Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 04, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | GLEN BURNIE BANCORP | |
Entity Central Index Key | 0000890066 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Common Stock Shares Outstanding | 2,842,039 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and due from banks | $ 2,196 | $ 2,420 |
Interest-bearing deposits in other financial institutions | 24,857 | 10,870 |
Cash and Cash Equivalents | 27,053 | 13,290 |
Investment securities available for sale, at fair value | 114,461 | 71,486 |
Restricted equity securities, at cost | 1,624 | 1,437 |
Loans, net of deferred fees and costs | 274,082 | 284,738 |
Less: Allowance for loan losses | (1,663) | (2,066) |
Loans, net | 272,419 | 282,672 |
Real estate acquired through foreclosure | 705 | 705 |
Premises and equipment, net | 3,878 | 3,761 |
Bank owned life insurance | 8,141 | 8,023 |
Deferred tax assets, net | 499 | 672 |
Accrued interest receivable | 1,367 | 961 |
Accrued taxes receivable | 1,221 | |
Prepaid expenses | 393 | 406 |
Other assets | 382 | 308 |
Total Assets | 430,922 | 384,942 |
LIABILITIES | ||
Noninterest-bearing deposits | 129,745 | 107,158 |
Interest-bearing deposits | 214,195 | 214,282 |
Total Deposits | 343,940 | 321,440 |
Short-term borrowings | 37,367 | 25,000 |
Long-term borrowings | 10,000 | |
Defined pension liability | 282 | 317 |
Accrued Taxes Payable | (284) | |
Accrued expenses and other liabilities | 2,544 | 2,505 |
Total Liabilities | 394,417 | 349,262 |
STOCKHOLDERS' EQUITY | ||
Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,838,357 and 2,827,473 shares as of September 30, 2020 and December 31, 2019, respectively. | 2,839 | 2,827 |
Additional paid-in capital | 10,610 | 10,525 |
Retained earnings | 22,810 | 22,537 |
Accumulated other comprehensive gain (loss) | 246 | (209) |
Total Stockholders' Equity | 36,505 | 35,680 |
Total Liabilities and Stockholders' Equity | $ 430,922 | $ 384,942 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 2,838,357 | 2,827,473 |
Common stock, shares outstanding | 2,834,325 | 2,827,473 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
INTEREST INCOME | ||||
Interest and fees on loans | $ 2,924 | $ 3,176 | $ 8,974 | $ 9,543 |
Interest and dividends on securities | 404 | 326 | 1,103 | 1,061 |
Interest on deposits with banks and federal funds sold | 21 | 88 | 107 | 270 |
Total Interest Income | 3,349 | 3,590 | 10,184 | 10,874 |
INTEREST EXPENSE | ||||
Interest on deposits | 237 | 336 | 851 | 1,001 |
Interest on short-term borrowings | 110 | 110 | 345 | 465 |
Interest on long-term borrowings | 6 | 6 | ||
Total Interest Expense | 353 | 446 | 1,202 | 1,466 |
Net Interest Income | 2,996 | 3,144 | 8,982 | 9,408 |
(Negative provision)/provision for loan losses | (669) | (139) | (263) | 65 |
Net interest income after provision for loan losses | 3,665 | 3,283 | 9,245 | 9,343 |
NONINTEREST INCOME | ||||
Gain on securities sold | 4 | 4 | 3 | |
Income on life insurance | 40 | 42 | 118 | 122 |
Total Noninterest Income | 260 | 391 | 743 | 955 |
NONINTEREST EXPENSE | ||||
Salary and benefits | 1,595 | 1,685 | 4,897 | 5,140 |
Occupancy and equipment expenses | 283 | 340 | 909 | 1,040 |
Legal, accounting and other professional fees | 233 | 259 | 737 | 794 |
Data processing and item processing services | 234 | 109 | 651 | 328 |
FDIC insurance costs | 41 | 141 | 116 | |
Advertising and marketing related expenses | 22 | 27 | 65 | 79 |
Loan collection costs | 5 | 22 | 92 | 62 |
Telephone costs | 56 | 62 | 146 | 183 |
Other expenses | 224 | 352 | 901 | 1,181 |
Total Noninterest Expenses | 2,693 | 2,856 | 8,539 | 8,923 |
Income before income taxes | 1,232 | 818 | 1,449 | 1,375 |
Income tax expense | 283 | 212 | 326 | 315 |
NET INCOME | $ 949 | $ 606 | $ 1,123 | $ 1,060 |
Basic and diluted net (loss) income per share of common stock | $ 0.33 | $ 0.21 | $ 0.40 | $ 0.38 |
Service charges on deposit accounts | ||||
NONINTEREST INCOME | ||||
Noninterest Income | $ 37 | $ 62 | $ 132 | $ 187 |
Other fees and commissions | ||||
NONINTEREST INCOME | ||||
Noninterest Income | $ 179 | $ 287 | $ 489 | $ 643 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income | $ 949 | $ 606 | $ 1,123 | $ 1,060 |
Net unrealized (loss) gain on securities available for sale: | ||||
Net unrealized (loss) gain on securities during the period | (160) | 301 | 1,325 | 2,132 |
Income tax benefit (expense) relating to item above | 44 | (83) | (364) | (586) |
Reclassification adjustment for gain on sales of securities included in net income | (3) | (3) | (2) | |
Net effect on other comprehensive (loss) income | (119) | 218 | 958 | 1,544 |
Net unrealized gain (loss) gain on interest rate swap: | ||||
Net unrealized gain (loss) on interest rate swap during the period | 77 | (134) | (695) | (753) |
Income tax (expense) benefit relating to item above | (21) | 37 | 192 | 208 |
Net effect on other comprehensive income (loss) | 56 | (97) | (503) | (545) |
Other comprehensive (loss) income | (63) | 121 | 455 | 999 |
Comprehensive income | $ 886 | $ 727 | $ 1,578 | $ 2,059 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Gain | Total |
Balances at Dec. 31, 2018 | $ 2,814 | $ 10,401 | $ 22,066 | $ (1,230) | $ 34,051 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,060 | 1,060 | |||
Cash dividends, $0.20 per share | (846) | (846) | |||
Dividends reinvested under dividend reinvestment plan | 10 | 94 | 104 | ||
Other comprehensive income | 999 | 999 | |||
Balances at Sep. 30, 2019 | 2,824 | 10,495 | 22,280 | (231) | 35,368 |
Balances at Dec. 31, 2019 | 2,827 | 10,525 | 22,537 | (209) | 35,680 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 1,123 | 1,123 | |||
Cash dividends, $0.20 per share | (850) | (850) | |||
Dividends reinvested under dividend reinvestment plan | 12 | 85 | 97 | ||
Other comprehensive income | 455 | 455 | |||
Balances at Sep. 30, 2020 | $ 2,839 | $ 10,610 | $ 22,810 | $ 246 | $ 36,505 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parentheticals) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||
Cash dividends, per share | $ 0.30 | $ 0.30 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 1,123 | $ 1,060 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, amortization, and accretion of premises and equipment | 212 | 320 |
Depreciation, amortization, and accretion of investment securities available for sale | (511) | 437 |
(Negative provision) provision for loan losses | (262) | 65 |
Increase in cash surrender value of bank owned life insurance | (118) | (122) |
Loss on write-down of MFB stock | 1 | |
Decrease in ground rents | 3 | |
(Increase) decrease in accrued interest receivable | (407) | 223 |
Net (increase) decrease in other assets | (63) | 157 |
Net increase in accrued expenses and other liabilities | 892 | 16 |
Net cash provided by operating activities | 869 | 2,157 |
Cash flows from investing activities: | ||
Redemptions and maturities of investment securities available for sale | 17,632 | 7,322 |
Proceeds from sales of available for sale debt securities | 20,770 | |
Purchases of investment securities available for sale | (58,771) | (9,641) |
Net (purchase) sale of Federal Home Loan Bank stock | (187) | 1,254 |
Net decrease in loans | 10,516 | 14,932 |
Purchases of premises and equipment | (410) | (249) |
Net cash (used in) provided by investing activities | (31,220) | 34,388 |
Cash flows from financing activities: | ||
Net increase (decrease) in deposits | 22,500 | 2,814 |
Increase (decrease) in short term borrowings | 12,367 | (35,000) |
Increase in long term borrowings | 10,000 | |
Cash dividends paid | (850) | (846) |
Common stock dividends reinvested | 97 | 104 |
Net cash provided by (used in) financing activities | 44,114 | (32,928) |
Net increase in cash and cash equivalents | 13,763 | 3,617 |
Cash and cash equivalents at beginning of year | 13,290 | 15,954 |
Cash and cash equivalents at end of year | 27,053 | 19,571 |
Supplemental Disclosures of Cash Flow Information: | ||
Interest paid on deposits and borrowings | 1,263 | 1,498 |
Income taxes refunded | (1,176) | |
Income taxes paid | 120 | |
Net decrease in unrealized depreciation on available for sale securities | 1,325 | 2,132 |
Net increase in unrealized appreciation on swaps | $ (697) | $ (754) |
ORGANIZATIONAL
ORGANIZATIONAL | 9 Months Ended |
Sep. 30, 2020 | |
ORGANIZATIONAL | |
ORGANIZATIONAL. | NOTE 1 – ORGANIZATIONAL Nature of Business Glen Burnie Bancorp (the “Company”) is a bank holding company organized in 1990 under the laws of the State of Maryland. The Company owns all the outstanding shares of capital stock of The Bank of Glen Burnie (the “Bank”), a commercial bank organized in 1949 under the laws of the State of Maryland (the “State”). The Bank provides financial services to individuals and corporate customers located in Anne Arundel County and surrounding areas of Central Maryland, and is subject to competition from other financial institutions. The Bank is also subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2020 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 2 – BASIS OF PRESENTATION In management’s opinion, the accompanying unaudited consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim period reporting, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position at September 30, 2020 and December 31, 2019, the results of operations for the three- and nine-month period ended September 30, 2020 and 2019, and the statements of cash flows for the nine-month period ended September 30, 2020 and 2019. The operating results for the three-and nine-month period ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any future interim period. The consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2020. The unaudited consolidated financial statements for September 30, 2020 and 2019, the consolidated balance sheet at December 31, 2019, and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, The Bank of Glen Burnie. Consolidation resulted in the elimination of all intercompany accounts and transactions. On January 10, 2019, the Board of Directors (the “Board”) of the Company and the Bank approved the contribution from the Company to the Bank of all of the common stock of GBB Properties, Inc. (“GBB”). The contribution and assignment of 3,600 shares of common stock occurred on January 22, 2019 and was treated as a capital contribution. Prior to the contribution, the Company owned all of the outstanding shares of common stock of GBB, a Maryland corporation which was organized in 1994 and which is engaged in the business of acquiring, holding and disposing of real property, typically acquired in connection with foreclosure proceedings (or deeds in lieu of foreclosure) instituted by the Bank. Cash Flow Presentation In the statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, Federal Home Loan Bank of Atlanta (“FHLB Atlanta”) overnight deposits, and federal funds sold. Generally, federal funds are sold for one-day periods. Reclassifications Certain items in the 2019 consolidated financial statements have been reclassified to conform to the 2020 classifications. The reclassifications had no effect on previously reported results of operations or retained earnings. Use of Estimates The preparation of financial statements 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 materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for loan losses (the “allowance”); the fair value of financial instruments, such as loans and investment securities; benefit plan obligations and expenses; and the valuation of deferred tax assets and liabilities. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 3 – EARNINGS PER SHARE Basic earnings per common share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average common shares outstanding during the period. Diluted EPS is computed by dividing net income available to common shareholders by the weighted average common shares outstanding, plus the effect of common stock equivalents (for example, stock options computed using the treasury stock method). Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Basic and diluted earnings per share: Net income $ 949,027 $ 605,522 $ 1,122,820 $ 1,059,823 Weighted average common shares outstanding 2,836,998 2,823,271 2,833,130 2,819,952 Basic and dilutive net income per share $ 0.33 $ 0.21 $ 0.40 $ 0.38 Diluted earnings per share calculations were not required for the three- and nine-month period ended September 30, 2020 and 2019, as there were no stock options outstanding. |
INVESTMENT SECURITIES
INVESTMENT SECURITIES | 9 Months Ended |
Sep. 30, 2020 | |
INVESTMENT SECURITIES | |
INVESTMENT SECURITIES | NOTE 4 – INVESTMENT SECURITIES Investment securities are accounted for according to their purpose and holding period. Trading securities are those that are bought and held principally for the purpose of selling them in the near term. The Company held no trading securities at September 30, 2020 or December 31, 2019. Available-for-sale investment securities, comprised of debt and mortgage-backed securities, are those that may be sold before maturity due to changes in the Company's interest rate risk profile or funding needs, and are reported at fair value with unrealized gains and losses, net of taxes, reported as a component of other comprehensive income. Held-to-maturity investment securities are those that management has the positive intent and ability to hold to maturity and are reported at amortized cost. The Company held no held-to-maturity securities at September 30, 2020 or December 31, 2019. Realized gains and losses are recorded in noninterest income and are determined on a trade date basis using the specific identification method. Interest and dividends on investment securities are recognized in interest income on an accrual basis. Premiums and discounts are amortized or accreted into interest income using the interest method over the expected lives of the individual securities. The following table summarizes the amortized cost and estimated fair value of the Company’s investment securities portfolio at September 30, 2020 and December 31, 2019: At September 30, 2020 Gross Gross Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Collateralized mortgage obligations $ 26,868 $ 412 $ (25) $ 27,255 Agency mortgage-backed securities 29,684 921 (10) 30,595 Municipal securities 24,975 399 (73) 25,301 U.S. Government agency securities 31,559 20 (269) 31,310 Total securities available for sale $ 113,086 $ 1,752 $ (377) $ 114,461 At December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Collateralized mortgage obligations $ 27,618 $ 52 $ (187) $ 27,483 Agency mortgage-backed securities 27,823 149 (135) 27,837 Municipal securities 12,301 191 (17) 12,475 U.S. Government agency securities 3,195 1 (5) 3,191 U.S. Treasury securities 500 — — 500 Total securities available for sale $ 71,437 $ 393 $ (344) $ 71,486 The gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2020 and December 31, 2019 are as follows: September 30, 2020 Less than 12 months 12 months or more Total Securities available for sale: Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (dollars in thousands) Collateralized mortgage obligations $ 1,899 $ (3) $ 2,131 $ (22) $ 4,030 $ (25) Agency mortgage-backed securities — — 596 (10) 596 (10) Municipal securities 15,271 (71) 544 (2) 15,815 (73) U.S. Government agency securities 23,496 (269) — — 23,496 (269) $ 40,666 $ (343) $ 3,271 $ (34) $ 43,937 $ (377) December 31, 2019 Less than 12 months 12 months or more Total Securities available for sale: Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (dollars in thousands) Collateralized mortgage obligations $ 11,792 $ (65) $ 7,330 $ (122) $ 19,122 $ (187) Agency mortgage-backed securities 4,577 (20) 10,918 (115) 15,495 (135) Municipal securities 1,806 (7) 864 (10) 2,670 (17) U.S. Government agency securities 591 (5) — — 591 (5) $ 18,766 $ (97) $ 19,112 $ (247) $ 37,878 $ (344) Declines in the fair value of held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary-impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At September 30, 2020, the Company recorded unrealized losses in its portfolio of debt securities totaling $377,000 related to 58 securities, which resulted from decreases in market interest rates, spread volatility, and other factors that management deems to be temporary. Management does not believe the securities are impaired due to reasons of credit quality. Since management believes that it is more likely than not that the Company will not be required to sell these securities prior to maturity or a full recovery of the amortized cost, the Company does not consider these securities to be other-than-temporarily impaired. At December 31, 2019, the Company recorded unrealized losses in its portfolio of debt securities totaling $344,000 related to 97 securities, which resulted from decreases in market interest rates, spread volatility, and other factors that management deems to be temporary. Management does not believe the securities are impaired due to reasons of credit quality. Since management believes that it is more likely than not that the Company will not be required to sell these securities prior to maturity or a full recovery of the amortized cost, the Company does not consider these securities to be other-than-temporarily impaired. Shown below are contractual maturities of debt securities at September 30, 2020. Actual maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. At September 30, 2020 Amortized Fair Yield (dollars in thousands) Cost Value (1), (2) Available for sale securities maturing: Within one year $ 1,818 $ 1,825 1.85 % Over one to five years 1,621 1,660 2.34 % Over five to ten years 10,928 11,061 1.39 % Over ten years 98,719 99,915 1.81 % Total debt securities $ 113,086 $ 114,461 _____________________ (1) Yields are stated as book yields which are adjusted for amortization and accretion of purchase premiums and discounts, respectively. (2) Yields on tax-exempt obligations are computed on a tax-equivalent basis. |
LOANS RECEIVABLE AND ALLOWANCE
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES | 9 Months Ended |
Sep. 30, 2020 | |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES | |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES | NOTE 5 – LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES The fundamental lending business of the Company is based on understanding, measuring, and controlling the credit risk inherent in the loan portfolio. The Company's loan portfolio is subject to varying degrees of credit risk. These risks entail both general risks, which are inherent in the lending process, and risks specific to individual borrowers. The Company's credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry or collateral type. The Company currently manages its credit products and the respective exposure to loan losses by the following specific portfolio segments, which are levels at which the Company develops and documents its systematic methodology to determine the allowance for loan losses. The Company considers each loan type to be a portfolio segment having unique risk characteristics. September 30, December 31, 2020 2019 (dollars in thousands) Amount % Amount % Consumer $ 12,167 4 $ 12,076 Residential real estate 78,997 29 81,033 Indirect 80,544 30 102,384 Commercial 13,683 5 11,907 Commercial SBA PPP 17,367 6 — Construction 1,983 1 3,317 Commercial real estate 69,341 25 74,021 Loans, net of deferred fees and costs 274,082 100 284,738 100 Less: Allowance for loan losses (1,663) (2,066) Loans, net $ 272,419 $ 282,672 The Bank’s net loans totaled $272.4 million at September 30, 2020, compared to $282.7 million at December 31, 2019, a decrease of $10.3 million, or 3.63%. Consumer loans increased from $12.1 million at December 31, 2019 to $12.2 million at September 30, 2020, an increase of $91,000, or 0.75%. Residential real estate loans decreased by $2.0 million, or 2.51%, from $81.0 million at December 31, 2019 to $79.0 million at September 30, 2020. Indirect loans decreased from $102.4 million at December 31, 2019 to $80.5 million at September 30, 2020, a decrease of $21.9 million, or 21.33%. Commercial loans increased $1.8 million, or 14.92%, to $13.7 million at September 30, 2020, compared to $11.9 million at December 31, 2019. The Commercial Small Business Administration (SBA) Paycheck Protection Program (PPP) loan balance was $17.4 million at September 30, 2020. This new loan type is discussed in “Item 5. Other Information.” Construction loans decreased by $1.3 million, or 40.22% to $2.0 million at September 30, 2020, compared to $3.3 million at December 31, 2019. Commercial real estate loans decreased from $74.0 million at December 31, 2019 to $69.3 million at September 30, 2020, a decrease of $4.7 million or 6.32%. Credit Risk and Allowance for Loan Losses . Credit risk is the risk of loss arising from the inability of a borrower to meet his or her obligations and entails both general risks, which are inherent in the process of lending, and risks specific to individual borrowers. Credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry, or collateral type. Residential mortgage and home equity loans and lines generally have the lowest credit loss experience. Loans secured by personal property, such as auto loans, generally experience medium credit losses. Unsecured loan products, such as personal revolving credit, have the highest credit loss experience and for that reason, the Bank has chosen not to engage in a significant amount of this type of lending. Credit risk in commercial lending can vary significantly, as losses as a percentage of outstanding loans can shift widely during economic cycles and are particularly sensitive to changing economic conditions. Generally, improving economic conditions result in improved operating results on the part of commercial customers, enhancing their ability to meet their particular debt service requirements. Improvements, if any, in operating cash flows can be offset by the impact of rising interest rates that may occur during improved economic times. Inconsistent economic conditions may have an adverse effect on the operating results of commercial customers, reducing their ability to meet debt service obligations. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that the collectability of the principal is unlikely. The allowance, based on evaluations of the collectability of loans and prior loan loss experience, is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The evaluations are performed for each class of loans and take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, value of collateral securing the loans and current economic conditions and trends that may affect the borrowers’ ability to pay. For example, delinquencies in unsecured loans and indirect automobile installment loans will be reserved for at significantly higher ratios than loans secured by real estate. Based on that analysis, the Bank deems its allowance for loan losses in proportion to the total nonaccrual loans and past due loans to be sufficient. For purposes of determining the allowance for loan losses, the Bank segments the loan portfolio into the following classifications: · Consumer · Residential Real Estate · Indirect · Commercial · Commercial SBA PPP · Construction · Commercial Real Estate Each of these segments are reviewed and analyzed quarterly using the average historical charge-offs over a forty-eight to sixty month period for their respective segments as well as the following qualitative factors: · Changes in asset quality metrics including past due loans (30 - 89 days), nonaccrual loans, classified assets, watch list loans all in relation to total loans. Also policy exceptions in relationship to loan volume. · Changes in the rate and direction of the loan volume by portfolio segment. · Concentration of credit including the concentration percentages, changes in concentration and concentrations relative to goals. · Changes in macro-economic factors including the rates and direction of unemployment, median income and population. · Changes in internal factors including external loan review required reserve changes, internal review penetration, internal required reserve changes, and weighted required reserve trends. · Changes in rate and direction of charge offs and recoveries. Transactions in the allowance for loan losses for the three months ended September 30, 2020 and the year ended December 31, 2019 were as follows: September 30, 2020 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Balance, beginning of year $ 122 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,066 Charge-offs — — (277) — — — — (277) Recoveries 9 27 81 20 — — — 137 Provision for loan losses 8 (65) (117) 25 — (4) (110) (263) Balance, end of quarter $ 139 $ 551 $ 604 $ 83 $ — $ 7 $ 279 $ 1,663 Individually evaluated for impairment: Balance in allowance $ 11 $ — $ — $ — $ — $ — $ — $ 11 Related loan balance 39 487 — — — — 4,569 5,095 Collectively evaluated for impairment: Balance in allowance $ 128 $ 551 $ 604 $ 83 $ — $ 7 $ 279 $ 1,652 Related loan balance 12,128 78,510 80,544 13,683 17,367 1,983 64,772 268,987 December 31, 2019 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Balance, beginning of year $ 161 $ 864 $ 988 $ 241 $ — $ 4 $ 283 $ 2,541 Charge-offs (69) (16) (504) (27) — — — (616) Recoveries 16 5 225 10 — — — 256 Provision for loan losses 14 (264) 208 (186) — 7 106 (115) Balance, end of year $ 122 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,066 Individually evaluated for impairment: Balance in allowance $ 15 $ — $ — $ — $ — $ — $ — $ 15 Related loan balance 86 631 — — — — 3,680 4,397 Collectively evaluated for impairment: Balance in allowance $ 107 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,051 Related loan balance 11,990 80,402 102,384 11,907 — 3,317 70,341 280,341 Management believes the allowance for credit losses is at an appropriate level to absorb inherent probable losses in the portfolio. September 30, September 30, (dollars in thousands) 2020 2019 Average loans $ 281,773 $ 293,958 Net charge offs to average loans (annualized) 0.07 % 0.14 % During the nine-month period ended September 30, 2020, loans to 30 borrowers and related entities totaling approximately $277,000 were determined to be uncollectible and were charged off. During the nine-month period ending September 30, 2019, loans to 47 borrowers and related entities totaling approximately $519,000 were determined to be uncollectible and were charged off. Reserve for Unfunded Commitments . Loan commitments and unused lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. The Bank generally requires collateral to support financial instruments with credit risk on the same basis as it does for on-balance sheet instruments. The collateral requirement is based on management's credit evaluation of the counter party. 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 amount does not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of September 30, 2020, and 2019, the Bank had outstanding commitments totaling $33.1 million and $34.6 million, respectively. These outstanding commitments consisted of letters of credit, undrawn lines of credit, and other loan commitments. The following table shows the Bank’s reserve for unfunded commitments arising from these transactions: Nine Months Ended Ended September 30, (dollars in thousands) 2020 2019 Beginning balance $ 37 $ 35 Reduction of unfunded reserve (8) (23) Provisions charged to operations 25 Ending balance $ 29 $ 37 Contractual Obligations and Commitments. No material changes, outside the normal course of business, have been made during the third quarter of 2020. Asset Quality . The following tables set forth the amount of the Bank’s current, past due, and non-accrual loans by categories of loans and restructured loans, at the dates indicated. At September 30, 2020 90 Days or (dollars in thousands) 30-89 Days More and Current Past Due Still Accruing Nonaccrual Total Consumer $ 11,954 $ 68 $ — $ 145 $ 12,167 Residential Real Estate 78,202 255 18 522 78,997 Indirect 79,800 528 — 216 80,544 Commercial 13,683 — — — 13,683 Commercial SBA PPP 17,367 — — — 17,367 Construction 1,983 — — — 1,983 Commercial Real Estate 65,260 — — 4,081 69,341 $ 268,249 $ 851 $ 18 $ 4,964 $ 274,082 At December 31, 2019 90 Days or (dollars in thousands) 30-89 Days More and Current Past Due Still Accruing Nonaccrual Total Consumer $ 11,865 $ 74 $ — $ 137 $ 12,076 Residential Real Estate 80,192 92 21 728 81,033 Indirect 101,605 656 — 123 102,384 Commercial 11,907 — — — 11,907 Commercial SBA PPP — — — — — Construction 3,317 — — — 3,317 Commercial Real Estate 70,882 — — 3,139 74,021 $ 279,768 $ 822 $ 21 $ 4,127 $ 284,738 The balances in the above charts have not been reduced by the allowance for loan loss. For the period ending September 30, 2020, the allowance for loan loss is $1.7 million. For the period ending December 31, 2019, the allowance for loan loss is $2.1 million. At September 30, 2020, there was a $464,000 loan outstanding that was in an accrual status, but known information about possible credit problems of borrowers caused management to have doubts as to the ability of such borrowers to comply with present loan repayment terms. Non-accrual loans with specific reserves at September 30, 2020 are comprised of: Consumer loans – One loan to one borrower that totaled $38,911 with specific reserves of $10,758 established for the loan, which was also a troubled debt restructured loan. Below is a summary of the recorded investment amount and related allowance for losses of the Bank’s impaired loans at September 30, 2020 and December 31, 2019. September 30, 2020 Unpaid Interest Average (dollars in thousands) Recorded Principal Income Specific Recorded Investment Balance Recognized Reserve Investment Impaired loans with specific reserves: Consumer $ 39 $ 39 $ 2 $ 11 $ 50 Total impaired loans with specific reserves 39 39 2 11 50 Impaired loans with no specific reserve: Consumer $ 44 $ 44 $ 3 $ n/a $ 66 Residential Real Estate 522 768 3 n/a 1,653 Indirect 215 215 8 n/a 248 Commercial Real Estate 4,569 4,569 134 n/a 4,814 Total impaired loans with no specific reserve $ 5,350 $ 5,596 $ 148 — $ 6,781 December 31, 2019 Unpaid Interest Average (dollars in thousands) Recorded Principal Income Specific Recorded Investment Balance Recognized Reserve Investment Impaired loans with specific reserves: Consumer $ 26 $ 41 $ 2 $ 15 $ 50 Total impaired loans with specific reserves $ 26 $ 41 $ 2 $ 15 $ 50 Impaired loans with no specific reserve: Consumer $ 96 $ 96 $ 8 n/a $ 122 Residential Real Estate 728 1,497 14 n/a 1,928 Indirect 123 123 6 n/a — Commercial Real Estate 3,680 3,680 81 n/a 3,845 Total impaired loans with no specific reserve $ 4,627 $ 5,396 $ 109 — $ 5,895 September 30, December 31, (dollars in thousands) 2020 2019 Troubled debt restructured loans $ 39 $ 41 Non-accrual and 90+ days past due and still accruing loans to average loans 1.78 % 1.45 % Allowance for loan losses to nonaccrual & 90+ days past due and still accruing loans 33.4 % 49.8 % At September 30, 2020, there was one troubled debt restructured loan consisting of a consumer loan in the amount of $39,000. The consumer loan is in a nonaccrual status. The following table shows the activity for non-accrual loans for the nine months ended September 30, 2019 and 2020. Residential Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial Real Estate Totals December 31, 2018 186 956 116 27 662 1,947 Transfers into nonaccrual 135 572 467 86 2,746 4,006 Loans paid down/payoffs (48) (755) (52) (86) (115) (1,056) Loans returned to accrual status (88) — (105) — — (193) Loans charged off (41) (17) (390) (27) — (475) September 30, 2019 144 756 36 — 3,293 4,229 December 31, 2019 137 728 123 — 3,139 4,127 Transfers into nonaccrual 64 — 434 — 1,619 2,117 Loans paid down/payoffs (56) (206) (47) — (100) (409) Loans returned to accrual status — — (17) — (577) (594) Loans charged off — — (277) — — (277) September 30, 2020 145 522 216 — 4,081 4,964 Other Real Estate Owned. At September 30, 2020 and December 31, 2019, the Company had $705,000 in real estate acquired in partial or total satisfaction of debt. All such properties are initially recorded at the lower of cost or fair value (net realizable value) at the date acquired and carried on the balance sheet as other real estate owned. Losses arising at the date of acquisition are charged against the allowance for credit losses. Subsequent write-downs that may be required and expense of operation are included in noninterest expense. Gains and losses realized from the sale of other real estate owned were included in noninterest income. Credit Quality Information In addition to monitoring the performance status of the loan portfolio, the Company utilizes a risk rating scale (1-8) to evaluate loan asset quality for all loans. Loans that are rated 1-4 are classified as pass credits. For the pass rated loans, management believes there is a low risk of loss related to these loans and, as necessary, credit may be strengthened through improved borrower performance and/or additional collateral. The Bank’s internal risk ratings are as follows: 1 Superior – minimal risk. (normally supported by pledged deposits, United States government securities, etc.) 2 Above Average - low risk. (all of the risks associated with this credit based on each of the bank’s creditworthiness criteria are minimal) 3 Average – moderately low risk. (most of the risks associated with this credit based on each of the bank’s creditworthiness criteria are minimal) 4 Acceptable – moderate risk. (the weighted overall risk associated with this credit based on each of the bank’s creditworthiness criteria is acceptable) 5 Other Assets Especially Mentioned – moderately high risk. (possesses deficiencies which corrective action by the bank would remedy; potential watch list) 6 Substandard – (the bank is inadequately protected and there exists the distinct possibility of sustaining some loss if not corrected) 7 Doubtful – (weaknesses make collection or liquidation in full, based on currently existing facts, improbable) 8 Loss – (of little value; not warranted as a bankable asset) The following tables provides information with respect to the Company's credit quality indicators by loan portfolio segment at September 30, 2020 and December 31, 2019: September 30, 2020 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Pass $ 12,084 $ 78,475 $ 80,328 $ 13,683 $ 17,367 $ 1,983 $ 64,772 $ 268,692 Special mention — — — — — — — — Substandard 83 522 49 — — — 4,569 5,223 Doubtful — — 167 — — — — 167 Loss — — — — — — — — $ 12,167 $ 78,997 $ 80,544 $ 13,683 $ 17,367 $ 1,983 $ 69,341 $ 274,082 Nonaccrual $ 145 $ 522 $ 216 $ — $ $ — $ 4,081 $ 4,964 Troubled debt restructures $ 39 $ — $ — $ — $ — $ — $ — $ 39 Number of TDRs accounts 1 — — — — — — 1 Non-performing TDRs $ 39 $ — $ — $ — $ — $ — $ — $ 39 Number of non-performing TDR accounts 1 — — — — — — 1 December 31, 2019 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Pass $ 11,939 $ 80,305 $ 102,261 $ 11,907 $ — $ 3,317 $ 70,341 $ 280,070 Special mention — — — — — — — — Substandard 137 728 44 — — — 3,680 4,589 Doubtful — — 79 — — — — 79 Loss — — — — — — — — $ 12,076 $ 81,033 $ 102,384 $ 11,907 $ — $ 3,317 $ 74,021 $ 284,738 Nonaccrual $ 137 $ 728 $ 123 $ — $ — $ — $ 3,139 $ 4,127 Troubled debt restructures $ 41 $ — $ — $ — $ — $ — $ — $ 41 Number of TDRs accounts 1 — — — — — — 1 Non-performing TDRs $ 41 $ — $ — $ — $ — $ — $ — $ 41 Number of non-performing TDR accounts 1 — — — — — — 1 |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
FAIR VALUE | NOTE 6 – FAIR VALUE ASC Topic 820 provides a framework for measuring and disclosing fair value under GAAP. ASC 820 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available-for-sale investment securities) or a nonrecurring basis (for example, impaired loans). ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Fair Value Hierarchy ASC 820‑10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820‑10, these inputs are summarized in the three broad levels listed below: · Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. · Level 2 – Other significant observable inputs (including quoted prices in active markets for similar securities). · Level 3 – Significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). The following is a description of valuation methodologies used for assets and liabilities recorded at fair value: Investment Securities Available-for-Sale and Interest Rate Swaps. Investment securities available-for-sale and interest rate swap contracts are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities, and interest rate swap contracts. Securities classified as Level 3 include asset-backed securities in illiquid markets. The Bank may be required, from time to time, to measure certain other financial and non-financial assets and liabilities at fair value on a non-recurring basis in accordance with GAAP. Loans. At September 30, 2020, these assets included 16 loans, excluding $1,345,625 of residential real estate, consumer and indirect loans. They have been classified as impaired and include nonaccrual, past due 90 days or more and still accruing, and a homogeneous pool of indirect loans all considered to be impaired loans, which are valued under Level 3 inputs. Impaired loans totaled $4,043,110 with $10,758 of specific reserves as of September 30, 2020. Foreclosed real estate assets are primarily valued on a nonrecurring basis at the fair values of the underlying real estate collateral. The Company is predominantly a cash flow lender with real estate serving as collateral on a majority of loans. These loans totaled $5,090,323 total impaired loans as of September 30, 2020. On a quarterly basis, the Company determines such fair values through a variety of data points and mostly rely on appraisals from independent appraisers. We obtain an appraisal on properties when they become impaired and have new appraisals at least every year. Typically, these appraisals do not include an inside inspection of the property as our loan documents do not require the borrower to allow access to the property. Therefore, the most significant unobservable inputs are the details of the amenities included within the property and the condition of the property. Further, we cannot always accurately assess the amount of time it takes to gain ownership of our collateral through the foreclosure process and the damage, as well as potential looting, of the property further decreasing our value. Thus, in determining the fair values we discount the current independent appraisals, with a range from 0% to 16%, based on individual circumstances. The remaining impaired loans ($298,000 with $10,758 of specific reserves as of September 30, 2020) include mobile homes, commercial, consumer, and indirect auto loans, which are valued based on the value of the underlying collateral. The changes in the assets subject to fair value measurements are summarized below by level: Fair (dollars in thousands) Level 1 Level 2 Level 3 Value September 30, 2020 Recurring: Securities available for sale Collateralized mortgage obligations $ — $ 27,255 $ — $ 27,255 Agency mortgage-backed securities — 30,595 — 30,595 Municipal securities — 25,301 — 25,301 U.S. Government agency securities — 31,310 — 31,310 Interest rate swap — (1,035) — (1,035) Non-recurring: Maryland Financial Bank stock — — 3 3 Impaired loans — — 5,378 5,378 OREO — 705 — 705 $ — $ 114,131 $ 5,381 $ 119,512 December 31, 2019 Recurring: Securities available for sale Collateralized mortgage obligations $ — $ 27,483 $ — $ 27,483 Agency mortgage-backed securities — 27,837 — 27,837 Municipal securities — 12,475 — 12,475 U.S. Government agency securities — 3,191 — 3,191 U.S. Treasury securities — 500 — 500 Interest rate swap — (336) — (336) Non-recurring: Maryland Financial Bank stock — — 3 3 Impaired loans — — 4,638 4,638 OREO 705 705 $ — $ 71,855 $ 4,641 $ 76,496 The estimated fair values of the Company’s financial instruments at September 30, 2020 and December 31, 2019 are summarized below. The fair values of a significant portion of these financial instruments are estimates derived using present value techniques and may not be indicative of the net realizable or liquidation values. Also, the calculation of estimated fair values is based on market conditions at a specific point in time and may not reflect current or future fair values. September 30, 2020 December 31, 2019 (dollars in thousands) Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and due from banks $ 2,196 $ 2,196 $ 2,420 $ 2,420 Interest-bearing deposits in other financial institutions 23,132 23,132 10,017 10,017 Federal funds sold 1,725 1,725 853 853 Investment securities available for sale 114,461 114,461 71,486 71,486 Investments in restricted stock 1,624 1,624 1,437 1,437 Ground rents 140 140 143 143 Loans, less allowance for credit losses 272,419 275,889 282,672 282,583 Accrued interest receivable 1,367 1,367 961 961 Cash value of life insurance 8,141 8,141 8,023 8,023 Financial liabilities: Deposits 343,940 345,264 321,440 300,944 Long-term borrowings 10,000 10,000 — — Short-term borrowings 37,367 37,368 25,000 25,386 Accrued interest payable 38 38 100 100 Unrecognized financial instruments: Commitments to extend credit 32,088 32,088 26,297 26,297 Standby letters of credit 1,044 1,044 1,059 1,059 The following table presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments that were estimated using an exit pricing notion. (dollars in thousands) Carrying Fair September 30, 2020 Amount Value Level 1 Level 2 Level 3 Financial instruments - Assets Cash and cash equivalents $ 27,053 $ 27,053 $ 27,053 $ — $ — Loans receivable, net 272,419 275,889 — — 275,889 Cash value of life insurance 8,141 8,141 — 8,141 — Financial instruments - Liabilities Deposits 343,940 345,264 129,888 215,376 — Long-term debt 10,000 10,000 — 10,000 — Short-term debt 37,367 37,368 — 37,368 — Fair values are based on quoted market prices for similar instruments or estimated using discounted cash flows. The discounts used are estimated using comparable market rates for similar types of instruments adjusted to be commensurate with the credit risk, overhead costs and optionality of such instruments. The fair value of cash and due from banks, federal funds sold, investments in restricted stocks and accrued interest receivable are equal to the carrying amounts. The fair values of investment securities are determined using market quotations if available, or measured using pricing models or other model-based valuation techniques such as present value and future value cash flows. The fair value of loans receivable is estimated using discounted cash flow analysis. For cash surrender value of life insurance, the carrying value is a reasonable estimate of fair value. Cash surrender value of life insurance is reported in the Level 2 fair value category. The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discounted rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 2 fair value category. The fair value of non-interest bearing deposits, interest-bearing checking, savings, and money market deposit accounts, securities sold under agreements to repurchase, and accrued interest payable are equal to the carrying amounts. The fair value of fixed-maturity time deposits is estimated using discounted cash flow analysis. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2020 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS New accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") with required effective dates. The following accounting pronouncements should be read in conjunction with "Critical Accounting Policies" of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2019 Form 10-K. ASU 2016‑02, “Leases (Topic 842).” In February 2016, the FASB issued ASU No. 2016-02. This guidance provides that lessees will be required to recognize the following for all operating leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee's obligation to make lease payments, 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. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the provisions of ASU No. 2016-02 on January 1, 2019 and elected several practical expedients made available by the FASB. Specifically, the Company elected the transition practical expedient to not recast comparative periods upon the adoption of the new guidance. In addition, the Company elected the package of practical expedients which among other things, requires no reassessment of whether existing contracts are or contain leases as well as no reassessment of lease classification for existing leases and the practical expedient which permits the Company to not separate non-lease components from lease components in determining the consideration in the lease agreement when the Company is a lessee and a lessor. The Company identified the primary lease agreements in scope of this new guidance as those relating to branch premises. As a result, the Company recognized a lease liability of $0.8 million and a related right-of-use asset of $0.8 million on its consolidated balance sheet on January 1, 2019. ASU No. 2016‑13, “Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” This update, commonly referred to as the current expected credit losses methodology (“CECL”), will change the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. For loans, this measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model previously required, but still permitted, under GAAP, which delays recognition until it is probable a loss has been incurred. In addition, the guidance will modify the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which will allow for reversal of credit impairments in future periods. At the FASB's October 16, 2019 meeting, the Board affirmed its decision to amend the effective date of this ASU for many companies. Public business entities that are SEC filers, excluding those meeting the smaller reporting company definition, will retain the initial required implementation date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All other entities will be required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 31, 2022. The Company is currently evaluating the implementation of ASU 2016-13 due to the change in implementation dates for smaller reporting companies included in the FASB's Exposure Draft. While the Company generally expects that the implementation of ASU 2016-13 will increase the allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements. ASU 2017‑08, “Receivables – Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities.” ASU 2017‑08 shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Entities generally amortize the premium over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017‑08 was effective for interim and annual reporting periods beginning after December 15, 2018. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2017-08 was effective for the Company on January 1, 2019 and did not have a significant impact on our financial statements. ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard better aligns an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedge instruments and the hedged item in the financial statements. Adoption for this ASU is required for fiscal years and interim periods beginning after December 15, 2018 and early adoption was permitted. ASU 2017-12 was effective for the Company on January 1, 2019 and did not have a significant impact on our financial statements. ASU No. 2018-11, “Leases - Targeted Improvements.” ASU No. 2018-11 provides entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company elected both transition options. ASU 2018-11 did not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2018-13, “Fair Value Measurement (Topic 820).” ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. Entities are also allowed to elect early adoption the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. As ASU No. 2018-13 only revises disclosure requirements, it did not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2018-14, “ Compensation – Retirement Benefit Plans – General (Subtopic 715-20).” ASU 2018-14 makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020; early adoption is permitted. As ASU 2018-14 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2019-01, Leases (Topic 842): “Codification Improvements.” On March 5, 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which amends certain aspects of the Board’s new leasing standard, ASU 2016-02 to address two lessor implementation issues and clarify when lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new leases standard, Topic 842, Leases. ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied. The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. As ASU 2019-01 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” was issued in April 2019 by the FASB. With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies that the reclassification of a debt security from held-to-maturity (“HTM”) to available-for-sale (“AFS”) under the transition guidance in ASU 2017-12 would not (1) call into question the classification of other HTM securities, (2) be required to actually designate any reclassified security in a last-of-layer hedge, or (3) be restricted from selling any reclassified security. As part of the transition of ASU 2019-04, entities may reclassify securities that would qualify for designation as the hedged item in a last-of-layer hedging relationship from HTM to AFS; however, entities that already made such a reclassification upon their adoption of ASU 2017-12 are precluded from reclassifying additional securities. All of the Company securities were classified as AFS at September 30, 2020. ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief” was issued on May 15, 2019. The ASU amends the transition guidance in the new credit losses standard, ASC 326, Financial Instruments—Credit Losses. The amendment provides entities with an option upon adoption of ASC 326-20, to irrevocably elect the fair value option for certain financial instruments that are both: (a) within the scope of ASC 326-20 (the current expected credit loss or “CECL” model) and (b) eligible for the fair value option in ASC 825-10, Financial Instruments—Overall. This election should be applied on an instrument-by-instrument basis for eligible financial assets. The fair value option election is not applicable to debt securities classified as available for sale or held to maturity. In addition, the amendment does not provide the option to discontinue or “unelect” the fair value option on instruments when an entity previously elected to apply it. If the fair value option is elected, an entity would recognize the difference between the carrying amount and the fair value of the financial instrument as part of the cumulative effect adjustment associated with the adoption of ASC 326. Subsequently, the financial instrument would be measured at fair value with changes in fair value reported in current earnings. The updated guidance is effective for interim and annual reporting periods beginning after December 31, 2022, with early adoption permitted. The Company is continuing to evaluate the extent of the potential impact upon adoption to the Company’s financial statements in January of 2023. ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740).” ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force).” The ASU clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments. ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs. ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method. In addition, the new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise. The amendments in this update become effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, and the amendments are to be applied prospectively. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements. ASU No. 2020-04, “Reference Rate Reform (Topic 848).” The ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements . ASU No. 2020-08, “Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs.” The amendments in this update clarify that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. The amendments in this update are effective beginning after December 15, 2020. The Company does not expect the guidance to have a material impact on the Company's consolidated financial statements. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2020 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 8 – REVENUE RECOGNITION On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent ASUs that modified Topic 606. The implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, interchange fees and merchant income. 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), 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 at the end of the month through a direct charge to customers’ accounts. Other Noninterest Income. Other noninterest income consists of: fees, exchange, other service charges, safety deposit box rental fees, and other miscellaneous revenue streams. Fees and other service charges are primarily comprised of debit card income, ATM fees, merchant services income, and other service charges. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit card transactions, in addition to account management fees. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, 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. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | BASIS OF PRESENTATION In management’s opinion, the accompanying unaudited consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim period reporting, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position at September 30, 2020 and December 31, 2019, the results of operations for the three- and nine-month period ended September 30, 2020 and 2019, and the statements of cash flows for the nine-month period ended September 30, 2020 and 2019. The operating results for the three-and nine-month period ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any future interim period. The consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2020. The unaudited consolidated financial statements for September 30, 2020 and 2019, the consolidated balance sheet at December 31, 2019, and accompanying notes should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, The Bank of Glen Burnie. Consolidation resulted in the elimination of all intercompany accounts and transactions. On January 10, 2019, the Board of Directors (the “Board”) of the Company and the Bank approved the contribution from the Company to the Bank of all of the common stock of GBB Properties, Inc. (“GBB”). The contribution and assignment of 3,600 shares of common stock occurred on January 22, 2019 and was treated as a capital contribution. Prior to the contribution, the Company owned all of the outstanding shares of common stock of GBB, a Maryland corporation which was organized in 1994 and which is engaged in the business of acquiring, holding and disposing of real property, typically acquired in connection with foreclosure proceedings (or deeds in lieu of foreclosure) instituted by the Bank. |
Cash Flow Presentation | Cash Flow Presentation In the statements of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, Federal Home Loan Bank of Atlanta (“FHLB Atlanta”) overnight deposits, and federal funds sold. Generally, federal funds are sold for one-day periods. |
Reclassifications | Reclassifications Certain items in the 2019 consolidated financial statements have been reclassified to conform to the 2020 classifications. The reclassifications had no effect on previously reported results of operations or retained earnings. |
Use of Estimates | Use of Estimates The preparation of financial statements 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 materially from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for loan losses (the “allowance”); the fair value of financial instruments, such as loans and investment securities; benefit plan obligations and expenses; and the valuation of deferred tax assets and liabilities. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS New accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") with required effective dates. The following accounting pronouncements should be read in conjunction with "Critical Accounting Policies" of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2019 Form 10-K. ASU 2016‑02, “Leases (Topic 842).” In February 2016, the FASB issued ASU No. 2016-02. This guidance provides that lessees will be required to recognize the following for all operating leases (with the exception of short-term leases): 1) a lease liability, which is the present value of a lessee's obligation to make lease payments, 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. Lessor accounting under the new guidance remains largely unchanged as it is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the provisions of ASU No. 2016-02 on January 1, 2019 and elected several practical expedients made available by the FASB. Specifically, the Company elected the transition practical expedient to not recast comparative periods upon the adoption of the new guidance. In addition, the Company elected the package of practical expedients which among other things, requires no reassessment of whether existing contracts are or contain leases as well as no reassessment of lease classification for existing leases and the practical expedient which permits the Company to not separate non-lease components from lease components in determining the consideration in the lease agreement when the Company is a lessee and a lessor. The Company identified the primary lease agreements in scope of this new guidance as those relating to branch premises. As a result, the Company recognized a lease liability of $0.8 million and a related right-of-use asset of $0.8 million on its consolidated balance sheet on January 1, 2019. ASU No. 2016‑13, “Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” This update, commonly referred to as the current expected credit losses methodology (“CECL”), will change the accounting for credit losses on loans and debt securities. Under the new guidance, the Company’s measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. For loans, this measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model previously required, but still permitted, under GAAP, which delays recognition until it is probable a loss has been incurred. In addition, the guidance will modify the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which will allow for reversal of credit impairments in future periods. At the FASB's October 16, 2019 meeting, the Board affirmed its decision to amend the effective date of this ASU for many companies. Public business entities that are SEC filers, excluding those meeting the smaller reporting company definition, will retain the initial required implementation date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All other entities will be required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 31, 2022. The Company is currently evaluating the implementation of ASU 2016-13 due to the change in implementation dates for smaller reporting companies included in the FASB's Exposure Draft. While the Company generally expects that the implementation of ASU 2016-13 will increase the allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements. ASU 2017‑08, “Receivables – Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities.” ASU 2017‑08 shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Entities generally amortize the premium over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount; the discount continues to be amortized to maturity. ASU No. 2017‑08 was effective for interim and annual reporting periods beginning after December 15, 2018. The guidance calls for a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ASU 2017-08 was effective for the Company on January 1, 2019 and did not have a significant impact on our financial statements. ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This standard better aligns an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedge instruments and the hedged item in the financial statements. Adoption for this ASU is required for fiscal years and interim periods beginning after December 15, 2018 and early adoption was permitted. ASU 2017-12 was effective for the Company on January 1, 2019 and did not have a significant impact on our financial statements. ASU No. 2018-11, “Leases - Targeted Improvements.” ASU No. 2018-11 provides entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU No. 2016-02. Specifically, under the amendments in ASU 2018-11: (1) entities may elect not to recast the comparative periods presented when transitioning to the new leasing standard, and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. The amendments have the same effective date as ASU 2016-02 (January 1, 2019 for the Company). The Company elected both transition options. ASU 2018-11 did not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2018-13, “Fair Value Measurement (Topic 820).” ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2018; early adoption is permitted. Entities are also allowed to elect early adoption the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. As ASU No. 2018-13 only revises disclosure requirements, it did not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2018-14, “ Compensation – Retirement Benefit Plans – General (Subtopic 715-20).” ASU 2018-14 makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other postretirement benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020; early adoption is permitted. As ASU 2018-14 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2019-01, Leases (Topic 842): “Codification Improvements.” On March 5, 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which amends certain aspects of the Board’s new leasing standard, ASU 2016-02 to address two lessor implementation issues and clarify when lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new leases standard, Topic 842, Leases. ASU 2019-01 aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied. The ASU also requires lessors within the scope of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within investing activities. Finally, the ASU exempts both lessees and lessors from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. As ASU 2019-01 only revises disclosure requirements, it will not have a material impact on the Company’s Consolidated Financial Statements. ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” was issued in April 2019 by the FASB. With respect to Topic 815, Derivatives and Hedging, ASU 2019-04 clarifies that the reclassification of a debt security from held-to-maturity (“HTM”) to available-for-sale (“AFS”) under the transition guidance in ASU 2017-12 would not (1) call into question the classification of other HTM securities, (2) be required to actually designate any reclassified security in a last-of-layer hedge, or (3) be restricted from selling any reclassified security. As part of the transition of ASU 2019-04, entities may reclassify securities that would qualify for designation as the hedged item in a last-of-layer hedging relationship from HTM to AFS; however, entities that already made such a reclassification upon their adoption of ASU 2017-12 are precluded from reclassifying additional securities. All of the Company securities were classified as AFS at September 30, 2020. ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief” was issued on May 15, 2019. The ASU amends the transition guidance in the new credit losses standard, ASC 326, Financial Instruments—Credit Losses. The amendment provides entities with an option upon adoption of ASC 326-20, to irrevocably elect the fair value option for certain financial instruments that are both: (a) within the scope of ASC 326-20 (the current expected credit loss or “CECL” model) and (b) eligible for the fair value option in ASC 825-10, Financial Instruments—Overall. This election should be applied on an instrument-by-instrument basis for eligible financial assets. The fair value option election is not applicable to debt securities classified as available for sale or held to maturity. In addition, the amendment does not provide the option to discontinue or “unelect” the fair value option on instruments when an entity previously elected to apply it. If the fair value option is elected, an entity would recognize the difference between the carrying amount and the fair value of the financial instrument as part of the cumulative effect adjustment associated with the adoption of ASC 326. Subsequently, the financial instrument would be measured at fair value with changes in fair value reported in current earnings. The updated guidance is effective for interim and annual reporting periods beginning after December 31, 2022, with early adoption permitted. The Company is continuing to evaluate the extent of the potential impact upon adoption to the Company’s financial statements in January of 2023. ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740).” ASU 2020-01, “Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force).” The ASU clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments. ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs. ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method. In addition, the new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise. The amendments in this update become effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, and the amendments are to be applied prospectively. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements. ASU No. 2020-04, “Reference Rate Reform (Topic 848).” The ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements . ASU No. 2020-08, “Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs.” The amendments in this update clarify that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. The amendments in this update are effective beginning after December 15, 2020. The Company does not expect the guidance to have a material impact on the Company's consolidated financial statements. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
EARNINGS PER SHARE | |
Schedule of earnings per common share | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Basic and diluted earnings per share: Net income $ 949,027 $ 605,522 $ 1,122,820 $ 1,059,823 Weighted average common shares outstanding 2,836,998 2,823,271 2,833,130 2,819,952 Basic and dilutive net income per share $ 0.33 $ 0.21 $ 0.40 $ 0.38 |
INVESTMENT SECURITIES (Tables)
INVESTMENT SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
INVESTMENT SECURITIES | |
Schedule of summary of investment securities | At September 30, 2020 Gross Gross Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Collateralized mortgage obligations $ 26,868 $ 412 $ (25) $ 27,255 Agency mortgage-backed securities 29,684 921 (10) 30,595 Municipal securities 24,975 399 (73) 25,301 U.S. Government agency securities 31,559 20 (269) 31,310 Total securities available for sale $ 113,086 $ 1,752 $ (377) $ 114,461 At December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair (dollars in thousands) Cost Gains Losses Value Collateralized mortgage obligations $ 27,618 $ 52 $ (187) $ 27,483 Agency mortgage-backed securities 27,823 149 (135) 27,837 Municipal securities 12,301 191 (17) 12,475 U.S. Government agency securities 3,195 1 (5) 3,191 U.S. Treasury securities 500 — — 500 Total securities available for sale $ 71,437 $ 393 $ (344) $ 71,486 |
Schedule of gross unrealized losses and fair value, aggregated by investment category and length of time in continuous unrealized loss position | The gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2020 and December 31, 2019 are as follows: September 30, 2020 Less than 12 months 12 months or more Total Securities available for sale: Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (dollars in thousands) Collateralized mortgage obligations $ 1,899 $ (3) $ 2,131 $ (22) $ 4,030 $ (25) Agency mortgage-backed securities — — 596 (10) 596 (10) Municipal securities 15,271 (71) 544 (2) 15,815 (73) U.S. Government agency securities 23,496 (269) — — 23,496 (269) $ 40,666 $ (343) $ 3,271 $ (34) $ 43,937 $ (377) December 31, 2019 Less than 12 months 12 months or more Total Securities available for sale: Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (dollars in thousands) Collateralized mortgage obligations $ 11,792 $ (65) $ 7,330 $ (122) $ 19,122 $ (187) Agency mortgage-backed securities 4,577 (20) 10,918 (115) 15,495 (135) Municipal securities 1,806 (7) 864 (10) 2,670 (17) U.S. Government agency securities 591 (5) — — 591 (5) $ 18,766 $ (97) $ 19,112 $ (247) $ 37,878 $ (344) |
Schedule of contractual maturities of investment securities | Shown below are contractual maturities of debt securities at September 30, 2020. Actual maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. At September 30, 2020 Amortized Fair Yield (dollars in thousands) Cost Value (1), (2) Available for sale securities maturing: Within one year $ 1,818 $ 1,825 1.85 % Over one to five years 1,621 1,660 2.34 % Over five to ten years 10,928 11,061 1.39 % Over ten years 98,719 99,915 1.81 % Total debt securities $ 113,086 $ 114,461 _____________________ (1) Yields are stated as book yields which are adjusted for amortization and accretion of purchase premiums and discounts, respectively. (2) Yields on tax-exempt obligations are computed on a tax-equivalent basis. |
LOANS RECEIVABLE AND ALLOWANC_2
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES | |
Schedule of major categories of loans | September 30, December 31, 2020 2019 (dollars in thousands) Amount % Amount % Consumer $ 12,167 4 $ 12,076 Residential real estate 78,997 29 81,033 Indirect 80,544 30 102,384 Commercial 13,683 5 11,907 Commercial SBA PPP 17,367 6 — Construction 1,983 1 3,317 Commercial real estate 69,341 25 74,021 Loans, net of deferred fees and costs 274,082 100 284,738 100 Less: Allowance for loan losses (1,663) (2,066) Loans, net $ 272,419 $ 282,672 |
Schedule of total allowance by loan segment | September 30, 2020 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Balance, beginning of year $ 122 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,066 Charge-offs — — (277) — — — — (277) Recoveries 9 27 81 20 — — — 137 Provision for loan losses 8 (65) (117) 25 — (4) (110) (263) Balance, end of quarter $ 139 $ 551 $ 604 $ 83 $ — $ 7 $ 279 $ 1,663 Individually evaluated for impairment: Balance in allowance $ 11 $ — $ — $ — $ — $ — $ — $ 11 Related loan balance 39 487 — — — — 4,569 5,095 Collectively evaluated for impairment: Balance in allowance $ 128 $ 551 $ 604 $ 83 $ — $ 7 $ 279 $ 1,652 Related loan balance 12,128 78,510 80,544 13,683 17,367 1,983 64,772 268,987 December 31, 2019 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Balance, beginning of year $ 161 $ 864 $ 988 $ 241 $ — $ 4 $ 283 $ 2,541 Charge-offs (69) (16) (504) (27) — — — (616) Recoveries 16 5 225 10 — — — 256 Provision for loan losses 14 (264) 208 (186) — 7 106 (115) Balance, end of year $ 122 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,066 Individually evaluated for impairment: Balance in allowance $ 15 $ — $ — $ — $ — $ — $ — $ 15 Related loan balance 86 631 — — — — 3,680 4,397 Collectively evaluated for impairment: Balance in allowance $ 107 $ 589 $ 917 $ 38 $ — $ 11 $ 389 $ 2,051 Related loan balance 11,990 80,402 102,384 11,907 — 3,317 70,341 280,341 |
Schedule of allowances for credit losses | September 30, September 30, (dollars in thousands) 2020 2019 Average loans $ 281,773 $ 293,958 Net charge offs to average loans (annualized) 0.07 % 0.14 % |
Schedule of reserve for unfunded commitments | Nine Months Ended Ended September 30, (dollars in thousands) 2020 2019 Beginning balance $ 37 $ 35 Reduction of unfunded reserve (8) (23) Provisions charged to operations 25 Ending balance $ 29 $ 37 |
Schedule of current, past due, and non-accrual loans by categories of loans and restructured loans | At September 30, 2020 90 Days or (dollars in thousands) 30-89 Days More and Current Past Due Still Accruing Nonaccrual Total Consumer $ 11,954 $ 68 $ — $ 145 $ 12,167 Residential Real Estate 78,202 255 18 522 78,997 Indirect 79,800 528 — 216 80,544 Commercial 13,683 — — — 13,683 Commercial SBA PPP 17,367 — — — 17,367 Construction 1,983 — — — 1,983 Commercial Real Estate 65,260 — — 4,081 69,341 $ 268,249 $ 851 $ 18 $ 4,964 $ 274,082 At December 31, 2019 90 Days or (dollars in thousands) 30-89 Days More and Current Past Due Still Accruing Nonaccrual Total Consumer $ 11,865 $ 74 $ — $ 137 $ 12,076 Residential Real Estate 80,192 92 21 728 81,033 Indirect 101,605 656 — 123 102,384 Commercial 11,907 — — — 11,907 Commercial SBA PPP — — — — — Construction 3,317 — — — 3,317 Commercial Real Estate 70,882 — — 3,139 74,021 $ 279,768 $ 822 $ 21 $ 4,127 $ 284,738 |
Schedule of impaired financing receivables | September 30, 2020 Unpaid Interest Average (dollars in thousands) Recorded Principal Income Specific Recorded Investment Balance Recognized Reserve Investment Impaired loans with specific reserves: Consumer $ 39 $ 39 $ 2 $ 11 $ 50 Total impaired loans with specific reserves 39 39 2 11 50 Impaired loans with no specific reserve: Consumer $ 44 $ 44 $ 3 $ n/a $ 66 Residential Real Estate 522 768 3 n/a 1,653 Indirect 215 215 8 n/a 248 Commercial Real Estate 4,569 4,569 134 n/a 4,814 Total impaired loans with no specific reserve $ 5,350 $ 5,596 $ 148 — $ 6,781 December 31, 2019 Unpaid Interest Average (dollars in thousands) Recorded Principal Income Specific Recorded Investment Balance Recognized Reserve Investment Impaired loans with specific reserves: Consumer $ 26 $ 41 $ 2 $ 15 $ 50 Total impaired loans with specific reserves $ 26 $ 41 $ 2 $ 15 $ 50 Impaired loans with no specific reserve: Consumer $ 96 $ 96 $ 8 n/a $ 122 Residential Real Estate 728 1,497 14 n/a 1,928 Indirect 123 123 6 n/a — Commercial Real Estate 3,680 3,680 81 n/a 3,845 Total impaired loans with no specific reserve $ 4,627 $ 5,396 $ 109 — $ 5,895 |
Schedule of allowance for loan loss and the unearned income on loans | September 30, December 31, (dollars in thousands) 2020 2019 Troubled debt restructured loans $ 39 $ 41 Non-accrual and 90+ days past due and still accruing loans to average loans 1.78 % 1.45 % Allowance for loan losses to nonaccrual & 90+ days past due and still accruing loans 33.4 % 49.8 % |
Schedule of non accrual loans | Residential Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial Real Estate Totals December 31, 2018 186 956 116 27 662 1,947 Transfers into nonaccrual 135 572 467 86 2,746 4,006 Loans paid down/payoffs (48) (755) (52) (86) (115) (1,056) Loans returned to accrual status (88) — (105) — — (193) Loans charged off (41) (17) (390) (27) — (475) September 30, 2019 144 756 36 — 3,293 4,229 December 31, 2019 137 728 123 — 3,139 4,127 Transfers into nonaccrual 64 — 434 — 1,619 2,117 Loans paid down/payoffs (56) (206) (47) — (100) (409) Loans returned to accrual status — — (17) — (577) (594) Loans charged off — — (277) — — (277) September 30, 2020 145 522 216 — 4,081 4,964 |
Schedule of risk ratings of loans by categories of loans | The following tables provides information with respect to the Company's credit quality indicators by loan portfolio segment at September 30, 2020 and December 31, 2019: September 30, 2020 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Pass $ 12,084 $ 78,475 $ 80,328 $ 13,683 $ 17,367 $ 1,983 $ 64,772 $ 268,692 Special mention — — — — — — — — Substandard 83 522 49 — — — 4,569 5,223 Doubtful — — 167 — — — — 167 Loss — — — — — — — — $ 12,167 $ 78,997 $ 80,544 $ 13,683 $ 17,367 $ 1,983 $ 69,341 $ 274,082 Nonaccrual $ 145 $ 522 $ 216 $ — $ $ — $ 4,081 $ 4,964 Troubled debt restructures $ 39 $ — $ — $ — $ — $ — $ — $ 39 Number of TDRs accounts 1 — — — — — — 1 Non-performing TDRs $ 39 $ — $ — $ — $ — $ — $ — $ 39 Number of non-performing TDR accounts 1 — — — — — — 1 December 31, 2019 Residential Commercial Commercial (dollars in thousands) Consumer Real Estate Indirect Commercial SBA PPP Construction Real Estate Total Pass $ 11,939 $ 80,305 $ 102,261 $ 11,907 $ — $ 3,317 $ 70,341 $ 280,070 Special mention — — — — — — — — Substandard 137 728 44 — — — 3,680 4,589 Doubtful — — 79 — — — — 79 Loss — — — — — — — — $ 12,076 $ 81,033 $ 102,384 $ 11,907 $ — $ 3,317 $ 74,021 $ 284,738 Nonaccrual $ 137 $ 728 $ 123 $ — $ — $ — $ 3,139 $ 4,127 Troubled debt restructures $ 41 $ — $ — $ — $ — $ — $ — $ 41 Number of TDRs accounts 1 — — — — — — 1 Non-performing TDRs $ 41 $ — $ — $ — $ — $ — $ — $ 41 Number of non-performing TDR accounts 1 — — — — — — 1 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
FAIR VALUE | |
Schedule of changes in asset subject to fair value measurement by Level | Fair (dollars in thousands) Level 1 Level 2 Level 3 Value September 30, 2020 Recurring: Securities available for sale Collateralized mortgage obligations $ — $ 27,255 $ — $ 27,255 Agency mortgage-backed securities — 30,595 — 30,595 Municipal securities — 25,301 — 25,301 U.S. Government agency securities — 31,310 — 31,310 Interest rate swap — (1,035) — (1,035) Non-recurring: Maryland Financial Bank stock — — 3 3 Impaired loans — — 5,378 5,378 OREO — 705 — 705 $ — $ 114,131 $ 5,381 $ 119,512 December 31, 2019 Recurring: Securities available for sale Collateralized mortgage obligations $ — $ 27,483 $ — $ 27,483 Agency mortgage-backed securities — 27,837 — 27,837 Municipal securities — 12,475 — 12,475 U.S. Government agency securities — 3,191 — 3,191 U.S. Treasury securities — 500 — 500 Interest rate swap — (336) — (336) Non-recurring: Maryland Financial Bank stock — — 3 3 Impaired loans — — 4,638 4,638 OREO 705 705 $ — $ 71,855 $ 4,641 $ 76,496 |
Schedule of estimated fair values of financial instruments | September 30, 2020 December 31, 2019 (dollars in thousands) Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and due from banks $ 2,196 $ 2,196 $ 2,420 $ 2,420 Interest-bearing deposits in other financial institutions 23,132 23,132 10,017 10,017 Federal funds sold 1,725 1,725 853 853 Investment securities available for sale 114,461 114,461 71,486 71,486 Investments in restricted stock 1,624 1,624 1,437 1,437 Ground rents 140 140 143 143 Loans, less allowance for credit losses 272,419 275,889 282,672 282,583 Accrued interest receivable 1,367 1,367 961 961 Cash value of life insurance 8,141 8,141 8,023 8,023 Financial liabilities: Deposits 343,940 345,264 321,440 300,944 Long-term borrowings 10,000 10,000 — — Short-term borrowings 37,367 37,368 25,000 25,386 Accrued interest payable 38 38 100 100 Unrecognized financial instruments: Commitments to extend credit 32,088 32,088 26,297 26,297 Standby letters of credit 1,044 1,044 1,059 1,059 |
Schedule of fair value hierarchy of financial instruments | (dollars in thousands) Carrying Fair September 30, 2020 Amount Value Level 1 Level 2 Level 3 Financial instruments - Assets Cash and cash equivalents $ 27,053 $ 27,053 $ 27,053 $ — $ — Loans receivable, net 272,419 275,889 — — 275,889 Cash value of life insurance 8,141 8,141 — 8,141 — Financial instruments - Liabilities Deposits 343,940 345,264 129,888 215,376 — Long-term debt 10,000 10,000 — 10,000 — Short-term debt 37,367 37,368 — 37,368 — |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | Jan. 22, 2019shares |
BASIS OF PRESENTATION | |
Capital contributions common share | 3,600 |
EARNINGS PER SHARE - Basic earn
EARNINGS PER SHARE - Basic earnings per share of common stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and diluted earnings per share: | ||||
Net income | $ 949 | $ 606 | $ 1,123 | $ 1,060 |
Weighted average common shares outstanding (in shares) | 2,836,998 | 2,823,271 | 2,833,130 | 2,819,952 |
Basic and diluted net (loss) income per share of common stock | $ 0.33 | $ 0.21 | $ 0.40 | $ 0.38 |
Options outstanding | 0 | 0 | 0 | 0 |
INVESTMENT SECURITIES (Details)
INVESTMENT SECURITIES (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Investment Securities | ||
Amortized Cost | $ 113,086,000 | $ 71,437,000 |
Gross Unrealized Gains | 1,752,000 | 393,000 |
Gross Unrealized Losses | (377,000) | (344,000) |
Fair Value | 114,461,000 | 71,486,000 |
Trading securities | 0 | 0 |
Held to maturity | 0 | 0 |
Collateralized mortgage obligations | ||
Investment Securities | ||
Amortized Cost | 26,868,000 | 27,618,000 |
Gross Unrealized Gains | 412,000 | 52,000 |
Gross Unrealized Losses | (25,000) | (187,000) |
Fair Value | 27,255,000 | 27,483,000 |
Agency mortgage-backed securities | ||
Investment Securities | ||
Amortized Cost | 29,684,000 | 27,823,000 |
Gross Unrealized Gains | 921,000 | 149,000 |
Gross Unrealized Losses | (10,000) | (135,000) |
Fair Value | 30,595,000 | 27,837,000 |
Municipal securities | ||
Investment Securities | ||
Amortized Cost | 24,975,000 | 12,301,000 |
Gross Unrealized Gains | 399,000 | 191,000 |
Gross Unrealized Losses | (73,000) | (17,000) |
Fair Value | 25,301,000 | 12,475,000 |
U.S. Government agency securities | ||
Investment Securities | ||
Amortized Cost | 31,559,000 | 3,195,000 |
Gross Unrealized Gains | 20,000 | 1,000 |
Gross Unrealized Losses | (269,000) | (5,000) |
Fair Value | $ 31,310,000 | 3,191,000 |
U.S. Treasury securities | ||
Investment Securities | ||
Amortized Cost | 500,000 | |
Fair Value | $ 500,000 |
INVESTMENT SECURITIES - Gross U
INVESTMENT SECURITIES - Gross Unrealized Losses and Fair Value Aggregated by Investment Category and Length of Time in Continuous Unrealized Loss Position (Details) $ in Thousands | Sep. 30, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Investment Securities | ||
Less than 12 months Fair Value | $ 40,666 | $ 18,766 |
Less than 12 months Unrealized Loss | (343) | (97) |
12 months or more Fair Value | 3,271 | 19,112 |
12 months or more Unrealized Loss | (34) | (247) |
Total Fair Value | 43,937 | 37,878 |
Total Unrealized Loss | $ (377) | $ (344) |
Number of securities continuous unrealized loss position more than twelve months | security | 58 | 97 |
Collateralized mortgage obligations | ||
Investment Securities | ||
Less than 12 months Fair Value | $ 1,899 | $ 11,792 |
Less than 12 months Unrealized Loss | (3) | (65) |
12 months or more Fair Value | 2,131 | 7,330 |
12 months or more Unrealized Loss | (22) | (122) |
Total Fair Value | 4,030 | 19,122 |
Total Unrealized Loss | (25) | (187) |
Agency mortgage-backed securities | ||
Investment Securities | ||
Less than 12 months Fair Value | 4,577 | |
Less than 12 months Unrealized Loss | (20) | |
12 months or more Fair Value | 596 | 10,918 |
12 months or more Unrealized Loss | (10) | (115) |
Total Fair Value | 596 | 15,495 |
Total Unrealized Loss | (10) | (135) |
Municipal securities | ||
Investment Securities | ||
Less than 12 months Fair Value | 15,271 | 1,806 |
Less than 12 months Unrealized Loss | (71) | (7) |
12 months or more Fair Value | 544 | 864 |
12 months or more Unrealized Loss | (2) | (10) |
Total Fair Value | 15,815 | 2,670 |
Total Unrealized Loss | (73) | (17) |
U.S. Government agency securities | ||
Investment Securities | ||
Less than 12 months Fair Value | 23,496 | 591 |
Less than 12 months Unrealized Loss | (269) | (5) |
Total Fair Value | 23,496 | 591 |
Total Unrealized Loss | $ (269) | $ (5) |
INVESTMENT SECURITIES - Contrac
INVESTMENT SECURITIES - Contractual Maturities of Investment Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Available for Sale Amortized Cost | ||
Due within one year | $ 1,818 | |
Due over one to five years | 1,621 | |
Due over five to ten years | 10,928 | |
Due over ten years | 98,719 | |
Amortized Cost | 113,086 | $ 71,437 |
Available for Sale Fair Value | ||
Due within one year | 1,825 | |
Due over one to five years | 1,660 | |
Due over five to ten years | 11,061 | |
Due over ten years | 99,915 | |
Fair Value | $ 114,461 | $ 71,486 |
Available for Sale, Yield | ||
Within one year | 1.85% | |
Over one to five years | 2.34% | |
Over five to ten years | 1.39% | |
Over ten years | 1.81% |
LOANS RECEIVABLE AND ALLOWANC_3
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Major Categories of Loans (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 274,082,000 | $ 284,738,000 |
Less: Allowance for loan losses | (1,663,000) | (2,066,000) |
Loans, net | $ 272,419,000 | $ 282,672,000 |
Loans and lease receivable allowances, percentage | 100.00% | 100.00% |
Increase (decrease) in loans and leases receivable | $ (10,300,000) | |
Percentage of increase (decrease) in loans and leases receivable | (3.63%) | |
Consumer | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 12,167,000 | $ 12,076,000 |
Loans and lease receivable allowances, percentage | 4.00% | 4.00% |
Increase (decrease) in loans and leases receivable | $ 91,000 | |
Percentage of increase (decrease) in loans and leases receivable | 0.75% | |
Consumer | Real Estate Loan [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 78,997,000 | $ 81,033,000 |
Loans and lease receivable allowances, percentage | 29.00% | 28.00% |
Indirect | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 80,544,000 | $ 102,384,000 |
Loans and lease receivable allowances, percentage | 30.00% | 36.00% |
Percentage of increase (decrease) in loans and leases receivable | (21.33%) | |
Commercial | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 13,683,000 | $ 11,907,000 |
Loans and lease receivable allowances, percentage | 5.00% | 4.00% |
Increase (decrease) in loans and leases receivable | $ (1,800,000) | |
Percentage of increase (decrease) in loans and leases receivable | (14.92%) | |
Commercial | Real Estate Loan [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 69,341,000 | $ 74,021,000 |
Loans and lease receivable allowances, percentage | 25.00% | 27.00% |
Commercial | SBA PPP Loan [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 17,367,000 | $ 0 |
Loans and lease receivable allowances, percentage | 6.00% | |
Construction | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 1,983,000 | $ 3,317,000 |
Loans and lease receivable allowances, percentage | 1.00% | 1.00% |
Increase (decrease) in loans and leases receivable | $ (1,300,000) | |
Percentage of increase (decrease) in loans and leases receivable | (40.22%) | |
Commercial SBA PPP | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Loans, net of deferred fees and costs | $ 17,400,000 | |
Residential Real estate | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Increase (decrease) in loans and leases receivable | $ 2,000,000 | |
Percentage of increase (decrease) in loans and leases receivable | 2.51% | |
Commercial Real Estate | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Increase (decrease) in loans and leases receivable | $ (4,700,000) | |
Percentage of increase (decrease) in loans and leases receivable | (6.32%) |
LOANS RECEIVABLE AND ALLOWANC_4
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Allowance for Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | $ 2,066 | $ 2,541 | $ 2,541 | ||
Charged off | (277) | (519) | (616) | ||
Recoveries | 137 | 256 | |||
Provision for loan losses | $ (669) | $ (139) | (263) | 65 | (115) |
Balance, end of year | 1,663 | 1,663 | 2,066 | ||
Individually evaluated for impairment: | |||||
Individually evaluated for impairment, Balance in allowance | 11 | 11 | 15 | ||
Individually evaluated for impairment, Related loan balance | 5,095 | 5,095 | 4,397 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 1,652 | 1,652 | 2,051 | ||
Collectively evaluated for impairment, Related loan balance | 268,987 | 268,987 | 280,341 | ||
Consumer | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 122 | 161 | 161 | ||
Charged off | (69) | ||||
Recoveries | 9 | 16 | |||
Provision for loan losses | 8 | 14 | |||
Balance, end of year | 139 | 139 | 122 | ||
Individually evaluated for impairment: | |||||
Individually evaluated for impairment, Balance in allowance | 11 | 11 | 15 | ||
Individually evaluated for impairment, Related loan balance | 39 | 39 | 86 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 128 | 128 | 107 | ||
Collectively evaluated for impairment, Related loan balance | 12,128 | 12,128 | 11,990 | ||
Consumer | Real Estate Loan [Member] | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 589 | 864 | 864 | ||
Charged off | (16) | ||||
Recoveries | 27 | 5 | |||
Provision for loan losses | (65) | (264) | |||
Balance, end of year | 551 | 551 | 589 | ||
Individually evaluated for impairment: | |||||
Individually evaluated for impairment, Related loan balance | 487 | 487 | 631 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 551 | 551 | 589 | ||
Collectively evaluated for impairment, Related loan balance | 78,510 | 78,510 | 80,402 | ||
Indirect | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 917 | 988 | 988 | ||
Charged off | (277) | (504) | |||
Recoveries | 81 | 225 | |||
Provision for loan losses | (117) | 208 | |||
Balance, end of year | 604 | 604 | 917 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 604 | 604 | 917 | ||
Collectively evaluated for impairment, Related loan balance | 80,544 | 80,544 | 102,384 | ||
Commercial | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 38 | 241 | 241 | ||
Charged off | (27) | ||||
Recoveries | 20 | 10 | |||
Provision for loan losses | 25 | (186) | |||
Balance, end of year | 83 | 83 | 38 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 83 | 83 | 38 | ||
Collectively evaluated for impairment, Related loan balance | 13,683 | 13,683 | 11,907 | ||
Commercial | Real Estate Loan [Member] | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 389 | 283 | 283 | ||
Provision for loan losses | 106 | ||||
Balance, end of year | 389 | ||||
Individually evaluated for impairment: | |||||
Individually evaluated for impairment, Related loan balance | 3,680 | ||||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 389 | ||||
Collectively evaluated for impairment, Related loan balance | 70,341 | ||||
Commercial | SBA PPP Loan [Member] | |||||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Related loan balance | 17,367 | 17,367 | |||
Construction | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 11 | $ 4 | 4 | ||
Provision for loan losses | (4) | 7 | |||
Balance, end of year | 7 | 7 | 11 | ||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 7 | 7 | 11 | ||
Collectively evaluated for impairment, Related loan balance | 1,983 | 1,983 | 3,317 | ||
Commercial Real Estate | Real Estate Loan [Member] | |||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||||
Balance, beginning of year | 389 | ||||
Provision for loan losses | (110) | ||||
Balance, end of year | 279 | 279 | $ 389 | ||
Individually evaluated for impairment: | |||||
Individually evaluated for impairment, Related loan balance | 4,569 | 4,569 | |||
Collectively evaluated for impairment: | |||||
Collectively evaluated for impairment, Balance in allowance | 279 | 279 | |||
Collectively evaluated for impairment, Related loan balance | $ 64,772 | $ 64,772 |
LOANS RECEIVABLE AND ALLOWANC_5
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Allowance for credit losses (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)borrower | Sep. 30, 2019USD ($)borrower | Dec. 31, 2019USD ($) | |
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES | |||
Average loans | $ 281,773 | $ 293,958 | |
Net charge-offs to average loans (annualized) | 0.07% | 0.14% | |
Number of borrowers | borrower | 30 | 47 | |
Loans charged off | $ 277 | $ 519 | $ 616 |
Outstanding commitments | 33,100 | 34,600 | |
Unfunded commitments | |||
Beginning balance | 37 | 35 | 35 |
Reduction of unfunded reserve | (8) | (23) | |
Provisions charged to operations | 25 | ||
Ending balance | $ 29 | $ 37 | $ 37 |
LOANS RECEIVABLE AND ALLOWANC_6
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Current, past due, and non-accrual loans by categories of loans and restructured loans (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | $ 268,249,000 | $ 279,768,000 | ||
Past Due | 464,000 | |||
Non-accrual | 4,964,000 | 4,127,000 | $ 4,229,000 | $ 1,947,000 |
Total | 274,082,000 | 284,738,000 | ||
30-89 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Past Due | 851,000 | 822,000 | ||
Financing Receivables, Equal to Greater than 90 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
90 Days or More and Still Accruing | 18,000 | 21,000 | ||
Consumer | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 11,954,000 | 11,865,000 | ||
Non-accrual | 145,000 | 137,000 | 144,000 | 186,000 |
Total | 12,167,000 | 12,076,000 | ||
Consumer | 30-89 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Past Due | 68,000 | 74,000 | ||
Consumer | Real Estate Loan [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 78,202,000 | 80,192,000 | ||
Non-accrual | 522,000 | 728,000 | 756,000 | 956,000 |
Total | 78,997,000 | 81,033,000 | ||
Consumer | Real Estate Loan [Member] | 30-89 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Past Due | 255,000 | 92,000 | ||
Consumer | Real Estate Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
90 Days or More and Still Accruing | 18,000 | 21,000 | ||
Indirect | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 79,800,000 | 101,605,000 | ||
Non-accrual | 216,000 | 123,000 | 36,000 | 116,000 |
Total | 80,544,000 | 102,384,000 | ||
Indirect | 30-89 Days Past Due | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Past Due | 528,000 | 656,000 | ||
Commercial | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 13,683,000 | 11,907,000 | ||
Non-accrual | 27,000 | |||
Total | 13,683,000 | 11,907,000 | ||
Commercial | Real Estate Loan [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 65,260,000 | 70,882,000 | ||
Non-accrual | 4,081,000 | 3,139,000 | $ 3,293,000 | $ 662,000 |
Total | 69,341,000 | 74,021,000 | ||
Commercial | SBA PPP Loan [Member] | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 17,367,000 | |||
Total | 17,367,000 | 0 | ||
Construction | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Current | 1,983,000 | 3,317,000 | ||
Total | $ 1,983,000 | $ 3,317,000 |
LOANS RECEIVABLE AND ALLOWANC_7
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Impaired financing receivables (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment with specific reserves | $ 39,000 | $ 26,000 |
Unpaid Principal Balance with specific reserves | 39,000 | 41,000 |
Interest Income Recognized with specific reserves | 2,000 | 2,000 |
Specific Reserve with specific reserves | 11,000 | 15,000 |
Recorded Investment | 50,000 | 50,000 |
Recorded Investment with no specific reserve | 5,350,000 | 4,627,000 |
Unpaid Principal Balance with no specific reserve | 5,596,000 | 5,396,000 |
Interest Income Recognized with no specific reserve | 148,000 | 109,000 |
Specific Reserve | 10,758 | |
Average Recorded Investment with no specific reserve | 6,781,000 | 5,895,000 |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment with specific reserves | 39,000 | 26,000 |
Unpaid Principal Balance with specific reserves | 39,000 | 41,000 |
Interest Income Recognized with specific reserves | 2,000 | 2,000 |
Specific Reserve with specific reserves | 11,000 | 15,000 |
Recorded Investment | 50,000 | 50,000 |
Recorded Investment with no specific reserve | 44,000 | 96,000 |
Unpaid Principal Balance with no specific reserve | 44,000 | 96,000 |
Interest Income Recognized with no specific reserve | 3,000 | 8,000 |
Average Recorded Investment with no specific reserve | 66,000 | 122,000 |
Consumer | Real Estate Loan [Member] | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment with no specific reserve | 522,000 | 728,000 |
Unpaid Principal Balance with no specific reserve | 768,000 | 1,497,000 |
Interest Income Recognized with no specific reserve | 3,000 | 14,000 |
Average Recorded Investment with no specific reserve | 1,653,000 | 1,928,000 |
Indirect | ||
Financing Receivable, Impaired [Line Items] | ||
Interest Income Recognized with specific reserves | 6,000 | |
Recorded Investment with no specific reserve | 215,000 | 123,000 |
Unpaid Principal Balance with no specific reserve | 215,000 | 123,000 |
Interest Income Recognized with no specific reserve | 8,000 | |
Specific Reserve | 10,758 | |
Average Recorded Investment with no specific reserve | 248,000 | |
Commercial | Real Estate Loan [Member] | ||
Financing Receivable, Impaired [Line Items] | ||
Recorded Investment with no specific reserve | 4,569,000 | 3,680,000 |
Unpaid Principal Balance with no specific reserve | 4,569,000 | 3,680,000 |
Interest Income Recognized with no specific reserve | 134,000 | 81,000 |
Average Recorded Investment with no specific reserve | $ 4,814,000 | $ 3,845,000 |
LOANS RECEIVABLE AND ALLOWANC_8
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Summary of allowance for credit losses (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Financing Receivable, Impaired [Line Items] | ||
Troubled debt restructured loans | $ 39,000 | $ 41,000 |
Non-accrual and 90+ days past due and still accruing loans to average loans | 1.78% | 1.45% |
Allowance for credit losses to non-accrual and 90 days or more and still accruing loans | 33.40% | 49.80% |
Consumer | ||
Financing Receivable, Impaired [Line Items] | ||
Troubled debt restructured loans | $ 39,000 |
LOANS RECEIVABLE AND ALLOWANC_9
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Non-accrual loans (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | $ 4,127 | $ 1,947 |
Transfer into non-accrual | 2,117 | 4,006 |
Loans paid down/payoffs | (409) | (1,056) |
Loans return to accrual status | (594) | (193) |
Loans charged off | (277) | (475) |
Balance | 4,964 | 4,229 |
Consumer | ||
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | 137 | 186 |
Transfer into non-accrual | 64 | 135 |
Loans paid down/payoffs | (56) | (48) |
Loans return to accrual status | (88) | |
Loans charged off | (41) | |
Balance | 145 | 144 |
Consumer | Real Estate Loan [Member] | ||
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | 728 | 956 |
Transfer into non-accrual | 572 | |
Loans paid down/payoffs | (206) | (755) |
Loans charged off | (17) | |
Balance | 522 | 756 |
Indirect | ||
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | 123 | 116 |
Transfer into non-accrual | 434 | 467 |
Loans paid down/payoffs | (47) | (52) |
Loans return to accrual status | (17) | (105) |
Loans charged off | (277) | (390) |
Balance | 216 | 36 |
Commercial | ||
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | 27 | |
Transfer into non-accrual | 86 | |
Loans paid down/payoffs | (86) | |
Loans charged off | (27) | |
Commercial | Real Estate Loan [Member] | ||
Financing Receivable Nonaccrual Status [Roll Forward] | ||
Balance | 3,139 | 662 |
Transfer into non-accrual | 1,619 | 2,746 |
Loans paid down/payoffs | (100) | (115) |
Loans return to accrual status | (577) | |
Balance | $ 4,081 | $ 3,293 |
LOANS RECEIVABLE AND ALLOWAN_10
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - Credit Quality Information (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | |
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | $ 274,082,000 | $ 284,738,000 | ||
Non-accrual | 4,964,000 | 4,127,000 | $ 4,229,000 | $ 1,947,000 |
Troubled debt restructures | $ 39,000 | $ 41,000 | ||
Number of TDRs accounts | loan | 1 | 1 | ||
Non-performing TDRs | 39 | 41,000 | ||
Number of non-performing TDRs accounts | loan | 1 | 1 | ||
Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | $ 268,692,000 | $ 280,070,000 | ||
Substandard | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 5,223,000 | 4,589,000 | ||
Doubtful | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 167,000 | 79,000 | ||
Consumer | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 12,167,000 | 12,076,000 | ||
Non-accrual | 145,000 | 137,000 | 144,000 | 186,000 |
Troubled debt restructures | $ 39,000 | $ 41,000 | ||
Number of TDRs accounts | loan | 1 | 1 | ||
Non-performing TDRs | 39 | 41,000 | ||
Number of non-performing TDRs accounts | loan | 1 | 1 | ||
Consumer | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | $ 12,084,000 | $ 11,939,000 | ||
Consumer | Substandard | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 83,000 | 137,000 | ||
Consumer | Real Estate Loan [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 78,997,000 | 81,033,000 | ||
Non-accrual | 522,000 | 728,000 | 756,000 | 956,000 |
Consumer | Real Estate Loan [Member] | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 78,475,000 | 80,305,000 | ||
Consumer | Real Estate Loan [Member] | Substandard | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 522,000 | 728,000 | ||
Indirect | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 80,544,000 | 102,384,000 | ||
Non-accrual | 216,000 | 123,000 | 36,000 | 116,000 |
Indirect | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 80,328,000 | 102,261,000 | ||
Indirect | Substandard | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 49,000 | 44,000 | ||
Indirect | Doubtful | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 167,000 | 79,000 | ||
Commercial | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 13,683,000 | 11,907,000 | ||
Non-accrual | 27,000 | |||
Commercial | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 13,683,000 | 11,907,000 | ||
Commercial | Real Estate Loan [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 69,341,000 | 74,021,000 | ||
Non-accrual | 4,081,000 | 3,139,000 | $ 3,293,000 | $ 662,000 |
Commercial | Real Estate Loan [Member] | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 64,772,000 | 70,341,000 | ||
Commercial | Real Estate Loan [Member] | Substandard | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 4,569,000 | 3,680,000 | ||
Commercial | SBA PPP Loan [Member] | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 17,367,000 | 0 | ||
Commercial | SBA PPP Loan [Member] | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 17,367,000 | |||
Construction | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | 1,983,000 | 3,317,000 | ||
Construction | Pass | ||||
Financing Receivable, Recorded Investment [Line Items] | ||||
Total | $ 1,983,000 | $ 3,317,000 |
LOANS RECEIVABLE AND ALLOWAN_11
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES - (Details) | 9 Months Ended | ||
Sep. 30, 2020USD ($)borrowerloan | Sep. 30, 2019borrower | Dec. 31, 2019USD ($) | |
Financing Receivable, Impaired [Line Items] | |||
Loans outstanding | $ 464,000 | ||
Number of borrowers | borrower | 30 | 47 | |
30-89 Days Past Due | |||
Financing Receivable, Impaired [Line Items] | |||
Loans outstanding | $ 851,000 | $ 822,000 | |
30-89 Days Past Due | Substandard | |||
Financing Receivable, Impaired [Line Items] | |||
Loans outstanding | $ 464,000 | ||
Consumer | |||
Financing Receivable, Impaired [Line Items] | |||
Number of loans | loan | 1 | ||
Number of borrowers | borrower | 1 | ||
Amount of consumer and indirect loans, outstanding | $ 38,911 | ||
Amount of consumer and indirect loans, specific reserves | 10,758 | ||
Consumer | 30-89 Days Past Due | |||
Financing Receivable, Impaired [Line Items] | |||
Loans outstanding | 68,000 | $ 74,000 | |
Commercial Real Estate | 30-89 Days Past Due | Substandard | |||
Financing Receivable, Impaired [Line Items] | |||
Loans outstanding | $ 464,000 |
FAIR VALUE (Details)
FAIR VALUE (Details) | Sep. 30, 2020USD ($)loan |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Specific reserve amount | $ 10,758 |
Impaired real estate loans | 5,090,323,000,000 |
Minimum | Discount Rate | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Fair value of discount rate | 0 |
Maximum | Discount Rate | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Fair value of discount rate | $ 16 |
Indirect | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Number of impaired loans classified as nonaccrual loans | loan | 16 |
Impaired loans includes nonaccrual, past due 90 days or more and still accruing | $ 1,345,625,000,000 |
Remaining impaired loan | 298,000 |
Specific reserve amount | 10,758 |
Impaired real estate loans | $ 4,043,110 |
FAIR VALUE - Changes in the ass
FAIR VALUE - Changes in the assets subject to fair value measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | $ (114,461) | $ (71,486) |
Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 119,512 | 76,496 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 114,131 | 71,855 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 5,381 | 4,641 |
Collateralized mortgage obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (27,255) | (27,483) |
Agency mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (30,595) | (27,837) |
Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (25,301) | (12,475) |
U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (500) | |
Recurring | Collateralized mortgage obligations | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (27,255) | (27,483) |
Recurring | Collateralized mortgage obligations | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (27,255) | (27,483) |
Recurring | Agency mortgage-backed securities | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (30,595) | (27,837) |
Recurring | Agency mortgage-backed securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (30,595) | (27,837) |
Recurring | Municipal securities | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (25,301) | (12,475) |
Recurring | Municipal securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (25,301) | (12,475) |
Recurring | US Government Securities | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (31,310) | (3,191) |
Recurring | US Government Securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (31,310) | (3,191) |
Recurring | U.S. Treasury securities | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (500) | |
Recurring | U.S. Treasury securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (500) | |
Recurring | Interest rate swap | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (1,035) | (336) |
Recurring | Interest rate swap | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Securities available for sale | (1,035) | (336) |
Nonrecurring | Fair Value. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Maryland Financial Bank stock | 3 | 3 |
Impaired loans | 5,378 | 4,638 |
OREO | 705 | 705 |
Nonrecurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
OREO | 705 | 705 |
Nonrecurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Maryland Financial Bank stock | 3 | 3 |
Impaired loans | $ 5,378 | $ 4,638 |
FAIR VALUE - Estimated fair val
FAIR VALUE - Estimated fair values of the Company's financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets - Carrying Amount | ||
Cash and due from banks | $ 2,196 | $ 2,420 |
Interest-bearing deposits | 23,132 | 10,017 |
Federal funds sold | 1,725 | 853 |
Debt securities | 114,461 | 71,486 |
Investments in restricted stock | 1,624 | 1,437 |
Ground rents | 140 | 143 |
Loans, net | 272,419 | 282,672 |
Accrued interest receivable | 1,367 | 961 |
Cash value of life insurance | 8,141 | 8,023 |
Financial liabilities - Carrying Amount | ||
Deposits | 343,940 | 321,440 |
Long-term borrowings | 10,000 | |
Short-term borrowings | 37,367 | 25,000 |
Accrued interest payable | 38 | 100 |
Unrecognized financial instruments: | ||
Commitments to extend credit | 32,088 | 26,297 |
Standby letters of credit | 1,044 | 1,059 |
Financial assets - Fair Value | ||
Cash and due from banks | 2,196 | 2,420 |
Interest-bearing deposits | 23,132 | 10,017 |
Federal funds sold | 1,725 | 853 |
Investment securities | 114,461 | 71,486 |
Investments in restricted stock | 1,624 | 1,437 |
Ground rents | 140 | 143 |
Loans, less allowance for credit losses | 275,889 | 282,583 |
Accrued interest receivable | 1,367 | 961 |
Cash value of life insurance | 8,141 | 8,023 |
Financial liabilities - Fair Value | ||
Deposits | 345,264 | 300,944 |
Long-term borrowings | 10,000 | |
Short-term borrowings | 37,368 | 25,386 |
Accrued interest payable | 38 | 100 |
Unrecognized financial instruments: | ||
Commitments to extend credit | 32,088 | 26,297 |
Standby letters of credit | $ 1,044 | $ 1,059 |
FAIR VALUE - Fair value hierarc
FAIR VALUE - Fair value hierarchy of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets - Carrying Amount | ||
Cash and cash equivalents | $ 27,053 | |
Loans receivable, net | 272,419 | $ 282,672 |
Cash value of life insurance | 8,141 | |
Financial liabilities - Carrying Amount | ||
Deposits | 343,940 | 321,440 |
Long-term debt | 10,000 | |
Short-term debt | 37,367 | 25,000 |
Financial assets - Fair Value | ||
Loans receivable, net | 275,889 | 282,583 |
Financial liabilities - Fair Value | ||
Deposits | 345,264 | 300,944 |
Long-term debt | 10,000 | |
Short-term debt | 37,368 | $ 25,386 |
Fair Value. | ||
Financial assets - Fair Value | ||
Cash and cash equivalents | 27,053 | |
Loans receivable, net | 275,889 | |
Cash value of life insurance | 8,141 | |
Financial liabilities - Fair Value | ||
Deposits | 345,264 | |
Long-term debt | 10,000 | |
Short-term debt | 37,368 | |
Fair Value. | Level 1 | ||
Financial assets - Fair Value | ||
Cash and cash equivalents | 27,053 | |
Financial liabilities - Fair Value | ||
Short-term debt | 129,888 | |
Fair Value. | Level 2 | ||
Financial assets - Fair Value | ||
Cash value of life insurance | 8,141 | |
Financial liabilities - Fair Value | ||
Deposits | 215,376 | |
Long-term debt | 10,000 | |
Short-term debt | 37,368 | |
Fair Value. | Level 3 | ||
Financial assets - Fair Value | ||
Loans receivable, net | $ 275,889 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Jan. 01, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | ||
Package of practical expedients | true | |
ASU 2016-02 | ||
RECENT ACCOUNTING PRONOUNCEMENTS | ||
Lease liability | $ 0.8 | |
Right-of-use asset | $ 0.8 |