, entities should apply the guidance on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and provide the disclosures required for a change in accounting principle. Given the composition of our securities portfolio, the Company does not expect that adoption of ASU 2017-08 will have a material impact on its consolidated financial statements. During August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The amendments in this ASU modify the designation and measurement guidance for hedge accounting as well as provide for increased transparency regarding the presentation of economic results on both the financial statements and related footnotes. Certain aspects of hedge effectiveness assessments will also be simplified upon implementation of this update. The amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period . During February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The amendments provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company elected to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act in the consolidated financial statements for the period ending December 31, 2017. The amount of this reclassification in 2017 was $811. In June 2018, the FASB issued ASU 2018-07, “Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” The amendments expand the scope of Topic 718 to include share-based payments issued to non-employees for goods or services, which were previously excluded. The amendments will align the accounting for share-based payments to nonemployees and employees more similarly. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-07 to have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments modify the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. Certain disclosure requirements in Topic 820 are also removed or modified. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain of the amendments are to be applied prospectively while others are to be applied retrospectively. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” These amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Certain disclosure requirements have been deleted while the following disclosure requirements have been added: the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The amendments are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-14 to have a material impact on its consolidated financial statements. |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary Of Significant Accounting Policies Tables | |
Bank premises and equipment | Premises and Improvements 10 - 40 years Furniture and Equipment 5 - 20 years |
Earnings per share | For the year ended Dollars in thousands December 31, 2018 December 31, 2017 December 31, 2016 Earnings Available to Common Stockholders: Net Income $ 9,095 $ 9,041 $ 9,762 Minority interest attributable to noncontrolling interest (10 ) (31 ) (194 ) Dividends paid/accumulated on preferred stock (413 ) (415 ) (487 ) Net Income Available to Common Stockholders $ 8,672 $ 8,595 $ 9,081 Year ended December 31, 2018 December 31, 2017 December 31, 2016 Dollars in thousands Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,672 3,238,177 $ 2.68 $ 8,595 3,269,713 $ 2.63 $ 9,081 3,282,335 $ 2.77 Effect of Dilutive Securities: Convertible Preferred Stock 413 357,841 (.15 ) 415 362,271 (0.15 ) 487 434,256 (0.20 ) Diluted EPS $ 9,085 3,596,017 $ 2.53 $ 9,010 3,631,984 $ 2.48 $ 9,568 3,716,591 $ 2.57 |
4. SECURITIES (Tables)
4. SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schedule amortized cost and fair value for securities | Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2018 U. S. Treasuries $ 123 $ - $ - $ 123 December 31, 2017 U. S. Treasuries $ 125 $ - $ - $ 125 |
Amortized cost and fair value of securities | Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2018 U. S. Government sponsored enterprises $ 7,999 - 113 7,886 Mortgage-backed obligations of federal agencies 409 - 6 403 Total Securities Available for Sale $ 8,408 $ - $ 119 $ 8,289 December 31, 2017 U. S. Treasuries $ 19,998 $ - $ - $ 19,998 U. S. Government sponsored enterprises 7,999 - 19 7,980 Mortgage-backed obligations of federal agencies 508 - 6 502 Equity securities1 135 - - 135 Total Securities Available for Sale $ 28,640 $ 9 $ 25 $ 28,615 1 Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01 |
Schedule of gain and losses on sales of debt and equity securities | Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ - $ - $ - $ - Due after one year through five years 123 123 7,999 7,886 Due after five years through ten years - - 409 403 Due after ten years - - - - Total $ 123 $ 123 $ 8,408 $ 8,289 |
Schedule of securities with unrealized losses | Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2018 U. S. Government sponsored enterprises $ - $ - $ 7,886 $ (113 ) $ 7,886 $ (113 ) Mortgage-backed obligations of federal agencies - - 403 (6 ) 403 (6 ) Total $ - $ - $ 8,289 $ (119 ) $ 8,289 $ (119 ) Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2017 U. S. Government sponsored enterprises $ 3,981 $ (19 ) $ - $ - $ 3,981 $ (19 ) Mortgage-backed obligations of federal agencies 502 (6 ) - - 502 (6 ) Total $ 4,483 $ (25 ) $ - $ - $ 4,483 $ (25 ) |
5. LOANS (Tables)
5. LOANS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schedule of loans held for investment | 2018 2017 Construction/Land Development $ 61,659 $ 71,620 Farmland 17,030 13,606 Real Estate 192,278 184,546 Multi-Family 9,665 10,298 Commercial Real Estate 147,342 148,906 Home Equity – closed end 11,039 11,606 Home Equity – open end 53,197 54,739 Commercial & Industrial – Non-Real Estate 36,021 36,912 Consumer 9,861 6,633 Dealer Finance 97,523 75,169 Credit Cards 3,184 2,939 Total $ 638,799 $ 616,974 |
Schedule impaired loans | December 31, 2018 December 31, 2017 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 2,414 $ 2,414 $ - $ 4,352 $ 5,269 $ - Farmland 1,941 1,941 - 1,984 1,984 - Real Estate 1,932 1,932 - 1,273 1,273 - Multi-Family - - - - - - Commercial Real Estate 6,176 6,176 - 6,229 6,229 - Home Equity – closed end - - - - - - Home Equity – open end - - - - 347 - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - 8 8 - Credit cards - - - - - - Dealer Finance 32 32 - 31 31 - 12,495 12,495 - 13,877 15,141 - Impaired loans with a valuation allowance Construction/Land Development 4,311 4,871 1,627 4,998 4,998 1,661 Farmland - - - - - - Real Estate 422 422 7 1,188 1,188 209 Multi-Family - - - - - - Commercial Real Estate - 1,500 - - - - Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer 8 8 2 - - - Credit cards - - - - - - Dealer Finance 194 194 10 47 47 12 4,935 6,995 1,646 6,233 6,233 1,882 Total impaired loans $ 17,430 $ 19,490 $ 1,646 $ 20,110 $ 21,374 $ 1,882 |
Schedule of aging of the recorded investment of past due loans | December 31, 2018 December 31, 2017 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 3,586 $ 89 $ 4,969 $ 382 Farmland 1,963 80 1,921 62 Real Estate 1,542 98 878 57 Multi-Family - - - - Commercial Real Estate 2,304 286 1,682 44 Home Equity – closed end - - - - Home Equity – open end - - 347 - Commercial & Industrial – Non-Real Estate - - 124 - Consumer - - 10 - Credit cards - - - - Dealer Finance 28 5 24 3 9,423 558 9,955 548 Impaired loans with a valuation allowance Construction/Land Development 6,352 91 5,911 258 Farmland - - - - Real Estate 554 23 1,194 49 Multi-Family - - - - Commercial Real Estate 4,167 - - - Home Equity – closed end - - - - Home Equity – open end - - - - Commercial & Industrial – Non-Real Estate - - - - Consumer 10 1 - - Credit cards - - - - Dealer Finance 206 14 56 3 11,289 129 7,161 310 Total impaired loans $ 20,712 $ 687 $ 17,116 $ 858 The following table presents the aging of the recorded investment of past due loans: 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2018 Construction/Land Development $ 290 $ - $ 1,767 $ 2,057 $ 59,602 $ 61,659 $ 2,327 $ - Farmland - - - - 17,030 17,030 - - Real Estate 3,074 677 1,729 5,480 186,798 192,278 1,477 726 Multi-Family - - - - 9,665 9,665 - - Commercial Real Estate 479 189 5,073 5,741 141,601 147,342 5,074 - Home Equity – closed end - - 12 12 11,027 11,039 - 12 Home Equity – open end 148 171 320 639 52,558 53,197 269 51 Commercial & Industrial – Non- Real Estate 40 22 80 142 35,879 36,021 98 - Consumer 89 26 3 118 9,743 9,861 5 2 Dealer Finance 2,763 337 96 3,196 94,327 97,523 155 9 Credit Cards 50 11 9 70 3,114 3,184 - - Total $ 6,933 $ 1,433 $ 9,089 $ 17,455 $ 621,344 $ 638,799 $ 9,405 $ 800 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2017 Construction/Land Development $ 167 $ 5,459 $ 3,908 $ 9,534 $ 62,086 $ 71,620 $ 3,908 $ - Farmland - - - - 13,606 13,606 - - Real Estate 2,858 1,954 560 5,372 179,174 184,546 1,720 143 Multi-Family 179 - - 179 10,119 10,298 - - Commercial Real Estate 544 - - 544 148,362 148,906 - - Home Equity – closed end - 25 - 25 11,581 11,606 3 - Home Equity – open end 454 165 268 887 53,852 54,739 448 - Commercial & Industrial – Non- Real Estate 108 36 595 739 36,173 36,912 599 - Consumer 43 5 - 48 6,585 6,633 - - Dealer Finance 1,300 252 189 1,741 73,428 75,169 226 54 Credit Cards 30 8 1 39 2,900 2,939 - 1 Total $ 5,683 $ 7,904 $ 5,521 $ 19,108 $ 597,866 $ 616,974 $ 6,904 $ 198 |
6. ALLOWANCE FOR LOAN LOSSES (T
6. ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schdule of allowance for loan losses | December 31, 2018 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 2,547 $ 489 $ 122 $ (86 ) $ 2,094 $ 1,627 $ 467 Farmland 25 - - (10 ) 15 - 15 Real Estate 719 99 12 (340 ) 292 7 285 Multi-Family 19 - - (9 ) 10 - 10 Commercial Real Estate 482 1,546 1 1,479 416 - 416 Home Equity – closed end 66 3 4 (54 ) 13 - 13 Home Equity – open end 209 - 8 (91 ) 126 - 126 Commercial & Industrial – Non-Real Estate 337 573 91 337 192 - 192 Consumer 148 51 41 (68 ) 70 2 68 Dealer Finance 1,440 2,083 861 1,756 1,974 10 1,964 Credit Cards 52 76 46 16 38 - 38 Total $ 6,044 $ 4,920 $ 1,186 $ 2,930 $ 5,240 $ 1,646 $ 3,594 December 31, 2017 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 3,381 $ 620 $ - $ (214 ) $ 2,547 $ 1,661 $ 886 Farmland 34 - - (9 ) 25 - 25 Real Estate 843 - 2 (126 ) 719 209 510 Multi-Family 23 - - (6 ) 19 - 19 Commercial Real Estate 705 - 13 (236 ) 482 - 482 Home Equity – closed end 75 7 25 (27 ) 66 - 66 Home Equity – open end 470 26 53 (288 ) 209 - 209 Commercial & Industrial – Non-Real Estate 586 179 72 (142 ) 337 - 337 Consumer 78 136 28 178 148 - 148 Dealer Finance 1,289 1,806 1,143 814 1,440 12 1,428 Credit Cards 59 98 37 54 52 - 52 Total $ 7,543 $ 2,872 $ 1,373 $ - $ 6,044 $ 1,882 $ 4,162 |
Investment in loans based on impairment method | December 31, 2018 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 61,659 $ 6,725 $ 54,934 Farmland 17,030 1,941 15,089 Real Estate 192,278 2,354 189,924 Multi-Family 9,665 - 9,665 Commercial Real Estate 147,342 6,176 141,166 Home Equity – closed end 11,039 - 11,039 Home Equity –open end 53,197 - 53,197 Commercial & Industrial – Non-Real Estate 36,021 - 36,021 Consumer 9,861 8 9,853 Dealer Finance 97,523 226 97,297 Credit Cards 3,184 - 3,184 Total $ 638,799 $ 17,430 $ 621,369 December 31, 2017 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 71,620 $ 9,350 $ 62,270 Farmland 13,606 1,984 11,622 Real Estate 184,546 2,461 182,085 Multi-Family 10,298 - 10,298 Commercial Real Estate 148,906 6,229 142,677 Home Equity – closed end 11,606 - 11,606 Home Equity –open end 54,739 - 54,739 Commercial & Industrial – Non-Real Estate 36,912 - 36,912 Consumer 6,633 8 6,625 Dealer Finance 75,169 78 75,091 Credit Cards 2,939 - 2,939 Total $ 616,974 $ 20,110 $ 596,864 |
Schedule of loan portfolio by internal loan grade | December 31, 2018 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 $ - $ 1,148 $ 15,857 $ 29,301 $ 9,353 $ - $ 6,000 $ - $ 61,659 Farmland 62 - 4,953 6,376 3,205 493 1,941 - 17,030 Real Estate - 1,644 55,429 106,387 22,679 1,531 4,608 - 192,278 Multi-Family - 2,895 6,604 166 - - - 9,665 Commercial Real Estate - 2,437 44,065 81,916 11,564 2,286 5,074 - 147,342 Home Equity – closed end - 31 3,245 5,842 1,909 - 12 - 11,039 Home Equity – open end 60 1,554 19,464 27,347 4,157 223 392 - 53,197 Commercial & Industrial (Non-Real Estate) 193 2,291 17,144 13,254 2,704 337 98 - 36,021 Consumer (excluding dealer) 27 190 2,648 5,192 1,800 - 4 - 9,861 Total $ 342 $ 9,295 $ 165,700 $ 282,219 $ 57,537 $ 4,870 $ 18,129 $ - $ 538,092 Credit Cards Dealer Finance Performing $ 3,175 $ 97,368 Non performing 9 155 Total $ 3,184 $ 97,523 December 31, 2017 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 $ - $ 690 $ 12,974 $ 30,197 $ 9,165 $ 3,520 $ 15,074 $ - $ 71,620 Farmland 63 - 3,153 4,120 3,793 494 1,983 - 13,606 Real Estate - 1,512 53,764 101,606 19,734 4,660 3,270 - 184,546 Multi-Family - 228 4,780 5,111 179 - - - 10,298 Commercial Real Estate - 3,525 45,384 89,195 9,012 634 1,156 - 148,906 Home Equity – closed end - - 3,535 5,410 1,279 1,379 3 - 11,606 Home Equity – open end 235 1,598 17,383 30,888 3,945 176 514 - 54,739 Commercial & Industrial (Non-Real Estate) 262 1,595 13,297 19,442 1,480 207 629 - 36,912 Consumer (excluding dealer) 34 490 2,226 88 1,065 2,254 476 - 6,633 Total $ 594 $ 9,638 $ 156,496 $ 286,057 $ 49,652 $ 13,324 $ 23,105 $ - $ 538,866 Credit Cards Dealer Finance Performing $ 2,938 $ 75,116 Non performing 1 53 Total $ 2,939 $ 75,169 |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Troubled Debt Restructuring Tables | |
Troubled debt restructurings | During the twelve months ended December 31, 2018, the Bank modified 21 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, 2018 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 742 $ 742 Commercial 2 1,248 1,248 Consumer 18 $ 183 $ 183 Total 21 $ 2,173 $ 2,173 As of December 31, 2018, there were 5 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due. December 31, 2018 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 2 $ 142 $ 142 Consumer 3 12 12 Total 5 $ 154 $ 154 During the twelve months ended December 31, 2017, the Bank modified 6 loans that were considered to be troubled debt restructurings. These modifications included 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, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Consumer 3 $ 32 $ 32 Total 3 $ 32 $ 32 As of December 31, 2017, there were 3 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 30 days past due. December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 67 $ 67 Construction/Land Development 2 1,502 1,502 Total 3 $ 1,569 $ 1,569 |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Bank Premises And Equipment Tables | |
Bank premises and equipment | 2018 2017 Land 3,887 $ 3,883 Buildings and improvements 14,370 12,384 Furniture and equipment 10,438 9,454 28,695 25,721 Less - accumulated depreciation (10,929 ) (9,827 ) Net $ 17,766 $ 15,894 |
9. OTHER REAL ESTATE OWNED (Tab
9. OTHER REAL ESTATE OWNED (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Real Estate Owned Tables | |
Other real estate owned activity | Other Real Estate Owned 2018 2017 Balance as of January 1 $ 1,984 $ 2,076 Loans transferred to OREO 600 231 Capital improvements - 2 Sale of OREO (132 ) (281 ) Write down of OREO or losses on sale (9 ) (44 ) Balance as of December 31 $ 2,443 $ 1,984 |
Other real estate owned valuation activity | 2018 2017 Balance as of January 1 $ 885 $ 885 Provision (recoveries) charged/(credited) to expense (23 ) - Reductions from sales of real estate owned (1 ) - Balance as of December 31 $ 861 $ 885 |
(Income) expenses related to foreclosed assets | 2018 2017 2016 Net loss (gain) on sales $ 9 $ 44 $ 19 Gain on foreclosure (94 ) - - Provision/(recoveries) for unrealized losses (10 ) - - Operating expenses, net of rental income 64 32 67 (Income) expenses related to foreclosed assets $ (31 ) $ 76 $ 86 |
10. DEPOSITS (Tables)
10. DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Deposits Tables | |
Maturity of deposits | 2018 $ 62,999 2019 50,775 2020 23,990 2021 7,174 2022 and after 10,928 Total $ 155,866 |
11. SHORT-TERM DEBT (Tables)
11. SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Short-Term Debt Tables | |
Short-term debt | Outstanding Average Maximum Outstanding At Balance at any Month End Year End Outstanding Yield 2018 Federal funds purchased $ 11,906 $ 10,116 $ 1,399 2.51 % FHLB short term 46,000 30,000 22,937 1.83 % Totals $ 40,116 $ 24,336 1.87 % 2017 Federal funds purchased $ 8,964 $ 5,296 $ 97 .17 % FHLB short term 50,000 20,000 20,301 .30 % Totals $ 25,296 $ 20,398 .31 % |
12. LONG-TERM DEBT (Tables)
12. LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-Term Debt Tables | |
Maturities of long-term debt | 2019 $ 6,928 2020 14,429 2021 5,929 2022 2,714 2023 7,000 Thereafter 3,125 Total $ 40,125 |
13. INCOME TAX EXPENSE (Tables)
13. INCOME TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Expense Tables | |
Components of the income tax expense | 2018 2017 2016 Current expense $ 1,155 $ 3,671 $ 3,046 Deferred expense (benefit) (55 ) (152 ) 53 Adjustments to deferred tax asset due to change in federal tax rate - 811 - Total deferred (benefit) expense (55 ) 659 53 Total Income Tax Expense $ 1,110 $ 4,330 $ 3,099 |
Components of the deferred taxes | 2018 2017 Deferred Tax Assets: Allowance for loan losses $ 1,096 $ 1,265 Split Dollar Life Insurance 3 3 Nonqualified deferred compensation 564 546 Low income housing partnerships losses 279 203 Core deposit amortization 13 108 Other real estate owned 173 173 Net unrealized loss on securities available for sale 25 5 Unfunded pension benefit obligation 1,030 1,096 Total Assets $ 3,183 $ 3,399 2018 2017 Deferred Tax Liabilities: Unearned low income housing credits $ 158 $ 180 Depreciation 403 340 Prepaid pension 849 1,010 Goodwill tax amortization 564 559 Total Liabilities 1,974 2 089 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,209 $ 1,310 |
Differences in actual income tax expense and the amounts computed using the federal statutory tax rates | 2018 2017 2016 Tax expense at federal statutory rates $ 2,104 $ 4,511 $ 4,307 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit - - 6 Partially tax-exempt income (49 ) (59 ) (41 ) Tax-exempt income (146 ) (212 ) (217 ) LIH and historic credits (774 ) (633 ) (896 ) Deferred Tax Asset rate change - 811 - Other (25 ) (88 ) (60 ) Total Income Tax Expense $ 1,110 $ 4,330 $ 3,099 |
14. EMPLOYEE BENEFITS (Tables)
14. EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits Tables Abstract | |
Reconciliation of the changes in the benefit obligations and fair value of plan assets | 2018 2017 2016 Change in Benefit Obligation Benefit obligation, beginning $ 15,103 $ 12,475 $ 10,944 Service cost 768 696 632 Interest cost 497 487 453 Actuarial (gain) loss (1,562 ) 1,620 872 Benefits paid (587 ) (175 ) (426 ) Benefit obligation, ending $ 14,219 $ 15,103 $ 12,475 Change in Plan Assets Fair value of plan assets, beginning $ 13,645 $ 12,032 $ 11,678 Actual return on plan assets (613 ) 1,788 780 Employer contribution - - - Benefits paid (587 ) (175 ) (426 ) Fair value of plan assets, ending $ 12,445 $ 13,645 $ 12,032 Funded status at the end of the year $ (1,774 ) $ (1,458 ) $ (443 ) |
Pension plan's asset allocation | 2018 2017 2016 Amount recognized in the Consolidated Balance Sheet Prepaid benefit cost $ 3,131 $ 3,760 $ 4,361 Unfunded pension benefit obligation under ASC 325-960 (4,905 ) (5,218 ) (4,804 ) Deferred taxes 1,030 1,096 1,633 Amount recognized in accumulated other comprehensive income (loss) Net loss $ (4,932 ) $ (5,260 ) $ (4,861 ) Prior service cost 27 42 57 Amount recognized $ (4,905 ) (5,218 ) (4,804 ) Deferred taxes 1,030 1,096 1,633 Amount recognized in accumulated comprehensive income $ (3,875 ) $ (4,122 ) $ (3,171 ) Prepaid benefit detail Benefit obligation $ (14,219 ) $ (15,103 ) $ (12,475 ) Fair value of assets 12,445 13,645 12,032 Unrecognized net actuarial loss 4,932 5,260 4,861 Unrecognized prior service cost (27 ) (42 ) (57 ) Prepaid (accrued) benefits $ 3,131 $ 3,760 $ 4,361 Components of net periodic benefit cost Service cost $ 768 $ 696 $ 632 Interest cost 496 487 452 Expected return on plan assets (923 ) (851 ) (854 ) Amortization of prior service cost (15 ) (15 ) (15 ) Recognized net actuarial loss 303 284 223 Net periodic benefit cost $ 629 $ 601 $ 438 Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) Net loss $ (328 ) $ 399 $ 724 Amortization of prior service cost 15 15 15 Total recognized in other comprehensive income $ (313 ) $ 414 $ 739 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 316 $ 1,015 $ 1,177 Additional disclosure information Accumulated benefit obligation $ 10,992 $ 10,760 $ 8,789 Vested benefit obligation $ 10,983 $ 10,750 $ 8,780 Discount rate used for net pension cost 3.50 % 4.00 % 4.25 % Discount rate used for disclosure 4.25 % 3.50 % 4.00 % Expected return on plan assets 7.25 % 7.25 % 7.50 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 12 12 13 |
Estimated future benefit payments | 2019 $ 2,685 2020 604 2021 394 2022 1,542 2022 894 2024-2028 7,483 $ 13,602 |
16. COMMITMENTS (Tables)
16. COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments Tables | |
Commitments outstanding | 2018 2017 Commitments to extend credit $ 169,863 $ 170,798 Standby letters of credit 2,119 1,533 |
Long term lease arrangements | 2019 $ 155 2020 128 2021 110 2022 105 2023 93 Thereafter 114 |
17. ON BALANCE SHEET DERIVATI_2
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
On Balance Sheet Derivative Instruments And Hedging Activities Tables | |
Forward option contracts | 2018 2017 Notional amount $ 184 $ 184 Fair value of contracts, included in other assets 44 59 |
18. TRANSACTIONS WITH RELATED_2
18. TRANSACTIONS WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Transactions With Related Parties Tables | |
Loan transactions with related parties | 2018 2017 Total loans, beginning of year $ 20,377 $ 7,486 New loans 5,785 6,803 Relationship change 169 10,403 Repayments (5,766 ) (4,315 ) Total loans, end of year $ 20,565 $ 20,377 |
20. FAIR VALUE MEASUREMENTS (Ta
20. FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements Tables | |
Fair value on a recurring basis | December 31, 2018 Total Level 1 Level 2 Level 3 U.S. Government sponsored enterprises $ 7,886 - $ 7,886 - Mortgage-backed obligations of federal agencies 403 - 403 - Total securities available for sale $ 8,289 $ - $ 8,289 $ - Derivatives $ 44 $ - $ 44 $ - December 31, 2017 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 19,998 $ 19,998 $ - $ - U.S. Government sponsored enterprises 7,980 - 7,980 - Mortgage-backed obligations of federal agencies 502 - 502 - Equity securities1 135 - 135 - Total securities available for sale $ 28,615 $ 19,998 $ 8,617 $ - Derivatives $ 59 $ - $ 59 $ - 1 Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01 |
Financial assets measured at fair value on nonrecurring basis | December 31, 2018 Total Level 1 Level 2 Level 3 Construction/Land Development $ 2,684 - - $ 2,684 Real Estate 415 - - 415 Consumer 6 6 Dealer Finance 184 - - 184 Impaired loans $ 3,289 - - $ 3,289 December 31, 2017 Total Level 1 Level 2 Level 3 Construction/Land Development $ 3,337 - - $ 3,337 Real Estate 979 - - 979 Dealer Finance 35 - - 35 Impaired loans $ 4,351 - - $ 4,351 |
Fair value measurements | Fair Value at December 31, 2018 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 3,289 Discounted appraised value Discount for selling costs and marketability 2%-9% (Average 4.21%) Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 4,351 Discounted appraised value Discount for selling costs and marketability 3%-19% (Average 5.5%) December 31, 2018 Total Level 1 Level 2 Level 3 Other real estate owned $ 2,443 - - $ 2,443 December 31, 2017 Total Level 1 Level 2 Level 3 Other real estate owned $ 1,984 - - $ 1,984 Fair Value at December 31, 2018 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 2,443 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 1,984 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) |
Carrying value and estimated fair value for financial instruments | Fair Value Measurements at December 31, 2018 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2018 Assets: Cash and cash equivalents $ 10,912 $ 10,912 $ - $ - $ 10,912 Securities 8,412 - 8,412 - 8,412 Loans held for sale 55,910 - 55,910 - 55,910 Loans held for investment, net 633,559 - - 613,717 613,717 Interest receivable 2,078 - 2,078 - 2,078 Bank owned life insurance 19,464 - 19,464 - 19,464 Total $ 730,335 $ 10,912 $ 85,864 $ 613,717 $ 710,493 Liabilities: Deposits $ 591,325 $ - $ 441,319 $ 153,848 $ 595,167 Short-term debt 40,116 - 40,116 - 40,116 Long-term debt 40,218 - - 39,609 39,609 Interest payable 348 - 348 - 348 Total $ 672,007 $ - $ 481,783 $ 193,457 $ 675,240 Fair Value Measurements at December 31, 2017 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2017 Assets: Cash and cash equivalents $ 11,907 $ 11,907 $ - $ - $ 11,907 Securities 28,740 19,998 8,742 - 28,740 Loans held for sale 39,775 - 39,775 - 39,775 Loans held for investment, net 610,930 - - 646,703 646,703 Interest receivable 2,007 - 2,007 - 2,007 Bank owned life insurance 13,950 - 13,950 - 13,950 Total $ 707,309 $ 31,905 $ 64,474 $ 646,703 $ 743,082 Liabilities: Deposits $ 569,177 $ - $ 403,907 $ 167,210 $ 571,117 Short-term debt 25,296 - 25,296 - 25,296 Long-term debt 49,733 - - 49,869 49, 869 Interest payable 260 - 260 - 260 Total $ 644,466 $ - $ 429,463 $ 217,079 $ 646,542 |
21. REGULATORY MATTERS (Tables)
21. REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Regulatory Matters Tables | |
Actual capital ratios for the bank | Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2018 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,597 14.44 % $ 52,955 8.00 % $ 66,194 10.00 % Tier 1 risk-based ratio 90,357 13.65 % 39,717 6.00 % 52,955 8.00 % Common equity tier 1 90,357 13.65 % 29,787 4.50 % 43,026 6.50 % Total assets leverage ratio 90,357 11.79 % 30,659 4.00 % 38,324 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2017 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,563 15.41 % $ 49,614 8.00 % $ 62,018 10.00 % Tier 1 risk-based ratio 89,519 14.43 % 37,211 6.00 % 49,614 8.00 % Common equity tier 1 89,519 14.43 % 27,908 4.50 % 40,312 6.50 % Total assets leverage ratio 89,519 12.07 % 29,656 4.00 % 37,070 5.00 % |
22. BUSINESS SEGMENTS (Tables)
22. BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure 22.Business Segments Tables Abstract | |
Schedule of business segments | December 31, 2018 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 36,550 $ 139 $ 144 $ - $ - $ (125 ) $ 36,708 Service charges on deposits 1,496 - - - - - 1,496 Investment services and insurance income - - 918 - - (19 ) 899 Mortgage banking income, net - 2,348 - - - (36 ) 2,312 Title insurance income - - - 1,294 - - 1,294 Other operating income 2,002 - - - - - 2,002 Total income 40,048 2,487 1,062 1,294 - (180 ) 44,711 Expenses: Interest Expense 4,839 118 - - - (125 ) 4,832 Provision for loan losses 2,930 - - - - - 2,930 Salaries and benefits 13,153 1,783 578 922 - - 16,436 Other operating expenses 9,448 553 57 220 49 (19 ) 10,308 Total expense 30,370 2,454 635 1,142 49 (144 ) 34,506 Income before income taxes 9,678 33 427 152 (49 ) (36 ) 10,205 Income tax expense (benefit) 1,021 - 57 - 32 - 1,110 Net income $ 8,657 $ 33 $ 370 $ 152 $ (81 ) $ (36 ) $ 9,095 Net income attributable to noncontrolling interest - 10 - 36 - (36 ) 10 Net Income attributable to F & M Bank Corp. $ 8,657 $ 23 $ 370 $ 116 $ (81 ) $ - $ 9,085 Total Assets $ 782,782 $ 7,449 $ 7,237 $ 458 $ 91,582 $ (109,255 ) $ 780,253 Goodwill $ 2,670 $ 48 $ - $ 2 $ 164 $ - $ 2,884 December 31, 2017 F&M Bank F&M Mortgage TEB Life/FMFS VSTitle Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 33,904 $ 125 $ 148 $ - $ - $ (82 ) $ 34,095 Service charges on deposits 1,360 - - - - - 1,360 Investment services and insurance income 1 - 772 - - (18 ) 755 Mortgage banking income, net - 2,269 - - - (49 ) 2,220 Title insurance income - - - 1,162 - - 1,162 Gain on prepayment of long-term debt 504 - - - - - 504 Loss on investments - (40 ) (2 ) - - - (42 ) Other operating income 2,128 1 - - 162 (358 ) 1,933 Total income 37,897 2,355 918 1,162 162 (507 ) 41,987 Expenses: Interest Expense 3,904 75 - - - (82 ) 3,897 Provision for loan losses - - - - - - - Salaries and benefits 12,092 1,557 474 731 - - 14,854 Other operating expenses 8,942 618 51 226 46 (18 ) 9,865 Total expense 24,938 2,250 525 957 46 (100 ) 28,616 Income before income taxes 12,959 105 393 205 116 (407 ) 13,371 Income tax expense (benefit) 4,316 - 109 - (95 ) - 4,330 Net income $ 8,643 $ 105 $ 284 $ 205 $ 211 $ (407 ) $ 9,041 Net income attributable to noncontrolling interest - 31 - 49 - (49 ) 31 Net Income attributable to F & M Bank Corp. $ 8,643 $ 74 $ 284 $ 156 $ 211 $ (358 ) $ 9,010 Total Assets $ 754,375 $ 7,018 $ 6,749 $ 1,067 $ 90,964 $ (106,903 ) $ 753,270 Goodwill $ 2,670 $ 47 $ - $ - $ 164 $ - $ 2,881 December 31, 2016 F&M Bank VBS Mortgage TEB Life/FMFS Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 31,949 $ 55 $ 152 $ - $ (6 ) $ 32,150 Service charges on deposits 1,174 - - - - 1,174 Investment services and insurance income 1 - 470 - (30 ) 441 Mortgage banking income, net - 2,565 - - - 2,565 Other operating income 2,353 - - - (951 ) 1,402 Total income 35,477 2,620 622 - (987 ) 37,732 Expenses: Interest Expense 3,605 - - - (6 ) 3,599 Provision for loan losses - - - - - - Salaries and benefits 11,123 1,387 290 - - 12,800 Other operating expenses 8,139 586 66 1 (320 ) 8,472 Total expense 22,867 1,973 356 1 (326 ) 24,871 Income before income taxes 12,610 647 266 (1 ) (661 ) 12,861 Income tax expense (benefit) 3,290 - 58 (249 ) - 3,099 Net income $ 9,320 $ 647 $ 208 $ 248 $ (661 ) $ 9,762 Net income attributable to noncontrolling interest - 194 - - - 194 Net Income attributable to F & M Bank Corp. $ 9,320 $ 453 $ 208 $ 248 $ (661 ) $ 9,568 Total Assets $ 748,273 $ 7,487 $ 6,476 $ 87,449 $ (104,796 ) $ 744,889 Goodwill $ 2,670 $ - $ - $ - $ - $ 2,670 |
23. PARENT CORPORATION ONLY FIN
23. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Tables) - Parent [Member] | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheets | Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash and cash equivalents $ 749 $ 917 Investment in subsidiaries 89,418 88,967 Other investments 135 135 Income tax receivable (including due from subsidiary) 946 565 Goodwill and intangibles 327 380 Total Assets $ 91,575 $ 90,964 Liabilities Deferred income taxes 151 177 Accrued expenses 72 86 Total Liabilities $ 223 $ 263 Stockholders’ Equity Preferred stock par value $25 per share, 400,000 shares authorized, 249,860 and 324,150 issued and outstanding at December 31, 2018 and 2017, respectively. $ 5,672 $ 7,529 Common stock par value $5 per share, 6,000,000 shares authorized, 3,213,132 and 3,255,036 shares issued and outstanding for 2018 and 2017, respectively 16,066 16,275 Additional paid in capital 7,987 10,225 Retained earnings 65,596 60,814 Accumulated other comprehensive loss (3,969 ) (4,142 ) Total Stockholders' Equity 91,352 90,701 Total Liabilities and Stockholders' Equity $ 91,575 $ 90,964 |
Statements of Income | Statements of Income For the years ended December 31, 2018, 2017 and 2016 2018 2017 2016 Income Dividends from affiliate $ 8,874 $ 5,000 $ 5,000 Net limited partnership income (loss) - 162 - Total Income 8,874 5,162 5,000 Expenses Total Expenses 49 47 1 Net income before income tax expense (benefit) and undistributed subsidiary net income 8,825 5,115 4,999 Income Tax Expense (Benefit) 32 (95 ) (249 ) Income before undistributed subsidiary net income 8,793 5,210 5,248 Undistributed subsidiary net income 292 3,800 4,320 Net Income F&M Bank Corp. $ 9,085 $ 9,010 $ 9,568 |
Statements of Cash Flows | Statements of Cash Flows For the years ended December 31, 2018, 2017 and 2016 2018 2017 2016 Cash Flows from Operating Activities Net income $ 9,085 $ 9,010 $ 9,568 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (292 ) (3,800 ) (4,320 ) Deferred tax (benefit) expense (3 ) (112 ) 5 Increase in other assets (328 ) (1,256 ) - Decrease in other liabilities (23 ) (77 ) (535 ) Net Cash Provided by Operating Activities 8,439 3,765 4,718 Cash Flows from Investing Activities Net Cash Used in Investing Activities - - - Cash Flows from Financing Activities Repurchase of preferred stock (2,788 ) (101 ) (1,961 ) Repurchase of common stock (1,782 ) (712 ) (577 ) Proceeds from issuance of common stock 266 197 183 Dividends paid in cash (4,303 ) (3,387 ) (3,115 ) Net Cash Used in Financing Activities (8,607 ) (4,003 ) (5,470 ) Net (decrease) increase in Cash and Cash Equivalents (168 ) (238 ) (752 ) Cash and Cash Equivalents, Beginning of Year 917 1,155 1,907 Cash and Cash Equivalents, End of Year $ 749 $ 917 $ 1,155 |
26. ACCUMULATED OTHER COMPREH_2
26. ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure 24.Accumulated Other Comprehensive Loss Tables Abstract | |
Accumulated other comprehensive loss | dollars in thousands Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December 31, 2015 4 (2,684 ) (2,680 ) Change in unrealized securities gains (losses), net of tax 2 - 2 Change in unfunded pension liability, net of tax - (487 ) (487 ) Balance at December 31, 2016 $ 6 $ (3,171 ) $ (3,165 ) Change in unrealized securities gains (losses), net of tax (26 ) - (26 ) Change in unfunded pension liability, net of tax - (951 ) (951 ) Balance at December 31, 2017 $ (20 ) $ (4,122 ) $ (4,142 ) Change in unrealized securities gains (losses), net of tax (74 ) - (74 ) Change in unfunded pension liability, net of tax - 247 247 Balance at December 31, 2018 $ (94 ) $ (3,875 ) $ (3,969 ) |
27. REVENUE RECOGNITION (Tables
27. REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition [Abstract] | |
Summary of noninterest income, segregated by revenue streams | Nine Months Ended December 31, 2018 2017 2016 Noninterest Income In-scope of Topic 606: Service Charges on Deposits $ 1,496 $ 1,359 $ 1,174 Investment Services and Insurance Income 901 755 441 Title Insurance Income 1,293 1,161 2,565 ATM and check card fees 1,537 1,387 - Other 525 490 - Noninterest Income (in-scope of Topic 606) 5,752 5,153 4,180 Noninterest Income (out-of-scope of Topic 606) 2,251 2,739 1,402 Total Noninterest Income $ 8,003 $ 7,892 $ 5,582 |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Premises and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 10 years |
Premises and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 40 years |
Furniture and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 5 years |
Furniture and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 20 years |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Available to Common Stockholders: | |||
Net income | $ 9,095 | $ 9,041 | $ 9,762 |
Minority interest | (10) | 31 | 194 |
Preferred stock dividends | 413 | 415 | 487 |
Net income available to common stockolders | $ 8,672 | $ 8,595 | $ 9,081 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Basic EPS, income | $ 8,672 | $ 8,595 | $ 9,081 |
Basic EPS, shares | 3,238,177 | 3,269,713 | 3,282,335 |
Basic EPS, per share amounts | $ 2.68 | $ 2.63 | $ 2.77 |
Effect of dilutive securities convertible preferred stock, income | $ 413 | $ 415 | $ 487 |
Effect of dilutive securities convertible preferred stock, shares | 357,841 | 362,271 | 434,256 |
Effect of dilutive securities convertible preferred stock, per share amounts | $ (.15) | $ (0.15) | $ (0.20) |
Diluted EPS, net income | $ 9,085 | $ 9,010 | $ 9,568 |
Diluted EPS, shares | 3,596,017 | 3,631,984 | 3,716,591 |
Diluted EPS, per share amounts | $ 2.53 | $ 2.48 | $ 2.57 |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details Narrative | |||
Loans held for sale | $ 55,910 | $ 39,775 | |
TDR loans | 8,030 | 7,800 | |
Advertising costs | $ 622 | $ 509 | $ 604 |
4. SECURITIES (Details)
4. SECURITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Available-for-Sale Securities | |||
Amortized cost | $ 8,408 | $ 28,640 | |
Gross unrealized gains | 0 | 9 | |
Gross unrealized losses | 119 | 25 | |
Fair value | 8,289 | 28,615 | |
Mortgage Backed Obligations of Federal Agencies [Member] | |||
Available-for-Sale Securities | |||
Amortized cost | 409 | 508 | |
Gross unrealized gains | 0 | 0 | |
Gross unrealized losses | 6 | 6 | |
Fair value | 403 | 502 | |
U. S. Treasuries [Member] | |||
Available-for-Sale Securities | |||
Amortized cost | 19,998 | ||
Gross unrealized gains | 0 | ||
Gross unrealized losses | 0 | ||
Fair value | 19,998 | ||
Held-to-Maturity Securities | |||
Amortized cost - held-to-maturity | 123 | 125 | |
Gross unrealized gains | 0 | 0 | |
Gross unrealized losses | 0 | 0 | |
Fair value - held-to-maturity | 123 | 125 | |
Government sponsored enterprises [Member] | |||
Available-for-Sale Securities | |||
Amortized cost | 7,999 | 7,999 | |
Gross unrealized gains | 0 | 0 | |
Gross unrealized losses | 113 | 19 | |
Fair value | $ 7,886 | 7,980 | |
Equity securities [Member] | |||
Available-for-Sale Securities | |||
Amortized cost | [1] | 135 | |
Gross unrealized gains | [1] | 0 | |
Gross unrealized losses | [1] | 0 | |
Fair value | [1] | $ 135 | |
[1] | Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01. |
4. SECURITIES (Details 1)
4. SECURITIES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Total, amortized cost | $ 123 | $ 125 |
Securities Held to Maturity [Member] | ||
Due in one year or less, amortized cost | 0 | |
Due after one year through five years, amortized cost | 123 | |
Due after five years through ten years, amortized cost | 0 | |
Due after ten years, amortized cost | 0 | |
Total, amortized cost | 123 | |
Due in one year or less, fair value | 0 | |
Due after one year through five years, fair value | 123 | |
Due after five years through ten years, fair value | 0 | |
Due after ten years, fair value | 0 | |
Total, fair value | 123 | |
Securities Available for Sale [Member] | ||
Due in one year or less, amortized cost | 0 | |
Due after one year through five years, amortized cost | 7,999 | |
Due after five years through ten years, amortized cost | 409 | |
Due after ten years, amortized cost | 0 | |
Total, amortized cost | 8,408 | |
Due in one year or less, fair value | 0 | |
Due after one year through five years, fair value | 7,866 | |
Due after five years through ten years, fair value | 403 | |
Due after ten years, fair value | 0 | |
Total, fair value | $ 8,289 |
4. SECURITIES (Details 2)
4. SECURITIES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Fair value less than 12 months | $ 0 | $ 4,483 |
Unrealized losses less than 12 months | 0 | (25) |
Fair value more than 12 months | 8,289 | 0 |
Unrealized losses more than 12 months | (119) | 0 |
Fair value total | 8,289 | 4,483 |
Unrealized losses total | (119) | (25) |
Government sponsored enterprises [Member] | ||
Fair value less than 12 months | 0 | 3,981 |
Unrealized losses less than 12 months | 0 | (19) |
Fair value more than 12 months | 7,886 | 0 |
Unrealized losses more than 12 months | (113) | 0 |
Fair value total | 7,886 | 3,981 |
Unrealized losses total | (113) | (19) |
Mortgage-back Securities [Member] | ||
Fair value less than 12 months | 0 | 502 |
Unrealized losses less than 12 months | 0 | (6) |
Fair value more than 12 months | 403 | 0 |
Unrealized losses more than 12 months | (6) | 0 |
Fair value total | 403 | 502 |
Unrealized losses total | $ (6) | $ (6) |
5. LOANS (Details)
5. LOANS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Loans held for investment | $ 638,799 | $ 616,974 |
Construction/Land Development [Member] | ||
Loans held for investment | 61,659 | 71,620 |
Farmland [Member] | ||
Loans held for investment | 17,030 | 13,606 |
Real Estate [Member] | ||
Loans held for investment | 192,278 | 184,546 |
Multi-Family [Member] | ||
Loans held for investment | 9,665 | 10,298 |
Commercial Real Estate [Member] | ||
Loans held for investment | 147,342 | 148,906 |
Home Equity - Closed End [Member] | ||
Loans held for investment | 11,039 | 11,606 |
Home Equity - Open End [Member] | ||
Loans held for investment | 53,197 | 54,739 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loans held for investment | 36,021 | 36,912 |
Consumer [Member] | ||
Loans held for investment | 9,861 | 6,633 |
Dealer Finance [Member] | ||
Loans held for investment | 97,523 | 75,169 |
Credit Cards [Member] | ||
Loans held for investment | $ 3,184 | $ 2,939 |
5. LOANS (Details 1)
5. LOANS (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Impaired loans without a valuation allowance | ||
Recorded investment | $ 12,495 | $ 13,877 |
Unpaid principal balance | 12,495 | 15,141 |
Related allowance | 0 | 0 |
Average recorded investment | 9,423 | 9,955 |
Interest income recognized | 558 | 548 |
Impaired loans with a valuation allowance | ||
Recorded investment | 4,935 | 6,233 |
Unpaid principal balance | 6,995 | 6,233 |
Related allowance | 1,646 | 1,882 |
Average recorded investment | 11,289 | 7,161 |
Interest income recognized | 129 | 310 |
Impaired loans valuation allowance | ||
Recorded investment | 17,430 | 20,110 |
Unpaid principal balance | 19,490 | 21,374 |
Related allowance | 1,646 | 1,882 |
Average recorded investment | 20,712 | 17,116 |
Interest income recognized | 687 | 858 |
Construction/Land Development [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded investment | 2,414 | 4,352 |
Unpaid principal balance | 2,414 | 5,269 |
Related allowance | 0 | 0 |
Average recorded investment | 3,586 | 4,969 |
Interest income recognized | 89 | 382 |
Impaired loans with a valuation allowance | ||
Recorded investment | 4,311 | 4,998 |
Unpaid principal balance | 4,871 | 4,998 |
Related allowance | 1,627 | 1,661 |
Average recorded investment | 6,352 | 5,911 |
Interest income recognized | 91 | 258 |
Farmland [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded investment | 1,941 | 1,984 |
Unpaid principal balance | 1,941 | 1,984 |
Related allowance | 0 | 0 |
Average recorded investment | 1,963 | 1,921 |
Interest income recognized | 80 | 62 |
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 | 1,932 | 1,273 |
Unpaid principal balance | 1,932 | 1,273 |
Related allowance | 0 | 0 |
Average recorded investment | 1,542 | 878 |
Interest income recognized | 98 | 57 |
Impaired loans with a valuation allowance | ||
Recorded investment | 422 | 1,188 |
Unpaid principal balance | 422 | 1,188 |
Related allowance | 7 | 209 |
Average recorded investment | 554 | 1,194 |
Interest income recognized | 23 | 49 |
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 | 6,176 | 6,229 |
Unpaid principal balance | 6,176 | 6,229 |
Related allowance | 0 | 0 |
Average recorded investment | 2,304 | 1,682 |
Interest income recognized | 286 | 44 |
Impaired loans with a valuation allowance | ||
Recorded investment | 0 | 0 |
Unpaid principal balance | 1,500 | 0 |
Related allowance | 0 | 0 |
Average recorded investment | 4,167 | 0 |
Interest income recognized | 0 | 0 |
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 | 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 |
Home Equity - Open End [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded investment | 0 | 0 |
Unpaid principal balance | 0 | 347 |
Related allowance | 0 | 0 |
Average recorded investment | 0 | 347 |
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 and Industrial Non-Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded investment | 0 | 0 |
Unpaid principal balance | 0 | 0 |
Related allowance | 0 | 0 |
Average recorded investment | 0 | 124 |
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 |
Consumer [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded investment | 0 | 8 |
Unpaid principal balance | 0 | 8 |
Related allowance | 0 | 0 |
Average recorded investment | 0 | 10 |
Interest income recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded investment | 8 | 0 |
Unpaid principal balance | 8 | 0 |
Related allowance | 2 | 0 |
Average recorded investment | 10 | 0 |
Interest income recognized | 1 | 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 | 32 | 31 |
Unpaid principal balance | 32 | 31 |
Related allowance | 0 | 0 |
Average recorded investment | 28 | 24 |
Interest income recognized | 5 | 3 |
Impaired loans with a valuation allowance | ||
Recorded investment | 194 | 47 |
Unpaid principal balance | 194 | 47 |
Related allowance | 10 | 12 |
Average recorded investment | 206 | 56 |
Interest income recognized | $ 14 | $ 3 |
5. LOANS (Details 2)
5. LOANS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
30-59 days past due | $ 6,933 | $ 5,683 |
60-89 days past due | 1,433 | 7,904 |
Greater than 90 days (excluding non-accrual) | 9,089 | 5,521 |
Total past due | 17,455 | 19,108 |
Current | 621,344 | 597,866 |
Total loans receivable | 638,799 | 616,974 |
Non-accrual loans | 9,405 | 6,904 |
Recorded investment greater than 90 days and accruing | 800 | 198 |
Construction/Land Development [Member] | ||
30-59 days past due | 290 | 167 |
60-89 days past due | 0 | 5,459 |
Greater than 90 days (excluding non-accrual) | 1,767 | 3,908 |
Total past due | 2,057 | 9,534 |
Current | 59,602 | 62,086 |
Total loans receivable | 61,659 | 71,620 |
Non-accrual loans | 2,327 | 3,908 |
Recorded investment greater than 90 days and accruing | 0 | 0 |
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 |
Total past due | 0 | 0 |
Current | 17,030 | 13,606 |
Total loans receivable | 17,030 | 13,606 |
Non-accrual loans | 0 | 0 |
Recorded investment greater than 90 days and accruing | 0 | 0 |
Real Estate [Member] | ||
30-59 days past due | 3,074 | 2,858 |
60-89 days past due | 677 | 1,954 |
Greater than 90 days (excluding non-accrual) | 1,729 | 560 |
Total past due | 5,480 | 5,372 |
Current | 186,798 | 179,174 |
Total loans receivable | 192,278 | 184,546 |
Non-accrual loans | 1,477 | 1,720 |
Recorded investment greater than 90 days and accruing | 726 | 143 |
Multi-Family [Member] | ||
30-59 days past due | 0 | 179 |
60-89 days past due | 0 | 0 |
Greater than 90 days (excluding non-accrual) | 0 | 0 |
Total past due | 0 | 179 |
Current | 9,665 | 10,119 |
Total loans receivable | 9,665 | 10,298 |
Non-accrual loans | 0 | 0 |
Recorded investment greater than 90 days and accruing | 0 | 0 |
Commercial Real Estate [Member] | ||
30-59 days past due | 479 | 544 |
60-89 days past due | 189 | 0 |
Greater than 90 days (excluding non-accrual) | 5,073 | 0 |
Total past due | 5,741 | 544 |
Current | 141,601 | 148,362 |
Total loans receivable | 147,342 | 148,906 |
Non-accrual loans | 5,074 | 0 |
Recorded investment greater than 90 days and accruing | 0 | 0 |
Home Equity - Closed End [Member] | ||
30-59 days past due | 0 | 0 |
60-89 days past due | 0 | 25 |
Greater than 90 days (excluding non-accrual) | 12 | 0 |
Total past due | 12 | 25 |
Current | 11,027 | 11,581 |
Total loans receivable | 11,039 | 11,606 |
Non-accrual loans | 0 | 3 |
Recorded investment greater than 90 days and accruing | 12 | 0 |
Home Equity - Open End [Member] | ||
30-59 days past due | 148 | 454 |
60-89 days past due | 171 | 165 |
Greater than 90 days (excluding non-accrual) | 320 | 268 |
Total past due | 639 | 887 |
Current | 52,558 | 53,852 |
Total loans receivable | 53,197 | 54,739 |
Non-accrual loans | 269 | 448 |
Recorded investment greater than 90 days and accruing | 51 | 0 |
Commercial and Industrial Non-Real Estate [Member] | ||
30-59 days past due | 40 | 108 |
60-89 days past due | 22 | 36 |
Greater than 90 days (excluding non-accrual) | 80 | 595 |
Total past due | 142 | 739 |
Current | 35,879 | 36,173 |
Total loans receivable | 36,021 | 36,912 |
Non-accrual loans | 98 | 599 |
Recorded investment greater than 90 days and accruing | 0 | 0 |
Consumer [Member] | ||
30-59 days past due | 89 | 43 |
60-89 days past due | 26 | 5 |
Greater than 90 days (excluding non-accrual) | 3 | 0 |
Total past due | 118 | 48 |
Current | 9,743 | 6,585 |
Total loans receivable | 9,861 | 6,633 |
Non-accrual loans | 5 | 0 |
Recorded investment greater than 90 days and accruing | 2 | 0 |
Dealer Finance [Member] | ||
30-59 days past due | 2,763 | 1,300 |
60-89 days past due | 337 | 252 |
Greater than 90 days (excluding non-accrual) | 96 | 189 |
Total past due | 3,196 | 1,741 |
Current | 94,327 | 73,428 |
Total loans receivable | 97,523 | 75,169 |
Non-accrual loans | 155 | 226 |
Recorded investment greater than 90 days and accruing | 9 | 54 |
Credit Cards [Member] | ||
30-59 days past due | 50 | 30 |
60-89 days past due | 11 | 8 |
Greater than 90 days (excluding non-accrual) | 9 | 1 |
Total past due | 70 | 39 |
Current | 3,114 | 2,900 |
Total loans receivable | 3,184 | 2,939 |
Non-accrual loans | 0 | 0 |
Recorded investment greater than 90 days and accruing | $ 0 | $ 1 |
5. LOANS (Details Narrative)
5. LOANS (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Loans | ||
Pledged loans | $ 186,673 | $ 218,323 |
Loans held for sale | $ 55,910 | $ 39,775 |
6. ALLOWANCE FOR LOAN LOSSES (D
6. ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Beginning balance | $ 6,044 | $ 7,543 |
Charge-offs | 4,920 | 2,872 |
Recoveries | 1,186 | 1,373 |
Provision for loan losses | 2,930 | 0 |
Ending balance | 5,240 | 6,044 |
Individually evaluated for impairment | 1,646 | 1,882 |
Collectively evaluated for impairment | 3,594 | 4,162 |
Construction/Land Development [Member] | ||
Beginning balance | 2,547 | 3,381 |
Charge-offs | 489 | 620 |
Recoveries | 122 | 0 |
Provision for loan losses | (86) | (214) |
Ending balance | 2,094 | 2,547 |
Individually evaluated for impairment | 1,627 | 1,661 |
Collectively evaluated for impairment | 467 | 886 |
Farmland [Member] | ||
Beginning balance | 25 | 34 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for loan losses | (10) | (9) |
Ending balance | 15 | 25 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 15 | 25 |
Real Estate [Member] | ||
Beginning balance | 719 | 843 |
Charge-offs | 99 | 0 |
Recoveries | 12 | 2 |
Provision for loan losses | (340) | (126) |
Ending balance | 292 | 719 |
Individually evaluated for impairment | 7 | 209 |
Collectively evaluated for impairment | 285 | 510 |
Multi-Family [Member] | ||
Beginning balance | 19 | 23 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for loan losses | (9) | (6) |
Ending balance | 10 | 19 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 10 | 19 |
Commercial Real Estate [Member] | ||
Beginning balance | 482 | 705 |
Charge-offs | 1,546 | 0 |
Recoveries | 1 | 13 |
Provision for loan losses | 1,479 | (236) |
Ending balance | 416 | 482 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 416 | 482 |
Home Equity - Closed End [Member] | ||
Beginning balance | 66 | 75 |
Charge-offs | 3 | 7 |
Recoveries | 4 | 25 |
Provision for loan losses | (54) | (27) |
Ending balance | 13 | 66 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 13 | 66 |
Home Equity - Open End [Member] | ||
Beginning balance | 209 | 470 |
Charge-offs | 0 | 26 |
Recoveries | 8 | 53 |
Provision for loan losses | (91) | (288) |
Ending balance | 126 | 209 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 126 | 209 |
Commercial and Industrial Non-Real Estate [Member] | ||
Beginning balance | 337 | 586 |
Charge-offs | 573 | 179 |
Recoveries | 91 | 72 |
Provision for loan losses | 337 | (142) |
Ending balance | 192 | 337 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 192 | 337 |
Consumer [Member] | ||
Beginning balance | 148 | 78 |
Charge-offs | 51 | 136 |
Recoveries | 41 | 28 |
Provision for loan losses | (68) | 178 |
Ending balance | 70 | 148 |
Individually evaluated for impairment | 2 | 0 |
Collectively evaluated for impairment | 68 | 148 |
Dealer Finance [Member] | ||
Beginning balance | 1,440 | 1,289 |
Charge-offs | 2,083 | 1,806 |
Recoveries | 861 | 1,143 |
Provision for loan losses | 1,756 | 814 |
Ending balance | 1,974 | 1,440 |
Individually evaluated for impairment | 10 | 12 |
Collectively evaluated for impairment | 1,964 | 1,428 |
Credit Cards [Member] | ||
Beginning balance | 52 | 59 |
Charge-offs | 76 | 98 |
Recoveries | 46 | 37 |
Provision for loan losses | 16 | 54 |
Ending balance | 38 | 52 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | $ 38 | $ 52 |
6. ALLOWANCE FOR LOAN LOSSES _2
6. ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Loan receivable | $ 638,799 | $ 616,974 |
Individually evaluated for impairment | 17,430 | 20,110 |
Collectively evaluated for impairment | 621,369 | 596,864 |
Construction/Land Development [Member] | ||
Loan receivable | 61,659 | 71,620 |
Individually evaluated for impairment | 6,725 | 9,350 |
Collectively evaluated for impairment | 54,934 | 62,270 |
Farmland [Member] | ||
Loan receivable | 17,030 | 13,606 |
Individually evaluated for impairment | 1,941 | 1,984 |
Collectively evaluated for impairment | 15,089 | 11,622 |
Real Estate [Member] | ||
Loan receivable | 192,278 | 184,546 |
Individually evaluated for impairment | 2,354 | 2,461 |
Collectively evaluated for impairment | 189,924 | 182,085 |
Multi-Family [Member] | ||
Loan receivable | 9,665 | 10,298 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 9,665 | 10,298 |
Commercial Real Estate [Member] | ||
Loan receivable | 147,342 | 148,906 |
Individually evaluated for impairment | 6,176 | 6,229 |
Collectively evaluated for impairment | 141,166 | 142,677 |
Home Equity - Closed End [Member] | ||
Loan receivable | 11,039 | 11,606 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 11,039 | 11,606 |
Home Equity - Open End [Member] | ||
Loan receivable | 53,197 | 54,739 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 53,197 | 54,739 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loan receivable | 36,021 | 36,912 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 36,021 | 36,912 |
Consumer [Member] | ||
Loan receivable | 9,861 | 6,633 |
Individually evaluated for impairment | 8 | 8 |
Collectively evaluated for impairment | 9,853 | 6,625 |
Dealer Finance [Member] | ||
Loan receivable | 97,523 | 75,169 |
Individually evaluated for impairment | 226 | 78 |
Collectively evaluated for impairment | 97,297 | 75,091 |
Credit Cards [Member] | ||
Loan receivable | 3,184 | 2,939 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | $ 3,184 | $ 2,939 |
6. ALLOWANCE FOR LOAN LOSSES _3
6. ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Construction/Land Development | $ 61,659 | $ 71,620 |
Farmland | 17,030 | 13,606 |
Real Estate | 192,278 | 184,546 |
Multi-Family | 9,665 | 10,298 |
Commercial Real Estate | 147,342 | 148,906 |
Home Equity - closed end | 11,039 | 11,606 |
Home Equity - open end | 53,197 | 54,739 |
Commercial & Industrial (Non-Real Estate) | 36,021 | 36,912 |
Consumer (excluding dealer) | 9,861 | 6,633 |
Total | 538,092 | 538,866 |
Grade 1 Minimal Risk [Member] | ||
Construction/Land Development | 0 | 0 |
Farmland | 62 | 63 |
Real Estate | 0 | 0 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 0 | 0 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 60 | 235 |
Commercial & Industrial (Non-Real Estate) | 193 | 262 |
Consumer (excluding dealer) | 27 | 34 |
Total | 342 | 594 |
Grade 2 Modest Risk [Member] | ||
Construction/Land Development | 1,148 | 690 |
Farmland | 0 | 0 |
Real Estate | 1,644 | 1,512 |
Multi-Family | 228 | |
Commercial Real Estate | 2,437 | 3,525 |
Home Equity - closed end | 31 | 0 |
Home Equity - open end | 1,554 | 1,598 |
Commercial & Industrial (Non-Real Estate) | 2,291 | 1,595 |
Consumer (excluding dealer) | 190 | 490 |
Total | 9,295 | 9,638 |
Grade 3 Average Risk [Member] | ||
Construction/Land Development | 15,857 | 12,974 |
Farmland | 4,953 | 3,153 |
Real Estate | 55,429 | 53,764 |
Multi-Family | 2,895 | 4,780 |
Commercial Real Estate | 44,065 | 45,384 |
Home Equity - closed end | 3,245 | 3,535 |
Home Equity - open end | 19,464 | 17,383 |
Commercial & Industrial (Non-Real Estate) | 17,144 | 13,297 |
Consumer (excluding dealer) | 2,648 | 2,226 |
Total | 165,700 | 156,496 |
Grade 4 Acceptable Risk [Member] | ||
Construction/Land Development | 29,301 | 30,197 |
Farmland | 6,376 | 4,120 |
Real Estate | 106,387 | 101,606 |
Multi-Family | 6,604 | 5,111 |
Commercial Real Estate | 81,916 | 89,195 |
Home Equity - closed end | 5,842 | 5,410 |
Home Equity - open end | 27,347 | 30,888 |
Commercial & Industrial (Non-Real Estate) | 13,254 | 19,442 |
Consumer (excluding dealer) | 5,192 | 88 |
Total | 282,219 | 286,057 |
Grade 5 Marginally Acceptable [Member] | ||
Construction/Land Development | 9,353 | 9,165 |
Farmland | 3,205 | 3,793 |
Real Estate | 22,679 | 19,734 |
Multi-Family | 166 | 179 |
Commercial Real Estate | 11,564 | 9,012 |
Home Equity - closed end | 1,909 | 1,279 |
Home Equity - open end | 4,157 | 3,945 |
Commercial & Industrial (Non-Real Estate) | 2,704 | 1,480 |
Consumer (excluding dealer) | 1,800 | 1,065 |
Total | 57,537 | 49,652 |
Grade 6 Watch [Member] | ||
Construction/Land Development | 0 | 3,520 |
Farmland | 493 | 494 |
Real Estate | 1,531 | 4,660 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 2,286 | 634 |
Home Equity - closed end | 0 | 1,379 |
Home Equity - open end | 223 | 176 |
Commercial & Industrial (Non-Real Estate) | 337 | 207 |
Consumer (excluding dealer) | 0 | 2,254 |
Total | 4,870 | 13,324 |
Grade 7 Substandard [Member] | ||
Construction/Land Development | 6,000 | 15,074 |
Farmland | 1,941 | 1,983 |
Real Estate | 4,608 | 3,270 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 5,074 | 1,156 |
Home Equity - closed end | 12 | 3 |
Home Equity - open end | 392 | 514 |
Commercial & Industrial (Non-Real Estate) | 98 | 629 |
Consumer (excluding dealer) | 4 | 476 |
Total | 18,129 | 23,105 |
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 |
Consumer (excluding dealer) | 0 | 0 |
Total | $ 0 | $ 0 |
6. ALLOWANCE FOR LOAN LOSSES _4
6. ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Credit cards | $ 3,184 | $ 2,939 |
Consumer | 97,523 | 75,169 |
Performing Financing Receivable [Member] | ||
Credit cards | 3,175 | 2,938 |
Consumer | 97,368 | 75,116 |
Nonperforming Financing Receivable [Member] | ||
Credit cards | 9 | 1 |
Consumer | $ 155 | $ 53 |
7. TROUBLED DEBT RESTRUCTURIN_2
7. TROUBLED DEBT RESTRUCTURING (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)Integer | Dec. 31, 2017USD ($)Integer | |
Troubled Debt Restructurings | ||
Number of contracts | Integer | 21 | 3 |
Pre-modification outstanding recorded investment | $ 2,173 | $ 32 |
Post-modification outstanding recorded investment | $ 2,173 | $ 32 |
Past Due Troubled Debt Restructurings | ||
Number of contracts | Integer | 5 | 3 |
Pre-modification outstanding recorded investment | $ 154 | $ 1,569 |
Post-modification outstanding recorded investment | $ 154 | $ 1,569 |
Real Estate [Member] | ||
Troubled Debt Restructurings | ||
Number of contracts | Integer | 1 | |
Pre-modification outstanding recorded investment | $ 742 | |
Post-modification outstanding recorded investment | $ 742 | |
Past Due Troubled Debt Restructurings | ||
Number of contracts | Integer | 2 | 1 |
Pre-modification outstanding recorded investment | $ 142 | $ 67 |
Post-modification outstanding recorded investment | $ 142 | $ 67 |
Construction/Land Development [Member] | ||
Troubled Debt Restructurings | ||
Number of contracts | Integer | 2 | |
Pre-modification outstanding recorded investment | $ 1,248 | |
Post-modification outstanding recorded investment | $ 1,248 | |
Past Due Troubled Debt Restructurings | ||
Number of contracts | Integer | 2 | |
Pre-modification outstanding recorded investment | $ 1,502 | |
Post-modification outstanding recorded investment | $ 1,502 | |
Consumer [Member] | ||
Troubled Debt Restructurings | ||
Number of contracts | Integer | 18 | 3 |
Pre-modification outstanding recorded investment | $ 183 | $ 32 |
Post-modification outstanding recorded investment | $ 183 | $ 32 |
Past Due Troubled Debt Restructurings | ||
Number of contracts | Integer | 3 | |
Pre-modification outstanding recorded investment | $ 12 | |
Post-modification outstanding recorded investment | $ 12 |
8. BANK PREMISES AND EQUIPMEN_2
8. BANK PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Notes to Financial Statements | ||
Land | $ 3,887 | $ 3,883 |
Buildings and improvements | 14,370 | 12,384 |
Furniture and equipment | 10,438 | 9,454 |
Gross | 28,695 | 25,721 |
Less - accumulated depreciation | (10,929) | (9,827) |
Net | $ 17,766 | $ 15,894 |
8. BANK PREMISES AND EQUIPMEN_3
8. BANK PREMISES AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Notes to Financial Statements | |||
Provisions for depreciation | $ 1,137 | $ 930 | $ 827 |
9. OTHER REAL ESTATE OWNED (Det
9. OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Other Real Estate Owned Details | ||
Beginning balance | $ 1,984 | $ 2,076 |
Loans transferred to OREO | 600 | 231 |
Capital improvements | 0 | 2 |
Sale of OREO | (132) | (281) |
Write down of OREO or losses on sale | (9) | (44) |
Ending balance | $ 2,443 | $ 1,984 |
9. OTHER REAL ESTATE OWNED (D_2
9. OTHER REAL ESTATE OWNED (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Other Real Estate Owned | ||
Beginning balance | $ 885 | $ 885 |
Provision (recoveries) charged/(credited) to expense | (23) | 0 |
Reductions from sales of real estate owned | (1) | 0 |
Ending balance | $ 861 | $ 885 |
9. OTHER REAL ESTATE OWNED (D_3
9. OTHER REAL ESTATE OWNED (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Real Estate Owned | |||
Net loss (gain) on sales | $ 9 | $ 44 | $ 19 |
Gain on foreclosure | (94) | 0 | 0 |
Provision/(recoveries) for unrealized losses | (10) | 0 | 0 |
Operating expenses, net of rental income | 64 | 32 | 67 |
(Income) expenses related to foreclosed assets | $ (31) | $ 76 | $ 86 |
9. OTHER REAL ESTATE OWNED (D_4
9. OTHER REAL ESTATE OWNED (Details Narrative) $ in Thousands | Dec. 31, 2018USD ($) |
Other Real Estate Owned Details Narrative Abstract | |
Foreclosed residential real estate properties | $ 375 |
10. DEPOSITS (Details)
10. DEPOSITS (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Banking and Thrift [Abstract] | |
2019 | $ 62,999 |
2020 | 50,775 |
2021 | 23,990 |
2022 | 7,174 |
2023 and after | 10,928 |
Total | $ 155,866 |
10. DEPOSITS (Details Narrative
10. DEPOSITS (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deposits | ||
Insurance limit | $ 250 | $ 250 |
Time deposits | $ 13,464 | $ 13,637 |
11. SHORT-TERM DEBT (Details)
11. SHORT-TERM DEBT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Outstanding at year end | $ 40,116 | $ 25,296 |
Average balance outstanding | $ 24,336 | $ 20,398 |
Year end interest rate | 1.87% | 0.31% |
Federal funds purchased [Member] | ||
Maximum outstanding at any month end | $ 11,906 | $ 8,964 |
Outstanding at year end | 10,116 | 5,296 |
Average balance outstanding | $ 1,399 | $ 97 |
Year end interest rate | 2.51% | 0.17% |
FHLB short term [Member] | ||
Maximum outstanding at any month end | $ 46,000 | $ 50,000 |
Outstanding at year end | 30,000 | 20,000 |
Average balance outstanding | $ 22,937 | $ 20,301 |
Year end interest rate | 1.83% | 0.30% |
12. LONG-TERM DEBT (Details)
12. LONG-TERM DEBT (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 6,928 |
2020 | 14,429 |
2021 | 5,929 |
2022 | 2,714 |
2023 | 7,000 |
Thereafter | 3,125 |
Total | $ 40,125 |
12.LONG-TERM DEBT (Details Narr
12.LONG-TERM DEBT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted average interest | 1.96% | 1.86% |
Balance of obligations | $ 40,125 | $ 49,554 |
Minimum [Member] | ||
Long-term debt interest rate | 1.27% | |
Maximum [Member] | ||
Long-term debt interest rate | 2.56% |
13. INCOME TAX EXPENSE (Details
13. INCOME TAX EXPENSE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current expense | $ 1,155 | $ 3,671 | $ 3,046 |
Deferred expense (benefit) | (55) | (152) | 53 |
Adjustments to deferred tax asset due to change in federal tax rate | 0 | 811 | 0 |
Total deferred (benefit) expense | (55) | 659 | 53 |
Total income tax expense | $ 1,110 | $ 4,330 | $ 3,099 |
13. INCOME TAX EXPENSE (Detai_2
13. INCOME TAX EXPENSE (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets: | ||
Allowance for loan losses | $ 1,096 | $ 1,265 |
Split dollar life insurance | 3 | 3 |
Nonqualified deferred compensation | 564 | 546 |
Low income housing partnerships losses | 279 | 203 |
Core deposit amortization | 13 | 108 |
Other real estate owned | 173 | 173 |
Net unrealized loss on securities available for sale | 25 | 5 |
Unfunded pension benefit obligation | 1,030 | 1,096 |
Total Assets | 3,183 | 3,399 |
Deferred Tax Liabilities: | ||
Unearned low income housing credits | 158 | 180 |
Depreciation | 403 | 340 |
Prepaid pension | 849 | 1,010 |
Goodwill tax amortization | 564 | 559 |
Total liabilities | 1,974 | 2,089 |
Net deferred tax asset (included in other assets on Balance Sheet) | $ 1,209 | $ 1,310 |
13. INCOME TAX EXPENSE (Detai_3
13. INCOME TAX EXPENSE (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Tax expense at federal statutory rates | $ 2,104 | $ 4,511 | $ 4,307 |
Increases (decreases) in taxes resulting from: | |||
State income taxes, net of federal benefit | 0 | 0 | 6 |
Partially tax-exempt income | (49) | (59) | (41) |
Tax-exempt income | (146) | (212) | (217) |
LIH and historic credits | (774) | (633) | (896) |
Deferred tax asset rate change | 0 | 811 | 0 |
Other | (25) | (88) | (60) |
Total income tax expense | $ 1,110 | $ 4,330 | $ 3,099 |
14. EMPLOYEE BENEFITS (Details)
14. EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in Benefit Obligation | |||
Benefit obligation, beginning | $ 15,103 | $ 12,475 | $ 10,944 |
Service cost | 768 | 696 | 632 |
Interest cost | 496 | 487 | 453 |
Actuarial (gain) loss | (1,562) | 1,620 | 872 |
Benefits paid | (587) | (175) | (426) |
Benefit obligation, ending | 14,219 | 15,103 | 12,475 |
Change in Plan Assets | |||
Fair value of plan assets, beginning | 13,645 | 12,032 | 11,678 |
Actual return on plan assets | (613) | 1,788 | 780 |
Employer contribution | 0 | 0 | 0 |
Benefits paid | (587) | (175) | (426) |
Fair value of plan assets, ending | 12,445 | 13,645 | 12,032 |
Funded status at the end of the year | $ (1,774) | $ (1,458) | $ (443) |
14. EMPLOYEE BENEFITS (Details
14. EMPLOYEE BENEFITS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amount recognized in the Consolidated Balance Sheet | |||
Prepaid benefit cost | $ 3,131 | $ 3,760 | $ 4,361 |
Unfunded pension benefit obligation under ASC 325-960 | (4,905) | (5,218) | (4,804) |
Deferred taxes | 1,030 | 1,096 | 1,633 |
Amount recognized in accumulated other comprehensive income (loss) | |||
Net loss | (4,932) | (5,260) | (4,861) |
Prior service cost | 27 | 42 | 57 |
Amount recognized | (4,905) | (5,218) | (4,804) |
Deferred taxes | 1,030 | 1,096 | 1,633 |
Amount recognized in accumulated comprehensive income | (3,875) | (4,122) | (3,171) |
Prepaid benefit detail | |||
Benefit obligation | (14,219) | (15,103) | (12,475) |
Fair value of assets | 12,445 | 13,645 | 12,032 |
Unrecognized net actuarial loss | 4,932 | 5,260 | 4,861 |
Unrecognized prior service cost | (27) | (42) | (57) |
Prepaid (accrued) benefits | 3,131 | 3,760 | 4,361 |
Components of net periodic benefit cost Comprehensive income (loss) | |||
Service cost | 768 | 696 | 632 |
Interest cost | 496 | 487 | 453 |
Expected return on plan assets | (923) | (851) | (854) |
Amortization of prior service cost | (15) | (15) | (15) |
Recognized net actuarial loss | 303 | 284 | 223 |
Net periodic benefit cost | 629 | 601 | 438 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) | |||
Net loss | (328) | 399 | 724 |
Amortization of prior service cost | 15 | 15 | 15 |
Total recognized in other comprehensive income | (313) | 414 | 739 |
Total recognized in net periodic benefit cost and other | 316 | 1,015 | 1,177 |
Additional disclosure information | |||
Accumulated benefit obligation | 10,992 | 10,760 | 8,789 |
Vested benefit obligation | $ 10,983 | $ 10,750 | $ 8,780 |
Discount rate used for net pension cost | 3.50% | 4.00% | 4.25% |
Discount rate used for disclosure | 4.25% | 3.50% | 4.00% |
Expected return on plan assets | 7.25% | 7.25% | 7.50% |
Rate of compensation increase | 3.00% | 3.00% | 3.00% |
Average remaining service (years) | 12 years | 12 years | 13 years |
14. EMPLOYEE BENEFITS (Detail_2
14. EMPLOYEE BENEFITS (Details 2) $ in Thousands | Dec. 31, 2018USD ($) |
Notes to Financial Statements | |
2019 | $ 2,685 |
2020 | 604 |
2021 | 394 |
2022 | 1,542 |
2023 | 894 |
2024-2028 | 7,483 |
Total | $ 13,602 |
14. EMPLOYEE BENEFITS (Detail_3
14. EMPLOYEE BENEFITS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Pension contributions | $ 0 | $ 0 | $ 0 |
Shares held by ESOP | 203,147 | 194,018 | |
Contributions under employee benefit plan - 401K Plan | $ 283 | $ 263 | 242 |
ESOP contributions | 443 | 430 | 407 |
Deferred Compensation Plan [Member] | |||
Contributions to employee benefit plan - deferred compensation plan | $ 125 | $ 125 | $ 125 |
15. CONCENTRATIONS OF CREDIT (D
15. CONCENTRATIONS OF CREDIT (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Concentrations Of Credit Details Narrative | ||
Cash deposits in other commercial banks | $ 2,195 | $ 1,798 |
16. COMMITMENTS (Details)
16. COMMITMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Commitments Details | ||
Commitments to extend credit | $ 169,863 | $ 170,798 |
Standby letters of credit | $ 2,119 | $ 1,533 |
16. COMMITMENTS (Details 1)
16. COMMITMENTS (Details 1) $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leases | |
2019 | $ 155 |
2020 | 128 |
2021 | 110 |
2022 | 105 |
2023 | 93 |
Thereafter | $ 114 |
16. COMMITMENTS (Details Narrat
16. COMMITMENTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments Details Narrative | |||
Lease expense | $ 249 | $ 355 | $ 291 |
17. ON BALANCE SHEET DERIVATI_3
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
On Balance Sheet Derivative Instruments And Hedging Activities Details | ||
Notional amount | $ 184 | $ 184 |
Fair market value of contracts | $ 44 | $ 59 |
18. TRANSACTIONS WITH RELATED_3
18. TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Transactions With Related Parties Details | ||
Total loans, beginning of year | $ 20,377 | $ 7,486 |
New loans | 5,785 | 6,803 |
Relationship change | 169 | 10,403 |
Repayments | (5,766) | (4,315) |
Total loans, end of year | $ 20,565 | $ 20,377 |
18. TRANSACTIONS WITH RELATED_4
18. TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Transactions With Related Parties | ||
Deposits of executive officers, directors and their affiliates | $ 4,110 | $ 7,757 |
19. DIVIDEND LIMITATIONS ON S_2
19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Dividend Limitations On Subsidiary Bank Details Narrative | |||
Dividends paid | $ 8,874 | $ 5,000 | $ 5,000 |
20. FAIR VALUE MEASUREMENTS (De
20. FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
U. S. Treasuries | $ 19,998 | ||
U. S. Government sponsored enterprises | $ 7,886 | 7,980 | |
Mortgage-backed obligations of federal agencies | 403 | 502 | |
Equity securities | [1] | 135 | |
Total securities available for sale | 8,289 | 28,615 | |
Derivatives | 44 | 59 | |
Fair Value Inputs Level 1 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
U. S. Treasuries | 19,998 | ||
U. S. Government sponsored enterprises | 0 | 0 | |
Mortgage-backed obligations of federal agencies | 0 | 0 | |
Equity securities | [1] | 0 | |
Total securities available for sale | 0 | 19,998 | |
Derivatives | 0 | 0 | |
Fair Value Inputs Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
U. S. Treasuries | 0 | ||
U. S. Government sponsored enterprises | 7,886 | 7,980 | |
Mortgage-backed obligations of federal agencies | 403 | 502 | |
Equity securities | [1] | 135 | |
Total securities available for sale | 8,289 | 8,617 | |
Derivatives | 44 | 59 | |
Fair Value Inputs Level 3 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
U. S. Treasuries | 0 | ||
U. S. Government sponsored enterprises | 0 | 0 | |
Mortgage-backed obligations of federal agencies | 0 | 0 | |
Equity securities | [1] | 0 | |
Total securities available for sale | 0 | 0 | |
Derivatives | $ 0 | $ 0 | |
[1] | Transferred to other investments on January 1, 2018 upon adoption of ASU 2016-01. |
20. FAIR VALUE MEASUREMENTS (_2
20. FAIR VALUE MEASUREMENTS (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Impaired loans | $ 3,289 | $ 4,351 |
Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 3,289 | 4,351 |
Construction/Land Development [Member] | ||
Impaired loans | 2,684 | 3,337 |
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 |
Construction/Land Development [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 2,684 | 3,337 |
Real Estate [Member] | ||
Impaired loans | 415 | 979 |
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 |
Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 415 | 979 |
Consumer [Member] | ||
Impaired loans | 6 | |
Consumer [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | |
Consumer [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | |
Consumer [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 6 | |
Dealer Finance [Member] | ||
Impaired loans | 184 | 35 |
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 |
Dealer Finance [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | $ 184 | $ 35 |
20. FAIR VALUE MEASUREMENTS (_3
20. FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Impaired loans | $ 3,289 | $ 4,351 |
Other real estate owned | 2,443 | 1,984 |
Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 3,289 | 4,351 |
Other real estate owned | $ 2,443 | $ 1,984 |
Valuation technique impaired loans | Discounted appraised value | Discounted appraised value |
Valuation technique other real estate owned | Discounted appraised value | Discounted appraised value |
Significant unobservable inputs impaired loans | Discount for selling costs and marketability | Discount for selling costs and marketability |
Significant unobservable inputs other real estate owned | Discount for selling costs | Discount for selling costs |
Fair Value Inputs Level 3 [Member] | Minimum [Member] | ||
Range impaired loans | 2.00% | 3.00% |
Range other real estate owned | 5.00% | 5.00% |
Fair Value Inputs Level 3 [Member] | Maximum [Member] | ||
Range impaired loans | 9.00% | 19.00% |
Range other real estate owned | 15.00% | 15.00% |
20. FAIR VALUE MEASUREMENTS (_4
20. FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other real estate | $ 2,443 | $ 1,984 |
Fair Value Inputs Level 1 [Member] | ||
Other real estate | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Other real estate | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Other real estate | $ 2,443 | $ 1,984 |
20. FAIR VALUE MEASUREMENTS (_5
20. FAIR VALUE MEASUREMENTS (Details 4) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash and cash equivalents, carrying amount | $ 10,912 | $ 11,907 |
Cash and cash equivalents, fair value | 10,912 | 11,907 |
Securities, carrying amount | 8,412 | 28,740 |
Securities, fair value | 8,412 | 28,740 |
Loans held for sale, carrying amount | 55,910 | 39,775 |
Loans held for sale, fair value | 55,910 | 39,775 |
Loans held for investment, net, carrying amount | 633,559 | 610,930 |
Loans held for investment, net, fair value | 613,717 | 646,703 |
Interest receivable, carrying amount | 2,078 | 2,007 |
Interest receivable, fair value | 2,078 | 2,007 |
Bank owned life insurance, carrying amount | 19,464 | 13,950 |
Bank owned life insurance, fair value | 19,464 | 13,950 |
Total assets, carrying amount | 730,335 | 707,309 |
Total assets, fair value | 710,493 | 743,082 |
Liabilities | ||
Deposits, carrying amount | 591,325 | 569,177 |
Deposits, fair value | 595,167 | 571,117 |
Short-term debt, carrying amount | 40,116 | 25,296 |
Short-term debt, fair value | 40,116 | 25,296 |
Long-term debt, carrying amount | 40,218 | 49,733 |
Long-term debt, fair value | 39,609 | 49,869 |
Interest payable, carrying amount | 348 | 260 |
Interest payable, fair value | 348 | 260 |
Total liabilities, carrying amount | 672,007 | 644,466 |
Total liabilities, fair value | 675,240 | 646,542 |
Fair Value Inputs Level 1 [Member] | ||
Assets: | ||
Cash and cash equivalents, fair value | 10,912 | 11,907 |
Securities, fair value | 0 | 19,998 |
Loans held for sale, fair value | 0 | 0 |
Loans held for investment, net, fair value | 0 | 0 |
Interest receivable, fair value | 0 | 0 |
Bank owned life insurance, fair value | 0 | 0 |
Total assets, fair value | 10,912 | 31,905 |
Liabilities | ||
Deposits, fair value | 0 | 0 |
Short-term debt, fair value | 0 | 0 |
Long-term debt, fair value | 0 | 0 |
Interest payable, fair value | 0 | 0 |
Total liabilities, fair value | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Assets: | ||
Cash and cash equivalents, fair value | 0 | 0 |
Securities, fair value | 8,412 | 8,742 |
Loans held for sale, fair value | 55,910 | 39,775 |
Loans held for investment, net, fair value | 0 | 0 |
Interest receivable, fair value | 2,078 | 2,007 |
Bank owned life insurance, fair value | 19,464 | 13,950 |
Total assets, fair value | 85,864 | 64,474 |
Liabilities | ||
Deposits, fair value | 441,319 | 403,907 |
Short-term debt, fair value | 40,116 | 25,296 |
Long-term debt, fair value | 0 | 0 |
Interest payable, fair value | 348 | 260 |
Total liabilities, fair value | 481,783 | 429,463 |
Fair Value Inputs Level 3 [Member] | ||
Assets: | ||
Cash and cash equivalents, fair value | 0 | 0 |
Securities, fair value | 0 | 0 |
Loans held for sale, fair value | 0 | 0 |
Loans held for investment, net, fair value | 613,717 | 646,703 |
Interest receivable, fair value | 0 | 0 |
Bank owned life insurance, fair value | 0 | 0 |
Total assets, fair value | 613,717 | 646,703 |
Liabilities | ||
Deposits, fair value | 153,848 | 167,210 |
Short-term debt, fair value | 0 | 0 |
Long-term debt, fair value | 39,609 | 49,869 |
Interest payable, fair value | 0 | 0 |
Total liabilities, fair value | $ 193,457 | $ 217,079 |
21. REGULATORY MATTERS (Details
21. REGULATORY MATTERS (Details) $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Total risk-based ratio [Member] | ||
Bank actual capital amount | $ 95,597 | $ 95,563 |
Bank actual capital ratio | .1444 | 0.1541 |
Minimum capital requirement amount | $ 52,955 | $ 49,614 |
Minimum capital requirement ratio | .0800 | .0800 |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 66,194 | $ 62,018 |
Minimum to be well capitalized under prompt corrective action provisions ratio | .1000 | .1000 |
Tier 1 risk-based ratio [Member] | ||
Bank actual capital amount | $ 90,357 | $ 89,519 |
Bank actual capital ratio | .1365 | 0.1443 |
Minimum capital requirement amount | $ 39,717 | $ 37,211 |
Minimum capital requirement ratio | .0600 | .0600 |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 52,955 | $ 49,614 |
Minimum to be well capitalized under prompt corrective action provisions ratio | .0800 | .0800 |
Common equity tier 1 [Member] | ||
Bank actual capital amount | $ 90,357 | $ 89,519 |
Bank actual capital ratio | .1365 | 0.1443 |
Minimum capital requirement amount | $ 29,787 | $ 27,908 |
Minimum capital requirement ratio | .0450 | .0450 |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 43,026 | $ 40,312 |
Minimum to be well capitalized under prompt corrective action provisions ratio | .0650 | .0650 |
Total assets leverage ratio [Member] | ||
Bank actual capital amount | $ 90,357 | $ 89,519 |
Bank actual capital ratio | .1179 | 0.1207 |
Minimum capital requirement amount | $ 30,659 | $ 29,656 |
Minimum capital requirement ratio | .0400 | .0400 |
Minimum to be well capitalized under prompt corrective action provisions amount | $ 38,324 | $ 37,070 |
Minimum to be well capitalized under prompt corrective action provisions ratio | .0500 | .0500 |
22. BUSINESS SEGMENTS (Details)
22. BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Interest income | $ 31,876 | $ 30,198 | $ 28,551 |
Service charges on deposits | 1,496 | 1,360 | 1,174 |
Gain on prepayment of long-term debt | 0 | (504) | 0 |
Income from bank owned life insurance | 527 | 449 | 476 |
Loss on sale of investments | 0 | (42) | 0 |
Other operating income | 2,242 | 2,109 | 1,657 |
Expenses: | |||
Interest expense | 4,832 | 3,897 | 3,599 |
Provision for loan losses | 2,930 | 0 | 0 |
Salaries and benefits | 12,622 | 11,482 | 9,986 |
Employee benefit expense | 3,714 | 3,372 | 2,814 |
Occupancy expense | 1,116 | 1,035 | 868 |
Equipment expense | 1,044 | 836 | 735 |
FDIC insurance assessment | 294 | 190 | 388 |
Legal and professional fees | 597 | 356 | 400 |
Directors fees | 468 | 517 | 486 |
Income tax expense (benefit) | 1,110 | 4,330 | 3,099 |
Net income | 9,095 | 9,041 | 9,762 |
Total assets | 780,253 | 753,270 | |
Goodwill | 2,884 | 2,881 | |
F&M Bank | |||
Interest income | 36,550 | 33,904 | 31,949 |
Service charges on deposits | 1,496 | 1,360 | 1,174 |
Investment services and insurance income | 0 | 1 | 1 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 504 | 0 | |
Loss on sale of investments | 0 | 0 | |
Other operating income | 2,002 | 2,128 | 2,353 |
Total income | 40,048 | 37,897 | 35,477 |
Expenses: | |||
Interest expense | 4,839 | 3,904 | 3,605 |
Provision for loan losses | 2,930 | 0 | 0 |
Salaries and benefits | 13,153 | 12,092 | 11,123 |
Other operating expenses | 9,448 | 8,942 | 8,139 |
Total expense | 30,370 | 24,938 | 22,867 |
Income before income taxes | 9,678 | 12,959 | 12,610 |
Income tax expense (benefit) | 1,021 | 4,316 | 3,290 |
Net income | 8,657 | 8,643 | 9,320 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 8,657 | 8,643 | 9,320 |
Total assets | 782,782 | 754,375 | 748,273 |
Goodwill | 2,670 | 2,670 | 2,670 |
F&M Mortgage | |||
Interest income | 139 | 125 | |
Service charges on deposits | 0 | 0 | |
Investment services and insurance income | 0 | 0 | |
Mortgage banking income, net | 2,348 | 2,269 | |
Title insurance income | 0 | 0 | |
Gain on prepayment of long-term debt | 0 | ||
Loss on sale of investments | (40) | ||
Other operating income | 0 | 1 | |
Total income | 2,487 | 2,355 | |
Expenses: | |||
Interest expense | 118 | 75 | |
Provision for loan losses | 0 | 0 | |
Salaries and benefits | 1,783 | 1,557 | |
Other operating expenses | 553 | 618 | |
Total expense | 2,454 | 2,250 | |
Income before income taxes | 33 | 105 | |
Income tax expense (benefit) | 0 | 0 | |
Net income | 33 | 105 | |
Net income attributable to noncontrolling interest | 10 | 31 | |
Net income attributable to F & M Bank Corp. | 23 | 74 | |
Total assets | 7,449 | 7,018 | |
Goodwill | 48 | 47 | |
TEB Life/FMFS | |||
Interest income | 144 | 148 | 152 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 918 | 772 | 470 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | |
Loss on sale of investments | (2) | 0 | |
Other operating income | 0 | 0 | 0 |
Total income | 1,062 | 918 | 622 |
Expenses: | |||
Interest expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 578 | 474 | 290 |
Other operating expenses | 57 | 51 | 66 |
Total expense | 635 | 525 | 356 |
Income before income taxes | 427 | 393 | 266 |
Income tax expense (benefit) | 57 | 109 | 58 |
Net income | 370 | 284 | 208 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 370 | 284 | 208 |
Total assets | 7,237 | 6,749 | 6,476 |
Goodwill | 0 | 0 | 0 |
VS Title | |||
Interest income | 0 | 0 | 0 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 0 | 0 | 0 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 1,294 | 1,162 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | |
Loss on sale of investments | 0 | 0 | |
Other operating income | 0 | 0 | 0 |
Total income | 1,294 | 1,162 | 0 |
Expenses: | |||
Interest expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 922 | 731 | 0 |
Other operating expenses | 220 | 226 | 0 |
Total expense | 1,142 | 957 | 0 |
Income before income taxes | 152 | 205 | 0 |
Income tax expense (benefit) | 0 | 0 | 0 |
Net income | 152 | 205 | 0 |
Net income attributable to noncontrolling interest | 36 | 49 | 0 |
Net income attributable to F & M Bank Corp. | 116 | 156 | 0 |
Total assets | 458 | 1,067 | 0 |
Goodwill | 2 | 0 | 0 |
Parent Only | |||
Interest income | 0 | 0 | 0 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 0 | 0 | 0 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | |
Loss on sale of investments | 0 | 0 | |
Other operating income | 0 | 162 | 0 |
Total income | 0 | 162 | 0 |
Expenses: | |||
Interest expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 0 | 0 | 0 |
Other operating expenses | 49 | 46 | 1 |
Total expense | 49 | 46 | 1 |
Income before income taxes | (49) | 116 | (1) |
Income tax expense (benefit) | 32 | (95) | (249) |
Net income | (81) | 211 | 248 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | (81) | 211 | 248 |
Total assets | 91,582 | 90,964 | 87,449 |
Goodwill | 164 | 164 | 0 |
Eliminations | |||
Interest income | (125) | (82) | (6) |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | (19) | (18) | (30) |
Mortgage banking income, net | (36) | (49) | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | |
Loss on sale of investments | 0 | 0 | |
Other operating income | 0 | (358) | (951) |
Total income | (180) | (507) | (987) |
Expenses: | |||
Interest expense | (125) | (82) | (6) |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 0 | 0 | 0 |
Other operating expenses | (19) | (18) | (320) |
Total expense | (144) | (100) | (326) |
Income before income taxes | (36) | (407) | (661) |
Income tax expense (benefit) | 0 | 0 | 0 |
Net income | (36) | (407) | (661) |
Net income attributable to noncontrolling interest | (36) | (49) | 0 |
Net income attributable to F & M Bank Corp. | 0 | (358) | (661) |
Total assets | (109,255) | (106,903) | (104,796) |
Goodwill | 0 | 0 | 0 |
F&M Bank Corp Consolidated | |||
Interest income | 36,708 | 34,095 | 32,150 |
Service charges on deposits | 1,496 | 1,360 | 1,174 |
Investment services and insurance income | 899 | 755 | 441 |
Mortgage banking income, net | 2,312 | 2,220 | 2,565 |
Title insurance income | 1,294 | 1,162 | 0 |
Gain on prepayment of long-term debt | 504 | 0 | |
Loss on sale of investments | (42) | 0 | |
Other operating income | 2,002 | 1,933 | 1,402 |
Total income | 44,711 | 41,987 | 37,732 |
Expenses: | |||
Interest expense | 4,832 | 3,897 | 3,599 |
Provision for loan losses | 2,930 | 0 | 0 |
Salaries and benefits | 16,436 | 14,854 | 12,800 |
Other operating expenses | 10,308 | 9,865 | 8,472 |
Total expense | 34,506 | 28,616 | 24,871 |
Income before income taxes | 10,205 | 13,371 | 12,861 |
Income tax expense (benefit) | 1,110 | 4,330 | 3,099 |
Net income | 9,095 | 9,041 | 9,762 |
Net income attributable to noncontrolling interest | 10 | 31 | 194 |
Net income attributable to F & M Bank Corp. | 9,085 | 9,010 | 9,568 |
Total assets | 780,253 | 753,270 | 744,889 |
Goodwill | $ 2,884 | $ 2,881 | 2,670 |
VBS Mortgage | |||
Interest income | 55 | ||
Service charges on deposits | 0 | ||
Investment services and insurance income | 0 | ||
Mortgage banking income, net | 2,565 | ||
Title insurance income | 0 | ||
Gain on prepayment of long-term debt | 0 | ||
Loss on sale of investments | 0 | ||
Other operating income | 0 | ||
Total income | 2,620 | ||
Expenses: | |||
Interest expense | 0 | ||
Provision for loan losses | 0 | ||
Salaries and benefits | 1,387 | ||
Other operating expenses | 586 | ||
Total expense | 1,973 | ||
Income before income taxes | 647 | ||
Income tax expense (benefit) | 0 | ||
Net income | 647 | ||
Net income attributable to noncontrolling interest | 194 | ||
Net income attributable to F & M Bank Corp. | 453 | ||
Total assets | 7,487 | ||
Goodwill | $ 0 |
23. PARENT COMPANY ONLY FINAN_2
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Cash and cash equivalents | $ 10,912 | $ 11,907 | ||
Total Assets | 780,253 | 753,270 | ||
Liabilities | ||||
Total Liabilities | 688,342 | 661,995 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $25 per share, 400,000 shares authorized, 249,860 and 324,150 issued and outstanding at December 31, 2018 and 2017, respectively. | 5,672 | 7,529 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,213,132 and 3,255,036 shares issued and outstanding for 2018 and 2017, respectively | 16,066 | 16,275 | ||
Retained earnings | 65,596 | 60,814 | ||
Accumulated other comprehensive loss | (3,969) | (4,142) | ||
Total Stockholders' Equity | 91,911 | 91,275 | $ 86,682 | $ 82,950 |
Total Liabilities and Stockholders' Equity | 780,253 | 753,270 | ||
Parent [Member] | ||||
Assets | ||||
Cash and cash equivalents | 749 | 917 | $ 1,155 | $ 1,907 |
Investment in subsidiaries | 89,418 | 88,967 | ||
Securities available for sale | 135 | 135 | ||
Income tax receivable (including due from subsidiary) | 946 | 565 | ||
Goodwill and intangibles | 327 | 380 | ||
Total Assets | 91,575 | 90,964 | ||
Liabilities | ||||
Deferred income taxes | 151 | 177 | ||
Accrued expenses | 72 | 86 | ||
Total Liabilities | 223 | 263 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $25 per share, 400,000 shares authorized, 249,860 and 324,150 issued and outstanding at December 31, 2018 and 2017, respectively. | 5,672 | 7,529 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,213,132 and 3,255,036 shares issued and outstanding for 2018 and 2017, respectively | 16,066 | 16,275 | ||
Additional paid in capital | 7,987 | 10,225 | ||
Retained earnings | 65,596 | 60,814 | ||
Accumulated other comprehensive loss | (3,969) | (4,142) | ||
Total Stockholders' Equity | 91,352 | 90,701 | ||
Total Liabilities and Stockholders' Equity | $ 91,575 | $ 90,964 |
23. PARENT COMPANY ONLY FINAN_3
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Expenses | |||
Income tax expense (benefit) | $ 1,110 | $ 4,330 | $ 3,099 |
Income before undistributed subsidiary Net income | 9,095 | 9,041 | 9,762 |
Undistributed subsidiary net income | (10) | (31) | (194) |
Net income | 9,085 | 9,010 | 9,568 |
Parent [Member] | |||
Income | |||
Dividends from affiliate | 8,874 | 5,000 | 5,000 |
Net limited partnership income (loss) | 0 | 162 | 0 |
Total income | 8,874 | 5,162 | 5,000 |
Expenses | |||
Total expenses | 49 | 47 | 1 |
Net income before income tax expense (benefit) and undistributed subsidiary net income | 8,825 | 5,115 | 4,999 |
Income tax expense (benefit) | 32 | (95) | (249) |
Income before undistributed subsidiary Net income | 8,793 | 5,210 | 5,248 |
Undistributed subsidiary net income | 292 | 3,800 | 4,320 |
Net income | $ 9,085 | $ 9,010 | $ 9,568 |
23. PARENT COMPANY ONLY FINAN_4
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities | |||
Net income | $ 9,085 | $ 9,010 | $ 9,568 |
Deferred tax (benefit) expense | 55 | (222) | 9 |
Net cash provided by operating activities | 11,883 | 6,854 | 15,586 |
Cash Flows from Investing Activities | |||
Net cash used in investing activities | (31,699) | (10,033) | (75,742) |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock | 266 | 197 | 183 |
Net cash used in financing activities | 18,821 | (1,269) | 67,992 |
Net (decrease) increase in cash and cash equivalents | (995) | (4,448) | 7,836 |
Cash and cash equivalents, beginning of year | 11,907 | ||
Cash and cash equivalents, end of year | 10,912 | 11,907 | |
Parent [Member] | |||
Cash Flows from Operating Activities | |||
Net income | 9,085 | 9,010 | 9,568 |
Undistributed subsidiary income | (292) | (3,800) | (4,320) |
Deferred tax (benefit) expense | (3) | (112) | 5 |
Increase in other assets | (328) | (1,256) | 0 |
Decrease in other liabilities | (23) | (77) | (535) |
Net cash provided by operating activities | 8,439 | 3,765 | 4,718 |
Cash Flows from Investing Activities | |||
Net cash used in investing activities | 0 | 0 | 0 |
Cash Flows from Financing Activities | |||
Repurchase of preferred stock | (2,788) | (101) | (1,961) |
Repurchase of common stock | (1,782) | (712) | (577) |
Proceeds from issuance of common stock | 266 | 197 | 183 |
Dividends paid in cash | (4,303) | (3,387) | (3,115) |
Net cash used in financing activities | (8,607) | (4,003) | (5,470) |
Net (decrease) increase in cash and cash equivalents | (168) | (238) | (752) |
Cash and cash equivalents, beginning of year | 917 | 1,155 | 1,907 |
Cash and cash equivalents, end of year | $ 749 | $ 917 | $ 1,155 |
26. ACCUMULATED OTHER COMPREH_3
26. ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unrealized Securities Gains Losses [Member] | |||
Beginning balance | $ (20) | $ 6 | $ 4 |
Change in unrealized securities gains (losses), net of tax | (74) | (26) | 2 |
Change in unfunded pension liability, net of tax | 0 | 0 | 0 |
Ending balance | (94) | (20) | 6 |
Adjustments Related to Pension Plan | |||
Beginning balance | (4,122) | (3,171) | (2,684) |
Change in unrealized securities gains (losses), net of tax | 0 | 0 | 0 |
Change in unfunded pension liability, net of tax | 247 | (951) | (487) |
Ending balance | (3,875) | (4,122) | (3,171) |
Accumulated Other comprehensive Income (Loss) | |||
Beginning balance | (4,142) | (3,165) | (2,680) |
Change in unrealized securities gains (losses), net of tax | (74) | (26) | 2 |
Change in unfunded pension liability, net of tax | 247 | (951) | (487) |
Ending balance | $ (3,969) | $ (4,142) | $ (3,165) |
27. REVENUE RECOGNITION (Detail
27. REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total noninterest income | $ 8,003 | $ 7,892 | $ 5,582 |
Service Charges on Deposits | |||
Total noninterest income | 1,496 | 1,359 | 1,174 |
Investment Services and Insurance Income | |||
Total noninterest income | 901 | 755 | 441 |
Title Insurance Income | |||
Total noninterest income | 1,293 | 1,161 | 2,565 |
ATM and check card fees | |||
Total noninterest income | 1,537 | 1,387 | 0 |
Other | |||
Total noninterest income | 525 | 490 | 0 |
Noninterest Income (in-scope of Topic 606) | |||
Total noninterest income | 5,752 | 5,153 | 4,180 |
Noninterest Income (out-of-scope of Topic 606) | |||
Total noninterest income | $ 2,251 | $ 2,739 | $ 1,402 |