Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Feb. 24, 2015 | Jun. 30, 2014 |
Document and Entity Information | |||
Entity Registrant Name | HERITAGE OAKS BANCORP | ||
Entity Central Index Key | 921547 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $172.60 | ||
Entity Common Stock, Shares Outstanding | 33,916,151 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ||
Cash and due from banks | $12,548 | $11,336 |
Interest earning deposits in other banks | 23,032 | 14,902 |
Total cash and cash equivalents | 35,580 | 26,238 |
Investment securities available for sale, at fair value | 355,580 | 276,795 |
Loans held for sale, at lower of cost or fair value | 2,586 | 2,386 |
Gross loans held for investment | 1,193,483 | 827,484 |
Net deferred loan fees | -1,445 | -1,281 |
Allowance for loan and lease losses | -16,802 | -17,859 |
Net loans held for investment | 1,175,236 | 808,344 |
Premises and equipment, net | 37,820 | 24,220 |
Premises and equipment held for sale | 1,978 | |
Deferred tax assets, net | 24,920 | 21,624 |
Bank-owned life insurance | 24,711 | 15,826 |
Federal Home Loan Bank stock | 7,853 | 4,739 |
Goodwill | 24,885 | 11,237 |
Other intangible assets | 5,347 | 1,344 |
Other assets | 13,631 | 10,898 |
Total assets | 1,710,127 | 1,203,651 |
Liabilities | ||
Non-interest bearing deposits | 461,479 | 291,856 |
Interest bearing deposits | 933,325 | 682,039 |
Total deposits | 1,394,804 | 973,895 |
Short term FHLB borrowing | 25,000 | 29,000 |
Long term FHLB borrowing | 70,558 | 59,500 |
Junior subordinated debentures | 13,233 | 8,248 |
Other liabilities | 8,592 | 6,581 |
Total liabilities | 1,512,187 | 1,077,224 |
Commitments and contingencies (Note 15) | ||
Shareholders' equity | ||
Common stock, no par value; authorized: 100,000,000 shares; issued and outstanding: 33,905,060 shares and 25,397,780 shares at December 31, 2014 and 2013, respectively. | 164,196 | 101,511 |
Additional paid in capital | 6,984 | 6,020 |
Retained earnings | 24,772 | 18,717 |
Accumulated other comprehensive income (loss), net of tax (benefit) of $677 and ($2,395) as of December 31, 2014 and 2013, respectively | 932 | -3,425 |
Total shareholders' equity | 197,940 | 126,427 |
Total liabilities and shareholders' equity | 1,710,127 | 1,203,651 |
Series C preferred stock | ||
Shareholders' equity | ||
Preferred stock, 5,000,000 shares authorized: Series C preferred stock, $3.25 per share stated value; issued and outstanding: 348,697 shares and 1,189,538 shares at December 31, 2014 and 2013, respectively. | $1,056 | $3,604 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Preferred stock | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, no par value (in dollars per share) | $0 | $0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 33,905,060 | 25,397,780 |
Common stock, shares outstanding | 33,905,060 | 25,397,780 |
Accumulated other comprehensive loss, tax benefit (in dollars) | $677 | ($2,395) |
Series C preferred stock | ||
Preferred stock | ||
Preferred stock, per share stated value (in dollars per share) | $3.25 | $3.25 |
Preferred stock, shares issued | 348,697 | |
Preferred stock, shares outstanding | 348,697 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interest Income | |||
Loans, including fees | $56,145 | $39,610 | $39,278 |
Investment securities | 7,238 | 5,476 | 6,896 |
Other interest-earning assets | 705 | 307 | 147 |
Total interest income | 64,088 | 45,393 | 46,321 |
Interest Expense | |||
Deposits | 3,567 | 2,860 | 2,988 |
Other borrowings | 1,590 | 1,007 | 830 |
Total interest expense | 5,157 | 3,867 | 3,818 |
Net interest income before provision for loan losses | 58,931 | 41,526 | 42,503 |
Provision for loan and lease losses | 7,681 | ||
Net interest income after provision for loan and lease losses | 58,931 | 41,526 | 34,822 |
Non-Interest Income | |||
Fees and service charges | 5,312 | 4,529 | 4,350 |
Net gain on sale of mortgage loans | 1,330 | 2,282 | 3,298 |
Other mortgage fee income | 290 | 642 | 965 |
Gain on sale of investment securities | 646 | 3,926 | 2,619 |
Other income | 1,997 | 1,496 | 1,316 |
Total non-interest income | 9,575 | 12,875 | 12,548 |
Non-Interest Expense | |||
Salaries and employee benefits | 23,476 | 18,977 | 18,304 |
Occupancy and equipment | 6,576 | 4,891 | 4,900 |
Information technology | 3,025 | 2,582 | 2,553 |
Professional services | 4,801 | 2,833 | 3,546 |
Regulatory assessments | 1,164 | 1,007 | 1,596 |
Sales and marketing | 843 | 584 | 690 |
Foreclosed asset costs and write-downs | 179 | 180 | 334 |
Provision for mortgage loan repurchases | 127 | 570 | 1,192 |
Amortization of intangible assets | 1,057 | 400 | 342 |
Merger, restructure, and integration | 9,190 | 1,051 | |
Other expense | 4,354 | 3,488 | 2,674 |
Total non-interest expense | 54,792 | 36,563 | 36,131 |
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 13,714 | 17,838 | 11,239 |
Income tax benefit | 4,749 | 6,997 | -1,798 |
Net income | 8,965 | 10,841 | 13,037 |
Dividends and accretion on preferred stock | 168 | 898 | 1,470 |
Net income available to common shareholders | $8,797 | $9,943 | $11,567 |
Earnings Per Common Share | |||
Basic (in dollars per share) | $0.27 | $0.38 | $0.44 |
Diluted (in dollars per share) | $0.27 | $0.37 | $0.44 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Condensed Consolidated Statements of Comprehensive Income | |||
Net income | $8,965 | $10,841 | $13,037 |
Other comprehensive income: | |||
Unrealized holding gains (losses) on securities arising during the period | 8,075 | -8,565 | 8,544 |
Reclassification for net (gains) on investments included in net income | -646 | -3,926 | -2,619 |
Other comprehensive income (loss), before income tax expense (benefit) | 7,429 | -12,491 | 5,925 |
Income tax expense (benefit) related to items of other comprehensive income | 3,072 | -5,141 | 2,438 |
Other comprehensive income (loss) | 4,357 | -7,350 | 3,487 |
Comprehensive income | $13,322 | $3,491 | $16,524 |
Consolidated_Statements_of_Sha
Consolidated Statements of Shareholders' Equity (USD $) | Series A senior preferred stock | Series A senior preferred stock | Series A senior preferred stock | Series A senior preferred stock | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(loss) | Total |
Preferred Stock | Additional Paid-In Capital | Retained Earnings | ||||||||
Balance at Dec. 31, 2011 | $23,764,000 | $101,140,000 | $7,006,000 | ($2,794,000) | $438,000 | $129,554,000 | ||||
Balance (in shares) at Dec. 31, 2011 | 25,145,717 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Accretion on Series A preferred stock | 376,000 | -376,000 | ||||||||
Dividend declared on Series A preferred stock | -1,094,000 | -1,094,000 | ||||||||
Exercise of stock options (in dollars) | 183,000 | 183,000 | ||||||||
Exercise of stock options (in shares) | 56,056 | |||||||||
Share-based compensation expense | 331,000 | 331,000 | ||||||||
Tax impact of share-based compensation expense | 31,000 | 31,000 | ||||||||
Issuance of restricted share awards (in shares) | 112,137 | |||||||||
Forfeiture of restricted share awards (in shares) | -6,800 | |||||||||
Net income | 13,037,000 | 13,037,000 | ||||||||
Other comprehensive income (loss) | 3,487,000 | 3,487,000 | ||||||||
Balance at Dec. 31, 2012 | 24,140,000 | 101,354,000 | 7,337,000 | 8,773,000 | 3,925,000 | 145,529,000 | ||||
Balance (in shares) at Dec. 31, 2012 | 25,307,110 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Repurchase of Shares (in dollars) | -20,725,000 | -275,000 | -21,000,000 | |||||||
Repurchase of warrants | -1,575,000 | -1,575,000 | ||||||||
Accretion on Series A preferred stock | 189,000 | -189,000 | ||||||||
Dividend declared on Series A preferred stock | -708,000 | -708,000 | ||||||||
Exercise of stock options (in dollars) | 138,000 | 138,000 | ||||||||
Exercise of stock options (in shares) | 33,757 | |||||||||
Share-based compensation expense | 533,000 | 533,000 | ||||||||
Tax impact of share-based compensation expense | 19,000 | 19,000 | ||||||||
Issuance of restricted share awards (in shares) | 72,786 | |||||||||
Forfeiture of restricted share awards (in shares) | -15,873 | |||||||||
Net income | 10,841,000 | 10,841,000 | ||||||||
Other comprehensive income (loss) | -7,350,000 | -7,350,000 | ||||||||
Balance at Dec. 31, 2013 | 3,604,000 | 101,511,000 | 6,020,000 | 18,717,000 | -3,425,000 | 126,427,000 | ||||
Balance (in shares) at Dec. 31, 2013 | 25,397,780 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Issuance of common stock in merger (in dollars) | 60,255,000 | 60,255,000 | ||||||||
Issuance of common stock in merger (in shares) | 7,541,326 | |||||||||
Repurchase of Shares (in dollars) | -387,000 | -387,000 | ||||||||
Repurchase of Shares (in shares) | -51,732 | -51,732 | ||||||||
Stock issuance costs | -381,000 | -381,000 | ||||||||
Partial conversion of Series C preferred stock (in dollars) | -2,548,000 | 2,548,000 | 168,000 | -168,000 | ||||||
Partial conversion of Series C preferred stock (in shares) | 840,841 | |||||||||
Dividends declared ($0.08 per share for period ended December 31, 2014) | -2,742,000 | -2,742,000 | ||||||||
Exercise of stock options (in dollars) | -269,000 | -269,000 | ||||||||
Exercise of stock options (in shares) | 68,339 | |||||||||
Share-based compensation expense | 993,000 | 993,000 | ||||||||
Tax impact of share-based compensation expense | 184,000 | 184,000 | ||||||||
Issuance of restricted share awards (in shares) | 134,368 | |||||||||
Forfeiture of restricted share awards (in shares) | -25,862 | |||||||||
Net income | 8,965,000 | 8,965,000 | ||||||||
Other comprehensive income (loss) | 4,357,000 | 4,357,000 | ||||||||
Balance at Dec. 31, 2014 | $1,056,000 | $164,196,000 | $6,984,000 | $24,772,000 | $932,000 | $197,940,000 | ||||
Balance (in shares) at Dec. 31, 2014 | 33,905,060 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Condensed Consolidated Statements of Shareholders' Equity | |
Dividends declared on common stock (in dollars per share) | $0.08 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net income | $8,965 | $10,841 | $13,037 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 1,829 | 1,368 | 1,348 |
Provision for credit losses | 7,681 | ||
Write-downs on premises and equipment held for sale | 880 | ||
Amortization of premiums / discounts on investment securities, net | 4,785 | 4,196 | 3,514 |
Amortization of intangible assets | 1,057 | 400 | 342 |
Accretion of discount on acquired and purchased loans, net | -2,488 | ||
Amortization of premium on borrowings | 168 | ||
Share-based compensation expense | 993 | 533 | 331 |
Gain on sale of available for sale securities | -646 | -3,926 | -2,619 |
Originations of loans held for sale | -81,748 | -139,075 | -189,748 |
Proceeds from sale of loans held for sale | 82,878 | 161,520 | 192,444 |
Gain on sale of loans held for sale | -1,330 | -2,282 | -3,298 |
Net increase in bank owned life insurance | -622 | -477 | -514 |
Decrease / (increase) in deferred tax asset | 5,407 | 5,448 | -540 |
Deferred tax assets valuation allowance adjustment | -5,605 | ||
Gain on sale of foreclosed collateral | -199 | ||
Tax impact of share-based compensation | -184 | -19 | -31 |
(Increase) decrease in other assets and other liabilities | 48 | 1,155 | -4,486 |
Net cash provided by operating activities | 19,992 | 39,682 | 11,657 |
Cash flows from investing activities: | |||
Cash Acquired in Excess of Payments to Acquire Business | 28,891 | ||
Purchase of securities, available for sale | -168,339 | -210,127 | -235,333 |
Sale of securities, available for sale | 129,074 | 161,181 | 140,163 |
Proceeds from principal paydowns of available for sale securities | 39,928 | 47,074 | 49,500 |
Proceeds from sale of property, premises and equipment | 3,590 | 19 | |
Purchase of FHLB stock | -941 | -164 | 110 |
Increase in loans, net | -86,233 | -140,932 | -55,498 |
Recoveries on previously charged-off loans | 857 | 1,767 | 2,356 |
Purchase of property, premises and equipment, net | -6,456 | -9,632 | -11,820 |
Proceeds from sale of foreclosed collateral | 1,628 | 1,374 | 1,799 |
Net cash received in branch acquisition | 25,985 | ||
Net cash used in investing activities | -58,001 | -149,459 | -82,719 |
Cash flows from financing activities: | |||
Increase in deposits, net | 49,408 | 103,025 | 58,085 |
Proceeds from Federal Home Loan Bank borrowing | 70,000 | 234,500 | 240,500 |
Repayments of Federal Home Loan Bank borrowing | -69,000 | -212,500 | -225,500 |
Proceeds from exercise of stock options including tax benefits | 453 | 157 | 214 |
Stock issuance costs | -381 | ||
Dividends declared | -2,742 | ||
Dividends on Series A preferred stock | -708 | -3,013 | |
Repurchase of common stock | -387 | ||
Retirement of Series A preferred stock and related warrants | -22,575 | ||
Net cash provided by financing activities | 47,351 | 101,899 | 70,286 |
Net increase (decrease) in cash and cash equivalents | 9,342 | -7,878 | -776 |
Cash and cash equivalents, beginning of period | 26,238 | 34,116 | 34,892 |
Cash and cash equivalents, end of period | 35,580 | 26,238 | 34,116 |
Cash Flow Information | |||
Interest paid | 4,995 | 3,821 | 4,081 |
Income taxes paid | 600 | 2,100 | 4,835 |
Non-Cash Flow Information | |||
Change in unrealized gain on available for sale securities | 7,428 | -12,489 | 2,649 |
Loans transferred to foreclosed collateral | 1,564 | 1,374 | 3,484 |
Land and buildings transferred to held for sale | 2,916 | ||
Accretion of preferred stock discount | 168 | 189 | 368 |
Common stock issued in MSN Transaction | $60,255 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary of Significant Accounting Policies | ||
Summary of Significant Accounting Policies | ||
Note 1. Summary of Significant Accounting Policies | ||
The accounting and reporting policies of Heritage Oaks Bancorp (the "Company") and subsidiaries conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. A summary of the Company's significant accounting and reporting policies consistently applied in the preparation of the accompanying Consolidated Financial Statements follows: | ||
Principles of Consolidation | ||
The Consolidated Financial Statements of the Company include the holding company ("Bancorp") and its wholly owned subsidiaries, Heritage Oaks Bank, (the "Bank") and CCMS Systems, Inc. (an inactive entity). Inter-company balances and transactions have been eliminated. | ||
Nature of Operations | ||
The Bank, which is the Company's sole operating subsidiary, operates branches within San Luis Obispo and Santa Barbara Counties and has a loan production office in Ventura County. The Bank offers traditional banking products such as checking, savings, money market account and certificates of deposit, as well as mortgage loans and commercial and consumer loans to customers who are predominately small to medium-sized businesses and individuals. As such, the Company is subject to a concentration risk associated with its banking operations in San Luis Obispo and Santa Barbara Counties, and to a lesser degree Ventura County. No one customer accounts for more than 10% of revenue or assets in any period presented and the Company has no assets nor does it generate any revenue from outside of the United States. While the chief decision-makers of the Company monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. | ||
Reclassifications | ||
Certain amounts in the 2012 and 2013 Consolidated Financial Statements have been reclassified to conform to the 2014 presentation. These reclassifications did not have any effect on the prior years' reported net income or shareholders' equity. | ||
Investment in Non-Consolidated Subsidiaries | ||
The Company accounts for its investment in Heritage Oaks Capital Trust II, Mission Community Capital Trust I, and Santa Lucia Bancorp (CA) Capital Trust, as unconsolidated subsidiaries using the equity method of accounting, as the Company is not the primary beneficiary of the trust. Mission Community Capital Trust I and Santa Lucia Bancorp (CA) Capital Trust were acquired as part of the acquisition of Mission Community Bancorp on February 28, 2014. The sole purpose of each of these trusts is for the issuance of trust preferred securities. | ||
Use of Estimates in the Preparation of Consolidated Financial Statements | ||
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan and lease losses, the valuation of real estate acquired through foreclosure, the carrying value of the Company's deferred tax assets and estimates used in the determination of the fair value of certain financial instruments, assets and liabilities acquired in business combinations, and accruals for restructuring activities, as described in Note 16. Restructuring Activities, of these Consolidated Financial Statements. | ||
In connection with the determination of the allowance for loan and lease losses and the value of foreclosed real estate, management obtains independent appraisals for significant properties. While management uses available information to recognize losses on loans and leases, and foreclosed real estate and collateral, future additions to the allowance for loan and lease losses may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan and lease losses and foreclosed real estate. | ||
These agencies may require the Company to recognize additions to the allowance for loan and lease losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan and lease losses and foreclosed real estate may change in future periods. See also Note 5. Loans and Allowance for Loan and Lease Losses, of these Consolidated Financial Statements. | ||
The Company uses an estimate of its future earnings in determining if it is more likely than not that the carrying value of its deferred tax assets will be realized over the period they are expected to reverse. If based on all available evidence, the Company believes that a portion or all of its deferred tax assets will not be realized; a valuation allowance may be established. See also Note 7. Income Taxes, of these Consolidated Financial Statements. | ||
The degree of judgment utilized in measuring the fair value of financial instruments, and assets and liabilities acquired in business combinations generally correlates to the level of pricing observability. Financial instruments, and acquired assets and liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments, and acquired assets and liabilities rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment is utilized in measuring the fair value. Observable pricing is impacted by a number of factors, including the type of asset or liability, whether the asset or liability is new to the market and not yet established, and the characteristics specific to the transaction. See also Note 2. Business Combination, and Note 3. Fair Value of Assets and Liabilities, of these Consolidated Financial Statements. | ||
Business Combinations and Related Matters | ||
Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method the acquiring entity in a business combination recognizes 100 percent of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must also be recognized at fair value, if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the statement of operations from the date of acquisition. Acquisition-related costs, including conversion charges, are expensed as incurred. The Company applied this guidance to the acquisition of Mission Community Bancorp that was consummated on February 28, 2014. The Company's Consolidated Financial Statements reflect the operations of Mission Community Bancorp from March 1, 2014, through December 31, 2014. | ||
Disclosure about Fair Value of Financial Instruments | ||
The Company's estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates are not necessarily indicative of the amounts the Company could have realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. | ||
Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these Consolidated Financial Statements since the balance sheet date and, therefore, current estimates of fair value may differ significantly from the amounts presented in the accompanying notes. | ||
The Company determines the fair market values of financial instruments based on the fair value hierarchy established in U.S. GAAP. The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings or a particular financial instrument. Pursuant to U.S. GAAP, the Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Specifically, U.S. GAAP describes three levels of inputs that may be used to measure fair value, as outlined below: | ||
Level 1 – Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities may include debt and equity securities that are traded in an active exchange market and that are highly liquid and are actively traded in over the counter markets. | ||
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments the value for which is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. | ||
The following methods and assumptions were used by the Company in estimating fair values of financial instruments. Many of these estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. | ||
Cash and Cash Equivalents | ||
The carrying amounts reported in the balance sheet for cash and cash equivalents approximate the fair values of those assets due to the short-term nature of the assets. | ||
Interest Bearing Deposits at Other Financial Institutions | ||
The carrying amounts reported in the balance sheet for interest bearing deposits at other financial institutions approximates the fair value of these assets due to the short-term nature of the assets. | ||
Investments in Securities Available for Sale | ||
Fair values are based upon quoted market prices, where available. If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments or through the use of other observable data supported by a valuation model. The fair value of newly issued securities, for which there is not a sufficient history of market transactions on which to base a fair value determination under Level 1 or 2 of the hierarchy, are initially valued under Level 3 of the hierarchy. At such time that sufficient history of market transactions is established, the securities' fair value is determined under Level 1 or 2 of the hierarchy and accordingly the security is transferred out of Level 3 and into the applicable level. | ||
Federal Home Loan Bank Stock | ||
The fair value of Federal Home Loan Bank stock is not readily determinable due to the lack of its transferability. | ||
Loans, Loans Held for Sale, and Accrued Interest Receivable | ||
For variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for other loans (for example, fixed rate loans and loans that possess a rate variable other than daily or that are at their floor rate) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. | ||
The fair value of loans held for sale is determined, when possible, using quoted secondary market prices. If no such quoted price exists, the fair value of the loan is determined using quoted prices for a similar asset or assets, adjusted for the specific attributes of that loan. The carrying amount of accrued interest receivable approximates its fair value. | ||
Impaired Loans | ||
A loan is considered impaired when it is probable that payment of interest and principal will not be made in accordance with the original contractual terms of the loan agreement. Impairment is measured based on the fair value of the underlying collateral, which is based on the appraised value of the collateral less any estimated costs to sell. As such, the Company records impaired loans as non-recurring Level 2 when the fair value of the underlying collateral is based on an observable market price or current appraised value. When current market prices are not available or the Company determines that the fair value of the underlying collateral is further impaired below appraised values based on Company specific experience with similar collateral, the Company records impaired loans as non-recurring Level 3. At December 31, 2014, a majority of the Company's impaired loans were evaluated based on the fair value of their underlying collateral as determined by the most recent appraisal available to management. | ||
Other Real Estate Owned and Foreclosed Collateral | ||
Other real estate owned and foreclosed collateral are adjusted to fair value, less any estimated costs to sell, at the time the loans are transferred into this category. The fair value of these assets is based on independent appraisals, observable market prices for similar assets, or management's estimation of value. When the fair value is based on independent appraisals or observable market prices for similar assets, the Company records other real estate owned or foreclosed collateral as non-recurring Level 2 assets. When appraised values are not available, there is no observable market price for similar assets, or management determines the fair value of the asset is further impaired below appraised values or observable market prices based on Company specific experience with similar assets, the Company records other real estate owned or foreclosed collateral as non-recurring Level 3 assets. The most common adjustment to reported appraised values of collateral is a monthly discount linked to the passage of time since the last appraisal. This discount factor ranges between 1% and 3% per month and is consistent with that used in the appraisals to discount for the passage of time between the transaction date for comparable properties used in the appraisal and the appraisal date. | ||
Federal Home Loan Bank Advances | ||
The fair value disclosed for FHLB advances is determined by discounting contractual cash flows at current market interest rates for similar instruments. | ||
Non-Interest Bearing Deposits | ||
The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). | ||
Interest Bearing Deposits and Accrued Interest Payable | ||
The fair values disclosed for interest bearing deposits (for example, interest-bearing checking accounts and passbook accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit are estimated using a discounted cash flow analysis that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits. The carrying amount of accrued interest payable approximates its fair value. | ||
Junior Subordinated Debentures | ||
The fair value disclosed for junior subordinated debentures is based on market prices of similar instruments issued with similar contractual terms and by issuers with a similar credit profile as the Company. | ||
Off-Balance Sheet Instruments | ||
Fair values of commitments to extend credit and standby letters of credit are based upon fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the counterparties' credit standing. | ||
Recent Accounting Pronouncements | ||
Recent Accounting Guidance Not Yet Effective | ||
On January 17, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors. This ASU provides clarification that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of this amendment on the Consolidated Financial Statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The amendments within this update are effective for the quarter ending March 31, 2017. The Company is currently in the process of evaluating the impact of the adoption of this update, but does not expect a material impact on the Company's Consolidated Financial Statements. | ||
In August 2014, the FASB issued ASU No. 2014-14 Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. This update addresses classification of government-guaranteed mortgage loans, including those where guarantees are offered by the Federal Housing Administration ("FHA"), the U.S. Department of Housing and Urban Development ("HUD"), and the U.S. Department of Veterans Affairs ("VA"). Although current accounting guidance stipulates proper measurement and classification in situations where a creditor obtains from a debtor, assets in satisfaction of a receivable (such as through foreclosure), current guidance does not specify how to measure and classify foreclosed mortgage loans that are government-guaranteed. Under the provisions of this update, a creditor would derecognize a mortgage loan that has been foreclosed upon, and recognize a separate receivable if the following conditions are met: (1) The loan has a government guarantee that is not separable from the loan before foreclosure, (2) At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, (3) At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. The amendments within this update are effective for annual and interim periods beginning after December 15, 2014. The Company does not believe the adoption of this update will have a material impact of the Company's Consolidated Financial Statements. | ||
Cash and Cash Equivalents | ||
Banking regulations require that all banks maintain a percentage of their deposits as reserves in cash or on deposit with the Federal Reserve Bank. In management's opinion, the Bank is in compliance with the reserve requirements as of December 31, 2014. The Company maintains amounts due from banks that exceed federally insured limits. Historically the Company has not experienced any losses in such accounts. For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks. Generally, interest bearing balances due from banks represent excess liquidity that the Company and/or Bank invests through other institutions overnight. | ||
Investment Securities Available for Sale | ||
The Company's investment securities are classified as available for sale and are measured at fair value, with changes in unrealized gains and losses, net of applicable taxes, reported as a separate component of shareholders' equity. The fair values of most securities that are designated available for sale are based on quoted market prices. If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments or through the use of other observable data supporting a valuation model. Gains or losses on sales of investment securities are determined on the specific identification method and recorded as a component of non-interest income. Premiums and discounts are amortized or accreted using the interest method over the expected lives of the related securities and recognized in interest income. | ||
Other than Temporary Impairment ("OTTI") | ||
The Company periodically evaluates investments in the portfolio for other than temporary impairment and more specifically when conditions warrant such an evaluation. When evaluating whether impairment is other than temporary, the Company considers, among other things, the following: (1) the length of time the security has been in an unrealized loss position, (2) the extent to which the security's fair value is less than its cost, (3) the financial condition of the issuer, (4) any adverse changes in ratings issued by various rating agencies, (5) the intent and ability of the Company to hold such securities for a period of time sufficient to allow for any anticipated recovery in fair value and (6) in the case of mortgage related securities, credit enhancements, loan-to-values, credit scores, delinquency and default rates, cash flows and the extent to which those cash flows are within management's initial expectations based on pre-purchase analyses. | ||
When an investment is deemed to be other than temporarily impaired, the Company is required to assess whether it has the intent to sell the investment, or if it is more likely than not that it will be required to sell the investment before its anticipated recovery of its full basis in the security. If the Company does not intend, nor anticipates it will be required to sell the investment, it must still perform an evaluation of future cash flows it expects to receive from the investment to determine if a credit loss has occurred. The evaluation includes future cash flows from the investment the Company expects to collect, based on an assessment of all available information about the applicable investment. The Company considers such factors as: the structure of the security and the Company's position within that structure, the remaining payment terms for the security, prepayment speeds, default rates, loss severity on the collateral supporting the security, expected changes in real estate prices, and assumptions regarding interest rates, to determine whether the Company will recover the remaining amortized cost basis of the security. In the event that a credit loss has been projected to have occurred, only the amount of impairment related to the credit loss is recognized through earnings. OTTI amounts related to all other factors, such as market conditions, are recorded as a component of accumulated other comprehensive income. | ||
Federal Home Loan Bank Stock | ||
The Bank is a member of the Federal Home Loan Bank ("FHLB") and as a condition of membership, the Bank is required to purchase stock in the FHLB. The required ownership of FHLB stock is based on the level of borrowing the Bank has obtained from the FHLB. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. There have been no events that would suggest that an impairment in the carrying value of the stock has occurred as of December 31, 2014. Dividends received on the FHLB stock are reported as a component of interest income. | ||
Loans Held for Sale | ||
Loans held for sale are carried at the lower of aggregate cost or fair value, which is determined by the specified value in the sales contract with the third party buyer. Net unrealized losses, if any, are recognized through a valuation allowance by charges to expense. | ||
Loans Held for Investment | ||
Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs of specific valuation allowances and net of any deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans. Nonrefundable fees and certain costs associated with originating or acquiring loans are deferred and amortized as an adjustment to interest income over the contractual lives of the loan. Upon prepayment, unamortized loan fees, net of costs, are immediately recognized in interest income. Other fees, including those collected upon principal prepayments, are included in interest income when received. | ||
Loans on which the accrual of interest has been discontinued are designated as non-accruing loans. The accrual of interest on loans is discontinued when principal and/or interest is past due 90 days based on contractual terms of the loan and/or when, in the opinion of management, there is reasonable doubt as to collectability unless such loans are well secured and in the process of collection. This policy is consistently applied to all portfolio segments. When loans are placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current period interest income. Interest income generally is not recognized on specific non-accruing loans unless the likelihood of further loss is remote. Interest payments received on such loans are generally applied as a reduction to the loan principal balance. Interest accruals are resumed only when the loan is brought current with respect to interest and principal and when, in the judgment of management, all remaining principal and interest is estimated to be fully collectable, there has been at least six months of sustained repayment performance since the loan was placed on non-accrual status and/or management believes, based on current information, that such loan is no longer impaired. When a loan is returned to accrual status from non-accrual status, the interest that had been accumulated while on non-accrual status is not recognized until such time as the loan is repaid in full. | ||
The Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the loan agreement. Measurement of impairment is based on expectations of future cash flows which are discounted at the loan's original effective interest rate, or measured by reference to an observable market value, if one exists, or the fair value of the collateral for a collateral-dependent loan. The Company selects the measurement method on a loan-by-loan basis except that collateral-dependent loans for which foreclosure is probable are measured at the fair value of the collateral. The Company recognizes interest income on impaired loans based on its existing methods of recognizing interest income on non-accrual loans. All loans are generally charged-off, either partially or fully, at such time that it is highly certain a loss has been realized. | ||
Acquired Loans and Leases | ||
Loans and leases acquired through purchase or through a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Should the Company's allowance for loan and lease losses methodology indicate that the credit discount associated with acquired, non-purchased credit impaired loans, is no longer sufficient to cover probable losses inherent in those loans, the Company will establish an allowance for those loans through a charge to provision for loan and lease losses. Acquired loans are evaluated upon acquisition for evidence of deterioration in credit quality since origination such that it is probable at acquisition that the Company will be unable to collect all contractually required payments. Such loans are classified as purchased credit impaired loans ("PCI loans"), while all other acquired loans are classified as non-PCI loans. | ||
The Company has elected to account for PCI loans on an individual loan level. The Company estimates the amount and timing of expected cash flows for each loan. The expected cash flow in excess of the loan's carrying value, which is fair value on the date of acquisition, is referred to as the accretable yield, and is recorded as interest income over the remaining expected life of the loan. The excess of the loan's contractual principal and interest over expected cash flows is referred to as the non-accretable difference, and is not recorded in the Company's Consolidated Financial Statements. | ||
Quarterly, management performs an evaluation of expected future cash flows for PCI loans. If current expectations of future cash flows are less than management's previous expectations, other than due to decreases in interest rates and prepayment assumptions, an allowance for loan and leases losses is recorded with a charge to current period earnings through provision for loan and lease losses. If there has been a probable and significant increase in expected future cash flows over that which was previously expected, the Company would first reduce any previously established allowance for loan and lease losses, and then record an adjustment to interest income through a prospective increase in the accretable yield. | ||
Allowance for Loan and Lease Losses ("ALLL") | ||
The Company manages credit risk not only through extensive risk analyses performed prior to a loan's approval, but also through the ongoing monitoring of loans within the portfolio, and more specifically certain types of loans that generally involve a greater degree of risk, such as commercial real estate, commercial lines of credit, and construction/land loans. The Company monitors loans in the portfolio through an exhaustive internal process, at least quarterly, as well as with the assistance of independent loan reviews. These reviews generally not only focus on problem loans, but also internally rated "pass" credits within certain pools of loans that may be expected to experience stress due to economic conditions. This process allows the Company to validate credit risk grade ratings, underwriting structure, and the Company's estimated exposure in the current economic environment as well as enhance communications with borrowers where necessary in an effort to mitigate potential future losses. All significant problem loans are analyzed in detail at least quarterly, in order to properly estimate potential exposure to loss associated with these loans in a timely manner. | ||
Each segment of loans in the portfolio possess varying degrees of risk, based on, among other things, the type of loan being made, the purpose of the loan, the type of collateral securing the loan, and the sensitivity the borrower has to changes in certain external factors such as economic conditions. The following provides a summary of the risks associated with various segments of the Company's loan portfolio, which are factors management regularly considers when evaluating the adequacy of the ALLL: | ||
• | Real estate secured – consist primarily of loans secured by commercial real estate, multi-family, farmland, and 1 to 4 family residential properties. Also included in this segment are equity lines of credit secured by real estate. As the majority of this segment is comprised of commercial real estate loans, risks associated with this segment lie primarily within that loan type. Adverse economic conditions may result in a decline in business activity and increased vacancy rates for commercial properties. These factors, in conjunction with a decline in real estate prices, may expose the Company to the potential for losses if a borrower cannot continue to service the loan with operating revenues, and the value of the property has declined to a level such that it no longer fully covers the Company's recorded investment in the loan. | |
• | Commercial and Industrial – consist primarily of commercial and industrial loans (business lines of credit), agriculture loans, and other commercial purpose loans. Repayment of commercial and industrial loans is generally provided from the cash flows of the related business to which the loan was made. Adverse changes in economic conditions may result in a decline in business activity, which can impact a borrower's ability to continue to make scheduled payments. The risk of repayment of agriculture loans arises largely from factors beyond the control of the Company or the related borrower, such as commodity prices and weather conditions. | |
• | Construction and Land segments – although construction and land loans generally possess a higher inherent risk of loss than other portfolio segments, improvements in the mix, collateral and nature of loans in this segment have resulted in an improvement in the risk profile of this segment of the portfolio. Risk arises from the necessity to complete projects within specified cost and time limits. Trends in the construction industry may also impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of future construction projects. | |
• | Installment – the installment loan portfolio is comprised primarily of a large number of small loans with scheduled amortization over a specific period. The majority of installment loans are made for consumer and business purchases. Weakened economic conditions may result in an increased level of delinquencies within this segment, as economic pressures may impact the capacity of such borrowers to repay their obligations. | |
ALLL Model Methodology | ||
The ALLL is maintained at a level which, in management's judgment, is appropriate to absorb probable credit losses inherent in the loan portfolio as of the balance sheet date. The amount of the ALLL is based on management's evaluation of the collectability of the loan portfolio, including the nature and volume of the portfolio, credit concentrations, trends in historical loss experience, the level of certain classified balances and specific impaired loans, and economic conditions and the related impact on specific borrowers and industry groups. The ALLL is increased by provisions for loan losses, which are charged to earnings and reduced by charge-offs, net of recoveries. Changes in the ALLL relating to impaired loans, including troubled debt restructurings ("TDRs"), are charged or credited to the provision for loan and lease losses. Because of uncertainties inherent in the estimation process, management's estimate of probable credit losses inherent in the loan portfolio and the related allowance may change. | ||
The nature of the process in which management determines the appropriate level of the ALLL involves the exercise of considerable judgment and the use of estimates. While management utilizes its best judgment and all available information in determining the adequacy of the ALLL, the ultimate adequacy of the ALLL is dependent upon a variety of factors beyond the Company's control, including but not limited to, the performance of the loan portfolio, changes in current and future economic conditions and the view of regulatory agencies regarding the level of classified assets. Weakness in economic conditions and any other factor that may adversely affect credit quality, result in higher levels of past due and non-accruing loans, defaults, and additional loan charge-offs, which may require additional provisions for loan losses in future periods and a higher balance in the Company's ALLL. The ALLL, as more fully described below, is comprised of two components: general reserves and specific loan reserves. | ||
General Reserves – The general reserve component of the ALLL, which is not attributable to loans specifically identified as impaired, is determined through a two-step process. First a quantitative allocation is determined by pooling performing loans by collateral type and purpose. These pools of loans are then further segmented by an internal risk grading system that classifies loans as: pass, special mention, substandard and doubtful. The Company's risk grade system allows management, among other things, to identify the risk associated with each loan, and to provide a basis for estimating credit losses inherent in the portfolio. Risk grades are generally assigned based on information concerning the borrower and the strength of the collateral. Risk grades are reviewed regularly by the Company's credit committee and are scrutinized by independent loan reviews performed semi-annually, as well as by regulatory agencies during scheduled examinations. Once credit risk grades have been assigned, estimated loss rates are then applied to each segment according to risk grade to determine the amount of the general portfolio allocation. | ||
Estimated loss rates are determined through an analysis of historical losses for each segment of the loan portfolio, based on the Company's prior experience with such loans. The following provides brief definitions for credit risk grade ratings assigned to loans in the portfolio: | ||
• | Pass – credits that have strong credit quality with adequate collateral or secondary source of repayment and little existing or known weaknesses. However, pass may include credits with exposure to certain potential factors that may adversely impact the credit, if they materialize, resulting in these credits being put on a watch list to monitor more closely than other pass rated credits. Such factors may be credit / relationship specific or general to an entire industry. | |
• | Special Mention – credits that have potential weaknesses that deserve management's close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit at some future date. | |
• | Substandard – credits that have a defined weakness or weaknesses which may jeopardize the orderly liquidation of the loan through cash flows, making it likely that repayment may have to come from some other source, such as the liquidation of collateral. The Company is more likely to incur losses on substandard credits if the weakness or weaknesses identified in the credit are not corrected. | |
• | Doubtful – credits that possess the characteristics of a substandard credit, but because of certain existing deficiencies related to the credit, full collection is highly questionable. The probability of incurring some loss on such credits is high, but because of certain important and reasonably specific pending factors which may work to The advantage of strengthening the credit, charge-off is deferred until such time the Company becomes reasonably certain that certain pending factors related to the credit will no longer provide some form of benefit. | |
The second component of the general reserve allocation of the ALLL is the qualitative allocation, and is determined by estimates the Company makes in regard to certain internal and external factors that may have either a positive or negative impact on the overall losses inherent in the loan portfolio. Internal factors include trends in credit quality of the loan portfolio, the existence and the effects of concentrations, the composition and volume of the loan portfolio and the scope and frequency of the loan review process as well as any other factor determined by management to have an impact on the credit quality of the loan portfolio. External factors include local, state and national economic and business conditions. While management regularly reviews the estimated impact these internal and external factors are expected to have on the loan portfolio, there can be no assurance that an adverse change in any one or combination of these factors will not be in excess of management's expectations. | ||
Specific Loan Reserves – The specific reserve component of the ALLL is determined through the measurement of impairment on certain loans that have been identified as impaired during each reporting period. | ||
A comprehensive analysis is performed at the time a loan is deemed impaired, which includes obtaining updated financial information regarding the borrower, obtaining updated appraisals on any collateral securing the loan and ultimately determining the extent to which the loan is impaired. In measuring the fair value of the collateral, management uses assumptions and methodologies consistent with those that would be utilized by third party valuation experts. Once the amount of impairment on specific impaired loans has been determined, the Company establishes a corresponding valuation allowance which then becomes a component of the Company's specific loan reserve in the ALLL. | ||
In certain instances the Company may work with the borrower to modify the terms of the loan agreement or otherwise restructure the loan in a way that would allow the borrower to continue to perform under the modified terms of the loan agreement. In those instances where modifications are made to loans, for which the borrower is experiencing financial difficulty and the Company has granted the borrower a concession that it would not have otherwise considered, the modifications constitute a TDR. Concessions may include a reduction in the contractual rate of interest, extension payments or maturity, and/or a combination of other actions designed to maximize collection efforts. The Company's policy for monitoring loan modifications for potential TDRs is focused on loans risk graded as special mention, substandard or doubtful. TDRs are considered impaired loans and require the Company to measure the amount of impairment, if any, and establish an ALLL for the loan at the time the loan is restructured. | ||
Impaired Loans | ||
A loan is identified as impaired when, based on all available information, the loan is no longer performing according to the original contractual terms of the loan agreement. The Company performs a review of all significant problem loans. If based on this review it is determined that the loan is impaired, the Company obtains updated appraisal information on the underlying collateral for collateral dependent loans and updated cash-flow information if the loan is unsecured or primarily dependent on future operating or other cash flows. Once the updated financial information is obtained and analyzed by management, a valuation allowance, if necessary, is established against the loan or a loss is recognized by a charge to the ALLL. Therefore, at the time a loan is considered impaired a valuation allowance typically has already been established or balances deemed uncollectable have been charged-off. | ||
When a borrower discontinues making payments according to the original contractual terms of the loan agreement, the Company must determine if it is appropriate to continue the accrual of interest on the loan. Generally, the Company places loans on non-accrual status and ceases the recognition of interest income when a loan has become delinquent 90 days or more, and/or when management believes the collection of all contractually required amounts is unlikely. Therefore, the Company generally places impaired loans on non-accrual status due to doubt surrounding the ultimate collection of contractual amounts due. | ||
Loans typically move to non-accrual status from the Company's substandard risk grade. When a loan is first classified as substandard, the Company performs a review of the loan in order to determine if the loan is impaired. If upon a loan's migration to non-accruing status, the financial information on the borrower previously obtained while the loan was classified as substandard is deemed to be outdated, the Company typically orders new appraisals on underlying collateral or obtains the most recent cash-flow information in order to have the most current indication of fair value. For collateral dependent loans, if a complete appraisal is expected to take a significant amount of time to complete, the Company may also rely on a broker's price opinion or other meaningful market data, such as comparable sales, in order to derive its best estimate of a property's fair value, while waiting for an appraisal at the time of the decision to classify the loan as substandard and/or non-accruing. | ||
An analysis of the underlying collateral is performed for loans on non-accrual status at least quarterly and new appraisals are typically received at least annually. Corresponding changes in any related valuation allowance are made or balances deemed to be fully uncollectable are charged-off. Cash-flow information for impaired loans dependent primarily on future operating or other cash-flows are updated quarterly as well, with subsequent shortfalls resulting in valuation allowance adjustments. | ||
In those cases where management has determined that it is in the best interest of the Bank to attempt to broker a troubled loan rather than to continue to hold it in its portfolio, additional charge-offs may be realized as distressed loan buyers that typically purchase these types of loans tend to require a higher rate of return than would be built into the Company's traditional hold to maturity model, resulting in the sales price for these loans being less than the adjusted carrying cost. | ||
Loan Charge-offs | ||
The Company typically moves to charge-off loan balances when the loan becomes 90 days past due, unless it is well secured and in the process of collection. The Company may also move to charge-off a loan when based on various evidence, it believes those balances are no longer collectable. Evidence may include updated information related to a borrower's financial condition or updated information related to collateral securing the loan. If a loan's credit quality deteriorates to the point that collection of principal through traditional means is believed by management to be doubtful, and management determines there is value in the collateral securing the loan through obtaining periodic appraisals, the Company generally takes steps to protect and liquidate the collateral. | ||
Any loss resulting from the difference between the Company's recorded investment in the loan and the fair market value of the collateral obtained through repossession is recognized by a charge to the ALLL. For most real estate and commercial loans, the Company generally recognizes a charge-off to bring the carrying balance of the loan down to the estimated fair value of the underlying collateral or some other determination of fair value when: (i) management determines that the asset is no longer collectable, (ii) repayment prospects for the credit have become unclear and/or are likely to occur over a time-frame the Company deems to be no longer reasonable, (iii) the loan or portion of the loan has been deemed a loss by the Company's internal review and/or independent review functions, or has been deemed a loss by regulatory examiners, (iv) the borrower has or is in the process of filing for bankruptcy. The Company's charge-off policy is consistently applied to all portfolio segments. | ||
The Company may defer charge-off on a loan, due to certain factors the Company has identified that may work to its benefit in minimizing potential losses. Those factors may include: working with the borrower to restructure the loan in an effort to bring about a more favorable outcome, the identification of an additional source of repayment, sufficient collateral to cover the Company's recorded investment in the loan, or any other identified factor that may work to strengthen the credit and reduce the potential for loss. | ||
Appraisals for Loans Secured by Real Estate Collateral | ||
For loan commitments greater than $0.5 million and a remaining term greater than one year at the loan's anniversary date, the Bank has a policy to perform an annual review of the borrower's financial condition and of any real estate securing the loan. This review includes, among other things, a physical inspection of the real estate securing the loan, an analysis of any related rent rolls, an analysis of all borrower and guarantor tax returns and financial statements. This information is used internally by the Bank to validate all covenants and the risk grade assigned to the loan. If during the review process the Bank learns of additional information that would suggest that the borrower's ability to repay has deteriorated since the original underwriting of the loan, and repayment may now be dependent on liquidation of the collateral, an additional independent appraisal of the collateral is requested. If based on the updated appraisal information it is determined the value of the collateral is impaired and the Bank no longer expects to collect all previously determined amounts related to the loan as stipulated in the loan's original agreement, the Bank typically moves to establish a valuation allowance for the loan or charge-off such differences. | ||
In general, once a loan is deemed to be impaired and/or the loan was downgraded to substandard status, the loan becomes the responsibility of the Bank's Special Assets department, which provides more diligent oversight of problem credits. This oversight includes, among other things, a review of all previous appraisals of collateral securing such loans and determining in the Bank's best judgment if those appraisals still represent the current fair value of the loan. Additional appraisals may be ordered at this time and annually thereafter, if deemed necessary. | ||
Reserve for Off-Balance Sheet Loan Commitments | ||
The Company has exposure to losses from unfunded loan commitments and letters of credit. Since the funds have not been disbursed on these commitments, they are not reported as loans outstanding. Estimated losses related to these commitments are not included in the allowance for loan losses reported in Note 5. Loans and the Allowance for Loan and Lease Losses, of these Consolidated Financial Statements. Instead they are accounted for as a separate loss contingency reserve within other liabilities on the Company's Consolidated Balance Sheets and related adjustments to this reserve are as a charge to earnings included in other non-interest expense on the Consolidated Statements of Income. Losses are experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from a party that may not be as financially sound in the current period as it was when the commitment was originally made. | ||
Premises and Equipment | ||
Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives, which range from three to ten years for furniture and fixtures and thirty years for buildings. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the remaining lease term, whichever is shorter. Expenditures for improvements or major repairs are capitalized and those for ordinary repairs and maintenance are charged to expense as incurred. | ||
Income Taxes | ||
Income taxes reported in the Consolidated Financial Statements are computed based on an asset and liability approach. We recognize the amount of taxes payable or refundable for the current year, and deferred tax assets and liabilities for the future tax consequences that have been recognized in the financial statement or tax returns. The measurement of tax assets and liabilities is based on the provisions of enacted tax laws. The Company files consolidated federal and combined state income tax returns. A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. | ||
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statements of operations. Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. In making the determination whether a deferred tax asset is more likely than not to be realized, management performs a quarterly evaluation of all available positive and negative evidence including the possibility of future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial results. A deferred tax asset valuation allowance is established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not that all or some portion of the deferred tax asset will not be realized. See also Note 7. Income Taxes, of these Consolidated Financial Statements for additional information related to deferred income taxes. | ||
Bank Owned Life Insurance | ||
The Company has purchased life insurance policies on certain employees. These Bank Owned Life Insurance ("BOLI") policies are recorded in the consolidated balance sheets at their cash surrender value. Income and expense from these policies and changes in the cash surrender value are recorded in non-interest income and non-interest expense in the consolidated statements of income. | ||
Goodwill and Other Intangible Assets | ||
Intangible assets are comprised of goodwill, core deposit intangibles and other identifiable intangibles acquired in business combinations. Intangible assets with definite useful lives are amortized over their respective estimated useful lives. If an event occurs that indicates the carrying amount of an intangible asset may not be recoverable, management reviews the asset for impairment. Any goodwill and any intangible asset acquired in a purchase business combination determined to have an indefinite useful life is not amortized, but is at least annually evaluated for impairment. | ||
The Company applies a qualitative analysis of conditions that might indicate that impairment of goodwill is more likely than not to have occurred. In the event that the qualitative analysis suggests that an impairment may have occurred, the Company, with the assistance of an independent third party valuation firm, uses several quantitative valuation methodologies in evaluating goodwill for impairment including a discounted cash flow approach that includes assumptions made concerning the future earnings potential of the organization, and a market-based approach that looks at values for organizations of comparable size, structure and business model. The current year's review of qualitative factors did not indicate that impairment has occurred, as such no quantitative analysis was performed at December 31, 2014. | ||
Other Real Estate Owned | ||
Real estate and other property acquired in full or partial settlement of loan obligations is referred to as other real estate owned ("OREO"). OREO is originally recorded in the Company's Consolidated Financial Statements at fair value less any estimated costs to sell. When property is acquired through foreclosure or surrendered in lieu of foreclosure, the Company measures the fair value of the property acquired against its recorded investment in the loan. If the fair value of the property at the time of acquisition is less than the recorded investment in the loan, the difference is charged to the allowance for loan losses. Any subsequent declines in the fair value of OREO are recorded against a valuation allowance for foreclosed assets, established through a charge to non-interest expense. All related operating or maintenance costs are charged to non-interest expense as incurred. Any subsequent gains or losses on the sale of OREO are recorded in other income. | ||
Federal Home Loan Bank Borrowings | ||
The Company may borrow from the FHLB at competitive rates, which typically approximate the London Inter-Bank Offered Rate ("LIBOR") for the equivalent term because they are secured with investments in high quality loans. Interest is accrued on a monthly basis based on the outstanding borrowing's interest rate and is included in interest expense on other borrowings. | ||
Salary Continuation Plan Agreements | ||
The Company has entered into salary continuation plan agreements with certain executive and senior officers. The measurement of the liability under these agreements is estimated using a discounted cash flow model, which includes estimates involving the length of time before retirement, estimated long-term discount rates based on the Bank's long-term borrowing rates at the time the agreement is executed, and expected benefit levels. Should these estimates vary substantially from actual events, the level of expense recognized in the future to provide these benefits could materially vary. | ||
Comprehensive Income | ||
Changes in the unrealized gain (loss) on available for sale securities net of income taxes was the only component of accumulated other comprehensive income for the Company for the years ended December 31, 2014, 2013 and 2012. | ||
Share-Based Compensation | ||
The Company grants incentive and non-qualified stock options, as well as restricted stock to directors and employees as a form of compensation. U.S. GAAP requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based forms of compensation issued to employees over the employees' requisite service period (generally the vesting period). The Company uses a straight-line method for the recognition of all share-based compensation expense. | ||
The amount of compensation expense to be recognized for options is based on the fair value of the options, utilizing a Black-Scholes option pricing model, at the date of the grant. The fair value for option grants is estimated based on the length of their term, the volatility of the stock price in past periods, and other factors. See also Note 12. Share-Based Compensation Plans, of these Consolidated Financial Statements for additional information related to share-based compensation. | ||
A valuation model is not used for pricing restricted stock because the value is based on the closing price of the Company's stock on the grant date. The amount of expense to be recognized for restricted stock grants is calculated as the number of shares granted multiplied by the stock price. The employee receives any dividends paid on the stock from the time of grant, but receives the restricted stock only when the vesting period has lapsed. | ||
Earnings Per Share | ||
Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of common and participating preferred shares outstanding for the reporting period, including the Series C Preferred Stock. In periods when the Company generates a net loss, preferred shares are not included in the calculation of basic loss per share. Diluted earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding over the reporting period, adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares are calculated using the treasury stock method and include incremental shares issuable upon exercise of outstanding stock options, other share-based compensation awards and any other security in which its conversion or exercise may result in the issuance of common stock, such as the warrant the Company issued to the U.S. Treasury during 2009, which was repurchased and cancelled in August 2013. The computation of diluted earnings per common share excludes the impacts of the assumed exercise or issuance of securities that would have an anti-dilutive effect, which can occur when the Company reports a net loss or when the market price for the Company's stock falls below the exercise price of equity awards issued by the Company. | ||
Loss Contingencies | ||
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Legal costs incurred to defend such matters are expensed as incurred. Management does not believe there are any such matters that will have a material effect on the Consolidated Financial Statements. | ||
Business_Combination
Business Combination | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Business Combination | ||||||||
Business Combination | Note 2. Business Combination | |||||||
On February 28, 2014, the Company acquired 100% of the outstanding common shares of Mission Community Bancorp ("MISN") and all unexercised warrants and options to purchase MISN common stock were cancelled, in exchange for 7,541,326 shares of the Company's common stock and $8.7 million in cash (the "MISN Transaction). In conjunction with the merger, MISN's wholly-owned bank subsidiary, Mission Community Bank, was merged with and into Heritage Oaks Bank. The transaction was valued at $69.0 million, based on the Company's closing stock price of $7.99 on February 28, 2014. With the acquisition, the Company believes it has created a more valuable community banking franchise, with a low-cost core deposit base, strong capital ratios, attractive net interest margins, lower operating costs, and better overall returns for the shareholders of the combined company. The Company also believes it now has a banking platform that is well positioned for future growth, both organically and through acquisitions. | ||||||||
The acquired assets and liabilities assumed have been recorded at fair value at the date of acquisition in these financial statements. The following table presents a summary of acquired assets and liabilities assumed: | ||||||||
February 28, 2014 | ||||||||
(dollars in thousands) | ||||||||
Assets acquired | ||||||||
Cash and due from banks | $ | 3,212 | ||||||
Interest earning deposits in other banks | 34,386 | |||||||
Securities available for sale | 76,159 | |||||||
Loans held for sale | 338 | |||||||
Loans and leases receivable | 280,316 | |||||||
Premises and equipment | 15,718 | |||||||
Deferred tax assets, net | 11,774 | |||||||
Goodwill | 13,648 | |||||||
Core deposit intangible asset | 5,060 | |||||||
Bank owned life insurance | 8,263 | |||||||
Other assets | 4,810 | |||||||
| | | | | ||||
Total assets acquired | $ | 453,684 | ||||||
| | | | | ||||
Liabilities assumed | ||||||||
Deposits | $ | 371,501 | ||||||
Advances from Federal Home Loan Bank | 6,071 | |||||||
Junior subordinated debentures | 4,804 | |||||||
Other liabilities | 2,346 | |||||||
| | | | | ||||
Total liabilities assumed | $ | 384,722 | ||||||
| | | | | ||||
Total consideration paid | $ | 68,962 | ||||||
| | | | | ||||
The fair value of net assets acquired includes fair value adjustments to certain loans that were not considered impaired as of the acquisition date, since they have not exhibited evidence of deterioration in credit quality since origination, and have been classified as non-PCI loans. The fair value adjustments were determined using discounted contractual cash flows, adjusted for expected losses and prepayments, where appropriate. Non-PCI loans acquired as of the acquisition date had a fair value and gross contractual payments receivable of $267.3 million and $328.2 million, respectively. As of the acquisition date, contractual cash flows not expected to be collected on these non-PCI loans totaled $5.4 million, which has been recorded as the credit risk component of the purchase discount, and which represented 2.0% of their gross outstanding principal balances. | ||||||||
Goodwill of $13.6 million arising from the acquisition is largely attributable to synergies and cost savings resulting from combining the operations of the companies. As this transaction was structured as a tax-free exchange, the goodwill will not be deductible for tax purposes. | ||||||||
The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate more accurate or appropriate values for the assets acquired and liabilities assumed, which may be reflective of conditions or events that existed at the acquisition date. As of December 31, 2014, adjustments to the fair value of assets acquired and liabilities assumed in the MISN Transaction were complete. | ||||||||
The following table summarizes the consideration paid for MISN: | ||||||||
February 28, 2014 | ||||||||
(dollars in thousands) | ||||||||
Consideration paid | ||||||||
Cash payments for MISN shares outstanding | $ | 2,554 | ||||||
Cash payments for MISN warrants | 5,766 | |||||||
Cash payments for MISN options | 387 | |||||||
Shares issued, @ $7.99 per share | 60,255 | |||||||
| | | | | ||||
Total consideration | $ | 68,962 | ||||||
| | | | | ||||
The following table presents unaudited pro forma information as if the MISN Transaction had occurred on January 1, 2013, which includes the pre-acquisition period for MISN. The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits and borrowings acquired, and the related income tax effects. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date. | ||||||||
For The Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
(dollars in thousands except per share data) | ||||||||
Net interest income | $ | 61,185 | $ | 59,269 | ||||
Provision for loan and lease losses | – | 310 | ||||||
Non-interest income | 10,189 | 14,755 | ||||||
Non-interest expense | 58,227 | 54,461 | ||||||
| | | | | | | | |
Income before income taxes | 13,147 | 19,253 | ||||||
Income tax expense | 4,553 | 7,552 | ||||||
| | | | | | | | |
Net income | $ | 8,594 | $ | 11,701 | ||||
| | | | | | | | |
Earnings Per Common Share | ||||||||
Basic | $ | 0.25 | $ | 0.33 | ||||
Diluted | $ | 0.25 | $ | 0.33 | ||||
Fair_Value_of_Assets_and_Liabi
Fair Value of Assets and Liabilities | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value of Assets and Liabilities | |||||||||||||||||
Fair Value of Assets and Liabilities | |||||||||||||||||
Note 3. Fair Value of Assets and Liabilities | |||||||||||||||||
Recurring Basis | |||||||||||||||||
The following table provides a summary of the financial instruments the Company measures at fair value on a recurring basis as of December 31, 2014 and 2013: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Obligations of U.S. government agencies | $ | 19,664 | $ | – | $ | 19,664 | $ | – | |||||||||
Mortgage backed securities | |||||||||||||||||
U.S government sponsored entities and agencies | 215,398 | – | 215,398 | – | |||||||||||||
Non-agency | 11,901 | – | 11,901 | – | |||||||||||||
State and municipal securities | 82,592 | – | 82,592 | – | |||||||||||||
Asset backed securities | 26,025 | – | 26,025 | – | |||||||||||||
| | | | | | | | | | | | | | ||||
Total assets measured on a recurring basis | $ | 355,580 | $ | – | $ | 355,580 | $ | – | |||||||||
| | | | | | | | | | | | | | ||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Obligations of U.S. government agencies | $ | 6,208 | $ | – | $ | 6,208 | $ | – | |||||||||
Mortgage backed securities | |||||||||||||||||
U.S government sponsored entities and agencies | 182,931 | – | 182,931 | – | |||||||||||||
Non-agency | 11,032 | – | 11,032 | – | |||||||||||||
State and municipal securities | 50,030 | – | 50,030 | – | |||||||||||||
Asset backed securities | 26,594 | – | 26,594 | – | |||||||||||||
| | | | | | | | | | | | | | ||||
Total assets measured on a recurring basis | $ | 276,795 | $ | – | $ | 276,795 | $ | – | |||||||||
| | | | | | | | | | | | | | ||||
There were no transfers between levels of fair value measures during 2014 and 2013 for assets measured at fair value on a recurring basis. There were no liabilities measured on a recurring basis during 2014. | |||||||||||||||||
In determining the fair value of Level 3 instruments on a recurring basis the Company takes into consideration several variables, including but not limited to: expectations about interest rate movements, prepayment speeds of the underlying mortgages for mortgage backed securities, expected default rates, and credit spreads over the risk free rate. Of these variables, default rates and credit spreads are perhaps the least observable and most impactful on the long-term value of a Level 3 security. Since a bond's value is represented by its yield which reflects the risk-free yield curve plus compensation for various risks incurred in buying the bond, changes to the risk assumptions including probability of default and timing of future cash flows can materially impact the market value. As of December 31, 2014 and 2013, there were no assets or liabilities classified as recurring Level 3. | |||||||||||||||||
Non-recurring Basis | |||||||||||||||||
The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost. Certain impaired loans measured at fair value at December 31, 2013 are no longer recorded at fair value due to the borrower payments reducing the carrying value of these loans to less than fair value, and due to other impaired loans being evaluated under the discounted cash flow method versus the collateral method. The discounted cash flow method as prescribed by ASC 310 Receivables, is not a fair value measurement since the discount rate utilized is the loan's effective interest rate, which is not a market rate. The discounted cash flow approach is used to measure impairment for certain impaired loans, because of their significant payment history and the global cash flow analysis performed on each borrower. | |||||||||||||||||
The following table provides a summary of assets the Company measures at fair value on a non-recurring basis as of December 31, 2014 and 2013: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | Year To | |||||||||||||
Active Markets for | Observable | Unobservable | Date Losses | ||||||||||||||
Identical Assets | Inputs | Inputs | (Recoveries) | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Impaired loans | |||||||||||||||||
Commercial real estate | $ | 1,325 | $ | – | $ | – | $ | 1,325 | $ | 1,026 | |||||||
Land | 3,261 | – | – | 3,261 | (946 | ) | |||||||||||
| | | | | | | | | | | | | | | | | |
Total assets measured on a non-recurring basis | $ | 4,586 | $ | – | $ | – | $ | 4,586 | $ | 80 | |||||||
| | | | | | | | | | | | | | | | | |
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | Year To | |||||||||||||
Active Markets for | Observable | Unobservable | Date Losses | ||||||||||||||
Identical Assets | Inputs | Inputs | (Recoveries) | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Impaired loans | |||||||||||||||||
Land | $ | 4,170 | $ | – | $ | – | $ | 4,170 | $ | (1,270 | ) | ||||||
| | | | | | | | | | | | | | | | | |
Total assets measured on a non-recurring basis | $ | 4,170 | $ | – | $ | – | $ | 4,170 | $ | (1,270 | ) | ||||||
| | | | | | | | | | | | | | | | | |
There were no transfers between levels of fair value measures during 2014 and 2013 for assets measured at fair value on a non-recurring basis. There were no liabilities measured on a non-recurring basis during 2014. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The following table provides a summary of the estimated fair value of financial instruments at December 31, 2014 and 2013: | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Carrying | |||||||||||||||||
Amount | Quoted Prices in | Significant Other | Significant | Fair Value | |||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 35,580 | $ | 35,580 | $ | – | $ | – | $ | 35,580 | |||||||
Investment securities available for sale | 355,580 | – | 355,580 | – | 355,580 | ||||||||||||
Federal Home Loan Bank stock | 7,853 | – | – | – | N/A | ||||||||||||
Loans receivable, net of deferred fees and costs | 1,192,038 | – | – | 1,196,997 | 1,196,997 | ||||||||||||
Loans held for sale | 2,586 | – | 2,586 | – | 2,586 | ||||||||||||
Accrued interest receivable | 5,659 | – | 2,038 | 3,621 | 5,659 | ||||||||||||
Liabilities | |||||||||||||||||
Non-interest bearing deposits | 461,479 | 461,479 | – | – | 461,479 | ||||||||||||
Interest bearing deposits | 933,325 | – | 936,151 | – | 936,151 | ||||||||||||
Federal Home Loan Bank advances | 95,558 | – | 96,679 | – | 96,679 | ||||||||||||
Junior subordinated debentures | 13,233 | – | – | 9,297 | 9,297 | ||||||||||||
Accrued interest payable | 401 | – | 401 | – | 401 | ||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Carrying | |||||||||||||||||
Amount | Quoted Prices in | Significant Other | Significant | Fair Value | |||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 26,238 | $ | 26,238 | $ | – | $ | – | $ | 26,238 | |||||||
Investment securities available for sale | 276,795 | – | 276,795 | – | 276,795 | ||||||||||||
Federal Home Loan Bank stock | 4,739 | – | – | – | N/A | ||||||||||||
Loans receivable, net of deferred fees and costs | 826,203 | – | – | 827,105 | 827,105 | ||||||||||||
Loans held for sale | 2,386 | – | 2,386 | – | 2,386 | ||||||||||||
Accrued interest receivable | 4,027 | – | 1,397 | 2,630 | 4,027 | ||||||||||||
Liabilities | |||||||||||||||||
Non interest-bearing deposits | 291,856 | 291,856 | – | – | 291,856 | ||||||||||||
Interest-bearing deposits | 682,039 | – | 684,345 | – | 684,345 | ||||||||||||
Federal Home Loan Bank advances | 88,500 | – | 86,990 | – | 86,990 | ||||||||||||
Junior subordinated debentures | 8,248 | – | – | 7,595 | 7,595 | ||||||||||||
Accrued interest payable | 239 | – | 239 | – | 239 | ||||||||||||
Information on off-balance sheet instruments as of December 31, 2014 and 2013 follows: | |||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Notional | Cost to Cede | Notional | Cost to Cede | ||||||||||||||
Amount | or Assume | Amount | or Assume | ||||||||||||||
(dollars in thousands) | |||||||||||||||||
Off-balance sheet instruments, commitments to extend credit and standby letters of credit | $ | 253,275 | $ | 2,533 | $ | 198,481 | $ | 1,985 | |||||||||
Investment_Securities
Investment Securities | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investment Securities | ||||||||||||||||||||
Investment Securities | Note 4. Investment Securities | |||||||||||||||||||
The following table sets forth the amortized cost and fair values of the Company's investment securities, all of which are reported as available for sale at December 31, 2014 and 2013: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 19,562 | $ | 191 | $ | (89 | ) | $ | 19,664 | |||||||||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 216,492 | 1,092 | (2,186 | ) | 215,398 | |||||||||||||||
Non-agency | 11,891 | 21 | (11 | ) | 11,901 | |||||||||||||||
State and municipal securities | 79,810 | 2,843 | (61 | ) | 82,592 | |||||||||||||||
Asset backed securities | 26,216 | – | (191 | ) | 26,025 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total available for sale securities | $ | 353,971 | $ | 4,147 | $ | (2,538 | ) | $ | 355,580 | |||||||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 6,243 | $ | 11 | $ | (46 | ) | $ | 6,208 | |||||||||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 186,981 | 342 | (4,392 | ) | 182,931 | |||||||||||||||
Non-agency | 10,924 | 156 | (48 | ) | 11,032 | |||||||||||||||
State and municipal securities | 51,532 | 269 | (1,771 | ) | 50,030 | |||||||||||||||
Asset backed securities | 26,935 | – | (341 | ) | 26,594 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total available for sale securities | $ | 282,615 | $ | 778 | $ | (6,598 | ) | $ | 276,795 | |||||||||||
| | | | | | | | | | | | | | |||||||
Those investment securities available for sale which have an unrealized loss position at December 31, 2014 and 2013 are detailed below: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 2,795 | $ | (17 | ) | $ | 2,607 | $ | (72 | ) | $ | 5,402 | $ | (89 | ) | |||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 50,583 | (670 | ) | 58,753 | (1,516 | ) | 109,336 | (2,186 | ) | |||||||||||
Non-agency | 3,000 | (7 | ) | 507 | (4 | ) | 3,507 | (11 | ) | |||||||||||
State and municipal securities | 5,899 | (47 | ) | 2,245 | (14 | ) | 8,144 | (61 | ) | |||||||||||
Asset backed securities | – | – | 17,153 | (191 | ) | 17,153 | (191 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 62,277 | $ | (741 | ) | $ | 81,265 | $ | (1,797 | ) | $ | 143,542 | $ | (2,538 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 2,773 | $ | (45 | ) | $ | 40 | $ | (1 | ) | $ | 2,813 | $ | (46 | ) | |||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 118,554 | (3,140 | ) | 18,863 | (1,252 | ) | 137,417 | (4,392 | ) | |||||||||||
Non-agency | 3,210 | (48 | ) | – | – | 3,210 | (48 | ) | ||||||||||||
State and municipal securities | 32,967 | (1,675 | ) | 2,458 | (96 | ) | 35,425 | (1,771 | ) | |||||||||||
Asset backed securities | 7,978 | (246 | ) | 9,747 | (95 | ) | 17,725 | (341 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 165,482 | $ | (5,154 | ) | $ | 31,108 | $ | (1,444 | ) | $ | 196,590 | $ | (6,598 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
As of December 31, 2014, the Company believes that unrealized losses on its investment securities are not attributable to credit quality, but rather fluctuations in market prices. In the case of the agency mortgage related securities, contractual cash flows are guaranteed by agencies of the U.S. Government. While the Company's investment security holdings have contractual maturity dates that range from 1 to 40 years, they have a much shorter effective duration dependent on the instrument's priority in the overall cash flow structure and the characteristics of the loans underlying the investment security. | ||||||||||||||||||||
Management does not intend to sell and it is unlikely that management will be required to sell the securities prior to their anticipated recovery. As of December 31, 2014, the Company does not believe unrealized losses related to any of its securities are other than temporary. | ||||||||||||||||||||
The proceeds from the sales and calls of securities and the associated gains and losses are listed below: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Proceeds | $ | 129,074 | $ | 161,765 | $ | 141,166 | ||||||||||||||
Gross gains | 1,050 | 5,599 | 3,152 | |||||||||||||||||
Gross losses | (404 | ) | (1,673 | ) | (533 | ) | ||||||||||||||
The income tax expense related to these net realized gains was $0.3 million, $1.6 million, and $1.1 million, in 2014, 2013 and 2012 respectively. | ||||||||||||||||||||
The table below provides a maturity distribution of available for sale investment securities at December 31, 2014 and 2013. The table reflects the expected lives of mortgage-backed securities, based on the Company's historical prepayment experience, because borrowers have the right to prepay obligations without prepayment penalties. Contractual maturities are reflected for all other security types. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amortized | Fair Value | Amortized | Fair Value | |||||||||||||||||
Cost | Cost | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Due one year or less | $ | 38,674 | $ | 38,587 | $ | 29,282 | $ | 28,999 | ||||||||||||
Due after one year through five years | 113,081 | 112,926 | 90,023 | 88,760 | ||||||||||||||||
Due after five years through ten years | 137,909 | 140,115 | 100,191 | 97,752 | ||||||||||||||||
Due after ten years | 64,307 | 63,952 | 63,119 | 61,284 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | $ | 353,971 | $ | 355,580 | $ | 282,615 | $ | 276,795 | ||||||||||||
| | | | | | | | | | | | | | |||||||
Securities having an amortized cost and a fair value of $67.3 million and $72.5 million, respectively at December 31, 2014, and $41.9 million and $40.4 million, respectively at December 31, 2013 were pledged to secure public deposits. At year-end 2014 and 2013, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of total securities. | ||||||||||||||||||||
The following table summarizes earnings on both taxable and tax-exempt investment securities: | ||||||||||||||||||||
For the years ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Taxable earnings on investment securities | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 348 | $ | 106 | $ | 105 | ||||||||||||||
Mortgage backed securities | 4,433 | 3,441 | 3,776 | |||||||||||||||||
State and municipal securities | 85 | 5 | 191 | |||||||||||||||||
Corporate debt securities | 6 | – | 631 | |||||||||||||||||
Asset backed securities | 353 | 427 | 241 | |||||||||||||||||
Non-taxable earnings on investment securities | ||||||||||||||||||||
State and municipal securities | 2,013 | 1,497 | 1,952 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total | $ | 7,238 | $ | 5,476 | $ | 6,896 | ||||||||||||||
| | | | | | | | | | | ||||||||||
Loans_and_Allowance_for_Loan_a
Loans and Allowance for Loan and Lease Losses | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Loans and Allowance for Loan and Lease Losses | ||||||||||||||||||||
Loans and Allowance for Loan and Lease Losses | Note 5. Loans and Allowance for Loan and Lease Losses | |||||||||||||||||||
The following table provides a summary of outstanding loan balances: | ||||||||||||||||||||
December 31, 2014 | December 31, | |||||||||||||||||||
2013 | ||||||||||||||||||||
Non-PCI | PCI | Total Loans | Non-PCI | |||||||||||||||||
Loans | Loans | Receivable | Loans | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Multi-family residential | $ | 78,645 | $ | – | $ | 78,645 | $ | 31,140 | ||||||||||||
Residential 1 to 4 family | 126,640 | 561 | 127,201 | 88,904 | ||||||||||||||||
Home equity lines of credit | 38,252 | – | 38,252 | 31,178 | ||||||||||||||||
Commercial | 584,056 | 4,416 | 588,472 | 432,203 | ||||||||||||||||
Farmland | 96,708 | 1,665 | 98,373 | 50,414 | ||||||||||||||||
Land | 19,316 | 851 | 20,167 | 24,523 | ||||||||||||||||
Construction | 24,493 | – | 24,493 | 13,699 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total real estate secured | 968,110 | 7,493 | 975,603 | 672,061 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 153,403 | 1,384 | 154,787 | 119,121 | ||||||||||||||||
Agriculture | 53,678 | 1,423 | 55,101 | 32,686 | ||||||||||||||||
Other | 14 | – | 14 | 38 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total commercial | 207,095 | 2,807 | 209,902 | 151,845 | ||||||||||||||||
Installment | 7,723 | – | 7,723 | 3,246 | ||||||||||||||||
Overdrafts | 255 | – | 255 | 332 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total gross loans held for investment | 1,183,183 | 10,300 | 1,193,483 | 827,484 | ||||||||||||||||
Net deferred loan fees | (1,445 | ) | – | (1,445 | ) | (1,281 | ) | |||||||||||||
Allowance for loan and lease losses | (16,802 | ) | – | (16,802 | ) | (17,859 | ) | |||||||||||||
| | | | | | | | | | | | | | |||||||
Total net loans held for investment | $ | 1,164,936 | $ | 10,300 | $ | 1,175,236 | $ | 808,344 | ||||||||||||
| | | | | | | | | | | | | | |||||||
Loans held for sale | $ | 2,586 | $ | – | $ | 2,586 | $ | 2,386 | ||||||||||||
At December 31, 2014, total net loans in the table above include $229.4 million of non-PCI loans acquired in the MISN Transaction. | ||||||||||||||||||||
Concentration of Credit Risk | ||||||||||||||||||||
The Company held loans that were collateralized by various forms of real estate of $978.2 million and $674.4 million at December 31, 2014 and 2013, respectively. Such loans are generally made to borrowers located in the counties of San Luis Obispo, Santa Barbara, and Ventura. The Company attempts to reduce its concentration of credit risk by making loans which are diversified by product type. While Management believes that the collateral presently securing this portfolio is adequate, there can be no assurances that further deterioration in the California real estate market would not expose the Company to significantly greater credit risk. | ||||||||||||||||||||
Loans Held for Sale | ||||||||||||||||||||
Loans held for sale are primarily single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans in this category are sold within thirty to sixty days. Under the terms of the mortgage purchase agreements, the purchaser has the right to require the Company to either repurchase the mortgage or reimburse losses incurred by the purchaser, which are determined to have been directly related to borrower fraud or misrepresentation. At December 31, 2014, the Company has five remaining loans for which the Company believes it is probable that the purchaser will seek reimbursement from the Company for losses sustained as a result of borrower fraud and/or misrepresentation. Although the Company intends to vigorously challenge claims for reimbursement, the Company had a reserve of $0.5 million for these potential repurchases at December 31, 2014, which is included in other liabilities. The reserve for mortgage repurchases was $0.4 million at December 31, 2013. Provisions for mortgage repurchases totaled $0.1 million, $0.6 million, and $1.2 million for the years ended December 31, 2014, 2013, and 2012, respectively. | ||||||||||||||||||||
Loans Serviced for Others | ||||||||||||||||||||
Loans serviced for others are not included in the Company's Consolidated Financial Statements. The unpaid principal balance of loans serviced for others, exclusive of Small Business Administration ("SBA") loans, was $44.8 million and $22.6 million at December 31, 2014 and 2013, respectively. The year over year increase can be attributed to the MISN Transaction. | ||||||||||||||||||||
From time to time, the Company also originates SBA loans for sale for which it retains the servicing of the guaranteed portion of the loan sold. At December 31, 2014 and 2013, the unpaid principal balance of SBA loans serviced for others totaled $13.0 million and $6.6 million, respectively. The Company recognized $43 thousand, and $0.4 million in gains related to the sale of SBA loans in 2014 and 2013. The Company did not recognize gains from the sale of SBA loans in 2012. The gain on sale of SBA loans is included as a component of other income in non-interest income. | ||||||||||||||||||||
Pledged Loans | ||||||||||||||||||||
At December 31, 2014, the Bank has pledged $869.5 million of loans to the Federal Home Loan Bank of San Francisco to secure a credit facility totaling $462.1 million under a blanket lien. Of this credit facility, $11.5 million is available as a line of credit, while the remainder is available for potential future borrowings. The Bank also has a collateralized borrowing line with the Federal Reserve Bank, which is secured by $11.5 million of loans at December 31, 2014. | ||||||||||||||||||||
Purchased Credit Impaired Loans | ||||||||||||||||||||
As part of the MISN Transaction described in Note 2. Business Combination, the Company acquired a portfolio of loans. Of the loans acquired, the Company classified PCI loans as those that have exhibited evidence of deterioration in credit quality since their origination, and where it was deemed probable, at acquisition, that all contractually required payments would not be collected. The Company did not have any loans classified as PCI at December 31, 2013. | ||||||||||||||||||||
The table below summarizes the unpaid principal balance and carrying amount of PCI loans as of December 31, 2014: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Unpaid Principal | Carrying | |||||||||||||||||||
Balance | Amount | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 886 | $ | 561 | ||||||||||||||||
Commercial | 6,109 | 4,416 | ||||||||||||||||||
Farmland | 2,027 | 1,665 | ||||||||||||||||||
Land | 993 | 851 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total real estate secured | 10,015 | 7,493 | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,883 | 1,384 | ||||||||||||||||||
Agriculture | 1,492 | 1,423 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total commercial | 3,375 | 2,807 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total PCI loans | $ | 13,390 | $ | 10,300 | ||||||||||||||||
| | | | | | | | |||||||||||||
The Company recorded PCI loans at fair value on the date of acquisition, and as a result no ALLL was recorded for these loans. The following table summarizes the contractually required payments, cash flows expected to be collected and fair value for PCI loans as of the date of acquisition: | ||||||||||||||||||||
February 28, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Contractually required payments including interest | $ | 19,827 | ||||||||||||||||||
Nonaccretable difference | (2,320 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Cash flows expected to be collected | 17,507 | |||||||||||||||||||
Accretable difference | (4,673 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Fair value at acquisition | $ | 12,834 | ||||||||||||||||||
The following table summarizes the accretable yield, or income expected to be collected for PCI loans: | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Balance, January 1, 2014 | $ | – | ||||||||||||||||||
New loans purchased (1) | 4,673 | |||||||||||||||||||
Accretion of income | (1,362 | ) | ||||||||||||||||||
Reclassifications from nonaccretable difference | 1,063 | |||||||||||||||||||
| | | | | ||||||||||||||||
Balance, December 31, 2014 | $ | 4,374 | ||||||||||||||||||
-1 | Attributable to the acquisition of MISN on February 28, 2014. | |||||||||||||||||||
Impaired Loans | ||||||||||||||||||||
The following tables provide a summary of the Company's recorded investment in non-PCI and PCI impaired loans as of and for the periods presented. The Company did not have any PCI loans at December 31, 2013 and 2012. | ||||||||||||||||||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 260 | $ | 383 | $ | – | $ | 349 | $ | 18 | ||||||||||
Home equity lines of credit | 258 | 340 | – | 258 | – | |||||||||||||||
Commercial | 4,000 | 6,255 | – | 3,814 | 132 | |||||||||||||||
Farmland | 283 | 282 | – | 291 | 16 | |||||||||||||||
Construction | – | – | – | 190 | 10 | |||||||||||||||
Land | 1,470 | 2,355 | – | 2,000 | 125 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2,875 | 3,967 | – | 3,994 | 162 | |||||||||||||||
Agriculture | 720 | 760 | – | 724 | – | |||||||||||||||
Installment | 112 | 201 | – | 117 | 4 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | 9,978 | 14,543 | – | 11,737 | 467 | |||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | – | – | – | |||||||||||||||
Home equity lines of credit | – | – | – | – | – | |||||||||||||||
Commercial | 498 | 688 | 148 | 502 | – | |||||||||||||||
Land | 4,876 | 8,499 | 1,472 | 5,268 | 3 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,043 | 1,054 | 151 | 1,272 | 64 | |||||||||||||||
Agriculture | – | – | – | – | – | |||||||||||||||
Installment | – | – | – | – | – | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | 6,417 | 10,241 | 1,771 | 7,042 | 67 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total non-PCI impaired loans | $ | 16,395 | $ | 24,784 | $ | 1,771 | $ | 18,779 | $ | 534 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment (1) | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 564 | $ | 886 | $ | – | $ | 580 | $ | 43 | ||||||||||
Home equity lines of credit | – | – | – | 61 | 21 | |||||||||||||||
Commercial | 4,432 | 6,109 | – | 4,978 | 673 | |||||||||||||||
Farmland | 1,673 | 2,027 | – | 1,698 | 98 | |||||||||||||||
Land | 853 | 993 | – | 921 | 69 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,388 | 1,883 | – | 2,089 | 366 | |||||||||||||||
Agriculture | 1,431 | 1,492 | – | 1,326 | 92 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total PCI loans | $ | 10,341 | $ | 13,390 | $ | – | $ | 11,653 | $ | 1,362 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
-1 | Recorded investment in PCI loans includes accrued interest receivable. | |||||||||||||||||||
For the Year Ended December 31, 2013 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 944 | $ | 1,102 | $ | – | $ | 870 | $ | 16 | ||||||||||
Home equity lines of credit | – | – | – | 28 | – | |||||||||||||||
Commercial | 901 | 1,646 | – | 775 | 5 | |||||||||||||||
Land | 1,221 | 1,948 | – | 1,320 | 49 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,857 | 2,241 | – | 2,162 | 27 | |||||||||||||||
Agriculture | 789 | 824 | – | 936 | – | |||||||||||||||
Installment loans to individuals | 118 | 190 | – | 68 | – | |||||||||||||||
Total | 5,830 | 7,951 | – | 6,159 | 97 | |||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | – | – | – | |||||||||||||||
Home equity lines of credit | – | – | – | – | – | |||||||||||||||
Commercial | – | – | – | – | – | |||||||||||||||
Land | 6,706 | 10,158 | 2,532 | 6,558 | 44 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3,480 | 3,602 | 623 | 2,522 | 25 | |||||||||||||||
Agriculture | – | – | – | – | – | |||||||||||||||
Installment loans to individuals | – | – | – | – | – | |||||||||||||||
Total | 10,186 | 13,760 | 3,155 | 9,080 | 69 | |||||||||||||||
Total non-PCI impaired loans | $ | 16,016 | $ | 21,711 | $ | 3,155 | $ | 15,239 | $ | 166 | ||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Average | Interest | |||||||||||||||||||
Recorded | Income | |||||||||||||||||||
Investment | Recognized | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 619 | $ | – | ||||||||||||||||
Home equity lines of credit | 240 | – | ||||||||||||||||||
Commercial | 2,672 | – | ||||||||||||||||||
Farmland | 542 | – | ||||||||||||||||||
Construction | 1,288 | – | ||||||||||||||||||
Land | 1,874 | – | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 794 | 4 | ||||||||||||||||||
Agriculture | 1,615 | – | ||||||||||||||||||
Installment | 2 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 9,646 | 4 | ||||||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 191 | – | ||||||||||||||||||
Home equity lines of credit | 63 | – | ||||||||||||||||||
Commercial | 179 | – | ||||||||||||||||||
Land | 5,313 | – | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3,475 | – | ||||||||||||||||||
Agriculture | 40 | – | ||||||||||||||||||
Installment | 136 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 9,397 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total non-PCI impaired loans | $ | 19,043 | $ | 4 | ||||||||||||||||
| | | | | | | | |||||||||||||
The Company did not record income from the receipt of cash payments related to non-accruing loans during the years ended December 31, 2014, 2013 and 2012. If interest on non-accruing loans had been recognized at the original interest rates stipulated in the respective loan agreements, interest income would have increased $0.6 million, $0.8 million and $1.3 million in 2014, 2013 and 2012, respectively. Interest income recognized on impaired loans in the tables above represents interest the Company recognized on accruing TDRs. | ||||||||||||||||||||
Troubled Debt Restructurings ("TDRs") | ||||||||||||||||||||
The majority of the Bank's TDRs were granted concessions regarding interest rates, payment structure and/or maturity. Loans modified as TDRs during the years ended December 31, 2014, and 2013, include a combination of partial charge-offs of principal along with extensions of the maturity date at the loan's original interest rate, which was lower than the current market rate for new debt with similar risk. The maturity date extensions granted were for periods ranging from 6 months to 10 years. As of December 31, 2014, the Company was committed to lend $0.1 million in additional funds to borrowers whose obligations to the Company were restructured. | ||||||||||||||||||||
The following table provides a summary of loans classified s TDRs as of the dates indicated below: | ||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||
Accrual | Non-accrual | Total | Accrual | Non-accrual | Total | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 130 | $ | 130 | $ | 260 | $ | 499 | $ | 109 | $ | 608 | ||||||||
Commercial | 2,449 | 78 | 2,527 | 225 | 136 | 361 | ||||||||||||||
Farmland | 283 | – | 283 | – | – | – | ||||||||||||||
Land | 1,109 | 5,149 | 6,258 | 2,010 | 5,883 | 7,893 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2,177 | 1,593 | 3,770 | 3,119 | 903 | 4,022 | ||||||||||||||
Agriculture | 34 | – | 34 | – | 45 | 45 | ||||||||||||||
Installment loans to individuals | 69 | – | 69 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total non-PCI loans | 6,251 | 6,950 | 13,201 | 5,853 | 7,076 | 12,929 | ||||||||||||||
PCI loans (1) | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Commercial | 223 | – | 223 | – | – | – | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 37 | 107 | 144 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total PCI loans | 260 | 107 | 367 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total TDRs | $ | 6,511 | $ | 7,057 | $ | 13,568 | $ | 5,853 | $ | 7,076 | $ | 12,929 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 | There were no PCI loans at December 31, 2013. | |||||||||||||||||||
The following tables summarize loan modifications which resulted in TDRs during the periods presented below: | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 1 | $ 39 | $ 39 | |||||||||||||||||
Commercial | 2 | 312 | 312 | |||||||||||||||||
Land | 3 | 444 | 444 | |||||||||||||||||
Construction | 1 | 367 | 367 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 20 | 2,132 | 2,132 | |||||||||||||||||
Agriculture | 1 | 662 | 662 | |||||||||||||||||
Installment | 1 | 73 | 73 | |||||||||||||||||
PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Commercial | 1 | 230 | 230 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3 | 177 | 177 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 33 | $ 4,436 | $ 4,436 | |||||||||||||||||
| | | | | | | ||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 1 | $ 139 | $ 139 | |||||||||||||||||
Commercial | 2 | 339 | 339 | |||||||||||||||||
Land | 1 | 1,254 | 1,254 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 10 | 2,141 | 2,141 | |||||||||||||||||
Agriculture | 2 | 67 | 67 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 16 | $ 3,940 | $ 3,940 | |||||||||||||||||
| | | | | | | ||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 3 | $ 563 | $ 563 | |||||||||||||||||
Commercial | 1 | 1,089 | 1,089 | |||||||||||||||||
Land | 3 | 8,433 | 7,063 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 12 | 2,973 | 2,883 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 19 | $ 13,058 | $ 11,598 | |||||||||||||||||
| | | | | | | ||||||||||||||
The following tables summarize loans that were modified as troubled debt restructurings within the twelve months prior to the balance sheet date, and for which there was a payment default during the periods presented below: | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Number of | Recorded | Number of | Recorded | Number of | Recorded | |||||||||||||||
TDRs | Investment | TDRs | Investment | TDRs | Investment | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | $ | – | 1 | $ | 97 | – | $ | – | |||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2 | 233 | 3 | 843 | 3 | 254 | ||||||||||||||
Agriculture | – | – | 1 | 18 | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 2 | $ | 233 | 5 | $ | 958 | 3 | $ | 254 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Allowance for Loan and Lease Losses | ||||||||||||||||||||
The following table summarizes the activity in the allowance for loan and lease losses by portfolio segment for the periods presented below: | ||||||||||||||||||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2013 | Losses | 2014 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 3,402 | $ | (29 | ) | $ | 39 | $ | (1,757 | ) | $ | 1,655 | ||||||||
Other real estate secured | 9,283 | (1,119 | ) | 40 | 1,270 | 9,474 | ||||||||||||||
Commercial | 4,781 | (758 | ) | 765 | 337 | 5,125 | ||||||||||||||
Installment | 99 | (8 | ) | 13 | 68 | 172 | ||||||||||||||
All other loans | 32 | – | – | (2 | ) | 30 | ||||||||||||||
Unallocated | 262 | 84 | 346 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 17,859 | $ | (1,914 | ) | $ | 857 | $ | – | $ | 16,802 | |||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2013 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2012 | Losses | 2013 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 4,641 | $ | (34 | ) | $ | 73 | $ | (1,278 | ) | $ | 3,402 | ||||||||
Other real estate secured | 7,147 | (300 | ) | 514 | 1,922 | 9,283 | ||||||||||||||
Commercial | 6,115 | (1,281 | ) | 1,112 | (1,165 | ) | 4,781 | |||||||||||||
Installment | 64 | (411 | ) | 68 | 378 | 99 | ||||||||||||||
All other loans | 38 | – | – | (6 | ) | 32 | ||||||||||||||
Unallocated | 113 | 149 | 262 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 18,118 | $ | (2,026 | ) | $ | 1,767 | $ | – | $ | 17,859 | |||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2012 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2011 | Losses | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 2,416 | $ | (2,168 | ) | $ | 22 | $ | 4,371 | $ | 4,641 | |||||||||
Other real estate secured | 10,133 | (3,610 | ) | 1,254 | (630 | ) | 7,147 | |||||||||||||
Commercial | 6,549 | (5,134 | ) | 1,054 | 3,646 | 6,115 | ||||||||||||||
Installment | 175 | (184 | ) | 23 | 50 | 64 | ||||||||||||||
All other loans | 41 | (137 | ) | 3 | 131 | 38 | ||||||||||||||
Unallocated | – | 113 | 113 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 19,314 | $ | (11,233 | ) | $ | 2,356 | $ | 7,681 | $ | 18,118 | |||||||||
| | | | | | | | | | | | | | | | | ||||
The following tables disaggregate the allowance for loan and lease losses and the recorded investment in loans by impairment methodology as of the dates presented below: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | Recorded Investment in Loans | |||||||||||||||||||
Individually | Collectively | Loans | Individually | Collectively | Loans | |||||||||||||||
Evaluated for | Evaluated for | Acquired with | Evaluated for | Evaluated for | Acquired with | |||||||||||||||
Impairment | Impairment | Deteriorated | Impairment | Impairment | Deteriorated | |||||||||||||||
Credit Quality | Credit Quality | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 1,472 | $ | 183 | $ | – | $ | 6,346 | $ | 12,968 | $ | 853 | ||||||||
Other real estate secured | 148 | 9,326 | – | 5,299 | 943,468 | 6,669 | ||||||||||||||
Commercial | 151 | 4,974 | – | 4,633 | 202,450 | 2,819 | ||||||||||||||
Installment | – | 172 | – | 112 | 7,611 | – | ||||||||||||||
All other loans | – | 30 | – | – | 255 | – | ||||||||||||||
Unallocated | – | 346 | – | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 1,771 | $ | 15,031 | $ | – | $ | 16,390 | $ | 1,166,752 | $ | 10,341 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | Recorded Investment in Loans | |||||||||||||||||||
Individually | Collectively | Loans | Individually | Collectively | Loans | |||||||||||||||
Evaluated for | Evaluated for | Acquired with | Evaluated for | Evaluated for | Acquired with | |||||||||||||||
Impairment | Impairment | Deteriorated | Impairment | Impairment | Deteriorated | |||||||||||||||
Credit Quality | Credit Quality | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 2,532 | $ | 870 | $ | – | $ | 7,696 | $ | 16,827 | $ | – | ||||||||
Other real estate secured | – | 9,283 | – | 1,462 | 646,076 | – | ||||||||||||||
Commercial | 623 | 4,158 | – | 5,291 | 146,554 | – | ||||||||||||||
Installment | – | 99 | – | – | 3,246 | – | ||||||||||||||
All other loans | – | 32 | – | – | 332 | – | ||||||||||||||
Unallocated | – | 262 | – | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 3,155 | $ | 14,704 | $ | – | $ | 14,449 | $ | 813,035 | $ | – | ||||||||
| | | | | | | | | | | | | | | | | | | | |
At December 31, 2014, total gross loans of $1.2 billion in the table above include $239.7 million of loans acquired through the MISN Transaction. Loans acquired through the MISN Transaction were initially recorded at fair value, and had no related ALLL on the acquisition date. During the fourth quarter of 2014, the Company's ALLL methodology indicated the existing discount for acquired, non-PCI, MISN loans was no longer deemed sufficient to cover probable losses inherent in those loans; the Company therefore established an ALLL. At December 31, 2014, approximately $1.0 million of the ALLL was allocated to the acquired, non-PCI MISN loans, and is included in the ALLL attributable to loans collectively evaluated for impairment in the table above. | ||||||||||||||||||||
The ALLL attributable to MISN acquired loans was established because the non-PCI loans acquired through the MISN Transaction required $1.0 million of provisions for loan and lease losses for the period ending, December 31, 2014 for probable losses inherent in those loans, which were determined to be in excess of the coverage provided by their un-accreted purchase discounts. However, other components of the ALLL, such as the ALLL for legacy Heritage Oaks loans collectively evaluated for impairment, and the ALLL for loans individually evaluated for impairment, had offsetting provision recaptures during 2014, resulting from continued improvements in the overall credit quality of the loan portfolio. When these provision recaptures were aggregated with the required provision for non-PCI loans acquired in the MISN Transaction, the result of these component provisions, and provision recaptures, resulted in an overall net $0 provision for loan and lease losses for 2014. | ||||||||||||||||||||
Reserve for Off-Balance Sheet Loan Commitments | ||||||||||||||||||||
The Company has exposure to losses from unfunded loan commitments and letters of credit. Estimated losses inherent in the outstanding balance of these commitments is not included in the ALLL, but is recorded separately, and included as a component of other liabilities in the consolidated balance sheets. The balance of the reserve for off-balance sheet commitments was $0.5 million and $0.3 million at December 31, 2014 and 2013, respectively. | ||||||||||||||||||||
Credit Quality | ||||||||||||||||||||
The following tables stratify loans held for investment by the Company's internal risk grading system: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Credit Risk Grades | ||||||||||||||||||||
Pass | Special | Substandard | Doubtful | Total | ||||||||||||||||
Mention | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 78,023 | $ | – | $ | 622 | $ | – | $ | 78,645 | ||||||||||
Residential 1 to 4 family | 125,733 | 199 | 708 | – | 126,640 | |||||||||||||||
Home equity lines of credit | 37,638 | – | 614 | – | 38,252 | |||||||||||||||
Commercial | 560,478 | 3,010 | 20,568 | – | 584,056 | |||||||||||||||
Farmland | 92,481 | 2,665 | 1,562 | – | 96,708 | |||||||||||||||
Land | 12,929 | – | 6,387 | – | 19,316 | |||||||||||||||
Construction | 24,493 | – | – | – | 24,493 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 138,202 | 2,943 | 12,104 | 154 | 153,403 | |||||||||||||||
Agriculture | 52,678 | 280 | 720 | – | 53,678 | |||||||||||||||
Other | – | – | 14 | – | 14 | |||||||||||||||
Installment | 7,618 | – | 105 | – | 7,723 | |||||||||||||||
Overdrafts | 255 | – | – | – | 255 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total non-PCI loans | 1,130,528 | 9,097 | 43,404 | 154 | 1,183,183 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | 561 | – | 561 | |||||||||||||||
Commercial | 126 | 680 | 3,610 | – | 4,416 | |||||||||||||||
Farmland | – | – | 1,665 | – | 1,665 | |||||||||||||||
Land | 294 | – | 557 | – | 851 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 36 | 97 | 1,175 | 76 | 1,384 | |||||||||||||||
Agriculture | – | – | 1,423 | – | 1,423 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total PCI loans | 456 | 777 | 8,991 | 76 | 10,300 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total loans held for investment | $ | 1,130,984 | $ | 9,874 | $ | 52,395 | $ | 230 | $ | 1,193,483 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
December 31, 2013 | ||||||||||||||||||||
Credit Risk Grades | ||||||||||||||||||||
Total | ||||||||||||||||||||
Non-PCI | ||||||||||||||||||||
Pass | Special | Substandard | Doubtful | Loans | ||||||||||||||||
Mention | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 30,560 | $ | – | $ | 580 | $ | – | $ | 31,140 | ||||||||||
Residential 1 to 4 family | 87,350 | 490 | 1,064 | – | 88,904 | |||||||||||||||
Home equity lines of credit | 31,021 | – | 157 | – | 31,178 | |||||||||||||||
Commercial | 414,058 | 3,574 | 14,571 | – | 432,203 | |||||||||||||||
Farmland | 47,988 | 975 | 1,451 | – | 50,414 | |||||||||||||||
Land | 15,244 | 862 | 8,417 | – | 24,523 | |||||||||||||||
Construction | 13,699 | – | – | – | 13,699 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 105,991 | 5,276 | 7,854 | – | 119,121 | |||||||||||||||
Agriculture | 31,279 | 196 | 1,211 | – | 32,686 | |||||||||||||||
Other | 38 | – | – | – | 38 | |||||||||||||||
Installment | 3,050 | 10 | 186 | – | 3,246 | |||||||||||||||
Overdrafts | 332 | – | – | – | 332 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total loans held for investment | $ | 780,610 | $ | 11,383 | $ | 35,491 | $ | – | $ | 827,484 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
The company did not have any PCI loans at December 31, 2013. | ||||||||||||||||||||
Aging of Loans Held for Investment | ||||||||||||||||||||
The following tables summarize the aging of loans held for investment as of the dates indicated below: | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Days Past Due | ||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ and Still | Non- | Total | |||||||||||||||
Accruing | Accruing | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Multi-family residential | $ | 78,645 | $ | – | $ | – | $ | – | $ | – | $ | 78,645 | ||||||||
Residential 1 to 4 family | 126,516 | – | – | – | 124 | 126,640 | ||||||||||||||
Home equity lines of credit | 37,994 | – | – | – | 258 | 38,252 | ||||||||||||||
Commercial | 581,971 | – | – | – | 2,085 | 584,056 | ||||||||||||||
Farmland | 96,708 | – | – | – | – | 96,708 | ||||||||||||||
Land | 14,079 | – | – | – | 5,237 | 19,316 | ||||||||||||||
Construction | 24,493 | – | – | – | – | 24,493 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 151,656 | – | 21 | – | 1,726 | 153,403 | ||||||||||||||
Agriculture | 52,992 | – | – | – | 686 | 53,678 | ||||||||||||||
Other | 14 | – | – | – | – | 14 | ||||||||||||||
Installment | 7,621 | 56 | 3 | – | 43 | 7,723 | ||||||||||||||
Overdrafts | 255 | – | – | – | – | 255 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total non-PCI loans | 1,172,944 | 56 | 24 | – | 10,159 | 1,183,183 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | 561 | – | – | – | – | 561 | ||||||||||||||
Commercial | 4,416 | – | – | – | – | 4,416 | ||||||||||||||
Farmland | 1,665 | – | – | – | – | 1,665 | ||||||||||||||
Land | 851 | – | – | – | – | 851 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,008 | – | – | – | 376 | 1,384 | ||||||||||||||
Agriculture | 1,423 | – | – | – | – | 1,423 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total PCI loans | 9,924 | – | – | – | 376 | 10,300 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total loans held for | $ | 1,182,868 | $ | 56 | $ | 24 | $ | – | $ | 10,535 | $ | 1,193,483 | ||||||||
investment | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Days Past Due | ||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ and Still | Non- | Total | |||||||||||||||
Accruing | Accruing | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 31,140 | $ | – | $ | – | $ | – | $ | – | $ | 31,140 | ||||||||
Residential 1 to 4 family | 88,455 | – | – | – | 449 | 88,904 | ||||||||||||||
Home equity lines of credit | 31,178 | – | – | – | – | 31,178 | ||||||||||||||
Commercial | 431,531 | – | – | – | 672 | 432,203 | ||||||||||||||
Farmland | 50,414 | – | – | – | – | 50,414 | ||||||||||||||
Land | 18,613 | – | – | – | 5,910 | 24,523 | ||||||||||||||
Construction | 13,699 | – | – | – | – | 13,699 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 116,841 | 100 | – | – | 2,180 | 119,121 | ||||||||||||||
Agriculture | 31,897 | – | – | – | 789 | 32,686 | ||||||||||||||
Other | 38 | – | – | – | – | 38 | ||||||||||||||
Installment loans to individuals | 3,127 | – | 2 | – | 117 | 3,246 | ||||||||||||||
Overdrafts | 332 | – | – | – | – | 332 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total loans held for investment | $ | 817,265 | $ | 100 | $ | 2 | $ | – | $ | 10,117 | $ | 827,484 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
The company did not have any PCI loans at December 31, 2013. | ||||||||||||||||||||
Property_Premises_and_Equipmen
Property, Premises and Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Premises and Equipment | ||||||||
Property, Premises and Equipment | Note 6. Property, Premises and Equipment | |||||||
At December 31, 2014 and 2013, property, premises and equipment consisted of the following: | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(dollars in thousands) | ||||||||
Land | $ | 11,543 | $ | 3,633 | ||||
Furniture and equipment | 5,941 | 5,751 | ||||||
Building and improvements | 26,487 | 15,347 | ||||||
Construction in progress | 784 | 9,018 | ||||||
| | | | | | | | |
Total cost | 44,755 | 33,749 | ||||||
| | | | | | | | |
Less: accumulated depreciation and amortization | 6,935 | 9,529 | ||||||
| | | | | | | | |
Total property, premises and equipment | $ | 37,820 | $ | 24,220 | ||||
| | | | | | | | |
Premises held for sale | 1,978 | |||||||
$ | $ | – | ||||||
Depreciation expense totaled $1.8 million, $1.4 million, and $1.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. The Company leases land, buildings, and equipment under non-cancelable operating leases expiring at various dates through 2022. See Note 15. Commitments and Contingencies, of these Consolidated Financial Statements for additional information regarding the Company's operating lease obligations. | ||||||||
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Income Taxes | Note 7. Income Taxes | |||||||||||||||||||
The table below summarizes the Company's net deferred tax asset as of December 31, 2014 and 2013: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Deferred tax assets | ||||||||||||||||||||
Reserves for loan losses | $ | 8,387 | $ | 8,679 | ||||||||||||||||
Forgone interest on non-accrual loans | 1,424 | 933 | ||||||||||||||||||
Fixed assets | 149 | 411 | ||||||||||||||||||
Accruals | 1,035 | 1,025 | ||||||||||||||||||
Alternative minimum tax credit | 2,125 | 2,855 | ||||||||||||||||||
Deferred income | 2,137 | 2,190 | ||||||||||||||||||
Deferred compensation | 1,703 | 1,603 | ||||||||||||||||||
Net operating loss carryforward | 10,962 | 2,234 | ||||||||||||||||||
Investment securities valuation | – | 2,395 | ||||||||||||||||||
Fair value adjustment for acquired assets and liabilities | 1,436 | – | ||||||||||||||||||
State deferred tax | – | 961 | ||||||||||||||||||
Charitable contributions carryforward | 71 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
29,429 | 23,286 | |||||||||||||||||||
Deferred tax liabilities | ||||||||||||||||||||
Fair value adjustment for acquired assets and liabilities | – | 330 | ||||||||||||||||||
Investment securities valuation | 738 | – | ||||||||||||||||||
Deferred costs, prepaids and FHLB advances | 1,465 | 1,332 | ||||||||||||||||||
State deferred tax | 2,306 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total deferred tax liabilities | 4,509 | 1,662 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax assets | $ | 24,920 | $ | 21,624 | ||||||||||||||||
| | | | | | | | |||||||||||||
Deferred tax assets relate to amounts that are expected to be realized through subsequent reversals of existing taxable temporary differences over the projection period. The ultimate realization of the Company's deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences reverse. U.S. GAAP requires that companies assess whether a valuation allowance should be established against deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard. In making such judgments, significant weight is given to evidence, both positive and negative, that can be objectively verified. At December 31, 2014, and 2013 there was no valuation allowance for the Company's deferred tax assets. The accounting for deferred taxes is based on an estimate of future results. Differences between anticipated and actual outcomes of these future tax consequences could have an impact on the Company's consolidated results of operations or financial position. | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2014, 2013, 2012, 2011, and 2010 are open to audit by federal and state taxing authorities. The Company does not have any uncertain income tax positions and has not accrued for any interest or penalties as of December 31, 2014 and 2013. The following table provides a summary for the current and deferred amounts of the Company's income tax provision (benefit) for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||||||||||
For The Years Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Current: | ||||||||||||||||||||
Federal | $ | 141 | $ | 1,181 | $ | 3,083 | ||||||||||||||
State | 253 | 368 | 1,264 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total current provision | 394 | 1,549 | 4,347 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Deferred: | ||||||||||||||||||||
Federal | $ | 3,116 | 3,816 | (455 | ) | |||||||||||||||
State | 1,239 | 1,632 | (85 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred provision (benefit) | 4,355 | 5,448 | (540 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Deferred Tax Valuation Allowance: | ||||||||||||||||||||
Federal | – | – | (3,662 | ) | ||||||||||||||||
State | – | – | (1,943 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred tax valuation allowance change | – | – | (5,605 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred provision (benefit) | $ | 4,749 | $ | 6,997 | $ | (1,798 | ) | |||||||||||||
| | | | | | | | | | | ||||||||||
The following table reconciles the statutory federal income tax expense and rate to the Company's effective income tax expense (benefit) and rate for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Tax provision at federal statutory tax rate | $ | 4,800 | 35 | $ | 6,243 | 35 | $ | 3,934 | 35 | |||||||||||
State income taxes, net of federal income tax benefit | 970 | 7.1 | 1,300 | 7.3 | 766 | 6.8 | ||||||||||||||
Change in deferred tax asset valuation allowance | – | – | – | – | (5,605 | ) | (49.9 | ) | ||||||||||||
Bank owned life insurance | (217 | ) | (1.6 | ) | (167 | ) | (0.9 | ) | (180 | ) | (1.6 | ) | ||||||||
Tax exempt income, net of interest expense | (826 | ) | (6.0 | ) | (610 | ) | (3.4 | ) | (608 | ) | (5.4 | ) | ||||||||
Merger and integration | 61 | 0.4 | 271 | 1.5 | – | – | ||||||||||||||
Other, net | (39 | ) | (0.3 | ) | (40 | ) | (0.3 | ) | (105 | ) | (0.9 | ) | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Total income tax provision (benefit) | $ | 4,749 | 34.6 | $ | 6,997 | 39.2 | $ | (1,798 | ) | (16.0 | ) | |||||||||
| | | | | | | | | | | | | | | | | | | | |
The Company has net operating losses ("NOL") of $11.0 million, available for carry-forward for federal and state tax purposes as of December 31, 2014. Of this amount $2.1 million is attributable to operating losses the Company incurred in 2009, and $8.9 million is attributable to the MISN Transaction. The realization of NOL carry-forwards attributable to operating losses the Company incurred in 2009 will expire in 2029. NOL attributable to the MISN Transaction will expire in 2034. The realization of these NOL carry-forwards for federal and state tax purposes is limited under current tax law with limitations placed on the amount of NOL that can be utilized annually. The Company does not, however, believe that these annual limitations will impact the ultimate deductibility of the NOL carry-forwards. Additionally, at December 31, 2014, the Company has $1.5 million in alternative minimum tax credit ("AMT") for federal income tax purposes, and $0.6 million AMT for state income tax purposes, that have no expiration. | ||||||||||||||||||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Goodwill and Other Intangible Assets | |||||||||||
Goodwill and Other Intangible Assets | Note 8. Goodwill and Other Intangible Assets | ||||||||||
Intangible assets consist of goodwill and core deposit intangible assets ("CDI") associated with the acquisition of core deposit balances, including those acquired in the MISN Transaction. At December 31, 2014, the carrying value of goodwill was $24.9 million, of which $13.6 million can be attributed to the MISN Transaction. | |||||||||||
CDI assets are subject to amortization. Amortization for the years ended December 31, 2014, 2013 and 2012 was $1.1 million, $0.4 million and $0.3 million, respectively. The following table summarizes the gross carrying amount, accumulated amortization and net carrying amount of CDI and provides an estimate for future amortization as of December 31, 2014: | |||||||||||
December 31, 2014 | |||||||||||
Gross | Accumulated | Net | |||||||||
Carrying Amount | Amortization | Carrying Amount | |||||||||
(dollars in thousands) | |||||||||||
Core deposit intangibles | $ | 9,261 | $ | (3,914 | ) | $ | 5,347 | ||||
December 31, 2014 | |||||||||||
Beginning | Estimated | Projected | |||||||||
Balance | Amortization | Ending Balance | |||||||||
(dollars in thousands) | |||||||||||
Period | |||||||||||
Year 2015 | $ | 5,347 | $ | (1,049 | ) | $ | 4,298 | ||||
Year 2016 | 4,298 | (944 | ) | 3,354 | |||||||
Year 2017 | 3,354 | (588 | ) | 2,766 | |||||||
Year 2018 | 2,766 | (549 | ) | 2,217 | |||||||
Year 2019 | 2,217 | (522 | ) | 1,695 | |||||||
Deposits
Deposits | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Deposits | Note 9. Deposits | ||||||||||||||||||||||
The following table provides a summary for the maturity of the Bank's time certificates of deposit as of December 31, 2014: | |||||||||||||||||||||||
Maturing In | |||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Over 5 Years | Total | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Time certificates of deposit: | |||||||||||||||||||||||
Amounts less than $100 | $ | 55,172 | $ | 17,008 | $ | 6,237 | $ | 3,230 | $ | 4,399 | $ | 7 | $ | 86,053 | |||||||||
Amounts of $100 or more | 108,145 | 30,401 | 13,688 | 14,481 | 13,925 | 13,146 | 193,786 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 163,317 | $ | 47,409 | $ | 19,925 | $ | 17,711 | $ | 18,324 | $ | 13,153 | $ | 279,839 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Pursuant to the Dodd-Frank Act, the maximum deposit insurance amount has been permanently increased to $250,000. | |||||||||||||||||||||||
Borrowings
Borrowings | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Borrowings | ||||||||||||||||||||
Borrowings | Note 10. Borrowings | |||||||||||||||||||
The Bank has several sources from which it may obtain borrowed funds. While deposits are the Bank's primary funding source, borrowings are a secondary source of funds. Borrowings can take the form of Federal Funds purchased through arrangements it has established with correspondent banks or advances from the Federal Home Loan Bank. Borrowing may occur for a variety of reasons including daily liquidity needs and balance sheet growth. The following provides a summary of the borrowing facilities available to the Bank and Company as well as the level of borrowings that were outstanding as of December 31, 2014. | ||||||||||||||||||||
Federal Funds Purchased | ||||||||||||||||||||
The Bank has borrowing lines with correspondent banks totaling $62.0 million as of December 31, 2014. As of December 31, 2014, there were no balances outstanding on these borrowing lines. | ||||||||||||||||||||
Federal Reserve Borrowing Facility | ||||||||||||||||||||
At December 31, 2014, the Bank has a collateralized borrowing line with the Federal Reserve Bank in the amount of $6.6 million, which borrowing line is collateralized by loans. At December 31, 2014, there was no outstanding balance on this borrowing line. | ||||||||||||||||||||
Federal Home Loan Bank Borrowings | ||||||||||||||||||||
At December 31, 2014, the Bank had $95.6 million of borrowings with the FHLB. The following table provides a summary of those borrowings as of December 31, 2014: | ||||||||||||||||||||
Year of Maturity | ||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Over 5 Years | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Federal Home Loan Bank borrowings | $ | 25,000 | $ | 13,522 | $ | 13,522 | $ | 8,014 | $ | 7,500 | $ | 28,000 | ||||||||
Weighted average interest rate | 0.27% | 0.68% | 1.19% | 1.09% | 1.64% | 2.49% | ||||||||||||||
Borrowings from FHLB are collateralized by the Company's loans receivable. FHLB advances require monthly interest only payments, with the full amount borrowed due at maturity. Of the $95.6 million outstanding, $70.6 million are comprised of fixed rate advances with rates ranging from 0.63% to 2.73%. The remaining $25.0 million are comprised of short-term, variable rate advances, with an interest rate of 0.27% as of December 31, 2014, which rate is tied to the Federal Funds Rate. | ||||||||||||||||||||
At December 31, 2014, $6.0 million of outstanding FHLB fixed rate advances were assumed in the MISN Transaction. These borrowings had purchase accounting fair value adjustments of $58 thousand at December 31, 2014, which will be amortized into interest expense over the remaining lives of the advances. For the year ended December 31, 2014, amortization of the premium on the FHLB advances assumed in the MISN Transaction totaled $13 thousand. | ||||||||||||||||||||
At December 31, 2014, $869.5 million in loans were pledged as collateral to secure a credit facility of $462.1 million under a blanket lien, of which $95.6 million was outstanding at December 31, 2014, as represented in the table above. Additionally, of the total amount of the credit facility with the FHLB, $11.5 million is available as a line of credit. | ||||||||||||||||||||
Holding Company Line of Credit | ||||||||||||||||||||
In addition to the Bank's sources of liquidity, the Company has an unsecured revolving line of credit with a correspondent bank totaling $10.0 million, which provides an additional source of liquidity to the holding company. This line of credit is subject to annual renewal. The Company pays a 0.25% annual fee to maintain this credit facility, as well as a 0.25% annual rate on the unused portion of the line. Interest on borrowings is at prime, or at the Company's option, a fixed rate based on LIBOR. | ||||||||||||||||||||
Junior Subordinated Debentures | ||||||||||||||||||||
On October 27, 2006, the Company issued $8.2 million of floating rate junior subordinated debt securities to Heritage Oaks Capital Trust II, a statutory trust created under the laws of the State of Delaware. These debentures are subordinated to effectively all borrowings of the Company. The Company used the proceeds from the issuance of these securities for general corporate purposes, which include among other things, capital contributions to the Bank, investments, payment of dividends, and repurchases of our common stock. These borrowings are callable by the Company at par. | ||||||||||||||||||||
The Company also assumed floating rate junior subordinated debt in the amount of $8.2 million in connection with the MISN Transaction on February 28, 2014. These instruments were issued by Mission Community Capital Trust I and Santa Lucia Bancorp (CA) Capital Trust prior to the MISN Transaction. These borrowings are effectively subordinated to all borrowings of the Company. At December 31, 2014, the carrying balance of these borrowings was $5.0 million, which reflects purchase accounting fair value adjustments of $3.2 million, related to MISN Transaction. Purchase accounting adjustments were based on current market rates for similar instruments at the time of acquisition, and are accreted into interest expense over the lives of the individual debt instruments. For the year ended December 31, 2014, accretion of the discount on the junior subordinated debt assumed in the MISN Transaction totaled $0.2 million. These borrowings are callable by the Company at par. | ||||||||||||||||||||
The following table provides a summary of junior subordinated debentures outstanding at December 31, 2014: | ||||||||||||||||||||
Amount | Carrying | Current | Issue | Scheduled | Rate Type | |||||||||||||||
Issued | Value | Rate | Date | Maturity | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Heritage Oaks Capital Trust II | $ | 8,248 | $ | 8,248 | 1.98% | 27-Oct-06 | Aug-37 | Variable 3-month LIBOR+1.72% | ||||||||||||
Mission Community Capital Trust I | $ | 3,093 | $ | 2,144 | 3.18% | 14-Oct-03 | Oct-33 | Variable 3-month LIBOR+2.95% | ||||||||||||
Santa Lucia Bancorp (CA) Capital Trust | $ | 5,155 | $ | 2,841 | 1.71% | 28-Apr-06 | Jul-36 | Variable 3-month LIBOR+1.48% | ||||||||||||
Pursuant to rules issued by the Federal Reserve Board, the Company is permitted to include junior subordinated debt in its determination of Tier I capital. Junior subordinated debt may not, however, constitute more than 25% of the Company's Tier I capital, subject to certain limitations. At December 31, 2014, the Company was able to include $12.8 million of junior subordinated debt in its Tier I capital for regulatory capital purposes. | ||||||||||||||||||||
In July 2013, the U.S. banking agencies approved the U.S. version of Basel III. The federal bank regulatory agencies adopted version of Basel III revises the risk-based and leverage capital requirements and the method for calculating risk-weighted assets to make them consistent with Basel III and to meet the requirements of the Dodd-Frank Act. Although many of the rules contained in these final regulations are applicable only to large, internationally active banks, some of them will apply on a phased in basis to all banking organizations, including the Company and the Bank. The rules, including alternative requirements for smaller community financial institutions like the Company, would be phased in through 2019. The implementation of the Basel III framework commences January 1, 2015. | ||||||||||||||||||||
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2014 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 11. Employee Benefit Plans |
Salary Continuation Agreements and Bank Owned Life Insurance | |
The Company established salary continuation agreements with certain senior and executive officers, as authorized by the Board of Directors. As of the end of 2011, the Company elected to no longer offer this type of agreement to new officers, but continues to honor the terms of the agreements in place as of that date. These agreements provide for annual cash payments for a period not to exceed 15 years, payable at age 60-65, depending on the agreement. In the event of death prior to retirement age, annual cash payments would be made to the beneficiaries for a determined number of years. At December 31, 2014 and 2013, the Company's liability under these agreements was $2.7 million, and is included in other liabilities in the Company's Consolidated Financial Statements. For the years ended December 31, 2014, 2013 and 2012, expenses associated with the Company's salary continuation plans were $0.2 million, $0.3 million and $0.2 million, respectively. | |
The Company maintains life insurance policies, referred to as bank owned life insurance or "BOLI", which are intended to offset costs associated with salary continuation agreements. The carrying value of BOLI totaled $24.7 million and $15.8 million at December 31, 2014 and 2013, respectively. As part of the MISN Transaction, the Company acquired $8.3 million in BOLI. Earnings on BOLI for the years ended December 31, 2014, 2013 and 2012 were $0.8 million, $0.6 million, and $0.6 million, respectively. | |
401(k) Savings Plan | |
The Company offers a savings plan for employees, which allows participants to make contributions by salary deduction in amounts up to the maximum amount specified pursuant to section 401(k) of the Internal Revenue Code. The Company matches employee contributions based on a prescribed formula. Employees vest immediately in their own contributions and they vest in the Company's contribution based on years of service. The Company incurred expenses associated with the plan of $0.3 million, $0.1 million, and $0.1 million for each of the years ended December 31, 2014, 2013 and 2012. | |
Employee Stock Ownership Plan | |
Prior to 2013, the Company sponsored an employee stock ownership plan ("ESOP") that covered all employees who had completed 12 consecutive months of service, were over 21 years of age and worked a minimum of 1,000 hours per year. In 2013, the Company elected to terminate the ESOP and distributed all shares and cash held by the ESOP to the participants. The amount of the Company's annual contribution to the ESOP was at the discretion of the Board of Directors. The Company made no contributions to the plan during 2014, 2013, and 2012. As of December 31, 2014 and 2013, the ESOP was fully liquidated and held no shares of the Company's common stock. | |
Sharebased_Compensation_Plans
Share-based Compensation Plans | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Share-based Compensation Plans | ||||||||||||||
Share-based Compensation Plans | Note 12. Share-based Compensation Plans | |||||||||||||
At December 31, 2014, the Company had share-based compensation awards outstanding under two share-based compensation plans, which are described below: | ||||||||||||||
The "2005 Equity Based Compensation Plan" | ||||||||||||||
The 2005 Equity Based Compensation Plan (the "2005 Plan") authorizes the granting of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units and Performance Share Cash Only Awards. All outstanding options were granted at prices equal to the fair market value of the Company's stock on the day of the grant. The 2005 Plan provides for a maximum of ten percent (10%) of the Company's issued and outstanding shares of common stock as of March 25, 2005 and adjusted on each anniversary thereafter to be ten percent (10%) of the then issued and outstanding number of shares. | ||||||||||||||
All outstanding options are granted at prices equal to the fair market value of the Company's stock on the day of the grant. Options vest ratably over three to four years depending on the terms of the grant, and expire no later than ten years from the grant date. In the event of a change in control in which the Company is not the surviving entity, all awards granted under the 2005 Plan shall immediately vest and or become immediately exercisable, except as otherwise determined at the time of grant of the award and specified in the award agreement, or unless the survivor corporation or the purchaser of assets of the Company agrees to assume the obligations of the Company with respect to all outstanding awards or to substitute such awards with equivalent awards with respect to the common stock of the successor. | ||||||||||||||
The "1997 Stock Option Plan" | ||||||||||||||
The 1997 Stock Option Plan is a tandem stock option plan permitting options to be granted either as "Incentive Stock Options" or as "Non-Qualified Stock Options" under the Internal Revenue Code. All outstanding options were granted at prices equal to the fair market value of the Company's stock on the day of the grant. Options granted vest at a rate of 20% per year for five years, and expire no later than ten years from the grant date. However, on May 26, 2005, the shareholders of the Company approved the 2005 Plan, discussed in the preceding paragraph, which stipulates no further grants will be made from the 1997 Stock Option Plan. | ||||||||||||||
Restricted Stock Awards | ||||||||||||||
The Company grants restricted stock periodically as a part of the 2005 Plan for the benefit of employees. Restricted stock issued typically vest ratably over a period of three to five years, depending on the specific terms of the grant, and any corresponding performance conditions associated with the grant. The following table summarizes activity with respect to restricted share-based compensation for the year ended December 31, 2014: | ||||||||||||||
Number of | Average Grant Date | |||||||||||||
Shares | Fair Value | |||||||||||||
Balance December 31, 2013 | 195,048 | $ | 4.87 | |||||||||||
Granted | 134,368 | 7.34 | ||||||||||||
Vested | (97,111 | ) | 4.24 | |||||||||||
Forfeited | (28,184 | ) | 5.96 | |||||||||||
| | | | | | | | |||||||
Balance December 31, 2014 | 204,121 | $ | 6.65 | |||||||||||
| | | | | | | | |||||||
The following table provides information related to options that have vested or are expected to vest and exercisable options as of December 31, 2014: | ||||||||||||||
Options Outstanding | ||||||||||||||
Options | ||||||||||||||
Available for | ||||||||||||||
Number of | Weighted Average | Grant | ||||||||||||
Shares | Exercise Price | |||||||||||||
Balance, December 31, 2013 | 562,257 | $ | 6.34 | 1,593,616 | ||||||||||
Granted | 341,643 | 7.38 | ||||||||||||
Forfeited | (86,266 | ) | 7.8 | |||||||||||
Expired | (6,738 | ) | 11.03 | |||||||||||
Exercised | (68,339 | ) | 3.95 | |||||||||||
| | | | | | | | | | | ||||
Balance, December 31, 2014 | 742,557 | $ | 6.83 | 2,003,176 | ||||||||||
| | | | | | | | | | | ||||
December 31, 2014 | ||||||||||||||
Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||
Contractual Life | Value | |||||||||||||
(Years) | ||||||||||||||
Vested or expected to vest | 706,840 | $ | 6.82 | 7.65 | $ | 1,445,657 | ||||||||
Exercisable at December 31, 2014 | 285,212 | $ | 6.73 | 5.76 | $ | 811,638 | ||||||||
The total intrinsic value, the amount by which the stock price exceeded the exercise price on the date of exercise, of options exercised in all plans during the years ended December 31, 2014, 2013, and 2012 was $0.2 million, $0.1 million and $0.1 million, respectively. The tax benefit related to the exercise of stock options and disqualifying dispositions on the exercise of incentive stock options were not material in 2014, 2013 or 2012. | ||||||||||||||
Share-Based Compensation Expense | ||||||||||||||
The following table provides a summary of the expense the Company recognized related to share-based compensation awards, as well as the remaining expense associated with those awards as of and for the years ended December 31, 2014, 2013 and 2012: | ||||||||||||||
For the Twelve Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Share-based compensation expense: | ||||||||||||||
Stock options | $ | 490 | $ | 240 | $ | 127 | ||||||||
Restricted stock | 503 | 293 | 204 | |||||||||||
| | | | | | | | | | | ||||
Total expense | $ | 993 | $ | 533 | $ | 331 | ||||||||
| | | | | | | | | | | ||||
Unrecognized compensation expense: | ||||||||||||||
Stock options | $ | 1,065 | $ | 645 | $ | 529 | ||||||||
Restricted stock | 967 | 651 | 573 | |||||||||||
| | | | | | | | | | | ||||
Total unrecognized expense | $ | 2,032 | $ | 1,296 | $ | 1,102 | ||||||||
| | | | | | | | | | | ||||
Compensation costs related to share-based awards are charged to earnings over the period the awards are expected to vest. Share-based compensation costs are included in salaries and employee benefits in the Consolidated Financial Statements. For the year ended December 31, 2014, the total income tax benefit recognized related to share-based compensation was $0.3 million. The total income tax benefit recognized related to share-based compensation less than $0.1 million for the years ended December 31, 2013, and 2012, respectively. At December 31, 2014, compensation expense related to unvested stock options and restricted stock is expected to be recognized over 2.8 years and 2.4 years, respectively. | ||||||||||||||
The following table presents the assumptions used in the calculation of the weighted average fair value of options granted at various dates during the years ended December 31, 2014, 2013 and 2012 using the Black-Scholes option pricing model: | ||||||||||||||
For the Twelve Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
Expected volatility | 49.38% | 55.33% | 52.26% | |||||||||||
Expected term (years) | 5.61 | 6.00 | 7.00 | |||||||||||
Dividend yield | 0.67% | 0.00% | 0.00% | |||||||||||
Risk free rate | 1.75% | 1.54% | 1.11% | |||||||||||
| | | | | | | | | | | ||||
Weighted-average grant date fair value | $ | 3.32 | $ | 3.30 | $ | 2.87 | ||||||||
| | | | | | | | | | | ||||
The fair value of each stock option award is determined on the date of grant using the Black-Scholes option valuation model, which uses assumptions outlined in the table above. Expectations for volatility are based on the historical volatility of the Company's common stock. The Company estimates forfeiture rates based on historical employee option exercise and termination experience. The Company recognizes share-based compensation costs on a straight line basis over the vesting period of the award, which is typically a period of three to five years. | ||||||||||||||
Shareholders_Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2014 | |
Shareholders' Equity | |
Shareholders' Equity | Note 13. Shareholders' Equity |
Preferred Stock | |
Under its Amended Articles of Incorporation, the Company is authorized to issue up to 5,000,000 shares of preferred stock, in one or more series, having such voting powers, designations, preferences, rights, qualifications, limitations and restrictions as determined by the Board of Directors. | |
Private Placement and Preferred Stock Conversion | |
On March 12, 2010, the Company sold 1,189,538 shares of its Series C Convertible Perpetual Preferred Stock ("Series C Preferred Stock") for $3.6 million as part of the overall private placement of securities completed at that time. Series C Preferred Stock is a non-voting class of preferred stock with a liquidation preference over the Company's common stock equal to the original conversion per share price of $3.25, plus any accrued but unpaid dividends. The Series C Preferred Stock is convertible to shares of common stock on a one share for one share basis based on the terms of the Series C Preferred Stock. Holders of the Series C Preferred Stock do not have any voting rights, including the right to elect any directors, other than the customary limited voting rights with respect to matters significantly and adversely affecting the rights and privileges of the Series C Preferred Stock. There is no stated dividend rate for shares of Series C Preferred Stock. However, holders of Series C Preferred Stock are entitled to a per share dividend equivalent to that declared for each common share into which Series C Preferred Stock is then convertible. | |
On October 29, 2014, the Company entered into an Exchange Agreement with the holder of its Series C Preferred Stock. Pursuant to the terms of the Exchange Agreement the holder of Series C Preferred Stock would exchange 1,189,538 shares of the Series C Preferred Stock for shares of the Company's common stock on a one-for-one exchange ratio basis. On December 22, 2014, the Company and the holder of its Series C Preferred stock entered into a First Amendment to Exchange Agreement to allow for an initial exchange of Preferred Stock whereby 840,841 shares of Series C Preferred Stock would be exchanged for 840,841 shares of the Company's common stock. The initial closing took place on December 24, 2014. The Exchange Agreement was also amended to allow for a subsequent closing for the exchange of the remaining 348,697 shares of Series C Preferred Stock for shares of the Company's common stock on a mutually agreed upon date before March 31, 2015. | |
The fair market value of the Company's common stock was higher than the conversion price of $3.25 per share of the Series C Preferred Stock on the date the Company made a firm commitment to issue the Series C Preferred Stock. Therefore, the Series C Preferred Stock has a contingent beneficial conversion feature associated with it. The total amount of the contingent beneficial conversion feature is approximately $238 thousand. During the fourth quarter of 2014, the Company recorded $168 thousand of the contingent beneficial conversion feature, commensurate with the partial conversion of the Series C Preferred Stock discussed above. | |
Cash Dividends | |
The Company paid cash dividends of $0.03 per share and $0.05 per share in the third and fourth quarters of 2014, respectively. Cash dividends were paid to holders of the Company's common stock and Series C Preferred Stock. Holders of the Company's Series C Preferred Stock are entitled to per share dividend equivalents to any dividends declared on the Company's common stock. See Note 17. Regulatory Matters, of these Consolidated Financial Statements for additional information on limitations on dividends on common stock. | |
The Company did not pay dividends on its common stock during 2013 or 2012. | |
Stock Repurchase Program | |
In the fourth quarter of 2014, the Company announced an agreement to repurchase up to $5.0 million of its outstanding common stock pursuant to a written plan compliant with Rule 10b5-1, and Rule 10b-18. Repurchase program activity under the current plan will expire on June 30, 2015, or earlier upon the completion of the repurchase of $5.0 million of the Company's common stock, as well as under certain other circumstances set forth in the repurchase plan agreement. The Company has no obligation to repurchase any shares under this program, and may suspend or discontinue it at any time. All shares as part of the repurchase program will be cancelled, and therefore no longer available for reissuance. As of December 31, 2014, the Company had repurchased 51,732 shares of its common stock under this plan at an average price of $7.47 per share. | |
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Earnings Per Share | ||||||||||||||||||||
Earnings Per Share | Note 14. Earnings Per Share | |||||||||||||||||||
The following tables set forth the number of shares used in the calculation of both basic and diluted earnings per common share: | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net | Shares | Net | Shares | Net | Shares | |||||||||||||||
Income | Income | Income | ||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 8,965 | $ | 10,841 | $ | 13,037 | ||||||||||||||
Dividends and accretion on preferred stock | (168 | ) | (898 | ) | (1,470 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Net income available to common shareholders | $ | 8,797 | $ | 9,943 | $ | 11,567 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding | 32,567,137 | 26,341,592 | 26,271,000 | |||||||||||||||||
Basic earnings per common share | $ | 0.27 | $ | 0.38 | $ | 0.44 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Dilutive effect of share-based compensation awards | 145,846 | 201,097 | 130,871 | |||||||||||||||||
Weighted average diluted shares outstanding | 32,712,983 | 26,542,689 | 26,401,871 | |||||||||||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.37 | $ | 0.44 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
For the years ended December 31, 2014, 2013 and 2012, common stock equivalents associated primarily with stock options, totaling approximately 99,000 shares, 360,000 shares and 280,000 shares, respectively, were excluded from the calculation of diluted earnings per share, as their impact would be anti-dilutive. | ||||||||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Commitments and Contingencies. | ||||||||||||||||||||
Commitments and Contingencies | Note 15. Commitments and Contingencies | |||||||||||||||||||
In the normal course of business, various claims and lawsuits are brought by and against the Company. In the opinion of management and the Company's general counsel, the disposition of all pending or threatened proceedings will not have a material effect on the Company's Consolidated Financial Statements. | ||||||||||||||||||||
Commitments to Extend Credit | ||||||||||||||||||||
In the normal course of business, the Bank enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk not recognized in the Company's Consolidated Financial Statements. | ||||||||||||||||||||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby letters of credit are conditional commitments to guarantee the performance of a Bank customer to a third party. Since many of the commitments and standby letters of credit are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. The Bank's Management evaluates each customer's credit worthiness on a case-by-case basis, and determines the amount of collateral deemed adequate to secure the loan, if collateral security is determined to be necessary for the particular loan. The Bank's exposure to loan loss in the event of nonperformance on commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments as it does for loans reflected in the Company's Consolidated Financial Statements. | ||||||||||||||||||||
As of December 31, 2014 and 2013, the Company had the following outstanding financial commitments: | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Commitments to extend credit | $ | 237,733 | $ | 181,445 | ||||||||||||||||
Standby letters of credit | 15,542 | 17,036 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total commitments and standby letters of credit | $ | 253,275 | $ | 198,481 | ||||||||||||||||
| | | | | | | | |||||||||||||
Commitments to extend credit and standby letters of credit are made at both fixed and variable rates of interest. At December 31, 2014, the Company had $35.7 million in fixed rate commitments and $217.5 million in variable rate commitments. | ||||||||||||||||||||
Other Commitments | ||||||||||||||||||||
The following table provides a summary of the future minimum required contractual payments the Bank is expected to make based upon obligations at December 31, 2014: | ||||||||||||||||||||
Less Than | One to | Three to | More than | December 31, | December 31, | |||||||||||||||
One Year | Three Years | Five Years | Five Years | 2014 | 2013 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
FHLB Advances and other borrowings | $ | 25,000 | $ | 27,000 | $ | 15,500 | $ | 28,000 | $ | 95,500 | $ | 88,500 | ||||||||
Operating lease obligations | 1,491 | 2,100 | 1,428 | 3,133 | 8,152 | 2,671 | ||||||||||||||
Salary continuation payments | 378 | 524 | 524 | 3,533 | 4,959 | 5,991 | ||||||||||||||
Junior subordinated debentures | – | – | – | 16,496 | 16,496 | 8,248 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total obligations | $ | 26,869 | $ | 29,624 | $ | 17,452 | $ | 51,162 | $ | 125,107 | $ | 105,410 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
The Company has leases that contain options to extend for periods from five to seven years. Options to extend which have been exercised and the related lease commitments are included in the table above. Total rent expense charged for leases during the reporting periods ended December 31, 2014, 2013 and 2012, were approximately $1.8 million, $1.6 million and $1.9 million, respectively. In 2012, the Company purchased the buildings used for three of its branches and its administrative headquarters facility, which had been previously leased, resulting in a significant reduction in the level of rent expense in 2012, as well as future minimum lease payments from amounts previously reported. In addition in 2012, the Bank closed three branch locations that were subject to leases that were set to expire within one to twelve months from their closure date. | ||||||||||||||||||||
Restructuring_Activities
Restructuring Activities | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Restructuring Activities | ||||||||||||||||||||
Restructuring Activities | Note 16. Restructuring Activities | |||||||||||||||||||
In conjunction with the MISN Transaction described in Note 2. Business Combination, the Company has initiated a restructuring and integration plan which has resulted in additional non-interest expenses during 2014. These additional costs were attributable to the integration of MISN systems into the Company's systems, the elimination of owned and leased facilities and related fixed assets, contract cancellation costs of duplicative systems and services, and termination benefits paid to employees displaced as a result of the merger and for retention of key employees through integration-related milestone dates. | ||||||||||||||||||||
The following table provides a summary of the expected and incurred costs associated with the restructuring and integration plan: | ||||||||||||||||||||
Costs | ||||||||||||||||||||
Incurred For | ||||||||||||||||||||
The Year Ended | ||||||||||||||||||||
Total Costs | Costs Incurred During | December 31, | ||||||||||||||||||
Expected To | 2014 | |||||||||||||||||||
Be Incurred | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
System integration | $ | 578 | $ | 223 | $ | (20 | ) | $ | 312 | $ | 9 | $ | 524 | |||||||
Fixed asset consolidation | 2,387 | 2,350 | (268 | ) | 41 | 152 | 2,275 | |||||||||||||
Contract cancellation costs | 1,746 | 1,656 | – | 90 | (75 | ) | 1,671 | |||||||||||||
Employee termination and retention | 3,836 | 2,641 | 803 | 274 | 319 | 4,037 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total restructuring costs | $ | 8,547 | $ | 6,870 | $ | 515 | $ | 717 | $ | 405 | $ | 8,507 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
The following table summarizes the change in the accrued liability related to the Company's restructuring and integration plan associated with the MISN Transaction for the periods presented below: | ||||||||||||||||||||
For the | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Balance, beginning of period | $ | — | ||||||||||||||||||
New charges (1) | 9,255 | |||||||||||||||||||
Cash payments | (7,460 | ) | ||||||||||||||||||
Other adjustments (2) | (748 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Balance, end of period | $ | 1,047 | ||||||||||||||||||
| | | | | ||||||||||||||||
-1 | Represents initial charges the Company incurred related to the restructuring and integration plan associated with the MISN Transaction. | |||||||||||||||||||
-2 | Adjustments related to previously accrued amounts associated with planned staff reduction, contract terminations, and other adjustments. | |||||||||||||||||||
Regulatory_Matters
Regulatory Matters | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Regulatory Matters | ||||||||||||||||||||
Regulatory Matters | Note 17. Regulatory Matters | |||||||||||||||||||
Consent Order | ||||||||||||||||||||
On November 5, 2014, the Bank entered into a Stipulation to the Issuance of a Consent Order with the Federal Deposit Insurance Corporation ("FDIC") and the California Department of Business Oversight ("DBO"), consenting to the issuance of a consent order ("the Consent Order") relating to identified deficiencies in the Bank's centralized Bank Secrecy Act and anti-money laundering compliance program, which is designed to comply with the requirements of the Bank Secrecy Act, the USA Patriot Act of 2001 and related anti-money laundering regulations (collectively, the "BSA/AML Requirements"). Per the Consent Order, the Bank must review, update and implement an enhanced Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") risk assessment process based on the 2010 Federal Financial Institutions Examination Council BSA/AML Examination Manual. Some of the areas highlighted in the Consent Order include the requirements to: i) enhance customer due-diligence procedures; ii) improve the enhanced due diligence analysis for high-risk customers; iii) ensure the proper identification and reporting of suspicious activity; iv) address and correct the noted violations of law; v) ensure that there is sufficient and qualified staff; and vi) ensure that all staff are properly trained to carry out the BSA/AML programs. Certain activities, including expansionary activities, that otherwise require regulatory approval will likely be impeded while the Consent Order remains outstanding. | ||||||||||||||||||||
Management and the Board have been working diligently to comply with the Consent Order and believe they have allocated sufficient resources to address the corrective actions required by the FDIC and DBO. Compliance and resolution of the Consent Order will ultimately be determined by the FDIC and DBO. | ||||||||||||||||||||
Memoranda of Understanding | ||||||||||||||||||||
From April 2012 to April 2013, the Bank operated under a Memoranda of Understanding ("MOU") with the FDIC and the DBO, which replaced a Consent Order entered into during 2010. In the MOU, the Company committed, among other things, continue to make progress in improving credit quality and processes as well as continue to comply with the 10% Leverage Ratio as originally established by the Order. Effective April 24, 2013, the FDIC and DBO terminated their MOU with the Bank. As such the Bank is no longer subject to the MOU's 10% Leverage Ratio requirement, as well as the other provision of the MOU. | ||||||||||||||||||||
From July 2012 to September 2013, the Company also operated under a MOU with the Federal Reserve Bank of San Francisco ("FRB"), which replaced a Written Agreement entered into with the Company in March 2010. In the MOU the Company committed to among other things, continue to seek FRB approval prior to: paying any dividends on its common and preferred stock; paying interest, principal or other sums on subordinated debt or trust preferred securities; or incurring, increasing, or guaranteeing any debt. On September 4, 2013, the FRB terminated the MOU with the Company. | ||||||||||||||||||||
Regulatory Capital | ||||||||||||||||||||
The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and the Bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. At year end 2014 and 2013, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. | ||||||||||||||||||||
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2014, the Company and the Bank meet all capital adequacy requirements to which they are subject. To be categorized as well-capitalized, the Bank must maintain minimum capital ratios as set forth in the table below. | ||||||||||||||||||||
The following table also sets forth the Company's and the Bank's actual regulatory capital amounts and ratios as of December 31, 2014 and 2013: | ||||||||||||||||||||
Actual | Capital Needed For | Capital | ||||||||||||||||||
Adequacy Purposes | Needed To Be | |||||||||||||||||||
Well Capitalized | ||||||||||||||||||||
Under Prompt | ||||||||||||||||||||
Corrective Action | ||||||||||||||||||||
Provisions | ||||||||||||||||||||
Capital | Ratio | Capital | Ratio | Capital | Ratio | |||||||||||||||
Amount | Amount | Amount | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 187,198 | 14.38% | $ | 104,111 | 8.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 180,640 | 13.88% | $ | 104,101 | 8.0% | $ | 130,126 | 10.0% | |||||||||||
Tier I capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 170,918 | 13.13% | $ | 52,056 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 164,361 | 12.63% | $ | 52,050 | 4.0% | $ | 78,076 | 6.0% | |||||||||||
Tier I capital to average assets: | ||||||||||||||||||||
Company | $ | 170,918 | 10.22% | $ | 66,902 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 164,361 | 9.83% | $ | 66,889 | 4.0% | $ | 83,611 | 5.0% | |||||||||||
As of December 31, 2013 | ||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 130,532 | 14.17% | $ | 73,709 | 8.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 126,000 | 13.68% | $ | 73,703 | 8.0% | $ | 92,128 | 10.0% | |||||||||||
Tier I capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 118,933 | 12.91% | $ | 36,855 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 114,402 | 12.42% | $ | 36,851 | 4.0% | $ | 55,277 | 6.0% | |||||||||||
Tier I capital to average assets: | ||||||||||||||||||||
Company | $ | 118,933 | 10.20% | $ | 46,649 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 114,402 | 9.82% | $ | 46,603 | 4.0% | $ | 58,254 | 5.0% | |||||||||||
As disclosed in Note 10. Borrowings, of these Consolidated Financial Statements, the proceeds from the issuance of Junior Subordinated Debentures, subject to percentage limitations, are considered Tier I capital by the Company for regulatory reporting purposes. At December 31, 2014 and 2013, the Company included $12.8 million, and $8.0 million of proceeds from the issuance of the debt securities in its Tier I capital. | ||||||||||||||||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Related Party Transactions | |||||||||||
Related Party Transactions | Note 18. Related Party Transactions | ||||||||||
The Bank has entered into loan and deposit transactions with certain directors and executive officers of the Bank and the Company. These loans were made and deposits were taken in the ordinary course of business. The following table sets forth loans made to directors and executive officers of the Company as of December 31, 2014: | |||||||||||
For The Year Ended | |||||||||||
December 31, 2014 | |||||||||||
(dollars in thousands) | |||||||||||
Outstanding balance, beginning of year | $ | 20,087 | |||||||||
Additional loans made | 18,452 | ||||||||||
Repayments | (13,548 | ) | |||||||||
Change in related party status | – | ||||||||||
| | | | | |||||||
Outstanding balance, end of year | $ | 24,991 | |||||||||
| | | | | |||||||
Deposits from related parties held by the Bank at December 31, 2014 and 2013 amounted to $3.2 million and $2.7 million, respectively. | |||||||||||
In addition to the loan and deposit relationships noted above, the Company paid firms affiliated with certain of its directors for facility rent, legal consultation fees related to collection matters and fuel for Company owned vehicles. The table below summarizes these payments for each of the periods presented: | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Payments to affiliated firms: | |||||||||||
Facility rent | $ | 240 | $ | 237 | $ | 233 | |||||
Legal consultation fees | 15 | 14 | 6 | ||||||||
Fuel for company owned vehicles | – | – | 5 | ||||||||
| | | | | | | | | | | |
Total payments to affiliated firms | $ | 255 | $ | 251 | $ | 244 | |||||
| | | | | | | | | | | |
Restriction_on_Transfers_of_Fu
Restriction on Transfers of Funds to Parent | 12 Months Ended |
Dec. 31, 2014 | |
Restriction on Transfers of Funds to Parent | |
Restriction on Transfers of Funds to Parent | Note 19. Restriction on Transfers of Funds to Parent |
There are legal limitations on the ability of the Bank to provide funds to the Bancorp. As of December 31, 2014, the Bank had obtained prior approval from the DBO to pay dividends up to $5.0 million to the Bancorp. The Bank may not pay dividends to the Bancorp in excess of this amount without prior approval from the DBO. Section 23A of the Federal Reserve Act restricts the Bank from extending credit to the Bancorp and other affiliates amounting to more than 20 percent of its contributed capital and retained earnings. | |
Additionally, as disclosed in Note 17. Regulatory Matters, of these Consolidated Financial Statements, the Bank was operating under a MOU by the FDIC and DBO from April 2012 to April 2013, and the Company was operating under a MOU with the Federal Reserve Bank of San Francisco from July 2012 to September 2013. The Memoranda of Understanding contained provisions that required the Bank to obtain regulatory approval prior to paying any dividends or other forms of payment that may have represented a reduction in the Bank's equity to the Bancorp. The Bancorp and Bank are no longer under this restriction. The Consent Order, as disclosed in Note 17. Regulatory Matters, of these Consolidated Financial Statements, which the Bank entered into on November 5, 2014, and which related to deficiencies in the Bank's centralized Bank Secrecy Act and Anti-money Laundering compliance program, does not contain restrictions on the Bank's ability to transfer funds to the Company. | |
Parent_Company_Financial_Infor
Parent Company Financial Information | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Parent Company Financial Information | |||||||||||
Parent Company Financial Information | Note 20. Parent Company Financial Information | ||||||||||
Heritage Oaks Bancorp | |||||||||||
Condensed Balance Sheets | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(dollars in thousands) | |||||||||||
Assets | |||||||||||
Cash | $ | 6,642 | $ | 4,726 | |||||||
Prepaid and other assets | 2,122 | 1,280 | |||||||||
Investment in bank | 202,565 | 128,940 | |||||||||
| | | | | | | | ||||
Total assets | $ | 211,329 | $ | 134,946 | |||||||
| | | | | | | | ||||
Liabilities | |||||||||||
Junior subordinated debentures | $ | 13,233 | $ | 8,248 | |||||||
Other liabilities | 156 | 271 | |||||||||
| | | | | | | | ||||
Total liabilities | 13,389 | 8,519 | |||||||||
Shareholders' Equity | |||||||||||
Preferred stock | 1,056 | 3,604 | |||||||||
Common stock | 164,196 | 101,511 | |||||||||
Additional paid in capital | 6,984 | 6,020 | |||||||||
Retained earnings | 24,772 | 18,717 | |||||||||
Accumulated other comprehensive income (loss) | 932 | (3,425 | ) | ||||||||
| | | | | | | | ||||
Total shareholders' equity | 197,940 | 126,427 | |||||||||
| | | | | | | | ||||
Total liabilities and shareholders' equity | $ | 211,329 | $ | 134,946 | |||||||
| | | | | | | | ||||
Heritage Oaks Bancorp | |||||||||||
Condensed Statements of Income | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Income | |||||||||||
Dividends from subsidiaries | $ | 10,000 | $ | 25,309 | $ | 3,517 | |||||
Interest income | 16 | 19 | 25 | ||||||||
| | | | | | | | | | | |
Total income | 10,016 | 25,328 | 3,542 | ||||||||
| | | | | | | | | | | |
Expense | |||||||||||
Share-based compensation | 211 | 133 | 114 | ||||||||
Other professional fees and outside services | 737 | 1,169 | 498 | ||||||||
Interest | 499 | 167 | 192 | ||||||||
| | | | | | | | | | | |
Total expense | 1,447 | 1,469 | 804 | ||||||||
| | | | | | | | | | | |
Income before income tax benefit and equity in undistibuted earnings of subsidiaries | 8,569 | 23,859 | 2,738 | ||||||||
Income tax benefit | (576 | ) | (347 | ) | (813 | ) | |||||
| | | | | | | | | | | |
Net income before equity in undistributed earnings of subsidiaries | 9,145 | 24,206 | 3,551 | ||||||||
Equity in undisbursed income of subsidiaries | 180 | 13,365 | (9,486 | ) | |||||||
Dividends and accretion on preferred stock | 168 | 898 | 1,470 | ||||||||
| | | | | | | | | | | |
Net income available to common shareholders | $ | 8,797 | $ | 9,943 | $ | 11,567 | |||||
| | | | | | | | | | | |
Heritage Oaks Bancorp | |||||||||||
Condensed Statements of Cash Flows | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 8,965 | $ | 10,841 | $ | 13,037 | |||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
Share-based compensation expense | 211 | 133 | 114 | ||||||||
Amortization of premium on borrowings | 175 | – | – | ||||||||
Undistributed loss (income) of subsidiaries | 180 | 13,365 | (9,486 | ) | |||||||
Increase in other assets and other liabilities | (868 | ) | (83 | ) | (656 | ) | |||||
| | | | | | | | | | | |
Net cash provided by operating activities | 8,663 | 24,256 | 3,009 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash acquired in MISN merger | (3,928 | ) | – | – | |||||||
Proceeds from the sale of assets | 338 | – | – | ||||||||
Other | (100 | ) | – | – | |||||||
| | | | | | | | | | | |
Net cash used in investing activities | (3,690 | ) | – | – | |||||||
Cash flows from financing activities: | |||||||||||
Dividends on Series A preferred stock | – | (708 | ) | (3,013 | ) | ||||||
Retirement of Series A preferred stock and related warrants | – | (22,575 | ) | – | |||||||
Dividends declared on common stock | (2,742 | ) | – | – | |||||||
Repurchase of common stock | (387 | ) | – | – | |||||||
Stock issuance costs | (381 | ) | – | – | |||||||
Proceeds from the exercise of options | 453 | 138 | 183 | ||||||||
| | | | | | | | | | | |
Net cash used in financing activities | (3,057 | ) | (23,145 | ) | (2,830 | ) | |||||
| | | | | | | | | | | |
Net increase in cash and cash equivalents | 1,916 | 1,111 | 179 | ||||||||
Cash and cash equivalents, beginning of year | 4,726 | 3,615 | 3,436 | ||||||||
| | | | | | | | | | | |
Cash and cash equivalents, end of year | $ | 6,642 | $ | 4,726 | $ | 3,615 | |||||
| | | | | | | | | | | |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events | |
Subsequent Events | Note 21. Subsequent Events |
Dividend Declaration | |
On January 28, 2015, the Company's Board of Directors declared a cash dividend of $0.05 per share, payable on March 2, 2015, to shareholders of the Company's common stock as of February 16, 2015. Holders of the Company's Series C Preferred Stock are also entitled to a per share dividend equivalent to the common dividend declared. | |
Quarterly_Financial_Informatio
Quarterly Financial Information (unaudited) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Quarterly Financial Information (unaudited) | ||||||||||||||||||||||||||
Quarterly Financial Information (unaudited) | Note 22. Quarterly Financial Information (unaudited) | |||||||||||||||||||||||||
The following table provides a summary of results for the periods indicated: | ||||||||||||||||||||||||||
For The Quarters Ended, | ||||||||||||||||||||||||||
Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||||||||
Interest income | $ | 17,064 | $ | 16,895 | $ | 16,541 | $ | 13,588 | $ | 11,736 | $ | 11,509 | $ | 11,075 | $ | 11,073 | ||||||||||
Net interest income | 15,726 | 15,571 | 15,197 | 12,437 | 10,687 | 10,482 | 10,149 | 10,208 | ||||||||||||||||||
Non-interest income | 2,354 | 2,982 | 2,476 | 1,763 | 1,879 | 2,423 | 2,912 | 5,661 | ||||||||||||||||||
Non-interest expense | 11,385 | 13,382 | 12,986 | 17,039 | 9,624 | 8,551 | 8,640 | 9,748 | ||||||||||||||||||
Income before provision (benefit) for income taxes | 6,695 | 5,171 | 4,687 | (2,839 | ) | 2,942 | 4,354 | 4,421 | 6,121 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | 4,352 | 3,429 | 2,949 | (1,765 | ) | 1,634 | 2,761 | 2,716 | 3,730 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends and accretion on preferred stock | 168 | – | – | – | – | 181 | 359 | 358 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shareholders | $ | 4,184 | $ | 3,429 | $ | 2,949 | $ | (1,765 | ) | $ | 1,634 | $ | 2,580 | $ | 2,357 | $ | 3,372 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per common share | ||||||||||||||||||||||||||
Basic | $ | 0.13 | $ | 0.1 | $ | 0.09 | $ | (0.06 | ) | $ | 0.06 | $ | 0.1 | $ | 0.09 | $ | 0.13 | |||||||||
Diluted | $ | 0.13 | $ | 0.1 | $ | 0.09 | $ | (0.06 | ) | $ | 0.06 | $ | 0.1 | $ | 0.09 | $ | 0.13 | |||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary of Significant Accounting Policies | ||
Principles of Consolidation | Principles of Consolidation | |
The Consolidated Financial Statements of the Company include the holding company ("Bancorp") and its wholly owned subsidiaries, Heritage Oaks Bank, (the "Bank") and CCMS Systems, Inc. (an inactive entity). Inter-company balances and transactions have been eliminated. | ||
Reclassifications | Reclassifications | |
Certain amounts in the 2012 and 2013 Consolidated Financial Statements have been reclassified to conform to the 2014 presentation. These reclassifications did not have any effect on the prior years' reported net income or shareholders' equity. | ||
Investment in Non-Consolidated Subsidiaries | Investment in Non-Consolidated Subsidiaries | |
The Company accounts for its investment in Heritage Oaks Capital Trust II, Mission Community Capital Trust I, and Santa Lucia Bancorp (CA) Capital Trust, as unconsolidated subsidiaries using the equity method of accounting, as the Company is not the primary beneficiary of the trust. Mission Community Capital Trust I and Santa Lucia Bancorp (CA) Capital Trust were acquired as part of the acquisition of Mission Community Bancorp on February 28, 2014. The sole purpose of each of these trusts is for the issuance of trust preferred securities. | ||
Use of Estimates in the Preparation of Consolidated Financial Statements | Use of Estimates in the Preparation of Consolidated Financial Statements | |
The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan and lease losses, the valuation of real estate acquired through foreclosure, the carrying value of the Company's deferred tax assets and estimates used in the determination of the fair value of certain financial instruments, assets and liabilities acquired in business combinations, and accruals for restructuring activities, as described in Note 16. Restructuring Activities, of these Consolidated Financial Statements. | ||
In connection with the determination of the allowance for loan and lease losses and the value of foreclosed real estate, management obtains independent appraisals for significant properties. While management uses available information to recognize losses on loans and leases, and foreclosed real estate and collateral, future additions to the allowance for loan and lease losses may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan and lease losses and foreclosed real estate. | ||
These agencies may require the Company to recognize additions to the allowance for loan and lease losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowance for loan and lease losses and foreclosed real estate may change in future periods. See also Note 5. Loans and Allowance for Loan and Lease Losses, of these Consolidated Financial Statements. | ||
The Company uses an estimate of its future earnings in determining if it is more likely than not that the carrying value of its deferred tax assets will be realized over the period they are expected to reverse. If based on all available evidence, the Company believes that a portion or all of its deferred tax assets will not be realized; a valuation allowance may be established. See also Note 7. Income Taxes, of these Consolidated Financial Statements. | ||
The degree of judgment utilized in measuring the fair value of financial instruments, and assets and liabilities acquired in business combinations generally correlates to the level of pricing observability. Financial instruments, and acquired assets and liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of observable pricing and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments, and acquired assets and liabilities rarely traded or not quoted will generally have little or no observable pricing and a higher degree of judgment is utilized in measuring the fair value. Observable pricing is impacted by a number of factors, including the type of asset or liability, whether the asset or liability is new to the market and not yet established, and the characteristics specific to the transaction. See also Note 2. Business Combination, and Note 3. Fair Value of Assets and Liabilities, of these Consolidated Financial Statements. | ||
Business Combinations and Related Matters | Business Combinations and Related Matters | |
Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method the acquiring entity in a business combination recognizes 100 percent of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceed the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed from contingencies must also be recognized at fair value, if the fair value can be determined during the measurement period. Results of operations of an acquired business are included in the statement of operations from the date of acquisition. Acquisition-related costs, including conversion charges, are expensed as incurred. The Company applied this guidance to the acquisition of Mission Community Bancorp that was consummated on February 28, 2014. The Company's Consolidated Financial Statements reflect the operations of Mission Community Bancorp from March 1, 2014, through December 31, 2014. | ||
Disclosure about Fair Value of Financial Instruments | Disclosure about Fair Value of Financial Instruments | |
The Company's estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates are not necessarily indicative of the amounts the Company could have realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. | ||
Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these Consolidated Financial Statements since the balance sheet date and, therefore, current estimates of fair value may differ significantly from the amounts presented in the accompanying notes. | ||
The Company determines the fair market values of financial instruments based on the fair value hierarchy established in U.S. GAAP. The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings or a particular financial instrument. Pursuant to U.S. GAAP, the Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Specifically, U.S. GAAP describes three levels of inputs that may be used to measure fair value, as outlined below: | ||
Level 1 – Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities may include debt and equity securities that are traded in an active exchange market and that are highly liquid and are actively traded in over the counter markets. | ||
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments the value for which is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. | ||
The following methods and assumptions were used by the Company in estimating fair values of financial instruments. Many of these estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. | ||
Cash and Cash Equivalents | ||
The carrying amounts reported in the balance sheet for cash and cash equivalents approximate the fair values of those assets due to the short-term nature of the assets. | ||
Interest Bearing Deposits at Other Financial Institutions | ||
The carrying amounts reported in the balance sheet for interest bearing deposits at other financial institutions approximates the fair value of these assets due to the short-term nature of the assets. | ||
Investments in Securities Available for Sale | ||
Fair values are based upon quoted market prices, where available. If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments or through the use of other observable data supported by a valuation model. The fair value of newly issued securities, for which there is not a sufficient history of market transactions on which to base a fair value determination under Level 1 or 2 of the hierarchy, are initially valued under Level 3 of the hierarchy. At such time that sufficient history of market transactions is established, the securities' fair value is determined under Level 1 or 2 of the hierarchy and accordingly the security is transferred out of Level 3 and into the applicable level. | ||
Federal Home Loan Bank Stock | ||
The fair value of Federal Home Loan Bank stock is not readily determinable due to the lack of its transferability. | ||
Loans, Loans Held for Sale, and Accrued Interest Receivable | ||
For variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for other loans (for example, fixed rate loans and loans that possess a rate variable other than daily or that are at their floor rate) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. | ||
The fair value of loans held for sale is determined, when possible, using quoted secondary market prices. If no such quoted price exists, the fair value of the loan is determined using quoted prices for a similar asset or assets, adjusted for the specific attributes of that loan. The carrying amount of accrued interest receivable approximates its fair value. | ||
Impaired Loans | ||
A loan is considered impaired when it is probable that payment of interest and principal will not be made in accordance with the original contractual terms of the loan agreement. Impairment is measured based on the fair value of the underlying collateral, which is based on the appraised value of the collateral less any estimated costs to sell. As such, the Company records impaired loans as non-recurring Level 2 when the fair value of the underlying collateral is based on an observable market price or current appraised value. When current market prices are not available or the Company determines that the fair value of the underlying collateral is further impaired below appraised values based on Company specific experience with similar collateral, the Company records impaired loans as non-recurring Level 3. At December 31, 2014, a majority of the Company's impaired loans were evaluated based on the fair value of their underlying collateral as determined by the most recent appraisal available to management. | ||
Other Real Estate Owned and Foreclosed Collateral | ||
Other real estate owned and foreclosed collateral are adjusted to fair value, less any estimated costs to sell, at the time the loans are transferred into this category. The fair value of these assets is based on independent appraisals, observable market prices for similar assets, or management's estimation of value. When the fair value is based on independent appraisals or observable market prices for similar assets, the Company records other real estate owned or foreclosed collateral as non-recurring Level 2 assets. When appraised values are not available, there is no observable market price for similar assets, or management determines the fair value of the asset is further impaired below appraised values or observable market prices based on Company specific experience with similar assets, the Company records other real estate owned or foreclosed collateral as non-recurring Level 3 assets. The most common adjustment to reported appraised values of collateral is a monthly discount linked to the passage of time since the last appraisal. This discount factor ranges between 1% and 3% per month and is consistent with that used in the appraisals to discount for the passage of time between the transaction date for comparable properties used in the appraisal and the appraisal date. | ||
Federal Home Loan Bank Advances | ||
The fair value disclosed for FHLB advances is determined by discounting contractual cash flows at current market interest rates for similar instruments. | ||
Non-Interest Bearing Deposits | ||
The fair values disclosed for non-interest bearing deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). | ||
Interest Bearing Deposits and Accrued Interest Payable | ||
The fair values disclosed for interest bearing deposits (for example, interest-bearing checking accounts and passbook accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The fair values for certificates of deposit are estimated using a discounted cash flow analysis that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits. The carrying amount of accrued interest payable approximates its fair value. | ||
Junior Subordinated Debentures | ||
The fair value disclosed for junior subordinated debentures is based on market prices of similar instruments issued with similar contractual terms and by issuers with a similar credit profile as the Company. | ||
Off-Balance Sheet Instruments | ||
Fair values of commitments to extend credit and standby letters of credit are based upon fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the counterparties' credit standing. | ||
Recent Accounting Guidance Adopted | Recent Accounting Pronouncements | |
Recent Accounting Guidance Not Yet Effective | ||
On January 17, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors. This ASU provides clarification that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of this amendment on the Consolidated Financial Statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The amendments within this update are effective for the quarter ending March 31, 2017. The Company is currently in the process of evaluating the impact of the adoption of this update, but does not expect a material impact on the Company's Consolidated Financial Statements. | ||
In August 2014, the FASB issued ASU No. 2014-14 Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40), Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. This update addresses classification of government-guaranteed mortgage loans, including those where guarantees are offered by the Federal Housing Administration ("FHA"), the U.S. Department of Housing and Urban Development ("HUD"), and the U.S. Department of Veterans Affairs ("VA"). Although current accounting guidance stipulates proper measurement and classification in situations where a creditor obtains from a debtor, assets in satisfaction of a receivable (such as through foreclosure), current guidance does not specify how to measure and classify foreclosed mortgage loans that are government-guaranteed. Under the provisions of this update, a creditor would derecognize a mortgage loan that has been foreclosed upon, and recognize a separate receivable if the following conditions are met: (1) The loan has a government guarantee that is not separable from the loan before foreclosure, (2) At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, (3) At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. The amendments within this update are effective for annual and interim periods beginning after December 15, 2014. The Company does not believe the adoption of this update will have a material impact of the Company's Consolidated Financial Statements. | ||
Cash and Cash Equivalents | Cash and Cash Equivalents | |
Banking regulations require that all banks maintain a percentage of their deposits as reserves in cash or on deposit with the Federal Reserve Bank. In management's opinion, the Bank is in compliance with the reserve requirements as of December 31, 2014. The Company maintains amounts due from banks that exceed federally insured limits. Historically the Company has not experienced any losses in such accounts. For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks. Generally, interest bearing balances due from banks represent excess liquidity that the Company and/or Bank invests through other institutions overnight. | ||
Investments Securities Available for Sale | Investment Securities Available for Sale | |
The Company's investment securities are classified as available for sale and are measured at fair value, with changes in unrealized gains and losses, net of applicable taxes, reported as a separate component of shareholders' equity. The fair values of most securities that are designated available for sale are based on quoted market prices. If quoted market prices are not available, fair values are extrapolated from the quoted prices of similar instruments or through the use of other observable data supporting a valuation model. Gains or losses on sales of investment securities are determined on the specific identification method and recorded as a component of non-interest income. Premiums and discounts are amortized or accreted using the interest method over the expected lives of the related securities and recognized in interest income. | ||
Other than Temporary Impairment ("OTTI") | ||
The Company periodically evaluates investments in the portfolio for other than temporary impairment and more specifically when conditions warrant such an evaluation. When evaluating whether impairment is other than temporary, the Company considers, among other things, the following: (1) the length of time the security has been in an unrealized loss position, (2) the extent to which the security's fair value is less than its cost, (3) the financial condition of the issuer, (4) any adverse changes in ratings issued by various rating agencies, (5) the intent and ability of the Company to hold such securities for a period of time sufficient to allow for any anticipated recovery in fair value and (6) in the case of mortgage related securities, credit enhancements, loan-to-values, credit scores, delinquency and default rates, cash flows and the extent to which those cash flows are within management's initial expectations based on pre-purchase analyses. | ||
When an investment is deemed to be other than temporarily impaired, the Company is required to assess whether it has the intent to sell the investment, or if it is more likely than not that it will be required to sell the investment before its anticipated recovery of its full basis in the security. If the Company does not intend, nor anticipates it will be required to sell the investment, it must still perform an evaluation of future cash flows it expects to receive from the investment to determine if a credit loss has occurred. The evaluation includes future cash flows from the investment the Company expects to collect, based on an assessment of all available information about the applicable investment. The Company considers such factors as: the structure of the security and the Company's position within that structure, the remaining payment terms for the security, prepayment speeds, default rates, loss severity on the collateral supporting the security, expected changes in real estate prices, and assumptions regarding interest rates, to determine whether the Company will recover the remaining amortized cost basis of the security. In the event that a credit loss has been projected to have occurred, only the amount of impairment related to the credit loss is recognized through earnings. OTTI amounts related to all other factors, such as market conditions, are recorded as a component of accumulated other comprehensive income. | ||
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock | |
The Bank is a member of the Federal Home Loan Bank ("FHLB") and as a condition of membership, the Bank is required to purchase stock in the FHLB. The required ownership of FHLB stock is based on the level of borrowing the Bank has obtained from the FHLB. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. There have been no events that would suggest that an impairment in the carrying value of the stock has occurred as of December 31, 2014. Dividends received on the FHLB stock are reported as a component of interest income. | ||
Loans Held for Sale | Loans Held for Sale | |
Loans held for sale are carried at the lower of aggregate cost or fair value, which is determined by the specified value in the sales contract with the third party buyer. Net unrealized losses, if any, are recognized through a valuation allowance by charges to expense. | ||
Loans Held for Investment | Loans Held for Investment | |
Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs of specific valuation allowances and net of any deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans. Nonrefundable fees and certain costs associated with originating or acquiring loans are deferred and amortized as an adjustment to interest income over the contractual lives of the loan. Upon prepayment, unamortized loan fees, net of costs, are immediately recognized in interest income. Other fees, including those collected upon principal prepayments, are included in interest income when received. | ||
Loans on which the accrual of interest has been discontinued are designated as non-accruing loans. The accrual of interest on loans is discontinued when principal and/or interest is past due 90 days based on contractual terms of the loan and/or when, in the opinion of management, there is reasonable doubt as to collectability unless such loans are well secured and in the process of collection. This policy is consistently applied to all portfolio segments. When loans are placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current period interest income. Interest income generally is not recognized on specific non-accruing loans unless the likelihood of further loss is remote. Interest payments received on such loans are generally applied as a reduction to the loan principal balance. Interest accruals are resumed only when the loan is brought current with respect to interest and principal and when, in the judgment of management, all remaining principal and interest is estimated to be fully collectable, there has been at least six months of sustained repayment performance since the loan was placed on non-accrual status and/or management believes, based on current information, that such loan is no longer impaired. When a loan is returned to accrual status from non-accrual status, the interest that had been accumulated while on non-accrual status is not recognized until such time as the loan is repaid in full. | ||
The Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the original contractual terms of the loan agreement. Measurement of impairment is based on expectations of future cash flows which are discounted at the loan's original effective interest rate, or measured by reference to an observable market value, if one exists, or the fair value of the collateral for a collateral-dependent loan. The Company selects the measurement method on a loan-by-loan basis except that collateral-dependent loans for which foreclosure is probable are measured at the fair value of the collateral. The Company recognizes interest income on impaired loans based on its existing methods of recognizing interest income on non-accrual loans. All loans are generally charged-off, either partially or fully, at such time that it is highly certain a loss has been realized. | ||
Acquired Loans and Leases | Acquired Loans and Leases | |
Loans and leases acquired through purchase or through a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. Should the Company's allowance for loan and lease losses methodology indicate that the credit discount associated with acquired, non-purchased credit impaired loans, is no longer sufficient to cover probable losses inherent in those loans, the Company will establish an allowance for those loans through a charge to provision for loan and lease losses. Acquired loans are evaluated upon acquisition for evidence of deterioration in credit quality since origination such that it is probable at acquisition that the Company will be unable to collect all contractually required payments. Such loans are classified as purchased credit impaired loans ("PCI loans"), while all other acquired loans are classified as non-PCI loans. | ||
The Company has elected to account for PCI loans on an individual loan level. The Company estimates the amount and timing of expected cash flows for each loan. The expected cash flow in excess of the loan's carrying value, which is fair value on the date of acquisition, is referred to as the accretable yield, and is recorded as interest income over the remaining expected life of the loan. The excess of the loan's contractual principal and interest over expected cash flows is referred to as the non-accretable difference, and is not recorded in the Company's Consolidated Financial Statements. | ||
Quarterly, management performs an evaluation of expected future cash flows for PCI loans. If current expectations of future cash flows are less than management's previous expectations, other than due to decreases in interest rates and prepayment assumptions, an allowance for loan and leases losses is recorded with a charge to current period earnings through provision for loan and lease losses. If there has been a probable and significant increase in expected future cash flows over that which was previously expected, the Company would first reduce any previously established allowance for loan and lease losses, and then record an adjustment to interest income through a prospective increase in the accretable yield. | ||
Allowance for Loan and Lease Losses ("ALLL") | Allowance for Loan and Lease Losses ("ALLL") | |
The Company manages credit risk not only through extensive risk analyses performed prior to a loan's approval, but also through the ongoing monitoring of loans within the portfolio, and more specifically certain types of loans that generally involve a greater degree of risk, such as commercial real estate, commercial lines of credit, and construction/land loans. The Company monitors loans in the portfolio through an exhaustive internal process, at least quarterly, as well as with the assistance of independent loan reviews. These reviews generally not only focus on problem loans, but also internally rated "pass" credits within certain pools of loans that may be expected to experience stress due to economic conditions. This process allows the Company to validate credit risk grade ratings, underwriting structure, and the Company's estimated exposure in the current economic environment as well as enhance communications with borrowers where necessary in an effort to mitigate potential future losses. All significant problem loans are analyzed in detail at least quarterly, in order to properly estimate potential exposure to loss associated with these loans in a timely manner. | ||
Each segment of loans in the portfolio possess varying degrees of risk, based on, among other things, the type of loan being made, the purpose of the loan, the type of collateral securing the loan, and the sensitivity the borrower has to changes in certain external factors such as economic conditions. The following provides a summary of the risks associated with various segments of the Company's loan portfolio, which are factors management regularly considers when evaluating the adequacy of the ALLL: | ||
• | Real estate secured – consist primarily of loans secured by commercial real estate, multi-family, farmland, and 1 to 4 family residential properties. Also included in this segment are equity lines of credit secured by real estate. As the majority of this segment is comprised of commercial real estate loans, risks associated with this segment lie primarily within that loan type. Adverse economic conditions may result in a decline in business activity and increased vacancy rates for commercial properties. These factors, in conjunction with a decline in real estate prices, may expose the Company to the potential for losses if a borrower cannot continue to service the loan with operating revenues, and the value of the property has declined to a level such that it no longer fully covers the Company's recorded investment in the loan. | |
• | Commercial and Industrial – consist primarily of commercial and industrial loans (business lines of credit), agriculture loans, and other commercial purpose loans. Repayment of commercial and industrial loans is generally provided from the cash flows of the related business to which the loan was made. Adverse changes in economic conditions may result in a decline in business activity, which can impact a borrower's ability to continue to make scheduled payments. The risk of repayment of agriculture loans arises largely from factors beyond the control of the Company or the related borrower, such as commodity prices and weather conditions. | |
• | Construction and Land segments – although construction and land loans generally possess a higher inherent risk of loss than other portfolio segments, improvements in the mix, collateral and nature of loans in this segment have resulted in an improvement in the risk profile of this segment of the portfolio. Risk arises from the necessity to complete projects within specified cost and time limits. Trends in the construction industry may also impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of future construction projects. | |
• | Installment – the installment loan portfolio is comprised primarily of a large number of small loans with scheduled amortization over a specific period. The majority of installment loans are made for consumer and business purchases. Weakened economic conditions may result in an increased level of delinquencies within this segment, as economic pressures may impact the capacity of such borrowers to repay their obligations. | |
ALLL Model Methodology | ||
The ALLL is maintained at a level which, in management's judgment, is appropriate to absorb probable credit losses inherent in the loan portfolio as of the balance sheet date. The amount of the ALLL is based on management's evaluation of the collectability of the loan portfolio, including the nature and volume of the portfolio, credit concentrations, trends in historical loss experience, the level of certain classified balances and specific impaired loans, and economic conditions and the related impact on specific borrowers and industry groups. The ALLL is increased by provisions for loan losses, which are charged to earnings and reduced by charge-offs, net of recoveries. Changes in the ALLL relating to impaired loans, including troubled debt restructurings ("TDRs"), are charged or credited to the provision for loan and lease losses. Because of uncertainties inherent in the estimation process, management's estimate of probable credit losses inherent in the loan portfolio and the related allowance may change. | ||
The nature of the process in which management determines the appropriate level of the ALLL involves the exercise of considerable judgment and the use of estimates. While management utilizes its best judgment and all available information in determining the adequacy of the ALLL, the ultimate adequacy of the ALLL is dependent upon a variety of factors beyond the Company's control, including but not limited to, the performance of the loan portfolio, changes in current and future economic conditions and the view of regulatory agencies regarding the level of classified assets. Weakness in economic conditions and any other factor that may adversely affect credit quality, result in higher levels of past due and non-accruing loans, defaults, and additional loan charge-offs, which may require additional provisions for loan losses in future periods and a higher balance in the Company's ALLL. The ALLL, as more fully described below, is comprised of two components: general reserves and specific loan reserves. | ||
General Reserves – The general reserve component of the ALLL, which is not attributable to loans specifically identified as impaired, is determined through a two-step process. First a quantitative allocation is determined by pooling performing loans by collateral type and purpose. These pools of loans are then further segmented by an internal risk grading system that classifies loans as: pass, special mention, substandard and doubtful. The Company's risk grade system allows management, among other things, to identify the risk associated with each loan, and to provide a basis for estimating credit losses inherent in the portfolio. Risk grades are generally assigned based on information concerning the borrower and the strength of the collateral. Risk grades are reviewed regularly by the Company's credit committee and are scrutinized by independent loan reviews performed semi-annually, as well as by regulatory agencies during scheduled examinations. Once credit risk grades have been assigned, estimated loss rates are then applied to each segment according to risk grade to determine the amount of the general portfolio allocation. | ||
Estimated loss rates are determined through an analysis of historical losses for each segment of the loan portfolio, based on the Company's prior experience with such loans. The following provides brief definitions for credit risk grade ratings assigned to loans in the portfolio: | ||
• | Pass – credits that have strong credit quality with adequate collateral or secondary source of repayment and little existing or known weaknesses. However, pass may include credits with exposure to certain potential factors that may adversely impact the credit, if they materialize, resulting in these credits being put on a watch list to monitor more closely than other pass rated credits. Such factors may be credit / relationship specific or general to an entire industry. | |
• | Special Mention – credits that have potential weaknesses that deserve management's close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit at some future date. | |
• | Substandard – credits that have a defined weakness or weaknesses which may jeopardize the orderly liquidation of the loan through cash flows, making it likely that repayment may have to come from some other source, such as the liquidation of collateral. The Company is more likely to incur losses on substandard credits if the weakness or weaknesses identified in the credit are not corrected. | |
• | Doubtful – credits that possess the characteristics of a substandard credit, but because of certain existing deficiencies related to the credit, full collection is highly questionable. The probability of incurring some loss on such credits is high, but because of certain important and reasonably specific pending factors which may work to The advantage of strengthening the credit, charge-off is deferred until such time the Company becomes reasonably certain that certain pending factors related to the credit will no longer provide some form of benefit. | |
The second component of the general reserve allocation of the ALLL is the qualitative allocation, and is determined by estimates the Company makes in regard to certain internal and external factors that may have either a positive or negative impact on the overall losses inherent in the loan portfolio. Internal factors include trends in credit quality of the loan portfolio, the existence and the effects of concentrations, the composition and volume of the loan portfolio and the scope and frequency of the loan review process as well as any other factor determined by management to have an impact on the credit quality of the loan portfolio. External factors include local, state and national economic and business conditions. While management regularly reviews the estimated impact these internal and external factors are expected to have on the loan portfolio, there can be no assurance that an adverse change in any one or combination of these factors will not be in excess of management's expectations. | ||
Specific Loan Reserves – The specific reserve component of the ALLL is determined through the measurement of impairment on certain loans that have been identified as impaired during each reporting period. | ||
A comprehensive analysis is performed at the time a loan is deemed impaired, which includes obtaining updated financial information regarding the borrower, obtaining updated appraisals on any collateral securing the loan and ultimately determining the extent to which the loan is impaired. In measuring the fair value of the collateral, management uses assumptions and methodologies consistent with those that would be utilized by third party valuation experts. Once the amount of impairment on specific impaired loans has been determined, the Company establishes a corresponding valuation allowance which then becomes a component of the Company's specific loan reserve in the ALLL. | ||
In certain instances the Company may work with the borrower to modify the terms of the loan agreement or otherwise restructure the loan in a way that would allow the borrower to continue to perform under the modified terms of the loan agreement. In those instances where modifications are made to loans, for which the borrower is experiencing financial difficulty and the Company has granted the borrower a concession that it would not have otherwise considered, the modifications constitute a TDR. Concessions may include a reduction in the contractual rate of interest, extension payments or maturity, and/or a combination of other actions designed to maximize collection efforts. The Company's policy for monitoring loan modifications for potential TDRs is focused on loans risk graded as special mention, substandard or doubtful. TDRs are considered impaired loans and require the Company to measure the amount of impairment, if any, and establish an ALLL for the loan at the time the loan is restructured. | ||
Impaired Loans | ||
A loan is identified as impaired when, based on all available information, the loan is no longer performing according to the original contractual terms of the loan agreement. The Company performs a review of all significant problem loans. If based on this review it is determined that the loan is impaired, the Company obtains updated appraisal information on the underlying collateral for collateral dependent loans and updated cash-flow information if the loan is unsecured or primarily dependent on future operating or other cash flows. Once the updated financial information is obtained and analyzed by management, a valuation allowance, if necessary, is established against the loan or a loss is recognized by a charge to the ALLL. Therefore, at the time a loan is considered impaired a valuation allowance typically has already been established or balances deemed uncollectable have been charged-off. | ||
When a borrower discontinues making payments according to the original contractual terms of the loan agreement, the Company must determine if it is appropriate to continue the accrual of interest on the loan. Generally, the Company places loans on non-accrual status and ceases the recognition of interest income when a loan has become delinquent 90 days or more, and/or when management believes the collection of all contractually required amounts is unlikely. Therefore, the Company generally places impaired loans on non-accrual status due to doubt surrounding the ultimate collection of contractual amounts due. | ||
Loans typically move to non-accrual status from the Company's substandard risk grade. When a loan is first classified as substandard, the Company performs a review of the loan in order to determine if the loan is impaired. If upon a loan's migration to non-accruing status, the financial information on the borrower previously obtained while the loan was classified as substandard is deemed to be outdated, the Company typically orders new appraisals on underlying collateral or obtains the most recent cash-flow information in order to have the most current indication of fair value. For collateral dependent loans, if a complete appraisal is expected to take a significant amount of time to complete, the Company may also rely on a broker's price opinion or other meaningful market data, such as comparable sales, in order to derive its best estimate of a property's fair value, while waiting for an appraisal at the time of the decision to classify the loan as substandard and/or non-accruing. | ||
An analysis of the underlying collateral is performed for loans on non-accrual status at least quarterly and new appraisals are typically received at least annually. Corresponding changes in any related valuation allowance are made or balances deemed to be fully uncollectable are charged-off. Cash-flow information for impaired loans dependent primarily on future operating or other cash-flows are updated quarterly as well, with subsequent shortfalls resulting in valuation allowance adjustments. | ||
In those cases where management has determined that it is in the best interest of the Bank to attempt to broker a troubled loan rather than to continue to hold it in its portfolio, additional charge-offs may be realized as distressed loan buyers that typically purchase these types of loans tend to require a higher rate of return than would be built into the Company's traditional hold to maturity model, resulting in the sales price for these loans being less than the adjusted carrying cost. | ||
Loan Charge-offs | Loan Charge-offs | |
The Company typically moves to charge-off loan balances when the loan becomes 90 days past due, unless it is well secured and in the process of collection. The Company may also move to charge-off a loan when based on various evidence, it believes those balances are no longer collectable. Evidence may include updated information related to a borrower's financial condition or updated information related to collateral securing the loan. If a loan's credit quality deteriorates to the point that collection of principal through traditional means is believed by management to be doubtful, and management determines there is value in the collateral securing the loan through obtaining periodic appraisals, the Company generally takes steps to protect and liquidate the collateral. | ||
Any loss resulting from the difference between the Company's recorded investment in the loan and the fair market value of the collateral obtained through repossession is recognized by a charge to the ALLL. For most real estate and commercial loans, the Company generally recognizes a charge-off to bring the carrying balance of the loan down to the estimated fair value of the underlying collateral or some other determination of fair value when: (i) management determines that the asset is no longer collectable, (ii) repayment prospects for the credit have become unclear and/or are likely to occur over a time-frame the Company deems to be no longer reasonable, (iii) the loan or portion of the loan has been deemed a loss by the Company's internal review and/or independent review functions, or has been deemed a loss by regulatory examiners, (iv) the borrower has or is in the process of filing for bankruptcy. The Company's charge-off policy is consistently applied to all portfolio segments. | ||
The Company may defer charge-off on a loan, due to certain factors the Company has identified that may work to its benefit in minimizing potential losses. Those factors may include: working with the borrower to restructure the loan in an effort to bring about a more favorable outcome, the identification of an additional source of repayment, sufficient collateral to cover the Company's recorded investment in the loan, or any other identified factor that may work to strengthen the credit and reduce the potential for loss. | ||
Appraisals for Loans Secured by Real Estate Collateral | Appraisals for Loans Secured by Real Estate Collateral | |
For loan commitments greater than $0.5 million and a remaining term greater than one year at the loan's anniversary date, the Bank has a policy to perform an annual review of the borrower's financial condition and of any real estate securing the loan. This review includes, among other things, a physical inspection of the real estate securing the loan, an analysis of any related rent rolls, an analysis of all borrower and guarantor tax returns and financial statements. This information is used internally by the Bank to validate all covenants and the risk grade assigned to the loan. If during the review process the Bank learns of additional information that would suggest that the borrower's ability to repay has deteriorated since the original underwriting of the loan, and repayment may now be dependent on liquidation of the collateral, an additional independent appraisal of the collateral is requested. If based on the updated appraisal information it is determined the value of the collateral is impaired and the Bank no longer expects to collect all previously determined amounts related to the loan as stipulated in the loan's original agreement, the Bank typically moves to establish a valuation allowance for the loan or charge-off such differences. | ||
In general, once a loan is deemed to be impaired and/or the loan was downgraded to substandard status, the loan becomes the responsibility of the Bank's Special Assets department, which provides more diligent oversight of problem credits. This oversight includes, among other things, a review of all previous appraisals of collateral securing such loans and determining in the Bank's best judgment if those appraisals still represent the current fair value of the loan. Additional appraisals may be ordered at this time and annually thereafter, if deemed necessary. | ||
Reserve for Off-Balance Sheet Loan Commitments | Reserve for Off-Balance Sheet Loan Commitments | |
The Company has exposure to losses from unfunded loan commitments and letters of credit. Since the funds have not been disbursed on these commitments, they are not reported as loans outstanding. Estimated losses related to these commitments are not included in the allowance for loan losses reported in Note 5. Loans and the Allowance for Loan and Lease Losses, of these Consolidated Financial Statements. Instead they are accounted for as a separate loss contingency reserve within other liabilities on the Company's Consolidated Balance Sheets and related adjustments to this reserve are as a charge to earnings included in other non-interest expense on the Consolidated Statements of Income. Losses are experienced when the Company is contractually obligated to make a payment under these instruments and must seek repayment from a party that may not be as financially sound in the current period as it was when the commitment was originally made. | ||
Premises and Equipment | Premises and Equipment | |
Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives, which range from three to ten years for furniture and fixtures and thirty years for buildings. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the remaining lease term, whichever is shorter. Expenditures for improvements or major repairs are capitalized and those for ordinary repairs and maintenance are charged to expense as incurred. | ||
Income Taxes | Income Taxes | |
Income taxes reported in the Consolidated Financial Statements are computed based on an asset and liability approach. We recognize the amount of taxes payable or refundable for the current year, and deferred tax assets and liabilities for the future tax consequences that have been recognized in the financial statement or tax returns. The measurement of tax assets and liabilities is based on the provisions of enacted tax laws. The Company files consolidated federal and combined state income tax returns. A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. | ||
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Interest expense and penalties associated with unrecognized tax benefits, if any, are classified as income tax expense in the consolidated statements of operations. Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. In making the determination whether a deferred tax asset is more likely than not to be realized, management performs a quarterly evaluation of all available positive and negative evidence including the possibility of future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial results. A deferred tax asset valuation allowance is established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not that all or some portion of the deferred tax asset will not be realized. See also Note 7. Income Taxes, of these Consolidated Financial Statements for additional information related to deferred income taxes. | ||
Bank Owned Life Insurance | Bank Owned Life Insurance | |
The Company has purchased life insurance policies on certain employees. These Bank Owned Life Insurance ("BOLI") policies are recorded in the consolidated balance sheets at their cash surrender value. Income and expense from these policies and changes in the cash surrender value are recorded in non-interest income and non-interest expense in the consolidated statements of income. | ||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | |
Intangible assets are comprised of goodwill, core deposit intangibles and other identifiable intangibles acquired in business combinations. Intangible assets with definite useful lives are amortized over their respective estimated useful lives. If an event occurs that indicates the carrying amount of an intangible asset may not be recoverable, management reviews the asset for impairment. Any goodwill and any intangible asset acquired in a purchase business combination determined to have an indefinite useful life is not amortized, but is at least annually evaluated for impairment. | ||
The Company applies a qualitative analysis of conditions that might indicate that impairment of goodwill is more likely than not to have occurred. In the event that the qualitative analysis suggests that an impairment may have occurred, the Company, with the assistance of an independent third party valuation firm, uses several quantitative valuation methodologies in evaluating goodwill for impairment including a discounted cash flow approach that includes assumptions made concerning the future earnings potential of the organization, and a market-based approach that looks at values for organizations of comparable size, structure and business model. The current year's review of qualitative factors did not indicate that impairment has occurred, as such no quantitative analysis was performed at December 31, 2014. | ||
Other Real Estate Owned | Other Real Estate Owned | |
Real estate and other property acquired in full or partial settlement of loan obligations is referred to as other real estate owned ("OREO"). OREO is originally recorded in the Company's Consolidated Financial Statements at fair value less any estimated costs to sell. When property is acquired through foreclosure or surrendered in lieu of foreclosure, the Company measures the fair value of the property acquired against its recorded investment in the loan. If the fair value of the property at the time of acquisition is less than the recorded investment in the loan, the difference is charged to the allowance for loan losses. Any subsequent declines in the fair value of OREO are recorded against a valuation allowance for foreclosed assets, established through a charge to non-interest expense. All related operating or maintenance costs are charged to non-interest expense as incurred. Any subsequent gains or losses on the sale of OREO are recorded in other income. | ||
Federal Home Loan Bank ("FHLB") Borrowings | Federal Home Loan Bank Borrowings | |
The Company may borrow from the FHLB at competitive rates, which typically approximate the London Inter-Bank Offered Rate ("LIBOR") for the equivalent term because they are secured with investments in high quality loans. Interest is accrued on a monthly basis based on the outstanding borrowing's interest rate and is included in interest expense on other borrowings. | ||
Salary Continuation Plan Agreements | Salary Continuation Plan Agreements | |
The Company has entered into salary continuation plan agreements with certain executive and senior officers. The measurement of the liability under these agreements is estimated using a discounted cash flow model, which includes estimates involving the length of time before retirement, estimated long-term discount rates based on the Bank's long-term borrowing rates at the time the agreement is executed, and expected benefit levels. Should these estimates vary substantially from actual events, the level of expense recognized in the future to provide these benefits could materially vary. | ||
Comprehensive Income | Comprehensive Income | |
Changes in the unrealized gain (loss) on available for sale securities net of income taxes was the only component of accumulated other comprehensive income for the Company for the years ended December 31, 2014, 2013 and 2012. | ||
Share-Based Compensation | Share-Based Compensation | |
The Company grants incentive and non-qualified stock options, as well as restricted stock to directors and employees as a form of compensation. U.S. GAAP requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based forms of compensation issued to employees over the employees' requisite service period (generally the vesting period). The Company uses a straight-line method for the recognition of all share-based compensation expense. | ||
The amount of compensation expense to be recognized for options is based on the fair value of the options, utilizing a Black-Scholes option pricing model, at the date of the grant. The fair value for option grants is estimated based on the length of their term, the volatility of the stock price in past periods, and other factors. See also Note 12. Share-Based Compensation Plans, of these Consolidated Financial Statements for additional information related to share-based compensation. | ||
A valuation model is not used for pricing restricted stock because the value is based on the closing price of the Company's stock on the grant date. The amount of expense to be recognized for restricted stock grants is calculated as the number of shares granted multiplied by the stock price. The employee receives any dividends paid on the stock from the time of grant, but receives the restricted stock only when the vesting period has lapsed. | ||
Earnings Per Share | Earnings Per Share | |
Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of common and participating preferred shares outstanding for the reporting period, including the Series C Preferred Stock. In periods when the Company generates a net loss, preferred shares are not included in the calculation of basic loss per share. Diluted earnings per common share are computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding over the reporting period, adjusted to include the effect of potentially dilutive common shares. Potentially dilutive common shares are calculated using the treasury stock method and include incremental shares issuable upon exercise of outstanding stock options, other share-based compensation awards and any other security in which its conversion or exercise may result in the issuance of common stock, such as the warrant the Company issued to the U.S. Treasury during 2009, which was repurchased and cancelled in August 2013. The computation of diluted earnings per common share excludes the impacts of the assumed exercise or issuance of securities that would have an anti-dilutive effect, which can occur when the Company reports a net loss or when the market price for the Company's stock falls below the exercise price of equity awards issued by the Company. | ||
Loss Contingencies | Loss Contingencies | |
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Legal costs incurred to defend such matters are expensed as incurred. Management does not believe there are any such matters that will have a material effect on the Consolidated Financial Statements. | ||
Business_Combination_Tables
Business Combination (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Business Combination | ||||||||
Summary of acquired assets and liabilities assumed | ||||||||
February 28, 2014 | ||||||||
(dollars in thousands) | ||||||||
Assets acquired | ||||||||
Cash and due from banks | $ | 3,212 | ||||||
Interest earning deposits in other banks | 34,386 | |||||||
Securities available for sale | 76,159 | |||||||
Loans held for sale | 338 | |||||||
Loans and leases receivable | 280,316 | |||||||
Premises and equipment | 15,718 | |||||||
Deferred tax assets, net | 11,774 | |||||||
Goodwill | 13,648 | |||||||
Core deposit intangible asset | 5,060 | |||||||
Bank owned life insurance | 8,263 | |||||||
Other assets | 4,810 | |||||||
| | | | | ||||
Total assets acquired | $ | 453,684 | ||||||
| | | | | ||||
Liabilities assumed | ||||||||
Deposits | $ | 371,501 | ||||||
Advances from Federal Home Loan Bank | 6,071 | |||||||
Junior subordinated debentures | 4,804 | |||||||
Other liabilities | 2,346 | |||||||
| | | | | ||||
Total liabilities assumed | $ | 384,722 | ||||||
| | | | | ||||
Total consideration paid | $ | 68,962 | ||||||
| | | | | ||||
Summary of consideration paid for MISN | ||||||||
February 28, 2014 | ||||||||
(dollars in thousands) | ||||||||
Consideration paid | ||||||||
Cash payments for MISN shares outstanding | $ | 2,554 | ||||||
Cash payments for MISN warrants | 5,766 | |||||||
Cash payments for MISN options | 387 | |||||||
Shares issued, @ $7.99 per share | 60,255 | |||||||
| | | | | ||||
Total consideration | $ | 68,962 | ||||||
| | | | | ||||
Schedule of unaudited pro forma financial information | ||||||||
For The Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
(dollars in thousands except per share data) | ||||||||
Net interest income | $ | 61,185 | $ | 59,269 | ||||
Provision for loan and lease losses | – | 310 | ||||||
Non-interest income | 10,189 | 14,755 | ||||||
Non-interest expense | 58,227 | 54,461 | ||||||
| | | | | | | | |
Income before income taxes | 13,147 | 19,253 | ||||||
Income tax expense | 4,553 | 7,552 | ||||||
| | | | | | | | |
Net income | $ | 8,594 | $ | 11,701 | ||||
| | | | | | | | |
Earnings Per Common Share | ||||||||
Basic | $ | 0.25 | $ | 0.33 | ||||
Diluted | $ | 0.25 | $ | 0.33 | ||||
Fair_Value_of_Assets_and_Liabi1
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value of Assets and Liabilities | |||||||||||||||||
Summary of the financial instruments the Company measures at fair value on a recurring basis | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Obligations of U.S. government agencies | $ | 19,664 | $ | – | $ | 19,664 | $ | – | |||||||||
Mortgage backed securities | |||||||||||||||||
U.S government sponsored entities and agencies | 215,398 | – | 215,398 | – | |||||||||||||
Non-agency | 11,901 | – | 11,901 | – | |||||||||||||
State and municipal securities | 82,592 | – | 82,592 | – | |||||||||||||
Asset backed securities | 26,025 | – | 26,025 | – | |||||||||||||
| | | | | | | | | | | | | | ||||
Total assets measured on a recurring basis | $ | 355,580 | $ | – | $ | 355,580 | $ | – | |||||||||
| | | | | | | | | | | | | | ||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | ||||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Obligations of U.S. government agencies | $ | 6,208 | $ | – | $ | 6,208 | $ | – | |||||||||
Mortgage backed securities | |||||||||||||||||
U.S government sponsored entities and agencies | 182,931 | – | 182,931 | – | |||||||||||||
Non-agency | 11,032 | – | 11,032 | – | |||||||||||||
State and municipal securities | 50,030 | – | 50,030 | – | |||||||||||||
Asset backed securities | 26,594 | – | 26,594 | – | |||||||||||||
| | | | | | | | | | | | | | ||||
Total assets measured on a recurring basis | $ | 276,795 | $ | – | $ | 276,795 | $ | – | |||||||||
| | | | | | | | | | | | | | ||||
Summary of assets the Company measures at fair value on a non-recurring basis | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | Year To | |||||||||||||
Active Markets for | Observable | Unobservable | Date Losses | ||||||||||||||
Identical Assets | Inputs | Inputs | (Recoveries) | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Impaired loans | |||||||||||||||||
Commercial real estate | $ | 1,325 | $ | – | $ | – | $ | 1,325 | $ | 1,026 | |||||||
Land | 3,261 | – | – | 3,261 | (946 | ) | |||||||||||
| | | | | | | | | | | | | | | | | |
Total assets measured on a non-recurring basis | $ | 4,586 | $ | – | $ | – | $ | 4,586 | $ | 80 | |||||||
| | | | | | | | | | | | | | | | | |
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Assets At | |||||||||||||||||
Fair Value | Quoted Prices in | Significant Other | Significant | Year To | |||||||||||||
Active Markets for | Observable | Unobservable | Date Losses | ||||||||||||||
Identical Assets | Inputs | Inputs | (Recoveries) | ||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Impaired loans | |||||||||||||||||
Land | $ | 4,170 | $ | – | $ | – | $ | 4,170 | $ | (1,270 | ) | ||||||
| | | | | | | | | | | | | | | | | |
Total assets measured on a non-recurring basis | $ | 4,170 | $ | – | $ | – | $ | 4,170 | $ | (1,270 | ) | ||||||
| | | | | | | | | | | | | | | | | |
Summary of the estimated fair value of financial instruments | |||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | |||||||||||||||||
Carrying | |||||||||||||||||
Amount | Quoted Prices in | Significant Other | Significant | Fair Value | |||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 35,580 | $ | 35,580 | $ | – | $ | – | $ | 35,580 | |||||||
Investment securities available for sale | 355,580 | – | 355,580 | – | 355,580 | ||||||||||||
Federal Home Loan Bank stock | 7,853 | – | – | – | N/A | ||||||||||||
Loans receivable, net of deferred fees and costs | 1,192,038 | – | – | 1,196,997 | 1,196,997 | ||||||||||||
Loans held for sale | 2,586 | – | 2,586 | – | 2,586 | ||||||||||||
Accrued interest receivable | 5,659 | – | 2,038 | 3,621 | 5,659 | ||||||||||||
Liabilities | |||||||||||||||||
Non-interest bearing deposits | 461,479 | 461,479 | – | – | 461,479 | ||||||||||||
Interest bearing deposits | 933,325 | – | 936,151 | – | 936,151 | ||||||||||||
Federal Home Loan Bank advances | 95,558 | – | 96,679 | – | 96,679 | ||||||||||||
Junior subordinated debentures | 13,233 | – | – | 9,297 | 9,297 | ||||||||||||
Accrued interest payable | 401 | – | 401 | – | 401 | ||||||||||||
Fair Value Measurements Using | |||||||||||||||||
As of | |||||||||||||||||
December 31, | |||||||||||||||||
2013 | |||||||||||||||||
Carrying | |||||||||||||||||
Amount | Quoted Prices in | Significant Other | Significant | Fair Value | |||||||||||||
Active Markets for | Observable | Unobservable | |||||||||||||||
Identical Assets | Inputs | Inputs | |||||||||||||||
(Level 1) | Level 2) | (Level 3) | |||||||||||||||
(dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | 26,238 | $ | 26,238 | $ | – | $ | – | $ | 26,238 | |||||||
Investment securities available for sale | 276,795 | – | 276,795 | – | 276,795 | ||||||||||||
Federal Home Loan Bank stock | 4,739 | – | – | – | N/A | ||||||||||||
Loans receivable, net of deferred fees and costs | 826,203 | – | – | 827,105 | 827,105 | ||||||||||||
Loans held for sale | 2,386 | – | 2,386 | – | 2,386 | ||||||||||||
Accrued interest receivable | 4,027 | – | 1,397 | 2,630 | 4,027 | ||||||||||||
Liabilities | |||||||||||||||||
Non interest-bearing deposits | 291,856 | 291,856 | – | – | 291,856 | ||||||||||||
Interest-bearing deposits | 682,039 | – | 684,345 | – | 684,345 | ||||||||||||
Federal Home Loan Bank advances | 88,500 | – | 86,990 | – | 86,990 | ||||||||||||
Junior subordinated debentures | 8,248 | – | – | 7,595 | 7,595 | ||||||||||||
Accrued interest payable | 239 | – | 239 | – | 239 | ||||||||||||
Summary of off-balance sheet instruments | |||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Notional | Cost to Cede | Notional | Cost to Cede | ||||||||||||||
Amount | or Assume | Amount | or Assume | ||||||||||||||
(dollars in thousands) | |||||||||||||||||
Off-balance sheet instruments, commitments to extend credit and standby letters of credit | $ | 253,275 | $ | 2,533 | $ | 198,481 | $ | 1,985 | |||||||||
Investment_Securities_Tables
Investment Securities (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Investment Securities | ||||||||||||||||||||
Schedule of amortized cost and fair values of the Company's investment securities, all of which are reported as available for sale | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 19,562 | $ | 191 | $ | (89 | ) | $ | 19,664 | |||||||||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 216,492 | 1,092 | (2,186 | ) | 215,398 | |||||||||||||||
Non-agency | 11,891 | 21 | (11 | ) | 11,901 | |||||||||||||||
State and municipal securities | 79,810 | 2,843 | (61 | ) | 82,592 | |||||||||||||||
Asset backed securities | 26,216 | – | (191 | ) | 26,025 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total available for sale securities | $ | 353,971 | $ | 4,147 | $ | (2,538 | ) | $ | 355,580 | |||||||||||
| | | | | | | | | | | | | | |||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Fair Value | |||||||||||||||||
Cost | Unrealized | Unrealized | ||||||||||||||||||
Gains | Losses | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 6,243 | $ | 11 | $ | (46 | ) | $ | 6,208 | |||||||||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 186,981 | 342 | (4,392 | ) | 182,931 | |||||||||||||||
Non-agency | 10,924 | 156 | (48 | ) | 11,032 | |||||||||||||||
State and municipal securities | 51,532 | 269 | (1,771 | ) | 50,030 | |||||||||||||||
Asset backed securities | 26,935 | – | (341 | ) | 26,594 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total available for sale securities | $ | 282,615 | $ | 778 | $ | (6,598 | ) | $ | 276,795 | |||||||||||
| | | | | | | | | | | | | | |||||||
Summary of investment securities in an unrealized loss position | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 2,795 | $ | (17 | ) | $ | 2,607 | $ | (72 | ) | $ | 5,402 | $ | (89 | ) | |||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 50,583 | (670 | ) | 58,753 | (1,516 | ) | 109,336 | (2,186 | ) | |||||||||||
Non-agency | 3,000 | (7 | ) | 507 | (4 | ) | 3,507 | (11 | ) | |||||||||||
State and municipal securities | 5,899 | (47 | ) | 2,245 | (14 | ) | 8,144 | (61 | ) | |||||||||||
Asset backed securities | – | – | 17,153 | (191 | ) | 17,153 | (191 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 62,277 | $ | (741 | ) | $ | 81,265 | $ | (1,797 | ) | $ | 143,542 | $ | (2,538 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 2,773 | $ | (45 | ) | $ | 40 | $ | (1 | ) | $ | 2,813 | $ | (46 | ) | |||||
Mortgage backed securities | ||||||||||||||||||||
U.S. government sponsored entities and agencies | 118,554 | (3,140 | ) | 18,863 | (1,252 | ) | 137,417 | (4,392 | ) | |||||||||||
Non-agency | 3,210 | (48 | ) | – | – | 3,210 | (48 | ) | ||||||||||||
State and municipal securities | 32,967 | (1,675 | ) | 2,458 | (96 | ) | 35,425 | (1,771 | ) | |||||||||||
Asset backed securities | 7,978 | (246 | ) | 9,747 | (95 | ) | 17,725 | (341 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 165,482 | $ | (5,154 | ) | $ | 31,108 | $ | (1,444 | ) | $ | 196,590 | $ | (6,598 | ) | |||||
| | | | | | | | | | | | | | | | | | | | |
Schedule of proceeds from the sales and calls of securities and the associated gains and losses | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Proceeds | $ | 129,074 | $ | 161,765 | $ | 141,166 | ||||||||||||||
Gross gains | 1,050 | 5,599 | 3,152 | |||||||||||||||||
Gross losses | (404 | ) | (1,673 | ) | (533 | ) | ||||||||||||||
Schedule of amortized cost and fair values maturities of available for sale investment securities | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Amortized | Fair Value | Amortized | Fair Value | |||||||||||||||||
Cost | Cost | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Due one year or less | $ | 38,674 | $ | 38,587 | $ | 29,282 | $ | 28,999 | ||||||||||||
Due after one year through five years | 113,081 | 112,926 | 90,023 | 88,760 | ||||||||||||||||
Due after five years through ten years | 137,909 | 140,115 | 100,191 | 97,752 | ||||||||||||||||
Due after ten years | 64,307 | 63,952 | 63,119 | 61,284 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total | $ | 353,971 | $ | 355,580 | $ | 282,615 | $ | 276,795 | ||||||||||||
| | | | | | | | | | | | | | |||||||
Summary of earnings on both taxable and tax-exempt investment securities | ||||||||||||||||||||
For the years ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Taxable earnings on investment securities | ||||||||||||||||||||
Obligations of U.S. government agencies | $ | 348 | $ | 106 | $ | 105 | ||||||||||||||
Mortgage backed securities | 4,433 | 3,441 | 3,776 | |||||||||||||||||
State and municipal securities | 85 | 5 | 191 | |||||||||||||||||
Corporate debt securities | 6 | – | 631 | |||||||||||||||||
Asset backed securities | 353 | 427 | 241 | |||||||||||||||||
Non-taxable earnings on investment securities | ||||||||||||||||||||
State and municipal securities | 2,013 | 1,497 | 1,952 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total | $ | 7,238 | $ | 5,476 | $ | 6,896 | ||||||||||||||
| | | | | | | | | | | ||||||||||
Loans_and_Allowance_for_Loan_a1
Loans and Allowance for Loan and Lease Losses (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Loans and Allowance for Loan and Lease Losses | ||||||||||||||||||||
Summary of outstanding loan balances | ||||||||||||||||||||
December 31, 2014 | December 31, | |||||||||||||||||||
2013 | ||||||||||||||||||||
Non-PCI | PCI | Total Loans | Non-PCI | |||||||||||||||||
Loans | Loans | Receivable | Loans | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Multi-family residential | $ | 78,645 | $ | – | $ | 78,645 | $ | 31,140 | ||||||||||||
Residential 1 to 4 family | 126,640 | 561 | 127,201 | 88,904 | ||||||||||||||||
Home equity lines of credit | 38,252 | – | 38,252 | 31,178 | ||||||||||||||||
Commercial | 584,056 | 4,416 | 588,472 | 432,203 | ||||||||||||||||
Farmland | 96,708 | 1,665 | 98,373 | 50,414 | ||||||||||||||||
Land | 19,316 | 851 | 20,167 | 24,523 | ||||||||||||||||
Construction | 24,493 | – | 24,493 | 13,699 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total real estate secured | 968,110 | 7,493 | 975,603 | 672,061 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 153,403 | 1,384 | 154,787 | 119,121 | ||||||||||||||||
Agriculture | 53,678 | 1,423 | 55,101 | 32,686 | ||||||||||||||||
Other | 14 | – | 14 | 38 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total commercial | 207,095 | 2,807 | 209,902 | 151,845 | ||||||||||||||||
Installment | 7,723 | – | 7,723 | 3,246 | ||||||||||||||||
Overdrafts | 255 | – | 255 | 332 | ||||||||||||||||
| | | | | | | | | | | | | | |||||||
Total gross loans held for investment | 1,183,183 | 10,300 | 1,193,483 | 827,484 | ||||||||||||||||
Net deferred loan fees | (1,445 | ) | – | (1,445 | ) | (1,281 | ) | |||||||||||||
Allowance for loan and lease losses | (16,802 | ) | – | (16,802 | ) | (17,859 | ) | |||||||||||||
| | | | | | | | | | | | | | |||||||
Total net loans held for investment | $ | 1,164,936 | $ | 10,300 | $ | 1,175,236 | $ | 808,344 | ||||||||||||
| | | | | | | | | | | | | | |||||||
Loans held for sale | $ | 2,586 | $ | – | $ | 2,586 | $ | 2,386 | ||||||||||||
Schedule of carrying amount and unpaid principal balance of purchased credit impaired loans | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Unpaid Principal | Carrying | |||||||||||||||||||
Balance | Amount | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 886 | $ | 561 | ||||||||||||||||
Commercial | 6,109 | 4,416 | ||||||||||||||||||
Farmland | 2,027 | 1,665 | ||||||||||||||||||
Land | 993 | 851 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total real estate secured | 10,015 | 7,493 | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,883 | 1,384 | ||||||||||||||||||
Agriculture | 1,492 | 1,423 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total commercial | 3,375 | 2,807 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total PCI loans | $ | 13,390 | $ | 10,300 | ||||||||||||||||
| | | | | | | | |||||||||||||
Schedule of purchased credit impaired loans with probability at acquisition that not all contractually required payments would be collected | ||||||||||||||||||||
February 28, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Contractually required payments including interest | $ | 19,827 | ||||||||||||||||||
Nonaccretable difference | (2,320 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Cash flows expected to be collected | 17,507 | |||||||||||||||||||
Accretable difference | (4,673 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Fair value at acquisition | $ | 12,834 | ||||||||||||||||||
Schedule of accretable yield, or income expected to be collected | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Balance, January 1, 2014 | $ | – | ||||||||||||||||||
New loans purchased (1) | 4,673 | |||||||||||||||||||
Accretion of income | (1,362 | ) | ||||||||||||||||||
Reclassifications from nonaccretable difference | 1,063 | |||||||||||||||||||
| | | | | ||||||||||||||||
Balance, December 31, 2014 | $ | 4,374 | ||||||||||||||||||
-1 | Attributable to the acquisition of MISN on February 28, 2014. | |||||||||||||||||||
Summary of the recorded investment in non-PCI and PCI impaired loans | ||||||||||||||||||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 260 | $ | 383 | $ | – | $ | 349 | $ | 18 | ||||||||||
Home equity lines of credit | 258 | 340 | – | 258 | – | |||||||||||||||
Commercial | 4,000 | 6,255 | – | 3,814 | 132 | |||||||||||||||
Farmland | 283 | 282 | – | 291 | 16 | |||||||||||||||
Construction | – | – | – | 190 | 10 | |||||||||||||||
Land | 1,470 | 2,355 | – | 2,000 | 125 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2,875 | 3,967 | – | 3,994 | 162 | |||||||||||||||
Agriculture | 720 | 760 | – | 724 | – | |||||||||||||||
Installment | 112 | 201 | – | 117 | 4 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | 9,978 | 14,543 | – | 11,737 | 467 | |||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | – | – | – | |||||||||||||||
Home equity lines of credit | – | – | – | – | – | |||||||||||||||
Commercial | 498 | 688 | 148 | 502 | – | |||||||||||||||
Land | 4,876 | 8,499 | 1,472 | 5,268 | 3 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,043 | 1,054 | 151 | 1,272 | 64 | |||||||||||||||
Agriculture | – | – | – | – | – | |||||||||||||||
Installment | – | – | – | – | – | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | 6,417 | 10,241 | 1,771 | 7,042 | 67 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total non-PCI impaired loans | $ | 16,395 | $ | 24,784 | $ | 1,771 | $ | 18,779 | $ | 534 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment (1) | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 564 | $ | 886 | $ | – | $ | 580 | $ | 43 | ||||||||||
Home equity lines of credit | – | – | – | 61 | 21 | |||||||||||||||
Commercial | 4,432 | 6,109 | – | 4,978 | 673 | |||||||||||||||
Farmland | 1,673 | 2,027 | – | 1,698 | 98 | |||||||||||||||
Land | 853 | 993 | – | 921 | 69 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,388 | 1,883 | – | 2,089 | 366 | |||||||||||||||
Agriculture | 1,431 | 1,492 | – | 1,326 | 92 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total PCI loans | $ | 10,341 | $ | 13,390 | $ | – | $ | 11,653 | $ | 1,362 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
-1 | Recorded investment in PCI loans includes accrued interest receivable. | |||||||||||||||||||
For the Year Ended December 31, 2013 | ||||||||||||||||||||
Recorded | Unpaid | Specific | Average | Interest | ||||||||||||||||
Investment | Principal | Allowance for | Recorded | Income | ||||||||||||||||
Balance | Impaired Loans | Investment | Recognized | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 944 | $ | 1,102 | $ | – | $ | 870 | $ | 16 | ||||||||||
Home equity lines of credit | – | – | – | 28 | – | |||||||||||||||
Commercial | 901 | 1,646 | – | 775 | 5 | |||||||||||||||
Land | 1,221 | 1,948 | – | 1,320 | 49 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,857 | 2,241 | – | 2,162 | 27 | |||||||||||||||
Agriculture | 789 | 824 | – | 936 | – | |||||||||||||||
Installment loans to individuals | 118 | 190 | – | 68 | – | |||||||||||||||
Total | 5,830 | 7,951 | – | 6,159 | 97 | |||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | – | – | – | |||||||||||||||
Home equity lines of credit | – | – | – | – | – | |||||||||||||||
Commercial | – | – | – | – | – | |||||||||||||||
Land | 6,706 | 10,158 | 2,532 | 6,558 | 44 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3,480 | 3,602 | 623 | 2,522 | 25 | |||||||||||||||
Agriculture | – | – | – | – | – | |||||||||||||||
Installment loans to individuals | – | – | – | – | – | |||||||||||||||
Total | 10,186 | 13,760 | 3,155 | 9,080 | 69 | |||||||||||||||
Total non-PCI impaired loans | $ | 16,016 | $ | 21,711 | $ | 3,155 | $ | 15,239 | $ | 166 | ||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Average | Interest | |||||||||||||||||||
Recorded | Income | |||||||||||||||||||
Investment | Recognized | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Without related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 619 | $ | – | ||||||||||||||||
Home equity lines of credit | 240 | – | ||||||||||||||||||
Commercial | 2,672 | – | ||||||||||||||||||
Farmland | 542 | – | ||||||||||||||||||
Construction | 1,288 | – | ||||||||||||||||||
Land | 1,874 | – | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 794 | 4 | ||||||||||||||||||
Agriculture | 1,615 | – | ||||||||||||||||||
Installment | 2 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 9,646 | 4 | ||||||||||||||||||
With related allowance | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 191 | – | ||||||||||||||||||
Home equity lines of credit | 63 | – | ||||||||||||||||||
Commercial | 179 | – | ||||||||||||||||||
Land | 5,313 | – | ||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3,475 | – | ||||||||||||||||||
Agriculture | 40 | – | ||||||||||||||||||
Installment | 136 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total | 9,397 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total non-PCI impaired loans | $ | 19,043 | $ | 4 | ||||||||||||||||
| | | | | | | | |||||||||||||
Summary of loans classified as TDRs | ||||||||||||||||||||
December 31, 2014 | December 31, 2013 | |||||||||||||||||||
Accrual | Non-accrual | Total | Accrual | Non-accrual | Total | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | $ | 130 | $ | 130 | $ | 260 | $ | 499 | $ | 109 | $ | 608 | ||||||||
Commercial | 2,449 | 78 | 2,527 | 225 | 136 | 361 | ||||||||||||||
Farmland | 283 | – | 283 | – | – | – | ||||||||||||||
Land | 1,109 | 5,149 | 6,258 | 2,010 | 5,883 | 7,893 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2,177 | 1,593 | 3,770 | 3,119 | 903 | 4,022 | ||||||||||||||
Agriculture | 34 | – | 34 | – | 45 | 45 | ||||||||||||||
Installment loans to individuals | 69 | – | 69 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total non-PCI loans | 6,251 | 6,950 | 13,201 | 5,853 | 7,076 | 12,929 | ||||||||||||||
PCI loans (1) | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Commercial | 223 | – | 223 | – | – | – | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 37 | 107 | 144 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total PCI loans | 260 | 107 | 367 | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total TDRs | $ | 6,511 | $ | 7,057 | $ | 13,568 | $ | 5,853 | $ | 7,076 | $ | 12,929 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 | There were no PCI loans at December 31, 2013. | |||||||||||||||||||
Schedule of loan modifications resulted in TDRs for non-PCI and PCI loans | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 1 | $ 39 | $ 39 | |||||||||||||||||
Commercial | 2 | 312 | 312 | |||||||||||||||||
Land | 3 | 444 | 444 | |||||||||||||||||
Construction | 1 | 367 | 367 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 20 | 2,132 | 2,132 | |||||||||||||||||
Agriculture | 1 | 662 | 662 | |||||||||||||||||
Installment | 1 | 73 | 73 | |||||||||||||||||
PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Commercial | 1 | 230 | 230 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 3 | 177 | 177 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 33 | $ 4,436 | $ 4,436 | |||||||||||||||||
| | | | | | | ||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 1 | $ 139 | $ 139 | |||||||||||||||||
Commercial | 2 | 339 | 339 | |||||||||||||||||
Land | 1 | 1,254 | 1,254 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 10 | 2,141 | 2,141 | |||||||||||||||||
Agriculture | 2 | 67 | 67 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 16 | $ 3,940 | $ 3,940 | |||||||||||||||||
| | | | | | | ||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Number of | Pre-Modification | Post-Modification | ||||||||||||||||||
TDRs | Outstanding Recorded | Outstanding Recorded | ||||||||||||||||||
Investment | Investment | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | 3 | $ 563 | $ 563 | |||||||||||||||||
Commercial | 1 | 1,089 | 1,089 | |||||||||||||||||
Land | 3 | 8,433 | 7,063 | |||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 12 | 2,973 | 2,883 | |||||||||||||||||
| | | | | | | ||||||||||||||
Total | 19 | $ 13,058 | $ 11,598 | |||||||||||||||||
| | | | | | | ||||||||||||||
Schedule of loans that were modified as troubled debt restructurings within the twelve months prior to the balance sheet date indicated for which there was a payment default | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Number of | Recorded | Number of | Recorded | Number of | Recorded | |||||||||||||||
TDRs | Investment | TDRs | Investment | TDRs | Investment | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI Loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Residential 1 to 4 family | – | $ | – | 1 | $ | 97 | – | $ | – | |||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 2 | 233 | 3 | 843 | 3 | 254 | ||||||||||||||
Agriculture | – | – | 1 | 18 | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | 2 | $ | 233 | 5 | $ | 958 | 3 | $ | 254 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Summary of the activity in the allowance for loan and lease losses by portfolio segment | ||||||||||||||||||||
For the Year Ended December 31, 2014 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2013 | Losses | 2014 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 3,402 | $ | (29 | ) | $ | 39 | $ | (1,757 | ) | $ | 1,655 | ||||||||
Other real estate secured | 9,283 | (1,119 | ) | 40 | 1,270 | 9,474 | ||||||||||||||
Commercial | 4,781 | (758 | ) | 765 | 337 | 5,125 | ||||||||||||||
Installment | 99 | (8 | ) | 13 | 68 | 172 | ||||||||||||||
All other loans | 32 | – | – | (2 | ) | 30 | ||||||||||||||
Unallocated | 262 | 84 | 346 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 17,859 | $ | (1,914 | ) | $ | 857 | $ | – | $ | 16,802 | |||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2013 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2012 | Losses | 2013 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 4,641 | $ | (34 | ) | $ | 73 | $ | (1,278 | ) | $ | 3,402 | ||||||||
Other real estate secured | 7,147 | (300 | ) | 514 | 1,922 | 9,283 | ||||||||||||||
Commercial | 6,115 | (1,281 | ) | 1,112 | (1,165 | ) | 4,781 | |||||||||||||
Installment | 64 | (411 | ) | 68 | 378 | 99 | ||||||||||||||
All other loans | 38 | – | – | (6 | ) | 32 | ||||||||||||||
Unallocated | 113 | 149 | 262 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 18,118 | $ | (2,026 | ) | $ | 1,767 | $ | – | $ | 17,859 | |||||||||
| | | | | | | | | | | | | | | | | ||||
For the Year Ended December 31, 2012 | ||||||||||||||||||||
Balance | Charge-offs | Recoveries | Provision | Balance | ||||||||||||||||
December 31, | for Loan | December 31, | ||||||||||||||||||
2011 | Losses | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 2,416 | $ | (2,168 | ) | $ | 22 | $ | 4,371 | $ | 4,641 | |||||||||
Other real estate secured | 10,133 | (3,610 | ) | 1,254 | (630 | ) | 7,147 | |||||||||||||
Commercial | 6,549 | (5,134 | ) | 1,054 | 3,646 | 6,115 | ||||||||||||||
Installment | 175 | (184 | ) | 23 | 50 | 64 | ||||||||||||||
All other loans | 41 | (137 | ) | 3 | 131 | 38 | ||||||||||||||
Unallocated | – | 113 | 113 | |||||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total | $ | 19,314 | $ | (11,233 | ) | $ | 2,356 | $ | 7,681 | $ | 18,118 | |||||||||
| | | | | | | | | | | | | | | | | ||||
Schedule of allowance for loan and lease losses and the recorded investment in loans by impairment methodology | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | Recorded Investment in Loans | |||||||||||||||||||
Individually | Collectively | Loans | Individually | Collectively | Loans | |||||||||||||||
Evaluated for | Evaluated for | Acquired with | Evaluated for | Evaluated for | Acquired with | |||||||||||||||
Impairment | Impairment | Deteriorated | Impairment | Impairment | Deteriorated | |||||||||||||||
Credit Quality | Credit Quality | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 1,472 | $ | 183 | $ | – | $ | 6,346 | $ | 12,968 | $ | 853 | ||||||||
Other real estate secured | 148 | 9,326 | – | 5,299 | 943,468 | 6,669 | ||||||||||||||
Commercial | 151 | 4,974 | – | 4,633 | 202,450 | 2,819 | ||||||||||||||
Installment | – | 172 | – | 112 | 7,611 | – | ||||||||||||||
All other loans | – | 30 | – | – | 255 | – | ||||||||||||||
Unallocated | – | 346 | – | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 1,771 | $ | 15,031 | $ | – | $ | 16,390 | $ | 1,166,752 | $ | 10,341 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | Recorded Investment in Loans | |||||||||||||||||||
Individually | Collectively | Loans | Individually | Collectively | Loans | |||||||||||||||
Evaluated for | Evaluated for | Acquired with | Evaluated for | Evaluated for | Acquired with | |||||||||||||||
Impairment | Impairment | Deteriorated | Impairment | Impairment | Deteriorated | |||||||||||||||
Credit Quality | Credit Quality | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Land | $ | 2,532 | $ | 870 | $ | – | $ | 7,696 | $ | 16,827 | $ | – | ||||||||
Other real estate secured | – | 9,283 | – | 1,462 | 646,076 | – | ||||||||||||||
Commercial | 623 | 4,158 | – | 5,291 | 146,554 | – | ||||||||||||||
Installment | – | 99 | – | – | 3,246 | – | ||||||||||||||
All other loans | – | 32 | – | – | 332 | – | ||||||||||||||
Unallocated | – | 262 | – | – | – | – | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 3,155 | $ | 14,704 | $ | – | $ | 14,449 | $ | 813,035 | $ | – | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Schedule of loan portfolio by the Company's internal risk grading system | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Credit Risk Grades | ||||||||||||||||||||
Pass | Special | Substandard | Doubtful | Total | ||||||||||||||||
Mention | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 78,023 | $ | – | $ | 622 | $ | – | $ | 78,645 | ||||||||||
Residential 1 to 4 family | 125,733 | 199 | 708 | – | 126,640 | |||||||||||||||
Home equity lines of credit | 37,638 | – | 614 | – | 38,252 | |||||||||||||||
Commercial | 560,478 | 3,010 | 20,568 | – | 584,056 | |||||||||||||||
Farmland | 92,481 | 2,665 | 1,562 | – | 96,708 | |||||||||||||||
Land | 12,929 | – | 6,387 | – | 19,316 | |||||||||||||||
Construction | 24,493 | – | – | – | 24,493 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 138,202 | 2,943 | 12,104 | 154 | 153,403 | |||||||||||||||
Agriculture | 52,678 | 280 | 720 | – | 53,678 | |||||||||||||||
Other | – | – | 14 | – | 14 | |||||||||||||||
Installment | 7,618 | – | 105 | – | 7,723 | |||||||||||||||
Overdrafts | 255 | – | – | – | 255 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total non-PCI loans | 1,130,528 | 9,097 | 43,404 | 154 | 1,183,183 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | – | – | 561 | – | 561 | |||||||||||||||
Commercial | 126 | 680 | 3,610 | – | 4,416 | |||||||||||||||
Farmland | – | – | 1,665 | – | 1,665 | |||||||||||||||
Land | 294 | – | 557 | – | 851 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 36 | 97 | 1,175 | 76 | 1,384 | |||||||||||||||
Agriculture | – | – | 1,423 | – | 1,423 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total PCI loans | 456 | 777 | 8,991 | 76 | 10,300 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total loans held for investment | $ | 1,130,984 | $ | 9,874 | $ | 52,395 | $ | 230 | $ | 1,193,483 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
December 31, 2013 | ||||||||||||||||||||
Credit Risk Grades | ||||||||||||||||||||
Total | ||||||||||||||||||||
Non-PCI | ||||||||||||||||||||
Pass | Special | Substandard | Doubtful | Loans | ||||||||||||||||
Mention | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 30,560 | $ | – | $ | 580 | $ | – | $ | 31,140 | ||||||||||
Residential 1 to 4 family | 87,350 | 490 | 1,064 | – | 88,904 | |||||||||||||||
Home equity lines of credit | 31,021 | – | 157 | – | 31,178 | |||||||||||||||
Commercial | 414,058 | 3,574 | 14,571 | – | 432,203 | |||||||||||||||
Farmland | 47,988 | 975 | 1,451 | – | 50,414 | |||||||||||||||
Land | 15,244 | 862 | 8,417 | – | 24,523 | |||||||||||||||
Construction | 13,699 | – | – | – | 13,699 | |||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 105,991 | 5,276 | 7,854 | – | 119,121 | |||||||||||||||
Agriculture | 31,279 | 196 | 1,211 | – | 32,686 | |||||||||||||||
Other | 38 | – | – | – | 38 | |||||||||||||||
Installment | 3,050 | 10 | 186 | – | 3,246 | |||||||||||||||
Overdrafts | 332 | – | – | – | 332 | |||||||||||||||
| | | | | | | | | | | | | | | | | ||||
Total loans held for investment | $ | 780,610 | $ | 11,383 | $ | 35,491 | $ | – | $ | 827,484 | ||||||||||
| | | | | | | | | | | | | | | | | ||||
Summary of the aging of loans held for investment | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Days Past Due | ||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ and Still | Non- | Total | |||||||||||||||
Accruing | Accruing | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real Estate Secured | ||||||||||||||||||||
Multi-family residential | $ | 78,645 | $ | – | $ | – | $ | – | $ | – | $ | 78,645 | ||||||||
Residential 1 to 4 family | 126,516 | – | – | – | 124 | 126,640 | ||||||||||||||
Home equity lines of credit | 37,994 | – | – | – | 258 | 38,252 | ||||||||||||||
Commercial | 581,971 | – | – | – | 2,085 | 584,056 | ||||||||||||||
Farmland | 96,708 | – | – | – | – | 96,708 | ||||||||||||||
Land | 14,079 | – | – | – | 5,237 | 19,316 | ||||||||||||||
Construction | 24,493 | – | – | – | – | 24,493 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 151,656 | – | 21 | – | 1,726 | 153,403 | ||||||||||||||
Agriculture | 52,992 | – | – | – | 686 | 53,678 | ||||||||||||||
Other | 14 | – | – | – | – | 14 | ||||||||||||||
Installment | 7,621 | 56 | 3 | – | 43 | 7,723 | ||||||||||||||
Overdrafts | 255 | – | – | – | – | 255 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total non-PCI loans | 1,172,944 | 56 | 24 | – | 10,159 | 1,183,183 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Residential 1 to 4 family | 561 | – | – | – | – | 561 | ||||||||||||||
Commercial | 4,416 | – | – | – | – | 4,416 | ||||||||||||||
Farmland | 1,665 | – | – | – | – | 1,665 | ||||||||||||||
Land | 851 | – | – | – | – | 851 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 1,008 | – | – | – | 376 | 1,384 | ||||||||||||||
Agriculture | 1,423 | – | – | – | – | 1,423 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total PCI loans | 9,924 | – | – | – | 376 | 10,300 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total loans held for | $ | 1,182,868 | $ | 56 | $ | 24 | $ | – | $ | 10,535 | $ | 1,193,483 | ||||||||
investment | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | ||||||||||||||||||||
Days Past Due | ||||||||||||||||||||
Current | 30-59 | 60-89 | 90+ and Still | Non- | Total | |||||||||||||||
Accruing | Accruing | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Non-PCI loans | ||||||||||||||||||||
Real estate secured | ||||||||||||||||||||
Multi-family residential | $ | 31,140 | $ | – | $ | – | $ | – | $ | – | $ | 31,140 | ||||||||
Residential 1 to 4 family | 88,455 | – | – | – | 449 | 88,904 | ||||||||||||||
Home equity lines of credit | 31,178 | – | – | – | – | 31,178 | ||||||||||||||
Commercial | 431,531 | – | – | – | 672 | 432,203 | ||||||||||||||
Farmland | 50,414 | – | – | – | – | 50,414 | ||||||||||||||
Land | 18,613 | – | – | – | 5,910 | 24,523 | ||||||||||||||
Construction | 13,699 | – | – | – | – | 13,699 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | 116,841 | 100 | – | – | 2,180 | 119,121 | ||||||||||||||
Agriculture | 31,897 | – | – | – | 789 | 32,686 | ||||||||||||||
Other | 38 | – | – | – | – | 38 | ||||||||||||||
Installment loans to individuals | 3,127 | – | 2 | – | 117 | 3,246 | ||||||||||||||
Overdrafts | 332 | – | – | – | – | 332 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total loans held for investment | $ | 817,265 | $ | 100 | $ | 2 | $ | – | $ | 10,117 | $ | 827,484 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Property_Premises_and_Equipmen1
Property, Premises and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Premises and Equipment | ||||||||
Schedule of property, premises and equipment | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
(dollars in thousands) | ||||||||
Land | $ | 11,543 | $ | 3,633 | ||||
Furniture and equipment | 5,941 | 5,751 | ||||||
Building and improvements | 26,487 | 15,347 | ||||||
Construction in progress | 784 | 9,018 | ||||||
| | | | | | | | |
Total cost | 44,755 | 33,749 | ||||||
| | | | | | | | |
Less: accumulated depreciation and amortization | 6,935 | 9,529 | ||||||
| | | | | | | | |
Total property, premises and equipment | $ | 37,820 | $ | 24,220 | ||||
| | | | | | | | |
Premises held for sale | 1,978 | |||||||
$ | $ | – | ||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Income Taxes | ||||||||||||||||||||
Summary of Company's net deferred tax asset | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Deferred tax assets | ||||||||||||||||||||
Reserves for loan losses | $ | 8,387 | $ | 8,679 | ||||||||||||||||
Forgone interest on non-accrual loans | 1,424 | 933 | ||||||||||||||||||
Fixed assets | 149 | 411 | ||||||||||||||||||
Accruals | 1,035 | 1,025 | ||||||||||||||||||
Alternative minimum tax credit | 2,125 | 2,855 | ||||||||||||||||||
Deferred income | 2,137 | 2,190 | ||||||||||||||||||
Deferred compensation | 1,703 | 1,603 | ||||||||||||||||||
Net operating loss carryforward | 10,962 | 2,234 | ||||||||||||||||||
Investment securities valuation | – | 2,395 | ||||||||||||||||||
Fair value adjustment for acquired assets and liabilities | 1,436 | – | ||||||||||||||||||
State deferred tax | – | 961 | ||||||||||||||||||
Charitable contributions carryforward | 71 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
29,429 | 23,286 | |||||||||||||||||||
Deferred tax liabilities | ||||||||||||||||||||
Fair value adjustment for acquired assets and liabilities | – | 330 | ||||||||||||||||||
Investment securities valuation | 738 | – | ||||||||||||||||||
Deferred costs, prepaids and FHLB advances | 1,465 | 1,332 | ||||||||||||||||||
State deferred tax | 2,306 | – | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total deferred tax liabilities | 4,509 | 1,662 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Net deferred tax assets | $ | 24,920 | $ | 21,624 | ||||||||||||||||
| | | | | | | | |||||||||||||
Summary for the current and deferred amounts of the Company's income tax provision (benefit) | ||||||||||||||||||||
For The Years Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Current: | ||||||||||||||||||||
Federal | $ | 141 | $ | 1,181 | $ | 3,083 | ||||||||||||||
State | 253 | 368 | 1,264 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total current provision | 394 | 1,549 | 4,347 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Deferred: | ||||||||||||||||||||
Federal | $ | 3,116 | 3,816 | (455 | ) | |||||||||||||||
State | 1,239 | 1,632 | (85 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred provision (benefit) | 4,355 | 5,448 | (540 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Deferred Tax Valuation Allowance: | ||||||||||||||||||||
Federal | – | – | (3,662 | ) | ||||||||||||||||
State | – | – | (1,943 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred tax valuation allowance change | – | – | (5,605 | ) | ||||||||||||||||
| | | | | | | | | | | ||||||||||
Total deferred provision (benefit) | $ | 4,749 | $ | 6,997 | $ | (1,798 | ) | |||||||||||||
| | | | | | | | | | | ||||||||||
Schedule of reconciliation of the statutory federal income tax expense / (benefit) rate to the Company's effective income tax (benefit) / expense and rate | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Tax provision at federal statutory tax rate | $ | 4,800 | 35 | $ | 6,243 | 35 | $ | 3,934 | 35 | |||||||||||
State income taxes, net of federal income tax benefit | 970 | 7.1 | 1,300 | 7.3 | 766 | 6.8 | ||||||||||||||
Change in deferred tax asset valuation allowance | – | – | – | – | (5,605 | ) | (49.9 | ) | ||||||||||||
Bank owned life insurance | (217 | ) | (1.6 | ) | (167 | ) | (0.9 | ) | (180 | ) | (1.6 | ) | ||||||||
Tax exempt income, net of interest expense | (826 | ) | (6.0 | ) | (610 | ) | (3.4 | ) | (608 | ) | (5.4 | ) | ||||||||
Merger and integration | 61 | 0.4 | 271 | 1.5 | – | – | ||||||||||||||
Other, net | (39 | ) | (0.3 | ) | (40 | ) | (0.3 | ) | (105 | ) | (0.9 | ) | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Total income tax provision (benefit) | $ | 4,749 | 34.6 | $ | 6,997 | 39.2 | $ | (1,798 | ) | (16.0 | ) | |||||||||
| | | | | | | | | | | | | | | | | | | | |
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Goodwill and Other Intangible Assets | ||||
Summary of the gross carrying amount, accumulated amortization and net carrying amount of CDI | ||||
December 31, 2014 | ||||
Gross | Accumulated | Net | ||
Carrying Amount | Amortization | Carrying Amount | ||
(dollars in thousands) | ||||
Core deposit intangibles | $ | $ | $ | |
9,261 | -3,914 | 5,347 | ||
Summary of an estimate for future amortization expense | ||||
December 31, 2014 | ||||
Beginning | Estimated | Projected | ||
Balance | Amortization | Ending Balance | ||
(dollars in thousands) | ||||
Period | ||||
Year 2015 | $ | $ | $ | |
5,347 | -1,049 | 4,298 | ||
Year 2016 | 4,298 | -944 | 3,354 | |
Year 2017 | 3,354 | -588 | 2,766 | |
Year 2018 | 2,766 | -549 | 2,217 | |
Year 2019 | 2,217 | -522 | 1,695 | |
Deposits_Tables
Deposits (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Summary for the maturity of the Bank's time certificates of deposit | The following table provides a summary for the maturity of the Bank's time certificates of deposit as of December 31, 2014: | ||||||||||||||||||||||
Maturing In | |||||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Over 5 Years | Total | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Time certificates of deposit: | |||||||||||||||||||||||
Amounts less than $100 | $ | 55,172 | $ | 17,008 | $ | 6,237 | $ | 3,230 | $ | 4,399 | $ | 7 | $ | 86,053 | |||||||||
Amounts of $100 or more | 108,145 | 30,401 | 13,688 | 14,481 | 13,925 | 13,146 | 193,786 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 163,317 | $ | 47,409 | $ | 19,925 | $ | 17,711 | $ | 18,324 | $ | 13,153 | $ | 279,839 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Borrowings_Tables
Borrowings (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Borrowings | ||||||||||||||||||||
Schedule of FHLB principal payment requirements | The following table provides a summary of those borrowings as of December 31, 2014: | |||||||||||||||||||
Year of Maturity | ||||||||||||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | Over 5 Years | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Federal Home Loan Bank borrowings | $ | 25,000 | $ | 13,522 | $ | 13,522 | $ | 8,014 | $ | 7,500 | $ | 28,000 | ||||||||
Weighted average interest rate | 0.27% | 0.68% | 1.19% | 1.09% | 1.64% | 2.49% | ||||||||||||||
Summary of junior subordinated debentures outstanding | The following table provides a summary of junior subordinated debentures outstanding at December 31, 2014: | |||||||||||||||||||
Amount | Carrying | Current | Issue | Scheduled | Rate Type | |||||||||||||||
Issued | Value | Rate | Date | Maturity | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Heritage Oaks Capital Trust II | $ | 8,248 | $ | 8,248 | 1.98% | 27-Oct-06 | Aug-37 | Variable 3-month LIBOR+1.72% | ||||||||||||
Mission Community Capital Trust I | $ | 3,093 | $ | 2,144 | 3.18% | 14-Oct-03 | Oct-33 | Variable 3-month LIBOR+2.95% | ||||||||||||
Santa Lucia Bancorp (CA) Capital Trust | $ | 5,155 | $ | 2,841 | 1.71% | 28-Apr-06 | Jul-36 | Variable 3-month LIBOR+1.48% | ||||||||||||
Sharebased_Compensation_Plans_
Share-based Compensation Plans (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Share-based Compensation Plans | ||||||||||||||
Summary of activity related to restricted stock granted, vested and forfeited | ||||||||||||||
Number of | Average Grant Date | |||||||||||||
Shares | Fair Value | |||||||||||||
Balance December 31, 2013 | 195,048 | $ | 4.87 | |||||||||||
Granted | 134,368 | 7.34 | ||||||||||||
Vested | (97,111 | ) | 4.24 | |||||||||||
Forfeited | (28,184 | ) | 5.96 | |||||||||||
| | | | | | | | |||||||
Balance December 31, 2014 | 204,121 | $ | 6.65 | |||||||||||
| | | | | | | | |||||||
Summary of activity related to options granted, exercised, and forfeited | ||||||||||||||
Options Outstanding | ||||||||||||||
Options | ||||||||||||||
Available for | ||||||||||||||
Number of | Weighted Average | Grant | ||||||||||||
Shares | Exercise Price | |||||||||||||
Balance, December 31, 2013 | 562,257 | $ | 6.34 | 1,593,616 | ||||||||||
Granted | 341,643 | 7.38 | ||||||||||||
Forfeited | (86,266 | ) | 7.8 | |||||||||||
Expired | (6,738 | ) | 11.03 | |||||||||||
Exercised | (68,339 | ) | 3.95 | |||||||||||
| | | | | | | | | | | ||||
Balance, December 31, 2014 | 742,557 | $ | 6.83 | 2,003,176 | ||||||||||
| | | | | | | | | | | ||||
December 31, 2014 | ||||||||||||||
Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||
Contractual Life | Value | |||||||||||||
(Years) | ||||||||||||||
Vested or expected to vest | 706,840 | $ | 6.82 | 7.65 | $ | 1,445,657 | ||||||||
Exercisable at December 31, 2014 | 285,212 | $ | 6.73 | 5.76 | $ | 811,638 | ||||||||
Summary of the expense recognized related to share-based compensation awards | ||||||||||||||
For the Twelve Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Share-based compensation expense: | ||||||||||||||
Stock options | $ | 490 | $ | 240 | $ | 127 | ||||||||
Restricted stock | 503 | 293 | 204 | |||||||||||
| | | | | | | | | | | ||||
Total expense | $ | 993 | $ | 533 | $ | 331 | ||||||||
| | | | | | | | | | | ||||
Unrecognized compensation expense: | ||||||||||||||
Stock options | $ | 1,065 | $ | 645 | $ | 529 | ||||||||
Restricted stock | 967 | 651 | 573 | |||||||||||
| | | | | | | | | | | ||||
Total unrecognized expense | $ | 2,032 | $ | 1,296 | $ | 1,102 | ||||||||
| | | | | | | | | | | ||||
Schedule of assumptions used in the calculation of weighted average fair value of options granted | ||||||||||||||
For the Twelve Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
Expected volatility | 49.38% | 55.33% | 52.26% | |||||||||||
Expected term (years) | 5.61 | 6.00 | 7.00 | |||||||||||
Dividend yield | 0.67% | 0.00% | 0.00% | |||||||||||
Risk free rate | 1.75% | 1.54% | 1.11% | |||||||||||
| | | | | | | | | | | ||||
Weighted-average grant date fair value | $ | 3.32 | $ | 3.30 | $ | 2.87 | ||||||||
| | | | | | | | | | | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Earnings Per Share | ||||||||||||||||||||
Schedule of calculation of both basic and diluted earnings per common share | ||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | ||||||||||||||||||
Net | Shares | Net | Shares | Net | Shares | |||||||||||||||
Income | Income | Income | ||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Net income | $ | 8,965 | $ | 10,841 | $ | 13,037 | ||||||||||||||
Dividends and accretion on preferred stock | (168 | ) | (898 | ) | (1,470 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Net income available to common shareholders | $ | 8,797 | $ | 9,943 | $ | 11,567 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding | 32,567,137 | 26,341,592 | 26,271,000 | |||||||||||||||||
Basic earnings per common share | $ | 0.27 | $ | 0.38 | $ | 0.44 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Dilutive effect of share-based compensation awards | 145,846 | 201,097 | 130,871 | |||||||||||||||||
Weighted average diluted shares outstanding | 32,712,983 | 26,542,689 | 26,401,871 | |||||||||||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.37 | $ | 0.44 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Commitments and Contingencies. | ||||||||||||||||||||
Schedule of outstanding financial commitments | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Commitments to extend credit | $ | 237,733 | $ | 181,445 | ||||||||||||||||
Standby letters of credit | 15,542 | 17,036 | ||||||||||||||||||
| | | | | | | | |||||||||||||
Total commitments and standby letters of credit | $ | 253,275 | $ | 198,481 | ||||||||||||||||
| | | | | | | | |||||||||||||
Summary of future minimum required contractual payments | ||||||||||||||||||||
Less Than | One to | Three to | More than | December 31, | December 31, | |||||||||||||||
One Year | Three Years | Five Years | Five Years | 2014 | 2013 | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
FHLB Advances and other borrowings | $ | 25,000 | $ | 27,000 | $ | 15,500 | $ | 28,000 | $ | 95,500 | $ | 88,500 | ||||||||
Operating lease obligations | 1,491 | 2,100 | 1,428 | 3,133 | 8,152 | 2,671 | ||||||||||||||
Salary continuation payments | 378 | 524 | 524 | 3,533 | 4,959 | 5,991 | ||||||||||||||
Junior subordinated debentures | – | – | – | 16,496 | 16,496 | 8,248 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total obligations | $ | 26,869 | $ | 29,624 | $ | 17,452 | $ | 51,162 | $ | 125,107 | $ | 105,410 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Restructuring_Activities_Table
Restructuring Activities (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Restructuring Activities | ||||||||||||||||||||
Summary of the expected and incurred costs of restructuring and integration plan | ||||||||||||||||||||
Costs | ||||||||||||||||||||
Incurred For | ||||||||||||||||||||
The Year Ended | ||||||||||||||||||||
Total Costs | Costs Incurred During | December 31, | ||||||||||||||||||
Expected To | 2014 | |||||||||||||||||||
Be Incurred | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
System integration | $ | 578 | $ | 223 | $ | (20 | ) | $ | 312 | $ | 9 | $ | 524 | |||||||
Fixed asset consolidation | 2,387 | 2,350 | (268 | ) | 41 | 152 | 2,275 | |||||||||||||
Contract cancellation costs | 1,746 | 1,656 | – | 90 | (75 | ) | 1,671 | |||||||||||||
Employee termination and retention | 3,836 | 2,641 | 803 | 274 | 319 | 4,037 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total restructuring costs | $ | 8,547 | $ | 6,870 | $ | 515 | $ | 717 | $ | 405 | $ | 8,507 | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Summary of change in the accrued liability related to restructuring and integration plan associated with the MISN Transaction | ||||||||||||||||||||
For the | ||||||||||||||||||||
Twelve Months Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Balance, beginning of period | $ | — | ||||||||||||||||||
New charges (1) | 9,255 | |||||||||||||||||||
Cash payments | (7,460 | ) | ||||||||||||||||||
Other adjustments (2) | (748 | ) | ||||||||||||||||||
| | | | | ||||||||||||||||
Balance, end of period | $ | 1,047 | ||||||||||||||||||
| | | | | ||||||||||||||||
-1 | Represents initial charges the Company incurred related to the restructuring and integration plan associated with the MISN Transaction. | |||||||||||||||||||
-2 | Adjustments related to previously accrued amounts associated with planned staff reduction, contract terminations, and other adjustments. | |||||||||||||||||||
Regulatory_Matters_Tables
Regulatory Matters (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||
Regulatory Matters | ||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block] | ||||||||||||||||||||
Actual | Capital Needed For | Capital | ||||||||||||||||||
Adequacy Purposes | Needed To Be | |||||||||||||||||||
Well Capitalized | ||||||||||||||||||||
Under Prompt | ||||||||||||||||||||
Corrective Action | ||||||||||||||||||||
Provisions | ||||||||||||||||||||
Capital | Ratio | Capital | Ratio | Capital | Ratio | |||||||||||||||
Amount | Amount | Amount | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
As of December 31, 2014 | ||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 187,198 | 14.38% | $ | 104,111 | 8.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 180,640 | 13.88% | $ | 104,101 | 8.0% | $ | 130,126 | 10.0% | |||||||||||
Tier I capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 170,918 | 13.13% | $ | 52,056 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 164,361 | 12.63% | $ | 52,050 | 4.0% | $ | 78,076 | 6.0% | |||||||||||
Tier I capital to average assets: | ||||||||||||||||||||
Company | $ | 170,918 | 10.22% | $ | 66,902 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 164,361 | 9.83% | $ | 66,889 | 4.0% | $ | 83,611 | 5.0% | |||||||||||
As of December 31, 2013 | ||||||||||||||||||||
Total capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 130,532 | 14.17% | $ | 73,709 | 8.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 126,000 | 13.68% | $ | 73,703 | 8.0% | $ | 92,128 | 10.0% | |||||||||||
Tier I capital to risk-weighted assets: | ||||||||||||||||||||
Company | $ | 118,933 | 12.91% | $ | 36,855 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 114,402 | 12.42% | $ | 36,851 | 4.0% | $ | 55,277 | 6.0% | |||||||||||
Tier I capital to average assets: | ||||||||||||||||||||
Company | $ | 118,933 | 10.20% | $ | 46,649 | 4.0% | N/A | N/A | ||||||||||||
Heritage Oaks Bank | $ | 114,402 | 9.82% | $ | 46,603 | 4.0% | $ | 58,254 | 5.0% | |||||||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Related Party Transactions | |||||||||||
Schedule of loans made to directors and executive officers of the Company | |||||||||||
For The Year Ended | |||||||||||
December 31, 2014 | |||||||||||
(dollars in thousands) | |||||||||||
Outstanding balance, beginning of year | $ | 20,087 | |||||||||
Additional loans made | 18,452 | ||||||||||
Repayments | (13,548 | ) | |||||||||
Change in related party status | – | ||||||||||
| | | | | |||||||
Outstanding balance, end of year | $ | 24,991 | |||||||||
| | | | | |||||||
Schedule of facility rent, legal consultation fees related to collection matters and fuel for Company owned vehicles | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Payments to affiliated firms: | |||||||||||
Facility rent | $ | 240 | $ | 237 | $ | 233 | |||||
Legal consultation fees | 15 | 14 | 6 | ||||||||
Fuel for company owned vehicles | – | – | 5 | ||||||||
| | | | | | | | | | | |
Total payments to affiliated firms | $ | 255 | $ | 251 | $ | 244 | |||||
| | | | | | | | | | | |
Parent_Company_Financial_Infor1
Parent Company Financial Information (Tables) (Heritage Oaks Bancorp) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Heritage Oaks Bancorp | |||||||||||
Parent Company Financial Information | |||||||||||
Schedule of condensed balance sheets | |||||||||||
December 31, | |||||||||||
2014 | 2013 | ||||||||||
(dollars in thousands) | |||||||||||
Assets | |||||||||||
Cash | $ | 6,642 | $ | 4,726 | |||||||
Prepaid and other assets | 2,122 | 1,280 | |||||||||
Investment in bank | 202,565 | 128,940 | |||||||||
| | | | | | | | ||||
Total assets | $ | 211,329 | $ | 134,946 | |||||||
| | | | | | | | ||||
Liabilities | |||||||||||
Junior subordinated debentures | $ | 13,233 | $ | 8,248 | |||||||
Other liabilities | 156 | 271 | |||||||||
| | | | | | | | ||||
Total liabilities | 13,389 | 8,519 | |||||||||
Shareholders' Equity | |||||||||||
Preferred stock | 1,056 | 3,604 | |||||||||
Common stock | 164,196 | 101,511 | |||||||||
Additional paid in capital | 6,984 | 6,020 | |||||||||
Retained earnings | 24,772 | 18,717 | |||||||||
Accumulated other comprehensive income (loss) | 932 | (3,425 | ) | ||||||||
| | | | | | | | ||||
Total shareholders' equity | 197,940 | 126,427 | |||||||||
| | | | | | | | ||||
Total liabilities and shareholders' equity | $ | 211,329 | $ | 134,946 | |||||||
| | | | | | | | ||||
Schedule of condensed statements of income | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Income | |||||||||||
Dividends from subsidiaries | $ | 10,000 | $ | 25,309 | $ | 3,517 | |||||
Interest income | 16 | 19 | 25 | ||||||||
| | | | | | | | | | | |
Total income | 10,016 | 25,328 | 3,542 | ||||||||
| | | | | | | | | | | |
Expense | |||||||||||
Share-based compensation | 211 | 133 | 114 | ||||||||
Other professional fees and outside services | 737 | 1,169 | 498 | ||||||||
Interest | 499 | 167 | 192 | ||||||||
| | | | | | | | | | | |
Total expense | 1,447 | 1,469 | 804 | ||||||||
| | | | | | | | | | | |
Income before income tax benefit and equity in undistibuted earnings of subsidiaries | 8,569 | 23,859 | 2,738 | ||||||||
Income tax benefit | (576 | ) | (347 | ) | (813 | ) | |||||
| | | | | | | | | | | |
Net income before equity in undistributed earnings of subsidiaries | 9,145 | 24,206 | 3,551 | ||||||||
Equity in undisbursed income of subsidiaries | 180 | 13,365 | (9,486 | ) | |||||||
Dividends and accretion on preferred stock | 168 | 898 | 1,470 | ||||||||
| | | | | | | | | | | |
Net income available to common shareholders | $ | 8,797 | $ | 9,943 | $ | 11,567 | |||||
| | | | | | | | | | | |
Schedule of condensed statements of cash flows | |||||||||||
For The Years Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
(dollars in thousands) | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 8,965 | $ | 10,841 | $ | 13,037 | |||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
Share-based compensation expense | 211 | 133 | 114 | ||||||||
Amortization of premium on borrowings | 175 | – | – | ||||||||
Undistributed loss (income) of subsidiaries | 180 | 13,365 | (9,486 | ) | |||||||
Increase in other assets and other liabilities | (868 | ) | (83 | ) | (656 | ) | |||||
| | | | | | | | | | | |
Net cash provided by operating activities | 8,663 | 24,256 | 3,009 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash acquired in MISN merger | (3,928 | ) | – | – | |||||||
Proceeds from the sale of assets | 338 | – | – | ||||||||
Other | (100 | ) | – | – | |||||||
| | | | | | | | | | | |
Net cash used in investing activities | (3,690 | ) | – | – | |||||||
Cash flows from financing activities: | |||||||||||
Dividends on Series A preferred stock | – | (708 | ) | (3,013 | ) | ||||||
Retirement of Series A preferred stock and related warrants | – | (22,575 | ) | – | |||||||
Dividends declared on common stock | (2,742 | ) | – | – | |||||||
Repurchase of common stock | (387 | ) | – | – | |||||||
Stock issuance costs | (381 | ) | – | – | |||||||
Proceeds from the exercise of options | 453 | 138 | 183 | ||||||||
| | | | | | | | | | | |
Net cash used in financing activities | (3,057 | ) | (23,145 | ) | (2,830 | ) | |||||
| | | | | | | | | | | |
Net increase in cash and cash equivalents | 1,916 | 1,111 | 179 | ||||||||
Cash and cash equivalents, beginning of year | 4,726 | 3,615 | 3,436 | ||||||||
| | | | | | | | | | | |
Cash and cash equivalents, end of year | $ | 6,642 | $ | 4,726 | $ | 3,615 | |||||
| | | | | | | | | | | |
Quarterly_Financial_Informatio1
Quarterly Financial Information (unaudited) (Tables) | 12 Months Ended | |||||||||||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||||||||||
Quarterly Financial Information (unaudited) | ||||||||||||||||||||||||||
Summary of results for the periods | ||||||||||||||||||||||||||
For The Quarters Ended, | ||||||||||||||||||||||||||
Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||||||||
Interest income | $ | 17,064 | $ | 16,895 | $ | 16,541 | $ | 13,588 | $ | 11,736 | $ | 11,509 | $ | 11,075 | $ | 11,073 | ||||||||||
Net interest income | 15,726 | 15,571 | 15,197 | 12,437 | 10,687 | 10,482 | 10,149 | 10,208 | ||||||||||||||||||
Non-interest income | 2,354 | 2,982 | 2,476 | 1,763 | 1,879 | 2,423 | 2,912 | 5,661 | ||||||||||||||||||
Non-interest expense | 11,385 | 13,382 | 12,986 | 17,039 | 9,624 | 8,551 | 8,640 | 9,748 | ||||||||||||||||||
Income before provision (benefit) for income taxes | 6,695 | 5,171 | 4,687 | (2,839 | ) | 2,942 | 4,354 | 4,421 | 6,121 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | 4,352 | 3,429 | 2,949 | (1,765 | ) | 1,634 | 2,761 | 2,716 | 3,730 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends and accretion on preferred stock | 168 | – | – | – | – | 181 | 359 | 358 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) available to common shareholders | $ | 4,184 | $ | 3,429 | $ | 2,949 | $ | (1,765 | ) | $ | 1,634 | $ | 2,580 | $ | 2,357 | $ | 3,372 | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per common share | ||||||||||||||||||||||||||
Basic | $ | 0.13 | $ | 0.1 | $ | 0.09 | $ | (0.06 | ) | $ | 0.06 | $ | 0.1 | $ | 0.09 | $ | 0.13 | |||||||||
Diluted | $ | 0.13 | $ | 0.1 | $ | 0.09 | $ | (0.06 | ) | $ | 0.06 | $ | 0.1 | $ | 0.09 | $ | 0.13 | |||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
segment | ||
Nature of Operations | ||
Number of business segments | 1 | |
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets | $1,710,127,000 | $1,203,651,000 |
Revenue | 0 | |
Loans Held for Investment | ||
Period for loans past due to be classified as non-accruing loans | 90 days | |
Minimum period of sustained repayment performance for loans to be returned to accruing status from non-accrual status | 6 months | |
Loan Charge-offs | ||
Period for loans past due to be charged-off | 90 days | |
All Non-United States countries | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets | 0 | |
Minimum | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Discount rate used monthly (as a percent) | 1.00% | |
Appraisals for Loans Secured by Real Estate Collateral | ||
Loan commitments over which an annual review of borrower's financial condition is done | $500,000 | |
Remaining term of the loan over which an annual review of borrower's financial condition is performed | 1 year | |
Maximum | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Discount rate used monthly (as a percent) | 3.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2014 | |
Furniture and equipment | Maximum | |
Property, Premises and Equipment | |
Property, Premises and Equipment, Useful Life | 10 years |
Furniture and equipment | Minimum | |
Property, Premises and Equipment | |
Property, Premises and Equipment, Useful Life | 3 years |
Building | |
Property, Premises and Equipment | |
Property, Premises and Equipment, Useful Life | 30 years |
Business_Combination_Details
Business Combination (Details) (USD $) | 0 Months Ended | ||
Feb. 28, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Assets acquired | |||
Goodwill | $24,885,000 | $11,237,000 | |
Liabilities assumed | |||
Premises and equipment held for sale | 1,978,000 | ||
MISN | |||
Business combination | |||
Percentage acquired of outstanding common shares | 100.00% | ||
Common stock issued (in shares) | 7,541,326 | ||
Aggregate cash consideration | 8,700,000 | ||
Transaction value | 69,000,000 | ||
Closing price (in dollars per share) | $7.99 | ||
Assets acquired | |||
Cash and due from banks | 3,212,000 | ||
Interest-bearing deposits in other banks | 34,386,000 | ||
Securities available for sale | 76,159,000 | ||
Loans held for sale | 338,000 | ||
Loans and leases receivable | 280,316,000 | ||
Premises and equipment | 15,718,000 | ||
Deferred tax assets, net | 11,774,000 | ||
Goodwill | 13,648,000 | ||
Bank owned life insurance | 8,263,000 | ||
Other assets | 4,810,000 | ||
Total assets acquired | 453,684,000 | ||
Liabilities assumed | |||
Deposits | 371,501,000 | ||
Advances from Federal Home Loan Bank | 6,071,000 | ||
Junior subordinated debentures | 4,804,000 | ||
Other liabilities | 2,346,000 | ||
Total liabilities assumed | 384,722,000 | ||
Total consideration paid | 68,962,000 | ||
Non-impaired loans and leases | 267,300,000 | ||
Gross contractual payments receivable | 328,200,000 | ||
Total contractual cash flows not expected to be collected on non-impaired loans and lease | 5,400,000 | ||
Credit risk component of purchase discount on gross outstanding principal balances (as a percent) | 2.00% | ||
MISN | Core Deposits | |||
Assets acquired | |||
Core deposit intangible asset | $5,060,000 |
Business_Combination_Details_2
Business Combination (Details 2) (MISN, USD $) | 0 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Feb. 28, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Feb. 28, 2014 |
MISN | ||||
Consideration Paid | ||||
Cash payments for MISN shares outstanding | $2,554 | |||
Cash payments for MISN warrants | 5,766 | |||
Cash payments for MISN options | 387 | |||
Shares issued, @7.99 per share | 60,255 | |||
Total consideration paid | 68,962 | 68,962 | ||
Pro Forma Financial Information | ||||
Net interest Income | 61,185 | 59,269 | ||
Provision for loan and lease losses | 310 | |||
Noninterest income | 10,189 | 14,755 | ||
Noninterest expense | 58,227 | 54,461 | ||
Income before income taxes | 13,147 | 19,253 | ||
Income tax expense | 4,553 | 7,552 | ||
Net Income | $8,594 | $11,701 | ||
Earnings Per Common Share | ||||
Basic (in dollars per share) | $0.25 | $0.33 | ||
Diluted (in dollars per share) | $0.25 | $0.33 |
Fair_Value_of_Assets_and_Liabi2
Fair Value of Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | $355,580 | $276,795 |
Obligations of U.S. government agencies | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 19,664 | 6,208 |
Mortgage-backed securities - Agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 215,398 | 182,931 |
Mortgage-backed securities - Non-agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 11,901 | 11,032 |
State and municipal securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 82,592 | 50,030 |
Asset backed securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 26,025 | 26,594 |
Significant Other Observable Inputs (Level 2) | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 355,580 | 276,795 |
Recurring basis | Assets At Fair Value | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 355,580 | 276,795 |
Recurring basis | Assets At Fair Value | Obligations of U.S. government agencies | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 19,664 | 6,208 |
Recurring basis | Assets At Fair Value | Mortgage-backed securities - Agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 215,398 | 182,931 |
Recurring basis | Assets At Fair Value | Mortgage-backed securities - Non-agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 11,901 | 11,032 |
Recurring basis | Assets At Fair Value | State and municipal securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 82,592 | 50,030 |
Recurring basis | Assets At Fair Value | Asset backed securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 26,025 | 26,594 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 355,580 | 276,795 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Obligations of U.S. government agencies | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 19,664 | 6,208 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities - Agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 215,398 | 182,931 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Mortgage-backed securities - Non-agency | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 11,901 | 11,032 |
Recurring basis | Significant Other Observable Inputs (Level 2) | State and municipal securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | 82,592 | 50,030 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Asset backed securities | ||
Financial instruments of the Company measured at fair value on a recurring basis | ||
Total assets measured on a recurring basis | $26,025 | $26,594 |
Fair_Value_of_Assets_and_Liabi3
Fair Value of Assets and Liabilities (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Recurring basis | ||
Total Losses for assets measured at fair value on a non-recurring basis | ||
Assets transfer from Level 1 to level 2 | $0 | $0 |
Nonrecurring basis | ||
Total Losses for assets measured at fair value on a non-recurring basis | ||
Year to Date losses/(Recoveries) | 80 | -1,270 |
Nonrecurring basis | Land | ||
Total Losses for assets measured at fair value on a non-recurring basis | ||
Year to Date losses/(Recoveries) on impaired loans | -946 | -1,270 |
Nonrecurring basis | Commercial and industrial | ||
Assets | ||
Impaired loans | 1,026 | |
Nonrecurring basis | Assets At Fair Value | ||
Assets | ||
Total assets measured on a non-recurring basis | 4,586 | 4,170 |
Nonrecurring basis | Assets At Fair Value | Land | ||
Assets | ||
Impaired loans | 3,261 | 4,170 |
Nonrecurring basis | Assets At Fair Value | Commercial and industrial | ||
Assets | ||
Impaired loans | 1,325 | |
Nonrecurring basis | Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Total assets measured on a non-recurring basis | 4,586 | 4,170 |
Nonrecurring basis | Significant Unobservable Inputs (Level 3) | Land | ||
Assets | ||
Impaired loans | 3,261 | 4,170 |
Nonrecurring basis | Significant Unobservable Inputs (Level 3) | Commercial and industrial | ||
Assets | ||
Impaired loans | $1,325 |
Fair_Value_of_Assets_and_Liabi4
Fair Value of Assets and Liabilities (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ||
Fair Value | $355,580 | $276,795 |
Liabilities | ||
Non-interest bearing deposits | 461,479 | 291,856 |
Junior subordinated debentures | 13,233 | 8,248 |
Off-balance sheet instruments, commitments to extend credit and standby letters of credit, Notional Amount | 253,275 | 198,481 |
Off-balance sheet instruments, commitments to extend credit and standby letters of credit, Cost to Cede or Assume | 2,533 | 1,985 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets | ||
Cash and cash equivalents | 35,580 | 26,238 |
Liabilities | ||
Non-interest bearing deposits | 461,479 | 291,856 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Fair Value | 355,580 | 276,795 |
Loans held for sale | 2,586 | 2,386 |
Accrued interest receivable | 2,038 | 1,397 |
Liabilities | ||
Interest bearing deposits | 936,151 | 684,345 |
Federal Home Loan Bank advances | 96,679 | 86,990 |
Accrued interest payable | 401 | 239 |
Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Loans receivable, net of deferred fees and costs | 1,196,997 | 827,105 |
Accrued interest receivable | 3,621 | 2,630 |
Liabilities | ||
Junior subordinated debentures | 9,297 | 7,595 |
Heritage Oaks Bancorp | ||
Liabilities | ||
Junior subordinated debentures | 13,233 | 8,248 |
Carrying Amount | ||
Assets | ||
Cash and cash equivalents | 35,580 | 26,238 |
Fair Value | 355,580 | 276,795 |
Federal Home Loan Bank stock | 7,853 | 4,739 |
Loans receivable, net of deferred fees and costs | 1,192,038 | 826,203 |
Loans held for sale | 2,586 | 2,386 |
Accrued interest receivable | 5,659 | 4,027 |
Liabilities | ||
Non-interest bearing deposits | 461,479 | 291,856 |
Interest bearing deposits | 933,325 | 682,039 |
Federal Home Loan Bank advances | 95,558 | 88,500 |
Junior subordinated debentures | 13,233 | 8,248 |
Accrued interest payable | 401 | 239 |
Assets At Fair Value | ||
Assets | ||
Cash and cash equivalents | 35,580 | 26,238 |
Fair Value | 355,580 | 276,795 |
Loans receivable, net of deferred fees and costs | 1,196,997 | 827,105 |
Loans held for sale | 2,586 | 2,386 |
Accrued interest receivable | 5,659 | 4,027 |
Liabilities | ||
Non-interest bearing deposits | 461,479 | 291,856 |
Interest bearing deposits | 936,151 | 684,345 |
Federal Home Loan Bank advances | 96,679 | 86,990 |
Junior subordinated debentures | 9,297 | 7,595 |
Accrued interest payable | $401 | $239 |
Investment_Securities_Details
Investment Securities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | $353,971 | $282,615 |
Gross Unrealized Gains | 4,147 | 778 |
Gross Unrealized Losses | -2,538 | -6,598 |
Fair Value | 355,580 | 276,795 |
Obligations of U.S. government agencies | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | 19,562 | 6,243 |
Gross Unrealized Gains | 191 | 11 |
Gross Unrealized Losses | -89 | -46 |
Fair Value | 19,664 | 6,208 |
Mortgage-backed securities - Agency | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | 216,492 | 186,981 |
Gross Unrealized Gains | 1,092 | 342 |
Gross Unrealized Losses | -2,186 | -4,392 |
Fair Value | 215,398 | 182,931 |
Mortgage-backed securities - Non-agency | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | 11,891 | 10,924 |
Gross Unrealized Gains | 21 | 156 |
Gross Unrealized Losses | -11 | -48 |
Fair Value | 11,901 | 11,032 |
State and municipal securities | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | 79,810 | 51,532 |
Gross Unrealized Gains | 2,843 | 269 |
Gross Unrealized Losses | -61 | -1,771 |
Fair Value | 82,592 | 50,030 |
Asset backed securities | ||
Reconciliation of amortized cost to fair value of investment securities reported as available for sale | ||
Total available for sale securities | 26,216 | 26,935 |
Gross Unrealized Losses | -191 | -341 |
Fair Value | $26,025 | $26,594 |
Investment_Securities_Details_
Investment Securities (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Investment securities | ||
Less Than Twelve Months, Fair Value | 62,277 | $165,482 |
Less Than Twelve Months, Unrealized Loss | -741 | -5,154 |
Twelve Months or More, Fair Value | 81,265 | 31,108 |
Twelve Months or More, Unrealized Loss | -1,797 | -1,444 |
Total, Fair Value | 143,542 | 196,590 |
Total, Unrealized Loss | -2,538 | -6,598 |
Investment security holdings | Minimum | ||
Securities in an unrealized loss position | ||
Maturity period of available-for-sale securities | 1 year | |
Investment security holdings | Maximum | ||
Securities in an unrealized loss position | ||
Maturity period of available-for-sale securities | 40 years | |
Obligations of U.S. government agencies | ||
Investment securities | ||
Less Than Twelve Months, Fair Value | 2,795 | 2,773 |
Less Than Twelve Months, Unrealized Loss | -17 | -45 |
Twelve Months or More, Fair Value | 2,607 | 40 |
Twelve Months or More, Unrealized Loss | -72 | -1 |
Total, Fair Value | 5,402 | 2,813 |
Total, Unrealized Loss | -89 | -46 |
Mortgage-backed securities - Agency | ||
Investment securities | ||
Less Than Twelve Months, Fair Value | 50,583 | 118,554 |
Less Than Twelve Months, Unrealized Loss | -670 | -3,140 |
Twelve Months or More, Fair Value | 58,753 | 18,863 |
Twelve Months or More, Unrealized Loss | -1,516 | -1,252 |
Total, Fair Value | 109,336 | 137,417 |
Total, Unrealized Loss | -2,186 | -4,392 |
Mortgage-backed securities - Non-agency | ||
Investment securities | ||
Less Than Twelve Months, Fair Value | 3,000 | 3,210 |
Less Than Twelve Months, Unrealized Loss | -7 | -48 |
Twelve Months or More, Fair Value | 507 | |
Twelve Months or More, Unrealized Loss | -4 | |
Total, Fair Value | 3,507 | 3,210 |
Total, Unrealized Loss | -11 | -48 |
State and municipal securities | ||
Investment securities | ||
Less Than Twelve Months, Fair Value | 5,899 | 32,967 |
Less Than Twelve Months, Unrealized Loss | -47 | -1,675 |
Twelve Months or More, Fair Value | 2,245 | 2,458 |
Twelve Months or More, Unrealized Loss | -14 | -96 |
Total, Fair Value | 8,144 | 35,425 |
Total, Unrealized Loss | -61 | -1,771 |
Asset backed securities | ||
Investment securities | ||
Less Than Twelve Months, Fair Value | 7,978 | |
Less Than Twelve Months, Unrealized Loss | -246 | |
Twelve Months or More, Fair Value | 17,153 | 9,747 |
Twelve Months or More, Unrealized Loss | -191 | -95 |
Total, Fair Value | 17,153 | 17,725 |
Total, Unrealized Loss | -191 | ($341) |
Investment_Securities_Details_1
Investment Securities (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Proceeds from the sales and calls of securities and the associated gains and losses | |||
Proceeds | $129,074,000 | $161,765,000 | $141,166,000 |
Gross gains | 1,050,000 | 5,599,000 | 3,152,000 |
Gross losses | -404,000 | -1,673,000 | -533,000 |
Income tax expense related to net realized gains on sale of securities | $300,000 | $1,600,000 | $1,100,000 |
Investment_Securities_Details_2
Investment Securities (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Available for sale securities, Amortized cost | ||
Due one year or less | $38,674 | $29,282 |
Due after one year through five years | 113,081 | 90,023 |
Due after five years through ten years | 137,909 | 100,191 |
Due after ten years | 64,307 | 63,119 |
Total available for sale securities | 353,971 | 282,615 |
Available for sale securities | ||
One Year Or Less | 38,587 | 28,999 |
Over 1 Through 5 Years | 112,926 | 88,760 |
Over 5 Years Through 10 Years | 140,115 | 97,752 |
Over 10 Years | 63,952 | 61,284 |
Total | 355,580 | 276,795 |
Obligations of U.S. government agencies | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 19,562 | 6,243 |
Available for sale securities | ||
Total | 19,664 | 6,208 |
Mortgage-backed securities - Agency | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 216,492 | 186,981 |
Available for sale securities | ||
Total | 215,398 | 182,931 |
Mortgage-backed securities - Non-agency | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 11,891 | 10,924 |
Available for sale securities | ||
Total | 11,901 | 11,032 |
State and municipal securities | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 79,810 | 51,532 |
Available for sale securities | ||
Total | 82,592 | 50,030 |
Asset backed securities | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 26,216 | 26,935 |
Available for sale securities | ||
Total | 26,025 | 26,594 |
Securities pledged to secure public deposits | ||
Available for sale securities, Amortized cost | ||
Total available for sale securities | 67,300 | 41,900 |
Available for sale securities | ||
Total | $72,500 | $40,400 |
Investment_Securities_Details_3
Investment Securities (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Earnings on both taxable and tax-exempt investment securities | |||
Total | $7,238 | $5,476 | $6,896 |
Obligations of U.S. government agencies | |||
Earnings on both taxable and tax-exempt investment securities | |||
Taxable earnings on investment securities | 348 | 106 | 105 |
Mortgage backed securities | |||
Earnings on both taxable and tax-exempt investment securities | |||
Taxable earnings on investment securities | 4,433 | 3,441 | 3,776 |
State and municipal securities | |||
Earnings on both taxable and tax-exempt investment securities | |||
Taxable earnings on investment securities | 85 | 5 | 191 |
Non-taxable earnings on investment securities | 2,013 | 1,497 | 1,952 |
Corporate debt securities | |||
Earnings on both taxable and tax-exempt investment securities | |||
Taxable earnings on investment securities | 6 | 631 | |
Asset backed securities | |||
Earnings on both taxable and tax-exempt investment securities | |||
Taxable earnings on investment securities | $353 | $427 | $241 |
Loans_and_Allowance_for_Loan_a2
Loans and Allowance for Loan and Lease Losses (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
loan | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | $1,193,483,000 | $827,484,000 | ||
Net loans held for investment | 1,175,236,000 | 808,344,000 | ||
Loans pledged as collateral | 869,500,000 | |||
FHLB secured credit facility | 462,100,000 | |||
FHLB secured line of credit | 11,500,000 | |||
Net deferred loan fees | -1,445,000 | -1,281,000 | ||
Allowance for loan and lease losses | -16,802,000 | -17,859,000 | -18,118,000 | -19,314,000 |
Loans held for sale | 2,586,000 | 2,386,000 | ||
Reserve maintained for the exercise of repurchase option by buyer | 500,000 | 400,000 | ||
Provision for mortgage loan repurchases | 127,000 | 570,000 | 1,192,000 | |
Concentration of Credit Risk | ||||
Loan portfolio collateralized by various forms of real estate | 978,200,000 | 674,400,000 | ||
Loans Serviced for Others | ||||
Unpaid principal balance of loans serviced for others, exclusive of SBA loans | 44,800,000 | 22,600,000 | ||
Unpaid principal balance of SBA loans serviced for others | 13,000,000 | 6,600,000 | ||
Recognized gains from the sale of SBA loans | 43,000 | 400,000 | ||
Number of remaining related loans for which the purchaser is seeking reimbursement | 5 | |||
Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 1,183,183,000 | 827,484,000 | ||
Net loans held for investment | 1,164,936,000 | 808,344,000 | ||
Net deferred loan fees | -1,445,000 | -1,281,000 | ||
Allowance for loan and lease losses | -16,802,000 | -17,859,000 | ||
Loans held for sale | 2,586,000 | 2,386,000 | ||
Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 10,300,000 | |||
Net loans held for investment | 10,300,000 | |||
Federal Reserve Bank | ||||
Outstanding loan balances | ||||
FHLB secured line of credit | 11,500,000 | |||
MISN | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 239,700,000 | |||
Net loans held for investment | 229,400,000 | |||
Land | ||||
Outstanding loan balances | ||||
Allowance for loan and lease losses | -1,655,000 | -3,402,000 | -4,641,000 | -2,416,000 |
Real Estate Secured | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 975,603,000 | |||
Real Estate Secured | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 968,110,000 | 672,061,000 | ||
Real Estate Secured | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 7,493,000 | |||
Real Estate Secured | Multi-family residential | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 78,645,000 | |||
Real Estate Secured | Multi-family residential | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 78,645,000 | 31,140,000 | ||
Real Estate Secured | Residential 1 to 4 family | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 127,201,000 | |||
Real Estate Secured | Residential 1 to 4 family | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 126,640,000 | 88,904,000 | ||
Real Estate Secured | Residential 1 to 4 family | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 561,000 | |||
Real Estate Secured | Home equity lines of credit | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 38,252,000 | |||
Real Estate Secured | Home equity lines of credit | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 38,252,000 | 31,178,000 | ||
Real Estate Secured | Commercial real estate | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 588,472,000 | |||
Real Estate Secured | Commercial real estate | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 584,056,000 | 432,203,000 | ||
Real Estate Secured | Commercial real estate | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 4,416,000 | |||
Real Estate Secured | Farmland | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 98,373,000 | |||
Real Estate Secured | Farmland | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 96,708,000 | 50,414,000 | ||
Real Estate Secured | Farmland | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 1,665,000 | |||
Real Estate Secured | Land | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 20,167,000 | |||
Real Estate Secured | Land | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 19,316,000 | 24,523,000 | ||
Real Estate Secured | Land | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 851,000 | |||
Real Estate Secured | Construction | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 24,493,000 | |||
Real Estate Secured | Construction | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 24,493,000 | 13,699,000 | ||
Commercial | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 209,902,000 | |||
Allowance for loan and lease losses | -5,125,000 | -4,781,000 | -6,115,000 | -6,549,000 |
Commercial | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 207,095,000 | 151,845,000 | ||
Commercial | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 2,807,000 | |||
Commercial | Commercial and industrial | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 154,787,000 | |||
Commercial | Commercial and industrial | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 153,403,000 | 119,121,000 | ||
Commercial | Commercial and industrial | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 1,384,000 | |||
Commercial | Agriculture | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 55,101,000 | |||
Commercial | Agriculture | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 53,678,000 | 32,686,000 | ||
Commercial | Agriculture | Purchased credit impaired loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 1,423,000 | |||
Commercial | Other | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 14,000 | |||
Commercial | Other | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 14,000 | 38,000 | ||
Installment loans to individuals | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 7,723,000 | |||
Allowance for loan and lease losses | -172,000 | -99,000 | -64,000 | -175,000 |
Installment loans to individuals | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 7,723,000 | 3,246,000 | ||
Overdrafts | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | 255,000 | |||
Overdrafts | Non-PCI Loans | ||||
Outstanding loan balances | ||||
Total gross loans held for investment | $255,000 | $332,000 |
Loans_and_Allowance_for_Loan_a3
Loans and Allowance for Loan and Lease Losses (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Investment in impaired loans | |||
Increase in interest income if interest on non-accruing loans had been recognized at original interest rates stipulated in the respective loan agreements | $600,000 | $800,000 | $1,300,000 |
Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 9,978,000 | 5,830,000 | |
Recorded investment with related allowance | 6,417,000 | 10,186,000 | |
Unpaid principal balance without related allowance | 14,543,000 | 7,951,000 | |
Unpaid principal balance with related allowance | 10,241,000 | 13,760,000 | |
Specific Allowance for Impaired Loans | 1,771,000 | 3,155,000 | |
Average recorded investment without related allowance | 11,737,000 | 6,159,000 | |
Average recorded investment with related allowance | 7,042,000 | 9,080,000 | 9,397,000 |
Interest income recognized without related allowance | 467,000 | 97,000 | |
Interest income recognized with related allowance | 67,000 | 69,000 | |
Recorded Investment | 16,395,000 | 16,016,000 | |
Unpaid Principal Balance | 24,784,000 | 21,711,000 | |
Average Recorded Investment | 18,779,000 | 15,239,000 | 19,043,000 |
Interest Income Recognized | 534,000 | 166,000 | 4,000 |
Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 10,341,000 | ||
Unpaid principal balance without related allowance | 13,390,000 | ||
Specific Allowance for Impaired Loans | 10,300,000 | ||
Average recorded investment without related allowance | 11,653,000 | ||
Interest income recognized without related allowance | 1,362,000 | ||
Unpaid Principal Balance | 13,390,000 | ||
Real Estate Secured | Non-PCI Loans | |||
Investment in impaired loans | |||
Average recorded investment without related allowance | 9,646,000 | ||
Interest Income Recognized | 4,000 | ||
Real Estate Secured | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Specific Allowance for Impaired Loans | 7,493,000 | ||
Unpaid Principal Balance | 10,015,000 | ||
Real Estate Secured | Residential 1 to 4 family | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 260,000 | 944,000 | |
Unpaid principal balance without related allowance | 383,000 | 1,102,000 | |
Average recorded investment without related allowance | 349,000 | 870,000 | 619,000 |
Average recorded investment with related allowance | 191,000 | ||
Interest income recognized without related allowance | 18,000 | 16,000 | |
Real Estate Secured | Residential 1 to 4 family | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 564,000 | ||
Unpaid principal balance without related allowance | 886,000 | ||
Specific Allowance for Impaired Loans | 561,000 | ||
Average recorded investment without related allowance | 580,000 | ||
Interest income recognized without related allowance | 43,000 | ||
Unpaid Principal Balance | 886,000 | ||
Real Estate Secured | Home equity lines of credit | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 258,000 | 901,000 | |
Unpaid principal balance without related allowance | 340,000 | 1,646,000 | |
Average recorded investment without related allowance | 258,000 | 28,000 | 240,000 |
Average recorded investment with related allowance | 63,000 | ||
Real Estate Secured | Home equity lines of credit | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Average recorded investment without related allowance | 61,000 | ||
Interest income recognized without related allowance | 21,000 | ||
Real Estate Secured | Commercial real estate | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 4,000,000 | ||
Recorded investment with related allowance | 498,000 | ||
Unpaid principal balance without related allowance | 6,255,000 | ||
Unpaid principal balance with related allowance | 688,000 | ||
Specific Allowance for Impaired Loans | 148,000 | ||
Average recorded investment without related allowance | 3,814,000 | 775,000 | 2,672,000 |
Average recorded investment with related allowance | 502,000 | 179,000 | |
Interest income recognized without related allowance | 132,000 | 5,000 | |
Real Estate Secured | Commercial real estate | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 4,432,000 | ||
Unpaid principal balance without related allowance | 6,109,000 | ||
Specific Allowance for Impaired Loans | 4,416,000 | ||
Average recorded investment without related allowance | 4,978,000 | ||
Interest income recognized without related allowance | 673,000 | ||
Unpaid Principal Balance | 6,109,000 | ||
Real Estate Secured | Farmland | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 283,000 | ||
Unpaid principal balance without related allowance | 282,000 | ||
Average recorded investment without related allowance | 291,000 | 542,000 | |
Interest income recognized without related allowance | 16,000 | ||
Real Estate Secured | Farmland | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 1,673,000 | ||
Unpaid principal balance without related allowance | 2,027,000 | ||
Specific Allowance for Impaired Loans | 1,665,000 | ||
Average recorded investment without related allowance | 1,698,000 | ||
Interest income recognized without related allowance | 98,000 | ||
Unpaid Principal Balance | 2,027,000 | ||
Real Estate Secured | Construction | Non-PCI Loans | |||
Investment in impaired loans | |||
Average recorded investment without related allowance | 190,000 | 1,288,000 | |
Interest income recognized without related allowance | 10,000 | ||
Real Estate Secured | Land | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 1,470,000 | 1,221,000 | |
Recorded investment with related allowance | 4,876,000 | 6,706,000 | |
Unpaid principal balance without related allowance | 2,355,000 | 1,948,000 | |
Unpaid principal balance with related allowance | 8,499,000 | 10,158,000 | |
Specific Allowance for Impaired Loans | 1,472,000 | 2,532,000 | |
Average recorded investment without related allowance | 2,000,000 | 1,320,000 | 1,874,000 |
Average recorded investment with related allowance | 5,268,000 | 6,558,000 | 5,313,000 |
Interest income recognized without related allowance | 125,000 | 49,000 | |
Interest income recognized with related allowance | 3,000 | 44,000 | |
Real Estate Secured | Land | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 853,000 | ||
Unpaid principal balance without related allowance | 993,000 | ||
Specific Allowance for Impaired Loans | 851,000 | ||
Average recorded investment without related allowance | 921,000 | ||
Interest income recognized without related allowance | 69,000 | ||
Unpaid Principal Balance | 993,000 | ||
Commercial | Non-PCI Loans | |||
Investment in impaired loans | |||
Average recorded investment without related allowance | 2,000 | ||
Commercial | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Specific Allowance for Impaired Loans | 2,807,000 | ||
Unpaid Principal Balance | 3,375,000 | ||
Commercial | Commercial and industrial | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 2,875,000 | 1,857,000 | |
Recorded investment with related allowance | 1,043,000 | 3,480,000 | |
Unpaid principal balance without related allowance | 3,967,000 | 2,241,000 | |
Unpaid principal balance with related allowance | 1,054,000 | 3,602,000 | |
Specific Allowance for Impaired Loans | 151,000 | 623,000 | |
Average recorded investment without related allowance | 3,994,000 | 2,162,000 | 794,000 |
Average recorded investment with related allowance | 1,272,000 | 2,522,000 | 3,475,000 |
Interest income recognized without related allowance | 162,000 | 27,000 | |
Interest income recognized with related allowance | 64,000 | 25,000 | |
Interest Income Recognized | 4,000 | ||
Commercial | Commercial and industrial | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 1,388,000 | ||
Unpaid principal balance without related allowance | 1,883,000 | ||
Specific Allowance for Impaired Loans | 1,384,000 | ||
Average recorded investment without related allowance | 2,089,000 | ||
Interest income recognized without related allowance | 366,000 | ||
Unpaid Principal Balance | 1,883,000 | ||
Commercial | Agriculture | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 720,000 | 789,000 | |
Unpaid principal balance without related allowance | 760,000 | 824,000 | |
Average recorded investment without related allowance | 724,000 | 936,000 | 1,615,000 |
Average recorded investment with related allowance | 40,000 | ||
Commercial | Agriculture | Purchased credit impaired loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 1,431,000 | ||
Unpaid principal balance without related allowance | 1,492,000 | ||
Specific Allowance for Impaired Loans | 1,423,000 | ||
Average recorded investment without related allowance | 1,326,000 | ||
Interest income recognized without related allowance | 92,000 | ||
Unpaid Principal Balance | 1,492,000 | ||
Installment loans to individuals | Non-PCI Loans | |||
Investment in impaired loans | |||
Recorded investment without related allowance | 112,000 | 118,000 | |
Unpaid principal balance without related allowance | 201,000 | 190,000 | |
Average recorded investment without related allowance | 117,000 | 68,000 | |
Average recorded investment with related allowance | 136,000 | ||
Interest income recognized without related allowance | $4,000 |
Loans_and_Allowance_for_Loan_a4
Loans and Allowance for Loan and Lease Losses (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
item | item | item | |
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | $6,511,000 | $5,853,000 | |
Non-Accruing | 7,057,000 | 7,076,000 | |
Loans classified as TDRs | 13,568,000 | 12,929,000 | |
Number of TDRs | 33 | 16 | |
Pre-Modification Outstanding Recorded Investment | 4,436,000 | 3,940,000 | |
Post-Modification Outstanding Recorded Investment | 4,436,000 | 3,940,000 | |
Troubled Debt Restructurings That Subsequently Defaulted | |||
Commitments to lend to borrowers with restructured obligations | 100,000 | ||
Minimum | |||
Troubled Debt Restructurings That Subsequently Defaulted | |||
Period of maturity date extensions granted | 6 months | ||
Maximum | |||
Troubled Debt Restructurings That Subsequently Defaulted | |||
Period of maturity date extensions granted | 10 years | ||
Real Estate Secured | Residential 1 to 4 family | |||
Troubled debt restructurings | |||
Number of TDRs | 1 | ||
Pre-Modification Outstanding Recorded Investment | 139,000 | ||
Post-Modification Outstanding Recorded Investment | 139,000 | ||
Real Estate Secured | Commercial real estate | |||
Troubled debt restructurings | |||
Number of TDRs | 2 | ||
Pre-Modification Outstanding Recorded Investment | 339,000 | ||
Post-Modification Outstanding Recorded Investment | 339,000 | ||
Commercial | Commercial and industrial | |||
Troubled debt restructurings | |||
Number of TDRs | 10 | ||
Pre-Modification Outstanding Recorded Investment | 2,141,000 | ||
Post-Modification Outstanding Recorded Investment | 2,141,000 | ||
Commercial | Agriculture | |||
Troubled debt restructurings | |||
Number of TDRs | 2 | ||
Pre-Modification Outstanding Recorded Investment | 67,000 | ||
Post-Modification Outstanding Recorded Investment | 67,000 | ||
Non-PCI Loans | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 6,251,000 | 5,853,000 | |
Non-Accruing | 6,950,000 | 7,076,000 | |
Loans classified as TDRs | 13,201,000 | 12,929,000 | |
Number of TDRs | 19 | ||
Pre-Modification Outstanding Recorded Investment | 13,058,000 | ||
Post-Modification Outstanding Recorded Investment | 11,598,000 | ||
Troubled Debt Restructurings That Subsequently Defaulted | |||
Number of TDRs | 2 | 5 | 3 |
Recorded Investment | 233,000 | 958,000 | 254,000 |
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 130,000 | 499,000 | |
Non-Accruing | 130,000 | 109,000 | |
Loans classified as TDRs | 260,000 | 608,000 | |
Number of TDRs | 1 | 3 | |
Pre-Modification Outstanding Recorded Investment | 39,000 | 563,000 | |
Post-Modification Outstanding Recorded Investment | 39,000 | 563,000 | |
Troubled Debt Restructurings That Subsequently Defaulted | |||
Number of TDRs | 1 | ||
Recorded Investment | 97,000 | ||
Non-PCI Loans | Real Estate Secured | Commercial real estate | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 2,449,000 | 225,000 | |
Non-Accruing | 78,000 | 136,000 | |
Loans classified as TDRs | 2,527,000 | 361,000 | |
Number of TDRs | 2 | 1 | |
Pre-Modification Outstanding Recorded Investment | 312,000 | 1,089,000 | |
Post-Modification Outstanding Recorded Investment | 312,000 | 1,089,000 | |
Non-PCI Loans | Real Estate Secured | Farmland | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 283,000 | ||
Loans classified as TDRs | 283,000 | ||
Non-PCI Loans | Real Estate Secured | Construction | |||
Troubled debt restructurings | |||
Number of TDRs | 1 | ||
Pre-Modification Outstanding Recorded Investment | 367,000 | ||
Post-Modification Outstanding Recorded Investment | 367,000 | ||
Non-PCI Loans | Real Estate Secured | Land | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 1,109,000 | 2,010,000 | |
Non-Accruing | 5,149,000 | 5,883,000 | |
Loans classified as TDRs | 6,258,000 | 7,893,000 | |
Number of TDRs | 3 | 1 | 3 |
Pre-Modification Outstanding Recorded Investment | 444,000 | 1,254,000 | 8,433,000 |
Post-Modification Outstanding Recorded Investment | 444,000 | 1,254,000 | 7,063,000 |
Non-PCI Loans | Commercial | Commercial and industrial | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 2,177,000 | 3,119,000 | |
Non-Accruing | 1,593,000 | 903,000 | |
Loans classified as TDRs | 3,770,000 | 4,022,000 | |
Number of TDRs | 20 | 12 | |
Pre-Modification Outstanding Recorded Investment | 2,132,000 | 2,973,000 | |
Post-Modification Outstanding Recorded Investment | 2,132,000 | 2,883,000 | |
Troubled Debt Restructurings That Subsequently Defaulted | |||
Number of TDRs | 2 | 3 | 3 |
Recorded Investment | 233,000 | 843,000 | 254,000 |
Non-PCI Loans | Commercial | Agriculture | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 34,000 | ||
Non-Accruing | 45,000 | ||
Loans classified as TDRs | 34,000 | 45,000 | |
Number of TDRs | 1 | ||
Pre-Modification Outstanding Recorded Investment | 662,000 | ||
Post-Modification Outstanding Recorded Investment | 662,000 | ||
Troubled Debt Restructurings That Subsequently Defaulted | |||
Number of TDRs | 1 | ||
Recorded Investment | 18,000 | ||
Non-PCI Loans | Installment loans to individuals | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 69,000 | ||
Loans classified as TDRs | 69,000 | ||
Number of TDRs | 1 | ||
Pre-Modification Outstanding Recorded Investment | 73,000 | ||
Post-Modification Outstanding Recorded Investment | 73,000 | ||
Purchased credit impaired loans | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 260,000 | ||
Non-Accruing | 107,000 | ||
Loans classified as TDRs | 367,000 | ||
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 223,000 | ||
Loans classified as TDRs | 223,000 | ||
Number of TDRs | 1 | ||
Pre-Modification Outstanding Recorded Investment | 230,000 | ||
Post-Modification Outstanding Recorded Investment | 230,000 | ||
Purchased credit impaired loans | Commercial | Commercial and industrial | |||
Troubled debt restructurings | |||
Accruing loans that were classified as TDRs | 37,000 | ||
Non-Accruing | 107,000 | ||
Loans classified as TDRs | 144,000 | ||
Number of TDRs | 3 | ||
Pre-Modification Outstanding Recorded Investment | 177,000 | ||
Post-Modification Outstanding Recorded Investment | $177,000 |
Loans_and_Allowance_for_Loan_a5
Loans and Allowance for Loan and Lease Losses (Details 4) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | $1,193,483 | $827,484 |
Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,130,984 | |
Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 9,874 | |
Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 52,395 | |
Credit Risk Grades, Doubtful | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 230 | |
Real Estate Secured | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 975,603 | |
Real Estate Secured | Multi-family residential | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 78,645 | |
Real Estate Secured | Residential 1 to 4 family | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 127,201 | |
Real Estate Secured | Home equity lines of credit | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 38,252 | |
Real Estate Secured | Commercial real estate | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 588,472 | |
Real Estate Secured | Farmland | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 98,373 | |
Real Estate Secured | Land | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 20,167 | |
Real Estate Secured | Construction | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 24,493 | |
Commercial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 209,902 | |
Commercial | Commercial and industrial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 154,787 | |
Commercial | Agriculture | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 55,101 | |
Commercial | Other | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 14 | |
Installment loans to individuals | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 7,723 | |
Overdrafts | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 255 | |
Non-PCI Loans | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,183,183 | 827,484 |
Non-PCI Loans | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,130,528 | 780,610 |
Non-PCI Loans | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 9,097 | 11,383 |
Non-PCI Loans | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 43,404 | 35,491 |
Non-PCI Loans | Credit Risk Grades, Doubtful | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 154 | |
Non-PCI Loans | Real Estate Secured | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 968,110 | 672,061 |
Non-PCI Loans | Real Estate Secured | Multi-family residential | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 78,645 | 31,140 |
Non-PCI Loans | Real Estate Secured | Multi-family residential | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 78,023 | 30,560 |
Non-PCI Loans | Real Estate Secured | Multi-family residential | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 622 | 580 |
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 126,640 | 88,904 |
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 125,733 | 87,350 |
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 199 | 490 |
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 708 | 1,064 |
Non-PCI Loans | Real Estate Secured | Home equity lines of credit | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 38,252 | 31,178 |
Non-PCI Loans | Real Estate Secured | Home equity lines of credit | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 37,638 | 31,021 |
Non-PCI Loans | Real Estate Secured | Home equity lines of credit | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 614 | 157 |
Non-PCI Loans | Real Estate Secured | Commercial real estate | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 584,056 | 432,203 |
Non-PCI Loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 560,478 | 414,058 |
Non-PCI Loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 3,010 | 3,574 |
Non-PCI Loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 20,568 | 14,571 |
Non-PCI Loans | Real Estate Secured | Farmland | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 96,708 | 50,414 |
Non-PCI Loans | Real Estate Secured | Farmland | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 92,481 | 47,988 |
Non-PCI Loans | Real Estate Secured | Farmland | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 2,665 | 975 |
Non-PCI Loans | Real Estate Secured | Farmland | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,562 | 1,451 |
Non-PCI Loans | Real Estate Secured | Land | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 19,316 | 24,523 |
Non-PCI Loans | Real Estate Secured | Land | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 12,929 | 15,244 |
Non-PCI Loans | Real Estate Secured | Land | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 862 | |
Non-PCI Loans | Real Estate Secured | Land | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 6,387 | 8,417 |
Non-PCI Loans | Real Estate Secured | Construction | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 24,493 | 13,699 |
Non-PCI Loans | Real Estate Secured | Construction | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 24,493 | 13,699 |
Non-PCI Loans | Commercial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 207,095 | 151,845 |
Non-PCI Loans | Commercial | Commercial and industrial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 153,403 | 119,121 |
Non-PCI Loans | Commercial | Commercial and industrial | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 138,202 | 105,991 |
Non-PCI Loans | Commercial | Commercial and industrial | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 2,943 | 5,276 |
Non-PCI Loans | Commercial | Commercial and industrial | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 12,104 | 7,854 |
Non-PCI Loans | Commercial | Commercial and industrial | Credit Risk Grades, Doubtful | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 154 | |
Non-PCI Loans | Commercial | Agriculture | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 53,678 | 32,686 |
Non-PCI Loans | Commercial | Agriculture | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 52,678 | 31,279 |
Non-PCI Loans | Commercial | Agriculture | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 280 | 196 |
Non-PCI Loans | Commercial | Agriculture | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 720 | 1,211 |
Non-PCI Loans | Commercial | Other | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 14 | 38 |
Non-PCI Loans | Commercial | Other | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 38 | |
Non-PCI Loans | Commercial | Other | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 14 | |
Non-PCI Loans | Installment loans to individuals | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 7,723 | 3,246 |
Non-PCI Loans | Installment loans to individuals | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 7,618 | 3,050 |
Non-PCI Loans | Installment loans to individuals | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 10 | |
Non-PCI Loans | Installment loans to individuals | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 105 | 186 |
Non-PCI Loans | Overdrafts | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 255 | 332 |
Non-PCI Loans | Overdrafts | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 255 | 332 |
Purchased credit impaired loans | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 10,300 | |
Purchased credit impaired loans | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 456 | |
Purchased credit impaired loans | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 777 | |
Purchased credit impaired loans | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 8,991 | |
Purchased credit impaired loans | Credit Risk Grades, Doubtful | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 76 | |
Purchased credit impaired loans | Real Estate Secured | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 7,493 | |
Purchased credit impaired loans | Real Estate Secured | Residential 1 to 4 family | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 561 | |
Purchased credit impaired loans | Real Estate Secured | Residential 1 to 4 family | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 561 | |
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 4,416 | |
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 126 | |
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 680 | |
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 3,610 | |
Purchased credit impaired loans | Real Estate Secured | Farmland | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,665 | |
Purchased credit impaired loans | Real Estate Secured | Farmland | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,665 | |
Purchased credit impaired loans | Real Estate Secured | Land | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 851 | |
Purchased credit impaired loans | Real Estate Secured | Land | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 294 | |
Purchased credit impaired loans | Real Estate Secured | Land | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 557 | |
Purchased credit impaired loans | Commercial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 2,807 | |
Purchased credit impaired loans | Commercial | Commercial and industrial | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,384 | |
Purchased credit impaired loans | Commercial | Commercial and industrial | Credit Risk Grades, Pass | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 36 | |
Purchased credit impaired loans | Commercial | Commercial and industrial | Credit Risk Grades, Special Mention | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 97 | |
Purchased credit impaired loans | Commercial | Commercial and industrial | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,175 | |
Purchased credit impaired loans | Commercial | Commercial and industrial | Credit Risk Grades, Doubtful | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 76 | |
Purchased credit impaired loans | Commercial | Agriculture | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | 1,423 | |
Purchased credit impaired loans | Commercial | Agriculture | Credit Risk Grades, Substandard | ||
Non-PCI loans by the internal risk grading system | ||
Total Gross loans | $1,423 |
Loans_and_Allowance_for_Loan_a6
Loans and Allowance for Loan and Lease Losses (Details 5) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2013 | Feb. 28, 2014 | |
Aging of loans held for investment | ||||
Current | $1,182,868,000 | $817,265,000 | ||
30-59 | 56,000 | 100,000 | ||
60-89 | 24,000 | 2,000 | ||
Non-Accruing | 10,535,000 | 10,117,000 | ||
Total | 1,193,483,000 | 827,484,000 | ||
Contractually required payments receivable of loans purchased during the period | ||||
Contractually required payments including interest | 19,827,000 | |||
Nonaccretable difference | -2,320,000 | |||
Cash flows expected to be collected | 17,507,000 | |||
Accretable difference | -4,673,000 | |||
Fair value at acquisition | 12,834,000 | |||
ALLL Allowance | ||||
Provision for credit losses | 7,681,000 | |||
Accretable yield, or income expected to be collected | ||||
New loans purchased | 4,673,000 | |||
Accretion of income | -1,362,000 | |||
Reclassifications from nonaccretable difference | 1,063,000 | |||
Balance at the end of the period | 4,374,000 | |||
Land | ||||
ALLL Allowance | ||||
Provision for credit losses | -1,757,000 | 4,371,000 | -1,278,000 | |
Commercial | ||||
ALLL Allowance | ||||
Provision for credit losses | 337,000 | 3,646,000 | -1,165,000 | |
Installment loans to individuals | ||||
ALLL Allowance | ||||
Provision for credit losses | 68,000 | 50,000 | 378,000 | |
Non-PCI Loans | ||||
Aging of loans held for investment | ||||
Current | 1,172,944,000 | |||
30-59 | 56,000 | |||
60-89 | 24,000 | |||
Non-Accruing | 10,159,000 | |||
Total | 1,183,183,000 | |||
Unpaid Principal Balance | 24,784,000 | 21,711,000 | ||
Carrying Amount | 1,771,000 | 3,155,000 | ||
Non-PCI Loans | Real Estate Secured | Multi-family residential | ||||
Aging of loans held for investment | ||||
Current | 78,645,000 | 31,140,000 | ||
Total | 78,645,000 | 31,140,000 | ||
Non-PCI Loans | Real Estate Secured | Residential 1 to 4 family | ||||
Aging of loans held for investment | ||||
Current | 126,516,000 | 88,455,000 | ||
Non-Accruing | 124,000 | 449,000 | ||
Total | 126,640,000 | 88,904,000 | ||
Non-PCI Loans | Real Estate Secured | Home equity lines of credit | ||||
Aging of loans held for investment | ||||
Current | 37,994,000 | 31,178,000 | ||
Non-Accruing | 258,000 | |||
Total | 38,252,000 | 31,178,000 | ||
Non-PCI Loans | Real Estate Secured | Commercial real estate | ||||
Aging of loans held for investment | ||||
Current | 581,971,000 | 431,531,000 | ||
Non-Accruing | 2,085,000 | 672,000 | ||
Total | 584,056,000 | 432,203,000 | ||
Carrying Amount | 148,000 | |||
Non-PCI Loans | Real Estate Secured | Farmland | ||||
Aging of loans held for investment | ||||
Current | 96,708,000 | 50,414,000 | ||
Total | 96,708,000 | 50,414,000 | ||
Non-PCI Loans | Real Estate Secured | Land | ||||
Aging of loans held for investment | ||||
Current | 14,079,000 | 18,613,000 | ||
Non-Accruing | 5,237,000 | 5,910,000 | ||
Total | 19,316,000 | 24,523,000 | ||
Carrying Amount | 1,472,000 | 2,532,000 | ||
Non-PCI Loans | Real Estate Secured | Construction | ||||
Aging of loans held for investment | ||||
Current | 24,493,000 | 13,699,000 | ||
Total | 24,493,000 | 13,699,000 | ||
Non-PCI Loans | Commercial | Commercial and industrial | ||||
Aging of loans held for investment | ||||
Current | 151,656,000 | 116,841,000 | ||
30-59 | 100,000 | |||
60-89 | 21,000 | |||
Non-Accruing | 1,726,000 | 2,180,000 | ||
Total | 153,403,000 | 119,121,000 | ||
Carrying Amount | 151,000 | 623,000 | ||
Non-PCI Loans | Commercial | Agriculture | ||||
Aging of loans held for investment | ||||
Current | 52,992,000 | 31,897,000 | ||
Non-Accruing | 686,000 | 789,000 | ||
Total | 53,678,000 | 32,686,000 | ||
Non-PCI Loans | Commercial | Other | ||||
Aging of loans held for investment | ||||
Current | 14,000 | 38,000 | ||
Total | 14,000 | 38,000 | ||
Non-PCI Loans | Installment loans to individuals | ||||
Aging of loans held for investment | ||||
Current | 7,621,000 | 3,127,000 | ||
30-59 | 56,000 | |||
60-89 | 3,000 | 2,000 | ||
Non-Accruing | 43,000 | 117,000 | ||
Total | 7,723,000 | 3,246,000 | ||
Non-PCI Loans | Overdrafts | ||||
Aging of loans held for investment | ||||
Current | 255,000 | 332,000 | ||
Total | 255,000 | 332,000 | ||
Purchased credit impaired loans | ||||
Aging of loans held for investment | ||||
Current | 9,924,000 | |||
Non-Accruing | 376,000 | |||
Total | 10,300,000 | |||
Unpaid Principal Balance | 13,390,000 | |||
Carrying Amount | 10,300,000 | |||
Purchased credit impaired loans | Real Estate Secured | ||||
Aging of loans held for investment | ||||
Unpaid Principal Balance | 10,015,000 | |||
Carrying Amount | 7,493,000 | |||
Purchased credit impaired loans | Real Estate Secured | Residential 1 to 4 family | ||||
Aging of loans held for investment | ||||
Current | 561,000 | |||
Total | 561,000 | |||
Unpaid Principal Balance | 886,000 | |||
Carrying Amount | 561,000 | |||
Purchased credit impaired loans | Real Estate Secured | Commercial real estate | ||||
Aging of loans held for investment | ||||
Current | 4,416,000 | |||
Total | 4,416,000 | |||
Unpaid Principal Balance | 6,109,000 | |||
Carrying Amount | 4,416,000 | |||
Purchased credit impaired loans | Real Estate Secured | Farmland | ||||
Aging of loans held for investment | ||||
Current | 1,665,000 | |||
Total | 1,665,000 | |||
Unpaid Principal Balance | 2,027,000 | |||
Carrying Amount | 1,665,000 | |||
Purchased credit impaired loans | Real Estate Secured | Land | ||||
Aging of loans held for investment | ||||
Current | 851,000 | |||
Total | 851,000 | |||
Unpaid Principal Balance | 993,000 | |||
Carrying Amount | 851,000 | |||
Purchased credit impaired loans | Commercial | ||||
Aging of loans held for investment | ||||
Unpaid Principal Balance | 3,375,000 | |||
Carrying Amount | 2,807,000 | |||
Purchased credit impaired loans | Commercial | Commercial and industrial | ||||
Aging of loans held for investment | ||||
Current | 1,008,000 | |||
Non-Accruing | 376,000 | |||
Total | 1,384,000 | |||
Unpaid Principal Balance | 1,883,000 | |||
Carrying Amount | 1,384,000 | |||
Purchased credit impaired loans | Commercial | Agriculture | ||||
Aging of loans held for investment | ||||
Current | 1,423,000 | |||
Total | 1,423,000 | |||
Unpaid Principal Balance | 1,492,000 | |||
Carrying Amount | 1,423,000 | |||
MISN | ||||
ALLL Allowance | ||||
Provision for credit losses | 0 | |||
MISN | Non-PCI Loans | ||||
Contractually required payments receivable of loans purchased during the period | ||||
Allowance for loan losses | $1,000,000 |
Loans_and_Allowance_for_Loan_a7
Loans and Allowance for Loan and Lease Losses (Details 6) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | $17,859,000 | $18,118,000 | $19,314,000 |
Charge-offs | -1,914,000 | -2,026,000 | -11,233,000 |
Recoveries | 857,000 | 1,767,000 | 2,356,000 |
Provision for loan losses | 7,681,000 | ||
Balance, at the end of the period | 16,802,000 | 17,859,000 | 18,118,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses individually evaluated for impairment | 1,771,000 | 3,155,000 | |
Allowance for loan and lease losses collectively evaluated for impairment | 15,031,000 | 14,704,000 | |
Recorded investment in loan individually evaluated for impairment | 16,390,000 | 14,449,000 | |
Recorded investment in loan collectively evaluated for impairment | 1,166,752,000 | 813,035,000 | |
Loans acquired with deteriorated credit quality | 10,341,000 | ||
Total gross loans held for investment | 1,193,483,000 | 827,484,000 | |
Loans acquired with deteriorated credit quality | 10,341,000 | ||
Reserve for off-balance sheet commitments | 500,000 | 300,000 | |
MISN | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Provision for loan losses | 0 | ||
Amount of allowance attributed to: | |||
Total gross loans held for investment | 239,700,000 | ||
Commercial | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 4,781,000 | 6,115,000 | 6,549,000 |
Charge-offs | -758,000 | -1,281,000 | -5,134,000 |
Recoveries | 765,000 | 1,112,000 | 1,054,000 |
Provision for loan losses | 337,000 | -1,165,000 | 3,646,000 |
Balance, at the end of the period | 5,125,000 | 4,781,000 | 6,115,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses individually evaluated for impairment | 151,000 | 623,000 | |
Allowance for loan and lease losses collectively evaluated for impairment | 4,974,000 | 4,158,000 | |
Recorded investment in loan individually evaluated for impairment | 4,633,000 | 5,291,000 | |
Recorded investment in loan collectively evaluated for impairment | 202,450,000 | 146,554,000 | |
Loans acquired with deteriorated credit quality | 2,819,000 | ||
Total gross loans held for investment | 209,902,000 | ||
Loans acquired with deteriorated credit quality | 2,819,000 | ||
Installment loans to individuals | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 99,000 | 64,000 | 175,000 |
Charge-offs | -8,000 | -411,000 | -184,000 |
Recoveries | 13,000 | 68,000 | 23,000 |
Provision for loan losses | 68,000 | 378,000 | 50,000 |
Balance, at the end of the period | 172,000 | 99,000 | 64,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses collectively evaluated for impairment | 172,000 | 99,000 | |
Recorded investment in loan individually evaluated for impairment | 112,000 | ||
Recorded investment in loan collectively evaluated for impairment | 7,611,000 | 3,246,000 | |
Total gross loans held for investment | 7,723,000 | ||
All other loans | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 32,000 | 38,000 | 41,000 |
Charge-offs | -137,000 | ||
Recoveries | 3,000 | ||
Provision for loan losses | -2,000 | -6,000 | 131,000 |
Balance, at the end of the period | 30,000 | 32,000 | 38,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses collectively evaluated for impairment | 30,000 | 32,000 | |
Recorded investment in loan collectively evaluated for impairment | 255,000 | 332,000 | |
Unallocated | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 262,000 | 113,000 | |
Provision for loan losses | 84,000 | 149,000 | 113,000 |
Balance, at the end of the period | 346,000 | 262,000 | 113,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses collectively evaluated for impairment | 346,000 | 262,000 | |
Land | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 3,402,000 | 4,641,000 | 2,416,000 |
Charge-offs | -29,000 | -34,000 | -2,168,000 |
Recoveries | 39,000 | 73,000 | 22,000 |
Provision for loan losses | -1,757,000 | -1,278,000 | 4,371,000 |
Balance, at the end of the period | 1,655,000 | 3,402,000 | 4,641,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses individually evaluated for impairment | 1,472,000 | 2,532,000 | |
Allowance for loan and lease losses collectively evaluated for impairment | 183,000 | 870,000 | |
Recorded investment in loan individually evaluated for impairment | 6,346,000 | 7,696,000 | |
Recorded investment in loan collectively evaluated for impairment | 12,968,000 | 16,827,000 | |
Loans acquired with deteriorated credit quality | 853,000 | ||
Loans acquired with deteriorated credit quality | 853,000 | ||
Other real estate secured | |||
Allocation of the allowance to various segments in the loan portfolio | |||
Balance, at the beginning of the period | 9,283,000 | 7,147,000 | 10,133,000 |
Charge-offs | -1,119,000 | -300,000 | -3,610,000 |
Recoveries | 40,000 | 514,000 | 1,254,000 |
Provision for loan losses | 1,270,000 | 1,922,000 | -630,000 |
Balance, at the end of the period | 9,474,000 | 9,283,000 | 7,147,000 |
Amount of allowance attributed to: | |||
Allowance for loan and lease losses individually evaluated for impairment | 148,000 | ||
Allowance for loan and lease losses collectively evaluated for impairment | 9,326,000 | 9,283,000 | |
Recorded investment in loan individually evaluated for impairment | 5,299,000 | 1,462,000 | |
Recorded investment in loan collectively evaluated for impairment | 943,468,000 | 646,076,000 | |
Loans acquired with deteriorated credit quality | 6,669,000 | ||
Loans acquired with deteriorated credit quality | $6,669,000 |
Property_Premises_and_Equipmen2
Property, Premises and Equipment (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Premises and Equipment | |||
Total cost | $44,755 | $33,749 | |
Less: accumulated depreciation and amortization | 6,935 | 9,529 | |
Total property, premises and equipment | 37,820 | 24,220 | |
Depreciation expense | 1,829 | 1,368 | 1,348 |
Land | |||
Property, Premises and Equipment | |||
Total cost | 11,543 | 3,633 | |
Furniture and equipment | |||
Property, Premises and Equipment | |||
Total cost | 5,941 | 5,751 | |
Building and improvements | |||
Property, Premises and Equipment | |||
Total cost | 26,487 | 15,347 | |
Construction in progress | |||
Property, Premises and Equipment | |||
Total cost | $784 | $9,018 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Deferred tax assets | |||
Reserves for loan losses | $8,387 | $8,679 | |
Forgone interest on non-accrual loans | 1,424 | 933 | |
Fixed assets | 149 | 411 | |
Accruals | 1,035 | 1,025 | |
Alternative minimum tax credit | 2,125 | 2,855 | |
Deferred income | 2,137 | 2,190 | |
Deferred compensation | 1,703 | 1,603 | |
Net operating loss carryforward | 10,962 | 2,234 | |
Investment securities valuation | 2,395 | ||
Charitable contribution | 1,436 | ||
State deferred tax | 961 | ||
Total deferred tax assets | 71 | ||
Valuation allowance | 5,605 | ||
Deferred tax assets | 29,429 | 23,286 | |
Deferred tax liabilities | |||
Fair value adjustment for purchased assets | 330 | ||
Investment securities valuation | 738 | ||
Deferred costs, prepaids and FHLB advances | 1,465 | 1,332 | |
State Deferred Tax | 2,306 | ||
Total deferred tax liabilities | 4,509 | 1,662 | |
Net deferred tax assets | 24,920 | 21,624 | |
Current: | |||
Federal | 141 | 1,181 | 3,083 |
State | 253 | 368 | 1,264 |
Total current provision | 394 | 1,549 | 4,347 |
Deferred: | |||
Federal | 3,116 | 3,816 | -455 |
State | 1,239 | 1,632 | -85 |
Total deferred provision / (benefit) | 4,355 | 5,448 | -540 |
Total income tax provision / (benefit) | 4,749 | 6,997 | -1,798 |
Deferred Tax Valuation Allowance: | |||
Deferred tax valuation allowance | -5,605 | ||
Reconciliation of the statutory federal income tax expense / (benefit) to the Company's effective income tax (benefit) / expense | |||
Tax provision at federal statutory tax rate | 4,800 | 6,243 | 3,934 |
State income taxes, net of federal income tax benefit | 970 | 1,300 | 766 |
Change in deferred tax asset valuation allowance | -5,605 | ||
Bank owned life insurance | -217 | -167 | -180 |
Tax exempt income, net of interest expense | -826 | -610 | -608 |
Merger and integration | 61 | 271 | |
Other, net | -39 | -40 | -105 |
Total income tax provision / (benefit) | 4,749 | 6,997 | -1,798 |
Reconciliation of the statutory federal income tax expense / (benefit) rate to the Company's effective income tax (benefit) / expense rate | |||
Tax provision at federal statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal income tax benefit (as a percent) | 7.10% | 7.30% | 6.80% |
Change in deferred tax asset valuation allowance (as a percent) | -49.90% | ||
Bank owned life insurance (as a percent) | -1.60% | -0.90% | -1.60% |
Tax exempt income, net of interest expense (as a percent) | -6.00% | -3.40% | -5.40% |
Merger and integration (as a percent) | 0.40% | 1.50% | |
Other, net (as a percent) | -0.30% | -0.30% | -0.90% |
Total income tax provision / (benefit) (as a percent) | 34.60% | 39.20% | -16.00% |
Federal | |||
Deferred tax assets | |||
Valuation allowance | 3,662 | ||
Deferred Tax Valuation Allowance: | |||
Deferred tax valuation allowance | -3,662 | ||
State tax | |||
Deferred tax assets | |||
Valuation allowance | 1,943 | ||
Deferred Tax Valuation Allowance: | |||
Deferred tax valuation allowance | -1,943 | ||
Heritage Oaks Bancorp | |||
Deferred: | |||
Total income tax provision / (benefit) | -576 | -347 | -813 |
Reconciliation of the statutory federal income tax expense / (benefit) to the Company's effective income tax (benefit) / expense | |||
Total income tax provision / (benefit) | ($576) | ($347) | ($813) |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Federal | |
NOL and tax credit carry-forward | |
NOL available for carry-forward | $11 |
Alternative minimum tax credit | 1.5 |
State tax | |
NOL and tax credit carry-forward | |
NOL available for carry-forward | 2.1 |
Additional NOL incurred during 2009 which expires in 2029 | 8.9 |
Alternative minimum tax credit | $0.60 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2014 |
Goodwill and Other Intangible Assets | ||||
Goodwill | $24,885 | $11,237 | ||
Core deposit intangible | ||||
Amortization of intangible assets | 1,057 | 400 | 342 | |
Gross Carrying Amount | 9,261 | |||
Accumulated Amortization | -3,914 | |||
Net Carrying Amount | 5,347 | |||
Estimated Amortization | ||||
Year 2015 | -1,049 | |||
Year 2016 | -944 | |||
Year 2017 | -588 | |||
Year 2018 | -549 | |||
Year 2019 | -522 | |||
Year 2014 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 5,347 | |||
Year 2015 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 4,298 | |||
Year 2016 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 3,354 | |||
Year 2017 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 2,766 | |||
Year 2018 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 2,217 | |||
Year 2019 | ||||
Core deposit intangible | ||||
Net Carrying Amount | 1,695 | |||
MISN | ||||
Goodwill and Other Intangible Assets | ||||
Goodwill | $13,648 |
Deposits_Details
Deposits (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Total | |
2015 | $163,317 |
2016 | 47,409 |
2017 | 19,925 |
2018 | 17,711 |
2019 | 18,324 |
Over 5 Years | 13,153 |
Total | 279,839 |
Amounts less than $100 | |
2015 | 55,172 |
2016 | 17,008 |
2017 | 6,237 |
2018 | 3,230 |
2019 | 4,399 |
Over 5 Years | 7 |
Total | 86,053 |
Amounts of $100 or more | |
2015 | 108,145 |
2016 | 30,401 |
2017 | 13,688 |
2018 | 14,481 |
2019 | 13,925 |
Over 5 Years | 13,146 |
Total | $193,786 |
Borrowings_Details
Borrowings (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Oct. 27, 2006 | Dec. 31, 2013 | Feb. 28, 2014 | |
Borrowings | ||||
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged | $869,500,000 | |||
Amortization of premium on borrowings | 168,000 | |||
FHLB payment requirements | ||||
2015 | 25,000,000 | 29,000,000 | ||
2016 | 13,522,000 | |||
2017 | 13,522,000 | |||
2018 | 8,014,000 | |||
2019 | 7,500,000 | |||
Due More Than 5 Years | 28,000,000 | |||
Total | 95,600,000 | |||
Short term FHLB borrowing | 25,000,000 | 29,000,000 | ||
Federal Home Loan Bank, Advances, Maturities Summary, Average Interest Rate of Amounts Due [Abstract] | ||||
2015 Weighted average interest rate | 0.27% | |||
2016 Weighted average interest rate | 0.68% | |||
2017 Weighted average interest rate | 1.19% | |||
2018 Weighted average interest rate | 1.09% | |||
2019 Weighted average interest rate | 1.64% | |||
Over 5 Years | 2.49% | |||
Junior Subordinated Debentures | ||||
Debentures outstanding | 13,233,000 | 8,248,000 | ||
Junior subordinated debt included in Tier I capital | 170,918,000 | 118,933,000 | ||
Unsecured revolving line of credit | ||||
Borrowings | ||||
Borrowing line | 10,000,000 | |||
Annual commitment fee | 0.25% | |||
Unused portion of line fee | 0.25% | |||
Federal Reserve Bank | ||||
Borrowings | ||||
Borrowing line | 6,600,000 | |||
Collateralized borrowing line, amount outstanding | 0 | |||
FHLB | ||||
Borrowings | ||||
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged | 869,500,000 | |||
Fixed rate FHLB advances with interest rates ranging from 0.6% to 2.4% | ||||
FHLB payment requirements | ||||
Total | 70,600,000 | |||
Fixed rate FHLB advances with interest rates ranging from 0.6% to 2.4% | MISN | ||||
Borrowings | ||||
Purchase accounting fair value adjustments | 58,000 | |||
Amortization of premium on borrowings | 13,000 | |||
FHLB payment requirements | ||||
Total | 6,000,000 | |||
Fixed rate FHLB advances with interest rates ranging from 0.6% to 2.4% | Minimum | ||||
FHLB payment requirements | ||||
Fixed interest rate (as a percent) | 0.63% | |||
Fixed rate FHLB advances with interest rates ranging from 0.6% to 2.4% | Maximum | ||||
FHLB payment requirements | ||||
Fixed interest rate (as a percent) | 2.73% | |||
Variable rate FHLB advances with an interest rate of 0.6% | ||||
FHLB payment requirements | ||||
2015 | 25,000,000 | |||
Short term FHLB borrowing | 25,000,000 | |||
Variable interest rate (as a percent) | 0.27% | |||
Junior subordinated debentures | ||||
Junior Subordinated Debentures | ||||
Junior subordinated debt included in Tier I capital | 12,800,000 | |||
Debt outstanding | 16,496,000 | 8,248,000 | ||
Junior subordinated debentures | MISN | ||||
Borrowings | ||||
Purchase accounting fair value adjustments | 3,200,000 | |||
Junior Subordinated Debentures | ||||
Debt outstanding | 5,000,000 | 8,200,000 | ||
Accretion of discount | 200,000 | |||
Junior subordinated debentures | Maximum | ||||
Junior Subordinated Debentures | ||||
Percentage of junior subordinate debentures, which may constitute for Tier I capital | 25.00% | |||
Heritage Oaks Capital Trust II | ||||
Junior Subordinated Debentures | ||||
Debentures issued | 8,248,000 | |||
Debentures outstanding | 8,248,000 | |||
Variable rate basis | Variable 3-month LIBOR + | |||
Variable rate basis spread (as a percent) | 1.72% | |||
Current Rate (as a percent) | 1.98% | |||
Mission Community Capital Trust I | ||||
Junior Subordinated Debentures | ||||
Debentures issued | 3,093,000 | |||
Debentures outstanding | 2,144,000 | |||
Variable rate basis | Variable 3-month LIBOR + | |||
Variable rate basis spread (as a percent) | 2.95% | |||
Current Rate (as a percent) | 3.18% | |||
Santa Lucia Bancorp (CA) Capital Trust | ||||
Junior Subordinated Debentures | ||||
Debentures issued | 5,155,000 | |||
Debentures outstanding | 2,841,000 | |||
Variable rate basis | Variable 3-month LIBOR + | |||
Variable rate basis spread (as a percent) | 1.48% | |||
Current Rate (as a percent) | 1.71% | |||
Heritage Oaks Bank | ||||
Junior Subordinated Debentures | ||||
Junior subordinated debt included in Tier I capital | 164,361,000 | 114,402,000 | ||
Heritage Oaks Bank | Correspondent Banks | ||||
Borrowings | ||||
Borrowing line | 62,000,000 | |||
Balances outstanding on borrowing line | 0 | |||
Heritage Oaks Bank | FHLB | ||||
Borrowings | ||||
Remaining borrowing capacity | 462,100,000 | |||
Heritage Oaks Bank | Letter of credit | ||||
Borrowings | ||||
Borrowing line | 11,500,000 | |||
Heritage Oaks Bank | Heritage Oaks Capital Trust II | Junior subordinated debentures | ||||
Junior Subordinated Debentures | ||||
Debentures issued | $8,200,000 |
Employee_Benefit_Plans_Details
Employee Benefit Plans (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Savings plan pursuant to section 401(k) of the Internal Revenue Code | |||
Expenses incurred as associated with the plan | $300,000 | $100,000 | $100,000 |
ESOP | |||
Number of consecutive months of service to be fulfilled by employees for eligibility to be covered under the plan | 12 months | ||
Minimum age of employees for eligibility to be covered under the plan | 21 years | ||
Minimum hours of work required by the employees to be covered under the plan per year | 1000 hours | ||
Contributions to the plan | 0 | 0 | 0 |
Company's common stock held under the plan (in shares) | 0 | 0 | |
Salary Continuation Plan | |||
Period for which annual cash payments are payable | 15 years | ||
Liability under salary continuation agreements | 2,700,000 | 2,700,000 | |
Expenses associated with the salary continuation plans | 200,000 | 300,000 | 200,000 |
Cash surrender values of the life insurance policies | 24,700,000 | 15,800,000 | |
Bank Owned Life Insurance Income | 800,000 | 600,000 | 600,000 |
MISN | |||
Salary Continuation Plan | |||
Cash surrender values of the life insurance policies | $8,300,000 | ||
Maximum | |||
Salary Continuation Plan | |||
Age at which annual cash payments are payable | 65 years | ||
Minimum | |||
Salary Continuation Plan | |||
Age at which annual cash payments are payable | 60 years |
Sharebased_Compensation_Plans_1
Share-based Compensation Plans (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 25, 2005 | |
plan | ||||
Share-based Compensation Plans | ||||
Number of share-based employee compensation plans | 2 | |||
Summary of the expenses the Company has recognized related to share-based compensation | ||||
Share-based compensation expense | $993,000 | $533,000 | $331,000 | |
Unrecognized compensation expense | 2,032,000 | 1,296,000 | 1,102,000 | |
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Income tax benefit recognized related to stock compensation | 300,000 | |||
2005 Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Percentage of the company's issued and outstanding shares of common stock offered under the plan after inception on each anniversary | 10.00% | |||
Minimum | 2005 Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting period | 3 years | |||
Maximum | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Income tax benefit recognized related to stock compensation | 100,000 | 100,000 | ||
Maximum | 2005 Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Percentage of the company's issued and outstanding shares of common stock offered under the plan | 10.00% | |||
Vesting period | 4 years | |||
Expiration term | 10 years | |||
Stock options | ||||
Summary of the expenses the Company has recognized related to share-based compensation | ||||
Share-based compensation expense | 490,000 | 240,000 | 127,000 | |
Unrecognized compensation expense | 1,065,000 | 645,000 | 529,000 | |
Weighted-average period over which expense is expected to be recognized | 2 years 9 months 18 days | |||
Number of shares | ||||
Options Available for Grant (in shares) | 2,003,176 | 1,593,616 | ||
Options outstanding, at the beginning of the period (in shares) | 562,257 | |||
Granted (in shares) | 341,643 | |||
Forfeited (in shares) | -86,266 | |||
Exercised (in shares) | -6,738 | |||
Expired (in shares) | -68,339 | |||
Options outstanding, at the end of the period (in shares) | 742,557 | 562,257 | ||
Weighted Average Exercise Price | ||||
Options outstanding, at the beginning of the period (in dollars per share) | $6.34 | |||
Granted (in dollars per share) | $7.38 | |||
Forfeited (in dollars per share) | $7.80 | |||
Exercised (in dollars per share) | $11.03 | |||
Expired (in dollars per share) | $3.95 | |||
Options outstanding, at the end of the period (in dollars per share) | $6.83 | $6.34 | ||
Options vested or expected to vest | ||||
Shares | 706,840 | |||
Weighted Average Exercise Price (in dollars per share) | $6.82 | |||
Weighted Average Remaining Contractual Life | 7 years 7 months 24 days | |||
Aggregate Intrinsic Value | 1,445,657,000 | |||
Options exercisable | ||||
Shares | 285,212 | |||
Weighted Average Exercise Price (in dollars per share) | $6.73 | |||
Weighted Average Remaining Contractual Life | 5 years 9 months 4 days | |||
Aggregate Intrinsic Value | 811,368,000 | |||
Aggregate intrinsic value of options exercised | ||||
Aggregate intrinsic value of options exercised | 200,000 | 100,000 | 100,000 | |
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Expected volatility (as a percent) | 49.38% | 55.33% | 52.26% | |
Expected term | 5 years 7 months 10 days | 6 years | 7 years | |
Dividend yield (as a percent) | 0.67% | 0.00% | 0.00% | |
Risk free rate (as a percent) | 1.75% | 1.54% | 1.11% | |
Weighted-average grant date fair value (in dollars per share) | $3.32 | $3.30 | $2.87 | |
Stock options | 1997 Stock Option Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting rate (as a percent) | 20.00% | |||
Vesting period | 5 years | |||
Stock options | Minimum | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting period | 3 years | |||
Stock options | Maximum | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting period | 5 years | |||
Stock options | Maximum | 1997 Stock Option Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Expiration term | 10 years | |||
Restricted stock | ||||
Summary of the expenses the Company has recognized related to share-based compensation | ||||
Share-based compensation expense | 503,000 | 293,000 | 204,000 | |
Unrecognized compensation expense | $967,000 | $651,000 | $573,000 | |
Weighted-average period over which expense is expected to be recognized | 2 years 4 months 24 days | |||
Number of Shares | ||||
Balance at the beginning of the period (in shares) | 195,048 | |||
Granted (in shares) | 134,368 | |||
Vested (in shares) | -97,111 | |||
Forfeited (in shares) | -28,184 | |||
Balance at the end of the period (in shares) | 204,121 | 195,048 | ||
Average Grant Date fair Value | ||||
Balance at the beginning of the period (in dollars per share) | $4.87 | |||
Granted (in dollars per share) | $7.34 | |||
Vested (in dollars per share) | $4.24 | |||
Forfeited (in dollars per share) | $5.96 | |||
Balance at the end of the period (in dollars per share) | $6.65 | $4.87 | ||
Restricted stock | Minimum | 2005 Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting period | 3 years | |||
Restricted stock | Maximum | 2005 Plan | ||||
Assumptions used in the calculation of the weighted average fair value of options granted | ||||
Vesting period | 5 years |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 24, 2014 | Oct. 29, 2014 | Mar. 12, 2010 | |
Preferred Stock | ||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||
Conversion price (in dollars per share) | $3.25 | |||||
Value of contingent beneficial conversion feature to be recognized upon conversion | $168,000 | |||||
Preferred stock dividends paid | 708,000 | 3,013,000 | ||||
Shares repurchased | 51,732 | |||||
Average price per share stock repurchase | $7.47 | |||||
Minimum | ||||||
Preferred Stock | ||||||
Discount rate (as a percent) | 1.00% | |||||
Number of series of preferred stock | 1 | |||||
Maximum | ||||||
Preferred Stock | ||||||
Preferred stock, shares authorized | 5,000,000 | |||||
Discount rate (as a percent) | 3.00% | |||||
Repurchase of shares authorized | 5,000,000 | |||||
Series C preferred stock | ||||||
Preferred Stock | ||||||
Issuance of stock (in shares) | 1,189,538 | |||||
Gross proceeds from private placement | 3,600,000 | |||||
Preferred stock conversion ratio | 1 | 1 | ||||
Stated dividend rate (as a percent) | 0.00% | |||||
Conversion price (in dollars per share) | $3.25 | |||||
Value of contingent beneficial conversion feature to be recognized upon conversion | $238,000 | |||||
Conversion of Series C preferred stock to common stock (in shares) | 840,841 | 1,189,538 | ||||
Series C preferred stock | Subsequent Event | ||||||
Preferred Stock | ||||||
Conversion of Series C preferred stock to common stock (in shares) | 348,697 | |||||
Common Stock | ||||||
Preferred Stock | ||||||
Conversion of Series C preferred stock to common stock (in shares) | 840,841 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Calculation of both basic and diluted earnings (loss) per common share | |||||||||||
Net income | $4,352 | $3,429 | $2,949 | ($1,765) | $1,634 | $2,761 | $2,716 | $3,730 | $8,965 | $10,841 | $13,037 |
Dividends and accretion on preferred stock | -168 | -181 | -359 | -358 | -168 | -898 | -1,470 | ||||
Net income available to common shareholders | 4,184 | 3,429 | 2,949 | -1,765 | 1,634 | 2,580 | 2,357 | 3,372 | 8,797 | 9,943 | 11,567 |
Weighted average shares outstanding | 32,567,137 | 26,341,592 | 26,271,000 | ||||||||
Basic earnings per common share (in dollars per share) | $0.13 | $0.10 | $0.09 | ($0.06) | $0.06 | $0.10 | $0.09 | $0.13 | $0.27 | $0.38 | $0.44 |
Dilutive effect of share-based compensation awards (in shares) | 145,846 | 201,097 | 130,871 | ||||||||
Weighted average diluted shares outstanding | 32,712,983 | 26,542,689 | 26,401,871 | ||||||||
Diluted earnings per common share (in dollars per share) | $0.13 | $0.10 | $0.09 | ($0.06) | $0.06 | $0.10 | $0.09 | $0.13 | $0.27 | $0.37 | $0.44 |
Stock options | |||||||||||
Shares excluded from the calculation of diluted earnings per share | |||||||||||
Shares excluded from the calculation of diluted earnings per share | 99,000 | 360,000 | 280,000 | ||||||||
Heritage Oaks Bancorp | |||||||||||
Calculation of both basic and diluted earnings (loss) per common share | |||||||||||
Net income | 8,965 | 10,841 | 13,037 | ||||||||
Dividends and accretion on preferred stock | -168 | -898 | -1,470 | ||||||||
Net income available to common shareholders | $8,797 | $9,943 | $11,567 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments and Contingencies | ||
Total commitments and standby letters of credit | $253,275,000 | $198,481,000 |
Outstanding financial fixed rate commitments | 35,700,000 | |
Outstanding financial variable rate commitments | 217,500,000 | |
Commitments to extend credit | ||
Commitments and Contingencies | ||
Total commitments and standby letters of credit | 237,733,000 | 181,445,000 |
Standby letters of credit | ||
Commitments and Contingencies | ||
Total commitments and standby letters of credit | $15,542,000 | $17,036,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
item | |||
Contractual obligations | |||
Contractual obligations, Due 2014 | $26,869,000 | ||
Contractual obligations, One to Three Years | 29,624,000 | ||
Contractual obligations, Three to Five Years | 17,452,000 | ||
Contractual obligations, More than Five Years | 51,162,000 | ||
Total Obligations | 125,107,000 | 105,410,000 | |
Operating lease obligations | |||
Operating lease obligations, Due 2014 | 1,491,000 | ||
Operating lease obligations, One to Three Years | 2,100,000 | ||
Operating lease obligations, Three to Five Years | 1,428,000 | ||
Operating lease obligations, More than 5 Years | 3,133,000 | ||
Operating Leases, Future Minimum Payments Due | 8,152,000 | 2,671,000 | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |||
Total rent expense charged for leases | 1,800,000 | 1,600,000 | 1,900,000 |
Number of branches of the entity for which buildings were purchased | 3 | ||
Number of branches closed | 3 | ||
FHLB Advances and other | |||
Contractual obligations | |||
Contractual obligations, Due 2014 | 25,000,000 | ||
Contractual obligations, One to Three Years | 27,000,000 | ||
Contractual obligations, Three to Five Years | 15,500,000 | ||
Contractual obligations, More than Five Years | 28,000,000 | ||
Total Obligations | 95,500,000 | 88,500,000 | |
Junior subordinated debentures | |||
Long-term Debt, Fiscal Year Maturity [Abstract] | |||
Debt obligations, More than Five Years | 16,496,000 | ||
Long-term Debt | 16,496,000 | 8,248,000 | |
Salary continuation payments | |||
Contractual obligations | |||
Contractual obligations, Due 2014 | 378,000 | ||
Contractual obligations, One to Three Years | 524,000 | ||
Contractual obligations, Three to Five Years | 524,000 | ||
Contractual obligations, More than Five Years | 3,533,000 | ||
Total Obligations | $4,959,000 | $5,991,000 | |
Minimum | |||
Long-term Debt, Fiscal Year Maturity [Abstract] | |||
Optional extension period of operating leases | 5 years | ||
Lease expiration term | 1 month | ||
Maximum | |||
Long-term Debt, Fiscal Year Maturity [Abstract] | |||
Optional extension period of operating leases | 7 years | ||
Lease expiration term | 12 months |
Restructuring_Activities_Detai
Restructuring Activities (Details) (USD $) | 12 Months Ended | 3 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 |
MISN | |||||
Restructuring activities | |||||
New charges | $9,255 | ||||
Cash payments | -7,460 | ||||
Other adjustments | -748 | ||||
Balance, end of the period | 1,047 | 1,047 | |||
Restructuring and integration plan | |||||
Restructuring activities | |||||
Total Costs Expected To Be incurred | 8,547 | 8,547 | |||
Amount Incurred | 405 | 717 | 515 | 6,870 | |
Cumulative Incurred | 8,507 | 8,507 | |||
Restructuring and integration plan | System integration | |||||
Restructuring activities | |||||
Total Costs Expected To Be incurred | 578 | 578 | |||
Amount Incurred | 9 | 312 | -20 | 223 | |
Cumulative Incurred | 524 | 524 | |||
Restructuring and integration plan | Fixed asset consolidation | |||||
Restructuring activities | |||||
Total Costs Expected To Be incurred | 2,387 | 2,387 | |||
Amount Incurred | 152 | 41 | -268 | 2,350 | |
Cumulative Incurred | 2,275 | 2,275 | |||
Restructuring and integration plan | Contract cancellation costs | |||||
Restructuring activities | |||||
Total Costs Expected To Be incurred | 1,746 | 1,746 | |||
Amount Incurred | -75 | 90 | 1,656 | ||
Cumulative Incurred | 1,671 | 1,671 | |||
Restructuring and integration plan | Employee termination and retention | |||||
Restructuring activities | |||||
Total Costs Expected To Be incurred | 3,836 | 3,836 | |||
Amount Incurred | 319 | 274 | 803 | 2,641 | |
Cumulative Incurred | $4,037 | $4,037 |
Regulatory_Matters_Details
Regulatory Matters (Details) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2013 | |
Total capital to risk-weighted assets: | |||
Actual, Capital Amount | $187,198,000 | $130,532,000 | |
Actual, Ratio (as a percent) | 14.38% | 14.17% | |
Capital Needed For Adequacy Purposes, Capital Amount | 104,111,000 | 73,709,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 8.00% | 8.00% | |
Tier I capital to risk-weighted assets: | |||
Actual, Capital Amount | 170,918,000 | 118,933,000 | |
Actual regulatory, Tier I capital to risk weighted assets (as a percent) | 13.13% | 12.91% | |
Capital Needed For Adequacy Purposes, Capital Amount | 52,056,000 | 36,855,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% | |
Tier I capital to average assets: | |||
Actual, Capital Amount | 170,918,000 | 118,933,000 | |
Actual regulatory, Leverage ratio (as a percent) | 10.20% | 10.20% | |
Capital Needed For Adequacy Purposes, Capital Amount | 66,902,000 | 46,649,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% | |
Amount included or not in Tier I and Total Risk Based capital | |||
Junior Subordinated Debt Included In Tier One Capital | 12,800,000 | 8,000,000 | |
Heritage Oaks Bank | |||
Company's and the Bank's actual regulatory capital amounts and ratios | |||
Minimum Leverage Ratio (as a percent) | 10.00% | ||
Total capital to risk-weighted assets: | |||
Actual, Capital Amount | 180,640,000 | 126,000,000 | |
Actual, Ratio (as a percent) | 13.88% | 13.68% | |
Capital Needed For Adequacy Purposes, Capital Amount | 104,101,000 | 73,703,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 8.00% | 8.00% | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, Capital Amount | 130,126,000 | 92,128,000 | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, rate | 10.00% | 10.00% | |
Tier I capital to risk-weighted assets: | |||
Actual, Capital Amount | 164,361,000 | 114,402,000 | |
Actual regulatory, Tier I capital to risk weighted assets (as a percent) | 12.63% | 12.42% | |
Capital Needed For Adequacy Purposes, Capital Amount | 52,050,000 | 36,851,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, Capital Amount | 78,076,000 | 55,277,000 | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, rate | 6.00% | 6.00% | |
Tier I capital to average assets: | |||
Actual, Capital Amount | 164,361,000 | 114,402,000 | |
Actual regulatory, Leverage ratio (as a percent) | 9.83% | 9.82% | |
Capital Needed For Adequacy Purposes, Capital Amount | 66,889,000 | 46,603,000 | |
Capital Needed For Adequacy Purposes, Ratio (as a percent) | 4.00% | 4.00% | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, Capital Amount | $83,611,000 | $58,254,000 | |
Capital Needed To Be Well Capitalized Under Prompt Corrective Action Provisions, rate | 5.00% | 5.00% |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Directors and executive officers | |||
Loans made to directors and executive officers | |||
Outstanding balance, beginning of year | $20,087,000 | ||
Additional loans made | 18,452,000 | ||
Repayments | -13,548,000 | ||
Outstanding balance, end of year | 24,991,000 | ||
Firms affiliated with directors | |||
Payments to affiliated firms: | |||
Facility rent | 240,000 | 237,000 | 233,000 |
Legal consulting fees | 15,000 | 14,000 | 6,000 |
Fuel for company owned vehicles | 5,000 | ||
Total payments to affiliated firms | 255,000 | 251,000 | 244,000 |
Heritage Oaks Bank | |||
Loans made to directors and executive officers | |||
Related party deposits | $3,200,000 | $2,700,000 |
Restriction_on_Transfers_of_Fu1
Restriction on Transfers of Funds to Parent (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Restriction on transfers of funds to parent | |
Maximum amount of approved dividend payments to the parent company. | $5 |
Heritage Oaks Bank | |
Restriction on transfers of funds to parent | |
Federal Reserve's limitation on advances to parent company as a percentage of contributed capital | 20.00% |
Parent_Company_Financial_Infor2
Parent Company Financial Information (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Assets | ||||
Total assets | $1,710,127 | $1,203,651 | ||
Liabilities | ||||
Junior subordinated debentures | 13,233 | 8,248 | ||
Other Liabilities | 8,592 | 6,581 | ||
Total liabilities | 1,512,187 | 1,077,224 | ||
Shareholders' equity | ||||
Common stock | 164,196 | 101,511 | ||
Additional paid in capital | 6,984 | 6,020 | ||
Retained earnings | 24,772 | 18,717 | ||
Accumulated other comprehensive income (loss), net of tax (benefit) of $677 and ($2,395) as of December 31, 2014 and 2013, respectively | 932 | -3,425 | ||
Total shareholders' equity | 197,940 | 126,427 | 145,529 | 129,554 |
Total liabilities and shareholders' equity | 1,710,127 | 1,203,651 | ||
Heritage Oaks Bancorp | ||||
Assets | ||||
Cash | 6,642 | 4,726 | ||
Prepaid and other assets | 2,122 | 1,280 | ||
Investment in bank | 202,565 | 128,940 | ||
Total assets | 211,329 | 134,946 | ||
Liabilities | ||||
Junior subordinated debentures | 13,233 | 8,248 | ||
Other Liabilities | 156 | 271 | ||
Total liabilities | 13,389 | 8,519 | ||
Shareholders' equity | ||||
Preferred stock | 1,056 | 3,604 | ||
Common stock | 164,196 | 101,511 | ||
Additional paid in capital | 6,984 | 6,020 | ||
Retained earnings | 24,772 | 18,717 | ||
Accumulated other comprehensive income (loss), net of tax (benefit) of $677 and ($2,395) as of December 31, 2014 and 2013, respectively | 932 | -3,425 | ||
Total shareholders' equity | 197,940 | 126,427 | ||
Total liabilities and shareholders' equity | $211,329 | $134,946 |
Parent_Company_Financial_Infor3
Parent Company Financial Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income | |||||||||||
Interest income | $17,064 | $16,895 | $16,541 | $13,588 | $11,736 | $11,509 | $11,075 | $11,073 | $64,088 | $45,393 | $46,321 |
Expense | |||||||||||
Share-based compensation | 993 | 533 | 331 | ||||||||
Interest | 5,157 | 3,867 | 3,818 | ||||||||
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 6,695 | 5,171 | 4,687 | -2,839 | 2,942 | 4,354 | 4,421 | 6,121 | 13,714 | 17,838 | 11,239 |
Income tax benefit | 4,749 | 6,997 | -1,798 | ||||||||
Dividends and accretion on preferred stock | 168 | 181 | 359 | 358 | 168 | 898 | 1,470 | ||||
Net income available to common shareholders | 4,184 | 3,429 | 2,949 | -1,765 | 1,634 | 2,580 | 2,357 | 3,372 | 8,797 | 9,943 | 11,567 |
Heritage Oaks Bancorp | |||||||||||
Income | |||||||||||
Dividends from subsidiaries | 10,000 | 25,309 | 3,517 | ||||||||
Interest income | 16 | 19 | 25 | ||||||||
Total income | 10,016 | 25,328 | 3,542 | ||||||||
Expense | |||||||||||
Share-based compensation | 211 | 133 | 114 | ||||||||
Other professional fees and outside services | 737 | 1,169 | 498 | ||||||||
Interest | 499 | 167 | 192 | ||||||||
Total expense | 1,447 | 1,469 | 804 | ||||||||
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 8,569 | 23,859 | 2,738 | ||||||||
Income tax benefit | -576 | -347 | -813 | ||||||||
Net income before equity in undistributed earnings of subsidiaries | 9,145 | 24,206 | 3,551 | ||||||||
Equity in undisbursed income of subsidiaries | 180 | 13,365 | -9,486 | ||||||||
Dividends and accretion on preferred stock | 168 | 898 | 1,470 | ||||||||
Net income available to common shareholders | $8,797 | $9,943 | $11,567 |
Parent_Company_Financial_Infor4
Parent Company Financial Information (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||||||||||
Net income | $4,352 | $3,429 | $2,949 | ($1,765) | $1,634 | $2,761 | $2,716 | $3,730 | $8,965 | $10,841 | $13,037 |
Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | |||||||||||
Share-based compensation expense | 993 | 533 | 331 | ||||||||
Amortization of premium on borrowings | 168 | ||||||||||
Increase in other assets and other liabilities | 48 | 1,155 | -4,486 | ||||||||
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | 19,992 | 39,682 | 11,657 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash acquired in MISN merger | 28,891 | ||||||||||
Proceeds from sale of assets | 3,590 | 19 | |||||||||
Net cash used in investing activities | -58,001 | -149,459 | -82,719 | ||||||||
Cash flows from financing activities: | |||||||||||
Dividends on Series A preferred stock | -708 | -3,013 | |||||||||
Retirement of Series A preferred stock and related warrants | 22,575 | ||||||||||
Dividends declared on common stock | -2,742 | ||||||||||
Repurchase of common stock | -387 | ||||||||||
Stock issuance costs | -381 | ||||||||||
Proceeds from the exercise of options | 453 | 157 | 214 | ||||||||
Net cash provided by / (used in) financing activities | 47,351 | 101,899 | 70,286 | ||||||||
Net increase in cash and cash equivalents | 9,342 | -7,878 | -776 | ||||||||
Cash and cash equivalents, beginning of period | 26,238 | 34,116 | 26,238 | 34,116 | 34,892 | ||||||
Cash and cash equivalents, end of period | 35,580 | 26,238 | 35,580 | 26,238 | 34,116 | ||||||
Heritage Oaks Bancorp | |||||||||||
Cash flows from operating activities: | |||||||||||
Net income | 8,965 | 10,841 | 13,037 | ||||||||
Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | |||||||||||
Share-based compensation expense | 211 | 133 | 114 | ||||||||
Amortization of premium on borrowings | 175 | ||||||||||
Undistributed loss (income) of subsidiaries | 180 | 13,365 | -9,486 | ||||||||
Increase in other assets and other liabilities | -868 | -83 | -656 | ||||||||
Net Cash Provided by (Used in) Operating Activities, Continuing Operations | 8,663 | 24,256 | 3,009 | ||||||||
Cash flows from investing activities: | |||||||||||
Cash acquired in MISN merger | -3,928 | ||||||||||
Proceeds from sale of assets | 338 | ||||||||||
Other | -100 | ||||||||||
Net cash used in investing activities | -3,690 | ||||||||||
Cash flows from financing activities: | |||||||||||
Dividends on Series A preferred stock | -708 | -3,013 | |||||||||
Retirement of Series A preferred stock and related warrants | -22,575 | ||||||||||
Dividends declared on common stock | -2,742 | ||||||||||
Repurchase of common stock | -387 | ||||||||||
Stock issuance costs | -381 | ||||||||||
Proceeds from the exercise of options | 453 | 138 | 183 | ||||||||
Net cash provided by / (used in) financing activities | -3,057 | -23,145 | -2,830 | ||||||||
Net increase in cash and cash equivalents | 1,916 | 1,111 | 179 | ||||||||
Cash and cash equivalents, beginning of period | 4,726 | 3,615 | 4,726 | 3,615 | 3,436 | ||||||
Cash and cash equivalents, end of period | $6,642 | $4,726 | $6,642 | $4,726 | $3,615 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 12 Months Ended | 0 Months Ended |
Dec. 31, 2014 | Jan. 28, 2015 | |
Subsequent events | ||
Cash dividend declared (in dollars per share) | $0.08 | |
Subsequent Event | ||
Subsequent events | ||
Cash dividend declared (in dollars per share) | $0.05 |
Quarterly_Financial_Informatio2
Quarterly Financial Information (unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interest Income | |||||||||||
Interest income | $17,064 | $16,895 | $16,541 | $13,588 | $11,736 | $11,509 | $11,075 | $11,073 | $64,088 | $45,393 | $46,321 |
Net interest income | 15,726 | 15,571 | 15,197 | 12,437 | 10,687 | 10,482 | 10,149 | 10,208 | 58,931 | 41,526 | 42,503 |
Provision for credit losses | 7,681 | ||||||||||
Non-Interest Income | |||||||||||
Non-interest income | 2,354 | 2,982 | 2,476 | 1,763 | 1,879 | 2,423 | 2,912 | 5,661 | 9,575 | 12,875 | 12,548 |
Non-Interest Expense | |||||||||||
Non-interest expense | 11,385 | 13,382 | 12,986 | 17,039 | 9,624 | 8,551 | 8,640 | 9,748 | 54,792 | 36,563 | 36,131 |
Income before provision (benefit) for income taxes | 6,695 | 5,171 | 4,687 | -2,839 | 2,942 | 4,354 | 4,421 | 6,121 | 13,714 | 17,838 | 11,239 |
Net income | 4,352 | 3,429 | 2,949 | -1,765 | 1,634 | 2,761 | 2,716 | 3,730 | 8,965 | 10,841 | 13,037 |
Dividends and accretion on preferred stock | 168 | 181 | 359 | 358 | 168 | 898 | 1,470 | ||||
Net income available to common shareholders | 4,184 | 3,429 | 2,949 | -1,765 | 1,634 | 2,580 | 2,357 | 3,372 | 8,797 | 9,943 | 11,567 |
Earnings Per Common Share | |||||||||||
Basic (in dollars per share) | $0.13 | $0.10 | $0.09 | ($0.06) | $0.06 | $0.10 | $0.09 | $0.13 | $0.27 | $0.38 | $0.44 |
Diluted (in dollars per share) | $0.13 | $0.10 | $0.09 | ($0.06) | $0.06 | $0.10 | $0.09 | $0.13 | $0.27 | $0.37 | $0.44 |
Business Combination, Integration Related Costs | $9,190 | $1,051 |
Uncategorized_Items
Uncategorized Items | 7/1/2014 - 9/30/2014 | 10/1/2014 - 12/31/2014 |
USD ($) | USD ($) | |
[us-gaap_DividendsCommonStockCash] | 0.03 | 0.05 |