|
|
2021
__________
|
| |||||
| ||||||
| ||||||
Assets: Cash and due from banks Federal funds sold Interest-bearing bank deposits Cash and cash equivalents Securitiesavailable-for-sale Loans held for sale Loans, net of unearned income Allowance for loan losses Loans, net Premises and equipment, net Bank-owned life insurance Other assets Total assets Liabilities: Deposits: Noninterest-bearing Interest-bearing Total deposits Federal funds purchased and securities sold under agreements to repurchase Accrued expenses and other liabilities Total liabilities Stockholders’ equity: Preferred stock of $.01 par value; authorized 200,000 shares; no issued shares Common stock of $.01 par value; authorized 8,500,000 shares; issued 3,957,135 shares Additionalpaid-in capital Retained earnings Accumulated other comprehensive income, net Less treasury stock, at cost—390,989 shares at March 31, 2020 and December 31, 2019 Total stockholders’ equity Total liabilities and stockholders’ equity (Dollars in thousands, except share data) March 31,
2020 December 31,
2019 $ 13,002 $ 15,172 29,651 25,944 52,053 51,327 94,706 92,443 280,435 235,902 1,563 2,202 443,868 460,901 (4,867 ) (4,386) 439,001 456,515 14,518 14,743 18,907 19,202 7,345 6,872 $ 856,475 $ 827,879 $ 205,769 $ 196,218 541,016 527,934 746,785 724,152 1,375 1,069 4,752 4,330 752,912 729,551 — — 39 39 3,784 3,784 102,692 101,801 6,403 2,059 (9,355 ) (9,355) 103,563 98,328 $ 856,475 $ 827,879
| Quarter ended March 31, | ||||||||
| (Dollars in thousands, except share and per share data) | 2020 | 2019 | ||||||
| ||||||||
Interest income: | ||||||||
Loans, including fees | $ | 5,412 | $ | 5,727 | ||||
Securities | ||||||||
Taxable | 1,111 | 1,015 | ||||||
Tax-exempt | 453 | 549 | ||||||
Federal funds sold and interest bearing bank deposits | 279 | 352 | ||||||
| ||||||||
Total interest income | 7,255 | 7,643 | ||||||
| ||||||||
Interest expense: | ||||||||
Deposits | 1,041 | 1,021 | ||||||
Short-term borrowings | 2 | 2 | ||||||
| ||||||||
Total interest expense | 1,043 | 1,023 | ||||||
| ||||||||
Net interest income | 6,212 | 6,620 | ||||||
Provision for loan losses | 400 | — | ||||||
| ||||||||
Net interest income after provision for loan losses | 5,812 | 6,620 | ||||||
| ||||||||
Noninterest income: | ||||||||
Service charges on deposit accounts | 172 | 184 | ||||||
Mortgage lending | 230 | 189 | ||||||
Bank-owned life insurance | 398 | 110 | ||||||
Other | 429 | 672 | ||||||
Securities gains, net | 6 | 5 | ||||||
| ||||||||
Total noninterest income | 1,235 | 1,160 | ||||||
| ||||||||
Noninterest expense: | ||||||||
Salaries and benefits | 2,831 | 2,938 | ||||||
Net occupancy and equipment | 597 | 384 | ||||||
Professional fees | 258 | 228 | ||||||
Other | 1,170 | 1,061 | ||||||
| ||||||||
Total noninterest expense | 4,856 | 4,611 | ||||||
| ||||||||
Earnings before income taxes | 2,191 | 3,169 | ||||||
Income tax expense | 390 | 626 | ||||||
| ||||||||
Net earnings | $ | 1,801 | $ | 2,543 | ||||
| ||||||||
Net earnings per share: | ||||||||
Basic and diluted | $ | 0.50 | $ | 0.70 | ||||
| ||||||||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 3,566,146 | 3,614,741 | ||||||
| ||||||||
| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
Net earnings | $ | 1,801 | $ | 2,543 | ||||
Other comprehensive income, net of tax: | ||||||||
Unrealized net holding gain on securities | 4,349 | 2,396 | ||||||
Reclassification adjustment for net gain on securities recognized in net earnings | (5 | ) | (4) | |||||
| ||||||||
Other comprehensive income | 4,344 | 2,392 | ||||||
| ||||||||
Comprehensive income | $ | 6,145 | $ | 4,935 | ||||
| ||||||||
| (Dollars in thousands, except share data) | Common Shares Outstanding | Common Stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Treasury stock | Total | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Quarter ended March 31, 2020 |
| |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance, December 31, 2019 | 3,566,146 | $ | 39 | $ | 3,784 | $ | 101,801 | $ | 2,059 | $ | (9,355 | ) | $ | 98,328 | ||||||||||||||
Net earnings | — | — | — | 1,801 | — | — | 1,801 | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | 4,344 | — | 4,344 | |||||||||||||||||||||
Cash dividends paid ($0.255 per share) | — | — | — | (910 | ) | — | — | (910) | ||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance, March 31, 2020 | 3,566,146 | $ | 39 | $ | 3,784 | $ | 102,692 | $ | 6,403 | $ | (9,355 | ) | $ | 103,563 | ||||||||||||||
| ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Quarter ended March 31, 2019 |
| |||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance, December 31, 2018 | 3,643,868 | $ | 39 | $ | 3,779 | $ | 95,635 | $ | (3,763 | ) | $ | (6,635 | ) | $ | 89,055 | |||||||||||||
Net earnings | — | — | — | 2,543 | — | — | 2,543 | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | 2,392 | — | 2,392 | |||||||||||||||||||||
Cash dividends paid ($0.25 per share) | — | — | — | (898 | ) | — | — | (898) | ||||||||||||||||||||
Stock repurchases | (62,518 | ) | — | — | — | — | (2,147 | ) | (2,147) | |||||||||||||||||||
Sale of treasury stock | 135 | — | 4 | — | — | — | 4 | |||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance, March 31, 2019 | 3,581,485 | $ | 39 | $ | 3,783 | $ | 97,280 | $ | (1,371 | ) | $ | (8,782 | ) | $ | 90,949 | |||||||||||||
| ||||||||||||||||||||||||||||
| Quarter ended March 31, | ||||||||
| (In thousands) | 2020 | 2019 | ||||||
| ||||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 1,801 | $ | 2,543 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Provision for loan losses | 400 | — | ||||||
Depreciation and amortization | 458 | 212 | ||||||
Premium amortization and discount accretion, net | 446 | 423 | ||||||
Net gain on securitiesavailable-for-sale | (6 | ) | (5) | |||||
Net gain on sale of loans held for sale | (163 | ) | (86) | |||||
Loans originated for sale | (9,844 | ) | (5,045) | |||||
Proceeds from sale of loans | 10,596 | 4,159 | ||||||
Increase in cash surrender value of bank-owned life insurance | (117 | ) | (110) | |||||
Income recognized from death benefit on bank-owned life insurance | (282 | ) | — | |||||
Net (increase) decrease in other assets | (444 | ) | 181 | |||||
Net (decrease) increase in accrued expenses and other liabilities | (1,035 | ) | 276 | |||||
| ||||||||
Net cash provided by operating activities | 1,810 | 2,548 | ||||||
| ||||||||
Cash flows from investing activities: | ||||||||
Proceeds from prepayments and maturities of securitiesavailable-for-sale | 9,575 | 10,264 | ||||||
Purchase of securitiesavailable-for-sale | (48,747 | ) | (8,974) | |||||
Decrease in loans, net | 17,015 | 4,276 | ||||||
Net purchases of premises and equipment | (104 | ) | (1,446) | |||||
Proceeds from bank-owned life insurance death benefit | 694 | — | ||||||
(Increase) decrease in FHLB stock | (9 | ) | 32 | |||||
| ||||||||
Net cash (used in) provided by investing activities | (21,576 | ) | 4,152 | |||||
| ||||||||
Cash flows from financing activities: | ||||||||
Net increase in noninterest-bearing deposits | 9,551 | 10,607 | ||||||
Net increase in interest-bearing deposits | 13,082 | 4,831 | ||||||
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase | 306 | (667) | ||||||
Stock repurchases | — | (2,147) | ||||||
Dividends paid | (910 | ) | (898) | |||||
| ||||||||
Net cash provided by financing activities | 22,029 | 11,726 | ||||||
| ||||||||
Net change in cash and cash equivalents | 2,263 | 18,426 | ||||||
Cash and cash equivalents at beginning of period | 92,443 | 65,076 | ||||||
| ||||||||
Cash and cash equivalents at end of period | $ | 94,706 | $ | 83,502 | ||||
| ||||||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 1,089 | $ | 1,033 | ||||
Income taxes | — | — | ||||||
Supplemental disclosure ofnon-cash transactions: | ||||||||
Initial recognition of operating lease right of use assets | — | 891 | ||||||
Initial recognition of operating lease liabilities | — | 889 | ||||||
Real estate acquired through foreclosure | 99 | — | ||||||
| ||||||||
2020.
owned (“OREO”).
● Gains on sales of OREO – A gain on sale should be recognized when a contract for sale exists andcontrol of the asset has been transferred |
Reclassifications
Certain amounts reported in the prior period have been reclassified to conform to the current-period presentation. These reclassifications had no impact buyer.
credit quality
|
|
Information about these pronouncements is described in more detail below.
ASU2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,improves the disclosure requirements on fair value measurements by eliminating the requirements to disclose (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (ii) the policy for timing of transfers between levels; and (iii) the valuation processes for Level 3 fair value measurements. This ASU also added specific disclosure requirements for fair value measurements for public entities including the requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.
The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2019, and all interim periods within those fiscal years. Early adoption was permitted upon issuance of the ASU. Entities are permitted to early adopt amendments that remove or modify disclosures and delay the adoption of the additional disclosures until their effective date. The Company adopted this ASU on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
ASU 2018- 15,Intangibles – Goodwill and Other – Internal Use Software (Subtopic350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contractaligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtaininternal-use software (and hosting arrangements that includeinternal-use software license). This ASU requires entities to use the guidance in FASB ASC350-40, Intangibles—Goodwill and Other—Internal Use Software, to determine whether to capitalize or expense implementation costs related to the service contract. This ASU also requires entities to (i) expense capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement; (ii) present the expense related to the capitalized implementation costs in the same line item on the income statement as fees associated with the hosting element of the arrangement; (iii) classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element; and (iv) present the capitalized implementation costs in the same balance sheet line item that a prepayment for the fees associated with the hosting arrangement would be presented.
The amendments in this ASU are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption was permitted. The Company adopted this ASU on January 1, 2020. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
| Quarter ended March 31, | ||||||||
| (Dollars in thousands, except share and per share data) | 2020 | 2019 | ||||||
| ||||||||
Basic and diluted: | ||||||||
Net earnings | $ | 1,801 | $ | 2,543 | ||||
Weighted average common shares outstanding | 3,566,146 | 3,614,741 | ||||||
| ||||||||
Net earnings per share | $ | 0.50 | $ | 0.70 | ||||
| ||||||||
below
| 1 year | 1 to 5 | 5 to 10 | After 10 | Fair | Gross Unrealized | Amortized | ||||||||||||||||||||||||||
| (Dollars in thousands) | or less | years | years | years | Value | Gains | Losses | Cost | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
March 31, 2020 | ||||||||||||||||||||||||||||||||
Agency obligations (a) | $ | 5,038 | 28,016 | 29,406 | 5,218 | 67,678 | 2,426 | 111 | $ | 65,363 | ||||||||||||||||||||||
Agency RMBS (a) | — | 1,047 | 8,872 | 135,452 | 145,371 | 3,863 | — | 141,508 | ||||||||||||||||||||||||
State and political subdivisions | 97 | 1,167 | 6,497 | 59,625 | 67,386 | 2,432 | 60 | 65,014 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Totalavailable-for-sale | $ | 5,135 | 30,230 | 44,775 | 200,295 | 280,435 | 8,721 | 171 | $ | 271,885 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Agency obligations (a) | $ | 4,993 | 27,245 | 18,470 | — | 50,708 | 215 | 98 | $ | 50,591 | ||||||||||||||||||||||
Agency RMBS (a) | — | 560 | 4,510 | 118,207 | 123,277 | 798 | 261 | 122,740 | ||||||||||||||||||||||||
State and political subdivisions | — | 1,355 | 6,166 | 54,396 | 61,917 | 2,104 | 9 | 59,822 | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Totalavailable-for-sale | $ | 4,993 | 29,160 | 29,146 | 172,603 | 235,902 | 3,117 | 368 | $ | 233,153 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
| (Dollars in thousands) | Fair
Value | Unrealized
Losses | Fair
Value | Unrealized
Losses | Fair
Value | Unrealized
Losses | ||||||||||||||||||
| ||||||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||||||
Agency obligations | $ | 5,218 | 111 | — | — | $ | 5,218 | 111 | ||||||||||||||||
State and political subdivisions | 5,197 | 60 | — | — | 5,197 | 60 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 10,415 | 171 | — | — | $ | 10,415 | 171 | ||||||||||||||||
| ||||||||||||||||||||||||
December 31, 2019: | ||||||||||||||||||||||||
Agency obligations | $ | 24,734 | 97 | 4,993 | 1 | $ | 29,727 | 98 | ||||||||||||||||
Agency RMBS | 40,126 | 98 | 21,477 | 163 | 61,603 | 261 | ||||||||||||||||||
State and political subdivisions | 2,741 | 9 | — | — | 2,741 | 9 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 67,601 | 204 | 26,470 | 164 | $ | 94,071 | 368 | ||||||||||||||||
| ||||||||||||||||||||||||
mortgage-backed securities (“MBS”)
| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
Gross realized gains | $ | 6 | $ | 5 | ||||
| ||||||||
Realized gains, net | $ | 6 | $ | 5 | ||||
| ||||||||
| (In thousands) | March 31,
2020 | December 31,
2019 | ||||||
| ||||||||
Commercial and industrial | $ | 56,447 | $ | 56,782 | ||||
Construction and land development | 32,302 | 32,841 | ||||||
Commercial real estate: | ||||||||
Owner occupied | 48,705 | 48,860 | ||||||
Hotel/motel | 43,249 | 43,719 | ||||||
Multi-family | 33,190 | 44,839 | ||||||
Other | 130,955 | 132,900 | ||||||
| ||||||||
Total commercial real estate | 256,099 | 270,318 | ||||||
Residential real estate: | ||||||||
Consumer mortgage | 45,548 | 48,923 | ||||||
Investment property | 45,462 | 43,652 | ||||||
| ||||||||
Total residential real estate | 91,010 | 92,575 | ||||||
Consumer installment | 8,424 | 8,866 | ||||||
| ||||||||
Total loans | 444,282 | 461,382 | ||||||
Less: unearned income | (414 | ) | (481) | |||||
| ||||||||
Loans, net of unearned income | $ | 443,868 | $ | 460,901 | ||||
| ||||||||
Constructionborrower, who owns the
Commercial real estate (“CRE”) —includes
|
|
|
|
rental rates, as well as the financialhealth of the borrower.
|
|
| (In thousands) | Current | Accruing 30-89 Days Past Due | Accruing Greater than 90 days | Total Accruing Loans | Non- Accrual | Total Loans | ||||||||||||||||||
| ||||||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||||||
Commercial and industrial | $ | 56,443 | 4 | — | 56,447 | — | $ | 56,447 | ||||||||||||||||
Construction and land development | 32,294 | 8 | — | 32,302 | — | 32,302 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Owner occupied | 48,705 | — | — | 48,705 | — | 48,705 | ||||||||||||||||||
Hotel/motel | 43,249 | — | — | 43,249 | — | 43,249 | ||||||||||||||||||
Multi-family | 33,190 | — | — | 33,190 | — | 33,190 | ||||||||||||||||||
Other | 130,955 | — | — | 130,955 | — | 130,955 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total commercial real estate | 256,099 | — | — | 256,099 | — | 256,099 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
Consumer mortgage | 44,514 | 922 | — | 45,436 | 112 | 45,548 | ||||||||||||||||||
Investment property | 45,462 | — | — | 45,462 | — | 45,462 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total residential real estate | 89,976 | 922 | — | 90,898 | 112 | 91,010 | ||||||||||||||||||
Consumer installment | 8,401 | 19 | — | 8,420 | 4 | 8,424 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 443,213 | 953 | — | 444,166 | 116 | $ | 444,282 | ||||||||||||||||
| ||||||||||||||||||||||||
December 31, 2019: | ||||||||||||||||||||||||
Commercial and industrial | $ | 56,758 | 24 | — | 56,782 | — | $ | 56,782 | ||||||||||||||||
Construction and land development | 32,385 | 456 | — | 32,841 | — | 32,841 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Owner occupied | 48,860 | — | — | 48,860 | — | 48,860 | ||||||||||||||||||
Hotel/motel | 43,719 | — | — | 43,719 | — | 43,719 | ||||||||||||||||||
Multi-family | 44,839 | — | — | 44,839 | — | 44,839 | ||||||||||||||||||
Other | 132,900 | — | — | 132,900 | — | 132,900 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total commercial real estate | 270,318 | — | — | 270,318 | — | 270,318 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
Consumer mortgage | 47,151 | 1,585 | — | 48,736 | 187 | 48,923 | ||||||||||||||||||
Investment property | 43,629 | 23 | — | 43,652 | — | 43,652 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total residential real estate | 90,780 | 1,608 | — | 92,388 | 187 | 92,575 | ||||||||||||||||||
Consumer installment | 8,802 | 64 | — | 8,866 | — | 8,866 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 459,043 | 2,152 | — | 461,195 | 187 | $ | 461,382 | ||||||||||||||||
| ||||||||||||||||||||||||
2020.
charged
-off.| March 31, 2020 | ||||||||||||||||||||||||
| (In thousands) | Commercial and industrial | Construction and land development | Commercial real estate | Residential real estate | Consumer installment | Total | ||||||||||||||||||
| ||||||||||||||||||||||||
Quarter ended: | ||||||||||||||||||||||||
Beginning balance | $ | 577 | 569 | 2,289 | 813 | 138 | $ | 4,386 | ||||||||||||||||
Charge-offs | — | — | — | — | (5 | ) | (5) | |||||||||||||||||
Recoveries | 53 | — | — | 31 | 2 | 86 | ||||||||||||||||||
| ||||||||||||||||||||||||
Net recoveries (charge-offs) | 53 | — | — | 31 | (3 | ) | 81 | |||||||||||||||||
Provision for loan losses | 45 | 13 | 307 | 33 | 2 | 400 | ||||||||||||||||||
| ||||||||||||||||||||||||
Ending balance | $ | 675 | 582 | 2,596 | 877 | 137 | $ | 4,867 | ||||||||||||||||
| ||||||||||||||||||||||||
| March 31, 2019 | ||||||||||||||||||||||||
| (In thousands) | Commercial and industrial | Construction and land development | Commercial real estate | Residential real estate | Consumer installment | Total | ||||||||||||||||||
| ||||||||||||||||||||||||
Quarter ended: | ||||||||||||||||||||||||
Beginning balance | $ | 778 | 700 | 2,218 | 946 | 148 | $ | 4,790 | ||||||||||||||||
Charge-offs | — | — | — | — | (15 | ) | (15) | |||||||||||||||||
Recoveries | 18 | — | — | 14 | 1 | 33 | ||||||||||||||||||
| ||||||||||||||||||||||||
Net recoveries (charge-offs) | 18 | — | — | 14 | (14 | ) | 18 | |||||||||||||||||
Provision for loan losses | (110 | ) | 73 | 33 | (30 | ) | 34 | — | ||||||||||||||||
| ||||||||||||||||||||||||
Ending balance | $ | 686 | 773 | 2,251 | 930 | 168 | $ | 4,808 | ||||||||||||||||
| ||||||||||||||||||||||||
| Collectively evaluated (1) | Individually evaluated (2) | Total | ||||||||||||||||||||||
| (In thousands) | Allowance for loan losses | Recorded investment in loans | Allowance for loan losses | Recorded investment in loans | Allowance for loan losses | Recorded investment in loans | ||||||||||||||||||
| ||||||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||||||
Commercial and industrial | $ | 675 | 56,447 | — | — | 675 | 56,447 | |||||||||||||||||
Construction and land development | 582 | 32,302 | — | — | 582 | 32,302 | ||||||||||||||||||
Commercial real estate | 2,596 | 256,099 | — | — | 2,596 | 256,099 | ||||||||||||||||||
Residential real estate | 877 | 91,010 | — | — | 877 | 91,010 | ||||||||||||||||||
Consumer installment | 137 | 8,424 | — | — | 137 | 8,424 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 4,867 | 444,282 | — | — | 4,867 | 444,282 | |||||||||||||||||
| ||||||||||||||||||||||||
March 31, 2019: | ||||||||||||||||||||||||
Commercial and industrial | $ | 686 | 50,898 | — | — | 686 | 50,898 | |||||||||||||||||
Construction and land development | 773 | 44,931 | — | — | 773 | 44,931 | ||||||||||||||||||
Commercial real estate | 2,251 | 265,149 | — | — | 2,251 | 265,149 | ||||||||||||||||||
Residential real estate | 930 | 103,631 | — | — | 930 | 103,631 | ||||||||||||||||||
Consumer installment | 168 | 8,564 | — | — | 168 | 8,564 | ||||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 4,808 | 473,173 | — | — | 4,808 | 473,173 | |||||||||||||||||
| ||||||||||||||||||||||||
|
|
| (In thousands) | Pass | Special Mention | Substandard Accruing | Nonaccrual | Total loans | |||||||||||||||
| ||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||
Commercial and industrial | $ | 53,875 | 2,326 | 246 | — | $ | 56,447 | |||||||||||||
Construction and land development | 31,392 | — | 910 | — | 32,302 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Owner occupied | 47,646 | 910 | 149 | — | 48,705 | |||||||||||||||
Hotel/motel | 43,249 | — | — | — | 43,249 | |||||||||||||||
Multi-family | 33,190 | — | — | — | 33,190 | |||||||||||||||
Other | 130,088 | 846 | 21 | — | 130,955 | |||||||||||||||
| ||||||||||||||||||||
Total commercial real estate | 254,173 | 1,756 | 170 | — | 256,099 | |||||||||||||||
Residential real estate: | ||||||||||||||||||||
Consumer mortgage | 41,666 | 1,223 | 2,547 | 112 | 45,548 | |||||||||||||||
Investment property | 44,582 | 514 | 366 | — | 45,462 | |||||||||||||||
| ||||||||||||||||||||
Total residential real estate | 86,248 | 1,737 | 2,913 | 112 | 91,010 | |||||||||||||||
Consumer installment | 8,299 | 58 | 63 | 4 | 8,424 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 433,987 | 5,877 | 4,302 | 116 | $ | 444,282 | |||||||||||||
| ||||||||||||||||||||
December 31, 2019: | ||||||||||||||||||||
Commercial and industrial | $ | 54,340 | 2,176 | 266 | — | $ | 56,782 | |||||||||||||
Construction and land development | 31,798 | — | 1,043 | — | 32,841 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Owner occupied | 47,865 | 917 | 78 | — | 48,860 | |||||||||||||||
Hotel/motel | 43,719 | — | — | — | 43,719 | |||||||||||||||
Multi-family | 44,839 | — | — | — | 44,839 | |||||||||||||||
Other | 132,030 | 849 | 21 | — | 132,900 | |||||||||||||||
| ||||||||||||||||||||
Total commercial real estate | 268,453 | 1,766 | 99 | — | 270,318 | |||||||||||||||
Residential real estate: | ||||||||||||||||||||
Consumer mortgage | 45,247 | 962 | 2,527 | 187 | 48,923 | |||||||||||||||
Investment property | 42,331 | 949 | 372 | — | 43,652 | |||||||||||||||
| ||||||||||||||||||||
Total residential real estate | 87,578 | 1,911 | 2,899 | 187 | 92,575 | |||||||||||||||
Consumer installment | 8,742 | 60 | 64 | — | 8,866 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 450,911 | 5,913 | 4,371 | 187 | $ | 461,382 | |||||||||||||
| ||||||||||||||||||||
The Company had no impaired loans at March 31, 2020.
| December 31, 2019 | ||||||||||||||||||||
| (In thousands) | Unpaid principal balance (1) | Charge-offs and payments applied (2) | Recorded investment (3) | Related allowance | ||||||||||||||||
| ||||||||||||||||||||
With no allowance recorded: |
| |||||||||||||||||||
Commercial and industrial | $ | 335 | (236 | ) | 99 |
|
| |||||||||||||
| ||||||||||||||||||||
Total impaired loans | $ | 335 | (236 | ) | 99 | $ | — | |||||||||||||
|
|
| ||||||||||||||||||
|
|
|
2020.
| Quarter ended March 31, 2020 | Quarter ended March 31, 2019 | |||||||||||||||
| (In thousands) | Average recorded investment | Total interest income recognized | Average recorded investment | Total interest income recognized | ||||||||||||
| ||||||||||||||||
Impaired loans: |
| |||||||||||||||
Commercial real estate: | ||||||||||||||||
Owner occupied | $ | — | $ | — | $ | 78 | $ | 9 | ||||||||
| ||||||||||||||||
Total commercial real estate | $ | — | $ | — | $ | 78 | $ | 9 | ||||||||
| ||||||||||||||||
Total | $ | — | $ | — | $ | 78 | $ | 9 | ||||||||
| ||||||||||||||||
default (defined
as 90 days or more past due).| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
MSRs, net: | ||||||||
Beginning balance | $ | 1,299 | $ | 1,441 | ||||
Additions, net | 49 | 41 | ||||||
Amortization expense | (99 | ) | (72) | |||||
| ||||||||
Ending balance | $ | 1,249 | $ | 1,410 | ||||
| ||||||||
Valuation allowance included in MSRs, net: | ||||||||
Beginning of period | $ | — | $ | — | ||||
End of period | — | — | ||||||
| ||||||||
Fair value of amortized MSRs: | ||||||||
Beginning of period | $ | 2,111 | $ | 2,697 | ||||
End of period | 1,917 | 2,591 | ||||||
| ||||||||
| (Dollars in thousands) | Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant (Level 3) | ||||||||||||
| ||||||||||||||||
March 31, 2020: | ||||||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
Agency obligations | $ | 67,678 | — | 67,678 | — | |||||||||||
Agency RMBS | 145,371 | — | 145,371 | — | ||||||||||||
State and political subdivisions | 67,386 | — | 67,386 | — | ||||||||||||
| ||||||||||||||||
Total securitiesavailable-for-sale | 280,435 | — | 280,435 | — | ||||||||||||
| ||||||||||||||||
Total assets at fair value | $ | 280,435 | — | 280,435 | — | |||||||||||
| ||||||||||||||||
December 31, 2019: | ||||||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
Agency obligations | $ | 50,708 | — | 50,708 | — | |||||||||||
Agency RMBS | 123,277 | — | 123,277 | — | ||||||||||||
State and political subdivisions | 61,917 | — | 61,917 | — | ||||||||||||
| ||||||||||||||||
Total securitiesavailable-for-sale | 235,902 | — | 235,902 | — | ||||||||||||
| ||||||||||||||||
Total assets at fair value | $ | 235,902 | — | 235,902 | — | |||||||||||
| ||||||||||||||||
Other real estate owned
Other real estate owned (“OREO”), consisting of properties obtained through foreclosure or in satisfaction of loans, are initially recorded at the lower of the loan’s carrying amount or the fair value of collateral less costs to sell upon transfer of the loans to other real estate. Subsequently, OREO is carried at the lower of carrying value or fair value less costs to sell. Fair values are generally based on third party appraisals of the property and are classified within Level 3 of the fair value hierarchy. The appraisals are sometimes further discounted based on management’s historical knowledge, and/or changes in market conditions from the date of the most recent appraisal, and/or management’s expertise and knowledge of the customer and the customer’s business. Such discounts are typically significant unobservable inputs for determining fair value. In cases where the carrying amount exceeds the fair value, less costs to sell, a loss is recognized in noninterest expense.
| (Dollars in thousands) | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Observable Inputs (Level 2) | Significant (Level 3) | ||||||||||||
| ||||||||||||||||
March 31, 2020: | ||||||||||||||||
Loans held for sale | $ | 1,563 | — | 1,563 | — | |||||||||||
Other assets(2) | 1,348 | — | — | 1,348 | ||||||||||||
| ||||||||||||||||
Total assets at fair value | $ | 2,911 | — | 1,563 | 1,348 | |||||||||||
| ||||||||||||||||
December 31, 2019: | ||||||||||||||||
Loans held for sale | $ | 2,202 | — | 2,202 | — | |||||||||||
Loans, net(1) | 99 | — | — | 99 | ||||||||||||
Other assets(2) | 1,299 | — | — | 1,299 | ||||||||||||
| ||||||||||||||||
Total assets at fair value | $ | 3,600 | — | 2,202 | 1,398 | |||||||||||
| ||||||||||||||||
|
|
(Dollars in thousands) | Carrying Amount | Valuation Technique | Significant Unobservable Input | Range | Weighted Average of Input | |||||||||||||||
March 31, 2020: | ||||||||||||||||||||
Other real estate owned | $ | 99 | Appraisal | Appraisal discount | 10.0 -10.0 | % | 10.0 | % | ||||||||||||
Mortgage servicing rights, net | 1,249 | Discounted cash flow | Prepayment Speed or CPR | 13.0 -17.4 | % | 14.7 | % | |||||||||||||
| Discount rate | 10.0 -12.0 | % | 10.0 | % | ||||||||||||||||
| ||||||||||||||||||||
December 31, 2019: | ||||||||||||||||||||
Impaired loans | $ | 99 | Appraisal | Appraisal discounts | 10.0 | % | ||||||||||||||
Mortgage servicing rights, net | 1,299 | Discounted cash flow | Prepayment Speed or CPR | 11.6 | % | |||||||||||||||
| Discount rate | 10.0 | % | ||||||||||||||||||
| ||||||||||||||||||||
below
Loans held for sale
Fair values
The carrying value, related estimated fair value, and placement in the fair value hierarchy of the Company’s financial instruments at March 31, 2020 and December 31, 2019 are presented below. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which fair value approximates carrying value included cash and cash equivalents. Financial liabilities for which fair value approximates carrying value included noninterest-bearing demand deposits, interest-bearing demand deposits, and savings deposits. Fair value approximates carrying value in these financial liabilities due to these products having no stated maturity. Additionally, financial liabilities for which fair value approximates carrying value included overnight borrowings such as federal funds purchased and securities sold under agreements to repurchase.
| Fair Value Hierarchy | ||||||||||||||||||||
| (Dollars in thousands) | Carrying amount | Estimated fair value | Level 1 inputs | Level 2 inputs | Level 3 Inputs | |||||||||||||||
| ||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||
Loans, net (1) | $ | 439,001 | $ | 433,758 | $ | — | $ | — | $ | 433,758 | ||||||||||
Loans held for sale | 1,563 | 1,614 | — | 1,614 | — | |||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Time Deposits | $ | 166,974 | $ | 168,375 | $ | — | $ | 168,375 | $ | — | ||||||||||
| ||||||||||||||||||||
December 31, 2019: | ||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||
Loans, net (1) | $ | 456,515 | $ | 453,705 | $ | — | $ | — | $ | 453,705 | ||||||||||
Loans held for sale | 2,202 | 2,251 | — | 2,251 | — | |||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Time Deposits | $ | 167,199 | $ | 168,316 | $ | — | $ | 168,316 | $ | — | ||||||||||
| ||||||||||||||||||||
|
2020.
Certain
the effects of public health, economic activity and measures taken to restore public health in light of theCOVID-19 pandemic;
●
conditions, including changes in accounting policies, rules,borrowers’ credit risks and practices;
portfolio reviews;
project;
our business continuity planning, and changes in the ways we communicate with, and provide services to our customers, implemented during theCOVID-19 pandemic;
the effects of war, or other conflicts, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions;
cyber attacks
information;
the risk that our deferred tax assets (“DTAs”),
Business
Act of 1934, as amended (the “Exchange Act”).
| Quarter ended March 31, | ||||||||
| (Dollars in thousands, except per share data) | 2020 | 2019 | ||||||
| ||||||||
Net interest income (a) | $ | 6,332 | $ | 6,766 | ||||
Less:tax-equivalent adjustment | 120 | 146 | ||||||
| ||||||||
Net interest income (GAAP) | 6,212 | 6,620 | ||||||
Noninterest income | 1,235 | 1,160 | ||||||
| ||||||||
Total revenue | 7,447 | 7,780 | ||||||
Provision for loan losses | 400 | — | ||||||
Noninterest expense | 4,856 | 4,611 | ||||||
Income tax expense | 390 | 626 | ||||||
| ||||||||
Net earnings | $ | 1,801 | $ | 2,543 | ||||
| ||||||||
Basic and diluted earnings per share | $ | 0.50 | $ | 0.70 | ||||
| ||||||||
|
2020.
Noninterest expense was2021
We have changed our
over the life of the underlying PPP loans.
The PPP,ascharged
-off.continuing
COVID-19 pandemic.Under the CARES Act, net operating losses arising in tax years beginning after December 31, 2017, and before January 1, 2021 may be carried back to each of the five tax years preceding the tax year of such loss. Since the enactment of the Tax Cuts and Jobs Act, net operating losses generally could not be carried back but could be carried forward indefinitely. Further, the Tax Cuts and Jobs Act limited net operating loss absorption to 80% of taxable income. The CARES Act temporarily removes the 80% limitation, reinstating it for tax years beginning after 2020.
| Quarter ended March 31, | ||||||||||||||||
| 2020 | 2019 | |||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||
| (Dollars in thousands) | Balance | Rate | Balance | Rate | ||||||||||||
|
|
|
|
| ||||||||||||
Loans and loans held for sale | $ | 452,155 | 4.81 | % | $ | 478,059 | 4.86 | % | ||||||||
Securities - taxable | 196,422 | 2.27 | % | 171,543 | 2.40 | % | ||||||||||
Securities -tax-exempt | 60,895 | 3.78 | % | 68,481 | 4.12 | % | ||||||||||
|
|
|
|
| ||||||||||||
Total securities | 257,317 | 2.63 | % | 240,024 | 2.89 | % | ||||||||||
Federal funds sold | 29,758 | 1.26 | % | 21,404 | 2.37 | % | ||||||||||
Interest bearing bank deposits | 49,378 | 1.52 | % | 36,676 | 2.51 | % | ||||||||||
|
|
|
|
| ||||||||||||
Total interest-earning assets | 788,608 | 3.76 | % | 776,163 | 4.07 | % | ||||||||||
|
|
|
|
| ||||||||||||
Deposits: | ||||||||||||||||
NOW | 149,344 | 0.51 | % | 132,358 | 0.54 | % | ||||||||||
Savings and money market | 220,909 | 0.46 | % | 220,311 | 0.41 | % | ||||||||||
Time Deposits | 167,447 | 1.44 | % | 177,186 | 1.43 | % | ||||||||||
|
|
|
|
| ||||||||||||
Total interest-bearing deposits | 537,700 | 0.78 | % | 529,855 | 0.78 | % | ||||||||||
Short-term borrowings | 1,361 | 0.50 | % | 1,974 | 0.49 | % | ||||||||||
|
|
|
|
| ||||||||||||
Total interest-bearing liabilities | 539,061 | 0.78 | % | 531,829 | 0.78 | % | ||||||||||
|
|
|
|
| ||||||||||||
Net interest income and margin(tax-equivalent) | $ | 6,332 | 3.23 | % | $ | 6,766 | 3.54 | % | ||||||||
|
|
|
|
| ||||||||||||
Quarter ended March 31,
customer deposits.
to 0.44%.
The net decrease in our funding costs was primarily due to lowerprevailing market interest rates.Such| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
Service charges on deposit accounts | $ | 172 | $ | 184 | ||||
Mortgage lending income | 230 | 189 | ||||||
Bank-owned life insurance | 398 | 110 | ||||||
Securities gains, net | 6 | 5 | ||||||
Other | 429 | 672 | ||||||
| ||||||||
Total noninterest income | $ | 1,235 | $ | 1,160 | ||||
| ||||||||
| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
Origination income, net | $ | 163 | $ | 86 | ||||
Servicing fees, net | 67 | 103 | ||||||
| ||||||||
Total mortgage lending income | $ | 230 | $ | 189 | ||||
| ||||||||
Noninterest Expense
| Quarter ended March 31, | ||||||||
| (Dollars in thousands) | 2020 | 2019 | ||||||
| ||||||||
Salaries and benefits | $ | 2,831 | $ | 2,938 | ||||
Net occupancy and equipment | 597 | 384 | ||||||
Professional fees | 258 | 228 | ||||||
Other | 1,170 | 1,061 | ||||||
| ||||||||
Total noninterest expense | $ | 4,856 | $ | 4,611 | ||||
| ||||||||
The decrease in salaries and benefits expense was primarily due to lower incentive accruals.
The increase in net occupancy and equipment expense was primarily
industrial
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Commercial and industrial | $ | 56,447 | 56,782 | 52,288 | 54,307 | 50,898 | ||||||||||||||
Construction and land development | 32,302 | 32,841 | 41,599 | 45,395 | 44,931 | |||||||||||||||
Commercial real estate | 256,099 | 270,318 | 267,346 | 268,500 | 265,149 | |||||||||||||||
Residential real estate | 91,010 | 92,575 | 95,215 | 99,292 | 103,631 | |||||||||||||||
Consumer installment | 8,424 | 8,866 | 9,148 | 9,091 | 8,564 | |||||||||||||||
| ||||||||||||||||||||
Total loans | 444,282 | 461,382 | 465,596 | 476,585 | 473,173 | |||||||||||||||
Less: unearned income | (414 | ) | (481 | ) | (488 | ) | (524 | ) | (523) | |||||||||||
| ||||||||||||||||||||
Loans, net of unearned income | $ | 443,868 | 460,901 | 465,108 | 476,061 | 472,650 | ||||||||||||||
| ||||||||||||||||||||
net of unearned income
2021.
2020.
| March 31, | December 31, | |||||||
| (In thousands) | 2020 | 2019 | ||||||
| ||||||||
Lessors of 1 to 4 family residential properties | $ | 45,462 | $ | 43,652 | ||||
Hotel/motel | 43,249 | 43,719 | ||||||
Shopping centers | 34,037 | 30,407 | ||||||
Multi-family residential properties | 33,190 | 44,839 | ||||||
Office buildings | 25,552 | 29,548 | ||||||
| ||||||||
| Portfolio Segment | ||||||||||||||||||||
| (In thousands) | Commercial and industrial | Construction and land development | Commercial real estate | Total | % of Total Loans | |||||||||||||||
| ||||||||||||||||||||
March 31, 2020: | ||||||||||||||||||||
Hotel/motel | $ | 755 | 7,293 | 43,249 | $ | 51,297 | 12 | % | ||||||||||||
Shopping centers | 25 | — | 34,037 | 34,062 | 8 | |||||||||||||||
Retail, excluding shopping centers | 435 | 826 | 18,413 | 19,674 | 4 | |||||||||||||||
Restaurants | 566 | — | 14,089 | 14,655 | 3 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 1,781 | 8,119 | 109,788 | $ | 119,688 | 27 | % | ||||||||||||
| ||||||||||||||||||||
| (In thousands) | Balance | % of Portfolio Modified | ||||||
| ||||||||
Commercial and industrial | $ | 939 | 2 | % | ||||
Construction and land development | 58 | — | ||||||
Commercial real estate | 37,639 | 15 | ||||||
Residential real estate | 4,557 | 5 | ||||||
Consumer installment | 118 | 1 | ||||||
| ||||||||
Total | $ | 43,311 | 10 | % | ||||
| ||||||||
within High Exposure Commercial Real Estate Segments
Section 4013.
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Balance at beginning of period | $ | 4,386 | 4,807 | 4,851 | 4,808 | 4,790 | ||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial and industrial | — | (236 | ) | (128 | ) | — | — | |||||||||||||
Residential real estate | — | (5 | ) | (1 | ) | — | — | |||||||||||||
Consumer installment | (5 | ) | (20 | ) | (2 | ) | (1 | ) | (15) | |||||||||||
| ||||||||||||||||||||
Total charge-offs | (5 | ) | (261 | ) | (131 | ) | (1 | ) | (15) | |||||||||||
Recoveries | 86 | 90 | 87 | 44 | 33 | |||||||||||||||
| ||||||||||||||||||||
Net recoveries (charge-offs) | 81 | (171 | ) | (44 | ) | 43 | 18 | |||||||||||||
Provision for loan losses | 400 | (250 | ) | — | — | — | ||||||||||||||
| ||||||||||||||||||||
Ending balance | $ | 4,867 | 4,386 | 4,807 | 4,851 | 4,808 | ||||||||||||||
| ||||||||||||||||||||
as a % of loans | 1.10 | % | 0.95 | 1.03 | 1.02 | 1.02 | ||||||||||||||
as a % of nonperforming loans | 4,196 | % | 2,345 | 2,763 | 3,703 | 2,845 | ||||||||||||||
Net (recoveries) charge-offs as % of average loans (a) | (0.07 | )% | 0.15 | 0.04 | (0.04 | ) | (0.02) | |||||||||||||
| ||||||||||||||||||||
Our allowance for loan losses is expected to increase as the cumulative effects of theCOVID0-19 pandemic affect our customers for a longer period and are more fully realized as a result.
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (Dollars in thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Nonperforming assets: | ||||||||||||||||||||
Nonaccrual loans | $ | 116 | 187 | 174 | 131 | 169 | ||||||||||||||
Other real estate owned | 99 | — | — | 303 | 172 | |||||||||||||||
| ||||||||||||||||||||
Total nonperforming assets | $ | 215 | 187 | 174 | 434 | 341 | ||||||||||||||
| ||||||||||||||||||||
as a % of loans and other real estate owned | 0.05 | % | 0.04 | 0.04 | 0.09 | 0.07 | ||||||||||||||
as a % of total assets | 0.03 | % | 0.02 | 0.02 | 0.05 | 0.04 | ||||||||||||||
Nonperforming loans as a % of total loans | 0.03 | % | 0.04 | 0.04 | 0.03 | 0.04 | ||||||||||||||
| ||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||
Residential real estate | 112 | 187 | 174 | 131 | 169 | |||||||||||||||
Consumer installment | 4 | — | — | — | — | |||||||||||||||
| ||||||||||||||||||||
Total nonaccrual loans | $ | 116 | 187 | 174 | 131 | 169 | ||||||||||||||
| ||||||||||||||||||||
At March 31, 2020 and December 31, 2019, respectively, there were
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Other real estate owned: | ||||||||||||||||||||
Residential | $ | 99 | — | — | 303 | 172 | ||||||||||||||
| ||||||||||||||||||||
Total other real estate owned | $ | 99 | — | — | 303 | 172 | ||||||||||||||
| ||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Potential problem loans: | ||||||||||||||||||||
Commercial and industrial | $ | 246 | 266 | 500 | 590 | 570 | ||||||||||||||
Construction and land development | 910 | 1,043 | 660 | 681 | 719 | |||||||||||||||
Commercial real estate | 170 | 99 | 102 | 105 | 338 | |||||||||||||||
Residential real estate | 2,913 | 2,899 | 3,460 | 3,621 | 3,724 | |||||||||||||||
Consumer installment | 63 | 64 | 45 | 51 | 130 | |||||||||||||||
| ||||||||||||||||||||
Total potential problem loans | $ | 4,302 | 4,371 | 4,767 | 5,048 | 5,481 | ||||||||||||||
| ||||||||||||||||||||
The following table is a summary of the Company’s performing loans that were past due at least 30 days, but less
| 2020 | 2019 | |||||||||||||||||||
| First | Fourth | Third | Second | First | ||||||||||||||||
| (In thousands) | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||
| ||||||||||||||||||||
Performing loans past due 30 to 89 days: | ||||||||||||||||||||
Commercial and industrial | $ | 4 | 24 | 53 | 109 | 428 | ||||||||||||||
Construction and land development | 8 | 456 | 449 | 351 | 152 | |||||||||||||||
Residential real estate | 922 | 1,608 | 94 | 214 | 339 | |||||||||||||||
Consumer installment | 19 | 64 | 21 | 8 | 8 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 953 | 2,152 | 617 | 682 | 927 | ||||||||||||||
| ||||||||||||||||||||
quarters
.2020.
These increases reflect deposits from2021 compared to 0.78% in the
2020.
2021 and 2020.
2020.
2021.
|
|
|
|
|
|
|
|
Since 2009, we have
2021.
forbeara
nce.
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Net interest income (GAAP) Tax-equivalent adjustment Net interest income(Tax-equivalent) non-GAAP non-non-GAAP non- 2020 2019 First Fourth Third Second First (in thousands) Quarter Quarter Quarter Quarter Quarter $ 6,212 6,280 6,567 6,597 6,620 120 126 140 145 146 $ 6,332 6,406 6,707 6,742 6,766
| 2020 | 2019 | |||||||||||||||||||
| (Dollars in thousands, except per share amounts) | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | |||||||||||||||
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Results of Operations | ||||||||||||||||||||
Net interest income (a) | $ | 6,332 | 6,406 | 6,707 | 6,742 | 6,766 | ||||||||||||||
Less:tax-equivalent adjustment | 120 | 126 | 140 | 145 | 146 | |||||||||||||||
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Net interest income (GAAP) | 6,212 | 6,280 | 6,567 | 6,597 | 6,620 | |||||||||||||||
Noninterest income | 1,235 | 2,458 | 991 | 885 | 1,160 | |||||||||||||||
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Total revenue | 7,447 | 8,738 | 7,558 | 7,482 | 7,780 | |||||||||||||||
Provision for loan losses | 400 | (250 | ) | — | — | — | ||||||||||||||
Noninterest expense | 4,856 | 5,633 | 4,824 | 4,629 | 4,611 | |||||||||||||||
Income tax expense | 390 | 671 | 527 | 546 | 626 | |||||||||||||||
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Net earnings | $ | 1,801 | 2,684 | 2,207 | 2,307 | 2,543 | ||||||||||||||
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Per share data: | ||||||||||||||||||||
Basic and diluted net earnings | $ | 0.50 | 0.76 | 0.62 | 0.64 | 0.70 | ||||||||||||||
Cash dividends declared | 0.26 | 0.25 | 0.25 | 0.25 | 0.25 | |||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic and diluted | 3,566,146 | 3,566,146 | 3,568,287 | 3,577,409 | 3,614,741 | |||||||||||||||
Shares outstanding, at period end | 3,566,146 | 3,566,146 | 3,566,146 | 3,571,828 | 3,581,485 | |||||||||||||||
Book value | $ | 29.04 | 27.57 | 27.12 | 26.34 | 25.39 | ||||||||||||||
Common stock price | ||||||||||||||||||||
High | $ | 59.99 | 53.90 | 47.38 | 39.55 | 39.43 | ||||||||||||||
Low | 24.11 | 40.00 | 32.33 | 31.06 | 30.61 | |||||||||||||||
Period end: | 41.98 | 53.00 | 47.38 | 33.50 | 39.43 | |||||||||||||||
To earnings ratio | 16.66 | 19.49 | 18.08 | 13.19 | 15.71 | |||||||||||||||
To book value | 145 | % | 192 | 175 | 127 | 155 | ||||||||||||||
Performance ratios: | ||||||||||||||||||||
Return on average equity | 7.24 | % | 10.86 | 9.25 | 10.00 | 11.31 | ||||||||||||||
Return on average assets | 0.86 | % | 1.30 | 1.06 | 1.12 | 1.23 | ||||||||||||||
Dividend payout ratio | 51.00 | % | 32.89 | 40.32 | 39.06 | 35.71 | ||||||||||||||
Asset Quality: | ||||||||||||||||||||
Allowance for loan losses as a % of: | ||||||||||||||||||||
Loans | 1.10 | % | 0.95 | 1.03 | 1.02 | 1.02 | ||||||||||||||
Nonperforming loans | 4,196 | % | 2,345 | 2,763 | 3,703 | 2,845 | ||||||||||||||
Nonperforming assets as a % of: | ||||||||||||||||||||
Loans and other real estate owned | 0.05 | % | 0.04 | 0.04 | 0.09 | 0.07 | ||||||||||||||
Total assets | 0.03 | % | 0.02 | 0.02 | 0.05 | 0.04 | ||||||||||||||
Nonperforming loans as a % of total loans | 0.03 | % | 0.04 | 0.04 | 0.03 | 0.04 | ||||||||||||||
Annualized net (recoveries) charge-offs as % of average loans | (0.07 | )% | 0.15 | 0.04 | (0.04 | ) | (0.02 | ) | ||||||||||||
Capital Adequacy: (c) | ||||||||||||||||||||
CET 1 risk-based capital ratio | 17.77 | % | 17.28 | 17.06 | 16.26 | 16.17 | ||||||||||||||
Tier 1 risk-based capital ratio | 17.77 | % | 17.28 | 17.06 | 16.26 | 16.17 | ||||||||||||||
Total risk-based capital ratio | 18.72 | % | 18.12 | 17.96 | 17.14 | 17.06 | ||||||||||||||
Tier 1 leverage ratio | 11.17 | % | 11.23 | 11.22 | 11.14 | 10.87 | ||||||||||||||
Other financial data: | ||||||||||||||||||||
Net interest margin (a) | 3.23 | % | 3.27 | 3.41 | 3.50 | 3.54 | ||||||||||||||
Effective income tax rate | 17.80 | % | 20.00 | 19.28 | 19.14 | 19.75 | ||||||||||||||
Efficiency ratio (b) | 64.17 | % | 63.55 | 62.67 | 60.69 | 58.18 | ||||||||||||||
Selected average balances: | ||||||||||||||||||||
Securities | $ | 257,317 | 249,106 | 247,114 | 243,784 | 240,024 | ||||||||||||||
Loans, net of unearned income | 451,210 | 469,579 | 472,747 | 473,281 | 477,335 | |||||||||||||||
Total assets | 838,725 | 827,684 | 829,761 | 821,706 | 827,143 | |||||||||||||||
Total deposits | 734,047 | 723,557 | 729,608 | 725,263 | 732,539 | |||||||||||||||
Total stockholders’ equity | 99,560 | 98,887 | 95,400 | 92,272 | 89,934 | |||||||||||||||
Selected period end balances: | ||||||||||||||||||||
Securities | $ | 280,435 | 235,902 | 251,152 | 248,813 | 241,287 | ||||||||||||||
Loans, net of unearned income | 443,868 | 460,901 | 465,108 | 476,061 | 472,650 | |||||||||||||||
Allowance for loan losses | 4,867 | 4,386 | 4,807 | 4,851 | 4,808 | |||||||||||||||
Total assets | 856,475 | 828,570 | 824,963 | 839,178 | 835,014 | |||||||||||||||
Total deposits | 746,785 | 724,152 | 723,071 | 740,501 | 739,631 | |||||||||||||||
Total stockholders’ equity | 103,563 | 98,328 | 96,720 | 94,065 | 90,949 | |||||||||||||||
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2020 Average Balance Interest Income/ Expense Yield/ Rate Average Balance Interest Income/ Expense Yield/ Rate Interest-earning assets: Loans and loans held for sale (1) Securities - taxable Securities-tax-exempt (2) Total securities Federal funds sold Interest bearing bank deposits Total interest-earning assets Cash and due from banks Other assets Total assets Interest-bearing liabilities: Deposits: NOW Savings and money market Time deposits Total interest-bearing deposits Short-term borrowings Total interest-bearing liabilities Noninterest-bearing deposits Other liabilities Stockholders’ equity Total liabilities and stockholders’ equity Net interest income and margin(tax-equivalent) Quarter ended March 31, 2019 (Dollars in thousands) $ 452,155 $ 5,412 4.81 % $ 478,059 $ 5,727 4.86 % 196,422 1,111 2.27 % 171,543 1,015 2.40 % 60,895 573 3.78 % 68,481 695 4.12 % 257,317 1,684 2.63 % 240,024 1,710 2.89 % 29,758 93 1.26 % 21,404 125 2.37 % 49,378 186 1.52 % 36,676 227 2.51 % 788,608 $ 7,375 3.76 % 776,163 $ 7,789 4.07 % 14,184 14,622 35,933 36,358 $ 838,725 $ 827,143 $ 149,344 $ 188 0.51 % $ 132,358 $ 175 0.54 % 220,909 253 0.46 % 220,311 222 0.41 % 167,447 600 1.44 % 177,186 624 1.43 % 537,700 1,041 0.78 % 529,855 1,021 0.78 % 1,361 2 0.50 % 1,974 2 0.49 % 539,061 $ 1,043 0.78 % 531,829 $ 1,023 0.78 % 196,347 202,684 3,757 2,696 99,560 89,934 $ 838,725 $ 827,143 $ 6,332 3.23 % $ 6,766 3.54 %
Commercial and industrial Construction and land development Commercial real estate Residential real estate Consumer installment Total loans Less: unearned income Loans, net of unearned income Less: allowance for loan losses Loans, net 2020 2019 First Fourth Third Second First (In thousands) Quarter Quarter Quarter Quarter Quarter $ 56,447 56,782 52,288 54,307 50,898 32,302 32,841 41,599 45,395 44,931 256,099 270,318 267,346 268,500 265,149 91,010 92,575 95,215 99,292 103,631 8,424 8,866 9,148 9,091 8,564 444,282 461,382 465,596 476,585 473,173 (414 ) (481 ) (488 ) (524 ) (523 ) 443,868 460,901 465,108 476,061 472,650 (4,867 ) (4,386 ) (4,807 ) (4,851 ) (4,808 ) $ 439,001 456,515 460,301 471,210 467,842
| 2020 | 2019 | |||||||||||||||||||||||
| (Dollars in thousands) | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | |||||||||||||||||||
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Allowance for loan losses: | ||||||||||||||||||||||||
Balance at beginning of period | $ | 4,386 | 4,807 | 4,851 | 4,808 | 4,790 | ||||||||||||||||||
Charge-offs: | ||||||||||||||||||||||||
Commercial and industrial | — | (236 | ) | (128 | ) | — | — | |||||||||||||||||
Residential real estate | — | (5 | ) | (1 | ) | — | — | |||||||||||||||||
Consumer installment | (5 | ) | (20 | ) | (2 | ) | (1 | ) | (15) | |||||||||||||||
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Total charge-offs | (5 | ) | (261 | ) | (131 | ) | (1 | ) | (15) | |||||||||||||||
Recoveries | 86 | 90 | 87 | 44 | 33 | |||||||||||||||||||
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Net recoveries (charge-offs) | 81 | (171 | ) | (44 | ) | 43 | 18 | |||||||||||||||||
Provision for loan losses | 400 | (250 | ) | — | — | — | ||||||||||||||||||
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Ending balance | $ | 4,867 | 4,386 | 4,807 | 4,851 | 4,808 | ||||||||||||||||||
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as a % of loans | 1.10 | % | 0.95 | 1.03 | 1.02 | 1.02 | ||||||||||||||||||
as a % of nonperforming loans | 4,196 | % | 2,345 | 2,763 | 3,703 | 2,845 | ||||||||||||||||||
Net (recoveries) charge-offs as % of avg. loans (a) | (0.07 | )% | 0.15 | 0.04 | (0.04 | ) | (0.02 | ) | ||||||||||||||||
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Nonperforming assets: | ||||||||||||||||||||||||
Nonaccrual loans | $ | 116 | 187 | 174 | 131 | 169 | ||||||||||||||||||
Other real estate owned | 99 | — | — | 303 | 172 | |||||||||||||||||||
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Total nonperforming assets | $ | 215 | 187 | 174 | 434 | 341 | ||||||||||||||||||
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as a % of loans and other real estate owned | 0.05 | % | 0.04 | 0.04 | 0.09 | 0.07 | ||||||||||||||||||
as a % of total assets | 0.03 | % | 0.02 | 0.02 | 0.05 | 0.04 | ||||||||||||||||||
Nonperforming loans as a % of total loans | 0.03 | % | 0.04 | 0.04 | 0.03 | 0.04 | ||||||||||||||||||
Accruing loans 90 days or more past due | $ | — | — | 94 | — | — | ||||||||||||||||||
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Commercial and industrial Construction and land development Commercial real estate Residential real estate Consumer installment Total allowance for loan losses 2020 2019 First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter (Dollars in thousands) Amount %* Amount %* Amount %* Amount %* Amount %* $ 675 12.7 $ 577 12.3 $ 685 11.2 $ 726 11.4 $ 686 10.8 582 7.3 569 7.1 730 8.9 781 9.5 773 9.5 2,596 57.6 2,289 58.6 2,354 57.4 2,287 56.4 2,251 56.0 877 20.5 813 20.1 890 20.5 904 20.8 930 21.9 137 1.9 138 1.9 148 2.0 153 1.9 168 1.8 $ 4,867 $ 4,386 $ 4,807 $ 4,851 $ 4,808
(Dollars in thousands)March 31, 2020Maturity of:3 months or less$7,155 Over 3 months through 6 months21,589 Over 6 months through 12 months28,723 Over 12 months50,680 Total CDs and other time deposits of $100,000 or more$ 108,147
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TheCOVID-19 pandemic is expected to continue to adversely affect our business, financial condition and results
The ultimate effects of theCOVID-19 pandemic on the economy, generally, our markets, and on us cannot be predicted. The timing and effects of theCOVID-19 pandemic on our business, results of operations and financial condition may include, among various other consequences, the following. These effects depend on the severity, scope and duration of the pandemic, its cumulative economic effects, and the effectiveness of healthcare; business and governmental actions addressing to the pandemic’s effects.
Employees’ health could be adversely affected, necessitating their recovery away from work;
Unavailability of key personnel necessary to conduct our business activities;
Our operating effectiveness may be reduced as our employees work from home or suffer from theCOVID-19 virus;
Shelter in place, or other restrictions and interruptions of our business and contact with our customers;
Sustained closures of our branch lobbies or the offices of our customers;
Declines in demand for loans and other banking services and products, and reduced interchange fees on payment cards ;
Reduced consumer spending due to both job losses, health concerns and required practices, such as social distancing and shelter in place, attributable to theCOVID-19 pandemic;
Reduced interchange revenue from reduced retail sales, travel and payment card usage, generally;
Significant volatility in United States financial markets and our investment securities portfolio, including credit concerns over state, county and municipal securities;
Our growth has been slowed, and may slow further, or our asset size may decline;
Reduced economic activity and reduced customer income and cash flows from normal business and employment could reduce the amounts of our deposits, increase deposit costs, and adversely affect our liquidity, financial condition and results of operations;
Declines in the credit quality of our loan portfolio, owing to the effects of theCOVID-19 pandemic in the markets we serve, leading to increased provisions for loan losses and increases in our allowance for possible credit losses;
Declines in the value of collateral for loans, including real estate collateral, especially in industries such as travel and hospitality;
Declines in the net worth and liquidity of borrowers, impairing their ability to pay timely their loan obligations to us;
Decreases in market interest rates that are expected to reduce our net interest income and our profitability;
Loan deferrals and loan modifications, including those mandated by law, or which are encouraged by our regulators, may increase our expense and risks of collectability, reduce our cash flows and liquidity and adversely affect our results of operations and financial condition;
Our waiver of various fees and service charges to support our customers and communities will adversely affect our results of operation and our liquidity and financial position;
TheCOVID-19 pandemic may change customer financial behaviors and payment practices. Electronic banking could become more popular with less customers doing business at our offices;
Certain of our assets, including loans and securities, may become impaired, which would adversely affect our results of operation and financial condition;
Reductions in income or losses will adversely affect our capital and growth of capital, including our capital for bank regulatory purposes;
Losses or reductions in net income may adversely affect the growth or amount of dividends we can pay on our common stock;
The effects of government fiscal and monetary policies on the economy and financial stability, generally, and on our business, results of operations and financial condition cannot be predicted;
The restoration of financial stability and economic growth may depend on the health care system developing and deployingCOVID-19 testing and contact tracing, and drugs that better addressCOVID-19, and vaccines to preventCOVID-19, which promote consumer and employee health and confidence in the economy.
These factors, together or in combination with other events or occurrences that are unknown or anticipated, may materially and adversely affect our business, financial condition and results of operations.
Our stock price may reflect securities market conditions
The ongoingCOVID-19pandemic has resulted in substantial securities market losses, especially for bank stocks and has, and may continue to, adversely affect the market of our common stock. The spread, intensification and duration ofCOVID-19 outbreak, as well as the effectiveness of governmental, fiscal and monetary policies, and regulatory responses to the pandemic, further affect the financial markets and the market prices for securities generally, and the market prices for bank stocks, including our common stock.
TheCOVID-19 global pandemic could result in deterioration of asset quality and an increase in credit losses.
Many businesses have or will have lower revenues and cash flows and many consumers will have lower income. These could result in an inability to repay loans timely in full, reduce our asset quality and reduce our deposits. Loan modifications and payment deferrals may also increase our credit risks. Our business, results of operations, liquidity and financial condition could be adversely affected.
TheCOVID-19pandemic has resulted in increased operational risks.
TheCOVID-19pandemic has resulted in heightened operational risks. Much of our workforce has been working remotely, and increased levels of remote access create additional cybersecurity risk and opportunities for cybercriminals to exploit vulnerabilities. Cybercriminals may increase their attempts to compromise business and consumer emails, including an increase in phishing attempts, and fraudulent vendors or other parties may view the pandemic as an opportunity to prey upon consumers and businesses during this time. This could result in increased fraud losses to us or our clients. The increase in online and remote banking activities may also increase the risk of fraud against our customers. State and local orders and regulations regarding the conduct ofin-person business operations have affected and may continue to affect our ability to operate at normal levels and to restore operations to theirpre-pandemic level for an unknown period of time. Separately, our third-party service providers have also been affected by the pandemic. To date, these disruptions have not been material and we have developed solutions to these disruptions, but we may experience additional disruption in the future, which could adversely affect our business, results of operations and financial condition.
The COVID-19 global pandemic may continue to cause uncertainty in markets and may result in an increase in our cost of funds.
The COVID-19 global pandemic has caused a great amount of uncertainty in markets, causing credit markets to seize and forcing companies, including our clients, to seek liquidity in the face of uncertain future cash flows. To the extent the clients’ funds are not used as working capital and not placed on deposit with us, we could be faced with funding draws of committed lending facilities, along with requests for new credit facilities from our clients. As clients use deposit balances to fund their businesses, this may put funding pressure on us, which may cause us to pay higher rates than normal for deposits and other funding.
As a participating lender in the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), the Bank is subject to additional risks of litigation from the Bank’s customers or other parties regarding the Bank’s processing of loans for the PPP and risks that the SBA may not fund some or all PPP loan guaranties.
The CARES Act and the PPP Enhancement Act included an approximately $659 billion loan for the PPP administered through by the SBA and the U.S. Department of the Treasury. Under the PPP, small businesses and other entities and individuals can apply for loans from existing SBA lenders and other approved PPP lenders, subject to numerous limitations and eligibility criteria. The Bank is participating as a lender in the PPP. The PPP opened on April 3, 2020; however, because of the short timeframe between the passing of the CARES Act and the opening of the PPP, there is some ambiguity in the laws, rules and guidance regarding the operation of the PPP, which exposes the Company to risks relating to noncompliance with the PPP. As of April 23, 2020, we have secured funding of approximately 250 loans totaling approximately $30 million though the PPP program. On or about April 16, 2020, the SBA notified lenders that the $349 billion earmarked for the PPP was exhausted. Congress approved approximately $310 billion of additional funding for the PPP on April 24, 2020. Since the opening of the PPP, several other larger banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP. We may be exposed to the risk of litigation, from both customers andnon-customers that approached the Bank regarding PPP loans, regarding its procedures used in processing applications for the PPP. If any such litigation is filed against the Bank and is not resolved favorably to the Bank, it may result in financial liability or adversely affect our reputation. Litigation can be costly, regardless of outcome. Any financial liability, litigation costs or reputational damage caused by PPP related litigation could have a material adverse effect on our business, financial condition and results of operations.
The Bank also has credit risk on PPP loans, if the SBA determines deficiencies in the manner in which PPP loans were originated, funded or serviced by the Bank, such as an issue with the eligibility of a borrower to receive a PPP loan, including those related to the ambiguity in the laws, rules and guidance regarding the PPP’s operation. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there were one or more deficiencies in the manner in which the PPP loan was originated, funded, or serviced by the Company, the SBA may deny its liability under the PPP loan guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from the Company. Similar issues may also result in the denial of forgiveness of PPP loans, which would adversely affect and could result in losses, including possible bankruptcies, which may expose us to further costs and potential losses.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS
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On March 10, 2020, the Company adopted a new $5 million stock repurchase program that becamebecome effective April 1, 2020.
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SIGNATURES
Pursuant to Rule 13a-14(a) of the requirements Securities ExchangeAct of 1934, As Adopted Pursuant To
Section 302 of the Sarbanes-Oxley Act of 2002, by Robert W. Dumas, Chairman, President and Chief Executive
Officer.
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