ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2019
PENNSYLVANIA | | 25-1424278 | | ||
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) | |
MAIN & FRANKLIN STREETS, P.O. BOX 430, JOHNSTOWN, PENNSYLVANIA | ||||
(Address of principal executive offices) | | | 15907-0430 (Zip Code) | |
Title Of Each Class | | | Trading Symbol | | | Name | | |
| Common Stock, Par Value $0.01 Per Share | | | ASRV | | | The NASDAQ Stock Market LLC | |
| 8.45% Beneficial Unsecured Securities, Series A (AmeriServ Financial Capital Trust I) | | | ASRVP | | | The NASDAQ Stock Market LLC | |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.o ☐ Yesþ ☒ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o
Large accelerated filer | | | Accelerated filer | | | Non-accelerated filer | | | Smaller reporting company |
☒ Emerging growth company | |
☐
2019.
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PART I | | | | | | | |
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PART II | | | | | | | |
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PART III | | | | | | | |
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PART IV | | | | | | | |
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i
Pennsylvania.
The Bank is subject to supervision and regular examination by the Federal Reserve Bank of Philadelphia and the PDB. Various federal and state laws and regulations govern many aspects of its banking operations. The following is a summary of key data (dollars in thousands) and ratios of the Bank at December 31, 2017:
Headquarters | Johnstown, PA | |||
Total Assets | $ | 1,151,205 | ||
Total Investment Securities | 159,956 | |||
Total Loans and Loans Held for Sale (net of unearned income) | 892,758 | |||
Total Deposits | 948,145 | |||
Total Net Income | 4,337 | |||
Asset Leverage Ratio | 8.75 | % | ||
Return on Average Assets | 0.38 | |||
Return on Average Equity | 4.37 | |||
Total Full-time Equivalent Employees | 232 |
Headquarters | | | Johnstown, PA | | |||
Total Assets | | | | $ | 1,156,426 | | |
Total Investment Securities | | | | | 175,278 | | |
Total Loans and Loans Held for Sale (net of unearned income) | | | | | 887,574 | | |
Total Deposits | | | | | 960,712 | | |
Total Net Income | | | | | 7,082 | | |
Asset Leverage Ratio | | | | | 9.50% | | |
Return on Average Assets | | | | | 0.61 | | |
Return on Average Equity | | | | | 6.61 | | |
Total Full-time Equivalent Employees | | | | | 240 | | |
position which is reported formally to the Board on a semi-annual basis.
policy, unless otherwise approved by the Company’s CEO or the Asset/Liability Management Committee.
| | | AT DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
U.S. Agency | | | | $ | 5,084 | | | | | $ | 7,685 | | | | | $ | 6,612 | | |
Municipal | | | | | 14,678 | | | | | | 13,301 | | | | | | 7,198 | | |
Corporate bonds | | | | | 39,769 | | | | | | 37,359 | | | | | | 35,886 | | |
U.S. Agency mortgage-backed securities | | | | | 80,046 | | | | | | 90,169 | | | | | | 79,854 | | |
Total cost basis of investment securities available for sale | | | | $ | 139,577 | | | | | $ | 148,514 | | | | | $ | 129,550 | | |
Total fair value of investment securities available for sale | | | | $ | 141,749 | | | | | $ | 146,731 | | | | | $ | 129,138 | | |
AT DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
U.S. Agency | $ | 6,612 | $ | 400 | $ | 2,900 | ||||||
Taxable municipal | 7,198 | 3,793 | — | |||||||||
Corporate bonds | 35,886 | 34,403 | 18,541 | |||||||||
U.S. Agency mortgage-backed securities | 79,854 | 88,738 | 96,801 | |||||||||
Total cost basis of investment securities available for sale | $ | 129,550 | $ | 127,334 | $ | 118,242 | ||||||
Total fair value of investment securities available for sale | $ | 129,138 | $ | 127,077 | $ | 119,467 |
Investment securities held to maturity at:
| | | AT DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
Municipal | | | | $ | 24,438 | | | | | $ | 24,740 | | | | | $ | 22,970 | | |
U.S. Agency mortgage-backed securities | | | | | 9,466 | | | | | | 9,983 | | | | | | 9,740 | | |
Corporate bonds and other securities | | | | | 6,032 | | | | | | 6,037 | | | | | | 6,042 | | |
Total cost basis of investment securities held to maturity | | | | $ | 39,936 | | | | | $ | 40,760 | | | | | $ | 38,752 | | |
Total fair value of investment securities held to maturity | | | | $ | 41,082 | | | | | $ | 40,324 | | | | | $ | 38,811 | | |
AT DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
Taxable municipal | $ | 22,970 | $ | 13,441 | $ | 5,592 | ||||||
U.S. Agency mortgage-backed securities | 9,740 | 11,177 | 10,827 | |||||||||
Corporate bonds and other securities | 6,042 | 6,047 | 5,000 | |||||||||
Total cost basis of investment securities held to maturity | $ | 38,752 | $ | 30,665 | $ | 21,419 | ||||||
Total fair value of investment securities held to maturity | $ | 38,811 | $ | 30,420 | $ | 21,533 |
DEPOSITS
| | | AT DECEMBER 31, | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||||||||||||||||||||||||||
Demand: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing | | | | $ | 151,292 | | | | | | —% | | | | | $ | 174,108 | | | | | | —% | | | | | $ | 182,301 | | | | | | —% | | |
Interest bearing | | | | | 170,326 | | | | | | 0.94 | | | | | | 138,572 | | | | | | 0.82 | | | | | | 129,589 | | | | | | 0.49 | | |
Savings | | | | | 96,783 | | | | | | 0.17 | | | | | | 98,035 | | | | | | 0.17 | | | | | | 97,405 | | | | | | 0.17 | | |
Money market | | | | | 234,387 | | | | | | 1.08 | | | | | | 249,618 | | | | | | 0.87 | | | | | | 275,636 | | | | | | 0.52 | | |
Certificates of deposit in denominations of $100,000 or more | | | | | 36,324 | | | | | | 2.33 | | | | | | 31,893 | | | | | | 1.66 | | | | | | 29,002 | | | | | | 1.10 | | |
Other time | | | | | 290,543 | | | | | | 2.09 | | | | | | 267,498 | | | | | | 1.70 | | | | | | 262,473 | | | | | | 1.41 | | |
Total deposits | | | | $ | 979,655 | | | | | | 1.35% | | | | | $ | 959,724 | | | | | | 1.07% | | | | | $ | 976,406 | | | | | | 0.79% | | |
|
AT DECEMBER 31, | ||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||||||||||||||||||
Demand: | ||||||||||||||||||||||||
Non-interest bearing | $ | 182,301 | —% | $ | 182,732 | — | % | $ | 171,175 | — | % | |||||||||||||
Interest bearing | 129,589 | 0.49 | 108,350 | 0.29 | 97,201 | 0.21 | ||||||||||||||||||
Savings | 97,405 | 0.17 | 95,986 | 0.17 | 94,425 | 0.17 | ||||||||||||||||||
Money market | 275,636 | 0.52 | 277,967 | 0.43 | 242,298 | 0.34 | ||||||||||||||||||
Other time | 291,475 | 1.38 | 290,612 | 1.28 | 287,783 | 1.24 | ||||||||||||||||||
Total deposits | $ | 976,406 | 0.79 | % | $ | 955,647 | 0.70 | % | $ | 892,882 | 0.66 | % |
| | | (IN THOUSANDS) | | |||
MATURING IN: | | | | | | | |
Three months or less | | | | $ | 4,893 | | |
Over three through six months | | | | | 10,325 | | |
Over six through twelve months | | | | | 18,227 | | |
Over twelve months | | | | | 5,325 | | |
Total | | | | $ | 38,770 | | |
| | | AT DECEMBER 31, | | |||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | $ | 174,021 | | | | | $ | 158,306 | | | | | $ | 159,219 | | | | | $ | 171,570 | | | | | $ | 181,117 | | |
Commercial loans secured by owner occupied real estate(1) | | | | | 91,693 | | | | | | 91,938 | | | | | | 89,979 | | | | | | 91,861 | | | | | | 97,172 | | |
Commercial loans secured by non-owner occupied real estate(1) | | | | | 363,882 | | | | | | 356,805 | | | | | | 374,173 | | | | | | 355,172 | | | | | | 324,971 | | |
Real estate – residential mortgage(1) | | | | | 235,239 | | | | | | 237,964 | | | | | | 247,278 | | | | | | 245,765 | | | | | | 257,937 | | |
Consumer | | | | | 18,255 | | | | | | 17,591 | | | | | | 19,383 | | | | | | 19,872 | | | | | | 20,344 | | |
Total loans | | | | | 883,090 | | | | | | 862,604 | | | | | | 890,032 | | | | | | 884,240 | | | | | | 881,541 | | |
Less: Unearned income | | | | | 384 | | | | | | 322 | | | | | | 399 | | | | | | 476 | | | | | | 557 | | |
Total loans, net of unearned income | | | | $ | 882,706 | | | | | $ | 862,282 | | | | | $ | 889,633 | | | | | $ | 883,764 | | | | | $ | 880,984 | | |
AT DECEMBER 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Commercial | $ | 159,218 | $ | 171,563 | $ | 181,115 | $ | 139,158 | $ | 120,120 | ||||||||||
Commercial loans secured by real estate(1) | 464,153 | 447,040 | 422,145 | 410,851 | 412,254 | |||||||||||||||
Real estate-mortgage(1) | 247,278 | 245,765 | 257,937 | 258,616 | 235,689 | |||||||||||||||
Consumer | 19,383 | 19,872 | 20,344 | 19,009 | 15,864 | |||||||||||||||
Total loans | 890,032 | 884,240 | 881,541 | 827,634 | 783,927 | |||||||||||||||
Less: Unearned income | 399 | 476 | 557 | 554 | 581 | |||||||||||||||
Total loans, net of unearned income | $ | 889,633 | $ | 883,764 | $ | 880,984 | $ | 827,080 | $ | 783,346 |
| | | AT DECEMBER 31, | | |||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | |||||||||||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||||||||||||||||||||
Non-accrual loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | | $ | — | | | | | $ | — | | | | | $ | 353 | | | | | $ | 496 | | | | | $ | 4,260 | | |
Commercial loans secured by owner occupied real estate | | | | | — | | | | | | — | | | | | | 859 | | | | | | — | | | | | | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 11 | | | | | | 547 | | | | | | 178 | | | | | | 18 | | |
Real estate – residential mortgage | | | | | 1,479 | | | | | | 1,210 | | | | | | 1,257 | | | | | | 929 | | | | | | 1,788 | | |
Total | | | | | 1,487 | | | | | | 1,221 | | | | | | 3,016 | | | | | | 1,603 | | | | | | 6,066 | | |
Other real estate owned: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial loans secured by owner occupied real estate | | | | | — | | | | | | 157 | | | | | | — | | | | | | — | | | | | | — | | |
Real estate – residential mortgage | | | | | 37 | | | | | | — | | | | | | 18 | | | | | | 21 | | | | | | 75 | | |
Total | | | | | 37 | | | | | | 157 | | | | | | 18 | | | | | | 21 | | | | | | 75 | | |
Total restructured loans not in non-accrual (TDR) | | | | | 815 | | | | | | — | | | | | | — | | | | | | — | | | | | | 156 | | |
Total non-performing assets including TDR | | | | $ | 2,339 | | | | | $ | 1,378 | | | | | $ | 3,034 | | | | | $ | 1,624 | | | | | $ | 6,297 | | |
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | | | | | 0.26% | | | | | | 0.16% | | | | | | 0.34% | | | | | | 0.18% | | | | | | 0.71% | | |
AT DECEMBER 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Commercial | $ | 353 | $ | 496 | $ | 4,260 | $ | — | $ | — | ||||||||||
Commercial loans secured by real estate | 1,406 | 178 | 18 | 778 | 1,632 | |||||||||||||||
Real estate-mortgage | 1,257 | 929 | 1,788 | 1,417 | 1,239 | |||||||||||||||
Total | 3,016 | 1,603 | 6,066 | 2,195 | 2,871 | |||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Commercial loans secured by real estate | — | — | — | 384 | 344 | |||||||||||||||
Real estate-mortgage | 18 | 21 | 75 | 128 | 673 | |||||||||||||||
Total | 18 | 21 | 75 | 512 | 1,017 | |||||||||||||||
Total restructured loans not in non-accrual (TDR) | — | — | 156 | 210 | 221 | |||||||||||||||
Total non-performing assets including TDR | $ | 3,034 | $ | 1,624 | $ | 6,297 | $ | 2,917 | $ | 4,109 | ||||||||||
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | 0.34 | % | 0.18 | % | 0.71 | % | 0.35 | % | 0.52 | % |
The Company is unaware of any additional loans which are required to either be charged-off or added to the non-performing asset totals disclosed above. Other real estate owned (OREO) is measured at fair value based on appraisals, less cost to sell at the date of foreclosure. The Company had no loans past due 90 days or more, still accruing, for the periods presented.
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Interest income due in accordance with original terms | | | | $ | 57 | | | | | $ | 75 | | | | | $ | 103 | | | | | $ | 118 | | | | | $ | 94 | | |
Interest income recorded | | | | | — | | | | | | — | | | | | | (75) | | | | | | — | | | | | | — | | |
Net reduction in interest income | | | | $ | 57 | | | | | $ | 75 | | | | | $ | 28 | | | | | $ | 118 | | | | | $ | 94 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Interest income due in accordance with original terms | $ | 103 | $ | 118 | $ | 94 | $ | 136 | $ | 178 | ||||||||||
Interest income recorded | (75 | ) | — | — | — | — | ||||||||||||||
Net reduction in interest income | $ | 28 | $ | 118 | $ | 94 | $ | 136 | $ | 178 |
For for Commerce. The city also hosts annual events such as the Flood City Music Festival and the Thunder in the Valley Motorcycle Rally, which draw several thousand visitors. The Johnstown, PA MSA unemployment rate decreased from a 6.8%5.2% average in 20162018 to a 6.0%5.0% average in 2017.2019. The Johnstown, PA MSA continues to have one of the highest jobless rates among the 18 metropolitan statistical areas across the state. This coupled with a declining population trend creates a challenge moving forward.
2019.
Hagerstown in Washington County, Maryland offers a rare combination of business advantages providing a major crossroads location that is convenient to the entire East Coast2019 at the intersection2018 level of I-81 and I-70. It has a workforce of over 400,000 with strengths in manufacturing and technology. It also offers an affordable cost of doing business and living within an hour of the Washington, D.C./Baltimore regions. There are also plenty of facilities and land slated for industrial/commercial development. Hagerstown has become a choice location for manufacturers, financial services, and distribution companies. The Hagerstown, MD-Martinsburg, WV MSA unemployment rate improved from a 4.6% average in 2016 to a 3.7% average in 2017.
The Economic Growth, Regulatory Relief, and Consumer Protection Act was enacted into law in 2018 and was designed to ease certain restrictions imposed by the Dodd-Frank Act.
| | | Minimum Capital Plus Buffer As of December 31, | | | Well Capitalized | | ||||||||||||
| | | 2018 | | | 2019 | | ||||||||||||
Common equity tier 1 capital ratio | | | | | 6.38% | | | | | | 7.00% | | | | | | 6.50% | | |
Tier 1 capital ratio | | | | | 7.88% | | | | | | 8.50% | | | | | | 8.00% | | |
Total capital ratio | | | | | 9.88% | | | | | | 10.50% | | | | | | 10.00% | | |
Minimum Capital | Well Capitalized | |||||||||||
Effective January 1, | ||||||||||||
2016 | 2017 | |||||||||||
Common equity tier 1 capital ratio | 5.125 | % | 5.75 | % | 6.5 | % | ||||||
Tier 1 capital ratio | 6.625 | % | 7.25 | % | 8.0 | % | ||||||
Total capital ratio | 8.625 | % | 9.25 | % | 10.0 | % |
Under the newcurrent rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer above its minimum risk-based capital requirements which increases over the transition
period, from 0.625%of 2.50% of total risk weighted assets in 2016 to 2.50% in 2019. Implementation of the deductions and other adjustments to common equity tier 1 capital began on January 1, 2015 and will be phased-in over a three-year period (beginning at 40% on January 1, 2015, 60% on January 1, 2016 and an additional 20% per year thereafter).
prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the Company.
http://www.sec.gov.
DISCLOSURES
| | | PRICES | | | CASH DIVIDENDS DECLARED | | ||||||||||||
| | | HIGH | | | LOW | | ||||||||||||
Year ended December 31, 2019: | | | | | | | | | | | | | | | | | | | |
First Quarter | | | | $ | 4.24 | | | | | $ | 3.97 | | | | | $ | 0.020 | | |
Second Quarter | | | | | 4.30 | | | | | | 4.03 | | | | | | 0.025 | | |
Third Quarter | | | | | 4.24 | | | | | | 4.08 | | | | | | 0.025 | | |
Fourth Quarter | | | | | 4.30 | | | | | | 4.11 | | | | | | 0.025 | | |
Year ended December 31, 2018: | | | | | | | | | | | | | | | | | | | |
First Quarter | | | | $ | 4.20 | | | | | $ | 4.00 | | | | | $ | 0.015 | | |
Second Quarter | | | | | 4.30 | | | | | | 4.00 | | | | | | 0.020 | | |
Third Quarter | | | | | 4.55 | | | | | | 4.10 | | | | | | 0.020 | | |
Fourth Quarter | | | | | 4.43 | | | | | | 3.98 | | | | | | 0.020 | | |
PRICES | CASH DIVIDENDS DECLARED | |||||||||||
HIGH | LOW | |||||||||||
Year ended December 31, 2017: | ||||||||||||
First Quarter | $ | 4.00 | $ | 3.60 | $ | 0.015 | ||||||
Second Quarter | 4.20 | 3.70 | 0.015 | |||||||||
Third Quarter | 4.05 | 3.80 | 0.015 | |||||||||
Fourth Quarter | 4.35 | 3.85 | 0.015 | |||||||||
Year ended December 31, 2016 | ||||||||||||
First Quarter | $ | 3.36 | $ | 2.96 | $ | 0.01 | ||||||
Second Quarter | 3.27 | 2.95 | 0.01 | |||||||||
Third Quarter | 3.34 | 3.02 | 0.015 | |||||||||
Fourth Quarter | 3.80 | 3.15 | 0.015 |
The declaration of cash dividends on the Company’s common stock is at the discretion of the Board, and any decision to declare a dividend is based on a number of factors, including, but not limited to, earnings, prospects, financial condition, regulatory capital levels, applicable covenants under any credit agreements and other contractual restrictions, Pennsylvania law, federal and Pennsylvania bank regulatory law, and other factors deemed relevant. Additionally, on January 24, 2017,
the first quarter of 2019, all shares authorized under this plan had been repurchased.
Period | | | Total number of shares purchased | | | Average price paid per share | | | Total number of shares purchased as part of publicly announced plan | | | Maximum number of shares that may yet be purchased under the plan | | ||||||||||||
October 1 – 31, 2019 | | | | | 15,107 | | | | | $ | 4.21 | | | | | | 15,107 | | | | | | 111,698 | | |
November 1 – 30, 2019 | | | | | 51,486 | | | | | | 4.24 | | | | | | 51,486 | | | | | | 60,212 | | |
December 1 – 31, 2019 | | | | | 24,250 | | | | | | 4.24 | | | | | | 24,250 | | | | | | 35,962 | | |
Total | | | | | 90,843 | | | | | | | | | | | | 90,843 | | | | | | | | |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plan | Maximum number of shares that may yet be purchased under the plan | ||||||||||||
October 1 – 31, 2017 | 19,900 | $ | 4.12 | 19,900 | 238,740 | |||||||||||
November 1 – 30, 2017 | 61,194 | 4.17 | 61,194 | 177,546 | ||||||||||||
December 1 – 31, 2017 | 71,883 | 4.31 | 71,883 | 105,663 | ||||||||||||
Total | 152,977 | $ | 4.23 | 152,977 |
In first nine months of 2017,During 2019, the Company was able to repurchase 686,360a total of 602,349 shares at an average price of $4.02. Through December 31, 2017, the Board of Director approved$4.23 under these repurchase plan had a total of 839,337 shares repurchased at an average price of $4.06. This represents approximately 89% of the authorized repurchase plan.
AT OR FOR THE YEAR ENDED DECEMBER 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) | ||||||||||||||||||||
SUMMARY OF INCOME STATEMENT DATA: | ||||||||||||||||||||
Total interest income | $ | 44,356 | $ | 41,869 | $ | 41,881 | $ | 40,441 | $ | 39,343 | ||||||||||
Total interest expense | 8,795 | 7,735 | 6,520 | 6,397 | 6,482 | |||||||||||||||
Net interest income | 35,561 | 34,134 | 35,361 | 34,044 | 32,861 | |||||||||||||||
Provision (credit) for loan losses | 800 | 3,950 | 1,250 | 375 | (1,100 | ) | ||||||||||||||
Net interest income after provision (credit) for loan losses | 34,761 | 30,184 | 34,111 | 33,669 | 33,961 | |||||||||||||||
Total non-interest income | 14,645 | 14,638 | 15,267 | 14,323 | 15,744 | |||||||||||||||
Total non-interest expense | 40,766 | 41,615 | 41,038 | 43,371 | 42,223 | |||||||||||||||
Income before income taxes | 8,640 | 3,207 | 8,340 | 4,621 | 7,482 | |||||||||||||||
Provision for income taxes | 5,347 | 897 | 2,343 | 1,598 | 2,289 | |||||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | $ | 3,023 | $ | 5,193 | ||||||||||
Net income available to common shareholders | $ | 3,293 | $ | 2,295 | $ | 5,787 | $ | 2,813 | $ | 4,984 | ||||||||||
PER COMMON SHARE DATA: | ||||||||||||||||||||
Basic earnings per share | $ | 0.18 | $ | 0.12 | $ | 0.31 | $ | 0.15 | $ | 0.26 | ||||||||||
Diluted earnings per share | 0.18 | 0.12 | 0.31 | 0.15 | 0.26 | |||||||||||||||
Cash dividends declared | 0.06 | 0.05 | 0.04 | 0.04 | 0.03 | |||||||||||||||
Book value at period end | 5.25 | 5.05 | 5.19 | 4.97 | 4.91 | |||||||||||||||
BALANCE SHEET AND OTHER DATA: | ||||||||||||||||||||
Total assets | $ | 1,167,655 | $ | 1,153,780 | $ | 1,148,497 | $ | 1,089,263 | $ | 1,056,036 | ||||||||||
Loans and loans held for sale, net of unearned income | 892,758 | 886,858 | 883,987 | 832,131 | 786,748 | |||||||||||||||
Allowance for loan losses | 10,214 | 9,932 | 9,921 | 9,623 | 10,104 | |||||||||||||||
Investment securities available for sale | 129,138 | 127,077 | 119,467 | 127,110 | 141,978 | |||||||||||||||
Investment securities held to maturity | 38,752 | 30,665 | 21,419 | 19,840 | 18,187 | |||||||||||||||
Deposits | 947,945 | 967,786 | 903,294 | 869,881 | 854,522 | |||||||||||||||
Total borrowed funds | 115,701 | 78,645 | 117,058 | 93,965 | 79,640 | |||||||||||||||
Stockholders’ equity | 95,102 | 95,395 | 118,973 | 114,407 | 113,307 | |||||||||||||||
Full-time equivalent employees | 302 | 305 | 318 | 314 | 352 | |||||||||||||||
SELECTED FINANCIAL RATIOS: | ||||||||||||||||||||
Return on average assets | 0.28 | % | 0.20 | % | 0.54 | % | 0.29 | % | 0.51 | % | ||||||||||
Return on average total equity | 3.42 | 2.30 | 5.10 | 2.61 | 4.69 | |||||||||||||||
Loans and loans held for sale, net of unearned income, as a percent of deposits, at period end | 94.18 | 91.64 | 97.86 | 95.66 | 92.07 | |||||||||||||||
Ratio of average total equity to average assets | 8.24 | 8.79 | 10.65 | 10.92 | 10.86 | |||||||||||||||
Common stock cash dividends as a percent of net income available to common shareholders | 33.80 | 41.18 | 13.03 | 26.73 | 11.36 | |||||||||||||||
Interest rate spread | 3.14 | 3.08 | 3.33 | 3.36 | 3.39 | |||||||||||||||
Net interest margin | 3.32 | 3.26 | 3.49 | 3.52 | 3.56 | |||||||||||||||
Allowance for loan losses as a percentage of loans, net of unearned income, at period end | 1.15 | 1.12 | 1.13 | 1.16 | 1.29 | |||||||||||||||
Non-performing assets as a percentage of loans and other real estate owned, at period end | 0.34 | 0.18 | 0.71 | 0.35 | 0.52 | |||||||||||||||
Net charge-offs as a percentage of average loans | 0.06 | 0.44 | 0.11 | 0.11 | 0.18 | |||||||||||||||
Ratio of earnings to fixed charges and preferred dividends:(1) | ||||||||||||||||||||
Excluding interest on deposits | 4.22X | 2.26X | 4.68X | 3.30X | 5.13X | |||||||||||||||
Including interest on deposits | 1.97 | 1.40 | 2.19 | 1.67 | 2.07 | |||||||||||||||
Cumulative one year interest rate sensitivity gap ratio, at period end | 1.22 | 1.44 | 1.23 | 1.13 | 1.09 |
| | | AT OR FOR THE YEAR ENDED DECEMBER 31, | | |||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | |||||||||||||||
| | | (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) | | |||||||||||||||||||||||||||
SUMMARY OF INCOME STATEMENT DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest income | | | | $ | 49,767 | | | | | $ | 47,094 | | | | | $ | 44,356 | | | | | $ | 41,869 | | | | | $ | 41,881 | | |
Total interest expense | | | | | 14,325 | | | | | | 11,600 | | | | | | 8,795 | | | | | | 7,735 | | | | | | 6,520 | | |
Net interest income | | | | | 35,442 | | | | | | 35,494 | | | | | | 35,561 | | | | | | 34,134 | | | | | | 35,361 | | |
Provision (credit) for loan losses | | | | | 800 | | | | | | (600) | | | | | | 800 | | | | | | 3,950 | | | | | | 1,250 | | |
Net interest income after provision (credit) for loan losses | | | | | 34,642 | | | | | | 36,094 | | | | | | 34,761 | | | | | | 30,184 | | | | | | 34,111 | | |
Total non-interest income | | | | | 14,773 | | | | | | 14,224 | | | | | | 14,645 | | | | | | 14,638 | | | | | | 15,267 | | |
Total non-interest expense | | | | | 41,815 | | | | | | 40,873 | | | | | | 40,726 | | | | | | 41,615 | | | | | | 41,038 | | |
Income before income taxes | | | | | 7,600 | | | | | | 9,445 | | | | | | 8,680 | | | | | | 3,207 | | | | | | 8,340 | | |
Provision for income taxes | | | | | 1,572 | | | | | | 1,677 | | | | | | 5,387 | | | | | | 897 | | | | | | 2,343 | | |
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | | | | $ | 2,310 | | | | | $ | 5,997 | | |
Net income available to common shareholders | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | | | | $ | 2,295 | | | | | $ | 5,787 | | |
PER COMMON SHARE DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic earnings per share | | | | $ | 0.35 | | | | | $ | 0.43 | | | | | $ | 0.18 | | | | | $ | 0.12 | | | | | $ | 0.31 | | |
Diluted earnings per share | | | | | 0.35 | | | | | | 0.43 | | | | | | 0.18 | | | | | | 0.12 | | | | | | 0.31 | | |
Cash dividends declared | | | | | 0.095 | | | | | | 0.075 | | | | | | 0.060 | | | | | | 0.050 | | | | | | 0.040 | | |
Book value at period end | | | | | 5.78 | | | | | | 5.56 | | | | | | 5.25 | | | | | | 5.05 | | | | | | 5.19 | | |
BALANCE SHEET AND OTHER DATA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | | | $ | 1,171,184 | | | | | $ | 1,160,680 | | | | | $ | 1,167,655 | | | | | $ | 1,153,780 | | | | | $ | 1,148,497 | | |
Loans and loans held for sale, net of unearned income | | | | | 887,574 | | | | | | 863,129 | | | | | | 892,758 | | | | | | 886,858 | | | | | | 883,987 | | |
Allowance for loan losses | | | | | 9,279 | | | | | | 8,671 | | | | | | 10,214 | | | | | | 9,932 | | | | | | 9,921 | | |
Investment securities available for sale | | | | | 141,749 | | | | | | 146,731 | | | | | | 129,138 | | | | | | 127,077 | | | | | | 119,467 | | |
Investment securities held to maturity | | | | | 39,936 | | | | | | 40,760 | | | | | | 38,752 | | | | | | 30,665 | | | | | | 21,419 | | |
Deposits | | | | | 960,513 | | | | | | 949,171 | | | | | | 947,945 | | | | | | 967,786 | | | | | | 903,294 | | |
Total borrowed funds | | | | | 100,574 | | | | | | 108,177 | | | | | | 115,701 | | | | | | 78,645 | | | | | | 117,058 | | |
Stockholders’ equity | | | | | 98,614 | | | | | | 97,977 | | | | | | 95,102 | | | | | | 95,395 | | | | | | 118,973 | | |
Full-time equivalent employees | | | | | 309 | | | | | | 303 | | | | | | 302 | | | | | | 305 | | | | | | 318 | | |
SELECTED FINANCIAL RATIOS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | | | | 0.51% | | | | | | 0.67% | | | | | | 0.28% | | | | | | 0.20% | | | | | | 0.54% | | |
Return on average total equity | | | | | 6.02 | | | | | | 8.08 | | | | | | 3.42 | | | | | | 2.30 | | | | | | 5.10 | | |
Loans and loans held for sale, net of unearned income, as a percent of deposits, at period end | | | | | 92.41 | | | | | | 90.94 | | | | | | 94.18 | | | | | | 91.64 | | | | | | 97.86 | | |
Ratio of average total equity to average assets | | | | | 8.52 | | | | | | 8.28 | | | | | | 8.24 | | | | | | 8.79 | | | | | | 10.65 | | |
Common stock cash dividends as a percent of net income available to common shareholders | | | | | 27.36 | | | | | | 17.31 | | | | | | 33.80 | | | | | | 41.18 | | | | | | 13.03 | | |
Interest rate spread | | | | | 3.05 | | | | | | 3.08 | | | | | | 3.14 | | | | | | 3.08 | | | | | | 3.33 | | |
Net interest margin | | | | | 3.29 | | | | | | 3.31 | | | | | | 3.32 | | | | | | 3.26 | | | | | | 3.49 | | |
Allowance for loan losses as a percentage of loans, net of unearned income, at period end | | | | | 1.05 | | | | | | 1.00 | | | | | | 1.14 | | | | | | 1.12 | | | | | | 1.13 | | |
Non-performing assets as a percentage of loans and other real estate owned, at period end | | | | | 0.26 | | | | | | 0.16 | | | | | | 0.34 | | | | | | 0.18 | | | | | | 0.71 | | |
Net charge-offs as a percentage of average loans | | | | | 0.02 | | | | | | 0.11 | | | | | | 0.06 | | | | | | 0.44 | | | | | | 0.11 | | |
Cumulative one year interest rate sensitivity gap ratio, at period end | | | | | 1.41 | | | | | | 1.15 | | | | | | 1.22 | | | | | | 1.44 | | | | | | 1.23 | | |
This new tax code arrived at a favorable time for AmeriServ. Our goal for 2017 was to re-establish the financial performance level that we reported in mid-2015. The result of this strong emphasis was that AmeriServ ended 2017 with the highest level of average loans for a full year on record. AmeriServ also ended 2017 with the highest level of average deposits on record, the highest level of total revenue on record and a reduced level of operating expenses. It is possible that had it not been necessary to recalculate the tax accounting process and accept a one-time charge against earnings, that 2017 may have been the best year since the restructure of the franchise in 2000.
That one-time charge resulted in AmeriServ announcing on January 23, 2018 net income for 2017 of $3,293,000 or $0.18 per common share. This was a 43% improvement in net income and a 50% improvement in earnings2019, our book value per share over 2016 which reported net incomewas $5.78.
AmeriServ is growing stronger year over year, but challenges remain. AmeriServ has become a very active lenderdeposits to small and mid-size businesses. AmeriServ finished 2017 for the fourth consecutive year with a record of lending over 90% of deposits into our regional markets. This means we are always seeking fresh deposits because it is our responsibility to provide affordable loans to the local and regionalmedium size businesses and consumers who are the backbone of our local economies.
AmeriServ also has been a company with a higher level of overhead than most community banks our size. We are working to improve this through technical advances which allow for higher productivity. A relationship has been established with a company who is the largest provider of banking software in the U.S. The goal is to continue to improve productivity and to consequently further reduce expenses.
It is important to note that AmeriServ is now fully focused on executing the 2017 – 2019 Strategic Plan. Perhaps the biggest challenge in that plan is to improve shareholder return. It was especially gratifying to meet and exceed the shareholder return target established in the strategic plan. That target is to return up to 75% of earnings to shareholders annually, subject to maintaining sufficient capital to support balance sheet growth. Using the adjusted net income figure prior to the one-time charge required under the Tax Cut and Jobs Act, the total capital return in 2017 was 76.4%. This was composed of quarterly cash dividend payments totaling $1,113,000. Also, a stock repurchase program returned $3,405,000 to shareholders. Upon completion of these entries, AmeriServ still met and exceeded the capital requirements established by the regulators enabling AmeriServ to operate successfully and to respond to expansion opportunities.
As has been our aim, we are setting forth in 2018 with all of the issues contained in the Tax Cut and Jobs Act as we know them today behind us. It is our job to use the new lower tax rate to build an even stronger and more profitable company. We will not chase the latest “fad.” Instead, we will continue to build strength in our balance sheet and then leverage that strength for the benefitregion. We want this economic
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) | | |||||||||||||||
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
Diluted earnings per share | | | | | 0.35 | | | | | | 0.43 | | | | | | 0.18 | | |
Return on average assets | | | | | 0.51% | | | | | | 0.67% | | | | | | 0.28% | | |
Return on average equity | | | | | 6.02 | | | | | | 8.08 | | | | | | 3.42 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) | ||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
Net income available to common shareholders | 3,293 | 2,295 | 5,787 | |||||||||
Diluted earnings per share | 0.18 | 0.12 | 0.31 | |||||||||
Return on average assets | 0.28 | % | 0.20 | % | 0.54 | % | ||||||
Return on average equity | 3.42 | 2.30 | 5.10 |
The Company reported net income availableof $6,028,000, or $0.35 per diluted common share in 2019. This represents an 18.6% decrease in earnings per share from the full year of 2018 when net income totaled $7,768,000, or $0.43 per diluted common share. The Company’s return on average equity declined to 6.02% for the 2019 year from 8.08% in 2018. Finally, the Company increased tangible book value per share by 4.1% during 2019 and returned almost 70% of net income to its shareholders through accretive common shareholdersstock buybacks and an increased cash dividend.
The Company reported net income available to common shareholders of $2.3 million, or $0.12 per diluted common share, for 2016. This represented a 61% decrease in earnings per share from 2015 where net income available to common shareholders totaled $5.8 million, or $0.31 per diluted share. This reduction reflects, 1.) a substantially higher than typical provision for loan losses and net loan charge offs that were recorded in the first quarter of 2016 to resolve the Company’s only meaningful direct loan exposure to the energy industry, 2.) a reduced level of net interest income that results from net interest margin compression, which is prevalent in the banking industry, as well as a lower level of loan prepayment fee income and additional interest expense related to the issuance of subordinated debt, and 3.) operating expenses increasing by $577,000, or 1.4% due to non-recurring costs for legal and accounting services that were necessary to address a trust operations trading error.
The Company reported net income available to common shareholders of $5.8 million, or $0.31 per diluted common share, for 2015. This represented a 107% increase in earnings per share from 2014 where net income available to common shareholders totalled $2.8 million, or $0.15 per diluted share. Factors causing this increase in earnings were solid loan and deposit growth in our community banking business which contributed to an increase of $1.3 million, or 3.9%, in net interest income while increasing revenue from our trust and wealth management business contributed to 6.6% growth in non-interest income in 2015. Additionally, operating expenses declined by $2.3 million, or 5.4%, as we improved the ongoing efficiency of the Company by successfully executing several profitability improvement initiatives.
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS) | | |||||||||||||||
Interest income | | | | $ | 49,767 | | | | | $ | 47,094 | | | | | $ | 44,356 | | |
Interest expense | | | | | 14,325 | | | | | | 11,600 | | | | | | 8,795 | | |
Net interest income | | | | | 35,442 | | | | | | 35,494 | | | | | | 35,561 | | |
Net interest margin | | | | | 3.29% | | | | | | 3.31% | | | | | | 3.32% | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||
Interest income | $ | 44,356 | $ | 41,869 | $ | 41,881 | ||||||
Interest expense | 8,795 | 7,735 | 6,520 | |||||||||
Net interest income | 35,561 | 34,134 | 35,361 | |||||||||
Net interest margin | 3.32 | % | 3.26 | % | 3.49 | % |
20172019 NET INTEREST PERFORMANCE OVERVIEW...OVERVIEW. The Company’s net interest income for the full year of 2017 increased2019 decreased by $1.4 million,$52,000, or 4.2%0.1%, when compared to the full year of 2016.2018. The Company’s net interest margin was 3.32%3.29% for the full year of 20172019 representing a sixtwo basis point improvementdecline from the full year
The Company experienced growth in average deposits which we believe reflects the loyalty of our core deposit base that provides a strong foundation upon which this growth builds. Specifically, total deposits averaged $976 million in 2017 which is $20.8 million, or 2.2%, higher than the $956$960 million average for the full year of 2016 The deposit growth occurred in interest bearing deposits while the total non-interest bearing demand deposit account balances remained relatively stable between years. As a result of this strong deposit growth,2018. Overall, the Company’s loan to deposit ratio endedaveraged 89.1% in the year at 91.5%fourth quarter of 2019 which we believe indicates that the Company has ample capacity to further grow its loan portfolio in 2018.
Total interest expense increased by $1,060,000, or 13.7%, for the full year of 2017 when compared to 2016, due to higher levels of both deposit and borrowing interest expense. Deposit interest expense in 2017 increased by $855,000, or 15.8%, due to the higher balance of deposits along with certain indexed money market accounts repricing upward after the Federal Reserve interest rate increases. The Company experienced a $205,000 increase in the interest cost for borrowings in 2017 primarily due to the immediate impact that the increases in the Federal Funds Rate had on the cost of overnight borrowed funds as well as matured FHLB term advances that were replaced with advances at higher rates. For the full year of 2017, total average FHLB borrowed funds of $62.6 million, increased by $4.9 million, or 8.4%.
portfolio.
The Company’s2017 and also exceeded loan originations in 2018, resulting in a net reduction to the loan portfolio. Included in the total level of payoffs experienced in 2018 was the successful workout of several criticized but performing loans which favorably impacted the quality of the loan portfolio.
products were the primary reasons for this growth. Specifically, total interest bearing deposits averaged $794 million in 2017 which is $21.2 million, or 2.7%, higher than the $773 million average for the full year of 2016. Deposit interest expense in 2017 increased2018 was higher by $855,000, or 15.8%, due to the higher balance of interest bearing deposits along with$2.2 million which reflects certain indexed money market accounts and term CDs repricing upward after the Federal Reserve interest rate increases. The cost of interest bearing deposits increased by nine28 basis points in 20172018 to 0.79%1.07% due to the impact of increasing national interest rates. Management continuesThe higher national interest rate environment in 2018 resulted in increasing market competitive pressure to carefully price interest rates paid on allretain existing deposit categories.customers and attract new customer deposits. Additionally, there has been customer movement of some funds out of lower yielding money market accounts into higher yielding certificates of deposits. The runoff of money market deposits has more than offset the growth of term deposit products and resulted in a decrease in the balance of total deposits in 2018. The Company experienced a $205,000$617,000, or 24.3%, increase in the interest cost for borrowings in 2017the full year of 2018 due to a higher average balance of total borrowed funds and the immediate impact that the increases in the Federal Funds Ratefederal funds rate had on the cost of overnight borrowed funds, FHLB term advances and a higher level of total borrowed funds. Total overnight borrowings increased by $7.9 million while their cost increased by 64 basis points to 1.21%. The Company also continued to utilize term advances from the FHLB, with maturities ranging between three and five years, to help fund earning asset growth and manage interest rate risk. The average balance of FHLB term advances decreased by $3.1 million while the average cost of these advances increased by 20 basis points to 1.52% as matured term advances were replaced by advances with higher interest rates. Total FHLB borrowed funds, including overnight borrowed funds, averaged $62.6 million or 5.4% of total average assets and increased by $4.9 million, or 8.4%. Overall, total interest bearing funding costs increased by nine31 basis points to 1.00%1.31%.
Overall, the Company expects that continued growth of earning assets as well as an increasing net interest margin will result in net interest income growth in 2018. The net interest margin stabilized in 2017 after a period of compression and also demonstrated improvement in the second half of the year. It is expected that this moderate pace of improvement in the net interest margin should continue in 2018. Solid commercial pipelines suggest that the Company should be able to grow the loan portfolio in 2018 although we expect the pricing pressures on new commercial loans to continue to be intense.
2016 NET INTEREST PERFORMANCE OVERVIEW... The Company’s net interest income for the full year of 2016 decreased by $1,227,000, or 3.5%, when compared to the full year of 2015. The Company’s net interest margin of 3.26% for the full year of 2016 was 23 basis points lower than the net interest margin of 3.49% for the full year of 2015. The 2016 reduction in net interest income has been significantly impacted by the following three factors: 1.) net interest margin compression that results from the prolonged low interest rate environment that exists in the economy and is pressuring community bank net interest margins, 2.) additional interest expense that was associated with the Company’s late fourth quarter 2015 issuance of subordinated debt, and 3.) a significantly lower level of loan prepayment fee income, which decreased by approximately $300,000 for full year of 2016. These factors more than offset the Company’s continued growth in earning assets and control of its cost of funds through disciplined deposit pricing. Specifically, the earning asset growth occurred in the loan portfolio as total loans averaged $888 million for the full year of 2016, which is $31 million, or 3.6%, higher than the $857 million average for the full year of 2015. This loan growth reflects the successful results of the Company’s business development efforts, with an emphasis on generating commercial loans and owner occupied commercial real estate loans particularly through its loan production offices. However, loan interest income is $134,000, or 0.4%, lower for the full year of 2016 when compared to the full year of 2015 due primarily to the previously mentioned decline in loan prepayment fees between years. Interest income on short-term investments and investment securities grew by $122,000 or 3.1% for the full year as the Company benefited from a higher balance of investment securities in 2016. Overall, total interest income decreased by $12,000, or 0.03%, in 2016.
The Company experienced significant growth in deposits between years which is a reflection of the loyalty and stability of our core deposit base that provides a strong foundation upon which this growth builds. Management’s ability to acquire new core deposit funding from outside of our traditional market areas as well as our ongoing efforts to offer new loan customers deposit products were the primary reasons for this growth. Specifically, total deposits averaged $956 million for the full year of 2016 which is $63 million, or 7.0%, higher than the $893 million average for the full year of 2015. The Company is also pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts. Deposit interest expense for the full year of 2016 increased by $648,000, or 13.6%, due to the higher balance of deposits along with certain money market accounts repricing upward after Federal Reserve fed funds interest rate increases. As a result of this strong deposit growth, the Company’s loan to deposit ratio ended the year at 91.6%.
Total interest expense increased for the full year of 2016 by $1,215,000, or 18.6%, as compared to 2015 due to higher levels of both borrowings and deposit interest expense. The Company experienced a $567,000 increase in the interest cost for borrowings in 2016, with $515,000 of this increase attributable to the Company’s subordinated debt issuance which occurred late in December of 2015. Specifically, the Company issued $7.65 million of subordinated debt which has a 6.50% fixed interest rate. The proceeds from the subordinated debt issuance, along with other cash on hand, was used to redeem all $21 million of our outstanding SBLF preferred stock on January 27, 2016. The remainder of the increase in borrowings interest expense was due to a greater utilization of FHLB term advances to extend borrowings for interest rate risk management purposes.
COMPONENT CHANGES IN NET INTEREST INCOME: 2016 VERSUS 2015... Regarding the separate components of net interest income, the Company’s total interest income in 2016 decreased by $12,000 when compared to 2015. This is evidenced by a $36.9 million increase in average earning assets due to increases in both average loans and average securities, which was more than offset by a 15 basis point decline in the earning asset yield from 4.14% to 3.99%. Within the earning asset base, total loan interest income decreased by $134,000 as the yield on the total loan portfolio decreased by 17 basis points from 4.44% to 4.27%. The greater level of total average loans in 2016 was more than offset by the impact of new loans having yields that are below the rate on the maturing instruments that they are replacing. Also negatively impacting loan interest income in 2016 was the reduced level of loan prepayment fee income. Investment securities interest revenue increased by $47,000 in 2016 due to a $2.3 million increase in the average investment securities portfolio. However, the yield on total investment securities decreased by one basis points from 2.67% to 2.66% due to net interest margin compression as well as an increase in premium amortization on mortgage backed securities, which resulted from an increase in mortgage prepayment speeds in 2016.
The Company’s total interest expense for 2016 increased by $1.2 million, or 18.6%, when compared to 2015. Total interest bearing deposits increased by $51.2 million or 7.1% due to management’s ability to acquire new core deposit funding from outside our traditional market areas as well as our ongoing efforts to offer new loan customers deposit products. Total interest bearing deposit interest expense increased by $648,000 in 2016 due to the higher volume of interest bearing deposits and an increase of four basis points in the cost of interest bearing deposits to 0.70%. Management continues to carefully price interest rates paid on all deposit categories. The Company experienced a $567,000 increase in the interest cost for borrowings in 2016, with $515,000 of this increase attributable to the Company’s subordinated debt issuance which occurred late in December of 2015. The increase in borrowings interest expense is also reflective of a greater usage total average FHLB term advances. The Company has utilized term advances from the FHLB, with maturities ranging between three and five years, to help fund its earning asset growth and manage interest rate risk. The average balance of FHLB term advances has increased by $2.6 million while the average cost of these advances has increased by 11 basis point to 1.32%. Total FHLB borrowings, including overnight borrowed funds, averaged $57.8 million or 5.1% of total assets during 2016. Overall, total interest bearing funding costs increased by 10 basis points to 0.91%.
The table that follows provides an analysis of net interest income on a tax-equivalent basis setting forth (i) average assets, liabilities, and stockholders’ equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of these tables, loan balances include non-accrual loans, and interest income on loans includes loan fees or amortization of such fees which have been deferred, as well as interest recorded on certain non-accrual loans as cash is received. Regulatory stock is included within available for sale investment securities for this analysis. Additionally, a tax rate of approximately 34% is21% was used to compute tax-equivalent yields.
YEAR ENDED DECEMBER 31, | ||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||
AVERAGE BALANCE | INTEREST INCOME/ EXPENSE | YIELD/ RATE | AVERAGE BALANCE | INTEREST INCOME/ EXPENSE | YIELD/ RATE | AVERAGE BALANCE | INTEREST INCOME/ EXPENSE | YIELD/ RATE | ||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||||||||||||||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||||||||||||||
Loans, net of unearned income | $ | 893,849 | $ | 39,257 | 4.39 | % | $ | 887,679 | $ | 37,891 | 4.27 | % | $ | 857,015 | $ | 38,024 | 4.44 | % | ||||||||||||||||||
Deposits with banks | 1,028 | 11 | 1.11 | 1,668 | 13 | 0.70 | 2,198 | 8 | 0.34 | |||||||||||||||||||||||||||
Short-term investment in money market funds | 7,996 | 130 | 1.63 | 15,156 | 84 | 0.56 | 10,700 | 14 | 0.14 | |||||||||||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||||||||||
Available for sale | 135,131 | 3,800 | 2.81 | 121,630 | 3,132 | 2.58 | 124,383 | 3,250 | 2.61 | |||||||||||||||||||||||||||
Held to maturity | 37,484 | 1,198 | 3.20 | 25,649 | 779 | 3.04 | 20,576 | 614 | 2.98 | |||||||||||||||||||||||||||
Total investment securities | 172,615 | 4,998 | 2.90 | 147,279 | 3,911 | 2.66 | 144,959 | 3,864 | 2.67 | |||||||||||||||||||||||||||
TOTAL INTEREST EARNING ASSETS/INTEREST INCOME | 1,075,488 | 44,396 | 4.14 | 1,051,782 | 41,899 | 3.99 | 1,014,872 | 41,910 | 4.14 | |||||||||||||||||||||||||||
Non-interest earning assets: | ||||||||||||||||||||||||||||||||||||
Cash and due from banks | 22,393 | 20,626 | 17,312 | |||||||||||||||||||||||||||||||||
Premises and equipment | 12,273 | 11,930 | 12,617 | |||||||||||||||||||||||||||||||||
Other assets | 67,169 | 68,046 | 69,201 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (10,241 | ) | (9,790 | ) | (9,766 | ) | ||||||||||||||||||||||||||||||
TOTAL ASSETS | $ | 1,167,082 | $ | 1,142,594 | $ | 1,104,236 | ||||||||||||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Interest bearing deposits: | ||||||||||||||||||||||||||||||||||||
Interest bearing demand | $ | 129,589 | $ | 638 | 0.49 | % | $ | 108,350 | $ | 317 | 0.29 | % | $ | 97,201 | $ | 199 | 0.21 | % | ||||||||||||||||||
Savings | 97,405 | 162 | 0.17 | 95,986 | 159 | 0.17 | 94,425 | 156 | 0.17 | |||||||||||||||||||||||||||
Money market | 275,636 | 1,446 | 0.52 | 277,967 | 1,198 | 0.43 | 242,298 | 817 | 0.34 | |||||||||||||||||||||||||||
Other time | 291,475 | 4,009 | 1.38 | 290,612 | 3,726 | 1.28 | 287,783 | 3,580 | 1.24 | |||||||||||||||||||||||||||
Total interest bearing deposits | 794,105 | 6,255 | 0.79 | 772,915 | 5,400 | 0.70 | 721,707 | 4,752 | 0.66 | |||||||||||||||||||||||||||
Federal funds purchased and other short-term borrowings | 16,972 | 206 | 1.21 | 9,030 | 52 | 0.57 | 24,582 | 86 | 0.35 | |||||||||||||||||||||||||||
Advances from Federal Home Loan Bank | 45,657 | 694 | 1.52 | 48,720 | 644 | 1.32 | 46,166 | 558 | 1.21 | |||||||||||||||||||||||||||
Guaranteed junior subordinated deferrable interest debentures | 13,085 | 1,120 | 8.57 | 13,085 | 1,120 | 8.57 | 13,085 | 1,120 | 8.57 | |||||||||||||||||||||||||||
Subordinated debt | 7,650 | 520 | 6.80 | 7,650 | 519 | 6.79 | 62 | 4 | 6.72 | |||||||||||||||||||||||||||
TOTAL INTEREST BEARING LIABILITIES/INTEREST EXPENSE | 877,469 | 8,795 | 1.00 | 851,400 | 7,735 | 0.91 | 805,602 | 6,520 | 0.81 | |||||||||||||||||||||||||||
Non-interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Demand deposits | 182,301 | 182,732 | 171,175 | |||||||||||||||||||||||||||||||||
Other liabilities | 11,119 | 8,074 | 9,871 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 96,193 | 100,388 | 117,588 | |||||||||||||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,167,082 | $ | 1,142,594 | $ | 1,104,236 | ||||||||||||||||||||||||||||||
Interest rate spread | 3.14 | 3.08 | 3.33 | |||||||||||||||||||||||||||||||||
Net interest income/net interest margin | 35,601 | 3.32 | % | 34,164 | 3.26 | % | 35,390 | 3.49 | % | |||||||||||||||||||||||||||
Tax-equivalent adjustment | (40 | ) | (30 | ) | (29 | ) | ||||||||||||||||||||||||||||||
Net interest income | $ | 35,561 | $ | 34,134 | $ | 35,361 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||||||||||||||||||||||||||||||||||||||
| | | AVERAGE BALANCE | | | INTEREST INCOME/ EXPENSE | | | YIELD/ RATE | | | AVERAGE BALANCE | | | INTEREST INCOME/ EXPENSE | | | YIELD/ RATE | | | AVERAGE BALANCE | | | INTEREST INCOME/ EXPENSE | | | YIELD/ RATE | | |||||||||||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net of unearned income | | | | $ | 875,198 | | | | | $ | 42,957 | | | | | | 4.91% | | | | | $ | 881,767 | | | | | $ | 41,049 | | | | | | 4.66% | | | | | $ | 893,849 | | | | | $ | 39,257 | | | | | | 4.39% | | |
Deposits with banks | | | | | 1,018 | | | | | | 24 | | | | | | 2.32 | | | | | | 1,023 | | | | | | 20 | | | | | | 1.90 | | | | | | 1,028 | | | | | | 11 | | | | | | 1.11 | | |
Short-term investment in money market funds | | | | | 10,552 | | | | | | 293 | | | | | | 2.77 | | | | | | 6,725 | | | | | | 201 | | | | | | 3.00 | | | | | | 7,996 | | | | | | 130 | | | | | | 1.63 | | |
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Available for sale | | | | | 153,458 | | | | | | 5,090 | | | | | | 3.32 | | | | | | 145,162 | | | | | | 4,527 | | | | | | 3.12 | | | | | | 135,131 | | | | | | 3,800 | | | | | | 2.81 | | |
Held to maturity | | | | | 40,553 | | | | | | 1,427 | | | | | | 3.52 | | | | | | 39,388 | | | | | | 1,318 | | | | | | 3.35 | | | | | | 37,484 | | | | | | 1,198 | | | | | | 3.20 | | |
Total investment securities | | | | | 194,011 | | | | | | 6,517 | | | | | | 3.36 | | | | | | 184,550 | | | | | | 5,845 | | | | | | 3.17 | | | | | | 172,615 | | | | | | 4,998 | | | | | | 2.90 | | |
TOTAL INTEREST EARNING ASSETS/ INTEREST INCOME | | | | | 1,080,779 | | | | | | 49,791 | | | | | | 4.61 | | | | | | 1,074,065 | | | | | | 47,115 | | | | | | 4.39 | | | | | | 1,075,488 | | | | | | 44,396 | | | | | | 4.14 | | |
Non-interest earning assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | | | | 20,239 | | | | | | | | | | | | | | | | | | 23,067 | | | | | | | | | | | | | | | | | | 22,393 | | | | | | | | | | | | | | |
Premises and equipment | | | | | 17,928 | | | | | | | | | | | | | | | | | | 12,480 | | | | | | | | | | | | | | | | | | 12,273 | | | | | | | | | | | | | | |
Other assets | | | | | 64,083 | | | | | | | | | | | | | | | | | | 62,040 | | | | | | | | | | | | | | | | | | 67,169 | | | | | | | | | | | | | | |
Allowance for loan losses | | | | | (8,404) | | | | | | | | | | | | | | | | | | (9,866) | | | | | | | | | | | | | | | | | | (10,241) | | | | | | | | | | | | | | |
TOTAL ASSETS | | | | $ | 1,174,625 | | | | | | | | | | | | | | | | | $ | 1,161,786 | | | | | | | | | | | | | | | | | $ | 1,167,082 | | | | | | | | | | | | | | |
Interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing demand | | | | $ | 170,326 | | | | | $ | 1,595 | | | | | | 0.94% | | | | | $ | 138,572 | | | | | $ | 1,134 | | | | | | 0.82% | | | | | $ | 129,589 | | | | | $ | 638 | | | | | | 0.49% | | |
Savings | | | | | 96,783 | | | | | | 162 | | | | | | 0.17 | | | | | | 98,035 | | | | | | 163 | | | | | | 0.17 | | | | | | 97,405 | | | | | | 162 | | | | | | 0.17 | | |
Money market | | | | | 234,387 | | | | | | 2,525 | | | | | | 1.08 | | | | | | 249,618 | | | | | | 2,183 | | | | | | 0.87 | | | | | | 275,636 | | | | | | 1,446 | | | | | | 0.52 | | |
Other time | | | | | 326,867 | | | | | | 6,907 | | | | | | 2.11 | | | | | | 299,391 | | | | | | 4,963 | | | | | | 1.66 | | | | | | 291,475 | | | | | | 4,009 | | | | | | 1.38 | | |
Total interest bearing deposits | | | | | 828,363 | | | | | | 11,189 | | | | | | 1.35 | | | | | | 785,616 | | | | | | 8,443 | | | | | | 1.07 | | | | | | 794,105 | | | | | | 6,255 | | | | | | 0.79 | | |
Federal funds purchased and other short-term borrowings | | | | | 11,088 | | | | | | 288 | | | | | | 2.59 | | | | | | 33,126 | | | | | | 720 | | | | | | 2.17 | | | | | | 16,972 | | | | | | 206 | | | | | | 1.21 | | |
Advances from Federal Home Loan Bank | | | | | 52,309 | | | | | | 1,090 | | | | | | 2.09 | | | | | | 44,974 | | | | | | 797 | | | | | | 1.77 | | | | | | 45,657 | | | | | | 694 | | | | | | 1.52 | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | 13,085 | | | | | | 1,121 | | | | | | 8.57 | | | | | | 13,085 | | | | | | 1,120 | | | | | | 8.57 | | | | | | 13,085 | | | | | | 1,120 | | | | | | 8.57 | | |
Subordinated debt | | | | | 7,650 | | | | | | 520 | | | | | | 6.80 | | | | | | 7,650 | | | | | | 520 | | | | | | 6.80 | | | | | | 7,650 | | | | | | 520 | | | | | | 6.80 | | |
Lease liabilities | | | | | 3,444 | | | | | | 117 | | | | | | 3.40 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
TOTAL INTEREST BEARING LIABILITIES/INTEREST EXPENSE | | | | | 915,939 | | | | | | 14,325 | | | | | | 1.56 | | | | | | 884,451 | | | | | | 11,600 | | | | | | 1.31 | | | | | | 877,469 | | | | | | 8,795 | | | | | | 1.00 | | |
Non-interest bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Demand deposits | | | | | 151,292 | | | | | | | | | | | | | | | | | | 174,108 | | | | | | | | | | | | | | | | | | 182,301 | | | | | | | | | | | | | | |
Other liabilities | | | | | 7,271 | | | | | | | | | | | | | | | | | | 7,077 | | | | | | | | | | | | | | | | | | 11,119 | | | | | | | | | | | | | | |
Stockholders’ equity | | | | | 100,123 | | | | | | | | | | | | | | | | | | 96,150 | | | | | | | | | | | | | | | | | | 96,193 | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | $ | 1,174,625 | | | | | | | | | | | | | | | | | $ | 1,161,786 | | | | | | | | | | | | | | | | | $ | 1,167,082 | | | | | | | | | | | | | | |
Interest rate spread | | | | | | | | | | | | | | | | | 3.05 | | | | | | | | | | | | | | | | | | 3.08 | | | | | | | | | | | | | | | | | | 3.14 | | |
Net interest income/net interest margin | | | | | | | | | | | 35,466 | | | | | | 3.29% | | | | | | | | | | | | 35,515 | | | | | | 3.31% | | | | | | | | | | | | 35,601 | | | | | | 3.32% | | |
Tax-equivalent adjustment | | | | | | | | | | | (24) | | | | | | | | | | | | | | | | | | (21) | | | | | | | | | | | | | | | | | | (40) | | | | | | | | |
Net interest income | | | | | | | | | | $ | 35,442 | | | | | | | | | | | | | | | | | $ | 35,494 | | | | | | | | | | | | | | | | | $ | 35,561 | | | | | | | | |
|
| | | 2019 vs. 2018 | | | 2018 vs. 2017 | | ||||||||||||||||||||||||||||||
| | | INCREASE (DECREASE) DUE TO CHANGE IN: | | | INCREASE (DECREASE) DUE TO CHANGE IN: | | ||||||||||||||||||||||||||||||
| | | AVERAGE VOLUME | | | RATE | | | TOTAL | | | AVERAGE VOLUME | | | RATE | | | TOTAL | | ||||||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||||||||
INTEREST EARNED ON: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net of unearned income | | | | $ | (308) | | | | | $ | 2,216 | | | | | $ | 1,908 | | | | | $ | (505) | | | | | $ | 2,297 | | | | | $ | 1,792 | | |
Deposits with banks | | | | | — | | | | | | 4 | | | | | | 4 | | | | | | (1) | | | | | | 10 | | | | | | 9 | | |
Short-term investments in money market funds | | | | | 106 | | | | | | (14) | | | | | | 92 | | | | | | (17) | | | | | | 88 | | | | | | 71 | | |
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Available for sale | | | | | 265 | | | | | | 298 | | | | | | 563 | | | | | | 292 | | | | | | 435 | | | | | | 727 | | |
Held to maturity | | | | | 40 | | | | | | 69 | | | | | | 109 | | | | | | 62 | | | | | | 58 | | | | | | 120 | | |
Total investment securities | | | | | 305 | | | | | | 367 | | | | | | 672 | | | | | | 354 | | | | | | 493 | | | | | | 847 | | |
Total interest income | | | | | 103 | | | | | | 2,573 | | | | | | 2,676 | | | | | | (169) | | | | | | 2,888 | | | | | | 2,719 | | |
INTEREST PAID ON: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest bearing demand deposits | | | | | 281 | | | | | | 180 | | | | | | 461 | | | | | | 46 | | | | | | 450 | | | | | | 496 | | |
Savings deposits | | | | | (1) | | | | | | — | | | | | | (1) | | | | | | 1 | | | | | | — | | | | | | 1 | | |
Money market | | | | | (116) | | | | | | 458 | | | | | | 342 | | | | | | (120) | | | | | | 857 | | | | | | 737 | | |
Other time deposits | | | | | 492 | | | | | | 1,452 | | | | | | 1,944 | | | | | | 113 | | | | | | 841 | | | | | | 954 | | |
Federal funds purchased and other short-term borrowings | | | | | (609) | | | | | | 177 | | | | | | (432) | | | | | | 280 | | | | | | 234 | | | | | | 514 | | |
Advances from Federal Home Loan Bank | | | | | 139 | | | | | | 154 | | | | ��� | | 293 | | | | | | (10) | | | | | | 113 | | | | | | 103 | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | — | | | | | | 1 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | |
Lease liabilities | | | | | 117 | | | | | | — | | | | | | 117 | | | | | | — | | | | | | — | | | | | | — | | |
Total interest expense | | | | | 303 | | | | | | 2,422 | | | | | | 2,725 | | | | | | 310 | | | | | | 2,495 | | | | | | 2,805 | | |
Change in net interest income | | | | $ | (200) | | | | | $ | 151 | | | | | $ | (49) | | | | | $ | (479) | | | | | $ | 393 | | | | | $ | (86) | | |
2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||||||||
INCREASE (DECREASE) DUE TO CHANGE IN: | INCREASE (DECREASE) DUE TO CHANGE IN: | |||||||||||||||||||||||
AVERAGE VOLUME | RATE | TOTAL | AVERAGE VOLUME | RATE | TOTAL | |||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
INTEREST EARNED ON: | ||||||||||||||||||||||||
Loans, net of unearned income | $ | 271 | $ | 1,095 | $ | 1,366 | $ | 247 | $ | (380 | ) | $ | (133 | ) | ||||||||||
Deposits with banks | (6 | ) | 4 | (2 | ) | (1 | ) | 6 | 5 | |||||||||||||||
Short-term investments in money market funds | (15 | ) | 61 | 46 | 7 | 63 | 70 | |||||||||||||||||
Investment securities: | ||||||||||||||||||||||||
Available for sale | 370 | 298 | 668 | (78 | ) | (40 | ) | (118 | ) | |||||||||||||||
Held to maturity | 376 | 43 | 419 | 153 | 12 | 165 | ||||||||||||||||||
Total investment securities | 746 | 341 | 1,087 | 75 | (28 | ) | 47 | |||||||||||||||||
Total interest income | 996 | 1,501 | 2,497 | 328 | (339 | ) | (11 | ) | ||||||||||||||||
INTEREST PAID ON: | ||||||||||||||||||||||||
Interest bearing demand deposits | 71 | 250 | 321 | 27 | 91 | 118 | ||||||||||||||||||
Savings deposits | 3 | — | 3 | 3 | — | 3 | ||||||||||||||||||
Money market | (10 | ) | 258 | 248 | 136 | 245 | 381 | |||||||||||||||||
Other time deposits | 10 | 273 | 283 | 34 | 112 | 146 | ||||||||||||||||||
Federal funds purchased and other short-term borrowings | 68 | 86 | 154 | (64 | ) | 30 | (34 | ) | ||||||||||||||||
Advances from Federal Home Loan Bank | (35 | ) | 85 | 50 | 33 | 53 | 86 | |||||||||||||||||
Subordinated debt | — | 1 | 1 | 515 | — | 515 | ||||||||||||||||||
Total interest expense | 107 | 953 | 1,060 | 684 | 531 | 1,215 | ||||||||||||||||||
Change in net interest income | $ | 889 | $ | 548 | $ | 1,437 | $ | (356 | ) | $ | (870 | ) | $ | (1,226 | ) |
LOAN QUALITY...QUALITY.The Company’s written lending policies require underwriting, loan documentation, and credit analysis standards to be met prior to funding any loan. After the loan has been approved and funded, continued periodic credit review is required. The Company’s policy is to individually review, as circumstances warrant, each of its commercial and commercial mortgage loans to determine if a loan is impaired. At a minimum, credit reviews are mandatory for all commercial and commercial mortgage loan relationships with aggregate balances in excess of $250,000$1,000,000 within a 12-month period. The Company has also identified three pools of small dollar value homogeneous loans which are evaluated collectively for impairment. These separate pools are for small business relationships with aggregate balances of $250,000 or less, residential mortgage loans and consumer loans. Individual loans within these pools are reviewed and removed from the pool if factors such as significant delinquency in payments of 90 days or more, bankruptcy, or other negative economic concerns indicate impairment. The following table sets forth information concerning the Company’s loan delinquency and other non-performing assets.
AT DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||||||
Total accruing loans past due 30 to 89 days | $ | 8,178 | $ | 3,278 | $ | 4,396 | ||||||
Total non-accrual loans | 3,016 | 1,603 | 6,066 | |||||||||
Total non-performing assets including TDRs(1) | 3,034 | 1,624 | 6,297 | |||||||||
Loan delinquency as a percentage of total loans, net of unearned income | 0.92 | % | 0.37 | % | 0.50 | % | ||||||
Non-accrual loans as a percentage of total loans, net of unearned income | 0.34 | 0.18 | 0.69 | |||||||||
Non-performing assets as a percentage of total loans, net of unearned income, and other real estate owned | 0.34 | 0.18 | 0.71 | |||||||||
Non-performing assets as a percentage of total assets | 0.26 | 0.14 | 0.55 | |||||||||
Total classified loans (loans rated substandard or doubtful) | $ | 5,433 | $ | 6,039 | $ | 8,566 |
| | | AT DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||||||||
Total accruing loans past due 30 to 89 days | | | | $ | 2,956 | | | | | $ | 4,752 | | | | | $ | 8,178 | | |
Total non-accrual loans | | | | | 1,487 | | | | | | 1,221 | | | | | | 3,016 | | |
Total non-performing assets including TDRs(1) | | | | | 2,339 | | | | | | 1,378 | | | | | | 3,034 | | |
Loan delinquency as a percentage of total loans, net of unearned income | | | | | 0.33% | | | | | | 0.55% | | | | | | 0.92% | | |
Non-accrual loans as a percentage of total loans, net of unearned income | | | | | 0.17 | | | | | | 0.14 | | | | | | 0.34 | | |
Non-performing assets as a percentage of total loans, net of unearned income, and other real estate owned | | | | | 0.26 | | | | | | 0.16 | | | | | | 0.34 | | |
Non-performing assets as a percentage of total assets | | | | | 0.20 | | | | | | 0.12 | | | | | | 0.26 | | |
Total classified loans (loans rated substandard or doubtful)(2) | | | | $ | 16,338 | | | | | $ | 4,302 | | | | | $ | 5,433 | | |
ALLOWANCE AND PROVISION FOR LOAN LOSSES...LOSSES.As described in more detail in the Critical Accounting Policies and Estimates section of this MD&A, the Company uses a comprehensive methodology and procedural discipline to maintain an ALL to absorb inherent losses in the loan portfolio. The Company believes this is a critical accounting policy since it involves significant estimates and judgments. The following table sets forth changes in the ALL and certain ratios for the periods ended.
YEAR ENDED DECEMBER 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES) | ||||||||||||||||||||
Balance at beginning of year | $ | 9,932 | $ | 9,921 | $ | 9,623 | $ | 10,104 | $ | 12,571 | ||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial | (278 | ) | (3,648 | ) | (170 | ) | (172 | ) | (50 | ) | ||||||||||
Commercial loans secured by real estate | (165 | ) | (13 | ) | (250 | ) | (708 | ) | (1,777 | ) | ||||||||||
Real estate-mortgage | (313 | ) | (291 | ) | (753 | ) | (322 | ) | (139 | ) | ||||||||||
Consumer | (172 | ) | (344 | ) | (188 | ) | (121 | ) | (154 | ) | ||||||||||
Total charge-offs | (928 | ) | (4,296 | ) | (1,361 | ) | (1,323 | ) | (2,120 | ) | ||||||||||
Recoveries: | ||||||||||||||||||||
Commercial | 27 | 140 | 101 | 141 | 80 | |||||||||||||||
Commercial loans secured by real estate | 14 | 40 | 111 | 231 | 481 | |||||||||||||||
Real estate-mortgage | 250 | 147 | 171 | 71 | 122 | |||||||||||||||
Consumer | 119 | 30 | 26 | 24 | 70 | |||||||||||||||
Total recoveries | 410 | 357 | 409 | 467 | 753 | |||||||||||||||
Net charge-offs | (518 | ) | (3,939 | ) | (952 | ) | (856 | ) | (1,367 | ) | ||||||||||
Provision (credit) for loan losses | 800 | 3,950 | 1,250 | 375 | (1,100 | ) | ||||||||||||||
Balance at end of year | $ | 10,214 | $ | 9,932 | $ | 9,921 | $ | 9,623 | $ | 10,104 | ||||||||||
Loans and loans held for sale, net of unearned income: | ||||||||||||||||||||
Average for the year | $ | 893,849 | $ | 887,679 | $ | 857,015 | $ | 804,721 | $ | 746,490 | ||||||||||
At December 31 | 892,758 | 886,858 | 880,984 | 827,080 | 786,748 | |||||||||||||||
As a percent of average loans: | ||||||||||||||||||||
Net charge-offs | 0.06 | % | 0.44 | % | 0.11 | % | 0.11 | % | 0.18 | % | ||||||||||
Provision (credit) for loan losses | 0.09 | 0.44 | 0.15 | 0.05 | (0.15 | ) | ||||||||||||||
Allowance as a percent of each of the following: | ||||||||||||||||||||
Total loans, net of unearned income | 1.15 | 1.12 | 1.13 | 1.16 | 1.29 | |||||||||||||||
Total accruing delinquent loans (past due 30 to 89 days) | 124.90 | 302.99 | 225.68 | 364.09 | 309.56 | |||||||||||||||
Total non-accrual loans | 338.66 | 619.59 | 163.55 | 438.21 | 351.93 | |||||||||||||||
Total non-performing assets | 336.65 | 611.58 | 157.55 | 329.89 | 245.90 | |||||||||||||||
Allowance as a multiple of net charge-offs | 19.72x | 2.52x | 10.42x | 11.24x | 7.39x |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | |||||||||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES) | | |||||||||||||||||||||||||||
Balance at beginning of year | | | | $ | 8,671 | | | | | $ | 10,214 | | | | | $ | 9,932 | | | | | $ | 9,921 | | | | | $ | 9,623 | | |
Charge-offs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | | | (9) | | | | | | (574) | | | | | | (311) | | | | | | (3,662) | | | | | | (404) | | |
Commercial loans secured by non-owner occupied real estate | | | | | (63) | | | | | | — | | | | | | (132) | | | | | | (82) | | | | | | (365) | | |
Real estate – residential mortgage | | | | | (98) | | | | | | (380) | | | | | | (313) | | | | | | (208) | | | | | | (403) | | |
Consumer | | | | | (262) | | | | | | (251) | | | | | | (172) | | | | | | (344) | | | | | | (188) | | |
Total charge-offs | | | | | (432) | | | | | | (1,205) | | | | | | (928) | | | | | | (4,296) | | | | | | (1,360) | | |
Recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | | | 22 | | | | | | 31 | | | | | | 27 | | | | | | 169 | | | | | | 174 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 48 | | | | | | 51 | | | | | | 56 | | | | | | 58 | | | | | | 76 | | |
Real estate – residential mortgage | | | | | 118 | | | | | | 119 | | | | | | 207 | | | | | | 100 | | | | | | 132 | | |
Consumer | | | | | 52 | | | | | | 61 | | | | | | 120 | | | | | | 30 | | | | | | 26 | | |
Total recoveries | | | | | 240 | | | | | | 262 | | | | | | 410 | | | | | | 357 | | | | | | 408 | | |
Net charge-offs | | | | | (192) | | | | | | (943) | | | | | | (518) | | | | | | (3,939) | | | | | | (952) | | |
Provision (credit) for loan losses | | | | | 800 | | | | | | (600) | | | | | | 800 | | | | | | 3,950 | | | | | | 1,250 | | |
Balance at end of year | | | | $ | 9,279 | | | | | $ | 8,671 | | | | | $ | 10,214 | | | | | $ | 9,932 | | | | | $ | 9,921 | | |
Loans and loans held for sale, net of unearned income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average for the year | | | | $ | 875,198 | | | | | $ | 881,767 | | | | | $ | 893,849 | | | | | $ | 887,679 | | | | | $ | 857,015 | | |
At December 31 | | | | | 887,574 | | | | | | 863,129 | | | | | | 892,758 | | | | | | 886,858 | | | | | | 883,987 | | |
As a percent of average loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net charge-offs | | | | | 0.02% | | | | | | 0.11% | | | | | | 0.06% | | | | | | 0.44% | | | | | | 0.11% | | |
Provision (credit) for loan losses | | | | | 0.09 | | | | | | (0.07) | | | | | | 0.09 | | | | | | 0.44 | | | | | | 0.15 | | |
Allowance as a percent of each of the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans, net of unearned income | | | | | 1.05 | | | | | | 1.00 | | | | | | 1.14 | | | | | | 1.12 | | | | | | 1.13 | | |
Total accruing delinquent loans (past due 30 to 89 days) | | | | | 313.90 | | | | | | 182.47 | | | | | | 124.90 | | | | | | 302.99 | | | | | | 225.68 | | |
Total non-accrual loans | | | | | 624.01 | | | | | | 710.16 | | | | | | 338.66 | | | | | | 619.59 | | | | | | 163.55 | | |
Total non-performing assets | | | | | 396.71 | | | | | | 629.25 | | | | | | 336.65 | | | | | | 611.58 | | | | | | 157.55 | | |
Allowance as a multiple of net charge-offs | | | | | 48.33x | | | | | | 9.20x | | | | | | 19.72x | | | | | | 2.52x | | | | | | 10.42x | | |
charge-offs of $518,000,only $192,000, or 0.06%0.02% of total loans, in 20172019 compared to net loan charge-offs of $3.9$943,000, or 0.11% of total loans, in 2018. Overall, nonperforming assets totaled $2.3 million, or 0.44%only 0.26% of total loans, at December 31, 2019. In summary, the allowance
For 2016, the Company recorded a $3,950,000 provision for loan losses compared to a $1,250,000 provision for loan losses for the full year of 2015 or an increase of $2.7 million between years. A substantially higher than typical provision and net loan charge-offs were recorded in the first quarter of 2016 and were necessary to resolve the Company’s only meaningful direct loan exposure to the energy industry. These loans were related to a single borrower in the fracking industry who had filed for bankruptcy protection in the fourth quarter of 2015. The bankruptcy changed from Chapter 11 (reorganization) to Chapter 7 (liquidation), and the Company concluded that its previously established reserves on these non-accrual loans were not sufficient to cover the discounted collateral values that resulted from the liquidation process. As a result of this action, the Company also experienced heightened net loan charge-offs of $3.9 million, or 0.44%, of total loans in 2016, compared to net loan charge-offs of $952,000, or 0.11% of total loans, in 2015. Overall, the Company continued to maintain excellent asset quality. At December 31, 2016, non-performing assets totaled $1.6 million, or only 0.18% of total loans, which is down by $4.7 million from the prior year-end and is one of the lowest levels ever reported by the Company. In summary, the allowance for loan losses provided a strong 612% coverage of non-performing loans, and 1.12% of total loans, at December 31, 2016, compared to 158% coverage of non-performing loans, and 1.13% of total loans, at December 31, 2015.
AT DECEMBER 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AMOUNT | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | AMOUNT | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | AMOUNT | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | AMOUNT | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | AMOUNT | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | AT DECEMBER 31, | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | 2019 | | 2018 | | 2017 | | 2016 | | 2015 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | AMOUNT | | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | | AMOUNT | | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | | AMOUNT | | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | | AMOUNT | | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | | AMOUNT | | PERCENT OF LOANS IN EACH CATEGORY TO TOTAL LOANS | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | (IN THOUSANDS, EXCEPT PERCENTAGES) | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 4,299 | 17.8 | % | $ | 4,041 | 19.3 | % | $ | 4,244 | 20.6 | % | $ | 3,262 | 16.8 | % | $ | 2,844 | 15.3 | % | | | $ | 3,951 | | | | | 30.1% | | | | $ | 3,057 | | | | | 29.0% | | | | $ | 4,298 | | | | | 28.0% | | | | $ | 4,041 | | | | | 29.8% | | | | $ | 4,243 | | | | | 31.6% | | | ||||||||||||||||||||||||||||||
Commercial loans secured by real estate | 3,666 | 52.0 | 3,584 | 50.4 | 3,449 | 47.9 | 3,902 | 49.6 | 4,885 | 52.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate-mortgage | 1,102 | 28.0 | 1,169 | 28.1 | 1,173 | 29.3 | 1,310 | 31.3 | 1,260 | 30.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial loans secured by non-owner occupied real estate | | | | 3,119 | | | | | 41.2 | | | | | 3,389 | | | | | 41.4 | | | | | 3,666 | | | | | 42.0 | | | | | 3,584 | | | | | 40.2 | | | | | 3,449 | | | | | 36.9 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate – residential mortgage | | | | 1,159 | | | | | 26.6 | | | | | 1,235 | | | | | 27.6 | | | | | 1,102 | | | | | 27.8 | | | | | 1,169 | | | | | 27.8 | | | | | 1,174 | | | | | 29.2 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | 128 | 2.2 | 151 | 2.2 | 151 | 2.2 | 190 | 2.3 | 136 | 2.0 | | | | 126 | | | | | 2.1 | | | | | 127 | | | | | 2.0 | | | | | 128 | | | | | 2.2 | | | | | 151 | | | | | 2.2 | | | | | 151 | | | | | 2.3 | | | ||||||||||||||||||||||||||||||||||||||||
Allocation to general risk | 1,019 | — | 987 | — | 904 | — | 959 | — | 979 | — | | | | 924 | | | | | — | | | | | 863 | | | | | — | | | | | 1,020 | | | | | — | | | | | 987 | | | | | — | | | | | 904 | | | | | — | | | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 10,214 | 100.0 | % | $ | 9,932 | 100.0 | % | $ | 9,921 | 100.0 | % | $ | 9,623 | 100.0 | % | $ | 10,104 | 100.0 | % | | | $ | 9,279 | | | | | 100.0% | | | | $ | 8,671 | | | | | 100.0% | | | | $ | 10,214 | | | | | 100.0% | | | | $ | 9,932 | | | | | 100.0% | | | | $ | 9,921 | | | | | 100.0% | | | ||||||||||||||||||||||||||||||
| |
Based on the Company’s current ALL methodology and the related assessment of the inherent risk factors contained within the Company’s loan portfolio, we believe that the ALL is adequate at December 31, 20172019 to cover losses within the Company’s loan portfolio.
• a $554,000 negative change in the net realized gain/loss on investment securities primarily results from two security sell transactions. Early in 2018, management viewed the gain recognized on the sale of equity securities, described in the third bulleted item, as an opportunity to rid the investment securities portfolio of certain investments having a low yield and a small balance. Similarly, because of the negative loan loss provision recognized during the fourth quarter of 2018, management viewed this as another opportunity to, again, sell certain low yielding securities. The funds from both sells were reinvested in securities with higher current market coupon rates. Both security sell transactions were negatively impacted by the market value of sold securities decreasing since 2017 due |
NON-INTEREST EXPENSE...Non-interest expense for 2017 totalled $40.8 million, which represents an $849,000, or 2.0%, decrease from 2016. Factors contributing to the higher interest rate environment in 2018. However, because of the reinvestment of the sold funds into higher yielding instruments, the result of both transactions positions the Company for an increased future return from the investment securities portfolio;
SEGMENT RESULTS...corresponding incremental increase to other term deposit products. Note that the retail banking division did experience deposit cost relief during the second half of 2019 because of the Federal Reserve’s action to decrease the fed funds rate in July, September and October. Retail banking’sbanking was also positively impacted by the lower level of FDIC insurance expense due to the application of the assessment credit during 2019. Finally, there was a higher level of net gains on loan sales into the secondary market as well as a higher level of mortgage related fee income due to increased residential mortgage loan production.
The commercial banking segment reported net incomegreater level of $5.8 million in 2017 compared to net income of $3.3 million in 2016 and $5.4 million in 2015. The net income contribution for 2017 increased due to the lower provision for loan losses. The higher loan loss provision in 2016pension cost. Also, there was necessary to resolve the troubled energy sector loan that had a significant negative impact to reported net income in 2016. Also, a decrease in classified assets and the levelvolume of delinquency duringlife insurance sales within the year contributed to the lower provision expense. Growth in commercial real estate loans over the past year also contributed to the higher level of net income. In addition to the growth experienced in the CRE portfolio the commercial banking segment also benefitted from a lower level of non-interest expense due to the closure of a loan production office and additional operation efficiencies.
The trust segment’s net income contribution was $1.4 million in 2017 compared to $1.1 million in 2016 and $1.3 million in 2015. The increase to total income occurred as expenses returned to a more normal level after additional costs were necessary in 2016 to address a trust operations trading error. Also, the higher level of net income results from continued effective management of existing customer accounts as asset market values have improved. Finally, income from the Financial Services business unit increased as wealth management continues to be an important strategic focus of the Company. Additionally, and slightly offsetting the favorable items mentioned above was additional investment in talent, which contributed to higher salaries
and benefits expense.financial services division. Overall, the fair market value of trust assets under administration totaled $2.186$2.238 billion at December 31, 2017,2019, an increase of $193$132 million, or 9.7%6.3%, from the December 31, 20162018 total of $1.993$2.106 billion.
the investment portfolio for stronger future returns.
Note 24.
Consolidated Balance Sheets at December 31, 2019.
LIQUIDITY...2019.
| | | AT DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
Total shareholders’ equity | | | | $ | 98,614 | | | | | $ | 97,977 | | | | | $ | 95,102 | | |
Less: Goodwill | | | | | 11,944 | | | | | | 11,944 | | | | | | 11,944 | | |
Tangible equity | | | | | 86,670 | | | | | | 86,033 | | | | | | 83,158 | | |
Total assets | | | | | 1,171,184 | | | | | | 1,160,680 | | | | | | 1,167,655 | | |
Less: Goodwill | | | | | 11,944 | | | | | | 11,944 | | | | | | 11,944 | | |
Tangible assets | | | | | 1,159,240 | | | | | | 1,148,736 | | | | | | 1,155,711 | | |
Tangible common equity ratio (non-GAAP) | | | | | 7.48% | | | | | | 7.49% | | | | | | 7.20% | | |
Total shares outstanding | | | | | 17,057,871 | | | | | | 17,619,303 | | | | | | 18,128,247 | | |
Tangible book value per share (non-GAAP) | | | | $ | 5.08 | | | | | $ | 4.88 | | | | | $ | 4.59 | | |
by $20.2$13.0 million of cash used in investing activities and $4.6 million of cash used in financing activities. Within investing activities,
On January 1, 2015, U.S. federal banking agencies implemented2019. There is a particular emphasis on ensuring that the newsubsidiary bank has appropriate levels of capital to support its non-owner occupied commercial real estate loan concentration, which stood at 334% of regulatory capital at December 31, 2019.
initially and 7.0% at January 1, 2019; a tier 1 capital ratio of 6.0% and 8.50%; a total capital ratio of 8.0% and 10.50%; and a tier 1 leverage ratio of 5.00% and 5.00%. Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must holdalso impose a capital conservation buffer above its(“CCB”) on top of the three minimum risk-basedrisk-weighted asset ratios. As of January 1, 2019, the CCB was 2.5%. Banking institutions that fail to meet the effective minimum ratios once the CCB is taken into account will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation. The severity of the constraints depends on the amount of the shortfall and the institution’s “eligible retained income” (four quarter trailing net income, net of distributions and tax effects not reflected in net income). The Company and the Bank meet all capital requirements, which increases overincluding the transition period, from 0.625% of total risk weighted assets in 2016 to 2.5% in 2019. The Company continuesCCB, and continue to be committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a return to our shareholders.
| | | MINIMUM CAPITAL RATIO | | | MINIMUM CAPITAL RATIO PLUS CAPITAL CONSERVATION BUFFER | | ||||||
Common equity tier 1 capital to risk-weighted assets | | | | | 4.5% | | | | | | 7.0% | | |
Tier 1 capital to risk-weighted assets | | | | | 6.0 | | | | | | 8.5 | | |
Total capital to risk-weighted assets | | | | | 8.0 | | | | | | 10.5 | | |
Tier 1 capital to total average consolidated assets | | | | | 4.0 | | | | | | | | |
to its shareholders through this program. Overall in 2019, this latest common stock buyback program, combined with the first quarter completion of the previously authorized common stock buyback program, resulted in the Company returning $2.6 million to its shareholders through the repurchase of 602,349 shares of its common stock. When including the increased cash dividend payments on our common stock, total capital returned to our shareholders was approximately 70% of net income for 2019. At December 31, 2019, the Company had approximately 17.1 million common shares outstanding.
INTEREST SENSITIVITY PERIOD | | | 3 MONTHS OR LESS | | | OVER 3 MONTHS THROUGH 6 MONTHS | | | OVER 6 MONTHS THROUGH 1 YEAR | | | OVER 1 YEAR | | | TOTAL | | |||||||||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES) | | |||||||||||||||||||||||||||
RATE SENSITIVE ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans and loans held for sale | | | | $ | 290,368 | | | | | $ | 51,288 | | | | | $ | 95,376 | | | | | $ | 450,542 | | | | | $ | 887,574 | | |
Investment securities | | | | | 38,832 | | | | | | 7,223 | | | | | | 12,092 | | | | | | 123,538 | | | | | | 181,685 | | |
Short-term assets | | | | | 6,526 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,526 | | |
Regulatory stock | | | | | 3,985 | | | | | | — | | | | | | — | | | | | | 2,125 | | | | | | 6,110 | | |
Bank owned life insurance | | | | | — | | | | | | — | | | | | | 38,916 | | | | | | — | | | | | | 38,916 | | |
Total rate sensitive assets | | | | $ | 339,711 | | | | | $ | 58,511 | | | | | $ | 146,384 | | | | | $ | 576,205 | | | | | $ | 1,120,811 | | |
RATE SENSITIVE LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing demand deposits | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 136,462 | | | | | $ | 136,462 | | |
Interest bearing demand deposits | | | | | 56,910 | | | | | | 834 | | | | | | 1,667 | | | | | | 118,356 | | | | | | 177,767 | | |
Savings | | | | | 512 | | | | | | 512 | | | | | | 1,024 | | | | | | 93,885 | | | | | | 95,933 | | |
Money market | | | | | 56,252 | | | | | | 5,177 | | | | | | 10,354 | | | | | | 136,560 | | | | | | 208,343 | | |
Certificates of deposit of $100,000 or more | | | | | 4,893 | | | | | | 10,325 | | | | | | 18,227 | | | | | | 5,325 | | | | | | 38,770 | | |
Other time deposits | | | | | 115,850 | | | | | | 19,427 | | | | | | 42,005 | | | | | | 125,956 | | | | | | 303,238 | | |
Total deposits | | | | | 234,417 | | | | | | 36,275 | | | | | | 73,277 | | | | | | 616,544 | | | | | | 960,513 | | |
Borrowings | | | | | 28,981 | | | | | | 4,110 | | | | | | 8,324 | | | | | | 59,159 | | | | | | 100,574 | | |
Total rate sensitive liabilities | | | | $ | 263,398 | | | | | $ | 40,385 | | | | | $ | 81,601 | | | | | $ | 675,703 | | | | | $ | 1,061,087 | | |
INTEREST SENSITIVITY GAP: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interval | | | | | 76,313 | | | | | | 18,126 | | | | | | 64,783 | | | | | | (99,498) | | | | | | — | | |
Cumulative | | | | $ | 76,313 | | | | | $ | 94,439 | | | | | $ | 159,222 | | | | | $ | 59,724 | | | | | $ | 59,724 | | |
Period GAP ratio | | | | | 1.29X | | | | | | 1.45X | | | | | | 1.79X | | | | | | 0.85X | | | | | | | | |
Cumulative GAP ratio | | | | | 1.29 | | | | | | 1.31 | | | | | | 1.41 | | | | | | 1.06 | | | | | | | | |
Ratio of cumulative GAP to total assets | | | | | 6.52% | | | | | | 8.06% | | | | | | 13.59% | | | | | | 5.10% | | | | | | | | |
INTEREST SENSITIVITY PERIOD | 3 MONTHS OR LESS | OVER 3 MONTHS THROUGH 6 MONTHS | OVER 6 MONTHS THROUGH 1 YEAR | OVER 1 YEAR | TOTAL | |||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES) | ||||||||||||||||||||
RATE SENSITIVE ASSETS: | ||||||||||||||||||||
Loans and loans held for sale | $ | 272,879 | $ | 55,391 | $ | 113,203 | $ | 451,285 | $ | 892,758 | ||||||||||
Investment securities | 33,294 | 6,179 | 11,496 | 116,921 | 167,890 | |||||||||||||||
Short-term assets | 7,954 | — | — | — | 7,954 | |||||||||||||||
Regulatory stock | 4,675 | — | — | 2,125 | 6,800 | |||||||||||||||
Bank owned life insurance | — | — | 37,860 | — | 37,860 | |||||||||||||||
Total rate sensitive assets | $ | 318,802 | $ | 61,570 | $ | 162,559 | $ | 570,331 | $ | 1,113,262 | ||||||||||
RATE SENSITIVE LIABILITIES: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing deposits | $ | — | $ | — | $ | — | $ | 183,603 | $ | 183,603 | ||||||||||
NOW | 4,620 | — | 33,042 | 132,681 | 170,343 | |||||||||||||||
Money market | 193,829 | — | — | 44,290 | 238,119 | |||||||||||||||
Other savings | 24,146 | — | — | 72,437 | 96,583 | |||||||||||||||
Certificates of deposit of $100,000 or more | 6,649 | 9,511 | 8,034 | 6,103 | 30,297 | |||||||||||||||
Other time deposits | 52,633 | 21,761 | 28,135 | 126,471 | 229,000 | |||||||||||||||
Total deposits | 281,877 | 31,272 | 69,211 | 565,585 | 947,945 | |||||||||||||||
Borrowings | 51,084 | 4,000 | 6,000 | 54,617 | 115,701 | |||||||||||||||
Total rate sensitive liabilities | $ | 332,961 | $ | 35,272 | $ | 75,211 | $ | 620,202 | $ | 1,063,646 | ||||||||||
INTEREST SENSITIVITY GAP: | ||||||||||||||||||||
Interval | (14,159 | ) | 26,298 | 87,348 | (49,871 | ) | — | |||||||||||||
Cumulative | $ | (14,159) | $ | 12,139 | $ | 99,487 | $ | 49,616 | $ | 49,616 | ||||||||||
Period GAP ratio | 0.96X | 1.75X | 2.16X | 0.82X | ||||||||||||||||
Cumulative GAP ratio | 0.96 | 1.03 | 1.22 | 1.05 | ||||||||||||||||
Ratio of cumulative GAP to total assets | (1.21 | )% | 1.04 | % | 8.52 | % | 4.25 | % |
When December 31, 20172019 is compared to December 31, 2016,2018, the Company’s cumulative GAP ratio through one year indicates that the Company’s balance sheet is still asset sensitive with some improvement notedand the level of asset sensitivity increased between years. We continue to see loan customer preference for fixed rate loans given the low overall low level of interest rates. Also, weThe increase in total deposits resulted in overnight borrowings decreasing which are immediately impacted by changes to national interest rates. We continue to have extended somea relatively consistent level of term advances with the FHLB to help manage our interest rate risk position. Overall,It should be noted that the low level of shortterm advances increased by $6.9 million in 2019 for interest rates makes this table more difficultrate risk management purposes. Due to analyze since there is little room forthe U.S. Treasury Yield curve becoming inverted in certain deposit liabilities to reprice downward further.
segments at various times during the year, term advances had a lower interest rate cost than overnight borrowed funds.
INTEREST RATE SCENARIO | | | VARIABILITY OF NET INTEREST INCOME | | | CHANGE IN MARKET VALUE OF PORTFOLIO EQUITY | | ||||||
200 bp increase | | | | | 5.5% | | | | | | 26.6% | | |
100 bp increase | | | | | 3.3 | | | | | | 16.1 | | |
100 bp decrease | | | | | (4.1) | | | | | | (24.6) | | |
INTEREST RATE SCENARIO | VARIABILITY OF NET INTEREST INCOME | CHANGE IN MARKET VALUE OF PORTFOLIO EQUITY | ||||||
200 bp increase | 1.4 | % | 18.7 | % | ||||
100 bp increase | 1.0 | 11.0 | ||||||
100 bp decrease | (1.1 | ) | (16.5 | ) |
The Company believes that its overall interest rate risk position is well controlled. The variability of net interest income is positive in the upward rate shocks due to the Company’s short duration investment securities portfolio, andthe scheduled repricing of loans tied to LIBOR or prime.prime, and the reduction to overnight borrowed funds. Also, the Company expects that it will not havecontinue its disciplined approach to repriceprice its core deposit accounts up as quickly when interest rates rise.in a controlled but competitive manner. The variability of net interest income is negative in the 100 basis point downward rate scenario as the Company has more exposure to assets repricing downward to a greater extent than liabilities due to the absolute low level of interest rates with the fed funds rate currently at a targeted range of 1.25%1.50% to 1.50%1.75%. The market value of portfolio equity increases in the upward rate shocks due to the improved value of the Company’s core deposit base. Negative variability of market value of portfolio equity occurs in the downward rate shock due to a reduced value for core deposits.
The amount of loans outstanding by category as of December 31, 2017,2019, which are due in (i) one year or less, (ii) more than one year through five years, and (iii) over five years, are shown in the following table. Loan balances are also categorized according to their sensitivity to changes in interest rates.
ONE YEAR OR LESS | MORE THAN ONE YEAR THROUGH FIVE YEARS | OVER FIVE YEARS | TOTAL LOANS | |||||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||||||
Commercial | $ | 51,136 | $ | 70,481 | $ | 37,575 | $ | 159,192 | ||||||||
Commercial loans secured by real estate | 62,886 | 135,410 | 265,484 | 463,780 | ||||||||||||
Real estate-mortgage | 22,921 | 58,389 | 169,093 | 250,403 | ||||||||||||
Consumer | 7,103 | 5,095 | 7,185 | 19,383 | ||||||||||||
Total | $ | 144,046 | $ | 269,375 | $ | 479,337 | $ | 892,758 | ||||||||
Loans with fixed-rate | $ | 49,404 | $ | 132,852 | $ | 244,437 | $ | 426,693 | ||||||||
Loans with floating-rate | 94,642 | 136,523 | 234,900 | 466,065 | ||||||||||||
Total | $ | 144,046 | $ | 269,375 | $ | 479,337 | $ | 892,758 | ||||||||
Percent composition of maturity | 16.1 | % | 30.2 | % | 53.7 | % | 100.0 | % | ||||||||
Fixed-rate loans as a percentage of total loans | 47.8 | % | ||||||||||||||
Floating-rate loans as a percentage of total loans | 52.2 | % |
| | | ONE YEAR OR LESS | | | MORE THAN ONE YEAR THROUGH FIVE YEARS | | | OVER FIVE YEARS | | | TOTAL LOANS | | ||||||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS) | | |||||||||||||||||||||
Commercial and industrial | | | | $ | 40,194 | | | | | $ | 93,467 | | | | | $ | 40,261 | | | | | $ | 173,922 | | |
Commercial loans secured by owner occupied real estate | | | | | 603 | | | | | | 29,233 | | | | | | 61,819 | | | | | | 91,655 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 29,955 | | | | | | 118,755 | | | | | | 214,925 | | | | | | 363,635 | | |
Real estate – residential mortgage | | | | | 10,581 | | | | | | 39,109 | | | | | | 190,417 | | | | | | 240,107 | | |
Consumer | | | | | 6,712 | | | | | | 4,488 | | | | | | 7,055 | | | | | | 18,255 | | |
Total | | | | $ | 88,045 | | | | | $ | 285,052 | | | | | $ | 514,477 | | | | | $ | 887,574 | | |
Loans with fixed-rate | | | | $ | 36,237 | | | | | $ | 189,670 | | | | | $ | 197,217 | | | | | $ | 423,124 | | |
Loans with floating-rate | | | | | 51,808 | | | | | | 95,382 | | | | | | 317,260 | | | | | | 464,450 | | |
Total | | | | $ | 88,045 | | | | | $ | 285,052 | | | | | $ | 514,477 | | | | | $ | 887,574 | | |
Percent composition of maturity | | | | | 9.9% | | | | | | 32.1% | | | | | | 58.0% | | | | | | 100.0% | | |
Fixed-rate loans as a percentage of total loans | | | | | | | | | | | | | | | | | | | | | | | 47.7% | | |
Floating-rate loans as a percentage of total loans | | | | | | | | | | | | | | | | | | | | | | | 52.3% | | |
CONTRACTUAL OBLIGATIONS... The following table presents, as of December 31, 2017, significant fixed and determinable contractual obligations to third parties by payment date. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.
PAYMENTS DUE IN | ||||||||||||||||||||||||
NOTE REFERENCE | ONE YEAR OR LESS | ONE TO THREE YEARS | THREE TO FIVE YEARS | OVER FIVE YEARS | TOTAL | |||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
Deposits without a stated maturity | 8 | $ | 688,648 | $ | — | $ | — | $ | — | $ | 688,648 | |||||||||||||
Certificates of deposit* | 8 | 128,307 | 95,520 | 30,205 | 13,109 | 267,141 | ||||||||||||||||||
Borrowed funds* | 10 | 62,019 | 30,667 | 5,438 | — | 98,124 | ||||||||||||||||||
Guaranteed junior subordinated deferrable interest debentures* | 10 | 1,015 | 2,030 | 2,030 | 17,784 | 22,859 | ||||||||||||||||||
Subordinated debt* | 10 | 497 | 994 | 994 | 9,142 | 11,627 | ||||||||||||||||||
Pension obligation | 14 | 3,500 | — | — | — | 3,500 | ||||||||||||||||||
Lease commitments | 15 | 445 | 531 | 500 | 1,558 | 3,034 |
OFF BALANCE SHEET ARRANGEMENTS...The Company incurs off-balance sheet risks in the normal course of business in order to meet the financing needs of its customers. These risks derive from commitments to extend credit and standby letters of credit. Such commitments and standby letters of credit involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual
amounts. The Company uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending. The Company had various outstanding commitments to extend credit approximating $165.1$195.5 million and standby letters of credit of $10.0$14.7 million as of December 31, 2017.2019. The Company can also use various interest rate contracts, such as interest rate swaps, caps, floors and swaptions to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. As of December 31, 2017,2019, the Company had $34$63.3 million in the notional amount of interest rate swaps outstanding.
BALANCE SHEET REFERENCE — Allowance for loan losses
INCOME STATEMENT REFERENCE — Provision (credit) for loan losses
DESCRIPTION
BALANCE SHEET REFERENCE — Goodwill
INCOME STATEMENT REFERENCE — Goodwill impairment
DESCRIPTION
and are susceptible to significant changes. The Company routinely utilizes the services of an independent third party that is regarded within the banking industry as an expert in valuing core deposits to monitor the ongoing
BALANCE SHEET REFERENCE — Net deferred tax asset
INCOME STATEMENT REFERENCE — Provision for income taxes
DESCRIPTION
ACCOUNT — Investment Securities
BALANCE SHEET REFERENCE — Investment securities
INCOME STATEMENT REFERENCE — Net realized gains (losses) on investment securities
DESCRIPTION
STATEMENTS
The challenge
repricing frequencies and the maturity structure of assets, liabilities, and hedges. The Company uses its asset liability management policy and hedging policy to control and manage interest rate risk. For information regarding the effect of changing interest rates on the Company’s net interest income and market value of its investment portfolio, see “Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations — Interest Rate Sensitivity.”
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS, EXCEPT SHARE DATA) | | |||||||||
ASSETS | | | | | | | | | | | | | |
Cash and due from depository institutions | | | | $ | 15,642 | | | | | $ | 27,970 | | |
Interest bearing deposits | | | | | 2,755 | | | | | | 2,740 | | |
Short-term investments in money market funds | | | | | 3,771 | | | | | | 4,184 | | |
Cash and cash equivalents | | | | | 22,168 | | | | | | 34,894 | | |
Investment securities: | | | | | | | | | | | | | |
Available for sale | | | | | 141,749 | | | | | | 146,731 | | |
Held to maturity (fair value $41,082 at December 31, 2019 and $40,324 at December 31, 2018) | | | | | 39,936 | | | | | | 40,760 | | |
Loans held for sale | | | | | 4,868 | | | | | | 847 | | |
Loans | | | | | 883,090 | | | | | | 862,604 | | |
Less: Unearned income | | | | | 384 | | | | | | 322 | | |
Allowance for loan losses | | | | | 9,279 | | | | | | 8,671 | | |
Net loans | | | | | 873,427 | | | | | | 853,611 | | |
Premises and equipment: | | | | | | | | | | | | | |
Operating lease right-of-use asset | | | | | 846 | | | | | | — | | |
Financing lease right-of-use asset | | | | | 3,078 | | | | | | — | | |
Other premises and equipment, net | | | | | 14,643 | | | | | | 13,348 | | |
Accrued interest income receivable | | | | | 3,449 | | | | | | 3,489 | | |
Goodwill | | | | | 11,944 | | | | | | 11,944 | | |
Bank owned life insurance | | | | | 38,916 | | | | | | 38,395 | | |
Net deferred tax asset | | | | | 3,976 | | | | | | 3,637 | | |
Federal Home Loan Bank stock | | | | | 3,985 | | | | | | 4,520 | | |
Federal Reserve Bank stock | | | | | 2,125 | | | | | | 2,125 | | |
Other assets | | | | | 6,074 | | | | | | 6,379 | | |
TOTAL ASSETS | | | | $ | 1,171,184 | | | | | $ | 1,160,680 | | |
LIABILITIES | | | | | | | | | | | | | |
Non-interest bearing deposits | | | | $ | 136,462 | | | | | $ | 150,627 | | |
Interest bearing deposits | | | | | 824,051 | | | | | | 798,544 | | |
Total deposits | | | | | 960,513 | | | | | | 949,171 | | |
Short-term borrowings | | | | | 22,412 | | | | | | 41,029 | | |
Advances from Federal Home Loan Bank | | | | | 53,668 | | | | | | 46,721 | | |
Operating lease liabilities | | | | | 865 | | | | | | — | | |
Financing lease liabilities | | | | | 3,163 | | | | | | — | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | 12,955 | | | | | | 12,939 | | |
Subordinated debt | | | | | 7,511 | | | | | | 7,488 | | |
Total borrowed funds | | | | | 100,574 | | | | | | 108,177 | | |
Other liabilities | | | | | 11,483 | | | | | | 5,355 | | |
TOTAL LIABILITIES | | | | | 1,072,570 | | | | | | 1,062,703 | | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Common stock, par value $0.01 per share; 30,000,000 shares authorized: 26,650,728 shares issued and 17,057,871 shares outstanding on December 31, 2019; 30,000,000 shares authorized: 26,609,811 shares issued and 17,619,303 shares outstanding on December 31, 2018 | | | | | 267 | | | | | | 266 | | |
Treasury stock at cost, 9,592,857 shares on December 31, 2019 and 8,990,508 shares on December 31, 2018 | | | | | (83,129) | | | | | | (80,579) | | |
Capital surplus | | | | | 145,888 | | | | | | 145,782 | | |
Retained earnings | | | | | 51,759 | | | | | | 46,733 | | |
Accumulated other comprehensive loss, net | | | | | (16,171) | | | | | | (14,225) | | |
TOTAL STOCKHOLDERS’ EQUITY | | | | | 98,614 | | | | | | 97,977 | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | $ | 1,171,184 | | | | | $ | 1,160,680 | | |
|
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS, EXCEPT SHARE DATA) | ||||||||
ASSETS | ||||||||
Cash and due from depository institutions | $ | 26,234 | $ | 25,107 | ||||
Interest bearing deposits | 2,698 | 3,066 | ||||||
Short-term investments in money market funds | 5,256 | 5,900 | ||||||
Cash and cash equivalents | 34,188 | 34,073 | ||||||
Investment securities: | ||||||||
Available for sale | 129,138 | 127,077 | ||||||
Held to maturity (fair value $38,811 at December 31, 2017 and $30,420 at December 31, 2016) | 38,752 | 30,665 | ||||||
Loans held for sale | 3,125 | 3,094 | ||||||
Loans | 890,032 | 884,240 | ||||||
Less: Unearned income | 399 | 476 | ||||||
Allowance for loan losses | 10,214 | 9,932 | ||||||
Net loans | 879,419 | 873,832 | ||||||
Premises and equipment, net | 12,734 | 11,694 | ||||||
Accrued interest income receivable | 3,603 | 3,116 | ||||||
Goodwill | 11,944 | 11,944 | ||||||
Bank owned life insurance | 37,860 | 37,903 | ||||||
Net deferred tax asset | 5,963 | 10,655 | ||||||
Federal Home Loan Bank stock | 4,675 | 3,359 | ||||||
Federal Reserve Bank stock | 2,125 | 2,125 | ||||||
Other assets | 4,129 | 4,243 | ||||||
TOTAL ASSETS | $ | 1,167,655 | $ | 1,153,780 | ||||
LIABILITIES | ||||||||
Non-interest bearing deposits | $ | 183,603 | $ | 188,808 | ||||
Interest bearing deposits | 764,342 | 778,978 | ||||||
Total deposits | 947,945 | 967,786 | ||||||
Short-term borrowings | 49,084 | 12,754 | ||||||
Advances from Federal Home Loan Bank | 46,229 | 45,542 | ||||||
Guaranteed junior subordinated deferrable interest debentures | 12,923 | 12,908 | ||||||
Subordinated debt | 7,465 | 7,441 | ||||||
Total borrowed funds | 115,701 | 78,645 | ||||||
Other liabilities | 8,907 | 11,954 | ||||||
TOTAL LIABILITIES | 1,072,553 | 1,058,385 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, par value $0.01 per share; 30,000,000 shares authorized: 26,585,403 shares issued and 18,128,247 shares outstanding on December 31, 2017; 26,521,291 shares issued and 18,903,472 shares outstanding on December 31, 2016 | 266 | 265 | ||||||
Treasury stock at cost, 8,457,156 shares on December 31, 2017 and 7,617,819 shares on December 31, 2016 | (78,233 | ) | (74,829 | ) | ||||
Capital surplus | 145,707 | 145,535 | ||||||
Retained earnings | 40,312 | 36,001 | ||||||
Accumulated other comprehensive loss, net | (12,950 | ) | (11,577 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY | 95,102 | 95,395 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,167,655 | $ | 1,153,780 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
�� | | | (IN THOUSANDS, EXCEPT PER SHARE DATA) | | |||||||||||||||
INTEREST INCOME | | | | | | | | | | | | | | | | | | | |
Interest and fees on loans: | | | | | | | | | | | | | | | | | | | |
Taxable | | | | $ | 42,832 | | | | | $ | 40,938 | | | | | $ | 39,122 | | |
Tax exempt | | | | | 101 | | | | | | 90 | | | | | | 95 | | |
Interest bearing deposits | | | | | 24 | | | | | | 20 | | | | | | 11 | | |
Short-term investments in money market funds | | | | | 293 | | | | | | 201 | | | | | | 130 | | |
Investment securities: | | | | | | | | | | | | | | | | | | | |
Available for sale | | | | | 5,090 | | | | | | 4,527 | | | | | | 3,800 | | |
Held to maturity | | | | | 1,427 | | | | | | 1,318 | | | | | | 1,198 | | |
Total Interest Income | | | | | 49,767 | | | | | | 47,094 | | | | | | 44,356 | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | 11,189 | | | | | | 8,443 | | | | | | 6,255 | | |
Short-term borrowings | | | | | 288 | | | | | | 720 | | | | | | 206 | | |
Advances from Federal Home Loan Bank | | | | | 1,090 | | | | | | 797 | | | | | | 694 | | |
Financing lease liabilities | | | | | 117 | | | | | | — | | | | | | — | | |
Guaranteed junior subordinated deferrable interest debentures | | | | | 1,121 | | | | | | 1,120 | | | | | | 1,120 | | |
Subordinated debt | | | | | 520 | | | | | | 520 | | | | | | 520 | | |
Total Interest Expense | | | | | 14,325 | | | | | | 11,600 | | | | | | 8,795 | | |
Net Interest Income | | | | | 35,442 | | | | | | 35,494 | | | | | | 35,561 | | |
Provision (credit) for loan losses | | | | | 800 | | | | | | (600) | | | | | | 800 | | |
Net Interest Income after Provision (Credit) for Loan Losses | | | | | 34,642 | | | | | | 36,094 | | | | | | 34,761 | | |
NON-INTEREST INCOME | | | | | | | | | | | | | | | | | | | |
Wealth management fees | | | | | 9,730 | | | | | | 9,659 | | | | | | 9,170 | | |
Service charges on deposit accounts | | | | | 1,271 | | | | | | 1,420 | | | | | | 1,581 | | |
Net gains on loans held for sale | | | | | 865 | | | | | | 489 | | | | | | 679 | | |
Mortgage related fees | | | | | 302 | | | | | | 196 | | | | | | 285 | | |
Net realized gains (losses) on investment securities | | | | | 118 | | | | | | (439) | | | | | | 115 | | |
Impairment charge on other investments | | | | | (500) | | | | | | — | | | | | | — | | |
Bank owned life insurance | | | | | 521 | | | | | | 536 | | | | | | 737 | | |
Other income | | | | | 2,466 | | | | | | 2,363 | | | | | | 2,078 | | |
Total Non-Interest Income | | | | | 14,773 | | | | | | 14,224 | | | | | | 14,645 | | |
NON-INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | | | 25,429 | | | | | | 24,358 | | | | | | 23,920 | | |
Net occupancy expense | | | | | 2,497 | | | | | | 2,462 | | | | | | 2,600 | | |
Equipment expense | | | | | 1,510 | | | | | | 1,464 | | | | | | 1,585 | | |
Professional fees | | | | | 4,885 | | | | | | 5,039 | | | | | | 5,058 | | |
Supplies, postage, and freight | | | | | 605 | | | | | | 674 | | | | | | 676 | | |
Miscellaneous taxes and insurance | | | | | 1,135 | | | | | | 1,062 | | | | | | 1,194 | | |
Federal deposit insurance expense | | | | | 100 | | | | | | 557 | | | | | | 628 | | |
Other expense | | | | | 5,654 | | | | | | 5,257 | | | | | | 5,065 | | |
Total Non-Interest Expense | | | | | 41,815 | | | | | | 40,873 | | | | | | 40,726 | | |
PRETAX INCOME | | | | | 7,600 | | | | | | 9,445 | | | | | | 8,680 | | |
Provision for income taxes | | | | | 1,572 | | | | | | 1,677 | | | | | | 5,387 | | |
NET INCOME | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
PER COMMON SHARE DATA: | | | | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 0.35 | | | | | $ | 0.43 | | | | | $ | 0.18 | | |
Average number of shares outstanding | | | | | 17,359 | | | | | | 17,933 | | | | | | 18,498 | | |
Diluted: | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 0.35 | | | | | $ | 0.43 | | | | | $ | 0.18 | | |
Average number of shares outstanding | | | | | 17,440 | | | | | | 18,037 | | | | | | 18,600 | | |
Cash dividends declared | | | | $ | 0.095 | | | | | $ | 0.075 | | | | | $ | 0.060 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||
INTEREST INCOME | ||||||||||||
Interest and fees on loans: | ||||||||||||
Taxable | $ | 39,122 | $ | 37,786 | $ | 37,923 | ||||||
Tax exempt | 95 | 75 | 72 | |||||||||
Interest bearing deposits | 11 | 13 | 8 | |||||||||
Short-term investments in money market funds | 130 | 84 | 14 | |||||||||
Investment securities: | ||||||||||||
Available for sale | 3,800 | 3,132 | 3,250 | |||||||||
Held to maturity | 1,198 | 779 | 614 | |||||||||
Total Interest Income | 44,356 | 41,869 | 41,881 | |||||||||
INTEREST EXPENSE | ||||||||||||
Deposits | 6,255 | 5,400 | 4,752 | |||||||||
Short-term borrowings | 206 | 52 | 86 | |||||||||
Advances from Federal Home Loan Bank | 694 | 644 | 558 | |||||||||
Guaranteed junior subordinated deferrable interest debentures | 1,120 | 1,120 | 1,120 | |||||||||
Subordinated debt | 520 | 519 | 4 | |||||||||
Total Interest Expense | 8,795 | 7,735 | 6,520 | |||||||||
Net Interest Income | 35,561 | 34,134 | 35,361 | |||||||||
Provision for loan losses | 800 | 3,950 | 1,250 | |||||||||
Net Interest Income after Provision for Loan Losses | 34,761 | 30,184 | 34,111 | |||||||||
NON-INTEREST INCOME | ||||||||||||
Trust and investment advisory fees | 8,462 | 8,333 | 8,344 | |||||||||
Service charges on deposit accounts | 1,581 | 1,674 | 1,750 | |||||||||
Net gains on loans held for sale | 679 | 884 | 767 | |||||||||
Mortgage related fees | 285 | 367 | 391 | |||||||||
Net realized gains on investment securities | 115 | 177 | 71 | |||||||||
Bank owned life insurance | 737 | 675 | 1,617 | |||||||||
Other income | 2,786 | 2,528 | 2,327 | |||||||||
Total Non-Interest Income | 14,645 | 14,638 | 15,267 | |||||||||
NON-INTEREST EXPENSE | ||||||||||||
Salaries and employee benefits | 24,127 | 24,034 | 24,042 | |||||||||
Net occupancy expense | 2,600 | 2,782 | 2,941 | |||||||||
Equipment expense | 1,585 | 1,688 | 1,773 | |||||||||
Professional fees | 5,058 | 5,280 | 5,003 | |||||||||
Supplies, postage, and freight | 676 | 705 | 726 | |||||||||
Miscellaneous taxes and insurance | 1,234 | 1,146 | 1,157 | |||||||||
Federal deposit insurance expense | 628 | 709 | 669 | |||||||||
Other expense | 4,858 | 5,271 | 4,727 | |||||||||
Total Non-Interest Expense | 40,766 | 41,615 | 41,038 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
COMPREHENSIVE INCOME (LOSS) | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
Other comprehensive income (loss), before tax: | | | | | | | | | | | | | | | | | | | |
Pension obligation change for defined benefit plan | | | | | (6,418) | | | | | | (244) | | | | | | 1,303 | | |
Income tax effect | | | | | 1,348 | | | | | | 51 | | | | | | (442) | | |
Unrealized holding gains (losses) on available for sale securities arising during period | | | | | 4,072 | | | | | | (1,810) | | | | | | (40) | | |
Income tax effect | | | | | (855) | | | | | | 381 | | | | | | 13 | | |
Reclassification adjustment for net realized (gains) losses on available for sale securities included in net income | | | | | (118) | | | | | | 439 | | | | | | (115) | | |
Income tax effect | | | | | 25 | | | | | | (92) | | | | | | 39 | | |
Other comprehensive income (loss) | | | | | (1,946) | | | | | | (1,275) | | | | | | 758 | | |
Comprehensive income | | | | $ | 4,082 | | | | | $ | 6,493 | | | | | $ | 4,051 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||
PRETAX INCOME | 8,640 | 3,207 | 8,340 | |||||||||
Provision for income taxes | 5,347 | 897 | 2,343 | |||||||||
NET INCOME | 3,293 | 2,310 | 5,997 | |||||||||
Preferred stock dividends | — | 15 | 210 | |||||||||
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | $ | 3,293 | $ | 2,295 | $ | 5,787 | ||||||
PER COMMON SHARE DATA: | ||||||||||||
Basic: | ||||||||||||
Net income | $ | 0.18 | $ | 0.12 | $ | 0.31 | ||||||
Average number of shares outstanding | 18,498 | 18,896 | 18,863 | |||||||||
Diluted: | ||||||||||||
Net income | $ | 0.18 | $ | 0.12 | $ | 0.31 | ||||||
Average number of shares outstanding | 18,600 | 18,955 | 18,933 | |||||||||
Cash dividends declared | $ | 0.06 | $ | 0.05 | $ | 0.04 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
COMMON STOCK | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 266 | | | | | | 266 | | | | | | 265 | | |
New common shares issued for exercise of stock options | | | | | 1 | | | | | | — | | | | | | 1 | | |
Balance at end of period | | | | | 267 | | | | | | 266 | | | | | | 266 | | |
TREASURY STOCK | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | (80,579) | | | | | | (78,233) | | | | | | (74,829) | | |
Treasury stock, purchased at cost (602,349, 533,352, and 839,337 shares in 2019, 2018, and 2017, respectively) | | | | | (2,550) | | | | | | (2,346) | | | | | | (3,404) | | |
Balance at end of period | | | | | (83,129) | | | | | | (80,579) | | | | | | (78,233) | | |
CAPITAL SURPLUS | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 145,782 | | | | | | 145,707 | | | | | | 145,535 | | |
New common shares issued for exercise of stock options (40,917, 24,408, and 64,112 shares in 2019, 2018, and 2017, respectively) | | | | | 99 | | | | | | 61 | | | | | | 159 | | |
Stock option expense | | | | | 7 | | | | | | 14 | | | | | | 13 | | |
Balance at end of period | | | | | 145,888 | | | | | | 145,782 | | | | | | 145,707 | | |
RETAINED EARNINGS | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | 46,733 | | | | | | 40,312 | | | | | | 36,001 | | |
Net income | | | | | 6,028 | | | | | | 7,768 | | | | | | 3,293 | | |
Cash dividend declared on common stock ($0.095, $0.075, and $0.060 in 2019, 2018, and 2017 respectively) | | | | | (1,642) | | | | | | (1,347) | | | | | | (1,113) | | |
Reclassification of certain income tax effects from accumulated other comprehensive income | | | | | — | | | | | | — | | | | | | 2,131 | | |
Cumulative effect adjustment for change in accounting principal | | | | | 640 | | | | | | — | | | | | | — | | |
Balance at end of period | | | | | 51,759 | | | | | | 46,733 | | | | | | 40,312 | | |
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period | | | | | (14,225) | | | | | | (12,950) | | | | | | (11,577) | | |
Reclassification of certain income tax effects from accumulated other comprehensive income | | | | | — | | | | | | — | | | | | | (2,131) | | |
Other comprehensive income (loss) | | | | | (1,946) | | | | | | (1,275) | | | | | | 758 | | |
Balance at end of period | | | | | (16,171) | | | | | | (14,225) | | | | | | (12,950) | | |
TOTAL STOCKHOLDERS’ EQUITY | | | | $ | 98,614 | | | | | $ | 97,977 | | | | | $ | 95,102 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
Other comprehensive loss, before tax: | ||||||||||||
Pension obligation change for defined benefit plan | 1,303 | (4,612 | ) | 579 | ||||||||
Income tax effect | (442 | ) | 1,569 | (197 | ) | |||||||
Unrealized holding losses on available for sale securities arising during period | (40 | ) | (1,305 | ) | (1,498 | ) | ||||||
Income tax effect | 13 | 443 | 509 | |||||||||
Reclassification adjustment for net realized gains on available for sale securities included in net income | (115 | ) | (177 | ) | (71 | ) | ||||||
Income tax effect | 39 | 60 | 25 | |||||||||
Other comprehensive income (loss) | 758 | (4,022 | ) | (653 | ) | |||||||
Comprehensive income (loss) | $ | 4,051 | $ | (1,712 | ) | $ | 5,344 |
| | | YEAR ENDED DECEMBER 31 | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | | | | |
Provision (credit) for loan losses | | | | | 800 | | | | | | (600) | | | | | | 800 | | |
Depreciation and amortization expense | | | | | 1,873 | | | | | | 1,530 | | | | | | 1,665 | | |
Net amortization of investment securities | | | | | 279 | | | | | | 347 | | | | | | 436 | | |
Net realized (gains) losses on investment securities – available for sale | | | | | (118) | | | | | | 439 | | | | | | (115) | | |
Impairment charge on other investments | | | | | 500 | | | | | | — | | | | | | — | | |
Net gains on loans held for sale | | | | | (865) | | | | | | (489) | | | | | | (679) | | |
Amortization of deferred loan fees | | | | | (142) | | | | | | (149) | | | | | | (162) | | |
Origination of mortgage loans held for sale | | | | | (49,460) | | | | | | (28,916) | | | | | | (45,637) | | |
Sales of mortgage loans held for sale | | | | | 46,304 | | | | | | 31,683 | | | | | | 46,285 | | |
Decrease (increase) in accrued interest receivable | | | | | 40 | | | | | | 114 | | | | | | (487) | | |
Increase in accrued interest payable | | | | | 546 | | | | | | 302 | | | | | | 114 | | |
Earnings on bank-owned life insurance | | | | | (521) | | | | | | (536) | | | | | | (571) | | |
Deferred income taxes | | | | | 179 | | | | | | 2,665 | | | | | | 4,303 | | |
Stock compensation expense | | | | | 7 | | | | | | 14 | | | | | | 13 | | |
Net change in operating leases | | | | | (67) | | | | | | — | | | | | | — | | |
Other, net | | | | | (493) | | | | | | (6,188) | | | | | | (1,737) | | |
Net cash provided by operating activities | | | | | 4,890 | | | | | | 7,984 | | | | | | 7,521 | | |
INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Purchase of investment securities – available for sale | | | | | (18,084) | | | | | | (45,427) | | | | | | (32,889) | | |
Purchase of investment securities – held to maturity | | | | | (2,257) | | | | | | (5,746) | | | | | | (10,572) | | |
Proceeds from maturities of investment securities – available for sale | | | | | 23,559 | | | | | | 16,299 | | | | | | 22,311 | | |
Proceeds from maturities of investment securities – held to maturity | | | | | 3,007 | | | | | | 3,651 | | | | | | 2,383 | | |
Proceeds from sales of investment securities – available for sale | | | | | 3,374 | | | | | | 9,466 | | | | | | 8,143 | | |
Purchase of regulatory stock | | | | | (13,557) | | | | | | (18,681) | | | | | | (17,661) | | |
Proceeds from redemption of regulatory stock | | | | | 14,092 | | | | | | 18,836 | | | | | | 16,345 | | |
Long-term loans originated | | | | | (205,603) | | | | | | (155,191) | | | | | | (154,054) | | |
Principal collected on long-term loans | | | | | 185,054 | | | | | | 181,582 | | | | | | 147,752 | | |
Purchases of premises and equipment | | | | | (2,821) | | | | | | (2,144) | | | | | | (2,705) | | |
Proceeds from sale of other real estate owned | | | | | 214 | | | | | | 46 | | | | | | 108 | | |
Proceeds from life insurance policies | | | | | — | | | | | | — | | | | | | 614 | | |
Net cash provided by (used in) investing activities | | | | | (13,022) | | | | | | 2,691 | | | | | | (20,225) | | |
FINANCING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Net (decrease) increase in deposit balances | | | | | 11,342 | | | | | | 1,226 | | | | | | (19,841) | | |
Net increase (decrease) in other short-term borrowings | | | | | (18,617) | | | | | | (8,055) | | | | | | 36,330 | | |
Principal borrowings on advances from Federal Home Loan Bank | | | | | 22,527 | | | | | | 12,492 | | | | | | 12,687 | | |
Principal repayments on advances from Federal Home Loan Bank | | | | | (15,580) | | | | | | (12,000) | | | | | | (12,000) | | |
Principal payments on financing lease liabilities | | | | | (173) | | | | | | — | | | | | | — | | |
Stock options exercised | | | | | 99 | | | | | | 61 | | | | | | 160 | | |
Purchases of treasury stock | | | | | (2,550) | | | | | | (2,346) | | | | | | (3,404) | | |
Common stock dividend paid | | | | | (1,642) | | | | | | (1,347) | | | | | | (1,113) | | |
Net cash provided by (used in) financing activities | | | | | (4,594) | | | | | | (9,969) | | | | | | 12,819 | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | | | (12,726) | | | | | | 706 | | | | | | 115 | | |
CASH AND CASH EQUIVALENTS AT JANUARY 1 | | | | | 34,894 | | | | | | 34,188 | | | | | | 34,073 | | |
CASH AND CASH EQUIVALENTS AT DECEMBER 31 | | | | $ | 22,168 | | | | | $ | 34,894 | | | | | $ | 34,188 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
PREFERRED STOCK | ||||||||||||
Balance at beginning of period | $ | — | $ | 21,000 | $ | 21,000 | ||||||
Redemption of all preferred shares outstanding | — | (21,000 | ) | — | ||||||||
Balance at end of period | — | — | 21,000 | |||||||||
COMMON STOCK | ||||||||||||
Balance at beginning of period | 265 | 265 | 264 | |||||||||
New common shares issued for dividend reinvestment and stock purchase plan | 1 | — | 1 | |||||||||
Balance at end of period | 266 | 265 | 265 | |||||||||
TREASURY STOCK | ||||||||||||
Balance at beginning of period | (74,829 | ) | (74,829 | ) | (74,829 | ) | ||||||
Treasury stock, 839,337 shares purchased at cost | (3,404 | ) | — | — | ||||||||
Balance at end of period | (78,233 | ) | (74,829 | ) | (74,829 | ) | ||||||
CAPITAL SURPLUS | ||||||||||||
Balance at beginning of period | �� | 145,535 | 145,441 | 145,256 | ||||||||
New common shares issued for exercise of stock options | 159 | 74 | 156 | |||||||||
Stock option expense | 13 | 20 | 29 | |||||||||
Balance at end of period | 145,707 | 145,535 | 145,441 | |||||||||
RETAINED EARNINGS | ||||||||||||
Balance at beginning of period | 36,001 | 34,651 | 29,618 | |||||||||
Net income | 3,293 | 2,310 | 5,997 | |||||||||
Cash dividend declared on common stock | (1,113 | ) | (945 | ) | (754 | ) | ||||||
Reclassification of certain income tax effects from accumulated other comprehensive income | 2,131 | — | — | |||||||||
Cash dividend declared on preferred stock | — | (15 | ) | (210 | ) | |||||||
Balance at end of period | 40,312 | 36,001 | 34,651 | |||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET | ||||||||||||
Balance at beginning of period | (11,577 | ) | (7,555 | ) | (6,902 | ) | ||||||
Reclassification of certain income tax effects from accumulated other comprehensive income | (2,131 | ) | — | — | ||||||||
Other comprehensive income (loss) | 758 | (4,022 | ) | (653 | ) | |||||||
Balance at end of period | (12,950 | ) | (11,577 | ) | (7,555 | ) | ||||||
TOTAL STOCKHOLDERS’ EQUITY | $ | 95,102 | $ | 95,395 | $ | 118,973 |
YEAR ENDED DECEMBER 31 | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Provision for loan losses | 800 | 3,950 | 1,250 | |||||||||
Depreciation and amortization expense | 1,665 | 1,803 | 1,790 | |||||||||
Net amortization of investment securities | 436 | 488 | 342 | |||||||||
Net realized gains on investment securities – available for sale | (115 | ) | (177 | ) | (71 | ) | ||||||
Net gains on loans held for sale | (679 | ) | (884 | ) | (767 | ) | ||||||
Amortization of deferred loan fees | (162 | ) | (231 | ) | (249 | ) | ||||||
Origination of mortgage loans held for sale | (45,637 | ) | (59,252 | ) | (51,759 | ) | ||||||
Sales of mortgage loans held for sale | 46,285 | 60,045 | 54,574 | |||||||||
Decrease (increase) in accrued interest receivable | (487 | ) | (59 | ) | 70 | |||||||
Increase (decrease) in accrued interest payable | 114 | (11 | ) | (55 | ) | |||||||
Earnings on bank-owned life insurance | (571 | ) | (675 | ) | (690 | ) | ||||||
Deferred income taxes | 4,303 | 414 | 888 | |||||||||
Stock compensation expense | 173 | 94 | 186 | |||||||||
Amortization of long term debt issuance costs | 39 | 39 | — | |||||||||
Other, net | (1,776 | ) | (1,186 | ) | (1,674 | ) | ||||||
Net cash provided by operating activities | 7,681 | 6,668 | 9,832 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Purchase of investment securities – available for sale | (32,889 | ) | (42,844 | ) | (22,241 | ) | ||||||
Purchase of investment securities – held to maturity | (10,572 | ) | (12,038 | ) | (6,237 | ) | ||||||
Proceeds from maturities of investment securities – available for sale | 22,311 | 24,574 | 24,532 | |||||||||
Proceeds from maturities of investment securities – held to maturity | 2,383 | 2,693 | 4,601 | |||||||||
Proceeds from sales of investment securities – available for sale | 8,143 | 8,966 | 3,570 | |||||||||
Purchase of regulatory stock | (17,661 | ) | (10,911 | ) | (19,320 | ) | ||||||
Proceeds from redemption of regulatory stock | 16,345 | 12,180 | 18,740 | |||||||||
Long-term loans originated | (154,054 | ) | (196,998 | ) | (246,304 | ) | ||||||
Principal collected on long-term loans | 157,258 | 189,505 | 183,380 | |||||||||
Participations purchased | (11,804 | ) | (17,192 | ) | (15,019 | ) | ||||||
Participations sold | 2,800 | 18,900 | 23,774 | |||||||||
Net increase in other short-term loans | (502 | ) | (875 | ) | (627 | ) | ||||||
Purchases of premises and equipment | (2,705 | ) | (1,380 | ) | (881 | ) | ||||||
Proceeds from sale of other real estate owned | 108 | 235 | 579 | |||||||||
Proceeds from life insurance policies | 614 | — | 1,598 | |||||||||
Net cash used in investing activities | (20,225 | ) | (25,185 | ) | (49,855 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Net (decrease) increase in deposit balances | (19,841 | ) | 64,492 | 33,339 | ||||||||
Net increase (decrease) in other short-term borrowings | 36,330 | (35,994 | ) | 9,868 | ||||||||
Principal borrowings on advances from Federal Home Loan Bank | 12,687 | 9,542 | 10,000 | |||||||||
Principal repayments on advances from Federal Home Loan Bank | (12,000 | ) | (12,000 | ) | (4,000 | ) | ||||||
Subordinated debt issuance, net | — | — | 7,418 | |||||||||
Purchases of treasury stock | (3,404 | ) | — | — | ||||||||
Preferred stock redemption | — | (21,000 | ) | — | ||||||||
Preferred stock dividend paid | — | (15 | ) | (210 | ) | |||||||
Common stock dividend paid | (1,113 | ) | (945 | ) | (754 | ) | ||||||
Net cash provided by financing activities | 12,659 | 4,080 | 55,661 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 115 | (14,437 | ) | 15,638 | ||||||||
CASH AND CASH EQUIVALENTS AT JANUARY 1 | 34,073 | 48,510 | 32,872 | |||||||||
CASH AND CASH EQUIVALENTS AT DECEMBER 31 | $ | 34,188 | $ | 34,073 | $ | 48,510 |
See accompanying notes to consolidated financial statements.
balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.
reviewed and evaluated for specific impairment if factors such as significant delinquency in payments of 90 days or more, bankruptcy, or other negative economic concerns indicate impairment.
Trust fees are recorded on the cash basis which approximates the accrual basis for such income.
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS, EXCEPT PER SHARE DATA) | | |||||||||||||||
Numerator: | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
Denominator: | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding (basic) | | | | | 17,359 | | | | | | 17,933 | | | | | | 18,498 | | |
Effect of stock options | | | | | 81 | | | | | | 104 | | | | | | 102 | | |
Weighted average common shares outstanding (diluted) | | | | | 17,440 | | | | | | 18,037 | | | | | | 18,600 | | |
Earnings per common share: | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 0.35 | | | | | $ | 0.43 | | | | | $ | 0.18 | | |
Diluted | | | | | 0.35 | | | | | | 0.43 | | | | | | 0.18 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||
Numerator: | ||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
Preferred stock dividends | — | 15 | 210 | |||||||||
Net income available to common shareholders | $ | 3,293 | $ | 2,295 | $ | 5,787 | ||||||
Denominator: | ||||||||||||
Weighted average common shares outstanding (basic) | 18,498 | 18,896 | 18,863 | |||||||||
Effect of stock options | 102 | 59 | 70 | |||||||||
Weighted average common shares outstanding (diluted) | 18,600 | 18,955 | 18,933 | |||||||||
Earnings per common share: | ||||||||||||
Basic | $ | 0.18 | $ | 0.12 | $ | 0.31 | ||||||
Diluted | 0.18 | 0.12 | 0.31 |
reclassified to earnings when the hedged transaction affects earnings. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item.
Under the new methodology, the service cost component will beis determined by aggregating the product of the discounted cash flows of the plan’s service cost for each year and an individual spot rate (referred to as the “spot rate” approach). The interest cost component will beis determined by aggregating the product of the discounted cash flows of the plan’s projected benefit obligations for each year and an individual spot rate. This change will result in a lower service cost and interest cost components of net periodic benefit cost under the new methodology compared to the previous methodology.
Management believes this new methodology which represents a change in an accounting estimate, is a betterappropriate measure of the service cost and interest cost as each year’s cash flows are specifically linked to the interest rates of bond payments in the same respective year. Our pension benefits are described further in Note 1418 of the Notes to Consolidated Financial Statements.
Fair value measurements for most of our assets are obtained from independent pricing services that we have engaged for this purpose. When available, we, or our independent pricing service, use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that incorporate available trade, bid, and other market information. Subsequently, all of our financial instruments use either of the foregoing methodologies to determine fair value adjustments recorded to our financial statements. In certain cases, however, when market observable inputs for model-based valuation techniques may not be readily available, we are required to make judgments about assumptions market participants would use in estimating the fair value of financial instruments. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. When market data is not available, we use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future valuations.
PRONOUNCEMENTS
goods or services takes place. At the time of adoption, the Company completed an assessment of revenue streams and review of the related contracts potentially affected by the new standard and concluded that ASU 2014-09 did not materially change the method in which it recognizes revenue. However, in 2019, the change was determined to be material related to certain revenue recognized within our wealth management segment. As a result, the Company made a one-time cumulative effect adjustment to retained earnings of $640,000, net of tax. Additional disclosures related to revenue recognition can be found in Note 4.
In June 2016, the FASB issued ASU 2016-13,Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments(“ASU 2016-13”), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the impact that the Update will have on our consolidated financial statements. The overall impact of the amendment will be affected by the portfolio composition and quality at the adoption date as well as economic conditions and forecasts at that time. We are currently evaluating third-party vendor solutions to assist us in the application of this standard.
In March 2017, the FASB issued ASU 2017-07,Compensation — Retirement Benefits (Topic 715). The amendments in this Update require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. This Update is not expected to have a significant impact on the Company’s financial statements.
In March 2017, the FASB issued ASU 2017-08,Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. This Update is not expected to have a significant impact on the Company’s financial statements.
In FebruaryJuly 2018, the FASB issued ASU 2018-02,Income Statement2018-11, Leases (Topic 842) — Reporting Comprehensive Income (Topic 220). On December 22, 2017, the U.S. federal government enacted a tax bill, H.R.1,An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act)Targeted Improvements, which, requires deferred tax liabilitiesamong other things, provides an additional transition method that would allow entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and assetsinstead recognize a cumulative-effect adjustment to be adjusted for the effectopening balance of a change in tax laws. The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.
The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted. The amendments in this Update should be applied either in the period of adoption. The Company adopted ASU 2016-02 and its related amendments as of January 1, 2019, which resulted in the recognition of operating and financing right-of-use assets totaling $932,000 and $3.3 million, respectively, as well as operating and financing lease liabilities totaling $932,000 and $3.3 million, respectively. The Company elected to adopt the
| | | AT DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
Non-interest income: | | | | | | | | | | | | | | | | | | | |
In-scope of Topic 606 | | | | | | | | | | | | | | | | | | | |
Wealth management fees | | | | $ | 9,730 | | | | | $ | 9,659 | | | | | $ | 9,170 | | |
Service charges on deposit accounts | | | | | 1,271 | | | | | | 1,420 | | | | | | 1,581 | | |
Other | | | | | 1,759 | | | | | | 1,720 | | | | | | 1,665 | | |
Non-interest income (in-scope of topic 606) | | | | | 12,760 | | | | | | 12,799 | | | | | | 12,416 | | |
Non-interest income (out-of-scope of topic 606) | | | | | 2,013 | | | | | | 1,425 | | | | | | 2,229 | | |
Total non-interest income | | | | $ | 14,773 | | | | | $ | 14,224 | | | | | $ | 14,645 | | |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||
| | | COST BASIS | | | GROSS UNREALIZED GAINS | | | GROSS UNREALIZED LOSSES | | | FAIR VALUE | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
U.S. Agency | | | | $ | 5,084 | | | | | $ | 32 | | | | | $ | — | | | | | $ | 5,116 | | |
Municipal | | | | | 14,678 | | | | | | 509 | | | | | | (17) | | | | | | 15,170 | | |
Corporate bonds | | | | | 39,769 | | | | | | 342 | | | | | | (281) | | | | | | 39,830 | | |
U.S. Agency mortgage-backed securities | | | | | 80,046 | | | | | | 1,681 | | | | | | (94) | | | | | | 81,633 | | |
Total | | | | $ | 139,577 | | | | | $ | 2,564 | | | | | $ | (392) | | | | | $ | 141,749 | | |
AT DECEMBER 31, 2017 | ||||||||||||||||
COST BASIS | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | |||||||||||||
(IN THOUSANDS) | ||||||||||||||||
U.S. Agency | $ | 6,612 | $ | — | $ | (40 | ) | $ | 6,572 | |||||||
Taxable municipal | 7,198 | 27 | (189 | ) | 7,036 | |||||||||||
Corporate bonds | 35,886 | 322 | (424 | ) | 35,784 | |||||||||||
U.S. Agency mortgage-backed securities | 79,854 | 611 | (719 | ) | 79,746 | |||||||||||
Total | $ | 129,550 | $ | 960 | $ | (1,372 | ) | $ | 129,138 |
Investment securities held to maturity:
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||
| | | COST BASIS | | | GROSS UNREALIZED GAINS | | | GROSS UNREALIZED LOSSES | | | FAIR VALUE | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
U.S. Agency mortgage-backed securities | | | | $ | 9,466 | | | | | $ | 251 | | | | | $ | (4) | | | | | $ | 9,713 | | |
Municipal | | | | | 24,438 | | | | | | 941 | | | | | | (53) | | | | | | 25,326 | | |
Corporate bonds and other securities | | | | | 6,032 | | | | | | 58 | | | | | | (47) | | | | | | 6,043 | | |
Total | | | | $ | 39,936 | | | | | $ | 1,250 | | | | | $ | (104) | | | | | $ | 41,082 | | |
|
AT DECEMBER 31, 2017 | ||||||||||||||||
COST BASIS | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | |||||||||||||
(IN THOUSANDS) | ||||||||||||||||
U.S. Agency mortgage-backed securities | $ | 9,740 | $ | 149 | $ | (45 | ) | $ | 9,844 | |||||||
Taxable municipal | 22,970 | 203 | (238 | ) | 22,935 | |||||||||||
Corporate bonds and other securities | 6,042 | 38 | (48 | ) | 6,032 | |||||||||||
Total | $ | 38,752 | $ | 390 | $ | (331 | ) | $ | 38,811 |
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||
| | | COST BASIS | | | GROSS UNREALIZED GAINS | | | GROSS UNREALIZED LOSSES | | | FAIR VALUE | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
U.S. Agency | | | | $ | 7,685 | | | | | $ | 4 | | | | | $ | (160) | | | | | $ | 7,529 | | |
Municipal | | | | | 13,301 | | | | | | 114 | | | | | | (234) | | | | | | 13,181 | | |
Corporate bonds | | | | | 37,359 | | | | | | 131 | | | | | | (996) | | | | | | 36,494 | | |
U.S. Agency mortgage-backed securities | | | | | 90,169 | | | | | | 516 | | | | | | (1,158) | | | | | | 89,527 | | |
Total | | | | $ | 148,514 | | | | | $ | 765 | | | | | $ | (2,548) | | | | | $ | 146,731 | | |
AT DECEMBER 31, 2016 | ||||||||||||||||
COST BASIS | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | |||||||||||||
(IN THOUSANDS) | ||||||||||||||||
U.S. Agency | $ | 400 | $ | — | $ | (2 | ) | $ | 398 | |||||||
Taxable municipal | 3,793 | 3 | (174 | ) | 3,622 | |||||||||||
Corporate bonds | 34,403 | 194 | (724 | ) | 33,873 | |||||||||||
U.S. Agency mortgage-backed securities | 88,738 | 1,132 | (686 | ) | 89,184 | |||||||||||
Total | $ | 127,334 | $ | 1,329 | $ | (1,586 | ) | $ | 127,077 |
Investment securities held to maturity:
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||
| | | COST BASIS | | | GROSS UNREALIZED GAINS | | | GROSS UNREALIZED LOSSES | | | FAIR VALUE | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
U.S. Agency mortgage-backed securities | | | | $ | 9,983 | | | | | $ | 78 | | | | | $ | (132) | | | | | $ | 9,929 | | |
Municipal | | | | | 24,740 | | | | | | 131 | | | | | | (404) | | | | | | 24,467 | | |
Corporate bonds and other securities | | | | | 6,037 | | | | | | 13 | | | | | | (122) | | | | | | 5,928 | | |
Total | | | | $ | 40,760 | | | | | $ | 222 | | | | | $ | (658) | | | | | $ | 40,324 | | |
AT DECEMBER 31, 2016 | ||||||||||||||||
COST BASIS | GROSS UNREALIZED GAINS | GROSS UNREALIZED LOSSES | FAIR VALUE | |||||||||||||
(IN THOUSANDS) | ||||||||||||||||
U.S. Agency mortgage-backed securities | $ | 11,177 | $ | 180 | $ | (79 | ) | $ | 11,278 | |||||||
Taxable municipal | 13,441 | 70 | (348 | ) | 13,163 | |||||||||||
Corporate bonds and other securities | 6,047 | 15 | (83 | ) | 5,979 | |||||||||||
Total | $ | 30,665 | $ | 265 | $ | (510 | ) | $ | 30,420 |
Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investors Service or Standard & Poor’s rating of A. At December 31, 2017, 57.8%2019, 53.4% of the portfolio was rated AAA as compared to 63.5%57.5% at December 31, 2016. 9.7%2018. Approximately 9.1% and 10.0% of the portfolio was rated below A or unrated on December 31, 2017.2019 and 2018, respectively. The Company and its subsidiaries, collectively, did not hold securities of any single issuer, excluding U.S. Treasurytreasury and U.S. Agencies,agencies, that exceeded 10% of shareholders’ equity at December 31, 2017.
2019.
2018.
2017.
maturity securities at December 31, 20172019 for U.S. Agency Mortgage-Backed and Corporate Bonds/Taxable Municipals and agency mortgage-backed, corporate bond/other securities, were 4.57 and 6.51 years.
municipal securities 4.62, 3.21, and 5.92 years, respectively.
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | U. S. AGENCY | | | MUNICIPAL | | | CORPORATE BONDS | | | U.S. AGENCY MORTGAGE- BACKED SECURITIES | | | TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE | | |||||||||||||||||||||||||||||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT YIELDS) | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COST BASIS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Within 1 year | | | | $ | — | | | | | | —% | | | | | $ | 500 | | | | | | 2.25% | | | | | $ | 1,500 | | | | | | 3.10% | | | | | $ | — | | | | | | —% | | | | | $ | 2,000 | | | | | | 2.89% | | |
After 1 year but within 5 years | | | | | — | | | | | | — | | | | | | 3,121 | | | | | | 3.09 | | | | | | 18,695 | | | | | | 3.43 | | | | | | 1,200 | | | | | | 2.46 | | | | | | 23,016 | | | | | | 3.33 | | |
After 5 years but within 10 years | | | | | 2,557 | | | | | | 2.93 | | | | | | 11,057 | | | | | | 3.26 | | | | | | 19,574 | | | | | | 4.11 | | | | | | 7,882 | | | | | | 2.99 | | | | | | 41,070 | | | | | | 3.59 | | |
After 10 years but within15 years | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 23,018 | | | | | | 2.83 | | | | | | 23,018 | | | | | | 2.83 | | |
Over 15 years | | | | | 2,527 | | | | | | 2.68 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 47,946 | | | | | | 2.90 | | | | | | 50,473 | | | | | | 2.89 | | |
Total | | | | $ | 5,084 | | | | | | 2.81 | | | | | $ | 14,678 | | | | | | 3.19 | | | | | $ | 39,769 | | | | | | 3.75 | | | | | $ | 80,046 | | | | | | 2.88 | | | | | $ | 139,577 | | | | | | 3.16 | | |
FAIR VALUE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Within 1 year | | | | $ | — | | | | | | | | | | | $ | 500 | | | | | | | | | | | $ | 1,503 | | | | | | | | | | | $ | — | | | | | | | | | | | $ | 2,003 | | | | | | | | |
After 1 year but within 5 years | | | | | — | | | | | | | | | | | | 3,179 | | | | | | | | | | | | 18,755 | | | | | | | | | | | | 1,213 | | | | | | | | | | | | 23,147 | | | | |||||
After 5 years but within 10 years | | | | | 2,570 | | | | | | | | | | | | 11,491 | | | | | | | | | | | | 19,572 | | | | | | | | | | | | 8,075 | | | | | | | | | | | | 41,708 | | | | |||||
After 10 years but within15 years | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 23,538 | | | | | | | | | | | | 23,538 | | | | |||||
Over 15 years | | | | | 2,546 | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 48,807 | | | | | | | | | | | | 51,353 | | | | |||||
Total | | | | $ | 5,116 | | | | | | | | | | | $ | 15,170 | | | | | | | | | | | $ | 39,830 | | | | | | | | | | | $ | 81,633 | | | | | | | | | | | $ | 141,749 | | | |
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||||||||||
U. S. AGENCY | U.S. AGENCY MORTGAGE-BACKED SECURITIES | CORPORATE BONDS AND OTHER | TOTAL INVESTMENT SECURITIES AVAILABLE FOR SALE | |||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT YIELDS) | ||||||||||||||||||||||||||||||||
COST BASIS | ||||||||||||||||||||||||||||||||
Within 1 year | $ | 400 | 1.03 | % | $ | 1 | 6.00 | % | $ | — | —% | $ | 401 | 1.04 | % | |||||||||||||||||
After 1 year but within 5 years | — | — | 848 | 2.09 | 10,938 | 2.99 | 11,786 | 2.93 | ||||||||||||||||||||||||
After 5 years but within 10 years | 3,230 | 2.75 | 14,623 | 2.91 | 30,646 | 3.64 | 48,499 | 3.36 | ||||||||||||||||||||||||
After 10 years but within 15 years | — | — | 24,516 | 2.30 | 1,500 | 3.98 | 26,016 | 2.39 | ||||||||||||||||||||||||
Over 15 years | 2,982 | 2.69 | 39,866 | 2.52 | — | — | 42,848 | 2.53 | ||||||||||||||||||||||||
Total | $ | 6,612 | 2.62 | $ | 79,854 | 2.52 | $ | 43,084 | 3.49 | $ | 129,550 | 2.84 | ||||||||||||||||||||
FAIR VALUE | ||||||||||||||||||||||||||||||||
Within 1 year | $ | 399 | $ | 1 | $ | — | $ | 400 | ||||||||||||||||||||||||
After 1 year but within 5 years | — | 843 | 10,924 | 11,767 | ||||||||||||||||||||||||||||
After 5 years but within 10 years | 3,220 | 14,859 | 30,477 | 48,556 | ||||||||||||||||||||||||||||
After 10 years but within 15 years | — | 24,301 | 1,419 | 25,720 | ||||||||||||||||||||||||||||
Over 15 years | 2,953 | 39,742 | — | 42,695 | ||||||||||||||||||||||||||||
Total | $ | 6,572 | $ | 79,746 | $ | 42,820 | $ | 129,138 |
Investment securities held to maturity:
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||||||||||||||||||||
| | | U.S. AGENCY MORTGAGE- BACKED SECURITIES | | | MUNICIPAL | | | CORPORATE BONDS AND OTHER | | | TOTAL INVESTMENT SECURITIES HELD TO MATURITY | | ||||||||||||||||||||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT YIELDS) | | |||||||||||||||||||||||||||||||||||||||||||||
COST BASIS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Within 1 year | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | |
After 1 year but within 5 years | | | | | 1,977 | | | | | | 2.50 | | | | | | 2,567 | | | | | | 3.33 | | | | | | 3,000 | | | | | | 2.95 | | | | | | 7,544 | | | | | | 2.96 | | |
After 5 years but within 10 years | | | | | — | | | | | | — | | | | | | 16,506 | | | | | | 3.37 | | | | | | 3,032 | | | | | | 4.40 | | | | | | 19,538 | | | | | | 3.53 | | |
After 10 years but within15 years | | | | | 2,232 | | | | | | 3.62 | | | | | | 5,050 | | | | | | 4.10 | | | | | | — | | | | | | — | | | | | | 7,282 | | | | | | 3.95 | | |
Over 15 years | | | | | 5,257 | | | | | | 3.30 | | | | | | 315 | | | | | | 3.50 | | | | | | — | | | | | | — | | | | | | 5,572 | | | | | | 3.31 | | |
Total | | | | $ | 9,466 | | | | | | 3.21 | | | | | $ | 24,438 | | | | | | 3.52 | | | | | $ | 6,032 | | | | | | 3.68 | | | | | $ | 39,936 | | | | | | 3.47 | | |
FAIR VALUE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Within 1 year | | | | $ | — | | | | | | | | | | | $ | — | | | | | | | | | | | $ | — | | | | | | | | | | | $ | — | | | | |||||
After 1 year but within 5 years | | | | | 2,009 | | | | | | | | | | | | 2,644 | | | | | | | | | | | | 2,953 | | | | | | | | | | | | 7,606 | | | | |||||
After 5 years but within 10 years | | | | | — | | | | | | | | | | | | 17,153 | | | | | | | | | | | | 3,090 | | | | | | | | | | | | 20,243 | | | | | | | | |
After 10 years but within15 years | | | | | 2,353 | | | | | | | | | | | | 5,209 | | | | | | | | | | | | — | | | | | | | | | | | | 7,562 | | | | |||||
Over 15 years | | | | | 5,351 | | | | | | | | | | | | 320 | | | | | | | | | | | | — | | | | | | | | | | | | 5,671 | | | | | | | | |
Total | | | | $ | 9,713 | | | | | | | | | | | $ | 25,326 | | | | | | | | | | | $ | 6,043 | | | | | | | | | | | $ | 41,082 | | | | | | | | |
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||
U.S. AGENCY MORTGAGE-BACKED SECURITIES | CORPORATE BONDS AND OTHER | TOTAL INVESTMENT SECURITIES HELD TO MATURITY | ||||||||||||||||||||||
(IN THOUSANDS, EXCEPT YIELDS) | ||||||||||||||||||||||||
COST BASIS | ||||||||||||||||||||||||
Within 1 year | $ | — | —% | $ | 2,000 | 1.78 | % | $ | 2,000 | 1.78 | % | |||||||||||||
After 1 year but within 5 years | 688 | 2.11 | 1,751 | 2.29 | 2,439 | 2.24 | ||||||||||||||||||
After 5 years but within 10 years | 2,081 | 2.49 | 12,797 | 3.57 | 14,878 | 3.42 | ||||||||||||||||||
After 10 years but within 15 years | 2,604 | 3.30 | 11,643 | 3.64 | 14,247 | 3.58 | ||||||||||||||||||
Over 15 years | 4,367 | 3.07 | 821 | 4.75 | 5,188 | 3.34 | ||||||||||||||||||
Total | $ | 9,740 | 2.94 | $ | 29,012 | 3.43 | $ | 38,752 | 3.31 | |||||||||||||||
FAIR VALUE | ||||||||||||||||||||||||
Within 1 year | $ | — | $ | 1,976 | $ | 1,976 | ||||||||||||||||||
After 1 year but within 5 years | 677 | 1,734 | 2,411 | |||||||||||||||||||||
After 5 years but within 10 years | 2,075 | 12,815 | 14,890 | |||||||||||||||||||||
After 10 years but within 15 years | 2,685 | 11,597 | 14,282 | |||||||||||||||||||||
Over 15 years | 4,407 | 845 | 5,252 | |||||||||||||||||||||
Total | $ | 9,844 | $ | 28,967 | $ | 38,811 |
Total investment securities: | LESS THAN 12 MONTHS | 12 MONTHS OR LONGER | TOTAL | |||||||||||||||||||||
FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | |||||||||||||||||||
U.S. Agency | $ | 5,923 | $ | (39 | ) | $ | 399 | $ | (1) | $ | 6,322 | $ | (40 | ) | ||||||||||
U.S. Agency mortgage-backed securities | 36,783 | (253 | ) | 22,625 | (511 | ) | 59,408 | (764 | ) | |||||||||||||||
Taxable municipal | 8,657 | (109 | ) | 7,727 | (318 | ) | 16,384 | (427 | ) | |||||||||||||||
Corporate bonds and other securities | 7,123 | (71 | ) | 13,655 | (401 | ) | 20,778 | (472 | ) | |||||||||||||||
Total | $ | 58,486 | $ | (472 | ) | $ | 44,406 | $ | (1,231 | ) | $ | 102,892 | $ | (1,703 | ) |
LESS THAN 12 MONTHS 12 MONTHS OR LONGER TOTAL FAIR
VALUE UNREALIZED
LOSSES FAIR
VALUE UNREALIZED
LOSSES FAIR
VALUE UNREALIZED
LOSSES U.S. Agency $ — $ — $ — $ — $ — $ — U.S. Agency mortgage-backed securities 7,084 (23) 8,562 (75) 15,646 (98) Municipal 2,269 (18) 1,123 (52) 3,392 (70) Corporate bonds and other
securities 7,797 (85) 11,783 (243) 19,580 (328) Total $ 17,150 $ (126) $ 21,468 $ (370) $ 38,618 $ (496)
Total investment securities: | LESS THAN 12 MONTHS | 12 MONTHS OR LONGER | TOTAL | |||||||||||||||||||||
FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | FAIR VALUE | UNREALIZED LOSSES | |||||||||||||||||||
U.S. Agency | $ | 398 | $ | (2 | ) | $ | — | $ | — | $ | 398 | $ | (2 | ) | ||||||||||
U.S. Agency mortgage-backed securities | 49,918 | (703 | ) | 1,576 | (62 | ) | 51,494 | (765 | ) | |||||||||||||||
Taxable municipal | 13,301 | (522 | ) | — | — | 13,301 | (522 | ) | ||||||||||||||||
Corporate bonds and other securities | 20,380 | (570 | ) | 6,762 | (237 | ) | 27,142 | (807 | ) | |||||||||||||||
Total | $ | 83,997 | $ | (1,797 | ) | $ | 8,338 | $ | (299 | ) | $ | 92,335 | $ | (2,096 | ) |
LESS THAN 12 MONTHS 12 MONTHS OR LONGER TOTAL FAIR
VALUE UNREALIZED
LOSSES FAIR
VALUE UNREALIZED
LOSSES FAIR
VALUE UNREALIZED
LOSSES U.S. Agency $ 244 $ (6) $ 5,631 $ (154) $ 5,875 $ (160) U.S. Agency mortgage-backed securities 17,718 (177) 39,983 (1,113) 57,701 (1,290) Municipal 6,601 (71) 15,880 (567) 22,481 (638) Corporate bonds and other
securities 15,221 (440) 17,038 (678) 32,259 (1,118) Total $ 39,784 $ (694) $ 78,532 $ (2,512) $ 118,316 $ (3,206)
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
Commercial: | | | | | | | | | | | | | |
Commercial and industrial | | | | $ | 173,922 | | | | | $ | 158,279 | | |
Commercial loans secured by owner occupied real estate | | | | | 91,655 | | | | | | 91,905 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 363,635 | | | | | | 356,543 | | |
Real estate – residential mortgage | | | | | 235,239 | | | | | | 237,964 | | |
Consumer | | | | | 18,255 | | | | | | 17,591 | | |
Loans, net of unearned income | | | | $ | 882,706 | | | | | $ | 862,282 | | |
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
Commercial | $ | 159,192 | $ | 171,529 | ||||
Commercial loans secured by real estate | 463,780 | 446,598 | ||||||
Real estate-mortgage | 247,278 | 245,765 | ||||||
Consumer | 19,383 | 19,872 | ||||||
Loans, net of unearned income | $ | 889,633 | $ | 883,764 |
Loan balances at December 31, 20172019 and 20162018 are net of unearned income of $399,000$384,000 and $476,000,$322,000, respectively. Real estate construction loans comprised 4.1%4.9% and 4.7%3.5% of total loans net of unearned income at December 31, 20172019 and 2016,2018, respectively. The Company has no exposure to subprime mortgage loans in either the loan or investment portfolios. The Company has no direct loan exposure to foreign countries. Additionally, the Company has no significant industry lending concentrations. As of December 31, 20172019 and 2016,2018, loans to customers engaged in similar activities and having similar economic characteristics, as defined by standard industrial classifications, did not exceed 10% of total loans. Additionally, the majority of the Company’s lending occurs within a 250 mile250-mile radius of the Johnstown market.
| | | BALANCE AT DECEMBER 31, 2018 | | | CHARGE- OFFS | | | RECOVERIES | | | PROVISION (CREDIT) | | | BALANCE AT DECEMBER 31, 2019 | | |||||||||||||||
Commercial | | | | $ | 3,057 | | | | | $ | (9) | | | | | $ | 22 | | | | | $ | 881 | | | | | $ | 3,951 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 3,389 | | | | | | (63) | | | | | | 48 | | | | | | (255) | | | | | | 3,119 | | |
Real estate – residential mortgage | | | | | 1,235 | | | | | | (98) | | | | | | 118 | | | | | | (96) | | | | | | 1,159 | | |
Consumer | | | | | 127 | | | | | | (262) | | | | | | 52 | | | | | | 209 | | | | | | 126 | | |
Allocation for general risk | | | | | 863 | | | | | | — | | | | | | — | | | | | | 61 | | | | | | 924 | | |
Total | | | | $ | 8,671 | | | | | $ | (432) | | | | | $ | 240 | | | | | $ | 800 | | | | | $ | 9,279 | | |
|
BALANCE AT DECEMBER 31, 2016 | CHARGE- OFFS | RECOVERIES | PROVISION (CREDIT) | BALANCE AT DECEMBER 31, 2017 | ||||||||||||||||
Commercial | $ | 4,041 | $ | (278 | ) | $ | 27 | $ | 509 | $ | 4,299 | |||||||||
Commercial loans secured by real estate | 3,584 | (165 | ) | 14 | 233 | 3,666 | ||||||||||||||
Real estate-mortgage | 1,169 | (313 | ) | 250 | (4 | ) | 1,102 | |||||||||||||
Consumer | 151 | (172 | ) | 119 | 30 | 128 | ||||||||||||||
Allocation for general risk | 987 | — | — | 32 | 1,019 | |||||||||||||||
Total | $ | 9,932 | $ | (928 | ) | $ | 410 | $ | 800 | $ | 10,214 |
BALANCE AT DECEMBER 31, 2015 | CHARGE- OFFS | RECOVERIES | PROVISION (CREDIT) | BALANCE AT DECEMBER 31, 2016 | ||||||||||||||||
Commercial | $ | 4,244 | $ | (3,648 | ) | $ | 140 | $ | 3,305 | $ | 4,041 | |||||||||
Commercial loans secured by real estate | 3,449 | (13 | ) | 40 | 108 | 3,584 | ||||||||||||||
Real estate-mortgage | 1,173 | (291 | ) | 147 | 140 | 1,169 | ||||||||||||||
Consumer | 151 | (344 | ) | 30 | 314 | 151 | ||||||||||||||
Allocation for general risk | 904 | — | — | 83 | 987 | |||||||||||||||
Total | $ | 9,921 | $ | (4,296 | ) | $ | 357 | $ | 3,950 | $ | 9,932 |
BALANCE AT DECEMBER 31, 2014 | CHARGE- OFFS | RECOVERIES | PROVISION (CREDIT) | BALANCE AT DECEMBER 31, 2015 | ||||||||||||||||
Commercial | $ | 3,262 | $ | (170 | ) | $ | 101 | $ | 1,051 | $ | 4,244 | |||||||||
Commercial loans secured by real estate | 3,902 | (250 | ) | 111 | (314 | ) | 3,449 | |||||||||||||
Real estate-mortgage | 1,310 | (753 | ) | 171 | 445 | 1,173 | ||||||||||||||
Consumer | 190 | (188 | ) | 26 | 123 | 151 | ||||||||||||||
Allocation for general risk | 959 | — | — | (55 | ) | 904 | ||||||||||||||
Total | $ | 9,623 | $ | (1,361 | ) | $ | 409 | $ | 1,250 | $ | 9,921 |
| | | BALANCE AT DECEMBER 31, 2017 | | | CHARGE- OFFS | | | RECOVERIES | | | PROVISION (CREDIT) | | | BALANCE AT DECEMBER 31, 2018 | | |||||||||||||||
Commercial | | | | $ | 4,298 | | | | | $ | (574) | | | | | $ | 31 | | | | | $ | (698) | | | | | $ | 3,057 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 3,666 | | | | | | — | | | | | | 51 | | | | | | (328) | | | | | | 3,389 | | |
Real estate – residential mortgage | | | | | 1,102 | | | | | | (380) | | | | | | 119 | | | | | | 394 | | | | | | 1,235 | | |
Consumer | | | | | 128 | | | | | | (251) | | | | | | 61 | | | | | | 189 | | | | | | 127 | | |
Allocation for general risk | | | | | 1,020 | | | | | | — | | | | | | — | | | | | | (157) | | | | | | 863 | | |
Total | | | | $ | 10,214 | | | | | $ | (1,205) | | | | | $ | 262 | | | | | $ | (600) | | | | | $ | 8,671 | | |
|
| | | BALANCE AT DECEMBER 31, 2016 | | | CHARGE- OFFS | | | RECOVERIES | | | PROVISION | | | BALANCE AT DECEMBER 31, 2017 | | |||||||||||||||
Commercial | | | | $ | 4,041 | | | | | $ | (311) | | | | | $ | 27 | | | | | $ | 541 | | | | | $ | 4,298 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 3,584 | | | | | | (132) | | | | | | 56 | | | | | | 158 | | | | | | 3,666 | | |
Real estate – residential mortgage | | | | | 1,169 | | | | | | (313) | | | | | | 207 | | | | | | 39 | | | | | | 1,102 | | |
Consumer | | | | | 151 | | | | | | (172) | | | | | | 120 | | | | | | 29 | | | | | | 128 | | |
Allocation for general risk | | | | | 987 | | | | | | — | | | | | | — | | | | | | 33 | | | | | | 1,020 | | |
Total | | | | $ | 9,932 | | | | | $ | (928) | | | | | $ | 410 | | | | | $ | 800 | | | | | $ | 10,214 | | |
2018.
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
Allowance for loan losses: | COMMERCIAL | COMMERCIAL LOANS SECURED BY REAL ESTATE | REAL ESTATE- MORTGAGE | CONSUMER | ALLOCATION FOR GENERAL RISK | TOTAL | ||||||||||||||||||
Specific reserve allocation | $ | 909 | $ | — | $ | — | $ | — | $ | — | $ | 909 | ||||||||||||
General reserve allocation | 3,390 | 3,666 | 1,102 | 128 | 1,019 | 9,305 | ||||||||||||||||||
Total allowance for loan losses | $ | 4,299 | $ | 3,666 | $ | 1,102 | $ | 128 | $ | 1,019 | $ | 10,214 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
Loans: | COMMERCIAL | COMMERCIAL LOANS SECURED BY REAL ESTATE | REAL ESTATE- MORTGAGE | CONSUMER | TOTAL | |||||||||||||||||||
Individually evaluated for impairment | $ | 496 | $ | 178 | $ | — | $ | — | $ | 674 | ||||||||||||||
Collectively evaluated for impairment | 171,033 | 446,420 | 245,765 | 19,872 | 883,090 | |||||||||||||||||||
Total loans | $ | 171,529 | $ | 446,598 | $ | 245,765 | $ | 19,872 | $ | 883,764 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
Allowance for loan losses: | COMMERCIAL | COMMERCIAL LOANS SECURED BY REAL ESTATE | REAL ESTATE- MORTGAGE | CONSUMER | ALLOCATION FOR GENERAL RISK | TOTAL | ||||||||||||||||||
Specific reserve allocation | $ | 496 | $ | 31 | $ | — | $ | — | $ | — | $ | 527 | ||||||||||||
General reserve allocation | 3,545 | 3,553 | 1,169 | 151 | 987 | 9,405 | ||||||||||||||||||
Total allowance for loan losses | $ | 4,041 | $ | 3,584 | $ | 1,169 | $ | 151 | $ | 987 | $ | 9,932 |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||
Loans: | | | COMMERCIAL | | | COMMERCIAL LOANS SECURED BY NON-OWNER OCCUPIED REAL ESTATE | | | REAL ESTATE – RESIDENTIAL MORTGAGE | | | CONSUMER | | | TOTAL | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Individually evaluated for impairment | | | | $ | 816 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | $ | 824 | | |
Collectively evaluated for impairment | | | | | 264,761 | | | | | | 363,627 | | | | | | 235,239 | | | | | | 18,255 | | | | | | 881,882 | | |
Total loans | | | | $ | 265,577 | | | | | $ | 363,635 | | | | | $ | 235,239 | | | | | $ | 18,255 | | | | | $ | 882,706 | | |
|
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||||||||
Allowance for loan losses: | | | COMMERCIAL | | | COMMERCIAL LOANS SECURED BY NON-OWNER OCCUPIED REAL ESTATE | | | REAL ESTATE – RESIDENTIAL MORTGAGE | | | CONSUMER | | | ALLOCATION FOR GENERAL RISK | | | TOTAL | | ||||||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||||||||
Specific reserve allocation | | | | $ | 84 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 92 | | |
General reserve allocation | | | | | 3,867 | | | | | | 3,111 | | | | | | 1,159 | | | | | | 126 | | | | | | 924 | | | | | | 9,187 | | |
Total allowance for loan losses | | | | $ | 3,951 | | | | | $ | 3,119 | | | | | $ | 1,159 | | | | | $ | 126 | | | | | $ | 924 | | | | | $ | 9,279 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||
Loans: | | | COMMERCIAL | | | COMMERCIAL LOANS SECURED BY NON-OWNER OCCUPIED REAL ESTATE | | | REAL ESTATE – RESIDENTIAL MORTGAGE | | | CONSUMER | | | TOTAL | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Individually evaluated for impairment | | | | $ | — | | | | | $ | 11 | | | | | $ | — | | | | | $ | — | | | | | $ | 11 | | |
Collectively evaluated for impairment | | | | | 250,184 | | | | | | 356,532 | | | | | | 237,964 | | | | | | 17,591 | | | | | | 862,271 | | |
Total loans | | | | $ | 250,184 | | | | | $ | 356,543 | | | | | $ | 237,964 | | | | | $ | 17,591 | | | | | $ | 862,282 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||||||||
| | | COMMERCIAL | | | COMMERCIAL LOANS SECURED BY NON-OWNER OCCUPIED REAL ESTATE | | | REAL ESTATE – RESIDENTIAL MORTGAGE | | | CONSUMER | | | ALLOCATION FOR GENERAL RISK | | | TOTAL | | ||||||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||||||||
Allowance for loan losses: | | | | | | | | ||||||||||||||||||||||||||||||
Specific reserve allocation | | | | $ | — | | | | | $ | 11 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 11 | | |
General reserve allocation | | | | | 3,057 | | | | | | 3,378 | | | | | | 1,235 | | | | | | 127 | | | | | | 863 | | | | | | 8,660 | | |
Total allowance for loan losses | | | | $ | 3,057 | | | | | $ | 3,389 | | | | | $ | 1,235 | | | | | $ | 127 | | | | | $ | 863 | | | | | $ | 8,671 | | |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||
| | | IMPAIRED LOANS WITH SPECIFIC ALLOWANCE | | | IMPAIRED LOANS WITH NO SPECIFIC ALLOWANCE | | | TOTAL IMPAIRED LOANS | | |||||||||||||||||||||
| | | RECORDED INVESTMENT | | | RELATED ALLOWANCE | | | RECORDED INVESTMENT | | | RECORDED INVESTMENT | | | UNPAID PRINCIPAL BALANCE | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Commercial | | | | $ | 816 | | | | | $ | 84 | | | | | $ | — | | | | | $ | 816 | | | | | $ | 816 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 8 | | | | | | 8 | | | | | | — | | | | | | 8 | | | | | | 30 | | |
Total impaired loans | | | | $ | 824 | | | | | $ | 92 | | | | | $ | — | | | | | $ | 824 | | | | | $ | 846 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||
| | | IMPAIRED LOANS WITH SPECIFIC ALLOWANCE | | | IMPAIRED LOANS WITH NO SPECIFIC ALLOWANCE | | | TOTAL IMPAIRED LOANS | | |||||||||||||||||||||
| | | RECORDED INVESTMENT | | | RELATED ALLOWANCE | | | RECORDED INVESTMENT | | | RECORDED INVESTMENT | | | UNPAID PRINCIPAL BALANCE | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Commercial loans secured by non-owner occupied real estate | | | | $ | 11 | | | | | $ | 11 | | | | | $ | — | | | | | $ | 11 | | | | | $ | 33 | | |
Total impaired loans | | | | $ | 11 | | | | | $ | 11 | | | | | $ | — | | | | | $ | 11 | | | | | $ | 33 | | |
AT DECEMBER 31, 2017 | ||||||||||||||||||||
IMPAIRED LOANS WITH SPECIFIC ALLOWANCE | IMPAIRED LOANS WITH NO SPECIFIC ALLOWANCE | TOTAL IMPAIRED LOANS | ||||||||||||||||||
RECORDED INVESTMENT | RELATED ALLOWANCE | RECORDED INVESTMENT | RECORDED INVESTMENT | UNPAID PRINCIPAL BALANCE | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Commercial | $ | 342 | $ | 342 | $ | 11 | $ | 353 | $ | 354 | ||||||||||
Commercial loans secured by real estate | 859 | 567 | 547 | 1,406 | 1,461 | |||||||||||||||
Total impaired loans | $ | 1,201 | $ | 909 | $ | 558 | $ | 1,759 | $ | 1,815 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||
IMPAIRED LOANS WITH SPECIFIC ALLOWANCE | IMPAIRED LOANS WITH NO SPECIFIC ALLOWANCE | TOTAL IMPAIRED LOANS | ||||||||||||||||||
RECORDED INVESTMENT | RELATED ALLOWANCE | RECORDED INVESTMENT | RECORDED INVESTMENT | UNPAID PRINCIPAL BALANCE | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Commercial | $ | 496 | $ | 496 | $ | — | $ | 496 | $ | 517 | ||||||||||
Commercial loans secured by real estate | 162 | 31 | 16 | 178 | 209 | |||||||||||||||
Total impaired loans | $ | 658 | $ | 527 | $ | 16 | $ | 674 | $ | 726 |
The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated.
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
Average impaired balance: | ||||||||||||
Commercial | $ | 1,075 | $ | 718 | $ | 1,271 | ||||||
Commercial loans secured by real estate | 838 | 356 | 866 | |||||||||
Consumer | — | — | 9 | |||||||||
Average investment in impaired loans | $ | 1,913 | $ | 1,074 | $ | 2,146 | ||||||
Interest income recognized: | ||||||||||||
Commercial | $ | 28 | $ | 14 | $ | 10 | ||||||
Commercial loans secured by real estate | 34 | 8 | 17 | |||||||||
Consumer | — | — | — | |||||||||
Interest income recognized on a cash basis on impaired loans | $ | 62 | $ | 22 | $ | 27 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
Average impaired balance: | | | | | | | | | | | | | | | | | | | |
Commercial | | | | $ | 597 | | | | | $ | 228 | | | | | $ | 1,075 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 10 | | | | | | 12 | | | | | | 838 | | |
Average investment in impaired loans | | | | $ | 607 | | | | | $ | 240 | | | | | $ | 1,913 | | |
Interest income recognized: | | | | | | | | | | | | | | | | | | | |
Commercial | | | | $ | 30 | | | | | $ | — | | | | | $ | 12 | | |
Commercial loans secured by non-owner occupied real estate | | | | | — | | | | | | — | | | | | | — | | |
Interest income recognized on a cash basis on impaired loans | | | | $ | 30 | | | | | $ | — | | | | | $ | 12 | | |
The following table presents the classes of the commercial and commercial real estate loan portfolioportfolios summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system.
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||
PASS | SPECIAL MENTION | SUBSTANDARD | DOUBTFUL | TOTAL | ||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||
Commercial | $ | 156,449 | $ | 500 | $ | 1,999 | $ | 244 | $ | 159,192 | ||||||||||||||
Commercial loans secured by real estate | 450,019 | 11,828 | 1,634 | 299 | 463,780 | |||||||||||||||||||
Total | $ | 606,468 | $ | 12,328 | $ | 3,633 | $ | 543 | $ | 622,972 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||
PASS | SPECIAL MENTION | SUBSTANDARD | DOUBTFUL | TOTAL | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Commercial | $ | 168,116 | $ | 1,087 | $ | 1,830 | $ | 496 | $ | 171,529 | ||||||||||
Commercial loans secured by real estate | 436,318 | 7,497 | 2,767 | 16 | 446,598 | |||||||||||||||
Total | $ | 604,434 | $ | 8,584 | $ | 4,597 | $ | 512 | $ | 618,127 |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||
| | | PASS | | | SPECIAL MENTION | | | SUBSTANDARD | | | DOUBTFUL | | | TOTAL | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Commercial and industrial | | | | $ | 161,147 | | | | | $ | 853 | | | | | $ | 11,922 | | | | | $ | — | | | | | $ | 173,922 | | |
Commercial loans secured by owner occupied real estate | | | | | 88,942 | | | | | | 1,384 | | | | | | 1,329 | | | | | | — | | | | | | 91,655 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 362,027 | | | | | | — | | | | | | 1,600 | | | | | | 8 | | | | | | 363,635 | | |
Total | | | | $ | 612,116 | | | | | $ | 2,237 | | | | | $ | 14,851 | | | | | $ | 8 | | | | | $ | 629,212 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||
| | | PASS | | | SPECIAL MENTION | | | SUBSTANDARD | | | DOUBTFUL | | | TOTAL | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
Commercial and industrial | | | | $ | 154,510 | | | | | $ | 2,089 | | | | | $ | 1,680 | | | | | $ | — | | | | | $ | 158,279 | | |
Commercial loans secured by owner occupied real estate | | | | | 86,997 | | | | | | 3,769 | | | | | | 1,139 | | | | | | — | | | | | | 91,905 | | |
Commercial loans secured by non-owner occupied real estate | | | | | 349,954 | | | | | | 6,316 | | | | | | 262 | | | | | | 11 | | | | | | 356,543 | | |
Total | | | | $ | 591,461 | | | | | $ | 12,174 | | | | | $ | 3,081 | | | | | $ | 11 | | | | | $ | 606,727 | | |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||
| | | PERFORMING | | | NON-PERFORMING | | | TOTAL | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
Real estate – residential mortgage | | | | $ | 233,760 | | | | | $ | 1,479 | | | | | $ | 235,239 | | |
Consumer | | | | | 18,255 | | | | | | — | | | | | | 18,255 | | |
Total | | | | $ | 252,015 | | | | | $ | 1,479 | | | | | $ | 253,494 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||
| | | PERFORMING | | | NON-PERFORMING | | | TOTAL | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
Real estate – residential mortgage | | | | $ | 236,754 | | | | | $ | 1,210 | | | | | $ | 237,964 | | |
Consumer | | | | | 17,591 | | | | | | — | | | | | | 17,591 | | |
Total | | | | $ | 254,345 | | | | | $ | 1,210 | | | | | $ | 255,555 | | |
AT DECEMBER 31, 2017 | ||||||||
PERFORMING | NON- PERFORMING | |||||||
(IN THOUSANDS) | ||||||||
Real estate-mortgage | $ | 246,021 | $ | 1,257 | ||||
Consumer | 19,383 | — | ||||||
Total | $ | 265,404 | $ | 1,257 |
AT DECEMBER 31, 2016 | ||||||||
PERFORMING | NON- PERFORMING | |||||||
(IN THOUSANDS) | ||||||||
Real estate-mortgage | $ | 244,836 | $ | 929 | ||||
Consumer | 19,872 | — | ||||||
Total | $ | 264,708 | $ | 929 |
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans.
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||||||
CURRENT | 30 – 59 DAYS PAST DUE | 60 – 89 DAYS PAST DUE | 90 DAYS PAST DUE | TOTAL PAST DUE | TOTAL LOANS | 90 DAYS PAST DUE AND STILL ACCRUING | ||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||||||
Commercial | $ | 159,181 | $ | — | $ | — | $ | 11 | $ | 11 | $ | 159,192 | $ | — | ||||||||||||||
Commercial loans secured by real estate | 457,722 | 5,238 | 534 | 286 | 6,058 | 463,780 | — | |||||||||||||||||||||
Real estate-mortgage | 243,393 | 2,373 | 671 | 841 | 3,885 | 247,278 | — | |||||||||||||||||||||
Consumer | 19,262 | 76 | 45 | — | 121 | 19,383 | — | |||||||||||||||||||||
Total | $ | 879,558 | $ | 7,687 | $ | 1,250 | $ | 1,138 | $ | 10,075 | $ | 889,633 | $ | — |
AT DECEMBER 31, 2016 | ||||||||||||||||||||||||||||
CURRENT | 30 – 59 DAYS PAST DUE | 60 – 89 DAYS PAST DUE | 90 DAYS PAST DUE | TOTAL PAST DUE | TOTAL LOANS | 90 DAYS PAST DUE AND STILL ACCRUING | ||||||||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||||||||||
Commercial | $ | 171,292 | $ | 237 | $ | — | $ | — | $ | 237 | $ | 171,529 | $ | — | ||||||||||||||
Commercial loans secured by real estate | 446,477 | 121 | — | — | 121 | 446,598 | — | |||||||||||||||||||||
Real estate-mortgage | 241,802 | 2,856 | 610 | 497 | 3,963 | 245,765 | — | |||||||||||||||||||||
Consumer | 19,795 | 50 | 27 | — | 77 | 19,872 | — | |||||||||||||||||||||
Total | $ | 879,366 | $ | 3,264 | $ | 637 | $ | 497 | $ | 4,398 | $ | 883,764 | $ | — |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||||||||||||||
| | | CURRENT | | | 30 – 59 DAYS PAST DUE | | | 60 – 89 DAYS PAST DUE | | | 90 DAYS PAST DUE | | | TOTAL PAST DUE | | | TOTAL LOANS | | | 90 DAYS PAST DUE AND STILL ACCRUING | | |||||||||||||||||||||
| | | | | | | | | (IN THOUSANDS) | | |||||||||||||||||||||||||||||||||
Commercial and industrial | | | | $ | 173,922 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 173,922 | | | | | $ | — | | |
Commercial loans secured by owner occupied real estate | | | | �� | 91,538 | | | | | | 117 | | | | | | — | | | | | | — | | | | | | 117 | | | | | | 91,655 | | | | | | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 363,635 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 363,635 | | | | | | — | | |
Real estate – residential mortgage | | | | | 231,022 | | | | | | 2,331 | | | | | | 864 | | | | | | 1,022 | | | | | | 4,217 | | | | | | 235,239 | | | | | | — | | |
Consumer | | | | | 18,190 | | | | | | 42 | | | | | | 23 | | | | | | — | | | | | | 65 | | | | | | 18,255 | | | | | | — | | |
Total | | | | $ | 878,307 | | | | | $ | 2,490 | | | | | $ | 887 | | | | | $ | 1,022 | | | | | $ | 4,399 | | | | | $ | 882,706 | | | | | $ | — | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||||||||||||||
| | | CURRENT | | | 30 – 59 DAYS PAST DUE | | | 60 – 89 DAYS PAST DUE | | | 90 DAYS PAST DUE | | | TOTAL PAST DUE | | | TOTAL LOANS | | | 90 DAYS PAST DUE AND STILL ACCRUING | | |||||||||||||||||||||
| | | | | | | | | (IN THOUSANDS) | | |||||||||||||||||||||||||||||||||
Commercial and industrial | | | | $ | 158,279 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 158,279 | | | | | $ | — | | |
Commercial loans secured by owner occupied real estate | | | | | 91,905 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 91,905 | | | | | | — | | |
Commercial loans secured by non-owner occupied real estate | | | | | 355,963 | | | | | | 580 | | | | | | — | | | | | | — | | | | | | 580 | | | | | | 356,543 | | | | | | — | | |
Real estate – residential mortgage | | | | | 232,465 | | | | | | 3,651 | | | | | | 472 | | | | | | 1,376 | | | | | | 5,499 | | | | | | 237,964 | | | | | | — | | |
Consumer | | | | | 17,408 | | | | | | 153 | | | | | | 30 | | | | | | — | | | | | | 183 | | | | | | 17,591 | | | | | | — | | |
Total | | | | $ | 856,020 | | | | | $ | 4,384 | | | | | $ | 502 | | | | | $ | 1,376 | | | | | $ | 6,262 | | | | | $ | 862,282 | | | | | $ | — | | |
policies, and trends in policy, financial information, and documentation exceptions, and 3)(3) a general risk reserve which provides support for variance from our assessment of the previously listed qualitative factors, provides protection against credit risks resulting from other inherent risk factors contained in the Company’s loan portfolio, and recognizes the model and estimation risk associated with the specific and formula driven allowances. The qualitative factors used in the formula driven general reserves are evaluated quarterly (and revised if necessary) by the Company’s management to establish allocations which accommodate each of the listed risk factors.
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||
Non-accrual loans: | | | | | | | | | | | | | |
Commercial loans secured by non-owner occupied real estate | | | | $ | 8 | | | | | $ | 11 | | |
Real estate – residential mortgage | | | | | 1,479 | | | | | | 1,210 | | |
Total | | | | | 1,487 | | | | | | 1,221 | | |
Other real estate owned: | | | | | | | | | | | | | |
Commercial loans secured by owner occupied real estate | | | | | — | | | | | | 157 | | |
Real estate – residential mortgage | | | | | 37 | | | | | | — | | |
Total | | | | | 37 | | | | | | 157 | | |
TDR’s not in non-accrual | | | | | 815 | | | | | | — | | |
Total non-performing assets including TDR | | | | $ | 2,339 | | | | | $ | 1,378 | | |
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | | | | | 0.26% | | | | | | 0.16% | | |
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||
Non-accrual loans: | ||||||||
Commercial | $ | 353 | $ | 496 | ||||
Commercial loans secured by real estate | 1,406 | 178 | ||||||
Real estate-mortgage | 1,257 | 929 | ||||||
Total | 3,016 | 1,603 | ||||||
Other real estate owned: | ||||||||
Real estate-mortgage | 18 | 21 | ||||||
Total | 18 | 21 | ||||||
Total restructured loans not in non-accrual (TDR) | — | — | ||||||
Total non-performing assets including TDR | $ | 3,034 | $ | 1,624 | ||||
Total non-performing assets as a percent of loans, net of unearned income, and other real estate owned | 0.34 | % | 0.18 | % |
The Company had no loans past due 90 days or more for the periods presented which were accruing interest.
Loans in accrual status | | | # of Loans | | | Current Balance | | | Concession Granted | | ||||||
Commercial and industrial | | | | | 2 | | | | | $ | 816 | | | | Extension of maturity date with a below market interest rate | |
Loans in non-accrual status | | | | | ||||||||||||
Commercial loan secured by non-owner occupied real estate | | | | | 1 | | | | | | 8 | | | | Extension of maturity date | |
Loans in non-accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial | 2 | $ | 343 | Extension of maturity date | ||||||||
Commercial loan secured by real estate | 2 | 587 | Extension of maturity date |
The following table details the loans modified in TDRs atduring the year ended December 31, 20162018 (dollars in thousands).
Loans in non-accrual status | | | # of Loans | | | Current Balance | | | Concession Granted | | ||||||
Commercial loan secured by non-owner occupied real estate | | | | | 1 | | | | | $ | 11 | | | | Extension of maturity date | |
Loans in non-accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial | 2 | $ | 496 | Extension of maturity date | ||||||||
Commercial loan secured by real estate | 1 | 16 | Extension of maturity date |
The following table details the TDRs at December 31, 2015 (dollars in thousands).
Loans in non-accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial loan secured by real estate | 6 | $ | 4,320 | Extension of maturity date |
Loans in accrual status | # of Loans | Current Balance | Concession Granted | |||||||||
Commercial loan secured by real estate | 1 | $ | 156 | Extension of maturity date |
The following table sets forth, for the periods indicated, (1) the gross interest income that would have been recorded if non-accrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period, (2) the amount of interest income actually recorded on such loans, and (3) the net reduction in interest income attributable to such loans.
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
Interest income due in accordance with original terms | $ | 103 | $ | 118 | $ | 94 | ||||||
Interest income recorded | (75 | ) | — | — | ||||||||
Net reduction in interest income | $ | 28 | $ | 118 | $ | 94 |
Foreclosed assets acquired in settlement of loans carried at fair value less estimated costs to sell are included in the otherOther assets on the Consolidated Balance Sheets. As of December 31, 2017 and 2016,2019, a total of $18,000 and $21,000, respectively$37,000 of residential real estate foreclosed assets were included in otherOther assets. As of December 31, 2017,2018, there were no residential real estate foreclosed assets included in Other assets. As of December 31, 2019, the Company had initiated formal foreclosure procedures on $74,000$267,000 of consumer residential mortgages.
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
Land | | | | $ | 1,198 | | | | | $ | 1,198 | | |
Premises | | | | | 27,711 | | | | | | 27,160 | | |
Furniture and equipment | | | | | 8,632 | | | | | | 9,085 | | |
Leasehold improvements | | | | | 1,174 | | | | | | 461 | | |
Total at cost | | | | | 38,715 | | | | | | 37,904 | | |
Less: Accumulated depreciation and amortization | | | | | 24,072 | | | | | | 24,556 | | |
Premises and equipment, net | | | | $ | 14,643 | | | | | $ | 13,348 | | |
AT DECEMBER 31, | ||||||||||||
2017 | 2016 | |||||||||||
(IN THOUSANDS) | ||||||||||||
Land | $ | 1,198 | $ | 1,198 | ||||||||
Premises | 25,745 | 24,670 | ||||||||||
Furniture and equipment | 8,664 | 7,949 | ||||||||||
Leasehold improvements | 483 | 708 | ||||||||||
Total at cost | 36,090 | 34,525 | ||||||||||
Less: Accumulated depreciation and amortization | 23,356 | 22,831 | ||||||||||
Premises and equipment, net | $ | 12,734 | $ | 11,694 |
The Company recorded depreciation expense wasof $1.5 million for 2019 and 2018 and $1.7 million for 2017.
| | | YEAR ENDED DECEMBER 31, 2019 | | |||
Lease cost | | | | | | | |
Financing lease cost: | | | | | | | |
Amortization of right-of-use asset | | | | $ | 258 | | |
Interest expense | | | | | 117 | | |
Operating lease cost | | | | | 117 | | |
Total lease cost | | | | $ | 492 | | |
| | | OPERATING | | | FINANCING | | ||||||
Weighted-average remaining term (years) | | | | | 11.9 | | | | | | 17.1 | | |
Weighted-average discount rate | | | | | 3.46% | | | | | | 3.60% | | |
| | | OPERATING | | | FINANCING | | ||||||
Undiscounted cash flows due: | | | | | | | | | | | | | |
Within 1 year | | | | $ | 118 | | | | | $ | 296 | | |
After 1 year but within 2 years | | | | | 120 | | | | | | 275 | | |
After 2 years but within 3 years | | | | | 98 | | | | | | 277 | | |
After 3 years but within 4 years | | | | | 69 | | | | | | 274 | | |
After 4 years but within 5 years | | | | | 69 | | | | | | 236 | | |
After 5 years | | | | | 589 | | | | | | 3,007 | | |
Total undiscounted cash flows | | | | | 1,063 | | | | | | 4,365 | | |
Discount on cash flows | | | | | (198) | | | | | | (1,202) | | |
Total lease liabilities | | | | $ | 865 | | | | | $ | 3,163 | | |
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
Demand: | | | | | | | | | | | | | |
Non-interest bearing | | | | $ | 136,462 | | | | | $ | 150,627 | | |
Interest bearing | | | | | 177,767 | | | | | | 169,151 | | |
Savings | | | | | 95,933 | | | | | | 97,406 | | |
Money market | | | | | 208,343 | | | | | | 221,398 | | |
Certificates of deposit in denominations of $100,000 or more | | | | | 38,770 | | | | | | 34,841 | | |
Other time | | | | | 303,238 | | | | | | 275,748 | | |
Total deposits | | | | $ | 960,513 | | | | | $ | 949,171 | | |
|
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
Demand: | ||||||||
Non-interest bearing | $ | 183,603 | $ | 188,808 | ||||
Interest bearing | 170,343 | 163,801 | ||||||
Savings | 96,583 | 96,475 | ||||||
Money market | 238,119 | 258,978 | ||||||
Certificates of deposit in denominations of $100,000 or more | 30,297 | 27,427 | ||||||
Other time | 229,000 | 232,297 | ||||||
Total deposits | $ | 947,945 | $ | 967,786 |
Interest expense on deposits consisted of the following:
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
Interest bearing demand | $ | 638 | $ | 317 | $ | 199 | ||||||
Savings | 162 | 159 | 156 | |||||||||
Money market | 1,446 | 1,198 | 817 | |||||||||
Certificates of deposit in denominations of $100,000 or more | 319 | 283 | 266 | |||||||||
Other time | 3,690 | 3,443 | 3,314 | |||||||||
Total interest expense | $ | 6,255 | $ | 5,400 | $ | 4,752 |
YEAR: | | | OTHER TIME DEPOSITS | | | CERTIFICATES OF DEPOSIT OF $100,000 OR MORE | | | TOTAL | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
2020 | | | | $ | 143,337 | | | | | $ | 33,445 | | | | | $ | 176,782 | | |
2021 | | | | | 102,425 | | | | | | 4,818 | | | | | | 107,243 | | |
2022 | | | | | 19,740 | | | | | | 107 | | | | | | 19,847 | | |
2023 | | | | | 20,242 | | | | | | 400 | | | | | | 20,642 | | |
2024 | | | | | 11,473 | | | | | | — | | | | | | 11,473 | | |
2025 and after | | | | | 6,021 | | | | | | — | | | | | | 6,021 | | |
Total | | | | $ | 303,238 | | | | | $ | 38,770 | | | | | $ | 342,008 | | |
YEAR: | OTHER TIME DEPOSITS | CERTIFICATES OF DEPOSIT OF $100,000 OR MORE | ||||||
(IN THOUSANDS) | ||||||||
2018 | $ | 102,529 | $ | 24,194 | ||||
2019 | 47,133 | 2,295 | ||||||
2020 | 38,932 | 3,707 | ||||||
2021 | 18,796 | — | ||||||
2022 | 9,532 | — | ||||||
2023 and after | 12,078 | 101 | ||||||
Total | $ | 229,000 | $ | 30,297 |
The maturities on certificates of deposit greater than $100,000 or more as of December 31, 2017, are as follows:
MATURING IN: | (IN THOUSANDS) | |||
Three months or less | $ | 6,649 | ||
Over three through six months | 9,511 | |||
Over six through twelve months | 8,034 | |||
Over twelve months | 6,103 | |||
Total | $ | 30,297 |
The aggregate amount of time deposit accounts (including certificates of deposit) that meet or exceed the FDIC insurance limit of $250,000 at December 31, 20172019 and 20162018 are $49.7$69.0 million and $45.8$61.1 million, respectively.
| | | AT DECEMBER 31, 2019 | | |||||||||
| | | FEDERAL FUNDS PURCHASED | | | SHORT-TERM BORROWINGS | | ||||||
| | | (IN THOUSANDS, EXCEPT RATES) | | |||||||||
Balance | | | | $ | — | | | | | $ | 22,412 | | |
Maximum balance at any month end | | | | | — | | | | | | 49,615 | | |
Average balance during year | | | | | 58 | | | | | | 11,030 | | |
Average rate paid for the year | | | | | 3.04% | | | | | | 2.59% | | |
Interest rate on year-end balance | | | | | — | | | | | | 1.81 | | |
| | | AT DECEMBER 31, 2018 | | |||||||||
| | | FEDERAL FUNDS PURCHASED | | | SHORT-TERM BORROWINGS | | ||||||
| | | (IN THOUSANDS, EXCEPT RATES) | | |||||||||
Balance | | | | $ | — | | | | | $ | 41,029 | | |
Maximum balance at any month end | | | | | — | | | | | | 82,932 | | |
Average balance during year | | | | | 54 | | | | | | 33,073 | | |
Average rate paid for the year | | | | | 1.70% | | | | | | 2.17% | | |
Interest rate on year-end balance | | | | | — | | | | | | 2.62 | | |
| | | AT DECEMBER 31, 2017 | | |||||||||
| | | FEDERAL FUNDS PURCHASED | | | OTHER SHORT-TERM BORROWINGS | | ||||||
| | | (IN THOUSANDS, EXCEPT RATES) | | |||||||||
Balance | | | | $ | — | | | | | $ | 49,084 | | |
Maximum balance at any month end | | | | | — | | | | | | 51,760 | | |
Average balance during year | | | | | 54 | | | | | | 16,918 | | |
Average rate paid for the year | | | | | 0.95% | | | | | | 1.21% | | |
Interest rate on year-end balance | | | | | — | | | | | | 1.54 | | |
AT DECEMBER 31, 2017 | ||||||||
FEDERAL FUNDS PURCHASED | SHORT-TERM BORROWINGS | |||||||
(IN THOUSANDS, EXCEPT RATES) | ||||||||
Balance | $ | — | $ | 49,084 | ||||
Maximum indebtedness at any month end | 645 | 51,760 | ||||||
Average balance during year | 54 | 16,972 | ||||||
Average rate paid for the year | 0.95 | % | 1.21 | % | ||||
Interest rate on year-end balance | — | 1.54 |
AT DECEMBER 31, 2016 | ||||||||
FEDERAL FUNDS PURCHASED | SHORT-TERM BORROWINGS | |||||||
(IN THOUSANDS, EXCEPT RATES) | ||||||||
Balance | $ | — | $ | 12,754 | ||||
Maximum indebtedness at any month end | — | 56,686 | ||||||
Average balance during year | — | 9,030 | ||||||
Average rate paid for the year | — | 0.58 | % | |||||
Interest rate on year-end balance | — | 0.74 |
AT DECEMBER 31, 2015 | ||||||||
FEDERAL FUNDS PURCHASED | OTHER SHORT-TERM BORROWINGS | |||||||
(IN THOUSANDS, EXCEPT RATES) | ||||||||
Balance | $ | — | $ | 48,748 | ||||
Maximum indebtedness at any month end | — | 65,071 | ||||||
Average balance during year | — | 24,582 | ||||||
Average rate paid for the year | — | 0.35 | % | |||||
Interest rate on year-end balance | — | 0.43 |
| | | AT DECEMBER 31, 2019 | | |||||||||
MATURING | | | WEIGHTED AVERAGE YIELD | | | BALANCE | | ||||||
| | | (IN THOUSANDS, EXCEPT RATES) | | |||||||||
2020 | | | | | 1.75% | | | | | $ | 18,729 | | |
2021 | | | | | 2.28 | | | | | | 9,496 | | |
2022 | | | | | 2.21 | | | | | | 17,838 | | |
2023 | | | | | 2.48 | | | | | | 5,568 | | |
2024 | | | | | 1.86 | | | | | | 2,037 | | |
Total advances from FHLB | | | | | 2.08 | | | | | $ | 53,668 | | |
|
| | | AT DECEMBER 31, 2018 | | |||||||||
MATURING | | | WEIGHTED AVERAGE YIELD | | | BALANCE | | ||||||
| | | (IN THOUSANDS, EXCEPT RATES) | | |||||||||
2019 | | | | | 1.51% | | | | | $ | 12,500 | | |
2020 | | | | | 1.74 | | | | | | 16,729 | | |
2021 | | | | | 2.28 | | | | | | 9,496 | | |
2022 | | | | | 2.86 | | | | | | 6,996 | | |
2023 | | | | | 2.86 | | | | | | 1,000 | | |
Total advances from FHLB | | | | | 1.98 | | | | | $ | 46,721 | | |
AT DECEMBER 31, 2017 | ||||||||
MATURING | WEIGHTED AVERAGE YIELD | BALANCE | ||||||
(IN THOUSANDS, EXCEPT RATES) | ||||||||
2018 | 1.48 | $ | 12,000 | |||||
2019 | 1.51 | 12,500 | ||||||
2020 | 1.74 | 16,729 | ||||||
2021 | 1.75 | 5,000 | ||||||
Total advances from FHLB | 1.61 | $ | 46,229 |
AT DECEMBER 31, 2016 | ||||||||
MATURING | WEIGHTED AVERAGE YIELD | BALANCE | ||||||
(IN THOUSANDS, EXCEPT RATES) | ||||||||
2017 | 1.06 | $ | 12,000 | |||||
2018 | 1.48 | 12,000 | ||||||
2019 | 1.51 | 12,500 | ||||||
2020 | 1.59 | 8,042 | ||||||
2021 | 1.60 | 1,000 | ||||||
Total advances from FHLB | 1.37 | $ | 45,542 |
The Company’s subsidiary Bank is a member of the FHLB which provides this subsidiary with the opportunity to obtain short to longer-term advances based upon the Company’s investment in assets secured by one- to four-family residential real estate and certain types of CRE.commercial and commercial real estate loans. The rate on open repo plus advances, which are typically overnight borrowings, can change daily, while the raterates on the advances isare fixed until the maturity of the advance. All FHLB stock along with an interest in certain residential mortgage, commercial real estate, and CREcommercial and industrial loans with an aggregate statutory value equal to the amount of the advances, are pledged as collateral to the FHLB of Pittsburgh to support these borrowings. At December 31, 2017,2019, the Company had immediately available $371$358 million of overnight borrowing capability at the FHLB, $34$30 million of short-term borrowing availability at the Federal Reserve Bank and $35 million of unsecured federal funds lines with correspondent banks.
| | | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2019 USING | | |||||||||||||||||||||
| | | TOTAL | | | (LEVEL 1) | | | (LEVEL 2) | | | (LEVEL 3) | | ||||||||||||
Equity securities | | | | $ | 366 | | | | | $ | 366 | | | | | $ | — | | | | | $ | — | | |
Available for sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Agency | | | | | 5,116 | | | | | | — | | | | | | 5,116 | | | | | | — | | |
Municipal | | | | | 15,170 | | | | | | — | | | | | | 15,170 | | | | | | — | | |
Corporate bonds | | | | | 39,830 | | | | | | — | | | | | | 39,830 | | | | | | — | | |
U.S. Agency mortgage-backed securities | | | | | 81,633 | | | | | | — | | | | | | 81,633 | | | | | | — | | |
Fair value swap asset | | | | | 959 | | | | | | — | | | | | | 959 | | | | | | — | | |
Fair value swap liability | | | | | (959) | | | | | | — | | | | | | (959) | | | | | | — | | |
| | | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2018 USING | | |||||||||||||||||||||
| | | TOTAL | | | (LEVEL 1) | | | (LEVEL 2) | | | (LEVEL 3) | | ||||||||||||
Available for sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Agency | | | | $ | 7,529 | | | | | $ | — | | | | | $ | 7,529 | | | | | $ | — | | |
Municipal | | | | | 13,181 | | | | | | — | | | | | | 13,181 | | | | | | — | | |
Corporate bonds | | | | | 36,494 | | | | | | — | | | | | | 36,494 | | | | | | — | | |
U.S. Agency mortgage-backed securities | | | | | 89,527 | | | | | | — | | | | | | 89,527 | | | | | | — | | |
Fair value swap asset | | | | | 257 | | | | | | — | | | | | | 257 | | | | | | — | | |
Fair value swap liability | | | | | (257) | | | | | | — | | | | | | (257) | | | | | | — | | |
Assets and Liability MeasuredRecorded on a Recurring Basis:
Assets and liability measured at fair value on a recurring basis are summarized below (in thousands):
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2017 USING | ||||||||||||||||
TOTAL | (LEVEL 1) | (LEVEL 2) | (LEVEL 3) | |||||||||||||
U.S. Agency securities | $ | 6,572 | $ | — | $ | 6,572 | $ | — | ||||||||
Taxable municipal | 7,036 | — | 7,036 | — | ||||||||||||
Corporate bonds | 35,784 | — | 35,784 | — | ||||||||||||
U.S. Agency mortgage-backed securities | 79,746 | — | 79,746 | — | ||||||||||||
Fair value swap asset | 92 | — | — | 92 | ||||||||||||
Fair value swap liability | (92 | ) | — | — | (92 | ) |
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2016 USING | ||||||||||||||||
TOTAL | (LEVEL 1) | (LEVEL 2) | (LEVEL 3) | |||||||||||||
U.S. Agency securities | $ | 398 | $ | — | $ | 398 | $ | — | ||||||||
Taxable municipal | 3,622 | — | 3,622 | — | ||||||||||||
Corporate bonds | 33,873 | — | 33,873 | — | ||||||||||||
U.S. Agency mortgage-backed securities | 89,184 | — | 89,184 | — |
Assets Measured on a Non-recurring Basis:
Assets measured at fair value on a non-recurring basis are summarized below (in thousands):
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2017 USING | ||||||||||||||||
TOTAL | (LEVEL 1) | (LEVEL 2) | (LEVEL 3) | |||||||||||||
Assets: | ||||||||||||||||
Impaired loans | $ | 850 | $ | — | $ | — | $ | 850 | ||||||||
Other real estate owned | 18 | — | — | 18 |
FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2016 USING | ||||||||||||||||
TOTAL | (LEVEL 1) | (LEVEL 2) | (LEVEL 3) | |||||||||||||
Assets: | ||||||||||||||||
Impaired loans | $ | 147 | $ | — | $ | — | $ | 147 | ||||||||
Other real estate owned | 21 | — | — | 21 |
Loans considered impaired are loans for which, based on current information and events, it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are reported at the fair value of the underlying collateral if the repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on observable market data which at times are discounted. At December 31, 2017,2019, impaired loans with a carrying value of $1.8 million$263,000 were reduced by a specific valuation allowance totaling $909,000$8,000 resulting in a net fair value of $850,000.$255,000. At December 31, 2016,2018, impaired loans with a carrying value of $674,000$11,000 were reduced by a specific valuation allowance totaling $527,000$11,000 resulting in a net fair value of $147,000.
OREOzero.
December 31, 2017 | Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Wgtd Ave) | |||||||||||||
Impaired loans | $ | 850 | Appraisal of collateral(1) | Appraisal adjustments(2) | 21% to 75% (54)% | |||||||||||
Other real estate owned | 18 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) | 16% to 64% (29)% | ||||||||||||
Liquidation expenses(2) | 2% to 206% (79)% |
December 31, 2016 | Quantitative Information About Level 3 Fair Value Measurements | |||||||||||||||
Fair Value | Valuation Techniques | Unobservable Input | Range (Wgtd Ave) | |||||||||||||
Impaired loans | $ | 147 | Appraisal of collateral(1) | Appraisal adjustments(2) | 40% to 99% (45)% | |||||||||||
Other real estate owned | 21 | Appraisal of collateral(1),(3) | Appraisal adjustments(2) | 20% to 77% (42)% | ||||||||||||
Liquidation expenses(2) | 3% to 199% (37)% |
| | | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2019 USING | | |||||||||||||||||||||
| | | TOTAL | | | (LEVEL 1) | | | (LEVEL 2) | | | (LEVEL 3) | | ||||||||||||
Impaired loans | | | | $ | 255 | | | | | $ | — | | | | | $ | — | | | | | $ | 255 | | |
Other real estate owned | | | | | 37 | | | | | | — | | | | | | — | | | | | | 37 | | |
| | | FAIR VALUE MEASUREMENTS AT DECEMBER 31, 2018 USING | | |||||||||||||||||||||
| | | TOTAL | | | (LEVEL 1) | | | (LEVEL 2) | | | (LEVEL 3) | | ||||||||||||
Impaired loans | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Other real estate owned | | | | | 157 | | | | | | — | | | | | | — | | | | | | 157 | | |
| | | Quantitative Information About Level 3 Fair Value Measurements | | ||||||||||||
December 31, 2019 | | | Fair Value | | | Valuation Techniques | | | Unobservable Input | | | Range (Wgtd Ave) | | |||
Impaired loans | | | | $ | 255 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) | | | 0% to 100% (3)% | |
Other real estate owned | | | | | 37 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) Liquidation expenses | | | 0% to 57% (38)% 21% to 134% (30)% | |
| | | Quantitative Information About Level 3 Fair Value Measurements | | ||||||||||||
December 31, 2018 | | | Fair Value | | | Valuation Techniques | | | Unobservable Input | ��� | | Range (Wgtd Ave) | | |||
Impaired loans | | | | $ | — | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) | | | 100% (100)% | |
Other real estate owned | | | | | 157 | | | | Appraisal of collateral(1) | | | Appraisal adjustments(2) Liquidation expenses | | | 0% to 39% (8)% 21% to 195% (40)% | |
AT DECEMBER 31, 2017 | ||||||||||||||||||||
Carrying Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
FINANCIAL ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 34,188 | $ | 34,188 | $ | 34,188 | $ | — | $ | — | ||||||||||
Investment securities – AFS | 129,138 | 129,138 | — | 129,138 | — | |||||||||||||||
Investment securities – HTM | 38,752 | 38,811 | — | 35,859 | 2,952 | |||||||||||||||
Regulatory stock | 6,800 | 6,800 | 6,800 | — | — | |||||||||||||||
Loans held for sale | 3,125 | 3,173 | 3,173 | — | — | |||||||||||||||
Loans, net of allowance for loan loss and unearned income | 879,419 | 873,784 | — | — | 873,784 | |||||||||||||||
Accrued interest income receivable | 3,603 | 3,603 | 3,603 | — | — | |||||||||||||||
Bank owned life insurance | 37,860 | 37,860 | 37,860 | — | — | |||||||||||||||
Fair value swap asset | 92 | 92 | — | — | 92 | |||||||||||||||
FINANCIAL LIABILITIES: | ||||||||||||||||||||
Deposits with no stated maturities | $ | 688,648 | $ | 688,648 | $ | 688,648 | $ | — | $ | — | ||||||||||
Deposits with stated maturities | 259,297 | 260,153 | — | — | 260,153 | |||||||||||||||
Short-term borrowings | 49,084 | 49,084 | 49,084 | — | — | |||||||||||||||
All other borrowings | 66,617 | 69,684 | — | — | 69,684 | |||||||||||||||
Accrued interest payable | 1,754 | 1,754 | 1,754 | — | — | |||||||||||||||
Fair value swap liability | 92 | 92 | — | — | 92 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||
Carrying Value | Fair Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
FINANCIAL ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 34,073 | $ | 34,073 | $ | 34,073 | $ | — | $ | — | ||||||||||
Investment securities – AFS | 127,077 | 127,077 | — | 127,077 | — | |||||||||||||||
Investment securities – HTM | 30,665 | 30,420 | — | 27,473 | 2,947 | |||||||||||||||
Regulatory stock | 5,484 | 5,484 | 5,484 | — | — | |||||||||||||||
Loans held for sale | 3,094 | 3,158 | 3,158 | — | — | |||||||||||||||
Loans, net of allowance for loan loss and unearned income | 873,832 | 869,960 | — | — | 869,960 | |||||||||||||||
Accrued interest income receivable | 3,116 | 3,116 | 3,116 | — | — | |||||||||||||||
Bank owned life insurance | 37,903 | 37,903 | 37,903 | — | — | |||||||||||||||
FINANCIAL LIABILITIES: | ||||||||||||||||||||
Deposits with no stated maturities | $ | 708,062 | $ | 708,062 | $ | 708,062 | $ | — | $ | — | ||||||||||
Deposits with stated maturities | 259,724 | 261,446 | — | — | 261,446 | |||||||||||||||
Short-term borrowings | 12,754 | 12,754 | 12,754 | — | — | |||||||||||||||
All other borrowings | 65,891 | 69,348 | — | — | 69,348 | |||||||||||||||
Accrued interest payable | 1,640 | 1,640 | 1,640 | — | — |
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||
| | | Carrying Value | | | Fair Value | | | (Level 1) | | | (Level 2) | | | (Level 3) | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
FINANCIAL ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities – HTM | | | | $ | 39,936 | | | | | $ | 41,082 | | | | | $ | — | | | | | $ | 38,129 | | | | | $ | 2,953 | | |
Loans held for sale | | | | | 4,868 | | | | | | 4,970 | | | | | | 4,970 | | | | | | — | | | | | | — | | |
Loans, net of allowance for loan loss and unearned income | | | | | 873,427 | | | | | | 873,908 | | | | | | — | | | | | | — | | | | | | 873,908 | | |
FINANCIAL LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits with no stated maturities | | | | | 651,469 | | | | | | 631,023 | | | | | | — | | | | | | — | | | | | | 631,023 | | |
Deposits with stated maturities | | | | | 309,044 | | | | | | 310,734 | | | | | | — | | | | | | — | | | | | | 310,734 | | |
All other borrowings(1) | | | | | 74,134 | | | | | | 76,323 | | | | | | — | | | | | | — | | | | | | 76,323 | | |
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||
| | | Carrying Value | | | Fair Value | | | (Level 1) | | | (Level 2) | | | (Level 3) | | |||||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||||||||
FINANCIAL ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investment securities – HTM | | | | $ | 40,760 | | | | | $ | 40,324 | | | | | $ | — | | | | | $ | 37,398 | | | | | $ | 2,926 | | |
Loans held for sale | | | | | 847 | | | | | | 871 | | | | | | 871 | | | | | | — | | | | | | — | | |
Loans, net of allowance for loan loss and unearned income | | | | | 853,611 | | | | | | 836,122 | | | | | | — | | | | | | — | | | | | | 836,122 | | |
FINANCIAL LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits with no stated maturities | | | | | 671,666 | | | | | | 627,323 | | | | | | — | | | | | | — | | | | | | 627,323 | | |
Deposits with stated maturities | | | | | 277,505 | | | | | | 277,010 | | | | | | — | | | | | | — | | | | | | 277,010 | | |
All other borrowings(1) | | | | | 67,148 | | | | | | 69,692 | | | | | | — | | | | | | — | | | | | | 69,692 | | |
The fair value of cash and cash equivalents, regulatory stock, accrued interest income receivable, short-term borrowings, and accrued interest payable are equal to the current carrying value.
The fair value of investment securities is equal to the available quoted market price for similar securities. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the US Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Level 3 securities are valued by discounted cash flows using the US Treasury rate for the remaining term of the securities.
Loans held for sale are priced individually at market rates on the day that the loan is locked for commitment with an investor.
The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these calculations is based upon the treasury yield curve adjusted for non-interest operating costs, credit loss, current market prices and assumed prepayment risk.
The fair value of bank owned life insurance is based upon the cash surrender value of the underlying policies and matches the book value.
Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Deposits with no stated maturities have an estimated fair value equal to both the amount payable on demand and the recorded book balance.
The fair value of all other borrowings is based on the discounted value of contractual cash flows. The discount rates are estimated using rates currently offered for similar instruments with similar remaining maturities.
The fair values of the fair value swaps used forinclude advances from Federal Home Loan Bank, guaranteed junior subordinated deferrable interest rate risk management represents the amount the Company would have expected to receive or pay to terminate such agreements.
Commitments to extend creditdebentures, and standby letters of credit are financial instruments generally not subject to sale, and fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 16.
subordinated debt.
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
Current | | | | $ | 1,393 | | | | | $ | (988) | | | | | $ | 1,084 | | |
Deferred | | | | | 179 | | | | | | 2,665 | | | | | | 1,679 | | |
Change in corporate tax rate | | | | | — | | | | | | — | | | | | | 2,624 | | |
Income tax expense | | | | $ | 1,572 | | | | | $ | 1,677 | | | | | $ | 5,387 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
Current | $ | 1,044 | $ | 483 | $ | 1,455 | ||||||
Deferred | 1,679 | 414 | 888 | |||||||||
Change in corporate tax rate | 2,624 | — | — | |||||||||
Income tax expense | $ | 5,347 | $ | 897 | $ | 2,343 |
The reconciliation between the federal statutory tax rate and the Company’s effective consolidated income tax rate is as follows:
YEAR ENDED DECEMBER 31, | ||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||
AMOUNT | RATE | AMOUNT | RATE | AMOUNT | RATE | |||||||||||||||||||
(IN THOUSANDS, EXCEPT PERCENTAGES) | ||||||||||||||||||||||||
Income tax expense based on federal statutory rate | $ | 2,938 | 34.0 | % | $ | 1,090 | 34.0 | % | $ | 2,836 | 34.0 | % | ||||||||||||
Tax exempt income | (283 | ) | (3.3 | ) | (255 | ) | (7.9 | ) | (574 | ) | (6.9 | ) | ||||||||||||
Other | 68 | 0.8 | 62 | 1.9 | 81 | 1.0 | ||||||||||||||||||
Change in corporate tax rate | 2,624 | 30.4 | — | — | — | — | ||||||||||||||||||
Total expense for income taxes | $ | 5,347 | 61.9 | % | $ | 897 | 28.0 | % | $ | 2,343 | 28.1 | % |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||||||||||||||||||||
| | | AMOUNT | | | RATE | | | AMOUNT | | | RATE | | | AMOUNT | | | RATE | | ||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT PERCENTAGES) | | |||||||||||||||||||||||||||||||||
Income tax expense based on federal statutory rate | | | | $ | 1,596 | | | | | | 21.0% | | | | | $ | 1,983 | | | | | | 21.0% | | | | | $ | 2,951 | | | | | | 34.0% | | |
Tax exempt income | | | | | (131) | | | | | | (1.4) | | | | | | (131) | | | | | | (1.4) | | | | | | (283) | | | | | | (3.3) | | |
Other | | | | | 107 | | | | | | 1.1 | | | | | | (175) | | | | | | (1.8) | | | | | | 95 | | | | | | 1.0 | | |
Change in corporate tax rate | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,624 | | | | | | 30.4 | | |
Total expense for income taxes | | | | $ | 1,572 | | | | | | 20.7% | | | | | $ | 1,677 | | | | | | 17.8% | | | | | $ | 5,387 | | | | | | 62.1% | | |
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
DEFERRED TAX ASSETS: | | | | | | | | | | | | | |
Allowance for loan losses | | | | $ | 1,949 | | | | | $ | 1,821 | | |
Unfunded commitment reserve | | | | | 215 | | | | | | 187 | | |
Unrealized investment security losses | | | �� | | — | | | | | | 374 | | |
Premises and equipment | | | | | 1,129 | | | | | | 1,056 | | |
Accrued pension obligation | | | | | 1,093 | | | | | | 144 | | |
Other | | | | | 230 | | | | | | 255 | | |
Total tax assets | | | | | 4,616 | | | | | | 3,837 | | |
DEFERRED TAX LIABILITIES: | | | | | | | | | | | | | |
Investment accretion | | | | | (82) | | | | | | (90) | | |
Unrealized investment security gains | | | | | (456) | | | | | | — | | |
Other | | | | | (102) | | | | | | (110) | | |
Total tax liabilities | | | | | (640) | | | | | | (200) | | |
Net deferred tax asset | | | | $ | 3,976 | | | | | $ | 3,637 | | |
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
DEFERRED TAX ASSETS: | ||||||||
Allowance for loan losses | $ | 2,145 | $ | 3,377 | ||||
Unfunded commitment reserve | 192 | 303 | ||||||
Unrealized investment security losses | 87 | 87 | ||||||
Premises and equipment | 804 | 1,542 | ||||||
Accrued pension obligation | 948 | 2,582 | ||||||
Alternative minimum tax credits | 1,724 | 2,110 | ||||||
Other | 219 | 895 | ||||||
Total tax assets | 6,119 | 10,896 | ||||||
DEFERRED TAX LIABILITIES: | ||||||||
Investment accretion | (33 | ) | (24 | ) | ||||
Other | (123 | ) | (217 | ) | ||||
Total tax liabilities | (156 | ) | (241 | ) | ||||
Net deferred tax asset | $ | 5,963 | $ | 10,655 |
At December 31, 20172019 and 2016,2018, the Company had no valuation allowance established against its deferred tax assets as we believe the Company will generate sufficient future taxable income to fully utilize alternative minimumthese assets.
credits that are not used to reduce regular taxes are eligible for a 50% refund in 2018 to 2020 and a 100% refund in 2021. Due to this change, the AMT tax credit has been fully utilized as of December 31, 2019. As of December 31, 2018, the AMT tax credit was reclassified to other assets and amounted to approximately $287,000.
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
Unrealized (gains) losses recognized in comprehensive income | | | | $ | (830) | | | | | $ | 288 | | |
Pension obligation of the defined benefit plan not yet recognized in income | | | | | 1,348 | | | | | | 51 | | |
Deferred provision for income taxes | | | | | (179) | | | | | | (2,665) | | |
Net increase (decrease) | | | | $ | 339 | | | | | $ | (2,326) | | |
|
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
Unrealized gains recognized in comprehensive income | $ | 53 | $ | 507 | ||||
Pension obligation of the defined benefit plan not yet recognized in income | (442 | ) | 1,569 | |||||
Deferred provision for income taxes | (1,679 | ) | (414 | ) | ||||
Change in corporate tax rate | (2,624 | ) | — | |||||
Net increase (decrease) | $ | (4,692 | ) | $ | 1,662 |
The Company has AMT credit carryforwards of approximately $1.7 million at December 31, 2017. These credits have an indefinite carryforward period.
PLAN:
at $1.2$1.3 million and is limited to 10% of the plan’s assets), mutual funds, and short-term cash equivalent instruments. The following actuarial tables are based upon data provided by an independent third party as of December 31, 2017.
2019.
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
CHANGE IN BENEFIT OBLIGATION: | | | | | | | | | | | | | |
Benefit obligation at beginning of year | | | | $ | 41,094 | | | | | $ | 41,013 | | |
Service cost | | | | | 1,470 | | | | | | 1,482 | | |
Interest cost | | | | | 1,569 | | | | | | 1,273 | | |
Actuarial loss | | | | | 7,758 | | | | | | 823 | | |
Special/contractual termination benefits | | | | | — | | | | | | 63 | | |
Benefits paid | | | | | (2,330) | | | | | | (3,560) | | |
Benefit obligation at end of year | | | | | 49,561 | | | | | | 41,094 | | |
CHANGE IN PLAN ASSETS: | | | | | | | | | | | | | |
Fair value of plan assets at beginning of year | | | | | 38,478 | | | | | | 37,100 | | |
Actual return on plan assets | | | | | 5,483 | | | | | | (1,062) | | |
Employer contributions | | | | | 3,200 | | | | | | 6,000 | | |
Benefits paid | | | | | (2,330) | | | | | | (3,560) | | |
Fair value of plan assets at end of year | | | | | 44,831 | | | | | | 38,478 | | |
Funded status of the plan | | | | $ | (4,730) | | | | | $ | (2,616) | | |
|
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
CHANGE IN BENEFIT OBLIGATION: | ||||||||
Benefit obligation at beginning of year | $ | 38,637 | $ | 33,117 | ||||
Service cost | 1,516 | 1,468 | ||||||
Interest cost | 1,292 | 1,430 | ||||||
Actuarial (gain) loss | 1,588 | 4,578 | ||||||
Benefits paid | (2,020 | ) | (1,956 | ) | ||||
Benefit obligation at end of year | 41,013 | 38,637 | ||||||
CHANGE IN PLAN ASSETS: | ||||||||
Fair value of plan assets at beginning of year | 30,671 | 28,429 | ||||||
Actual return on plan assets | 4,949 | 348 | ||||||
Employer contributions | 3,500 | 3,850 | ||||||
Benefits paid | (2,020 | ) | (1,956 | ) | ||||
Fair value of plan assets at end of year | 37,100 | 30,671 | ||||||
Funded status of the plan | $ | (3,913 | ) | $ | (7,966 | ) |
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
AMOUNTS NOT YET RECOGNIZED AS A COMPONENT OF NET PERIODIC PENSION COST: | ||||||||
Amounts recognized in accumulated other comprehensive loss consists of: | ||||||||
Net actuarial loss | $ | 15,326 | $ | 17,602 | ||||
Total | $ | 15,326 | $ | 17,602 |
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
ACCUMULATED BENEFIT OBLIGATION: | ||||||||
Accumulated benefit obligation | $ | 37,594 | $ | 35,153 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
AMOUNTS NOT YET RECOGNIZED AS A COMPONENT OF NET PERIODIC PENSION COST: | | | | | | | | | | | | | |
Amounts recognized in accumulated other comprehensive loss consists of: | | | | | | | | | | | | | |
Net actuarial loss | | | | $ | 22,113 | | | | | $ | 18,461 | | |
Total | | | | $ | 22,113 | | | | | $ | 18,461 | | |
|
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
ACCUMULATED BENEFIT OBLIGATION: | | | | | | | | | | | | | |
Accumulated benefit obligation | | | | $ | 45,501 | | | | | $ | 37,695 | | |
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
WEIGHTED AVERAGE ASSUMPTIONS: | | | | | | | | | | | | | |
Discount rate | | | | | 3.20% | | | | | | 4.28% | | |
Salary scale | | | | | 2.50 | | | | | | 2.50 | | |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST: | | | | | | | | | | | | | | | | | | | |
Service cost | | | | $ | 1,470 | | | | | $ | 1,482 | | | | | $ | 1,516 | | |
Interest cost | | | | | 1,569 | | | | | | 1,273 | | | | | | 1,292 | | |
Expected return on plan assets | | | | | (3,025) | | | | | | (2,798) | | | | | | (2,539) | | |
Special termination benefit liability | | | | | — | | | | | | 63 | | | | | | — | | |
Recognized net actuarial loss | | | | | 1,649 | | | | | | 1,548 | | | | | | 1,454 | | |
Net periodic pension cost | | | | $ | 1,663 | | | | | $ | 1,568 | | | | | $ | 1,723 | | |
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
WEIGHTED AVERAGE ASSUMPTIONS: | ||||||||
Discount rate | 3.63 | % | 4.12 | % | ||||
Salary scale | 2.50 | 2.50 |
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE LOSS | | | | | | | | | | | | | | | | | | | |
Net (gain) loss | | | | $ | 5,300 | | | | | $ | 4,683 | | | | | $ | (822) | | |
Recognized loss | | | | | (1,649) | | | | | | (1,548) | | | | | | (1,454) | | |
Total recognized in other comprehensive loss before tax effect | | | | $ | 3,651 | | | | | $ | 3,135 | | | | | $ | (2,276) | | |
Total recognized in net benefit cost and other comprehensive loss before tax effect | | | | $ | 5,314 | | | | | $ | 4,703 | | | | | $ | (553) | | |
|
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
COMPONENTS OF NET PERIODIC BENEFIT COST: | ||||||||||||
Service cost | $ | 1,516 | $ | 1,468 | $ | 1,557 | ||||||
Interest cost | 1,292 | 1,430 | 1,341 | |||||||||
Expected return on plan assets | (2,539 | ) | (2,275 | ) | (2,130 | ) | ||||||
Recognized net actuarial loss | 1,454 | 1,333 | 1,386 | |||||||||
Net periodic pension cost | $ | 1,723 | $ | 1,956 | $ | 2,154 |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE LOSS | ||||||||||||
Net (gain) loss | $ | (822 | ) | $ | 6,505 | $ | 1,221 | |||||
Recognized loss | (1,454 | ) | (1,333 | ) | (1,386 | ) | ||||||
Total recognized in other comprehensive loss before tax effect | $ | (2,276 | ) | $ | 5,172 | $ | (165 | ) | ||||
Total recognized in net benefit cost and other comprehensive loss before tax effect | $ | (553 | ) | $ | 7,128 | $ | 1,989 |
The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is $1,561,000.
$2,499,000.
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
WEIGHTED AVERAGE ASSUMPTIONS: | | | | | | | | | | | | | | | | | | | |
Discount rate | | | | | 4.28% | | | | | | 3.63% | | | | | | 4.12% | | |
Expected return on plan assets | | | | | 7.50 | | | | | | 7.50 | | | | | | 7.75 | | |
Rate of compensation increase | | | | | 2.50 | | | | | | 2.50 | | | | | | 2.50 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
WEIGHTED AVERAGE ASSUMPTIONS: | ||||||||||||
Discount rate | 4.12 | % | 4.20 | % | 4.00 | % | ||||||
Expected return on plan assets | 7.75 | 7.75 | 8.00 | |||||||||
Rate of compensation increase | 2.50 | 2.50 | 2.50 |
The Company has assumed a 7.75%7.50% long-term expected return on plan assets. This assumption was based upon the plan’s historical investment performance over a longer-term period of 15 years combined with the plan’s investment objective of balanced growth and income. Additionally, this assumption also incorporates a targeted range for equity securities of approximately 60% of plan assets.
PLAN ASSETS:
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
ASSET CATEGORY: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | | 1% | | | | | | 49% | | |
Domestic equities | | | | | 8 | | | | | | 7 | | |
Mutual funds/ETFs | | | | | 82 | | | | | | 42 | | |
International equities | | | | | 1 | | | | | | — | | |
Corporate bonds | | | | | 8 | | | | | | 2 | | |
Total | | | | | 100% | | | | | | 100% | | |
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
ASSET CATEGORY: | ||||||||
Cash and cash equivalents | —% | 8 | % | |||||
Domestic equities | 12 | 10 | ||||||
Mutual funds/ETFs | 82 | 76 | ||||||
International equities | 4 | 1 | ||||||
Corporate bonds | 2 | 5 | ||||||
Total | 100 | % | 100 | % |
The major categories of assets in the Company’s Pension Plan as of yearendyear-end are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value.
| | | YEAR ENDED DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
Level 1: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 186 | | | | | $ | 18,939 | | |
Domestic equities | | | | | 3,782 | | | | | | 2,841 | | |
Mutual funds/ETFs | | | | | 36,469 | | | | | | 15,808 | | |
International equities | | | | | 620 | | | | | | — | | |
Level 2: | | | | | | | | | | | | | |
Corporate bonds | | | | | 3,774 | | | | | | 890 | | |
Total fair value of plan assets | | | | $ | 44,831 | | | | | $ | 38,478 | | |
YEAR ENDED DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
Level 1: | ||||||||
Cash and cash equivalents | $ | 44 | $ | 2,454 | ||||
Domestic equities | 4,340 | 3,067 | ||||||
Mutual funds/ETFs | 30,470 | 23,310 | ||||||
International equities | 1,322 | 307 | ||||||
Level 2: | ||||||||
Corporate bonds | 924 | 1,533 | ||||||
Total fair value of plan assets | $ | 37,100 | $ | 30,671 |
Cash and cash equivalents may include uninvested cash balances along with money market mutual funds, treasury bills, or other assets normally categorized as cash equivalents. Domestic equities may
market value of the plan assets (at December 31, 2017, 3.4%2019, 2.8% of the plan assets were invested in ASRV common stock). This asset mix is intended to ensure that there is a steady stream of cash from maturing investments to fund benefit payments.
YEAR: | | | ESTIMATED FUTURE BENEFIT PAYMENTS | | |||
| | | (IN THOUSANDS) | | |||
2020 | | | | $ | 4,096 | | |
2021 | | | | | 3,910 | | |
2022 | | | | | 4,317 | | |
2023 | | | | | 3,949 | | |
2024 | | | | | 4,205 | | |
Years 2025 – 2029 | | | | | 15,975 | | |
YEAR: | ESTIMATED FUTURE BENEFIT PAYMENTS | |||||||
(IN THOUSANDS) | ||||||||
2018 | $ | 2,698 | ||||||
2019 | 2,692 | |||||||
2020 | 2,817 | |||||||
2021 | 2,832 | |||||||
2022 | 3,116 | |||||||
Years 2023 – 2027 | 14,988 |
401(k) PLAN:
2019.
The Company’s obligation for future minimum lease payments on operating leases at December 31, 2017, is as follows:
YEAR: | FUTURE MINIMUM LEASE PAYMENTS | |||
(IN THOUSANDS) | ||||
2018 | $ | 445 | ||
2019 | 277 | |||
2020 | 254 | |||
2021 | 254 | |||
2022 | 256 | |||
2023 and thereafter | 1,558 |
In addition to the amounts set forth above, certain of the leases require payments by the Company for taxes, insurance, and maintenance. Rent expense included in total non-interest expense amounted to $571,000, $767,000 and $821,000, in 2017, 2016, and 2015, respectively.
real estate.
2018.
SBLF:
On August 11, 2011, pursuant to the Small Business Lending Fund (SBLF), the Company issued and sold to the US Treasury 21,000 shares of its Senior Non-Cumulative Perpetual Preferred Stock, Series E (Series E Preferred Stock) for the aggregate proceeds of $21 million. The SBLF was a voluntary program sponsored by the US Treasury that encouraged small business lending by providing capital to qualified community banks at
favorable rates. The Company used the proceeds from the Series E Preferred Stock issued to the US Treasury to repurchase all 21,000 shares of its outstanding preferred shares previously issued to the US Treasury under the Capital Purchase Program.
On January 27, 2016, we redeemed the Series E Preferred Stock, at a redemption price of 100% of the liquidation amount plus accrued but unpaid dividends, after receiving approval of our federal banking regulator and the US Treasury.
2017.
| | | YEAR ENDED DECEMBER 31 | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||||||||||||||||||||
| | | SHARES | | | WEIGHTED AVERAGE EXERCISE PRICE | | | SHARES | | | WEIGHTED AVERAGE EXERCISE PRICE | | | SHARES | | | WEIGHTED AVERAGE EXERCISE PRICE | | ||||||||||||||||||
Outstanding at beginning of year | | | | | 336,313 | | | | | $ | 2.91 | | | | | | 360,721 | | | | | $ | 2.85 | | | | | | 417,566 | | | | | $ | 2.76 | | |
Granted | | | | | 7,000 | | | | | | 4.19 | | | | | | 5,000 | | | | | | 4.22 | | | | | | 17,500 | | | | | | 3.96 | | |
Exercised | | | | | (40,917) | | | | | | 2.45 | | | | | | (24,408) | | | | | | 2.49 | | | | | | (64,112) | | | | | | 2.49 | | |
Forfeited | | | | | (5,748) | | | | | | 2.44 | | | | | | (5,000) | | | | | | 1.92 | | | | | | (10,233) | | | | | | 3.10 | | |
Outstanding at end of year | | | | | 296,648 | | | | | | 3.02 | | | | | | 336,313 | | | | | | 2.91 | | | | | | 360,721 | | | | | | 2.85 | | |
Exercisable at end of year | | | | | 282,565 | | | | | | 2.96 | | | | | | 307,814 | | | | | | 2.86 | | | | | | 308,301 | | | | | | 2.79 | | |
Weighted average fair value of options granted in current year | | | | | | | | | | $ | 0.62 | | | | | | | | | | | $ | 0.56 | | | | | | | | | | | $ | 1.12 | | |
YEAR ENDED DECEMBER 31 | ||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||
SHARES | WEIGHTED AVERAGE EXERCISE PRICE | SHARES | WEIGHTED AVERAGE EXERCISE PRICE | SHARES | WEIGHTED AVERAGE EXERCISE PRICE | |||||||||||||||||||
Outstanding at beginning of year | 417,566 | $ | 2.76 | 470,449 | $ | 2.74 | 559,909 | $ | 2.66 | |||||||||||||||
Granted | 17,500 | 3.96 | 54,000 | 3.03 | 32,500 | 2.96 | ||||||||||||||||||
Exercised | (64,112 | ) | 2.49 | (32,661 | ) | 2.27 | (75,923 | ) | 2.07 | |||||||||||||||
Forfeited | (10,233 | ) | 3.10 | (74,222 | ) | 3.04 | (46,037 | ) | 3.04 | |||||||||||||||
Outstanding at end of year | 360,721 | 2.85 | 417,566 | 2.76 | 470,449 | 2.74 | ||||||||||||||||||
Exercisable at end of year | 308,301 | 2.79 | 328,062 | 2.69 | 336,555 | 2.58 | ||||||||||||||||||
Weighted average fair value of options granted in current year | $ | 1.12 | $ | 0.93 | $ | 0.67 |
A total of 308,301282,565 of the 360,721296,648 options outstanding at December 31, 2017,2019, are exercisable and have exercise prices between $1.53$1.70 and $4.00,$4.22, with a weighted average exercise price of $2.85$2.96 and a weighted average remaining contractual life of 5.034.03 years. The remaining 52,42014,083 options that are not yet exercisable have exercise prices between $2.96$3.90 and $4.00,$4.22, with a weighted average exercise price of $3.22$4.14 and a weighted average remaining contractual life of 7.908.64 years. The fair value of each option grant is estimated on the date of grant using the Binomial or Black-Scholes option pricing model with the following assumptions used for grants in 2019, 2018, and 2017.
| | | YEAR ENDED DECEMBER 31 | | ||||||||||||
PRICING MODEL ASSUMPTION RANGES | | | 2019 | | | 2018 | | | 2017 | | ||||||
Risk-free interest rate | | | | | 2.65% | | | | | | 3.13% | | | | 2.23 – 2.38% | |
Expected lives in years | | | | | 10 | | | | | | 10 | | | | 10 | |
Expected volatility | | | | | 15.75% | | | | | | 15.59% | | | | 28.09 – 28.84% | |
Expected dividend rate | | | | | 1.91% | | | | | | 1.90% | | | | 1.50% | |
YEAR ENDED DECEMBER 31 | ||||||||||||
BLACK-SCHOLES ASSUMPTION RANGES | 2017 | 2016 | 2015 | |||||||||
Risk-free interest rate | 2.23 – 2.38% | 1.56 – 1.73% | 1.97% | |||||||||
Expected lives in years | 10 | 10 | 10 | |||||||||
Expected volatility | 28.09 – 28.84% | 29% | 22% | |||||||||
Expected dividend rate | 1.50% | 1.35-1.81% | 1.35% |
| | | YEAR ENDING DECEMBER 31, 2019 | | | YEAR ENDING DECEMBER 31, 2018 | | | YEAR ENDING DECEMBER 31, 2017 | | |||||||||||||||||||||||||||||||||||||||||||||
| | | Net Unrealized Gains and Losses on Investment Securities AFS(1) | | | Defined Benefit Pension Items(1) | | | Total(1) | | | Net Unrealized Gains and Losses on Investment Securities AFS(1) | | | Defined Benefit Pension Items(1) | | | Total(1) | | | Net Unrealized Gains and Losses on Investment Securities AFS(1) | | | Defined Benefit Pension Items(1) | | | Total(1) | | |||||||||||||||||||||||||||
Beginning balance | | | | $ | (1,409) | | | | | $ | (12,816) | | | | | $ | (14,225) | | | | | $ | (327) | | | | | $ | (12,623) | | | | | $ | (12,950) | | | | | $ | (171) | | | | | $ | (11,406) | | | | | $ | (11,577) | | |
Reclassification of certain income tax effects from accumulated other comprehensive loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (53) | | | | | | (2,078) | | | | | | (2,131) | | |
Other comprehensive income (loss) before reclassifications | | | | | 3,217 | | | | | | (6,373) | | | | | | (3,156) | | | | | | (1,429) | | | | | | (1,416) | | | | | | (2,845) | | | | | | (27) | | | | | | 1,071 | | | | | | 1,044 | | |
Amounts reclassified from accumulated other comprehensive loss | | | | | (93) | | | | | | 1,303 | | | | | | 1,210 | | | | | | 347 | | | | | | 1,223 | | | | | | 1,570 | | | | | | (76) | | | | | | (210) | | | | | | (286) | | |
Net current period other comprehensive income (loss) | | | | | 3,124 | | | | | | (5,070) | | | | | | (1,946) | | | | | | (1,082) | | | | | | (193) | | | | | | (1,275) | | | | | | (156) | | | | | | (1,217) | | | | | | (1,373) | | |
Ending balance | | | | $ | 1,715 | | | | | $ | (17,886) | | | | | $ | (16,171) | | | | | $ | (1,409) | | | | | $ | (12,816) | | | | | $ | (14,225) | | | | | $ | (327) | | | | | $ | (12,623) | | | | | $ | (12,950) | | |
YEAR ENDING DECEMBER 31, 2017 | YEAR ENDING DECEMBER 31, 2016 | |||||||||||||||||||||||
Net Unrealized Gains and Losses on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | Net Unrealized Gains and Losses on Investment Securities AFS(1) | Defined Benefit Pension Items(1) | Total(1) | |||||||||||||||||||
Beginning balance | $ | (171 | ) | $ | (11,406 | ) | $ | (11,577 | ) | $ | 808 | $ | (8,363 | ) | $ | (7,555 | ) | |||||||
Reclassification of certain income tax effects from accumulated other comprehensive loss | (53 | ) | (2,078 | ) | (2,131 | ) | — | — | — | |||||||||||||||
Other comprehensive income (loss) before reclassifications | (27 | ) | 1,071 | 1,044 | (862 | ) | (3,563 | ) | (4,425 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | (76 | ) | (210 | ) | (286 | ) | (117 | ) | 520 | 403 | ||||||||||||||
Net current period other comprehensive loss | (156 | ) | (1,217 | ) | (1,373 | ) | (979 | ) | (3,043 | ) | (4,022 | ) | ||||||||||||
Ending balance | $ | (327 | ) | $ | (12,623 | ) | $ | (12,950 | ) | $ | (171 | ) | $ | (11,406 | ) | $ | (11,577 | ) |
| | | Amount reclassified from accumulated other comprehensive loss(1) | | | |||||||||||||||||
Details about accumulated other comprehensive loss components | | | YEAR ENDING DECEMBER 31, 2019 | | | YEAR ENDING DECEMBER 31, 2018 | | | YEAR ENDING DECEMBER 31, 2017 | | | Affected line item in the statement of operations | | |||||||||
Realized (gains) losses on sale of securities | | | | $ | (118) | | | | | $ | 439 | | | | | $ | (115) | | | | Net realized (gains) losses on investment securities | |
| | | | | 25 | | | | | | (92) | | | | | | 39 | | | | Provision for income taxes | |
| | | | $ | (93) | | | | | $ | 347 | | | | | $ | (76) | | | | Net of tax | |
Amortization of estimated defined benefit pension plan loss(2) | | | | $ | 1,649 | | | | | $ | 1,548 | | | | | $ | (318) | | | | Other expense | |
| | | | | (346) | | | | | | (325) | | | | | | 108 | | | | Provision for income taxes | |
| | | | $ | 1,303 | | | | | $ | 1,223 | | | | | $ | (210) | | | | Net of tax | |
Total reclassifications for the period | | | | $ | 1,210 | | | | | $ | 1,570 | | | | | $ | (286) | | | | Net income | |
Amount reclassified from accumulated other comprehensive loss(1) | ||||||||||||
Details about accumulated other comprehensive loss components | YEAR ENDING DECEMBER 31, 2017 | YEAR ENDING DECEMBER 31, 2016 | Affected line item in the statement of operations | |||||||||
Unrealized gains and losses on sale of securities | $ | (115 | ) | $ | (177 | ) | Net realized gains on investment securities | |||||
39 | 60 | Provision for income taxes | ||||||||||
$ | (76 | ) | $ | (117 | ) | Net of tax | ||||||
Amortization of defined benefit items(2) Recognized net actuarial loss | $ | (318 | ) | $ | 788 | Salaries and employee benefits | ||||||
108 | (268 | ) | Provision for income taxes | |||||||||
$ | (210 | ) | $ | 520 | Net of tax | |||||||
Total reclassifications for the period | $ | (286 | ) | $ | 403 | Net income |
intermediary for its customers, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. TheFor the years ended December 31, 2019 and 2018, the Company received $139,000$120,000 and $25,000, respectively, in fees on the interest rate swap transactions.
DECEMBER 31, 2019 | | ||||||||||||||||||||||||
| | | HEDGE TYPE | | | AGGREGATE NOTIONAL AMOUNT | | | WEIGHTED AVERAGE RATE RECEIVED/(PAID) | | | REPRICING FREQUENCY | | | INCREASE (DECREASE) IN INTEREST EXPENSE | | |||||||||
Swap assets | | | Fair Value | | | | $ | 31,668 | | | | | | 4.44% | | | | Monthly | | | | $ | (18) | | |
Swap liabilities | | | Fair Value | | | | | (31,668) | | | | | | (4.44) | | | | Monthly | | | | | 18 | | |
Net exposure | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
DECEMBER 31, 2018 | | ||||||||||||||||||||||||
| | | HEDGE TYPE | | | AGGREGATE NOTIONAL AMOUNT | | | WEIGHTED AVERAGE RATE RECEIVED/(PAID) | | | REPRICING FREQUENCY | | | INCREASE (DECREASE) IN INTEREST EXPENSE | | |||||||||
Swap assets | | | Fair Value | | | | $ | 19,825 | | | | | | 4.31% | | | | Monthly | | | | $ | (41) | | |
Swap liabilities | | | Fair Value | | | | | (19,825) | | | | | | (4.31) | | | | Monthly | | | | | 41 | | |
Net exposure | | | | | | | | — | | | | | | — | | | | | | | | | — | | |
HEDGE TYPE | AGGREGATE NOTIONAL AMOUNT | WEIGHTED AVERAGE RATE RECEIVED/ (PAID) | REPRICING FREQUENCY | INCREASE (DECREASE) IN INTEREST EXPENSE | ||||||||||||||||
SWAP ASSETS | FAIR VALUE | $ | 16,948,686 | 3.47 | % | MONTHLY | $ | (110,778 | ) | |||||||||||
SWAPLIABILITIES | FAIR VALUE | (16,948,686 | ) | (3.47 | ) | MONTHLY | 110,778 | |||||||||||||
NET EXPOSURE | — | — | — |
The Company monitors and controls all derivative products with a comprehensive Board of DirectorDirectors approved hedging policy.Hedging Policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps, interest rate caps/floors, and swaptions. All hedge transactions must be approved in
The contribution of the major business segments to the Consolidated ResultsStatements of Operations were as follows:
| | | YEAR ENDED DECEMBER 31, 2019 | | |||||||||||||||||||||
| | | COMMUNITY BANKING | | | WEALTH MANAGEMENT | | | INVESTMENT/ PARENT | | | TOTAL | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
Net interest income | | | | $ | 40,865 | | | | | $ | 81 | | | | | $ | (5,504) | | | | | $ | 35,442 | | |
Provision for loan loss | | | | | 800 | | | | | | — | | | | | | — | | | | | | 800 | | |
Non-interest income | | | | | 5,407 | | | | | | 9,736 | | | | | | (370) | | | | | | 14,773 | | |
Non-interest expense | | | | | 31,856 | | | | | | 7,340 | | | | | | 2,619 | | | | | | 41,815 | | |
Income (loss) before income taxes | | | | | 13,616 | | | | | | 2,477 | | | | | | (8,493) | | | | | | 7,600 | | |
Income tax expense (benefit) | | | | | 2,715 | | | | | | 593 | | | | | | (1,736) | | | | | | 1,572 | | |
Net income (loss) | | | | $ | 10,901 | | | | | $ | 1,884 | | | | | $ | (6,757) | | | | | $ | 6,028 | | |
Total assets | | | | $ | 981,787 | | | | | $ | 10,361 | | | | | $ | 179,036 | | | | | $ | 1,171,184 | | |
|
YEAR ENDED DECEMBER 31, 2017 | ||||||||||||||||||||
RETAIL BANKING | COMMERCIAL BANKING | TRUST | INVESTMENT/ PARENT | TOTAL | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Net interest income | $ | 20,541 | $ | 18,642 | $ | 61 | $ | (3,683 | ) | $ | 35,561 | |||||||||
Provision for loan loss | 122 | 678 | — | — | 800 | |||||||||||||||
Non-interest income | 4,956 | 414 | 9,170 | 105 | 14,645 | |||||||||||||||
Non-interest expense | 21,247 | 9,892 | 7,094 | 2,533 | 40,766 | |||||||||||||||
Income (loss) before income taxes | 4,128 | 8,486 | 2,137 | (6,111 | ) | 8,640 | ||||||||||||||
Income tax expense | 1,381 | 2,642 | 772 | 552 | 5,347 | |||||||||||||||
Net income (loss) | $ | 2,747 | $ | 5,844 | $ | 1,365 | $ | (6,663 | ) | $ | 3,293 | |||||||||
Total assets | $ | 353,924 | $ | 643,055 | $ | 5,413 | $ | 165,263 | $ | 1,167,655 |
YEAR ENDED DECEMBER 31, 2016 | ||||||||||||||||||||
RETAIL BANKING | COMMERCIAL BANKING | TRUST | INVESTMENT/ PARENT | TOTAL | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Net interest income | $ | 20,860 | $ | 18,518 | $ | 56 | $ | (5,300 | ) | $ | 34,134 | |||||||||
Provision for loan loss | 175 | 3,775 | — | — | 3,950 | |||||||||||||||
Non-interest income | 5,281 | 439 | 8,749 | 169 | 14,638 | |||||||||||||||
Non-interest expense | 21,704 | 10,453 | 7,097 | 2,361 | 41,615 | |||||||||||||||
Income (loss) before income taxes | 4,262 | 4,729 | 1,708 | (7,492 | ) | 3,207 | ||||||||||||||
Income tax expense (benefit) | 1,252 | 1,387 | 581 | (2,323 | ) | 897 | ||||||||||||||
Net income (loss) | $ | 3,010 | $ | 3,342 | $ | 1,127 | $ | (5,169 | ) | $ | 2,310 | |||||||||
Total assets | $ | 357,500 | $ | 635,843 | $ | 5,217 | $ | 155,220 | $ | 1,153,780 |
YEAR ENDED DECEMBER 31, 2015 | ||||||||||||||||||||
RETAIL BANKING | COMMERCIAL BANKING | TRUST | INVESTMENT/ PARENT | TOTAL | ||||||||||||||||
(IN THOUSANDS) | ||||||||||||||||||||
Net interest income | $ | 20,680 | $ | 18,390 | $ | 58 | $ | (3,767 | ) | $ | 35,361 | |||||||||
Credit provision for loan loss | 192 | 1,058 | — | — | 1,250 | |||||||||||||||
Non-interest income | 5,537 | 552 | 8,683 | 495 | 15,267 | |||||||||||||||
Non-interest expense | 21,849 | 10,303 | 6,606 | 2,280 | 41,038 | |||||||||||||||
Income (loss) before income taxes | 4,176 | 7,581 | 2,135 | (5,552 | ) | 8,340 | ||||||||||||||
Income tax expense (benefit) | 1,160 | 2,167 | 726 | (1,710 | ) | 2,343 | ||||||||||||||
Net income (loss) | $ | 3,016 | $ | 5,414 | $ | 1,409 | $ | (3,842 | ) | $ | 5,997 | |||||||||
Total assets | $ | 415,008 | $ | 589,840 | $ | 5,263 | $ | 138,386 | $ | 1,148,497 |
| | | YEAR ENDED DECEMBER 31, 2018 | | |||||||||||||||||||||
| | | COMMUNITY BANKING | | | WEALTH MANAGEMENT | | | INVESTMENT/ PARENT | | | TOTAL | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
Net interest income | | | | $ | 39,195 | | | | | $ | 71 | | | | | $ | (3,772) | | | | | $ | 35,494 | | |
Credit provision for loan loss | | | | | (600) | | | | | | — | | | | | | — | | | | | | (600) | | |
Non-interest income | | | | | 4,832 | | | | | | 9,651 | | | | | | (259) | | | | | | 14,224 | | |
Non-interest expense | | | | | 30,809 | | | | | | 7,319 | | | | | | 2,745 | | | | | | 40,873 | | |
Income (loss) before income taxes | | | | | 13,818 | | | | | | 2,403 | | | | | | (6,776) | | | | | | 9,445 | | |
Income tax expense | | | | | 2,764 | | | | | | 554 | | | | | | (1,641) | | | | | | 1,677 | | |
Net income (loss) | | | | $ | 11,054 | | | | | $ | 1,849 | | | | | $ | (5,135) | | | | | $ | 7,768 | | |
Total assets | | | | $ | 966,910 | | | | | $ | 9,345 | | | | | $ | 184,425 | | | | | $ | 1,160,680 | | |
|
| | | YEAR ENDED DECEMBER 31, 2017 | | |||||||||||||||||||||
| | | COMMUNITY BANKING | | | WEALTH MANAGEMENT | | | INVESTMENT/ PARENT | | | TOTAL | | ||||||||||||
| | | (IN THOUSANDS) | | |||||||||||||||||||||
Net interest income | | | | $ | 39,183 | | | | | $ | 61 | | | | | $ | (3,683) | | | | | $ | 35,561 | | |
Provision for loan loss | | | | | 800 | | | | | | — | | | | | | — | | | | | | 800 | | |
Non-interest income | | | | | 5,370 | | | | | | 9,170 | | | | | | 105 | | | | | | 14,645 | | |
Non-interest expense | | | | | 31,139 | | | | | | 7,054 | | | | | | 2,533 | | | | | | 40,726 | | |
Income (loss) before income taxes | | | | | 12,614 | | | | | | 2,177 | | | | | | (6,111) | | | | | | 8,680 | | |
Income tax expense (benefit) | | | | | 4,023 | | | | | | 812 | | | | | | 552 | | | | | | 5,387 | | |
Net income (loss) | | | | $ | 8,591 | | | | | $ | 1,365 | | | | | $ | (6,663) | | | | | $ | 3,293 | | |
Total assets | | | | $ | 993,689 | | | | | $ | 8,703 | | | | | $ | 165,263 | | | | | $ | 1,167,655 | | |
For a more detailed discussion see the Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
| | | AT DECEMBER 31, 2019 | | |||||||||||||||||||||||||||||||||
| | | COMPANY | | | BANK | | | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | | | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | | ||||||||||||||||||||||||
| | | AMOUNT | | | RATIO | | | AMOUNT | | | RATIO | | | RATIO | | | RATIO | | ||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS) | | |||||||||||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | | | | $ | 132,544 | | | | | | 13.49% | | | | | $ | 119,477 | | | | | | 12.23% | | | | | | 8.00% | | | | | | 10.00% | | |
Tier 1 Common Equity (To Risk Weighted Assets) | | | | | 102,841 | | | | | | 10.47 | | | | | | 109,173 | | | | | | 11.17 | | | | | | 4.50 | | | | | | 6.50 | | |
Tier 1 Capital (To Risk Weighted Assets) | | | | | 114,729 | | | | | | 11.68 | | | | | | 109,173 | | | | | | 11.17 | | | | | | 6.00 | | | | | | 8.00 | | |
Tier 1 Capital (To Average Assets) | | | | | 114,729 | | | | | | 9.87 | | | | | | 109,173 | | | | | | 9.50 | | | | | | 4.00 | | | | | | 5.00 | | |
| | | AT DECEMBER 31, 2018 | | |||||||||||||||||||||||||||||||||
| | | COMPANY | | | BANK | | | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | | | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | | ||||||||||||||||||||||||
| | | AMOUNT | | | RATIO | | | AMOUNT | | | RATIO | | | RATIO | | | RATIO | | ||||||||||||||||||
| | | (IN THOUSANDS, EXCEPT RATIOS) | | |||||||||||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | | | | $ | 129,178 | | | | | | 13.53% | | | | | $ | 115,451 | | | | | | 12.14% | | | | | | 8.00% | | | | | | 10.00% | | |
Tier 1 Common Equity (To Risk Weighted Assets) | | | | | 100,258 | | | | | | 10.50 | | | | | | 105,891 | | | | | | 11.14 | | | | | | 4.50 | | | | | | 6.50 | | |
Tier 1 Capital (To Risk Weighted Assets) | | | | | 112,130 | | | | | | 11.74 | | | | | | 105,891 | | | | | | 11.14 | | | | | | 6.00 | | | | | | 8.00 | | |
Tier 1 Capital (To Average Assets) | | | | | 112,130 | | | | | | 9.71 | | | | | | 105,891 | | | | | | 9.28 | | | | | | 4.00 | | | | | | 5.00 | | |
AT DECEMBER 31, 2017 | ||||||||||||||||||||||||
COMPANY | BANK | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | |||||||||||||||||||||
AMOUNT | RATIO | AMOUNT | RATIO | RATIO | RATIO | |||||||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | $ | 126,276 | 13.21 | % | $ | 110,681 | 11.64 | % | 8.00 | % | 10.00 | % | ||||||||||||
Tier 1 Common Equity (To Risk Weighted Assets) | 95,882 | 10.03 | 99,552 | 10.47 | 4.50 | 6.50 | ||||||||||||||||||
Tier 1 Capital (To Risk Weighted Assets) | 107,682 | 11.26 | 99,552 | 10.47 | 6.00 | 8.00 | ||||||||||||||||||
Tier 1 Capital (To Average Assets) | 107,682 | 9.32 | 99,552 | 8.75 | 4.00 | 5.00 |
AT DECEMBER 31, 2016 | ||||||||||||||||||||||||
COMPANY | BANK | MINIMUM REQUIRED FOR CAPITAL ADEQUACY PURPOSES | TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION REGULATIONS* | |||||||||||||||||||||
AMOUNT | RATIO | AMOUNT | RATIO | RATIO | RATIO | |||||||||||||||||||
(IN THOUSANDS, EXCEPT RATIOS) | ||||||||||||||||||||||||
Total Capital (To Risk Weighted Assets) | $ | 125,131 | 13.15 | % | $ | 107,618 | 11.35 | % | 8.00 | % | 10.00 | % | ||||||||||||
Tier 1 Common Equity (To Risk Weighted Assets) | 95,028 | 9.99 | 96,796 | 10.21 | 4.50 | 6.50 | ||||||||||||||||||
Tier 1 Capital (To Risk Weighted Assets) | 106,868 | 11.23 | 96,796 | 10.21 | 6.00 | 8.00 | ||||||||||||||||||
Tier 1 Capital (To Average Assets) | 106,868 | 9.35 | 96,796 | 8.61 | 4.00 | 5.00 |
On July 2, 2013, See the Federal Reserve approved final rules that substantially amenddiscussion of the regulatory risk-based capital rules applicable totangible common equity ratio under the Company and the Bank. The final rules implement the “Basel III” regulatory capital reforms, as well as certain changes required by the Dodd-Frank Act, which will require institutions to, among other things, have more capital and a higher quality of capital by increasing the minimum regulatory capital ratios, and requiring capital buffers. The new rules became effective for the Company on January 1, 2015, with an implementation period that stretches to 2019. For a more detailed discussion see the Capital ResourcesBalance Sheet section of the MD&A.
AT DECEMBER 31, | ||||||||
2017 | 2016 | |||||||
(IN THOUSANDS) | ||||||||
ASSETS | ||||||||
Cash | $ | 100 | $ | 100 | ||||
Short-term investments in money market funds | 4,521 | 5,397 | ||||||
Investment securities available for sale | 5,307 | 6,041 | ||||||
Equity investment in banking subsidiary | 99,408 | 97,158 | ||||||
Equity investment in non-banking subsidiaries | 6,444 | 5,168 | ||||||
Other assets | 499 | 2,665 | ||||||
TOTAL ASSETS | $ | 116,279 | $ | 116,529 | ||||
LIABILITIES | ||||||||
Guaranteed junior subordinated deferrable interest debentures | $ | 12,923 | $ | 12,908 | ||||
Subordinated debt | 7,465 | 7,441 | ||||||
Other liabilities | 789 | 785 | ||||||
TOTAL LIABILITIES | 21,177 | 21,134 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Total stockholders’ equity | 95,102 | 95,395 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 116,279 | $ | 116,529 |
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
INCOME | ||||||||||||
Inter-entity management and other fees | $ | 2,315 | $ | 2,305 | $ | 2,432 | ||||||
Dividends from banking subsidiary | 2,850 | 3,000 | 5,100 | |||||||||
Dividends from non-banking subsidiaries | 840 | 650 | 975 | |||||||||
Interest, dividend and other income | 163 | 214 | 669 | |||||||||
TOTAL INCOME | 6,168 | 6,169 | 9,176 | |||||||||
EXPENSE | ||||||||||||
Interest expense | 1,642 | 1,640 | 1,125 | |||||||||
Salaries and employee benefits | 2,416 | 2,314 | 2,302 | |||||||||
Other expense | 1,618 | 1,549 | 1,562 | |||||||||
TOTAL EXPENSE | 5,676 | 5,503 | 4,989 | |||||||||
INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES | 492 | 666 | 4,187 | |||||||||
Benefit for income taxes | (1,114 | ) | (1,015 | ) | (642 | ) | ||||||
Equity in undistributed earnings of subsidiaries | 1,687 | 629 | 1,168 | |||||||||
NET INCOME | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
COMPREHENSIVE INCOME (LOSS) | $ | 4,051 | $ | (1,712 | ) | $ | 5,344 |
| | | AT DECEMBER 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
| | | (IN THOUSANDS) | | |||||||||
ASSETS | | | | | | | | | | | | | |
Cash | | | | $ | 100 | | | | | $ | 100 | | |
Short-term investments in money market funds | | | | | 2,544 | | | | | | 3,711 | | |
Cash and cash equivalents | | | | | 2,644 | | | | | | 3,811 | | |
Investment securities available for sale | | | | | 3,758 | | | | | | 4,747 | | |
Equity investment in banking subsidiary | | | | | 104,843 | | | | | | 103,647 | | |
Equity investment in non-banking subsidiaries | | | | | 7,830 | | | | | | 6,745 | | |
Other assets | | | | | 978 | | | | | | 208 | | |
TOTAL ASSETS | | | | $ | 120,053 | | | | | $ | 119,158 | | |
LIABILITIES | | | | | | | | | | | | | |
Guaranteed junior subordinated deferrable interest debentures | | | | $ | 12,955 | | | | | $ | 12,939 | | |
Subordinated debt | | | | | 7,511 | | | | | | 7,488 | | |
Other liabilities | | | | | 973 | | | | | | 754 | | |
TOTAL LIABILITIES | | | | | 21,439 | | | | | | 21,181 | | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Total stockholders’ equity | | | | | 98,614 | | | | | | 97,977 | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | $ | 120,053 | | | | | $ | 119,158 | | |
|
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
INCOME | | | | | | | | | | | | | | | | | | | |
Inter-entity management and other fees | | | | $ | 2,556 | | | | | $ | 2,430 | | | | | $ | 2,315 | | |
Dividends from banking subsidiary | | | | | 3,800 | | | | | | 3,500 | | | | | | 2,850 | | |
Dividends from non-banking subsidiaries | | | | | 1,105 | | | | | | 1,190 | | | | | | 840 | | |
Interest, dividend and other income | | | | | 186 | | | | | | 119 | | | | | | 163 | | |
TOTAL INCOME | | | | | 7,647 | | | | | | 7,239 | | | | | | 6,168 | | |
EXPENSE | | | | | | | | | | | | | | | | | | | |
Interest expense | | | | | 1,642 | | | | | | 1,642 | | | | | | 1,642 | | |
Salaries and employee benefits | | | | | 2,614 | | | | | | 2,610 | | | | | | 2,416 | | |
Other expense | | | | | 1,707 | | | | | | 1,733 | | | | | | 1,618 | | |
TOTAL EXPENSE | | | | | 5,963 | | | | | | 5,985 | | | | | | 5,676 | | |
INCOME BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES | | | | | 1,684 | | | | | | 1,254 | | | | | | 492 | | |
Benefit for income taxes | | | | | (676) | | | | | | (722) | | | | | | (1,114) | | |
Equity in undistributed earnings of subsidiaries | | | | | 3,668 | | | | | | 5,792 | | | | | | 1,687 | | |
NET INCOME | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
COMPREHENSIVE INCOME | | | | $ | 4,082 | | | | | $ | 6,493 | | | | | $ | 4,051 | | |
|
| | | YEAR ENDED DECEMBER 31, | | |||||||||||||||
| | | 2019 | | | 2018 | | | 2017 | | |||||||||
| | | (IN THOUSANDS) | | |||||||||||||||
OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Net income | | | | $ | 6,028 | | | | | $ | 7,768 | | | | | $ | 3,293 | | |
Adjustment to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | | | | |
Equity in undistributed earnings of subsidiaries | | | | | (3,668) | | | | | | (5,792) | | | | | | (1,687) | | |
Stock compensation expense | | | | | 7 | | | | | | 14 | | | | | | 13 | | |
Other – net | | | | | (427) | | | | | | 433 | | | | | | 1,325 | | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | | | | 1,940 | | | | | | 2,423 | | | | | | 2,944 | | |
INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Purchase of investment securities – available for sale | | | | | — | | | | | | (1,002) | | | | | | (1,002) | | |
Proceeds from maturity and sales of investment securities – available for sale | | | | | 1,085 | | | | | | 1,462 | | | | | | 1,699 | | |
NET CASH PROVIDED BY INVESTING ACTIVITIES | | | | | 1,085 | | | | | | 460 | | | | | | 697 | | |
FINANCING ACTIVITIES | | | | | | | | | | | | | | | | | | | |
Purchases of treasury stock | | | | | (2,550) | | | | | | (2,346) | | | | | | (3,404) | | |
Common stock dividends paid | | | | | (1,642) | | | | | | (1,347) | | | | | | (1,113) | | |
NET CASH USED IN FINANCING ACTIVITIES | | | | | (4,192) | | | | | | (3,693) | | | | | | (4,517) | | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | | | | | (1,167) | | | | | | (810) | | | | | | (876) | | |
CASH AND CASH EQUIVALENTS AT JANUARY 1 | | | | | 3,811 | | | | | | 4,621 | | | | | | 5,497 | | |
CASH AND CASH EQUIVALENTS AT DECEMBER 31 | | | | $ | 2,644 | | | | | $ | 3,811 | | | | | $ | 4,621 | | |
YEAR ENDED DECEMBER 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
(IN THOUSANDS) | ||||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 3,293 | $ | 2,310 | $ | 5,997 | ||||||
Adjustment to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||||
Equity in undistributed earnings of subsidiaries | (1,687 | ) | (629 | ) | (1,168 | ) | ||||||
Stock compensation expense | 13 | 20 | 29 | |||||||||
Other – net | 1,325 | 1,463 | 842 | |||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 2,944 | 3,164 | 5,700 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Purchase of investment securities – available for sale | (1,002 | ) | (996 | ) | (1,533 | ) | ||||||
Proceeds from maturity and sales of investment securities – available for sale | 1,699 | 3,396 | 4,669 | |||||||||
Proceeds from life insurance policies | — | — | 719 | |||||||||
NET CASH PROVIDED BY INVESTING ACTIVITIES | 697 | 2,400 | 3,855 | |||||||||
FINANCING ACTIVITIES | ||||||||||||
Subordinated debt issuance, net | — | — | 7,418 | |||||||||
Preferred stock redemption | — | (21,000 | ) | — | ||||||||
Preferred stock dividends paid | — | (15 | ) | (210 | ) | |||||||
Purchases of treasury stock | (3,404 | ) | — | — | ||||||||
Common stock dividends paid | (1,113 | ) | (945 | ) | (754 | ) | ||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (4,517 | ) | (21,960 | ) | 6,454 | |||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (876 | ) | (16,396 | ) | 16,009 | |||||||
CASH AND CASH EQUIVALENTS AT JANUARY 1 | 5,497 | 21,893 | 5,884 | |||||||||
CASH AND CASH EQUIVALENTS AT DECEMBER 31 | $ | 4,621 | $ | 5,497 | $ | 21,893 |
The ability of the subsidiary Bank to upstream cash to the parent company is restricted by regulations. Federal law prevents the parent company from borrowing from its subsidiary Bank unless the loans are secured by specified assets. Further, such secured loans are limited in amount to ten percent of the subsidiary Bank’s capital and surplus. In addition, the Bank is subject to legal limitations on the amount of dividends that can be paid to its shareholder. The dividend limitation generally restricts dividend payments to a bank’s retained net income for the current and preceding two calendar years. Cash may also be upstreamed to the parent company by the subsidiaries as an inter-entity management fee. The subsidiary Bank had a combined $110,300,000$108,228,000 of restricted surplus and retained earnings at December 31, 2017.
| | | 2019 QUARTER ENDED | | |||||||||||||||||||||
| | | DEC. 31 | | | SEPT. 30 | | | JUNE 30 | | | MARCH 31 | | ||||||||||||
| | | (IN THOUSANDS, EXCEPT PER SHARE DATA) | | |||||||||||||||||||||
Interest income | | | | $ | 12,405 | | | | | $ | 12,433 | | | | | $ | 12,765 | | | | | $ | 12,164 | | |
Interest expense | | | | | 3,445 | | | | | | 3,669 | | | | | | 3,704 | | | | | | 3,507 | | |
Net interest income | | | | | 8,960 | | | | | | 8,764 | | | | | | 9,061 | | | | | | 8,657 | | |
Provision (credit) for loan losses | | | | | 975 | | | | | | 225 | | | | | | — | | | | | | (400) | | |
Net interest income after provision (credit) for loan losses | | | | | 7,985 | | | | | | 8,539 | | | | | | 9,061 | | | | | | 9,057 | | |
Non-interest income | | | | | 3,416 | | | | | | 4,095 | | | | | | 3,657 | | | | | | 3,605 | | |
Non-interest expense | | | | | 10,563 | | | | | | 10,503 | | | | | | 10,456 | | | | | | 10,293 | | |
Income before income taxes | | | | | 838 | | | | | | 2,131 | | | | | | 2,262 | | | | | | 2,369 | | |
Provision for income taxes | | | | | 169 | | | | | | 442 | | | | | | 470 | | | | | | 491 | | |
Net income | | | | $ | 669 | | | | | $ | 1,689 | | | | | $ | 1,792 | | | | | $ | 1,878 | | |
Basic earnings per common share | | | | $ | 0.04 | | | | | $ | 0.10 | | | | | $ | 0.10 | | | | | $ | 0.11 | | |
Diluted earnings per common share | | | | | 0.04 | | | | | | 0.10 | | | | | | 0.10 | | | | | | 0.11 | | |
Cash dividends declared per common share | | | | | 0.025 | | | | | | 0.025 | | | | | | 0.025 | | | | | | 0.020 | | |
| | | 2018 QUARTER ENDED | | |||||||||||||||||||||
| | | DEC. 31 | | | SEPT. 30 | | | JUNE 30 | | | MARCH 31 | | ||||||||||||
| | | (IN THOUSANDS, EXCEPT PER SHARE DATA) | | |||||||||||||||||||||
Interest income | | | | $ | 12,125 | | | | | $ | 12,149 | | | | | $ | 11,603 | | | | | $ | 11,217 | | |
Interest expense | | | | | 3,346 | | | | | | 3,040 | | | | | | 2,745 | | | | | | 2,469 | | |
Net interest income | | | | | 8,779 | | | | | | 9,109 | | | | | | 8,858 | | | | | | 8,748 | | |
Provision (credit) for loan losses | | | | | (700) | | | | | | — | | | | | | 50 | | | | | | 50 | | |
Net interest income after provision (credit) for loan losses | | | | | 9,479 | | | | | | 9,109 | | | | | | 8,808 | | | | | | 8,698 | | |
Non-interest income | | | | | 3,322 | | | | | | 3,586 | | | | | | 3,681 | | | | | | 3,635 | | |
Non-interest expense | | | | | 10,374 | | | | | | 10,096 | | | | | | 10,292 | | | | | | 10,111 | | |
Income before income taxes | | | | | 2,427 | | | | | | 2,599 | | | | | | 2,197 | | | | | | 2,222 | | |
Provision for income taxes | | | | | 499 | | | | | | 270 | | | | | | 453 | | | | | | 455 | | |
Net income | | | | $ | 1,928 | | | | | $ | 2,329 | | | | | $ | 1,744 | | | | | $ | 1,767 | | |
Basic earnings per common share | | | | $ | 0.11 | | | | | $ | 0.13 | | | | | $ | 0.10 | | | | | $ | 0.10 | | |
Diluted earnings per common share | | | | | 0.11 | | | | | | 0.13 | | | | | | 0.10 | | | | | | 0.10 | | |
Cash dividends declared per common share | | | | | 0.020 | | | | | | 0.020 | | | | | | 0.020 | | | | | | 0.015 | | |
2017 QUARTER ENDED | ||||||||||||||||
DEC. 31 | SEPT. 30 | JUNE 30 | MARCH 31 | |||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||||||
Interest income | $ | 11,370 | $ | 11,187 | $ | 11,051 | $ | 10,748 | ||||||||
Interest expense | 2,366 | 2,250 | 2,152 | 2,027 | ||||||||||||
Net interest income | 9,004 | 8,937 | 8,899 | 8,721 | ||||||||||||
Provision for loan losses | 50 | 200 | 325 | 225 | ||||||||||||
Net interest income after provision for loan losses | 8,954 | 8,737 | 8,574 | 8,496 | ||||||||||||
Non-interest income | 3,699 | 3,629 | 3,755 | 3,562 | ||||||||||||
Non-interest expense | 10,250 | 10,114 | 10,317 | 10,085 | ||||||||||||
Income before income taxes | 2,403 | 2,252 | 2,012 | 1,973 | ||||||||||||
Provision for income taxes | 3,398 | 701 | 623 | 625 | ||||||||||||
Net income (loss) | $ | (995 | ) | $ | 1,551 | $ | 1,389 | $ | 1,348 | |||||||
Basic earnings (loss) per common share | $ | (0.05 | ) | $ | 0.08 | $ | 0.07 | $ | 0.07 | |||||||
Diluted earnings (loss) per common share | (0.05 | ) | 0.08 | 0.07 | 0.07 | |||||||||||
Cash dividends declared per common share | 0.015 | 0.015 | 0.015 | 0.015 |
2016 QUARTER ENDED | ||||||||||||||||
DEC. 31 | SEPT. 30 | JUNE 30 | MARCH 31 | |||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||||||
Interest income | $ | 10,582 | $ | 10,476 | $ | 10,389 | $ | 10,422 | ||||||||
Interest expense | 1,998 | 1,970 | 1,903 | 1,864 | ||||||||||||
Net interest income | 8,584 | 8,506 | 8,486 | 8,558 | ||||||||||||
Provision for loan losses | 300 | 300 | 250 | 3,100 | ||||||||||||
Net interest income after provision for loan losses | 8,284 | 8,206 | 8,236 | 5,458 | ||||||||||||
Non-interest income | 3,798 | 3,661 | 3,742 | 3,437 | ||||||||||||
Non-interest expense | 10,509 | 10,356 | 10,039 | 10,711 | ||||||||||||
Income (loss) before income taxes | 1,573 | 1,511 | 1,939 | (1,816 | ) | |||||||||||
Provision (benefit) for income taxes | 423 | 446 | 577 | (549 | ) | |||||||||||
Net income (loss) | $ | 1,150 | $ | 1,065 | $ | 1,362 | $ | (1,267 | ) | |||||||
Basic earnings (loss) per common share | $ | 0.06 | $ | 0.06 | $ | 0.07 | $ | (0.07 | ) | |||||||
Diluted earnings (loss) per common share | 0.06 | 0.06 | 0.07 | (0.07 | ) | |||||||||||
Cash dividends declared per common share | 0.015 | 0.015 | 0.010 | 0.010 |
2019.
/s/ JEFFREY A. STOPKO | | | /s/ MICHAEL D. LYNCH | | |
| Jeffrey A. Stopko President & Chief Executive Officer | | | Michael D. Lynch Senior Vice President & Chief Financial Officer | |
February 15, 2018
/s/ JEFFREY A. STOPKO | | | /s/ MICHAEL D. LYNCH | | |
| Jeffrey A. Stopko President & Chief Executive Officer | | | Michael D. Lynch Senior Vice President & Chief Financial Officer | |
2019.
None.
Equity Compensation Plan Information | | ||||||||||||||||||
Plan category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | |||||||||
Equity compensation plans approved by security holders | | | | | 296,648 | | | | | $ | 3.02 | | | | | | 444,668 | | |
Equity compensation plans not approved by security holders | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
Total | | | | | 296,648 | | | | | $ | 3.02 | | | | | | 444,668 | | |
Equity Compensation Plan Information | ||||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders | 360,721 | $ | 2.79 | 448,170 | ||||||||
Equity compensation plans not approved by security holders | 0 | 0 | 0 | |||||||||
Total | 360,721 | $ | 2.79 | 448,170 |
Information required by this section is presented in the “Principal Owners” and “Security Ownership of Management” sections of the Proxy Statement for the Annual Meeting of Shareholders.
AmeriServ Financial, Inc. and Subsidiaries | | | | | | | | |
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EXHIBIT NUMBER | | | DESCRIPTION | | | PRIOR FILING OR EXHIBIT PAGE NUMBER HEREIN | |
31.1 | | | Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. | | | Attached | |
31.2 | | | Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. | | | Attached | |
32.1 | | | Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | | | Attached | |
32.2 | | | Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. | | | Attached | |
101 | | | The following information from AMERISERV FINANCIAL, INC.’s Annual Report on Form 10-K for the year ended December 31, | | | Attached | |
March 2, 2020
/s/ Allan R. Dennison | | | Chairman Director | | | /s/ Michael D. Lynch Michael D. Lynch | | | SVP & CFO | | |
| /s/ Jeffrey A. Stopko Jeffrey A. Stopko | | | President & CEO Director | | | /s/ Margaret A. O’Malley | | Director | | |
| /s/ J. Michael Adams, Jr. J. Michael Adams, Jr. | | | Director | | ||||||
/s/ Mark E. Pasquerilla Mark E. Pasquerilla | | ||||||||||
| Director | | |||||||||
| /s/ Craig G. Ford Craig G. Ford | | | Director | | | /s/ Sara A. Sargent Sara A. Sargent | | |||
| Director | ||||||||||
| /s/ Kim W. Kunkle Kim W. Kunkle | | | Director | | | /s/ Robert L. Wise Robert L. Wise | | | Director | |
AMERISERV LOANPRODUCTION LOCATIONS
Main Office DowntownJohnstown
216 Franklin StreetPO Box 520Johnstown, PA 15901
1-800-837-BANK (2265)
15904
Hagerstown Office1829 Howell RoadSuite 3Hagerstown, MD 21740-6606
Monroeville LPO16602
State College Loan Store1857 N. Atherton StreetState College, PA 16803-1521
Piper Sandler 6th Floor New York, NY 10020 Telephone: (800) 635-6860 | | | Keefe Bruyette & Woods, Inc. 787 Seventh Avenue Equitable Bldg — 4th Floor New York, NY 10019 Telephone: (800) 966-1559 | | |
| |||||
Stifel Nicolaus 7111 Fairway Drive, STE 301 Palm Beach Gardens, FL 33418 Telephone: (561) 615-5300 | | Virtu Financial, Inc. New York, NY Telephone: (888) 931-4357 | |||
| |||||
Raymond James & Associates Chicago, IL Telephone: (312) | | | |
J. Michael Adams, Jr.Attorney-at-Law Mike Adams & Associates, LLC
Allan R. DennisonNon-executive Vice Chairman, Retired President & Chief Executive Officer AmeriServ Financial Bank, and Non-executive Vice Chairman of the Board of all Subsidiaries
Daniel R. DeVosRetired President & CEO, Concurrent Technologies Corporation
Bruce E. Duke, III M.D.Retired Surgeon, Conemaugh Health Initiatives
Craig G. FordNon-executive Chairman, Former President & CEO, AmeriServ Financial, Inc., AmeriServ Financial Bank, and Non-executive Chairman of the Board of all Subsidiaries
Board of Directors | | | | | | General Officers | |
J. Michael Adams, Jr. Chief Counsel to the Pennsylvania DCED Allan R. Dennison Non-Executive Chairman of the Board of all Subsidiaries Craig G. Ford Non-Executive Vice Chairman of the Board of all Subsidiaries Kim W. Kunkle President & CEO, Laurel Holdings, Inc. Margaret A. O’Malley Attorney-at-Law Yost & O’Malley | | | Mark E. Pasquerilla President, Pasquerilla Enterprises L.P. Sara A. Sargent Owner/President, The Sargent’s Group Jeffrey A. Stopko, CPA President & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank Robert L. Wise Retired President, Pennsylvania Electric Company, GPU Genco, Inc. & GPU International, Inc. & GPU Energy, Inc. | | | Jeffrey A. Stopko, CPA President & Chief Executive Officer Frank E. Adams Senior Vice President & Chief Loan Review Officer Susan Tomera Angeletti Senior Vice President, Director — Corporate Marketing & Alternative Delivery Michael D. Lynch Senior Vice President, Chief Financial Officer, Chief Investment Officer & Chief Risk Officer James P. Ziance Senior Vice President & Chief Internal Auditor Laura L. Fiore Vice President, Deputy Auditor Anthony M. Gojmerac Vice President, Purchasing & Facilities Officer Wendy M. Gressick Vice President, Deputy Loan Review Officer Tammie L. Slavick Vice President, Financial & Profitability Analysis Sharon M. Callihan Corporate Secretary | |
Kim W. KunklePresident & CEO, Laurel Holdings, Inc.
Margaret A. O’MalleyAttorney-at-Law Yost & O’Malley
Mark E. PasquerillaPresident, Pasquerilla Enterprises L.P.
Sara A. SargentOwner/President, The Sargent’s Group
Thomas C. SlaterRetired Owner, President & Director, Slater Laboratories, Inc.
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank
Robert L. WiseRetired President, Pennsylvania Electric Company, GPU Genco, Inc. and GPU International, Inc. and GPU Energy, Inc.
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer
Susan Tomera AngelettiSenior Vice President, Director of Marketing & Alternative Delivery
Michael D. Lynch Senior Vice President, Chief Financial Officer, Chief Investment Officer & Chief Risk Officer
James P. ZianceSenior Vice President & Chief Internal Auditor
Frank E. AdamsVice President & Chief Loan Review Officer
Anthony M. Gojmerac Vice President, Purchasing & Facilities Officer
William D. LaytonVice President & Manager of Regulatory Accounting
Sharon M. CallihanCorporate Secretary
J. Michael Adams, Jr.Attorney-at-Law Mike Adams & Associates, LLC
Allan R. DennisonNon-executive Vice Chairman, Retired President & Chief Executive Officer AmeriServ Financial Bank, and Non-executive Vice Chairman of the Board of all Subsidiaries
Daniel R. DeVosRetired President & CEO, Concurrent Technologies Corporation
Bruce E. Duke, III, M.D.Retired Surgeon, Conemaugh Health Initiatives
Craig G. FordNon-executive Chairman, Former President & CEO, AmeriServ Financial, Inc., AmeriServ Financial Bank, and Non-executive Chairman of the Board of all Subsidiaries
Kim W. KunklePresident & CEO, Laurel Holdings, Inc.
Margaret A. O’MalleyAttorney-at-Law Yost & O’Malley
Mark E. PasquerillaPresident, Pasquerilla Enterprises L.P.
Sara A. SargentOwner/President, The Sargent’s Group
Thomas C. SlaterRetired Owner, President & Director, Slater Laboratories, Inc.
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank
Robert L. WiseRetired President, Pennsylvania Electric Company, GPU Genco, Inc. and GPU International, Inc. and GPU Energy, Inc.
Board of Directors | | | General Officers | | | | |
J. Michael Adams, Jr. Chief Counsel to the Pennsylvania DCED Allan R. Dennison Non-Executive Chairman of the Board of all Subsidiaries Craig G. Ford Non-Executive Vice Chairman of the Board of all Subsidiaries Kim W. Kunkle President & CEO, Laurel Holdings, Inc. Margaret A. O’Malley Attorney-at-Law Yost & O’Malley Mark E. Pasquerilla President, Pasquerilla Enterprises L.P. Sara A. Sargent Owner/President, The Sargent’s Group Jeffrey A. Stopko, CPA President & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank Robert L. Wise Retired President, Pennsylvania Electric Company, GPU Genco, Inc. & GPU International, Inc. & GPU Energy, Inc. | | | Jeffrey A. Stopko, CPA President & Chief Executive Officer Michael R. Baylor Executive Vice President & Chief Commercial Banking Officer Jack W. Babich Senior Vice President, Chief Human Resources Officer & Corporate Services Officer Russell B. Flynn Senior Vice President, Retail Lending Bettina D. Fochler Senior Vice President, Chief Credit Officer Wayne A. Kessler Senior Vice President, Area Executive, Johnstown Michael D. Lynch Senior Vice President, Chief Financial Officer, Chief Investment Officer & Chief Risk Officer Kerri L. Mueller Senior Vice President, Retail Banking Matthew C. Rigo Senior Vice President, Area Executive, Wilkins Township Robert E. Werner, III Senior Vice President & Chief Information Officer Todd C. Allison Vice President & Director of Information Technology Michael S. Andrascik Vice President, Bank Security Officer Thomas R. Boyd, Jr. Vice President, Commercial Relationship Manager Carie L. Braniff Vice President, Corporate Security Officer Robert J. Cabala Vice President, Commercial Relationship Manager George T. Chaney II Vice President, Portfolio Manager Jennifer L. Devan Vice President, Chief Compliance Officer Bernard A. Eckenrode Vice President, Commercial Relationship Manager | | | Mitchell D. Edwards Vice President, Commercial Relationship Manager Jason D. Eminhizer Vice President, Commercial Relationship Manager Christine E. Fisher Vice President, Business Services Anthony M. Gojmerac Vice President, Purchasing & Facilities Officer Chelsea M. Hartnett Vice President, Manager Credit Analysis Daniel L. Herr Vice President, Portfolio Manager Kevin H. Justice Vice President, Commercial Relationship Manager, Hagerstown Bruce A. Mabon Vice President, Collections & Assigned Risk Manager Patrick R. Miles Vice President, Commercial Relationship Manager, Altoona Elizabeth R. Shank Vice President, Deposit Operations Manager Cynthia L. Stewart Vice President, Manager Loan Administration Shana Stiles Vice President, BSA & Assistant Corporate Services Manager Charlene J. Tessari Vice President, Application & IT Risk Management Catherine M. Torok Vice President, Chief Information Security Officer Michelle D. Wyandt Vice President, Supervisor Credit Analysis | |
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer
Michael R. BaylorExecutive Vice President & Chief Commercial Banking Officer
Jack W. BabichSenior Vice President, Chief Human Resources Officer & Corporate Services Officer
Michael A. BodnarSenior Vice President, Area Executive & Commercial Real Estate Manager
Russell B. FlynnSenior Vice President, Retail Lending
Bettina D. FochlerSenior Vice President, Chief Credit Officer
Wayne A. KesslerSenior Vice President, Area Executive Johnstown
Michael D. LynchSenior Vice President, Chief Financial Officer, Chief Investment Officer & Chief Risk Officer
Kerri L. MuellerSenior Vice President Retail Banking
Matthew C. RigoSenior Vice President, Area Executive, Wilkins Township
J. Seth SmithSenior Vice President, Area Executive State College
Robert E. Werner, IIISenior Vice President & Chief Information Officer
Todd C. AllisonVice President & Director of Information Technology
Michael S. AndrascikVice President, Bank Security Officer
Thomas R. Boyd, Jr.Vice President, Commercial Relationship Manager II
Jennifer L. DevanVice President, Chief Compliance Officer
Bernard A. EckenrodeVice President, Commercial Relationship Manager II
Mitchell D. EdwardsVice President, Commercial Relationship Manager III
Jason D. EminhizerVice President, Commercial Relationship Manager II
Christine E. FisherVice President, Business Services
Anthony M. GojmeracVice President, Purchasing & Facilities Officer
Daniel L. HerrVice President, Portfolio Manager
Kevin H. JusticeVice President, Commercial Relationship Manager II, Hagerstown
Bruce A. MabonVice President, Collection & Assigned Risk Manager Patrick R. Miles Vice President, Commercial Relationship Manager II Altoona
Elizabeth R. ShankVice President, Deposit Operations Manager
Cynthia L. Stewart Vice President, Manager Loan Administration
Charlene J. TessariVice President, Application and IT Risk Management
Michelle D. WyandtVice President, Supervisor Credit Analysis
J. Michael Adams, Jr.Attorney-at-Law Mike Adams & Associates, LLC
Allan R. DennisonNon-executive Vice Chairman, Retired President & Chief Executive Officer AmeriServ Financial Bank, and Non-executive Vice Chairman of the Board of all Subsidiaries
Craig G. FordNon-executive Chairman, Former President & CEO, AmeriServ Financial, Inc., AmeriServ Financial Bank, and Non-executive Chairman of the Board of all Subsidiaries
Richard W. BloomingdalePresident, PA AFL-CIO
James T. HuerthPresident & Chief Executive Officer AmeriServ Trust & Financial Services Company
George B. KaufmanAttorney-at-Law
Kim W. KunklePresident & CEO, Laurel Holdings, Inc.
Mark E. MillerDirector of Support Services, Somerset Hospital & President, Pine Grill, Inc.
Margaret A. O’MalleyAttorney-at-Law Yost & O’Malley
Sara A. SargentOwner/President The Sargent’s Group
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank
Robert L. WiseRetired President, Pennsylvania Electric Company, GPU Genco, Inc. and GPU International, Inc. and GPU Energy, Inc.
AMERISERV TRUST & FINANCIAL SERVICES COMPANY | | | | | | WEST CHESTER CAPITAL ADVISORS | |
Board of Directors | | | | | | Board of Directors | |
J. Michael Adams, Jr. Chief Counsel to the Pennsylvania DCED Richard W. Bloomingdale President, PA AFL-CIO Allan R. Dennison Non-Executive Chairman of the Board of all Subsidiaries Craig G. Ford Non-Executive Vice Chairman of the Board of all Subsidiaries James T. Huerth President & Chief Executive Officer, AmeriServ Trust & Financial Services Company George B. Kaufman Attorney-at-Law Kim W. Kunkle President & CEO, Laurel Holdings, Inc. Mark E. Miller Director of Support Services, Somerset Hospital & President, Pine Grill, Inc. Margaret A. O’Malley Attorney-at-Law Yost & O’Malley Sara A. Sargent Owner/President The Sargent’s Group Jeffrey A. Stopko, CPA President & Chief Executive Officer, AmeriServ Financial, Inc. & AmeriServ Financial Bank Robert L. Wise Retired President, Pennsylvania Electric Company, GPU Genco, Inc. & GPU International, Inc. & GPU Energy, Inc. General Officers James T. Huerth President & Chief Executive Officer David A. Finui Executive Vice President, Director — Wealth and Capital Management | | | Nicholas E. Debias, Jr., CTA Senior Vice President, Senior Wealth Management Advisor Bettina D. Fochler Senior Vice President, Chief Credit Officer Wayne Kessler Senior Vice President, Area Executive Johnstown Michael D. Lynch Senior Vice President, Treasurer Ernest L. Petersen, III Senior Vice President, Chief Administrative Officer & Diversified Services Manager Christopher C. Sheedy Senior Vice President & Trust Specialty Real Estate Director Kathleen M. Wallace Senior Vice President, Retirement Services Manager Timothy E. Walters Senior Vice President, Diversified Services — Wealth Advisor Mary Ann Brustle Vice President Risk Management & Trust Compliance Officer Sharon E. Delic Vice President, Retirement Services Officer Michael P. Geiser Vice President, Trust Operations Manager Dennis E. Hunt Vice President, Retirement Services Officer David M. Margetan Vice President, Retirement Services Officer Justin F. Maser Vice President, Portfolio Manager Scott D. Porterfield Vice President, Wealth Management Advisor Trust Company Office Locations 216 Franklin Street AmeriServ Financial Bank Building Johnstown, PA 15901-1911 140 South Main Street Greensburg, PA 15601 | | | J. Michael Adams, Jr. Chief Counsel to the Pennsylvania DCED Allan R. Dennison Non-Executive Chairman of the Board of all Subsidiaries Craig G. Ford Non-Executive Vice Chairman of the Board of all Subsidiaries James T. Huerth President & Chief Executive Officer, AmeriServ Trust & Financial Services Company Steven M. Krawick, AAMS, CMFC President & Chief Executive Officer, West Chester Capital Advisors Jeffrey A. Stopko, CPA President & Chief Executive Officer, AmeriServ Financial, Inc. & AmeriServ Financial Bank Robert L. Wise Retired President, Pennsylvania Electric Company, GPU Genco, Inc. & GPU International, Inc. & GPU Energy, Inc. General Officers Steven M. Krawick, AAMS, CMFC President & Chief Executive Officer Michael D. Lynch Senior Vice President, Chief Financial Officer & Treasurer Frank J. Lapinsky Vice President, Chief Administrative Officer & Portfolio Manager Mary F. Stanek Vice President, Portfolio Manager Office Location 216 Franklin Street AmeriServ Financial Bank Building Johnstown, PA 15901-1911 | |
James T. HuerthPresident & Chief Executive Officer
Nicholas E. Debias, Jr., CTASenior Vice President, Senior Wealth Management Advisor
David A. FinuiSenior Vice President, Personal Trust & Financial Services Manager
Bettina D. FochlerSenior Vice President, Chief Credit Officer
Michael D. LynchSenior Vice President, Treasurer
Ernest L. Petersen, IIISenior Vice President, Chief Administrative Officer & Diversified Services Manager
Christopher C. SheedySenior Vice President & Trust Specialty Real Estate Director
Kathleen M. WallaceSenior Vice President, Retirement Services Manager
Mary Ann BrustleVice President Risk Management &Trust Compliance Officer
Sharon E. DelicVice President, Retirement Services Officer
Michael P. GeiserVice President, Trust Operations Manager
John T. KrupaVice President, Wealth Management Advisor
David M. MargetanVice President, Retirement Services Officer
Justin F. MaserVice President, Portfolio Manager
Monica M. PapugaVice President, Senior Trust Accounting Officer
216 Franklin Street AmeriServ Financial Bank Building PO Box 520 Johnstown, PA 15907-0520
J. Michael Adams, Jr.Attorney-at-Law Mike Adams & Associates, LLC
Allan R. DennisonNon-executive Vice Chairman, Retired President & Chief Executive Officer AmeriServ Financial Bank, and Non-executive Vice Chairman of the Board of all Subsidiaries
Craig G. FordNon-executive Chairman, Former President & CEO, AmeriServ Financial, Inc., AmeriServ Financial Bank, and Non-executive Chairman of the Board of all Subsidiaries
James T. HuerthPresident & Chief Executive Officer AmeriServ Trust & Financial Services Company
Steven M. Krawick, AAMS, CMFCPresident & Chief Executive Officer West Chester Capital Advisors
Jeffrey A. Stopko, CPAPresident & Chief Executive Officer AmeriServ Financial, Inc. & AmeriServ Financial Bank
Robert L. WiseRetired President, Pennsylvania Electric Company, GPU Genco, Inc. and GPU International, Inc. and GPU Energy, Inc.
Steven M. Krawick, AAMS, CMFCPresident & Chief Executive Officer
Michael D. LynchSenior Vice President, Chief Financial Officer & Treasurer
Frank J. LapinskyVice President, Chief Administrative Officer & Portfolio Manager
Mary F. StanekVice President, Portfolio Manager
216 Franklin Street AmeriServ Financial Bank Building PO Box 520 Johnstown, PA 15907-0520