Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 09, 2018 | Jun. 30, 2017 | |
Employee Benefits Tables | |||
Entity Registrant Name | F&M BANK CORP | ||
Entity Central Index Key | 740,806 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 3,256,579 | ||
Entity Public Float | $ 85,615,255 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and due from banks | $ 10,622 | $ 7,755 |
Money market funds | 1,285 | 674 |
Federal funds sold | 0 | 7,926 |
Cash and cash equivalents | 11,907 | 16,355 |
Securities: | ||
Held to maturity - fair value of $125 in 2017 and 2016 | 125 | 125 |
Available for sale | 28,615 | 24,783 |
Other investments | 12,503 | 14,567 |
Loans held for sale | 39,775 | 62,735 |
Loans held for investment | 616,974 | 591,636 |
Less: allowance for loan losses | (6,044) | (7,543) |
Net loans held for investment | 610,930 | 584,093 |
Other real estate owned | 1,984 | 2,076 |
Bank premises and equipment, net | 15,894 | 10,340 |
Interest receivable | 2,007 | 1,785 |
Goodwill | 2,881 | 2,670 |
Bank owned life insurance | 13,950 | 13,513 |
Other assets | 12,699 | 11,847 |
Total assets | 753,270 | 744,889 |
Deposits: | ||
Noninterest bearing | 162,233 | 146,617 |
Interest bearing | 406,944 | 390,468 |
Total deposits | 569,177 | 537,085 |
Short-term debt | 25,296 | 40,000 |
Accrued liabilities | 17,789 | 16,885 |
Long-term debt | 49,733 | 64,237 |
Total liabilities | 661,995 | 658,207 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred Stock $25 par value, 400,000 shares authorized, 324,150 and 327,350 shares issued and outstanding at December 31, 2017 and 2016, respectively | 7,529 | 7,609 |
Common stock $5 par value, 6,000,000 shares authorized, 3,255,036 and 3,270,315 shares issued and outstanding at December 31, 2017 and 2016, respectively | 16,275 | 16,352 |
Additional paid in capital - common stock | 10,225 | 10,684 |
Retained earnings | 60,814 | 54,509 |
Noncontrolling interest | 574 | 693 |
Accumulated other comprehensive loss | (4,142) | (3,165) |
Total stockholders' equity | 91,275 | 86,682 |
Total liabilities and stockholders' equity | $ 753,270 | $ 744,889 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Held to maturity - fair value | $ 125 | $ 125 |
Preferred Stock,par value | $ 25 | $ 25 |
Preferred Stock,shares authorized | 400,000 | 400,000 |
Preferred Stock,shares issued | 324,150 | 327,350 |
Preferred Stock,shares outstanding | 324,150 | 327,350 |
Common stock, par value | $ 5 | $ 5 |
Common stock shares authorized | 6,000,000 | 6,000,000 |
Common stock shares issued | 3,255,036 | 3,270,315 |
Common stock shares outstanding | 3,255,036 | 3,270,315 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest and Dividend Income | |||
Interest and fees on loans held for investment | $ 32,479 | $ 29,816 | $ 27,957 |
Interest from loans held for sale | 1,112 | 1,924 | 1,099 |
Interest from money market funds and federal funds sold | 166 | 38 | 21 |
Interest from debt securities - taxable | 338 | 372 | 327 |
Total Interest and Dividend Income | 34,095 | 32,150 | 29,404 |
Interest Expense | |||
Total interest on deposits | 2,688 | 2,380 | 2,153 |
Interest from short-term debt | 63 | 55 | 69 |
Interest from long-term debt | 1,146 | 1,164 | 654 |
Total interest expense | 3,897 | 3,599 | 2,876 |
Net Interest Income | 30,198 | 28,551 | 26,528 |
Provision for Lease losses | 0 | 0 | 300 |
Net Interest Income After Provision for Loan Losses | 30,198 | 28,551 | 26,228 |
Non interest Income | |||
Service charges on deposit accounts | 1,360 | 1,174 | 963 |
Insurance, other commissions and mortgage banking, net | 4,137 | 3,006 | 2,575 |
Other operating income | 2,109 | 1,657 | 1,401 |
Income from bank owned life insurance | 449 | 476 | 473 |
Gain on prepayment of long term debt | 504 | 0 | 0 |
Loss on sale of other investments | (42) | 0 | 0 |
Low income housing partnership losses | (625) | (731) | (619) |
Total Noninterest Income | 7,892 | 5,582 | 4,793 |
Noninterest Expenses | |||
Salaries | 11,482 | 9,986 | 9,018 |
Employee benefits | 3,372 | 2,814 | 2,439 |
Occupancy expense | 1,035 | 868 | 801 |
Equipment expense | 836 | 735 | 715 |
FDIC insurance assessment | 190 | 388 | 587 |
Other real estate owned, net | 76 | 86 | 566 |
Other operating expenses | 7,728 | 6,395 | 5,428 |
Total noninterest expenses | 24,719 | 21,272 | 19,554 |
Income before Income Taxes | 13,371 | 12,861 | 11,467 |
Income Tax Expense | 4,330 | 3,099 | 2,886 |
Net Income | 9,041 | 9,762 | 8,581 |
Net Income attributable to noncontrolling interests | (31) | (194) | (164) |
Net Income attributable to F & M Bank Corp. | 9,010 | 9,568 | 8,417 |
Dividends paid/accumulated on preferred stock | 415 | 487 | 510 |
Net income available to common stockholders | $ 8,595 | $ 9,081 | $ 7,907 |
Per Common Share Data | |||
Net Income - basic | $ 2.63 | $ 2.77 | $ 2.40 |
Net Income - diluted | 2.48 | 2.57 | 2.25 |
Cash dividends on common stock | $ 0.94 | $ .80 | $ 0.73 |
Weighted average common shares outstanding - basic | 3,269,713 | 3,282,335 | 3,290,812 |
Weighted average common shares outstanding - diluted | 3,631,984 | 3,716,591 | 3,735,212 |
Consolidated Statements of Com
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Other Comprehensive Income [Abstract] | |||
Net Income | $ 9,041 | $ 9,762 | $ 8,581 |
Other comprehensive income (loss): | |||
Pension plan adjustment | (414) | (738) | (537) |
Tax effect | 141 | 251 | 183 |
Pension plan adjustment, net of tax | (273) | (487) | (354) |
Unrealized holding gains on available-for-sale securities | (34) | 3 | 2 |
Tax effect | 12 | (1) | (1) |
Unrealized holding gains, net of tax | (22) | 2 | 1 |
Total other comprehensive income (loss) | (295) | (485) | (353) |
Total comprehensive income | 8,746 | 9,277 | 8,228 |
Comprehensive income attributable to noncontrolling interest | (31) | (194) | (164) |
Comprehensive income attributable to F&M Bank Corp. | $ 8,715 | $ 9,083 | $ 8,064 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid In Capital | Retained Earnings | Noncontrolling Interest | Accumulated Other comprehensive Income (Loss) | Total |
Begining balance, Amount at Dec. 31, 2014 | $ 9,425 | $ 16,459 | $ 11,260 | $ 42,554 | $ 426 | $ (2,327) | $ 77,797 |
Net income | 8,417 | 164 | 8,581 | ||||
Other comprehensive income (loss) | (353) | (353) | |||||
Distributions to noncontrolling interest | (17) | (17) | |||||
Dividends on preferred stock | (510) | (510) | |||||
Dividends on common stock | (2,405) | (2,405) | |||||
Common stock repurchased | (67) | (223) | (290) | ||||
Common Stock issued | 35 | 112 | 147 | ||||
Ending balance, Amount at Dec. 31, 2015 | 9,425 | 16,427 | 11,149 | 48,056 | 573 | (2,680) | 82,950 |
Net income | 9,568 | 194 | 9,762 | ||||
Other comprehensive income (loss) | (485) | (485) | |||||
Distributions to noncontrolling interest | (74) | (74) | |||||
Dividends on preferred stock | (487) | ||||||
Dividends on common stock | (487) | (487) | |||||
Preferred stock issued | (2,628) | (2,628) | |||||
Common stock repurchased | (112) | (466) | (578) | ||||
Common Stock issued | 37 | 146 | 183 | ||||
Preferred stock repurchased | (1,816) | (145) | (1,961) | ||||
Ending balance, Amount at Dec. 31, 2016 | 7,609 | 16,352 | 10,684 | 54,509 | 693 | (3,165) | 86,682 |
Net income | 9,010 | 31 | 9,041 | ||||
Other comprehensive income (loss) | (295) | (295) | |||||
Distributions to noncontrolling interest | (150) | (150) | |||||
Dividends on preferred stock | (415) | (415) | |||||
Dividends on common stock | (2,972) | (2,972) | |||||
Common stock repurchased | (110) | (602) | (712) | ||||
Common Stock issued | 33 | 164 | 197 | ||||
Preferred stock repurchased | (80) | (21) | (101) | ||||
Stranded tax effect of Tax Cuts and Jobs Act | 682 | (682) | |||||
Ending balance, Amount at Dec. 31, 2017 | $ 7,529 | $ 16,275 | $ 10,225 | $ 60,814 | $ 574 | $ (4,142) | $ 91,275 |
Consolidated Statements of Cha7
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | |||
Common Stock issued | 6,705 | 7,494 | 6,916 |
Common stock repurchased | 21,984 | 22,583 | 13,277 |
Preferred stock repurchased | 3,200 | 72,650 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net income | $ 9,010 | $ 9,568 | $ 8,417 |
Depreciation | 930 | 827 | 727 |
Amortization of intangibles | 53 | 0 | 0 |
Amortization of securities | 0 | 109 | 147 |
Proceeds from sale of loans held for sale originated | 67,517 | 73,112 | 77,662 |
Gain on sale of loans held for sale originated | (2,331) | (2,778) | (2,297) |
Loans held for sale originated | (68,647) | (66,779) | (77,152) |
Provision for loan losses | 0 | 0 | 300 |
(Expense) benefit for deferred taxes | (222) | 9 | 341 |
(Increase) in interest receivable | (222) | (76) | (34) |
Increase in other assets | (1,693) | (444) | (457) |
Increase in accrued liabilities | 1,498 | 1,690 | 1,480 |
Amortization of limited partnership investments | 625 | 731 | 627 |
Loss on sale of investments | 42 | 0 | 0 |
Loss on sale and valuation adjustments of other real estate owned | 44 | 19 | 489 |
Income from life insurance investment | (449) | (476) | (473) |
Net Cash Provided by Operating Activities | 6,155 | 15,512 | 9,777 |
Cash flows from investing activities | |||
Proceeds from maturities of securities available for sale | 86,741 | 32,218 | 8,243 |
Proceeds from sales of other investments | 55 | 0 | 0 |
Purchases of securities available for saleand other investments | (89,428) | (47,137) | (12,040) |
Capital improvements to other real estate owned | (2) | (24) | 0 |
Net increase in loans held for investment | (27,068) | (49,386) | (25,892) |
Net decrease (increase) in loans held for sale participations | 26,421 | (8,483) | (42,637) |
Net purchase of property and equipment | (6,484) | (3,553) | (1,811) |
Proceeds from sale of other real estate owned | 281 | 623 | 688 |
Net Cash Used in Investing Activities | (9,484) | (75,742) | (73,449) |
Cash flows from financing activities | |||
Net change in deposits | 32,092 | 42,415 | 3,165 |
Net change in short-term debt | (14,704) | 15,046 | 10,596 |
Dividends paid in cash | (3,387) | (3,115) | (2,915) |
Proceeds from long-term debt | 0 | 20,000 | 40,000 |
Proceeds from issuance of common stock | 197 | 183 | 147 |
Repurchase of preferred stock | (712) | (1,961) | 0 |
Repurchase of common stock | (101) | (578) | (290) |
Repayments of long-term debt | (14,504) | (3,924) | (1,714) |
Net cash provided by (used in) financing activities | (1,119) | 68,066 | 48,989 |
Net (Decrease) Increase in Cash and Cash Equivalents | (4,448) | 7,836 | (14,683) |
Cash and Cash Equivalents, Beginning of Year | 16,355 | 8,519 | 23,202 |
Cash and Cash Equivalents, End of Year | 11,907 | 16,355 | 8,519 |
Supplemental Cash Flow information: | |||
Interest | 3,866 | 3,573 | 2,854 |
Income taxes | 4,460 | 2,300 | 1,500 |
Supplemental Disclosure: | |||
Transfers from loans to other real estate owned | 231 | 566 | 125 |
Loans originated for the sale of other real estate owned | 0 | 0 | (328) |
Unrealized gain (loss) on securities available for sale | (26) | 2 | 1 |
Minimum pension liability adjustment | $ (952) | $ (487) | $ (354) |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Nature Of Operations | |
NOTE 1. NATURE OF OPERATIONS | F & M Bank Corp. (the “Company”), through its subsidiary Farmers & Merchants Bank (the “Bank”), operates under a charter issued by the Commonwealth of Virginia and provides commercial banking services. As a state-chartered bank, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve Bank. The Bank provides services to customers located mainly in Rockingham, Shenandoah, Page and Augusta Counties in Virginia, and the adjacent county of Hardy, West Virginia. Services are provided at thirteen branch offices and a Dealer Finance Division loan production office. The Company offers insurance, mortgage lending, title insurance and financial services through its subsidiaries, TEB Life Insurance, Inc., Farmers & Merchants Financial Services, Inc, VBS Mortgage, LLC (VBS) and VS Title, LLC. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The accounting and reporting policies of the Company and its subsidiaries conform to generally accepted accounting principles and to accepted practice within the banking industry. The following is a summary of the more significant policies: Principles of Consolidation The consolidated financial statements include the accounts of Farmers and Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., VBS Mortgage, LLC, (net of noncontrolling interest) and VS Title, LLC. Significant inter-company accounts and transactions have been eliminated. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, goodwill and intangibles, fair value, the valuation of deferred tax assets and liabilities, pension accounting and the valuation of foreclosed real estate. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. Securities Certain debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. The Company has no securities classified as trading. The Company follows the accounting guidance related to recognition and presentation of other-than-temporary impairment. The guidance specifies that if (a) an entity does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that the entity will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired, unless there is a credit loss. When criteria (a) and (b) are met, the entity will recognize the credit component of other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security. For equity securities, when the Company has decided to sell an impaired available-for-sale security and the Company does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed other-than-temporarily impaired in the period in which the decision to sell is made. The Company recognizes an impairment loss when the impairment is deemed other than temporary even if a decision to sell has not been made. Other Investments The Company periodically invests in low income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership (usually 15 years). In addition, state and federal historic rehabilitation credits are generated from some of the partnerships. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. The effective yield method is used to record the income statement effects of these investments. Other Investment Securities Due to the nature and restrictions placed on the Company's investment in common stock of the Federal Home Loan Bank of Atlanta ("FHLB") and the Federal Reserve Bank of Richmond, these securities are considered restricted and carried at cost. Income Taxes Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The results for the year ended December 31, 2017 include the effect of the Tax Cuts and Jobs Act (the Tax Act), which was signed into law on December 22, 2017. Among other things, the Tax Act permanently lowers the federal corporate income tax rate to 21% from the maximum rate prior to the passage of the Tax Act of 35%, effective January 1, 2018. As a result of the reduction of the federal corporate tax rate, U.S. GAAP requires companies to re-measure their deferred tax assets and deferred tax liabilities, including those accounted for in accumulated other comprehensive income (loss), as of the date of the Tax Act’s enactment and record the corresponding effects in income tax expense in the fourth quarter of 2017. The Company recognized a $811 reduction in the value of its net deferred tax asset and recorded a corresponding incremental income tax expense in the Company’s consolidated statement of income for 2017. The Company’s evaluation of the effect of the Tax Act is considered a preliminary estimate and is subject to refinement for up to one year. No material adjustment is anticipated. The Company recognizes interest and penalties on income taxes as a component of income tax expense. Loans Held for Investment The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and any unearned income. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless secured and in process of collection. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. A loan is considered past due when a payment of principal or interest or both is due but not paid. Management closely monitors past due loans in timeframes of 30-59 days, 60-89 days, and 90 or more days past due. These policies apply to all loan portfolio segments. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Troubled debt restructurings are considered impaired loans. Loans Held for Sale These loans consist of fixed rate loans made through the Company’s subsidiary, VBS Mortgage, and loans purchased from Northpointe Bank, Grand Rapids, MI. VBS Mortgage originates conforming mortgage loans for sale in the secondary market. These loans consist primarily of fixed-rate, single-family residential mortgage loans which meet the underwriting characteristics of the investors. VBS enters into mortgage loan commitments whereby the interest rate on the loan is determined prior to funding (rate lock commitments). The period of time between issuance of a loan commitment and sale of the loan generally ranges from two to three weeks. VBS protects itself from changes in interest rates through the use of best efforts forward delivery contracts, by committing to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed the interest rate risk on the loan. As a result, the Company is not generally exposed to significant losses nor will it realize significant gains related to its rate lock commitments due to changes in interest rates. The correlation between the rate lock commitments and the best efforts contracts is very high due to their similarity. The market value of rate lock commitments and best efforts contracts is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. VBS determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the estimated value of the underlying assets while taking into consideration the probability that the loan will be funded. The fair value of rate lock commitments and best efforts contracts was considered immaterial at December 31, 2017 and 2016. The average time on the line is two or three weeks. These loans are pre-sold with servicing released and no interest is retained after the loans are sold. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in 2017, 2016, or 2015. Gains on sales of loans and commission expense are recognized at the loan closing date and are included in mortgage banking income, net on the Company’s consolidated income statement. The Bank participates in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation. Pursuant to the terms of a participation agreement, the Bank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage loan originators located throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Bank has participated in similar arrangements since 2003 as a higher yielding alternative to federal funds sold or investment securities. These loans are short-term, residential real estate loans that have an average life in our portfolio of approximately two weeks. The Bank holds these loans during the period of time between loan closing and when the loan is paid off by the ultimate secondary market purchaser. As of December 31, 2017, and 2016, there were $36,130 and $62,550 million of these loans included in loans held for sale on the Company’s consolidated balance sheet. Troubled Debt Restructuring In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company has $7.8 million in loans classified as TDRs that are current and performing as of December 31, 2017, and $9.8 million as of December 31, 2016. Allowance for Loan and Losses The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Except for credit card and dealer finance loans, all loans are assigned an internal risk rating based on certain credit quality indicators. Credit card, consumer and dealer finance loans are monitored based on payment activity. Loss rates are amplified for loans with adverse risk ratings that are not considered impaired. In the general allowance, the historical loss rate is combined with the qualitative factors, resulting in an adjusted loss factor for each segment of loans. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Historical loss rates are combined with qualitative factors resulting in an adjusted loss factor for each segment. Specific allowances are established for individually-evaluated impaired loans based on the excess of the loan balance relative to the fair value of the collateral, if the loan is deemed collateral dependent. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Other Real Estate Owned (OREO) OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. Bank Premises and Equipment Land is carried at cost and bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. The ranges of the useful lives of the premises and equipment are as follows: Premises and Improvements 10 - 40 years Furniture and Equipment 5 - 20 years Maintenance, repairs, and minor improvements are charged to operations as incurred. Gains and losses on dispositions are reflected in other income or expense. Goodwill and Intangible Assets The Company accounts for goodwill and intangible assets under ASC 805, “Business Combinations” and ASC 350, “Intangibles”, respectively. Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. Additionally, acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. The Company recorded goodwill and intangible assets in 2017 related to the purchase of VS Title which was valued by an independent third party. The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Impairment testing is performed annually, as well as when an event triggering impairment may have occurred. The Company performs its annual analysis as of December 31 each fiscal year. Accounting guidance permits preliminary assessment of qualitative factors to determine whether a more substantial impairment testing is required. The Company chose to bypass the preliminary assessment and utilized a two-step process for impairment testing of goodwill. The first step tests for impairment, while the second step, if necessary, measures the impairment. No indicators of impairment were identified during the years ended December 31, 2017, 2016, and 2015. Pension Plans The Bank has a qualified noncontributory defined benefit pension plan which covers all full-time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company complies with ASC 325-960 “Defined Benefit Pension Plans” which requires recognition of the over-funded or under-funded status of pension and other postretirement benefit plans on the balance sheet. Under ASC 325-960, gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. Advertising Costs The Company follows the policy of charging the cost of advertising to expense as incurred. Total advertising costs included in other operating expenses for 2017, 2016, and 2015 were $507, $496, and $452, respectively. Bank Owned Life Insurance The Company has purchased life insurance policies on certain employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Transfers of Financial Assets Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Comprehensive Income Comprehensive income is shown in a two-statement approach, the first statement presents total net income and its components followed by a second statement that presents all the components of other comprehensive income such as unrealized gains and losses on available for sale securities and changes in the funded status of a defined benefit pension plan. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”). The Company early adopted this new standard in the current year. ASU 2018-02 requires reclassification from AOCI to retained earnings for stranded tax effects resulting from the impact of the newly enacted federal corporate tax rate on items included in AOCI. The amount of the reclassification in 2017 was $682. Derivative Financial Instruments Under ASC 815, the gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedging item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period. The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk. Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as trading activities and would be recorded at fair value with changes in fair value recorded in income. Derivative hedge contracts must meet specific effectiveness tests. Changes in fair value of the derivative financial instruments must be effective at offsetting changes in the fair value of the hedging items due to the designated hedge risk during the term of the hedge. Further, if the underlying financial instrument differs from the hedged asset or liability, there must be a clear economic relationship between the prices of the two financial instruments. If periodic assessment indicates derivatives no longer provide an effective hedge, the derivatives contracts would be closed out and settled or classified as a trading activity. Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the consolidated financial statements. Fair Value Measurements The Company follows the provisions of ASC Topic 820 “Fair Value Measurements and Disclosures,” for financial assets and financial liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Reclassifications Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year. The reclassification adjustments related to our consolidation of VBS and the classification of individual line items in a manner consistent with the rest of the Company on the income statement. These reclassifications had no impact on net income or earnings per share. Earnings per Share Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended Dollars in thousands December 31, 2017 December 31, 2016 December |
3. CASH AND DUE FROM BANKS
3. CASH AND DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
NOTE 3. CASH AND DUE FROM BANKS | The Bank is required to maintain average reserve balances based on a percentage of deposits. Due to the deposit reclassification procedures implemented by the Bank, there is no Federal Reserve Bank reserve requirement for the years ended December 31, 2017 and 2016. |
4. SECURITIES
4. SECURITIES | 12 Months Ended |
Dec. 31, 2017 | |
Securities | |
NOTE 4. SECURITIES | The amortized cost and fair value, with unrealized gains and losses, of securities held to maturity were as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2017 U. S. Treasuries $ 125 $ - $ - $ 125 December 31, 2016 U. S. Treasuries $ 125 $ - $ - $ 125 The amortized cost and fair value of securities available for sale are as follows: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2017 U. S. Treasuries $ 19,998 $ - $ - $ 19,998 U. S. Government sponsored enterprises 7,999 - 19 7,980 Mortgage-backed obligations of federal agencies 508 - 6 502 Equity securities 135 - - 135 Total Securities Available for Sale $ 28,640 $ - $ 25 $ 28,615 December 31, 2016 U. S. Treasuries $ 24,005 $ 9 $ - $ 24,014 Mortgage-backed obligations of federal agencies 634 - - 634 Equity securities 135 - - 135 Total Securities Available for Sale $ 24,774 $ 9 $ - $ 24,783 The amortized cost and fair value of securities at December 31, 2017, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125 $ 125 $ 19,998 $ 19,998 Due after one year through five years - - 7,999 7,980 Due after five years through ten years - - 508 502 Due after ten years - - 135 135 Total $ 125 $ 125 $ 28,640 $ 28,615 There were no sales of debt or equity securities during 2017, 2016 or 2015. There were no pledged securities at December 31, 2017 or 2016. Other investments consist of investments in twenty low-income housing and historic equity partnerships (carrying basis of $7,406), stock in the Federal Home Loan Bank (carrying basis of $3,627), and various other investments (carrying basis of $1,470). The interests in the low-income housing and historic equity partnerships have limited transferability and the interests in the other stocks are restricted as to sales. The market values of these securities are estimated to approximate their carrying values as of December 31, 2017. At December 31, 2017, the Company was committed to invest an additional $4,231 in six low-income housing limited partnerships. These funds will be paid as requested by the general partner to complete the projects. This additional investment has been reflected in the above carrying basis and in accrued liabilities on the balance sheet. The primary purpose of the investment portfolio is to generate income and meet liquidity needs of the Company through readily saleable financial instruments. The portfolio includes fixed rate bonds, whose prices move inversely with rates and variable rate bonds. At the end of any accounting period, the investment portfolio has unrealized gains and losses. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes and credit risk changes for other than temporary impairment. The primary concern in a loss situation is the credit quality of the business behind the instrument. Bonds deteriorate in value due to credit quality of the individual issuer and changes in market conditions. A summary of unrealized losses (in thousands) and the length of time in a continuous loss position, by security type of December 31, 2017 were as follows: Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2017 U. S. Government sponsored enterprises $ 3,981 $ (19 ) $ - $ - $ 3,981 $ (19 ) Mortgage-backed obligations of federal agencies 502 (6 ) - - 502 (6 ) Total $ 4,483 $ (25 ) $ - $ - $ 4,483 $ (25 ) As of December 31, 2016, there were no securities in an unrealized loss position. Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than the cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery of fair value. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost. As of December 31, 2017, the Company had two agencies and a mortgage backed security that were temporarily impaired due to rising interest rates not the credit quality of the security. There were no securities that had been in an unrealized loss position for more than twelve months. The Company did not recognize any other-than-temporary impairment losses in 2017, 2016 or 2015. |
5. LOANS
5. LOANS | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
NOTE 5. LOANS | Loans held for investment as of December 31, 2017, and 2016 were as follows: 2017 2016 Construction/Land Development $ 71,620 $ 76,172 Farmland 13,606 12,901 Real Estate 184,546 172,758 Multi-Family 10,298 7,605 Commercial Real Estate 148,906 150,061 Home Equity – closed end 11,606 11,453 Home Equity – open end 54,739 54,420 Commercial & Industrial – Non-Real Estate 36,912 31,306 Consumer 6,633 6,643 Dealer Finance 75,169 65,495 Credit Cards 2,939 2,822 Total $ 616,974 $ 591,636 The Company has pledged loans held for investment as collateral for borrowings with the Federal Home Loan Bank of Atlanta totaling $218,323 and $199,401 as of December 31, 2017, and 2016, respectively. The Company maintains a blanket lien on its entire residential real estate portfolio and certain commercial and home equity loans. Loans held for sale consists of loans originated by VBS Mortgage for sale in the secondary market, and the Bank’s commitment to purchase residential mortgage loan Participations from Northpointe Bank. The volume of loans purchased from Northpointe fluctuates due to a number of factors including changes in secondary market rates, which affects demand for mortgage loans; the number of participating banks involved in the program; the number of mortgage loan originators selling loans to the lead bank and the funding capabilities of the lead bank. Loans held for sale as of December 31, 2017, and 2016 were $39,775 and $62,735, respectively. The following is a summary of information pertaining to impaired loans (in thousands), as of December 31, 2017 and 2016: December 31, 2017 December 31, 2016 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 4,352 $ 5,269 $ - $ 3,296 $ 3,652 $ - Farmland 1,984 1,984 - - - - Real Estate 1,273 1,273 - 768 768 - Multi-Family - - - - - - Commercial Real Estate 6,229 6,229 - 1,958 1,958 - Home Equity – closed end - - - - - - Home Equity – open end - 347 - - 347 - Commercial & Industrial – Non-Real Estate - - - 170 170 - Consumer 8 8 - 13 13 - Credit cards - - - - - - Dealer Finance 31 31 - - - - 13,877 15,141 - 6,205 6,908 - Impaired loans with a valuation allowance Construction/Land Development 4,998 4,998 1,661 6,592 6,592 1,853 Farmland - - - - - - Real Estate 1,188 1,188 209 1,206 1,206 221 Multi-Family - - - - - - Commercial Real Estate - - - 952 952 60 Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - - - - Credit cards - - - - - - Dealer Finance 47 47 12 87 87 20 6,233 6,233 1,882 8,837 8,837 2,154 Total impaired loans $ 20,110 $ 21,374 $ 1,882 $ 15,042 $ 15,745 $ 2,154 The Recorded Investment is defined as the principal balance less principal payments and charge-offs. The following is a summary of the average investment and interest income recognized for impaired loans (dollars in thousands): December 31, 2017 December 31, 2016 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 4,969 $ 382 $ 2,547 $ 10 Farmland 1,921 62 - - Real Estate 878 57 778 10 Multi-Family - - - - Commercial Real Estate 1,682 44 1,087 114 Home Equity – closed end - - - - Home Equity – open end 347 - 964 2 Commercial & Industrial – Non-Real Estate 124 - 174 2 Consumer 10 - 11 - Credit cards - - - - Dealer Finance 24 3 14 1 9,955 548 5,575 139 Impaired loans with a valuation allowance Construction/Land Development 5,911 258 8,525 291 Farmland - - - - Real Estate 1,194 49 1,215 10 Multi-Family - - - - Commercial Real Estate - - 959 57 Home Equity – closed end - - - - Home Equity – open end - - 969 - Commercial & Industrial – Non-Real Estate - - 14 - Consumer - - - - Credit cards - - - - Dealer Finance 56 3 77 1 7,161 310 11,759 359 Total impaired loans $ 17,116 $ 858 $ 17,334 $ 498 The following table presents the aging of the recorded investment of past due loans (in thousands) as of December 31, 2017 and 2016: 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2017 Construction/Land Development $ 167 $ 5,459 $ 3,908 $ 9,534 $ 62,086 $ 71,620 $ 3,908 $ - Farmland - - - - 13,606 13,606 - - Real Estate 2,858 1,954 560 5,372 179,174 184,546 1,720 143 Multi-Family 179 - - 179 10,119 10,298 - - Commercial Real Estate 544 - - 544 148,362 148,906 - - Home Equity – closed end - 25 - 25 11,581 11,606 3 - Home Equity – open end 454 165 268 887 53,852 54,739 448 - Commercial & Industrial – Non- Real Estate 108 36 595 739 36,173 36,912 599 - Consumer 43 5 - 48 6,585 6,633 - - Dealer Finance 1,300 252 189 1,741 73,428 75,169 226 54 Credit Cards 30 8 1 39 2,900 2,939 - 1 Total $ 5,683 $ 7,904 $ 5,521 $ 19,108 $ 597,866 $ 616,974 $ 6,904 $ 198 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days) Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2016 Construction/Land Development $ 73 $ 101 $ 2,175 $ 2,349 $ 73,823 $ 76,172 $ 2,805 $ - Farmland - - - - 12,901 12,901 - - Real Estate 2,135 746 774 3,655 169,103 172,758 1,399 81 Multi-Family - - - - 7,605 7,605 - - Commercial Real Estate 139 - - 139 149,922 150,061 - - Home Equity – closed end 101 - 32 133 11,320 11,453 32 - Home Equity – open end 484 - 69 553 53,867 54,420 279 - Commercial & Industrial – Non- Real Estate 313 5 - 318 30,988 31,306 70 - Consumer 35 4 6 45 6,598 6,643 - - Dealer Finance 797 187 183 1,167 64,328 65,495 178 26 Credit Cards 18 4 - 22 2,800 2,822 - - Total $ 4,095 $ 1,047 $ 3,239 $ 8,381 $ 583,255 $ 591,636 $ 4,763 $ 107 |
6. ALLOWANCE FOR LOAN LOSSES
6. ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 6. ALLOWANCE FOR LOAN LOSSES | A summary of changes in the allowance for loan losses (in thousands) for the years ended December 31, 2017 and 2016 is as follows: December 31, 2017 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 3,381 $ 620 $ - $ (214 ) $ 2,547 $ 1,661 $ 886 Farmland 34 - - (9 ) 25 - 25 Real Estate 843 - 2 (126 ) 719 209 510 Multi-Family 23 - - (6 ) 19 - 19 Commercial Real Estate 705 - 13 (236 ) 482 - 482 Home Equity – closed end 75 7 25 (27 ) 66 - 66 Home Equity – open end 470 26 53 (288 ) 209 - 209 Commercial & Industrial – Non-Real Estate 586 179 72 (142 ) 337 - 337 Consumer 78 136 28 178 148 - 148 Dealer Finance 1,289 1,806 1,143 814 1,440 12 1,428 Credit Cards 59 98 37 54 52 - 52 Total $ 7,543 $ 2,872 $ 1,373 $ - $ 6,044 $ 1,882 $ 4,162 December 31, 2016 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,442 $ 356 $ 7 $ (712 ) $ 3,381 $ 1,853 $ 1,528 Farmland 95 - - (61 ) 34 - 34 Real Estate 806 23 4 56 843 221 622 Multi-Family 71 - - (48 ) 23 - 23 Commercial Real Estate 445 19 135 144 705 - 705 Home Equity – closed end 174 8 - (91 ) 75 - 75 Home Equity – open end 634 370 120 86 470 60 410 Commercial & Industrial – Non-Real Estate 1,055 293 267 (443 ) 586 - 586 Consumer 108 37 19 (12 ) 78 - 78 Dealer Finance 836 1,081 417 1,117 1,289 20 1,269 Credit Cards 115 74 54 (36 ) 59 - 59 Total $ 8,781 $ 2,261 $ 1,023 $ - $ 7,543 $ 2,154 $ 5,389 The following table presents the recorded investment in loans (in thousands) based on impairment method as of December 31, 2017 and 2016: December 31, 2017 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 71,620 $ 9,350 $ 62,270 Farmland 13,606 1,984 11,622 Real Estate 184,546 2,461 182,085 Multi-Family 10,298 - 10,298 Commercial Real Estate 148,906 6,229 142,677 Home Equity – closed end 11,606 - 11,606 Home Equity –open end 54,739 - 54,739 Commercial & Industrial – Non-Real Estate 36,912 - 36,912 Consumer 6,633 8 6,625 Dealer Finance 75,169 78 75,091 Credit Cards 2,939 - 2,939 $ 616,974 $ 20,110 $ 596,864 Total December 31, 2016 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 76,172 $ 9,888 $ 66,284 Farmland 12,901 - 12,901 Real Estate 172,758 1,974 170,784 Multi-Family 7,605 - 7,605 Commercial Real Estate 150,061 2,910 147,151 Home Equity – closed end 11,453 - 11,453 Home Equity –open end 54,420 - 54,420 Commercial & Industrial – Non-Real Estate 31,306 170 31,136 Consumer 6,643 13 6,630 Dealer Finance 65,495 87 65,408 Credit Cards 2,822 - 2,822 $ 591,636 $ 15,042 $ 576,594 The following table shows the Company’s loan portfolio broken down by internal loan grade (in thousands) as of December 31, 2017 and 2016: December 31, 2017 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 690 $ 12,974 $ 30,197 $ 9,165 $ 3,520 $ 15,074 $ - $ 71,620 Farmland 63 - 3,153 4,120 3,793 494 1,983 - 13,606 Real Estate - 1,512 53,764 101,606 19,734 4,660 3,270 - 184,546 Multi-Family - 228 4,780 5,111 179 - - - 10,298 Commercial Real Estate - 3,525 45,384 89,195 9,012 634 1,156 - 148,906 Home Equity – closed end - - 3,535 5,410 1,279 1,379 3 - 11,606 Home Equity – open end 235 1,598 17,383 30,888 3,945 176 514 - 54,739 Commercial & Industrial (Non-Real Estate) 262 1,595 13,297 19,442 1,480 207 629 - 36,912 Consumer (excluding dealer) 34 490 2,226 88 1,065 2,254 476 - 6,633 Total $ 594 $ 9,638 $ 156,496 $ 286,057 $ 49,652 $ 13,324 $ 23,105 $ - $ 538,866 Credit Cards Dealer Finance Performing $ 2,938 $ 75,116 Non performing 1 53 Total $ 2,939 $ 75,169 December 31, 2016 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 1,478 $ 10,870 $ 43,863 $ 8,399 $ 2,473 $ 9,089 $ - $ 76,172 Farmland 65 - 3,073 3,456 4,446 1,861 - - 12,901 Real Estate - 1,149 62,168 74,242 28,266 4,680 2,253 - 172,758 Multi-Family - 311 3,009 4,099 186 - - - 7,605 Commercial Real Estate - 2,793 32,986 91,157 19,181 1,840 2,104 - 150,061 Home Equity – closed end - 150 3,966 4,139 1,746 1,414 38 - 11,453 Home Equity – open end 124 1,724 16,415 30,974 4,547 125 511 - 54,420 Commercial & Industrial (Non-Real Estate) 1,375 1,267 6,827 19,530 2,198 39 70 - 31,306 Consumer (excluding dealer) 67 174 1,837 607 1,242 2,252 466 - 6,643 Total $ 1,631 $ 9,046 $ 141,151 $ 272,065 $ 70,211 $ 14,684 $ 14,531 $ - $ 523,319 Credit Cards Dealer Finance Performing $ 2,822 $ 65,291 Non performing - 204 Total $ 2,822 $ 65,495 Description of internal loan grades: Grade 1 – Minimal Risk Grade 2 – Modest Risk Grade 3 – Average Risk Grade 4 – Acceptable Risk Grade 5 – Marginally acceptable s Grade 6 – Watch Grade 7 – Substandard Grade 8 – Doubtful Credit card and dealer finance loans are classified as performing or nonperforming. A loan is nonperforming when payments of principal and interest are past due 90 days or more. |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 7. TROUBLED DEBT RESTRUCTURING | In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans, which are considered in the qualitative factors within the allowance for loan loss methodology. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance calculation. Additionally, specific reserves may be established on restructured loans which are evaluated individually for impairment. During the twelve months ended December 31, 2017, the Bank modified 3 loans that were considered to be troubled debt restructurings. These modifications include rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof. December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Consumer 3 $ 32 $ 32 Total 3 $ 32 $ 32 As of December 31, 2017, there were 3 loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 90 days past due. December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 67 $ 67 Construction/Land Development 2 1,502 1,502 Total 3 $ 1,569 $ 1,569 During the twelve months ended December 31, 2016, the Bank modified 6 loans that were considered to be troubled debt restructurings. These modifications included rate adjustments, revisions to amortization schedules, suspension of principal payments for a temporary period, re-advancing funds to be applied as payments to bring the loan(s) current, or any combination thereof. December 31, 2016 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 2 $ 141 $ 141 Consumer 4 39 39 Total 6 $ 180 $ 180 As of December 31, 2016, there were no loans restructured in the previous twelve months, in default. A restructured loan is considered in default when it becomes 90 days past due. |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 8. BANK PREMISES AND EQUIPMENT | Bank premises and equipment as of December 31 are summarized as follows: 2017 2016 Land $ 3,883 $ 3,091 Buildings and improvements 12,384 7,877 Furniture and equipment 9,454 8,257 25,721 19,225 Less - accumulated depreciation (9,827 ) (8,885 ) Net $ 15,894 $ 10,340 Provisions for depreciation of $930 in 2017, $827 in 2016, and $727 in 2015 were charged to operations. |
9. OTHER REAL ESTATE OWNED
9. OTHER REAL ESTATE OWNED | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 9. OTHER REAL ESTATE OWNED | The table below reflects other real estate owned (OREO) activity for 2017 and 2016: Other Real Estate Owned 2017 2016 Balance as of January 1 $ 2,076 $ 2,128 Loans transferred to OREO 231 566 Capital improvements 2 24 Sale of OREO (281 ) (623 ) Write down of OREO or losses on sale (44 ) (19 ) Balance as of December 31 $ 1,984 $ 2,076 At December 31, 2017, the balance of real estate owned includes $207 of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property. At December 31, 2017, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure procedures are in process is $103. |
10. DEPOSITS
10. DEPOSITS | 12 Months Ended |
Dec. 31, 2017 | |
Banking and Thrift [Abstract] | |
NOTE 10. DEPOSITS | Time deposits that meet or exceed the FDIC insurance limit of $250 at year end 2017 and 2016 were $13,637 and $7,841. At December 31, 2017, the scheduled maturities of time deposits are as follows: 2018 $ 66,749 2019 51,434 2020 30,151 2021 9,296 2022 and after 7,640 Total $ 165,270 |
11. SHORT-TERM DEBT
11. SHORT-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTE 11. SHORT-TERM DEBT | Short-term debt, all maturing within 12 months, as of December 31, 2017 and 2016 is summarized as follows: Outstanding Average Maximum Outstanding At Balance at any Month End Year End Outstanding Yield 2017 Federal funds purchased $ 8,964 $ 5,296 $ 97 .17 % FHLB short term 50,000 20,000 20,301 .30 % Totals $ 25,296 $ 20,398 .31 % 2016 Federal funds purchased $ 11,421 $ - $ 637 .98 % FHLB short term 50,000 40,000 34,740 .12 % Securities sold under agreements to repurchase 4,272 - 2,133 .25 % Totals $ 40,000 $ 37,510 .15 % The Company utilizes short-term debt such as Federal funds purchased and Federal Home Loan Bank of Atlanta (FHLB) short term borrowings to support the loans held for sale participation program and provide liquidity. Federal funds purchased are unsecured overnight borrowings from other financial institutions. FHLB short term debt, which is secured by the loan portfolio, can be a daily rate variable loan that acts as a line of credit or a fixed rate advance, depending on the need of the Company. Securities sold under repurchase agreements are secured transactions with customers and generally mature the day following the date sold. This product was discontinued in 2017. As of December 31, 2017, the Company had unsecured lines of credit with correspondent banks totaling $41,000, which may be used in the management of short-term liquidity, in which $5,296 was outstanding. |
12. LONG-TERM DEBT
12. LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTE 12. LONG-TERM DEBT | The Company utilizes the FHLB advance program to fund loan growth and provide liquidity. The interest rates on long-term debt are fixed at the time of the advance and range from 1.16% to 2.56%; the weighted average interest rate was 1.86% and 1.80% at December 31, 2017 and December 31, 2016, respectively. The balance of these obligations at December 31, 2017 and 2016 were $49,554 and $63,982 respectively. The Company recognized a gain of $504 on prepayment of two FHLB advances totaling $10,000 during the first quarter of 2017 and there were no additional borrowings in 2017. FHLB advances include a $5,000 line of credit at FHLB that is pledged to the Commonwealth of Virginia to secure public funds. The maturities of long-term Federal Home Loan Bank long term debt as of December 31, 2017, were as follows: 2018 $ 9,428 2019 6,929 2020 14,429 2021 5,929 2022 2,714 Thereafter 10,125 Total $ 49,554 In addition, the Company has a note payable to purchase a lot adjacent to one of the Bank branches for $170 at December 31, 2017 that is payable in two remaining annual payments on January 1, 2018 and 2019. There was $255 outstanding on this note at December 31, 2016. VS Title, LLC has a note payable for vehicle purchases with a balance of $9 at December 31, 2017. |
13. INCOME TAX EXPENSE
13. INCOME TAX EXPENSE | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
NOTE 13. INCOME TAX EXPENSE | The components of income tax expense were as follows: 2017 2016 2015 Current expense $ 3,671 $ 3,046 $ 3,227 Deferred expense (benefit) (152 ) 53 (341 ) Adjustments to deferred tax asset due to change in federal tax rate 811 - - Total deferred (benefit) expense 659 53 (341 ) Total Income Tax Expense $ 4,330 $ 3,099 $ 2,886 The components of deferred taxes as of December 31, were as follows: 2017 2016 Deferred Tax Assets: Allowance for loan losses $ 1,265 $ 2,354 Split Dollar Life Insurance 3 4 Nonqualified deferred compensation 546 856 Low income housing partnerships losses 203 94 Core deposit amortization 108 165 Other real estate owned 173 280 Unfunded pension benefit obligation 1,096 1,633 Total Assets $ 3,394 $ 5,386 2017 2016 Deferred Tax Liabilities: Unearned low income housing credits $ 180 $ 307 Depreciation 340 437 Prepaid pension 1,010 1,840 Goodwill tax amortization 559 901 Net unrealized gain (loss) on securities available for sale (5 ) 3 Total Liabilities 2 084 3,488 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,310 $ 1,898 The following table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rates: 2017 2016 2015 Tax expense at federal statutory rates $ 4,511 $ 4,307 $ 3,843 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit - 6 8 Partially tax-exempt income (59 ) (41 ) (46 ) Tax-exempt income (212 ) (217 ) (223 ) LIH and historic credits (633 ) (896 ) (701 ) Deferred Tax Asset rate change 811 Other (88 ) (60 ) 5 Total Income Tax Expense $ 4,330 $ 3,099 $ 2,886 The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions in accordance with accounting guidance related to income taxes. The Company and its subsidiaries file federal income tax returns and state income tax returns. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for years before 2014. |
14. EMPLOYEE BENEFITS
14. EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 14. EMPLOYEE BENEFITS | Defined Benefit Pension Plan The Company has a qualified noncontributory defined benefit pension plan which covers substantially all of its employees hired before April 1, 2012. The benefits are primarily based on years of service and earnings. The Company uses December 31st as the measurement date for the defined benefit pension plan. The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets for 2017, 2016 and 2015: 2017 2016 2015 Change in Benefit Obligation Benefit obligation, beginning $ 12,475 $ 10,944 $ 10,777 Service cost 696 632 648 Interest cost 487 453 411 Actuarial (gain) loss 1,620 872 (137 ) Benefits paid (175 ) (426 ) (754 ) Benefit obligation, ending $ 15,103 $ 12,475 $ 10,945 Change in Plan Assets Fair value of plan assets, beginning $ 12,032 $ 11,678 $ 11,684 Actual return on plan assets 1,788 780 (1 ) Employer contribution - - 750 Benefits paid (175 ) (426 ) (755 ) Fair value of plan assets, ending $ 13,645 $ 12,032 $ 11,678 Funded status at the end of the year $ (1,458 ) $ (443 ) $ 733 The fair value of plan assets is measured based on the fair value hierarchy as discussed in Note 20, “Fair Value Measurements” to the Consolidated Financial Statements. The valuations are based on third party data received as of the balance sheet date. All plan assets are considered Level 1 assets, as quoted prices exist in active markets for identical assets. 2017 2016 2015 Amount recognized in the Consolidated Balance Sheet Prepaid benefit cost $ 3,760 $ 4,361 $ 4,799 Unfunded pension benefit obligation under ASC 325-960 (5,218 ) (4,804 ) (4,065 ) Deferred taxes 1,096 1,633 1,382 Amount recognized in accumulated other comprehensive income (loss) Net loss $ (5,260 ) $ (4,861 ) $ (4,137 ) Prior service cost 42 57 72 Amount recognized (5,218 ) (4,804 ) (4,065 ) Deferred taxes 1,096 1,633 1,382 Amount recognized in accumulated comprehensive income $ (4,122 ) $ (3,171 ) $ (2,683 ) Prepaid benefit detail Benefit obligation $ (15,103 ) $ (12,475 ) $ (10,945 ) Fair value of assets 13,645 12,032 11,678 Unrecognized net actuarial loss 5,260 4,861 4,138 Unrecognized prior service cost (42 ) (57 ) (72 ) Prepaid (accrued) benefits $ 3,760 $ 4,361 $ 4,799 Components of net periodic benefit cost Service cost $ 696 $ 632 $ 648 Interest cost 487 452 411 Expected return on plan assets (851 ) (854 ) (839 ) Amortization of prior service cost (15 ) (15 ) (15 ) Recognized net actuarial loss 284 223 181 Net periodic benefit cost $ 601 $ 438 $ 386 Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) Net loss $ 399 $ 724 $ 522 Amortization of prior service cost 15 15 15 Total recognized in other comprehensive income $ 414 $ 739 $ 537 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 1,015 $ 1,177 $ 923 Additional disclosure information Accumulated benefit obligation $ 10,760 $ 8,789 $ 7,601 Vested benefit obligation $ 10,750 $ 8,780 $ 7,539 Discount rate used for net pension cost 4.00 % 4.25 % 4.00 % Discount rate used for disclosure 3.50 % 4.00 % 4.25 % Expected return on plan assets 7.25 % 7.50 % 7.50 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 12 13 13 Funding Policy Due to the current funding status of the plan, the Company did not make a contribution in 2017 or 2016. The Company’s contributions for 2015 was $750. The net periodic pension cost of the plan for 2018 will be approximately $629. Long-Term Rate of Return The Company, as plan sponsor, selects the expected long-term rate of return on assets assumption in consultation with investment advisors and the plan actuary. This rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (net of inflation) for the major asset classes held or anticipated to be held by the trust. Undue weight is not given to recent experience, which may not continue over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions. Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further, and solely for this purpose, the plan is assumed to continue in force and not terminate during the period during which the assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the trust, and expenses (both investment and non-investment) typically paid from plan assets (to the extent such expenses are not explicitly estimated within periodic cost). Asset Allocation The trust fund is sufficiently diversified to maintain a reasonable level of risk without imprudently sacrificing return, with a targeted asset allocation of 39% fixed income and 61% equity. The Investment Manager selects investment fund managers with demonstrated experience and expertise, and funds with demonstrated historical performance, for the implementation of the Plan’s investment strategy. The Investment Manager will consider both actively and passively managed investment strategies and will allocate funds across the asset classes to develop an efficient investment structure. The pension plan’s allocations as of December 31, 2017, and 2016 were 61% equity and 39% fixed and 61% equity and 39% fixed, respectively. Estimated Future Benefit Payments, which reflect expected future service, as appropriate, as of December 31, 2017, are as follows: 2018 $ 1,862 2019 698 2020 264 2021 179 2022 2,867 2023-2027 7,151 $ 13,021 Employee Stock Ownership Plan (ESOP) The Company sponsors an ESOP which provides stock ownership to substantially all employees of the Company. The Plan provides total vesting upon the attainment of five years of service. Contributions to the plan are made at the discretion of the Board of Directors and are allocated based on the compensation of each employee relative to total compensation paid by the Company. All shares issued and held by the Plan are considered outstanding in the computation of earnings per share. Dividends on Company stock are allocated and paid to participants at least annually. Shares of Company stock, when distributed, have restrictions on transferability. For the plan year ending September 30, 2017 the Company contributed $430 in 2017, $407 in 2016, and $270 in 2015 to the Plan and charged this expense to operations. The shares held by the ESOP totaled 194,018 and 190,271 at December 31, 2017 and 2016, respectively. 401(K) Plan The Company sponsors a 401(k) savings plan under which eligible employees may choose to save up to 20 percent of their salary on a pretax basis, subject to certain IRS limits. Under the Federal Safe Harbor rules employees are automatically enrolled at 3% (in the third year this increases by 1% per year up to 6%) of their salary unless elected otherwise. The Company matches one hundred percent of the first 1% contributed by the employee and fifty percent from 2% to 6% of employee contributions. Vesting in the contributions made by the Company is 100% after two years of service. Contributions under the plan amounted to $263, $242 and $212 in 2017, 2016 and 2015, respectively. Deferred Compensation Plan The Company has a nonqualified deferred compensation plan for several of its key employees and directors. The Company may make annual contributions to the plan, and the employee or director has the option to defer a portion of their salary or bonus based on qualifying annual elections. Contributions to the plan totaled $125 in 2017, $125 in 2016 and $110 in 2015. A liability is accrued for the obligation under the plan and totaled $3,377 and $2,767 at December 31, 2017 and 2016, respectively. Investments in Life Insurance Contracts The Bank currently offers a variety of benefit plans to all full-time employees. While the costs of these plans are generally tax deductible to the Bank, the cost has been escalating greatly in recent years. To help offset escalating benefit costs and to attract and retain qualified employees, the Bank purchased Bank Owned Life Insurance (BOLI) contracts that will provide benefits to employees during their lifetime. Dividends received on these policies are tax-deferred and the death benefits under the policies are tax exempt. Rates of return on a tax-equivalent basis are very favorable when compared to other long-term investments which the Bank might make. The accrued liability related to the BOLI contracts was $443 and $412 for December 31, 2017 and 2016, respectively. |
15. CONCENTRATIONS OF CREDIT
15. CONCENTRATIONS OF CREDIT | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
NOTE 15. CONCENTRATIONS OF CREDIT | The Company had cash deposits in other commercial banks in excess of FDIC insurance limits totaling $1,798 and $680 at December 31, 2017 and 2016, respectively. The Company grants commercial, residential real estate and consumer loans to customers located primarily in the northwestern portion of the State of Virginia. There were no loan concentration areas greater than 25% of capital. Collateral required by the Company is determined on an individual basis depending on the purpose of the loan and the financial condition of the borrower. As of December 31, 2017, approximately 80% of the loan portfolio was secured by real estate. |
16. COMMITMENTS
16. COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
NOTE 16. COMMITMENTS | The Company makes commitments to extend credit in the normal course of business and issues standby letters of credit to meet the financing needs of its customers. The amount of the commitments represents the Company's exposure to credit loss that is not included in the consolidated balance sheet. As of the December 31, 2017 and 2016, the Company had the following commitments outstanding: 2017 2016 Commitments to extend credit $ 170,798 $ 148,060 Standby letters of credit 1,533 1,089 The Company uses the same credit policies in making commitments to extend credit and issue standby letters of credit as it does for the loans reflected in the consolidated balance sheet. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. Collateral required, if any, upon extension of credit is based on management's credit evaluation of the borrower’s ability to pay. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment. The Bank leases four of its branch offices and its loan production office under long term lease arrangements which had initial terms of either three, five or ten years. VBS leased its building until December of 2017 and therefore recorded lease expense in 2017, 2016 and 2015. VST leases three of its offices, the lease expense is included in the following disclosure as well as future lease payments. The North Augusta Branch and the Dealer Finance division office are leases with related parties. The Company considers these lease agreements to be arm’s length transactions. Lease expense was $355, $291 and $281 for 2017, 2016 and 2015, respectively. As of December 31, 2017, the required lease payments for the next five years were as follows: 2018 $ 177 2019 150 2020 128 2021 110 2022 105 |
17. ON BALANCE SHEET DERIVATIVE
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | Derivative Financial Instruments The Company has stand alone derivative financial instruments in the form of forward option contracts. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments, and the value of the derivative are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the Company’s balance sheet as derivative assets and derivative liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail their obligations. The Company deals only with primary dealers. Derivative instruments are generally either negotiated Over-the-Counter (OTC) contracts or standardized contracts executed on a recognized exchange. Negotiated OTC derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity. The Company issues to customer’s certificates of deposit with an interest rate that is derived from the rate of return on the stock of the companies that comprise The Dow Jones Industrial Average. In order to manage the interest rate risk associated with this deposit product, the Company has purchased a series of forward option contracts. These contracts provide the Company with a rate of return commensurate with the return of The Dow Jones Industrial Average from the time of the contract until maturity of the related certificates of deposit. These contracts are accounted for as fair value hedges. Because the certificates of deposit can be redeemed by the customer at any time and the related forward options contracts cannot be cancelled by the Company, the hedge is not considered effective. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. There was no ineffective portion included in the consolidated income statement for the years ended December 31, 2017, 2016 and 2015. At December 31, the information pertaining to the forward option contracts, included in other assets and other liabilities on the balance sheet, is as follows: 2017 2016 Notional amount $ 184 $ 190 Fair value of contracts, included in other assets 59 26 Mortgage Banking Derivatives Commitments to fund certain mortgage loans originated by VBS (rate lock commitments) to be sold into the secondary market and best efforts commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the practice of VBS to enter into best efforts commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated hedge relationships. The fair value of the mortgage banking derivatives were estimated based on changes in interest rates from the date of the commitments and were considered immaterial at December 31, 2017 and 2016, and were not recorded on the Company’s balance sheet. |
18. TRANSACTIONS WITH RELATED P
18. TRANSACTIONS WITH RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 18. TRANSACTIONS WITH RELATED PARTIES | During the year, executive officers and directors (and companies controlled by them) were customers of and had transactions with the Company in the normal course of business. Management believes these transactions were made on substantially the same terms as those prevailing for other customers and did not involve any abnormal risk. Loan transactions with related parties are shown in the following schedule: 2017 2016 Total loans, beginning of year $ 7,486 $ 7,180 New loans 6,803 4,701 Relationship change 10,403 611 Repayments (4,315 ) (5,006 ) Total loans, end of year $ 20,377 $ 7,486 Deposit of executive officers and directors and their affiliates were $7,757 and $4,524 on December 31, 2017 and 2016 respectively. Management believes these deposits were made under the same terms available to other customers of the bank. |
19. DIVIDEND LIMITATIONS ON SUB
19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK | The principal source of funds of F & M Bank Corp. is dividends paid by the Farmers & Merchants Bank. The Federal Reserve Act restricts the amount of dividends the Bank may pay. Approval by the Board of Governors of the Federal Reserve System is required if the dividends declared by a state member bank, in any year, exceed the sum of (1) net income of the current year and (2) income net of dividends for the preceding two years. As of January 1, 2018, approximately $13,705 was available for dividend distribution without permission of the Board of Governors. Dividends paid by the Bank to the Company totaled $5,000 in 2017, $5,000 in 2016 and $2,500 in 2015. |
20. FAIR VALUE MEASUREMENTS
20. FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
NOTE 20. FAIR VALUE MEASUREMENTS | The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Accounting guidance for fair value excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. The Company records fair value adjustments to certain assets and liabilities and determines fair value disclosures utilizing a definition of fair value of assets and liabilities that states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additional considerations are involved to determine the fair value of financial assets in markets that are not active. The Company uses a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 – Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements: Securities Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and exchange traded equities, such as U. S. Treasuries. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. The carrying value of restricted Federal Reserve Bank and Federal Home Loan Bank stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following table. Derivatives The Company’s derivatives are recorded at fair value based on third party vendor supplied information using discounted cash flow analysis from observable-market based inputs, which are considered Level 2 inputs. The following tables present the balances of financial assets measured at fair value on a recurring basis as of December 31, 2017, and 2016 (dollars in thousands): December 31, 2017 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 19,998 $ 19,998 $ - $ - U.S. Government sponsored enterprises 7,980 - 7,980 - Mortgage-backed obligations of federal agencies 502 - 502 - Equity securities 135 - 135 - Total securities available for sale $ 28,615 $ 19,998 $ 8,617 - December 31, 2016 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 24,014 $ 24,014 $ - $ - Mortgage-backed obligations of federal agencies 634 - 634 - Equity securities 135 - 135 - Total securities available for sale $ 24,783 $ 24,014 $ 769 - Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements: Loans Held for Sale Loans held for sale are short-term loans purchased at par for resale to investors at the par value of the loan and loans originated by VBS for sale in the secondary market. Loan participations are generally repurchased within 15 days. Loans originated for sale by VBS are recorded at lower of cost or market. No market adjustments were required at December 31, 2017 or 2016; therefore, loans held for sale were carried at cost. Because of the short-term nature and fixed repurchase price, the book value of these loans approximates fair value at December 31, 2017, and 2016. Impaired Loans Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. Troubled debt restructurings are impaired loans. Impaired loans are measured at fair value on a nonrecurring basis. If an individually-evaluated impaired loan’s balance exceeds fair value, the amount is allocated to the allowance for loan losses. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income. The fair value of an impaired loan and measurement of associated loss is based on one of three methods: the observable market price of the loan, the present value of projected cash flows, or the fair value of the collateral. The observable market price of a loan is categorized as a Level 1 input. The present value of projected cash flows method results in a Level 3 categorization because the calculation relies on the Company’s judgment to determine projected cash flows, which are then discounted at the current rate of the loan, or the rate prior to modification if the loan is a troubled debt restructure. Loans measured using the fair value of collateral method are categorized in Level 3. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. Most collateral is real estate. The Company bases collateral method fair valuation upon the “as-is” value of independent appraisals or evaluations. The value of real estate collateral is determined by an independent appraisal utilizing an income or market valuation approach. The Company discounts appraised value by estimated selling costs to arrive at net fair value. Appraisals conducted by an independent, licensed appraiser outside of the Company using observable market data is categorized as Level 3. The value of business equipment is based upon an outside appraisal (Level 3) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). As of December 31, 2017, and 2016, the fair value measurements for impaired loans with specific allocations were primarily based upon the fair value of the collateral. The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis during the period (dollars in thousands): December 31, 2017 Total Level 1 Level 2 Level 3 Construction/Land Development $ 3,337 - - $ 3,337 Real Estate 979 - - 979 Dealer Finance 35 - - 35 Impaired loans $ 4,351 - - $ 4,351 December 31, 2016 Total Level 1 Level 2 Level 3 Construction/Land Development $ 4,739 - - $ 4,739 Real Estate 985 - - 985 Commercial Real Estate 892 - - 892 Dealer Finance 67 - - 67 Impaired loans $ 6,683 - - $ 6,683 The following table presents information about Level 3 Fair Value Measurements for December 31, 2017 and 2016: Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 4,351 Discounted appraised value Discount for selling costs and marketability 3%-19% (Average 5.5%) Fair Value at December 31, 2016 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 6,683 Discounted appraised value Discount for selling costs and marketability 2%-50% (Average 4.7%) Other Real Estate Owned Certain assets such as other real estate owned (OREO) are measured at fair value less cost to sell. Valuation of other real estate owned is determined using current appraisals from independent parties, a level three input. If current appraisals cannot be obtained prior to reporting dates, or if declines in value are identified after a recent appraisal is received, appraisal values are discounted, resulting in Level 3 estimates. If the Company markets the property with a realtor, estimated selling costs reduce the fair value, resulting in a valuation based on Level 3 inputs. The Company markets other real estate owned both independently and with local realtors. Properties marketed by realtors are discounted by selling costs. Properties that the Company markets independently are not discounted by selling costs. The following table summarizes the Company’s other real estate owned that were measured at fair value on a nonrecurring basis during the period. December 31, 2017 Total Level 1 Level 2 Level 3 Other real estate owned $ 1,984 - - $ 1,984 December 31, 2016 Total Level 1 Level 2 Level 3 Other real estate owned $ 2,076 - - $ 2,076 The following table presents information about Level 3 Fair Value Measurements for December 31, 2017 and 2016: Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 1,984 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) Fair Value at December 31, 2016 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 2,076 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: Cash and Due from Bank, and Interest-Bearing Deposits The carrying amounts approximate fair value. Securities The fair values of securities, excluding restricted stock, are determined by quoted market prices or dealer quotes. The fair value of certain state and municipal securities is not readily available through market sources other than dealer quotations, so fair value estimates are based on quoted market prices of similar instruments adjusted for differences between the quoted instruments and the instruments being valued. The carrying value of restricted securities and other investments approximates fair value and are therefore excluded from the following table. Loans Held for Sale Fair values of loans held for sale are based on commitments on hand from investors or prevailing market prices. Loans Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, real estate – commercial, real estate – construction, real estate – mortgage, credit card and other consumer loans. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, as well as estimates for prepayments. The estimate of maturity is based on the Company’s historical experience with repayments for loan classification, modified, as required, by an estimate of the effect of economic conditions on lending. Fair value for significant nonperforming loans is based on estimated cash flows which are discounted using a rate commensurate with the risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows and discount rates are determined within management’s judgment, using available market information and specific borrower information. Bank-Owned Life Insurance Bank-owned life insurance represents insurance policies on officers of the Company. The cash values of the policies are estimates using information provided by insurance carriers. These policies are carried at their cash surrender value, which approximates fair value. Deposits The fair value of demand and savings deposits is the amount payable on demand. The fair value of fixed maturity term deposits and certificates of deposit is estimated using the rates currently offered for deposits with similar remaining maturities. Short-Term Debt The carrying amounts of short-term debt maturing within 90 days approximate their fair values. Fair values of any other short-term debt are estimated using discounted cash flow analyses based on the current incremental borrowing rates for similar types of debt. Long-Term Debt The fair value of the Company’s long-term debt is estimated using discounted cash flow analyses based on the Company’s incremental borrowing rates for similar types of debt arrangements. Accrued Interest The carrying amounts of accrued interest approximate fair value. Fair Value Measurements at December 31, 2017 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2016 Assets: Cash and cash equivalents $ 11,907 $ 11,907 $ - $ - $ 11,907 Securities 28,740 19,998 8,742 - 28,740 Loans held for sale 39,775 - 39,775 - 39,775 Loans held for investment, net 610,930 - - 646,703 646,703 Interest receivable 2,007 - 2,007 - 2,007 Bank owned life insurance 13,950 - 13,950 - 13,950 Total $ 707,309 $ 31,905 $ 64,474 $ 646,703 $ 743,082 Liabilities: Deposits $ 569,177 $ - $ 403,907 $ 167,210 $ 571,117 Short-term debt 25,296 - 25,296 - 25,296 Long-term debt 49,733 - - 49,869 49, 869 Interest payable 260 - 260 - 260 Total $ 644,466 $ - $ 429,463 $ 217,079 $ 646,542 The estimated fair values, and related carrying amounts (in thousands), of the Company’s financial instruments are as follows: Fair Value Measurements at December 31, 2016 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2016 Assets: Cash and cash equivalents $ 16,355 $ 16,355 $ - $ - $ 16,355 Securities 24,908 24,014 894 - 24,908 Loans held for sale 62,735 - 62,735 - 62,735 Loans held for investment, net 584,093 - - 598,991 598,991 Interest receivable 1,785 - 1,785 - 1,785 Bank owned life insurance 13,513 - 13,513 - 13,513 Total $ 703,389 $ 40,369 $ 78,927 $ 598,991 $ 718,287 Liabilities: Deposits $ 537,085 $ - $ 379,857 $ 158,073 $ 537,930 Short-term debt 40,000 - 40,000 - 40,000 Long-term debt 64,237 - - 63,945 63,945 Interest payable 228 - 228 - 228 Total $ 641,550 $ - $ 420,085 $ 222,018 $ 642,103 |
21. REGULATORY MATTERS
21. REGULATORY MATTERS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 21. REGULATORY MATTERS | The Company meets the eligibility criteria of a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding Company Policy Statement issued in February 2015 and is no longer obligated to report consolidated regulatory capital. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective January 1, 2015, with full compliance of all the requirements being phased in over a multi-year schedule and becoming fully phased in by January 1, 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2017 was 1.25% and for 2016 was 0.625%. The net unrealized gain on securities available for sale and the unfunded pension liability are not included in computing regulatory capital. Quantitative measures established by regulation, to ensure capital adequacy, require the Bank to maintain minimum amounts and ratios. These ratios are defined in the regulations and the amounts are set forth in the table below. Management believes, as of December 31, 2017 and 2016, that the Bank meets all capital adequacy requirements to which they are subject. As of the most recent notification from the Federal Reserve Bank Report of Examination, the subsidiary bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category. The actual capital ratios for the Bank are presented in the following table (dollars in thousands): Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2017 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,563 15.41 % $ 49,614 8.00 % $ 62,018 10.00 % Tier 1 risk-based ratio 89,519 14.43 % 37,211 6.00 % 49,614 8.00 % Common equity tier 1 89,519 14.43 % 27,908 4.50 % 40,312 6.50 % Total assets leverage ratio 89,519 12.07 % 29,656 4.00 % 37,070 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2016 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 93,519 15.08 % $ 49,615 8.00 % $ 62,019 10.00 % Tier 1 risk-based ratio 85,976 13.86 % 37,212 6.00 % 49,615 8.00 % Common equity tier 1 85,976 13.86 % 27,909 4.50 % 40,312 6.50 % Total assets leverage ratio 85,976 11.83 % 29,065 4.00 % 36,331 5.00 % |
22. BUSINESS SEGMENTS
22. BUSINESS SEGMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Business Segments | |
NOTE 22. BUSINESS SEGMENTS | December 31, 2017 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 33,904 $ 125 $ 148 $ - $ - $ (82 ) $ 34,095 Service charges on deposits 1,360 - - - - - 1,360 Investment services and insurance income 1 - 772 - - (18 ) 755 Mortgage banking income, net - 2,220 - - - - 2,220 Title insurance income - 279 - 883 - - 1,162 Gain on prepayment of long-term debt 504 - - - - - 504 Loss on sale of investments - (40 ) (2 ) - - - (42 ) Other operating income 2,128 - - - 162 (357 ) 1,933 Total income 37,897 2,584 918 883 162 (457 ) 41,987 Expenses: Interest Expense 3,904 75 - - - (82 ) 3,897 Provision for loan losses - - - - - - - Salaries and benefits 12,092 1,733 474 555 - - 14,854 Other operating expenses 8,942 672 51 172 46 (18 ) 9,865 Total expense 24,938 2,480 525 727 46 (100 ) 28,616 Income before income taxes 12,959 104 393 156 116 (357 ) 13,371 Income tax expense (benefit) 4,316 - 109 - (95 ) - 4,330 Net income $ 8,643 $ 104 $ 284 $ 156 $ 211 $ (357 ) $ 9,041 Net income attributable to noncontrolling interest - 31 - - - - 31 Net Income attributable to F & M Bank Corp. $ 8,643 $ 73 $ 284 $ 156 $ 211 $ (357 ) $ 9,010 Total Assets $ 754,375 $ 7,018 $ 6,749 $ 811 $ 90,964 $ (106,647 ) $ 753,270 Goodwill $ 2,670 $ 47 $ - $ - $ 164 $ - $ 2,881 December 31, 2016 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 31,949 $ 55 $ 152 $ - $ - $ (6 ) $ 32,150 Service charges on deposits 1,174 - - - - - 1,174 Investment services and insurance income 1 - 470 - - (30 ) 441 Mortgage banking income, net - 2,565 - - - - 2,565 Title insurance income - - - - - - - Gain on prepayment of long-term debt - - - - - - - Loss on investments - - - - - - - Other operating income 2,353 - - - - (951 ) 1,402 Total income 35,477 2,620 622 - - (987 ) 37,732 Expenses: Interest Expense 3,605 - - - - (6 ) 3,599 Provision for loan losses - - - - - - - Salaries and benefits 11,123 1,387 290 - - - 12,800 Other operating expenses 8,139 586 66 - 1 (320 ) 8,472 Total expense 22,867 1,973 356 - 1 (326 ) 24,871 Income before income taxes 12,610 647 266 - (1 ) (661 ) 12,861 Income tax expense (benefit) 3,290 - 58 - (249 ) - 3,099 Net income $ 9,320 $ 647 $ 208 $ - $ 248 $ (661 ) $ 9,762 Net income attributable to noncontrolling interest - 194 - - - - 194 Net Income attributable to F & M Bank Corp. $ 9,320 $ 453 $ 208 $ - $ 248 $ (661 ) $ 9,568 Total Assets $ 748,273 $ 7,487 $ 6,476 $ - $ 87,449 $ (104,796 ) $ 744,889 Goodwill $ 2,670 $ - $ - $ - $ - $ - $ 2,670 December 31, 2015 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 29,206 $ 51 $ 152 $ - $ - $ (5 ) $ 29,404 Service charges on deposits 963 - - - - - 963 Investment services and insurance income 2 - 522 - - (14 ) 510 Mortgage banking income, net - 2,066 - - - - 2,066 Title insurance income - - - - - - - Gain on prepayment of long-term debt - - - - - - - Loss on investments - - - - - - - Other operating income 2,142 - - - 5 (893 ) 1,254 Total income 32,313 2,117 674 - 5 (912 ) 34,197 Expenses: Interest Expense 2,881 - - - - (5 ) 2,876 Provision for loan losses 300 - - - - - 300 Salaries and benefits 10,056 1,103 298 - - - 11,457 Other operating expenses 7,887 466 35 - 21 (312 ) 8,097 Total expense 21,124 1,569 333 - 21 (317 ) 22,730 Income before income taxes 11,189 548 341 - (16 ) (595 ) 11,467 Income tax expense (benefit) 2,948 - 129 - (191 ) - 2,886 Net income $ 8,241 $ 548 $ 212 $ - $ 175 $ (595 ) $ 8,581 Net income attributable to noncontrolling interest - 164 - - - - 164 Net Income attributable to F & M Bank Corp. $ 8,241 $ 384 $ 212 $ - $ 175 $ (595 ) $ 8,417 Total Assets $ 669,968 $ 2,180 $ 6,269 $ - $ 84,897 $ (97,957 ) $ 665,357 Goodwill $ 2,670 $ - $ - $ - $ - $ - $ 2,670 |
23. PARENT COMPANY ONLY FINANCI
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS | Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash and cash equivalents $ 917 $ 1,155 Investment in subsidiaries 88,967 85,481 Securities available for sale 135 135 Income tax receivable (including due from subsidiary) 565 - Goodwill and intangibles 380 - Total Assets $ 90,964 $ 86,771 Liabilities Income tax payable (including due from subsidiary) $ - $ 313 Deferred income taxes 177 307 Accrued expenses 86 - Demand obligations for low income housing investment - 162 Total Liabilities $ 263 $ 782 Stockholders’ Equity Preferred stock par value $5 per share, 400,000 shares authorized, 324,150 and 327,350 issued and outstanding at December 31, 2017 and 2016, respectively. $ 7,529 $ 7,609 Common stock par value $5 per share, 6,000,000 shares authorized, 3,255,036 and 3,270,315 shares issued and outstanding for 2016 and 2015, respectively 16,275 16,352 Additional paid in capital 10,225 10,684 Retained earnings 60,814 54,509 Accumulated other comprehensive income (loss) (4,142 ) (3,165 ) Total Stockholders' Equity 90,701 85,989 Total Liabilities and Stockholders' Equity $ 90,964 $ 86,771 Statements of Income For the years ended December 31, 2017, 2016 and 2015 2017 2016 2015 Income Dividends from affiliate $ 5,000 $ 5,000 $ 2,500 Net limited partnership income (loss) 162 - 5 Total Income 5,162 5,000 2,505 Expenses Total Expenses 47 1 21 Net income before income tax expense (benefit) and undistributed subsidiary net income 5,115 4,999 2,484 Income Tax Expense (Benefit) (95 ) (249 ) (191 ) Income before undistributed subsidiary net income 5,210 5,248 2,675 Undistributed subsidiary net income 3,800 4,320 5,742 Net Income F&M Bank Corp. $ 9,010 $ 9,568 $ 8,417 Statements of Cash Flows For the years ended December 31, 2017, 2016 and 2015 2017 2016 2015 Cash Flows from Operating Activities Net income $ 9,010 $ 9,568 $ 8,417 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (3,800 ) (4,320 ) (5,742 ) Deferred tax (benefit) expense (112 ) 5 (81 ) Decrease (increase) in other assets (1,256 ) - 1,300 Increase (decrease) in other liabilities (77 ) (535 ) (143 ) Net Cash Provided by Operating Activities 3,765 4,718 3,751 Cash Flows from Investing Activities Net Cash Used in Investing Activities - - - Cash Flows from Financing Activities Repurchase of preferred stock (101 ) (1,961 ) Repurchase of common stock (712 ) (577 ) (289 ) Proceeds from issuance of common stock 197 183 146 Dividends paid in cash (3,387 ) (3,115 ) (2,915 ) Net Cash Used in Financing Activities (4,003 ) (5,470 ) (3,058 ) Net (Decrease) increase in Cash and Cash Equivalents (238 ) (752 ) 693 Cash and Cash Equivalents, Beginning of Year 1,155 1,907 1,214 Cash and Cash Equivalents, End of Year $ 917 $ 1,155 $ 1,907 |
24. INVESTMENT IN VBS MORTGAGE,
24. INVESTMENT IN VBS MORTGAGE, LLC | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
NOTE 24. INVESTMENT IN VBS MORTGAGE, LLC | On November 3, 2008, the Bank acquired a 70% ownership interest in VBS Mortgage, LLC (formerly Valley Broker Services, DBA VBS Mortgage). VBS originates both conventional and government sponsored mortgages for sale in the secondary market. Accordingly, the Company consolidated the assets, liabilities, revenues and expenses of VBS Mortgage, LLC and reflected the issued and outstanding interest not held by the Company in its consolidated financial statements as noncontrolling interest. |
25. INVESTMENT IN VS TITLE, LLC
25. INVESTMENT IN VS TITLE, LLC | 12 Months Ended |
Dec. 31, 2017 | |
Investment In Vs Title Llc | |
NOTE 25. INVESTMENT IN VS TITLE, LLC | On January 1, 2017, the Bank acquired a 76% ownership interest in VS Title, LLC (VST). VST provides title insurance services to the customers in our market area, including VBS Mortgage and the Bank. VBS Mortgage is the minority owner in VST and accordingly, the Company consolidated the assets, liabilities, revenues and expenses of VST, however there is no noncontrolling interest reflected as the 24% is included in VBS Mortgage’s income. |
26. ACCUMULATED OTHER COMPREHEN
26. ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2017 | |
Accumulated Other Comprehensive Loss | |
NOTE 26. ACCUMULATED OTHER COMPREHENSIVE LOSS | The balances in accumulated other comprehensive loss are shown in the following table: dollars in thousands Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December, 31, 2014 3 (2,330 ) (2,327 ) Change in unrealized securities gains (losses), net of tax 1 - 1 Change in unfunded pension liability, net of tax - (354 ) (354 ) Balance at December, 31, 2015 4 (2,684 ) (2,680 ) Change in unrealized securities gains (losses), net of tax 2 - 2 Change in unfunded pension liability, net of tax - (487 ) (487 ) Balance at December, 31, 2016 $ 6 $ (3,171 ) $ (3,165 ) Change in unrealized securities gains (losses), net of tax (26 ) - (26 ) Change in unfunded pension liability, net of tax - (951 ) (951 ) Balance at December, 31, 2017 $ (20 ) $ (4,122 ) $ (4,142 ) There were no reclassifications adjustments reported on the consolidated statements of income during 2015, 2016 or 2017. |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Principles of Consolidation | The consolidated financial statements include the accounts of Farmers and Merchants Bank, TEB Life Insurance Company, Farmers & Merchants Financial Services, Inc., VBS Mortgage, LLC, (net of noncontrolling interest) and VS Title, LLC. Significant inter-company accounts and transactions have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, goodwill and intangibles, fair value, the valuation of deferred tax assets and liabilities, pension accounting and the valuation of foreclosed real estate. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, money market funds whose initial maturity is ninety days or less and Federal funds sold. |
Securities | Certain debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method. The Company has no securities classified as trading. The Company follows the accounting guidance related to recognition and presentation of other-than-temporary impairment. The guidance specifies that if (a) an entity does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that the entity will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired, unless there is a credit loss. When criteria (a) and (b) are met, the entity will recognize the credit component of other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment is amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security. For equity securities, when the Company has decided to sell an impaired available-for-sale security and the Company does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed other-than-temporarily impaired in the period in which the decision to sell is made. The Company recognizes an impairment loss when the impairment is deemed other than temporary even if a decision to sell has not been made. |
Other Investments | The Company periodically invests in low income housing partnerships whose primary benefit is the distribution of federal income tax credits to partners. The Company recognizes these benefits and the cost of the investments over the life of the partnership (usually 15 years). In addition, state and federal historic rehabilitation credits are generated from some of the partnerships. Amortization of these investments is prorated based on the amount of benefits received in each year to the total estimated benefits over the life of the projects. The effective yield method is used to record the income statement effects of these investments. |
Other Investment Securities | Due to the nature and restrictions placed on the Company's investment in common stock of the Federal Home Loan Bank of Atlanta ("FHLB") and the Federal Reserve Bank of Richmond, these securities are considered restricted and carried at cost. |
Income Taxes | Income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The results for the year ended December 31, 2017 include the effect of the Tax Cuts and Jobs Act (the Tax Act), which was signed into law on December 22, 2017. Among other things, the Tax Act permanently lowers the federal corporate income tax rate to 21% from the maximum rate prior to the passage of the Tax Act of 35%, effective January 1, 2018. As a result of the reduction of the federal corporate tax rate, U.S. GAAP requires companies to re-measure their deferred tax assets and deferred tax liabilities, including those accounted for in accumulated other comprehensive income (loss), as of the date of the Tax Act’s enactment and record the corresponding effects in income tax expense in the fourth quarter of 2017. The Company recognized a $811 reduction in the value of its net deferred tax asset and recorded a corresponding incremental income tax expense in the Company’s consolidated statement of income for 2017. The Company’s evaluation of the effect of the Tax Act is considered a preliminary estimate and is subject to refinement for up to one year. No material adjustment is anticipated. The Company recognizes interest and penalties on income taxes as a component of income tax expense. |
Loans Held for Investment | The Company, through its banking subsidiary, provides mortgage, commercial, and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans, particularly commercial and residential mortgages. The ability of the Company’s debtors to honor their contracts is largely dependent upon the real estate and general economic conditions in the Company’s market area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off, generally are reported at their outstanding unpaid principal balance adjusted for the allowance for loan losses, and any unearned income. Interest income is accrued on the unpaid principal balance. The accrual of interest on loans is generally discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Loans are typically charged off when the loan is 120 days past due, unless secured and in process of collection. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. The Company’s loans are grouped into eleven segments: construction/land development, farmland, real estate, multi-family, commercial real estate, home equity – closed end, home equity – open end, commercial & industrial – non-real estate, consumer, credit cards and dealer finance. Each segment is subject to certain risks that influence the establishment of pricing, loan structures, approval requirements, reserves, and ongoing credit management. The Company does not segregate the portfolio further. Construction and land development loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. Completed properties that do not sell or become leased within originally expected timeframes may impact the borrower’s ability to service the debt. These risks are measured by market-area unemployment rates, bankruptcy rates, housing and commercial building market trends, and interest rates. Risks specific to the borrower are also evaluated, including previous repayment history, debt service ability, and current and projected loan-to value ratios for the collateral. Farmland loans are loans secured by agricultural property. These loans are subject to risks associated with the value of the underlying farmland and the cash flows of the borrower’s farming operations. Multifamily loans are loans secured by multi-unit residential property. These loans are subject to risks associated with the value of the underlying property as well as the successful operation and management of the property. Real estate loans are for consumer residential real estate where the credit quality is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, and local housing market trends and interest rates. Risks specific to a borrower are determined by previous repayment history, loan-to-value ratios, and debt-to-income ratios. The commercial real estate segment includes loans secured by commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for commercial buildings, business bankruptcy rates, local unemployment rates and interest rate trends that would impact the businesses housed by the commercial real estate. The Company’s home-equity loan portfolios (closed end and open end) carry risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value at origination, experienced underwriting, and requiring standards for appraisers. Commercial and industrial non-real estate loans are secured by collateral other than real estate or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, interest rates, and borrower repayment ability and collateral value (if secured). Consumer non-real estate includes non-dealer financed automobile loans and other consumer loans. Certain consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay. If the loan is secured, the Company analyzes loan-to-value ratios. All consumer non-real estate loans are analyzed for debt-to-income ratios and previous credit history, as well as for general risks for the portfolio, including local unemployment rates, personal bankruptcy rates and interest rates. Credit card loan portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Dealer finance lending generally carries certain risks associated with the values of the collateral and borrower’s ability to repay the loan. The Company focuses its dealer finance lending on used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. Interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. A loan is considered past due when a payment of principal or interest or both is due but not paid. Management closely monitors past due loans in timeframes of 30-59 days, 60-89 days, and 90 or more days past due. These policies apply to all loan portfolio segments. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Troubled debt restructurings are considered impaired loans. |
Loans Held for Sale | These loans consist of fixed rate loans made through the Company’s subsidiary, VBS Mortgage, and loans purchased from Northpointe Bank, Grand Rapids, MI. VBS Mortgage originates conforming mortgage loans for sale in the secondary market. These loans consist primarily of fixed-rate, single-family residential mortgage loans which meet the underwriting characteristics of the investors. VBS enters into mortgage loan commitments whereby the interest rate on the loan is determined prior to funding (rate lock commitments). The period of time between issuance of a loan commitment and sale of the loan generally ranges from two to three weeks. VBS protects itself from changes in interest rates through the use of best efforts forward delivery contracts, by committing to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed the interest rate risk on the loan. As a result, the Company is not generally exposed to significant losses nor will it realize significant gains related to its rate lock commitments due to changes in interest rates. The correlation between the rate lock commitments and the best efforts contracts is very high due to their similarity. The market value of rate lock commitments and best efforts contracts is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. VBS determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the estimated value of the underlying assets while taking into consideration the probability that the loan will be funded. The fair value of rate lock commitments and best efforts contracts was considered immaterial at December 31, 2017 and 2016. The average time on the line is two or three weeks. These loans are pre-sold with servicing released and no interest is retained after the loans are sold. Because of the short holding period, these loans are carried at the lower of cost or market and no market adjustments were deemed necessary in 2017, 2016, or 2015. Gains on sales of loans and commission expense are recognized at the loan closing date and are included in mortgage banking income, net on the Company’s consolidated income statement. The Bank participates in a Mortgage Purchase Program with Northpointe Bank (Northpointe), a Michigan banking corporation. Pursuant to the terms of a participation agreement, the Bank purchases participation interests in loans made by Northpointe related to fully underwritten and pre-sold mortgage loans originated by various prescreened mortgage loan originators located throughout the United States. A takeout commitment is in place at the time the loans are purchased. The Bank has participated in similar arrangements since 2003 as a higher yielding alternative to federal funds sold or investment securities. These loans are short-term, residential real estate loans that have an average life in our portfolio of approximately two weeks. The Bank holds these loans during the period of time between loan closing and when the loan is paid off by the ultimate secondary market purchaser. As of December 31, 2017, and 2016, there were $36,130 and $62,550 million of these loans included in loans held for sale on the Company’s consolidated balance sheet. |
Troubled Debt Restructuring | In situations where, for economic or legal reasons related to a borrower's financial condition, management may grant a concession to the borrower that it would not otherwise consider, the related loan is classified as a troubled debt restructuring ("TDR"). Management strives to identify borrowers in financial difficulty early and work with them to modify their loan to more affordable terms before their loan reaches nonaccrual status. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of either interest or principal, management measures any impairment on the restructuring as noted above for impaired loans. The Company has $7.8 million in loans classified as TDRs that are current and performing as of December 31, 2017, and $9.8 million as of December 31, 2016. |
Allowance for Loan and Losses | The allowance for loan losses represents management’s estimate of probable losses inherent in the Company’s loan portfolio. A provision for estimated losses is charged to earnings to establish and maintain the allowance for loan losses at a level reflective of the estimated credit risk. When management determines that a loan balance or portion of a loan balance is not collectible, the loss is charged against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of each segment of loans. The Company’s allowance for loan losses has two basic components: the general allowance and the specific allowance. Each of these components is determined based upon estimates and judgments. The general allowance uses historical loss experience as an indicator of future losses, along with various qualitative factors, including levels and trends in delinquencies, nonaccrual loans, charge-offs and recoveries, trends in volume and terms of loans, effects of changes in underwriting standards, experience of lending staff, economic conditions, and portfolio concentrations. Except for credit card and dealer finance loans, all loans are assigned an internal risk rating based on certain credit quality indicators. Credit card, consumer and dealer finance loans are monitored based on payment activity. Loss rates are amplified for loans with adverse risk ratings that are not considered impaired. In the general allowance, the historical loss rate is combined with the qualitative factors, resulting in an adjusted loss factor for each segment of loans. The period-end balances for each loan segment are multiplied by the adjusted loss factor. Historical loss rates are combined with qualitative factors resulting in an adjusted loss factor for each segment. Specific allowances are established for individually-evaluated impaired loans based on the excess of the loan balance relative to the fair value of the collateral, if the loan is deemed collateral dependent. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. |
Other Real Estate Owned (OREO) | OREO is held for sale and represents real estate acquired through or in lieu of foreclosure. OREO is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The Company’s policy is to carry OREO on its balance sheet at the lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed. |
Bank Premises and Equipment | Land is carried at cost and bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is charged to income over the estimated useful lives of the assets on a combination of the straight-line and accelerated methods. The ranges of the useful lives of the premises and equipment are as follows: Premises and Improvements 10 - 40 years Furniture and Equipment 5 - 20 years Maintenance, repairs, and minor improvements are charged to operations as incurred. Gains and losses on dispositions are reflected in other income or expense. |
Goodwill and Intangible Assets | The Company accounts for goodwill and intangible assets under ASC 805, “Business Combinations” and ASC 350, “Intangibles”, respectively. Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. Additionally, acquired intangible assets are separately recognized if the benefit of the assets can be sold, transferred, licensed, rented, or exchanged, and amortized over their useful lives. The Company recorded goodwill and intangible assets in 2017 related to the purchase of VS Title which was valued by an independent third party. The Company records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. Impairment testing is performed annually, as well as when an event triggering impairment may have occurred. The Company performs its annual analysis as of December 31 each fiscal year. Accounting guidance permits preliminary assessment of qualitative factors to determine whether a more substantial impairment testing is required. The Company chose to bypass the preliminary assessment and utilized a two-step process for impairment testing of goodwill. The first step tests for impairment, while the second step, if necessary, measures the impairment. No indicators of impairment were identified during the years ended December 31, 2017, 2016, and 2015. |
Pension Plans | The Bank has a qualified noncontributory defined benefit pension plan which covers all full-time employees hired prior to April 1, 2012. The benefits are primarily based on years of service and earnings. The Company complies with ASC 325-960 “Defined Benefit Pension Plans” which requires recognition of the over-funded or under-funded status of pension and other postretirement benefit plans on the balance sheet. Under ASC 325-960, gains and losses, prior service costs and credits, and any remaining transition amounts that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic cost. |
Advertising Costs | The Company follows the policy of charging the cost of advertising to expense as incurred. Total advertising costs included in other operating expenses for 2017, 2016, and 2015 were $507, $496, and $452, respectively. |
Bank Owned Life Insurance | The Company has purchased life insurance policies on certain employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. |
Transfers of Financial Assets | Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company – put presumptively beyond reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. |
Comprehensive Income | Comprehensive income is shown in a two-statement approach, the first statement presents total net income and its components followed by a second statement that presents all the components of other comprehensive income such as unrealized gains and losses on available for sale securities and changes in the funded status of a defined benefit pension plan. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”). The Company early adopted this new standard in the current year. ASU 2018-02 requires reclassification from AOCI to retained earnings for stranded tax effects resulting from the impact of the newly enacted federal corporate tax rate on items included in AOCI. The amount of the reclassification in 2017 was $682. |
Derivative Financial Instruments | Under ASC 815, the gain or loss on a derivative designated and qualifying as a fair value hedging instrument, as well as the offsetting gain or loss on the hedging item attributable to the risk being hedged, is recognized currently in earnings in the same accounting period. The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings. Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk. Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as trading activities and would be recorded at fair value with changes in fair value recorded in income. Derivative hedge contracts must meet specific effectiveness tests. Changes in fair value of the derivative financial instruments must be effective at offsetting changes in the fair value of the hedging items due to the designated hedge risk during the term of the hedge. Further, if the underlying financial instrument differs from the hedged asset or liability, there must be a clear economic relationship between the prices of the two financial instruments. If periodic assessment indicates derivatives no longer provide an effective hedge, the derivatives contracts would be closed out and settled or classified as a trading activity. |
Loss Contingencies | Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the consolidated financial statements. |
Fair Value Measurements | The Company follows the provisions of ASC Topic 820 “Fair Value Measurements and Disclosures,” for financial assets and financial liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. |
Reclassifications | Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year. The reclassification adjustments related to our consolidation of VBS and the classification of individual line items in a manner consistent with the rest of the Company on the income statement. These reclassifications had no impact on net income or earnings per share. |
Earnings per Share | Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued. The dilutive effect of conversion of preferred stock is reflected in the diluted earnings per common share calculation. Net income available to common stockholders represents consolidated net income adjusted for preferred dividends declared. The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended Dollars in thousands December 31, 2017 December 31, 2016 December 31, 2015 Earnings Available to Common Stockholders: Net Income $ 9,041 $ 9,762 $ 8,581 Minority interest attributable to noncontrolling interest 31 194 164 Dividends paid/accumulated on preferred stock 415 487 510 Net Income Available to Common Stockholders $ 8,595 $ 9,081 $ 7,907 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended December 31, 2017 December 31, 2016 December 31, 2015 Dollars in thousands Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,595 3,269,713 $ 2.63 $ 9,081 3,282,335 $ 2.77 $ 7,907 3,290,812 $ 2.40 Effect of Dilutive Securities: Convertible Preferred Stock 415 362,271 (0.15 ) 487 434,256 (0.20 ) 510 444,400 (0.15 ) Diluted EPS $ 9,010 3,631,984 $ 2.48 $ 9,568 3,716,591 $ 2.57 $ 8,417 3,735,212 $ 2.25 |
Recent Accounting Pronouncements | In May 2014, the FASB issued ASU No. 2014-09, “ Revenue from Contracts with Customers: Topic 606 In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The amendments in ASU 2016-01, among other things: 1) Requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 2) Requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 3) Requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables). 4) Eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently assessing the impact that adoption of ASU 2016-01 will have on its consolidated financial statements by contracting with a third party vendor. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently assessing the impact that ASU 2016-02 will have on its consolidated financial statements by gathering data on current lease agreements and analyzing the capital impact of expected right of use assets that will be recorded. No changes are expected regarding total lease expense. During March 2016, the FASB issued ASU No. 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” The amendments in this ASU clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria remain intact. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company does not expect the adoption of ASU 2016-05 to have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting.” The amendments in this ASU eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. In addition, the amendments in this ASU require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Early Adoption is permitted. The Company does not expect the adoption of ASU 2016-07 to have a material impact on its consolidated financial statements. During June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For public companies that are not SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements and has formed a Current Expected Credit Losses steering committee that is researching methods and models. During August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. If retrospective application is impractical for some of the issues addressed by the update, the amendments for those issues would be applied prospectively as of the earliest date practicable. During January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business—inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required to be present. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs. The amendments in this ASU provide a screen to determine when a set is not a business. If the screen is not met, the amendments (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The ASU provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition . During January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. The amendments in this ASU simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Public business entities that are U.S. Securities and Exchange Commission (SEC) filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Public business entities that are not SEC filers should adopt the amendments in this ASU for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements. During March 2017, the FASB issued ASU 2017-07, “Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The amendments in this ASU require an employer that offers defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715 to report the service cost component of net periodic benefit cost in the same line item(s) as other compensation costs arising from services rendered during the period. The other components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component. If the other components of net periodic benefit cost are not presented on a separate line or lines, the line item(s) used in the income statement must be disclosed. In addition, only the service cost component will be eligible for capitalization as part of an asset, when applicable. The amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-07 to have a material impact on its consolidated financial statements. During March 2017, the FASB issued ASU 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities.” The amendments in this ASU shorten the amortization period for certain callable debt securities purchased at a premium. Upon adoption of the standard, premiums on these qualifying callable debt securities will be amortized to the earliest call date. Discounts on purchased debt securities will continue to be accreted to maturity. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. Upon transition, entities should apply the guidance on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and provide the disclosures required for a change in accounting principle. Given the composition of our securities portfolio, the Company does not expect that adoption of ASU 2017-08 will have a material impact on its consolidated financial statements. During May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. Given the Company historically has not issued stock based compensation, the Company does not expect the adoption of ASU 2017-09 will have a material impact on its consolidated financial statements. During August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The amendments in this ASU modify the designation and measurement guidance for hedge accounting as well as provide for increased transparency regarding the presentation of economic results on both the financial statements and related footnotes. Certain aspects of hedge effectiveness assessments will also be simplified upon implementation of this update. The amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period . During February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” The amendments provide financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. The amendments are effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Organizations should apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company has elected to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act in the consolidated financial statements for the period ending December 31, 2017. The amount of this reclassification in 2017 was $811. |
2. SUMMARY OF SIGNIFICANT ACC36
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Bank Premises and Equipment | Premises and Improvements 10 - 40 years Furniture and Equipment 5 - 20 years |
Earnings per Share | The following table provides a reconciliation of net income to net income available to common stockholders for the periods presented: For the year ended Dollars in thousands December 31, 2017 December 31, 2016 December 31, 2015 Earnings Available to Common Stockholders: Net Income $ 9,041 $ 9,762 $ 8,581 Minority interest attributable to noncontrolling interest 31 194 164 Dividends paid/accumulated on preferred stock 415 487 510 Net Income Available to Common Stockholders $ 8,595 $ 9,081 $ 7,907 The following table shows the effect of dilutive preferred stock conversion on the Company's earnings per share for the periods indicated: Year ended December 31, 2017 December 31, 2016 December 31, 2015 Dollars in thousands Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Net Income Available to Common Stockholders Weighted Average Shares Per Share Amounts Basic EPS $ 8,595 3,269,713 $ 2.63 $ 9,081 3,282,335 $ 2.77 $ 7,907 3,290,812 $ 2.40 Effect of Dilutive Securities: Convertible Preferred Stock 415 362,271 (0.15 ) 487 434,256 (0.20 ) 510 444,400 (0.15 ) Diluted EPS $ 9,010 3,631,984 $ 2.48 $ 9,568 3,716,591 $ 2.57 $ 8,417 3,735,212 $ 2.25 |
4. SECURITIES (Tables)
4. SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Schedule Amortized Cost and Fair Value for Securities | Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2017 U. S. Treasuries $ 125 $ - $ - $ 125 December 31, 2016 U. S. Treasuries $ 125 $ - $ - $ 125 |
Amortized cost and fair value of securities | Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2017 U. S. Treasuries $ 19,998 $ - $ - $ 19,998 U. S. Government sponsored enterprises 7,999 - 19 7,980 Mortgage-backed obligations of federal agencies 508 - 6 502 Equity securities 135 - - 135 Total Securities Available for Sale $ 28,640 $ - $ 25 $ 28,615 December 31, 2016 U. S. Treasuries $ 24,005 $ 9 $ - $ 24,014 Mortgage-backed obligations of federal agencies 634 - - 634 Equity securities 135 - - 135 Total Securities Available for Sale $ 24,774 $ 9 $ - $ 24,783 |
Schedule of gain and losses on sales of debt and equity securities | Securities Held to Maturity Securities Available for Sale Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 125 $ 125 $ 19,998 $ 19,998 Due after one year through five years - - 7,999 7,980 Due after five years through ten years - - 508 502 Due after ten years - - 135 135 Total $ 125 $ 125 $ 28,640 $ 28,615 |
Schedule of Securities with Unrealized Losses | Less than 12 Months More than 12 Months Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2017 U. S. Government sponsored enterprises $ 3,981 $ (19 ) $ - $ - $ 3,981 $ (19 ) Mortgage-backed obligations of federal agencies 502 (6 ) - - 502 (6 ) Total $ 4,483 $ (25 ) $ - $ - $ 4,483 $ (25 ) |
5. LOANS (Tables)
5. LOANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Schedule of loans held for investment | 2017 2016 Construction/Land Development $ 71,620 $ 76,172 Farmland 13,606 12,901 Real Estate 184,546 172,758 Multi-Family 10,298 7,605 Commercial Real Estate 148,906 150,061 Home Equity – closed end 11,606 11,453 Home Equity – open end 54,739 54,420 Commercial & Industrial – Non-Real Estate 36,912 31,306 Consumer 6,633 6,643 Dealer Finance 75,169 65,495 Credit Cards 2,939 2,822 Total $ 616,974 $ 591,636 |
Schedule Impaired Loans | December 31, 2017 December 31, 2016 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance Impaired loans without a valuation allowance: Construction/Land Development $ 4,352 $ 5,269 $ - $ 3,296 $ 3,652 $ - Farmland 1,984 1,984 - - - - Real Estate 1,273 1,273 - 768 768 - Multi-Family - - - - - - Commercial Real Estate 6,229 6,229 - 1,958 1,958 - Home Equity – closed end - - - - - - Home Equity – open end - 347 - - 347 - Commercial & Industrial – Non-Real Estate - - - 170 170 - Consumer 8 8 - 13 13 - Credit cards - - - - - - Dealer Finance 31 31 - - - - 13,877 15,141 - 6,205 6,908 - Impaired loans with a valuation allowance Construction/Land Development 4,998 4,998 1,661 6,592 6,592 1,853 Farmland - - - - - - Real Estate 1,188 1,188 209 1,206 1,206 221 Multi-Family - - - - - - Commercial Real Estate - - - 952 952 60 Home Equity – closed end - - - - - - Home Equity – open end - - - - - - Commercial & Industrial – Non-Real Estate - - - - - - Consumer - - - - - - Credit cards - - - - - - Dealer Finance 47 47 12 87 87 20 6,233 6,233 1,882 8,837 8,837 2,154 Total impaired loans $ 20,110 $ 21,374 $ 1,882 $ 15,042 $ 15,745 $ 2,154 December 31, 2017 December 31, 2016 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized Impaired loans without a valuation allowance: Construction/Land Development $ 4,969 $ 382 $ 2,547 $ 10 Farmland 1,921 62 - - Real Estate 878 57 778 10 Multi-Family - - - - Commercial Real Estate 1,682 44 1,087 114 Home Equity – closed end - - - - Home Equity – open end 347 - 964 2 Commercial & Industrial – Non-Real Estate 124 - 174 2 Consumer 10 - 11 - Credit cards - - - - Dealer Finance 24 3 14 1 9,955 548 5,575 139 Impaired loans with a valuation allowance Construction/Land Development 5,911 258 8,525 291 Farmland - - - - Real Estate 1,194 49 1,215 10 Multi-Family - - - - Commercial Real Estate - - 959 57 Home Equity – closed end - - - - Home Equity – open end - - 969 - Commercial & Industrial – Non-Real Estate - - 14 - Consumer - - - - Credit cards - - - - Dealer Finance 56 3 77 1 7,161 310 11,759 359 Total impaired loans $ 17,116 $ 858 $ 17,334 $ 498 |
Schedule of aging of the recorded investment of past due loans | 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2017 Construction/Land Development $ 167 $ 5,459 $ 3,908 $ 9,534 $ 62,086 $ 71,620 $ 3,908 $ - Farmland - - - - 13,606 13,606 - - Real Estate 2,858 1,954 560 5,372 179,174 184,546 1,720 143 Multi-Family 179 - - 179 10,119 10,298 - - Commercial Real Estate 544 - - 544 148,362 148,906 - - Home Equity – closed end - 25 - 25 11,581 11,606 3 - Home Equity – open end 454 165 268 887 53,852 54,739 448 - Commercial & Industrial – Non- Real Estate 108 36 595 739 36,173 36,912 599 - Consumer 43 5 - 48 6,585 6,633 - - Dealer Finance 1,300 252 189 1,741 73,428 75,169 226 54 Credit Cards 30 8 1 39 2,900 2,939 - 1 Total $ 5,683 $ 7,904 $ 5,521 $ 19,108 $ 597,866 $ 616,974 $ 6,904 $ 198 30-59 Days Past due 60-89 Days Past Due Greater than 90 Days) Total Past Due Current Total Loan Receivable Non-Accrual Loans Recorded Investment >90 days & accruing December 31, 2016 Construction/Land Development $ 73 $ 101 $ 2,175 $ 2,349 $ 73,823 $ 76,172 $ 2,805 $ - Farmland - - - - 12,901 12,901 - - Real Estate 2,135 746 774 3,655 169,103 172,758 1,399 81 Multi-Family - - - - 7,605 7,605 - - Commercial Real Estate 139 - - 139 149,922 150,061 - - Home Equity – closed end 101 - 32 133 11,320 11,453 32 - Home Equity – open end 484 - 69 553 53,867 54,420 279 - Commercial & Industrial – Non- Real Estate 313 5 - 318 30,988 31,306 70 - Consumer 35 4 6 45 6,598 6,643 - - Dealer Finance 797 187 183 1,167 64,328 65,495 178 26 Credit Cards 18 4 - 22 2,800 2,822 - - Total $ 4,095 $ 1,047 $ 3,239 $ 8,381 $ 583,255 $ 591,636 $ 4,763 $ 107 |
6. ALLOWANCE FOR LOAN LOSSES (T
6. ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Schdule of allowance for loan losses | December 31, 2017 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 3,381 $ 620 $ - $ (214 ) $ 2,547 $ 1,661 $ 886 Farmland 34 - - (9 ) 25 - 25 Real Estate 843 - 2 (126 ) 719 209 510 Multi-Family 23 - - (6 ) 19 - 19 Commercial Real Estate 705 - 13 (236 ) 482 - 482 Home Equity – closed end 75 7 25 (27 ) 66 - 66 Home Equity – open end 470 26 53 (288 ) 209 - 209 Commercial & Industrial – Non-Real Estate 586 179 72 (142 ) 337 - 337 Consumer 78 136 28 178 148 - 148 Dealer Finance 1,289 1,806 1,143 814 1,440 12 1,428 Credit Cards 59 98 37 54 52 - 52 Total $ 7,543 $ 2,872 $ 1,373 $ - $ 6,044 $ 1,882 $ 4,162 December 31, 2016 Beginning Balance Charge-offs Recoveries Provision for Loan Losses Ending Balance Individually Evaluated for Impairment Collectively Evaluated for Impairment Allowance for loan losses: Construction/Land Development $ 4,442 $ 356 $ 7 $ (712 ) $ 3,381 $ 1,853 $ 1,528 Farmland 95 - - (61 ) 34 - 34 Real Estate 806 23 4 56 843 221 622 Multi-Family 71 - - (48 ) 23 - 23 Commercial Real Estate 445 19 135 144 705 - 705 Home Equity – closed end 174 8 - (91 ) 75 - 75 Home Equity – open end 634 370 120 86 470 60 410 Commercial & Industrial – Non-Real Estate 1,055 293 267 (443 ) 586 - 586 Consumer 108 37 19 (12 ) 78 - 78 Dealer Finance 836 1,081 417 1,117 1,289 20 1,269 Credit Cards 115 74 54 (36 ) 59 - 59 Total $ 8,781 $ 2,261 $ 1,023 $ - $ 7,543 $ 2,154 $ 5,389 |
Investment in loans based on impairment method | December 31, 2017 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 71,620 $ 9,350 $ 62,270 Farmland 13,606 1,984 11,622 Real Estate 184,546 2,461 182,085 Multi-Family 10,298 - 10,298 Commercial Real Estate 148,906 6,229 142,677 Home Equity – closed end 11,606 - 11,606 Home Equity –open end 54,739 - 54,739 Commercial & Industrial – Non-Real Estate 36,912 - 36,912 Consumer 6,633 8 6,625 Dealer Finance 75,169 78 75,091 Credit Cards 2,939 - 2,939 $ 616,974 $ 20,110 $ 596,864 Total December 31, 2016 Loan Receivable Individually Evaluated for Impairment Collectively Evaluated for Impairment Construction/Land Development $ 76,172 $ 9,888 $ 66,284 Farmland 12,901 - 12,901 Real Estate 172,758 1,974 170,784 Multi-Family 7,605 - 7,605 Commercial Real Estate 150,061 2,910 147,151 Home Equity – closed end 11,453 - 11,453 Home Equity –open end 54,420 - 54,420 Commercial & Industrial – Non-Real Estate 31,306 170 31,136 Consumer 6,643 13 6,630 Dealer Finance 65,495 87 65,408 Credit Cards 2,822 - 2,822 $ 591,636 $ 15,042 $ 576,594 |
Schedule of Loan Portfolio by internal loan grade | December 31, 2017 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 690 $ 12,974 $ 30,197 $ 9,165 $ 3,520 $ 15,074 $ - $ 71,620 Farmland 63 - 3,153 4,120 3,793 494 1,983 - 13,606 Real Estate - 1,512 53,764 101,606 19,734 4,660 3,270 - 184,546 Multi-Family - 228 4,780 5,111 179 - - - 10,298 Commercial Real Estate - 3,525 45,384 89,195 9,012 634 1,156 - 148,906 Home Equity – closed end - - 3,535 5,410 1,279 1,379 3 - 11,606 Home Equity – open end 235 1,598 17,383 30,888 3,945 176 514 - 54,739 Commercial & Industrial (Non-Real Estate) 262 1,595 13,297 19,442 1,480 207 629 - 36,912 Consumer (excluding dealer) 34 490 2,226 88 1,065 2,254 476 - 6,633 Total $ 594 $ 9,638 $ 156,496 $ 286,057 $ 49,652 $ 13,324 $ 23,105 $ - $ 538,866 Credit Cards Dealer Finance Performing $ 2,938 $ 75,116 Non performing 1 53 Total $ 2,939 $ 75,169 December 31, 2016 Grade 1 Minimal Risk Grade 2 Modest Risk Grade 3 Average Risk Grade 4 Acceptable Risk Grade 5 Marginally Acceptable Grade 6 Watch Grade 7 Substandard Grade 8 Doubtful Total Construction/Land Development $ - $ 1,478 $ 10,870 $ 43,863 $ 8,399 $ 2,473 $ 9,089 $ - $ 76,172 Farmland 65 - 3,073 3,456 4,446 1,861 - - 12,901 Real Estate - 1,149 62,168 74,242 28,266 4,680 2,253 - 172,758 Multi-Family - 311 3,009 4,099 186 - - - 7,605 Commercial Real Estate - 2,793 32,986 91,157 19,181 1,840 2,104 - 150,061 Home Equity – closed end - 150 3,966 4,139 1,746 1,414 38 - 11,453 Home Equity – open end 124 1,724 16,415 30,974 4,547 125 511 - 54,420 Commercial & Industrial (Non-Real Estate) 1,375 1,267 6,827 19,530 2,198 39 70 - 31,306 Consumer (excluding dealer) 67 174 1,837 607 1,242 2,252 466 - 6,643 Total $ 1,631 $ 9,046 $ 141,151 $ 272,065 $ 70,211 $ 14,684 $ 14,531 $ - $ 523,319 Credit Cards Dealer Finance Performing $ 2,822 $ 65,291 Non performing - 204 Total $ 2,822 $ 65,495 |
7. TROUBLED DEBT RESTRUCTURING
7. TROUBLED DEBT RESTRUCTURING (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Troubled Debt Restructuring Tables | |
Troubled Debt Restructurings | December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Consumer 3 $ 32 $ 32 Total 3 $ 32 $ 32 December 31, 2017 Pre-Modification Post-Modification (dollars in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 1 $ 67 $ 67 Construction/Land Development 2 1,502 1,502 Total 3 $ 1,569 $ 1,569 December 31, 2016 Pre-Modification Post-Modification (in thousands) Outstanding Outstanding Troubled Debt Restructurings Number of Contracts Recorded Investment Recorded Investment Real Estate 2 $ 141 $ 141 Consumer 4 39 39 Total 6 $ 180 $ 180 |
8. BANK PREMISES AND EQUIPMENT
8. BANK PREMISES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Bank Premises And Equipment Tables | |
Bank premises and equipment | 2017 2016 Land $ 3,883 $ 3,091 Buildings and improvements 12,384 7,877 Furniture and equipment 9,454 8,257 25,721 19,225 Less - accumulated depreciation (9,827 ) (8,885 ) Net $ 15,894 $ 10,340 |
9. OTHER REAL ESTATE OWNED (Tab
9. OTHER REAL ESTATE OWNED (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Real Estate Owned Tables | |
Other Real Estate Owned Activity | Other Real Estate Owned 2017 2016 Balance as of January 1 $ 2,076 $ 2,128 Loans transferred to OREO 231 566 Capital improvements 2 24 Sale of OREO (281 ) (623 ) Write down of OREO or losses on sale (44 ) (19 ) Balance as of December 31 $ 1,984 $ 2,076 |
10. DEPOSITS (Tables)
10. DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Deposits Tables | |
Maturity of Deposits | 2018 $ 66,749 2019 51,434 2020 30,151 2021 9,296 2022 and after 7,640 Total $ 165,270 |
11. SHORT-TERM DEBT (Tables)
11. SHORT-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-Term Debt Tables | |
Short-term debt | Outstanding Average Maximum Outstanding At Balance at any Month End Year End Outstanding Yield 2017 Federal funds purchased $ 8,964 $ 5,296 $ 97 .17 % FHLB short term 50,000 20,000 20,301 .30 % Totals $ 25,296 $ 20,398 .31 % 2016 Federal funds purchased $ 11,421 $ - $ 637 .98 % FHLB short term 50,000 40,000 34,740 .12 % Securities sold under agreements to repurchase 4,272 - 2,133 .25 % Totals $ 40,000 $ 37,510 .15 % |
12. LONG-TERM DEBT (Tables)
12. LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Long-Term Debt Tables | |
Maturities of long-term debt | 2018 $ 9,428 2019 6,929 2020 14,429 2021 5,929 2022 2,714 Thereafter 10,125 Total $ 49,554 |
13. INCOME TAX EXPENSE (Tables)
13. INCOME TAX EXPENSE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Expense Tables | |
Components of the income tax expense | 2017 2016 2015 Current expense $ 3,671 $ 3,046 $ 3,227 Deferred expense (benefit) (152 ) 53 (341 ) Adjustments to deferred tax asset due to change in federal tax rate 811 - - Total deferred (benefit) expense 659 53 (341 ) Total Income Tax Expense $ 4,330 $ 3,099 $ 2,886 |
Components of the deferred taxes | 2017 2016 Deferred Tax Assets: Allowance for loan losses $ 1,265 $ 2,354 Split Dollar Life Insurance 3 4 Nonqualified deferred compensation 546 856 Low income housing partnerships losses 203 94 Core deposit amortization 108 165 Other real estate owned 173 280 Unfunded pension benefit obligation 1,096 1,633 Total Assets $ 3,394 $ 5,386 2017 2016 Deferred Tax Liabilities: Unearned low income housing credits $ 180 $ 307 Depreciation 340 437 Prepaid pension 1,010 1,840 Goodwill tax amortization 559 901 Net unrealized gain (loss) on securities available for sale (5 ) 3 Total Liabilities 2 084 3,488 Net Deferred Tax Asset (included in Other Assets on Balance Sheet) $ 1,310 $ 1,898 |
Differences in actual income tax expense and the amounts computed using the federal statutory tax rates | 2017 2016 2015 Tax expense at federal statutory rates $ 4,511 $ 4,307 $ 3,843 Increases (decreases) in taxes resulting from: State income taxes, net of federal benefit - 6 8 Partially tax-exempt income (59 ) (41 ) (46 ) Tax-exempt income (212 ) (217 ) (223 ) LIH and historic credits (633 ) (896 ) (701 ) Deferred Tax Asset rate change 811 Other (88 ) (60 ) 5 Total Income Tax Expense $ 4,330 $ 3,099 $ 2,886 |
14. EMPLOYEE BENEFITS (Tables)
14. EMPLOYEE BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefits Tables Abstract | |
Reconciliation of the changes in the benefit obligations and fair value of plan assets | 2017 2016 2015 Change in Benefit Obligation Benefit obligation, beginning $ 12,475 $ 10,944 $ 10,777 Service cost 696 632 648 Interest cost 487 453 411 Actuarial (gain) loss 1,620 872 (137 ) Benefits paid (175 ) (426 ) (754 ) Benefit obligation, ending $ 15,103 $ 12,475 $ 10,945 Change in Plan Assets Fair value of plan assets, beginning $ 12,032 $ 11,678 $ 11,684 Actual return on plan assets 1,788 780 (1 ) Employer contribution - - 750 Benefits paid (175 ) (426 ) (755 ) Fair value of plan assets, ending $ 13,645 $ 12,032 $ 11,678 Funded status at the end of the year $ (1,458 ) $ (443 ) $ 733 |
Pension plan's asset allocation | 2017 2016 2015 Amount recognized in the Consolidated Balance Sheet Prepaid benefit cost $ 3,760 $ 4,361 $ 4,799 Unfunded pension benefit obligation under ASC 325-960 (5,218 ) (4,804 ) (4,065 ) Deferred taxes 1,096 1,633 1,382 Amount recognized in accumulated other comprehensive income (loss) Net loss $ (5,260 ) $ (4,861 ) $ (4,137 ) Prior service cost 42 57 72 Amount recognized (5,218 ) (4,804 ) (4,065 ) Deferred taxes 1,096 1,633 1,382 Amount recognized in accumulated comprehensive income $ (4,122 ) $ (3,171 ) $ (2,683 ) Prepaid benefit detail Benefit obligation $ (15,103 ) $ (12,475 ) $ (10,945 ) Fair value of assets 13,645 12,032 11,678 Unrecognized net actuarial loss 5,260 4,861 4,138 Unrecognized prior service cost (42 ) (57 ) (72 ) Prepaid (accrued) benefits $ 3,760 $ 4,361 $ 4,799 Components of net periodic benefit cost Service cost $ 696 $ 632 $ 648 Interest cost 487 452 411 Expected return on plan assets (851 ) (854 ) (839 ) Amortization of prior service cost (15 ) (15 ) (15 ) Recognized net actuarial loss 284 223 181 Net periodic benefit cost $ 601 $ 438 $ 386 Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) Net loss $ 399 $ 724 $ 522 Amortization of prior service cost 15 15 15 Total recognized in other comprehensive income $ 414 $ 739 $ 537 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 1,015 $ 1,177 $ 923 Additional disclosure information Accumulated benefit obligation $ 10,760 $ 8,789 $ 7,601 Vested benefit obligation $ 10,750 $ 8,780 $ 7,539 Discount rate used for net pension cost 4.00 % 4.25 % 4.00 % Discount rate used for disclosure 3.50 % 4.00 % 4.25 % Expected return on plan assets 7.25 % 7.50 % 7.50 % Rate of compensation increase 3.00 % 3.00 % 3.00 % Average remaining service (years) 12 13 13 |
Estimated Future Benefit Payments | 2018 $ 1,862 2019 698 2020 264 2021 179 2022 2,867 2023-2027 7,151 $ 13,021 |
16. COMMITMENTS (Tables)
16. COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments Tables | |
Commitments outstanding | 2017 2016 Commitments to extend credit $ 170,798 $ 148,060 Standby letters of credit 1,533 1,089 |
Long term lease arrangements | 2018 $ 177 2019 150 2020 128 2021 110 2022 105 |
17. ON BALANCE SHEET DERIVATI49
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
On Balance Sheet Derivative Instruments And Hedging Activities Tables | |
Forward option contracts | 2017 2016 Notional amount $ 184 $ 190 Fair value of contracts, included in other assets 59 26 |
18. TRANSACTIONS WITH RELATED50
18. TRANSACTIONS WITH RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Transactions With Related Parties Tables | |
Loan transactions with related parties | 2017 2016 Total loans, beginning of year $ 7,486 $ 7,180 New loans 6,803 4,701 Relationship change 10,403 611 Repayments (4,315 ) (5,006 ) Total loans, end of year $ 20,377 $ 7,486 |
20. FAIR VALUE MEASUREMENTS (Ta
20. FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements Tables | |
Fair value on a recurring basis | December 31, 2017 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 19,998 $ 19,998 $ - $ - U.S. Government sponsored enterprises 7,980 - 7,980 - Mortgage-backed obligations of federal agencies 502 - 502 - Equity securities 135 - 135 - Total securities available for sale $ 28,615 $ 19,998 $ 8,617 - December 31, 2016 Total Level 1 Level 2 Level 3 U. S. Treasuries $ 24,014 $ 24,014 $ - $ - Mortgage-backed obligations of federal agencies 634 - 634 - Equity securities 135 - 135 - Total securities available for sale $ 24,783 $ 24,014 $ 769 - |
Financial Assets Measured at Fair Value On Nonrecurring Basis | December 31, 2017 Total Level 1 Level 2 Level 3 Construction/Land Development $ 3,337 - - $ 3,337 Real Estate 979 - - 979 Dealer Finance 35 - - 35 Impaired loans $ 4,351 - - $ 4,351 December 31, 2016 Total Level 1 Level 2 Level 3 Construction/Land Development $ 4,739 - - $ 4,739 Real Estate 985 - - 985 Commercial Real Estate 892 - - 892 Dealer Finance 67 - - 67 Impaired loans $ 6,683 - - $ 6,683 |
Fair Value Measurements | Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 4,351 Discounted appraised value Discount for selling costs and marketability 3%-19% (Average 5.5%) Fair Value at December 31, 2016 Valuation Technique Significant Unobservable Inputs Range Impaired Loans $ 6,683 Discounted appraised value Discount for selling costs and marketability 2%-50% (Average 4.7%) December 31, 2017 Total Level 1 Level 2 Level 3 Other real estate owned $ 1,984 - - $ 1,984 December 31, 2016 Total Level 1 Level 2 Level 3 Other real estate owned $ 2,076 - - $ 2,076 Fair Value at December 31, 2017 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 1,984 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) Fair Value at December 31, 2016 Valuation Technique Significant Unobservable Inputs Range Other real estate owned $ 2,076 Discounted appraised value Discount for selling costs 5%-15% (Average 8%) |
Carrying Value and Estimated Fair Value for Financial Instruments | Fair Value Measurements at December 31, 2017 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2016 Assets: Cash and cash equivalents $ 11,907 $ 11,907 $ - $ - $ 11,907 Securities 28,740 19,998 8,742 - 28,740 Loans held for sale 39,775 - 39,775 - 39,775 Loans held for investment, net 610,930 - - 646,703 646,703 Interest receivable 2,007 - 2,007 - 2,007 Bank owned life insurance 13,950 - 13,950 - 13,950 Total $ 707,309 $ 31,905 $ 64,474 $ 646,703 $ 743,082 Liabilities: Deposits $ 569,177 $ - $ 403,907 $ 167,210 $ 571,117 Short-term debt 25,296 - 25,296 - 25,296 Long-term debt 49,733 - - 49,869 49, 869 Interest payable 260 - 260 - 260 Total $ 644,466 $ - $ 429,463 $ 217,079 $ 646,542 Fair Value Measurements at December 31, 2016 Using (dollars in thousands) Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at December 31, 2016 Assets: Cash and cash equivalents $ 16,355 $ 16,355 $ - $ - $ 16,355 Securities 24,908 24,014 894 - 24,908 Loans held for sale 62,735 - 62,735 - 62,735 Loans held for investment, net 584,093 - - 598,991 598,991 Interest receivable 1,785 - 1,785 - 1,785 Bank owned life insurance 13,513 - 13,513 - 13,513 Total $ 703,389 $ 40,369 $ 78,927 $ 598,991 $ 718,287 Liabilities: Deposits $ 537,085 $ - $ 379,857 $ 158,073 $ 537,930 Short-term debt 40,000 - 40,000 - 40,000 Long-term debt 64,237 - - 63,945 63,945 Interest payable 228 - 228 - 228 Total $ 641,550 $ - $ 420,085 $ 222,018 $ 642,103 |
21. REGULATORY MATTERS (Tables)
21. REGULATORY MATTERS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Regulatory Matters Tables | |
Actual Capital Ratios For The Bank | Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2017 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 95,563 15.41 % $ 49,614 8.00 % $ 62,018 10.00 % Tier 1 risk-based ratio 89,519 14.43 % 37,211 6.00 % 49,614 8.00 % Common equity tier 1 89,519 14.43 % 27,908 4.50 % 40,312 6.50 % Total assets leverage ratio 89,519 12.07 % 29,656 4.00 % 37,070 5.00 % Actual Minimum Capital Requirement Minimum to be Well Capitalized Under Prompt Corrective Action Provisions December 31, 2016 Amount Ratio Amount Ratio Amount Ratio Total risk-based ratio $ 93,519 15.08 % $ 49,615 8.00 % $ 62,019 10.00 % Tier 1 risk-based ratio 85,976 13.86 % 37,212 6.00 % 49,615 8.00 % Common equity tier 1 85,976 13.86 % 27,909 4.50 % 40,312 6.50 % Total assets leverage ratio 85,976 11.83 % 29,065 4.00 % 36,331 5.00 % |
22. BUSINESS SEGMENTS (Tables)
22. BUSINESS SEGMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Segments Tables | |
Schedule of Business Segments | December 31, 2017 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 33,904 $ 125 $ 148 $ - $ - $ (82 ) $ 34,095 Service charges on deposits 1,360 - - - - - 1,360 Investment services and insurance income 1 - 772 - - (18 ) 755 Mortgage banking income, net - 2,220 - - - - 2,220 Title insurance income - 279 - 883 - - 1,162 Gain on prepayment of long-term debt 504 - - - - - 504 Loss on sale of investments - (40 ) (2 ) - - - (42 ) Other operating income 2,128 - - - 162 (357 ) 1,933 Total income 37,897 2,584 918 883 162 (457 ) 41,987 Expenses: Interest Expense 3,904 75 - - - (82 ) 3,897 Provision for loan losses - - - - - - - Salaries and benefits 12,092 1,733 474 555 - - 14,854 Other operating expenses 8,942 672 51 172 46 (18 ) 9,865 Total expense 24,938 2,480 525 727 46 (100 ) 28,616 Income before income taxes 12,959 104 393 156 116 (357 ) 13,371 Income tax expense (benefit) 4,316 - 109 - (95 ) - 4,330 Net income $ 8,643 $ 104 $ 284 $ 156 $ 211 $ (357 ) $ 9,041 Net income attributable to noncontrolling interest - 31 - - - - 31 Net Income attributable to F & M Bank Corp. $ 8,643 $ 73 $ 284 $ 156 $ 211 $ (357 ) $ 9,010 Total Assets $ 754,375 $ 7,018 $ 6,749 $ 811 $ 90,964 $ (106,647 ) $ 753,270 Goodwill $ 2,670 $ 47 $ - $ - $ 164 $ - $ 2,881 December 31, 2016 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 31,949 $ 55 $ 152 $ - $ - $ (6 ) $ 32,150 Service charges on deposits 1,174 - - - - - 1,174 Investment services and insurance income 1 - 470 - - (30 ) 441 Mortgage banking income, net - 2,565 - - - - 2,565 Title insurance income - - - - - - - Gain on prepayment of long-term debt - - - - - - - Loss on investments - - - - - - - Other operating income 2,353 - - - - (951 ) 1,402 Total income 35,477 2,620 622 - - (987 ) 37,732 Expenses: Interest Expense 3,605 - - - - (6 ) 3,599 Provision for loan losses - - - - - - - Salaries and benefits 11,123 1,387 290 - - - 12,800 Other operating expenses 8,139 586 66 - 1 (320 ) 8,472 Total expense 22,867 1,973 356 - 1 (326 ) 24,871 Income before income taxes 12,610 647 266 - (1 ) (661 ) 12,861 Income tax expense (benefit) 3,290 - 58 - (249 ) - 3,099 Net income $ 9,320 $ 647 $ 208 $ - $ 248 $ (661 ) $ 9,762 Net income attributable to noncontrolling interest - 194 - - - - 194 Net Income attributable to F & M Bank Corp. $ 9,320 $ 453 $ 208 $ - $ 248 $ (661 ) $ 9,568 Total Assets $ 748,273 $ 7,487 $ 6,476 $ - $ 87,449 $ (104,796 ) $ 744,889 Goodwill $ 2,670 $ - $ - $ - $ - $ - $ 2,670 December 31, 2015 F&M Bank VBS Mortgage TEB Life/FMFS VS Title Parent Only Eliminations F&M Bank Corp. Consolidated Revenues: Interest Income $ 29,206 $ 51 $ 152 $ - $ - $ (5 ) $ 29,404 Service charges on deposits 963 - - - - - 963 Investment services and insurance income 2 - 522 - - (14 ) 510 Mortgage banking income, net - 2,066 - - - - 2,066 Title insurance income - - - - - - - Gain on prepayment of long-term debt - - - - - - - Loss on investments - - - - - - - Other operating income 2,142 - - - 5 (893 ) 1,254 Total income 32,313 2,117 674 - 5 (912 ) 34,197 Expenses: Interest Expense 2,881 - - - - (5 ) 2,876 Provision for loan losses 300 - - - - - 300 Salaries and benefits 10,056 1,103 298 - - - 11,457 Other operating expenses 7,887 466 35 - 21 (312 ) 8,097 Total expense 21,124 1,569 333 - 21 (317 ) 22,730 Income before income taxes 11,189 548 341 - (16 ) (595 ) 11,467 Income tax expense (benefit) 2,948 - 129 - (191 ) - 2,886 Net income $ 8,241 $ 548 $ 212 $ - $ 175 $ (595 ) $ 8,581 Net income attributable to noncontrolling interest - 164 - - - - 164 Net Income attributable to F & M Bank Corp. $ 8,241 $ 384 $ 212 $ - $ 175 $ (595 ) $ 8,417 Total Assets $ 669,968 $ 2,180 $ 6,269 $ - $ 84,897 $ (97,957 ) $ 665,357 Goodwill $ 2,670 $ - $ - $ - $ - $ - $ 2,670 |
23. PARENT CORPORATION ONLY FIN
23. PARENT CORPORATION ONLY FINANCIAL STATEMENTS (Tables) - Parent [Member] | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheets | 2017 2016 Assets Cash and cash equivalents $ 917 $ 1,155 Investment in subsidiaries 88,967 85,481 Securities available for sale 135 135 Income tax receivable (including due from subsidiary) 565 - Goodwill and intangibles 380 - Total Assets $ 90,964 $ 86,771 Liabilities Income tax payable (including due from subsidiary) $ - $ 313 Deferred income taxes 177 307 Accrued expenses 86 - Demand obligations for low income housing investment - 162 Total Liabilities $ 263 $ 782 Stockholders’ Equity Preferred stock par value $5 per share, 400,000 shares authorized, 324,150 and 327,350 issued and outstanding at December 31, 2017 and 2016, respectively. $ 7,529 $ 7,609 Common stock par value $5 per share, 6,000,000 shares authorized, 3,255,036 and 3,270,315 shares issued and outstanding for 2016 and 2015, respectively 16,275 16,352 Additional paid in capital 10,225 10,684 Retained earnings 60,814 54,509 Accumulated other comprehensive income (loss) (4,142 ) (3,165 ) Total Stockholders' Equity 90,701 85,989 Total Liabilities and Stockholders' Equity $ 90,964 $ 86,771 |
Statements of Income | 2017 2016 2015 Income Dividends from affiliate $ 5,000 $ 5,000 $ 2,500 Net limited partnership income (loss) 162 - 5 Total Income 5,162 5,000 2,505 Expenses Total Expenses 47 1 21 Net income before income tax expense (benefit) and undistributed subsidiary net income 5,115 4,999 2,484 Income Tax Expense (Benefit) (95 ) (249 ) (191 ) Income before undistributed subsidiary net income 5,210 5,248 2,675 Undistributed subsidiary net income 3,800 4,320 5,742 Net Income F&M Bank Corp. $ 9,010 $ 9,568 $ 8,417 |
Statements of Cash Flows | 2017 2016 2015 Cash Flows from Operating Activities Net income $ 9,010 $ 9,568 $ 8,417 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed subsidiary income (3,800 ) (4,320 ) (5,742 ) Deferred tax (benefit) expense (112 ) 5 (81 ) Decrease (increase) in other assets (1,256 ) - 1,300 Increase (decrease) in other liabilities (77 ) (535 ) (143 ) Net Cash Provided by Operating Activities 3,765 4,718 3,751 Cash Flows from Investing Activities Net Cash Used in Investing Activities - - - Cash Flows from Financing Activities Repurchase of preferred stock (101 ) (1,961 ) Repurchase of common stock (712 ) (577 ) (289 ) Proceeds from issuance of common stock 197 183 146 Dividends paid in cash (3,387 ) (3,115 ) (2,915 ) Net Cash Used in Financing Activities (4,003 ) (5,470 ) (3,058 ) Net (Decrease) increase in Cash and Cash Equivalents (238 ) (752 ) 693 Cash and Cash Equivalents, Beginning of Year 1,155 1,907 1,214 Cash and Cash Equivalents, End of Year $ 917 $ 1,155 $ 1,907 |
26. ACCUMULATED OTHER COMPREH55
26. ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accumulated Other Comprehensive Loss Tables | |
Accumulated Other Comprehensive Loss | dollars in thousands Unrealized Securities Gains (Losses) Adjustments Related to Pension Plan Accumulated Other Comprehensive Loss Balance at December, 31, 2014 3 (2,330 ) (2,327 ) Change in unrealized securities gains (losses), net of tax 1 - 1 Change in unfunded pension liability, net of tax - (354 ) (354 ) Balance at December, 31, 2015 4 (2,684 ) (2,680 ) Change in unrealized securities gains (losses), net of tax 2 - 2 Change in unfunded pension liability, net of tax - (487 ) (487 ) Balance at December, 31, 2016 $ 6 $ (3,171 ) $ (3,165 ) Change in unrealized securities gains (losses), net of tax (26 ) - (26 ) Change in unfunded pension liability, net of tax - (951 ) (951 ) Balance at December, 31, 2017 $ (20 ) $ (4,122 ) $ (4,142 ) |
2. SUMMARY OF SIGNIFICANT ACC56
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Buildings and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 10 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 40 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment, Estimated Useful Lives | 20 years |
2. SUMMARY OF SIGNIFICANT ACC57
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Available to Common Stockholders: | |||
Net Income | $ 9,041 | $ 9,762 | $ 8,581 |
Minority interest | 31 | 194 | 164 |
Preferred Stock Dividends | 415 | 487 | 510 |
Net Income Available to Common Stockolders | $ 8,595 | $ 9,081 | $ 7,907 |
2. SUMMARY OF SIGNIFICANT ACC58
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Basic EPS, Income | $ 8,595 | $ 9,081 | $ 7,907 |
Basic EPS, Shares | 3,269,713 | 3,282,335 | 3,290,812 |
Basic EPS, Per Share Amounts | $ 2.63 | $ 2.77 | $ 2.40 |
Effect of Dilutive Securities Convertible Preferred Stock, Income | $ 415 | $ 487 | $ 510 |
Effect of Dilutive Securities Convertible Preferred Stock, Shares | 362,271 | 434,256 | 444,400 |
Effect of Dilutive Securities Convertible Preferred Stock, Per Share Amounts | $ (0.15) | $ (0.20) | $ (0.15) |
Diluted EPS Net income | $ 9,010 | $ 9,568 | $ 8,417 |
Diluted EPS, Shares | 3,631,984 | 3,716,591 | 3,735,212 |
Diluted EPS, Per Share Amounts | $ 2.48 | $ 2.57 | $ 2.25 |
2. SUMMARY OF SIGNIFICANT ACC59
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Details Narrative | |||
OREO on balance sheet | $ 1,984 | $ 2,076 | |
Advertising costs | 507 | 496 | $ 452 |
TDR loans | $ 7,800 | $ 9,800 |
4. SECURITIES (Details)
4. SECURITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Available-for-Sale Securities | ||
Amortized Cost | $ 28,640 | $ 24,774 |
Gross Unrealized Gains | 0 | 9 |
Gross Unrealized Losses | 25 | 0 |
Fair Value | 28,615 | 24,783 |
Mortgage Backed Obligations of Federal Agencies [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 508 | 634 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 6 | 0 |
Fair Value | 502 | 634 |
U. S. Treasuries [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 19,998 | 24,005 |
Gross Unrealized Gains | 0 | 9 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 19,998 | 24,014 |
Held-to-Maturity Securities | ||
Amortized Cost - Held-to-Maturity | 125 | 125 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value - Held-to-Maturity | 125 | 125 |
Government sponsored enterprises [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 7,999 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 19 | |
Fair Value | 7,980 | |
Equity securities [Member] | ||
Available-for-Sale Securities | ||
Amortized Cost | 135 | 135 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 135 | $ 135 |
4. SECURITIES (Details 1)
4. SECURITIES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Total, Amortized Cost | $ 125 | $ 125 |
Securities Held to Maturity [Member] | ||
Due in one year or less, Amortized Cost | 125 | |
Due in one year or less, Fair Value | 125 | |
Due after one year through five years, Amortized Cost | 0 | |
Due after one year through five years, Fair Value | 0 | |
Due after five years through ten years, Amortized Cost | 0 | |
Due after five years through ten years, Fair Value | 0 | |
Due after ten years,Amortized Cost | 0 | |
Due after ten years, Fair Value | 0 | |
Total, Amortized Cost | 125 | |
Total, Fair Value | 125 | |
Securities Available for Sale [Member] | ||
Due in one year or less, Amortized Cost | 19,998 | |
Due in one year or less, Fair Value | 19,998 | |
Due after one year through five years, Amortized Cost | 7,999 | |
Due after one year through five years, Fair Value | 7,980 | |
Due after five years through ten years, Amortized Cost | 508 | |
Due after five years through ten years, Fair Value | 502 | |
Due after ten years,Amortized Cost | 135 | |
Due after ten years, Fair Value | 135 | |
Total, Amortized Cost | 28,640 | |
Total, Fair Value | $ 28,615 |
4. SECURITIES (Details 2)
4. SECURITIES (Details 2) $ in Thousands | Dec. 31, 2017USD ($) |
Fair Value Less than 12 Months | $ 4,483 |
Unrealized Losses Less than 12 Months | (25) |
Fair Value More than 12 Months | 0 |
Unrealized Losses More than 12 Months | 0 |
Fair Value Total | 4,483 |
Unrealized Losses Total | (25) |
Government sponsored enterprises [Member] | |
Fair Value Less than 12 Months | 3,981 |
Unrealized Losses Less than 12 Months | (19) |
Fair Value More than 12 Months | 0 |
Unrealized Losses More than 12 Months | 0 |
Fair Value Total | 3,981 |
Unrealized Losses Total | (19) |
Mortgage-back Securities [Member] | |
Fair Value Less than 12 Months | 502 |
Unrealized Losses Less than 12 Months | (6) |
Fair Value More than 12 Months | 0 |
Unrealized Losses More than 12 Months | 0 |
Fair Value Total | 502 |
Unrealized Losses Total | $ (6) |
4. SECURITIES (Details Narrativ
4. SECURITIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Investment Securities Details Narrative | ||
Other investments | $ 12,503 | $ 14,567 |
5. LOANS (Details)
5. LOANS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Loans held for investment | $ 616,974 | $ 591,636 |
Construction/Land Development [Member] | ||
Loans held for investment | 71,620 | 76,172 |
Farmland [Member] | ||
Loans held for investment | 13,606 | 12,901 |
Real Estate [Member] | ||
Loans held for investment | 184,546 | 172,758 |
Multi-Family [Member] | ||
Loans held for investment | 10,298 | 7,605 |
Commercial Real Estate [Member] | ||
Loans held for investment | 148,906 | 150,061 |
Home Equity - Closed End [Member] | ||
Loans held for investment | 11,606 | 11,453 |
Home Equity - Open End [Member] | ||
Loans held for investment | 54,739 | 54,420 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loans held for investment | 36,912 | 31,306 |
Consumer [Member] | ||
Loans held for investment | 6,633 | 6,643 |
Dealer Finance [Member] | ||
Loans held for investment | 75,169 | 65,495 |
Credit Cards [Member] | ||
Loans held for investment | $ 2,939 | $ 2,822 |
5. LOANS (Details 1)
5. LOANS (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Impaired loans without a valuation allowance | ||
Recorded Investment | $ 13,877 | $ 6,205 |
Unpaid Principal Balance | 15,141 | 6,908 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 9,955 | 5,575 |
Interest Income Recognized | 548 | 139 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 6,233 | 8,837 |
Unpaid Principal Balance | 6,233 | 8,837 |
Related Allowance | 1,882 | 2,154 |
Average Recorded Investment | 7,161 | 11,759 |
Interest Income Recognized | 310 | 359 |
Impaired loans valuation allowance | ||
Recorded Investment | 20,110 | 15,042 |
Unpaid Principal Balance | 21,374 | 15,745 |
Related Allowance | 1,882 | 2,154 |
Average Recorded Investment | 17,116 | 17,334 |
Interest Income Recognized | 858 | 498 |
Construction/Land Development [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 4,352 | 3,296 |
Unpaid Principal Balance | 5,269 | 3,652 |
Related Allowance | 0 | |
Average Recorded Investment | 4,969 | 2,547 |
Interest Income Recognized | 382 | 10 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 4,998 | 6,592 |
Unpaid Principal Balance | 4,998 | 6,592 |
Related Allowance | 1,661 | 1,853 |
Average Recorded Investment | 5,911 | 8,525 |
Interest Income Recognized | 258 | 291 |
Farmland [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 1,984 | |
Unpaid Principal Balance | 1,984 | |
Related Allowance | 0 | 0 |
Average Recorded Investment | 1,921 | |
Interest Income Recognized | 62 | |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | |
Unpaid Principal Balance | 0 | |
Related Allowance | 0 | |
Average Recorded Investment | 0 | |
Interest Income Recognized | 0 | |
Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 1,273 | 768 |
Unpaid Principal Balance | 1,273 | 768 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 878 | 778 |
Interest Income Recognized | 57 | 10 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 1,188 | 1,206 |
Unpaid Principal Balance | 1,188 | 1,206 |
Related Allowance | 209 | 221 |
Average Recorded Investment | 1,194 | 1,215 |
Interest Income Recognized | 49 | 10 |
Multi-Family [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Commercial Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 6,229 | 1,958 |
Unpaid Principal Balance | 6,229 | 1,958 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 1,682 | 1,087 |
Interest Income Recognized | 44 | 114 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 952 |
Unpaid Principal Balance | 0 | 952 |
Related Allowance | 0 | 60 |
Average Recorded Investment | 0 | 959 |
Interest Income Recognized | 0 | 57 |
Home Equity - Closed End [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Home Equity - Open End [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 347 | 347 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 347 | 964 |
Interest Income Recognized | 0 | 2 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 969 |
Interest Income Recognized | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 170 |
Unpaid Principal Balance | 0 | 170 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 124 | 174 |
Interest Income Recognized | 0 | 2 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 14 |
Interest Income Recognized | 0 | 0 |
Consumer [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 8 | 13 |
Unpaid Principal Balance | 8 | 13 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 10 | 11 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Credit Cards [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 0 | 0 |
Unpaid Principal Balance | 0 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 0 | 0 |
Interest Income Recognized | 0 | 0 |
Dealer Finance [Member] | ||
Impaired loans without a valuation allowance | ||
Recorded Investment | 31 | 0 |
Unpaid Principal Balance | 31 | 0 |
Related Allowance | 0 | 0 |
Average Recorded Investment | 24 | 14 |
Interest Income Recognized | 3 | 1 |
Impaired loans with a valuation allowance | ||
Recorded Investment | 47 | 87 |
Unpaid Principal Balance | 47 | 87 |
Related Allowance | 12 | 20 |
Average Recorded Investment | 56 | 77 |
Interest Income Recognized | $ 3 | $ 1 |
5. LOANS (Details 2)
5. LOANS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
30-59 Days Past due | $ 5,683 | $ 4,095 |
60-89 Days Past due | 7,904 | 1,047 |
Greater than 90 Days (excluding non-accrual) | 5,521 | 3,239 |
Total past due | 19,108 | 8,381 |
Current | 597,866 | 583,255 |
Total Loans Receivable | 616,974 | 591,636 |
Non-Accrual Loans | 6,904 | 4,763 |
Recorded Investment Greater than 90 days and accruing | 198 | 107 |
Construction/Land Development [Member] | ||
30-59 Days Past due | 167 | 73 |
60-89 Days Past due | 5,459 | 101 |
Greater than 90 Days (excluding non-accrual) | 3,908 | 2,175 |
Total past due | 9,534 | 2,349 |
Current | 62,086 | 73,823 |
Total Loans Receivable | 71,620 | 76,172 |
Non-Accrual Loans | 3,908 | 2,805 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Farmland [Member] | ||
30-59 Days Past due | 0 | 0 |
60-89 Days Past due | 0 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Total past due | 0 | 0 |
Current | 13,606 | 12,901 |
Total Loans Receivable | 13,606 | 12,901 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Real Estate [Member] | ||
30-59 Days Past due | 2,858 | 2,135 |
60-89 Days Past due | 1,954 | 746 |
Greater than 90 Days (excluding non-accrual) | 560 | 774 |
Total past due | 5,372 | 3,655 |
Current | 179,174 | 169,103 |
Total Loans Receivable | 184,546 | 172,758 |
Non-Accrual Loans | 1,720 | 1,399 |
Recorded Investment Greater than 90 days and accruing | 143 | 81 |
Multi-Family [Member] | ||
30-59 Days Past due | 179 | 0 |
60-89 Days Past due | 0 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Total past due | 179 | 0 |
Current | 10,119 | 7,605 |
Total Loans Receivable | 10,298 | 7,605 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Commercial Real Estate [Member] | ||
30-59 Days Past due | 544 | 139 |
60-89 Days Past due | 0 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 0 |
Total past due | 544 | 139 |
Current | 148,362 | 149,922 |
Total Loans Receivable | 148,906 | 150,061 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Home Equity - Closed End [Member] | ||
30-59 Days Past due | 0 | 101 |
60-89 Days Past due | 25 | 0 |
Greater than 90 Days (excluding non-accrual) | 0 | 32 |
Total past due | 25 | 133 |
Current | 11,581 | 11,320 |
Total Loans Receivable | 11,606 | 11,453 |
Non-Accrual Loans | 3 | 32 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Home Equity - Open End [Member] | ||
30-59 Days Past due | 454 | 484 |
60-89 Days Past due | 165 | 0 |
Greater than 90 Days (excluding non-accrual) | 268 | 69 |
Total past due | 887 | 553 |
Current | 53,852 | 53,867 |
Total Loans Receivable | 54,739 | 54,420 |
Non-Accrual Loans | 448 | 279 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Commercial and Industrial Non-Real Estate [Member] | ||
30-59 Days Past due | 108 | 313 |
60-89 Days Past due | 36 | 5 |
Greater than 90 Days (excluding non-accrual) | 595 | 0 |
Total past due | 739 | 318 |
Current | 36,173 | 30,988 |
Total Loans Receivable | 36,912 | 31,306 |
Non-Accrual Loans | 599 | 70 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Consumer [Member] | ||
30-59 Days Past due | 43 | 35 |
60-89 Days Past due | 5 | 4 |
Greater than 90 Days (excluding non-accrual) | 0 | 6 |
Total past due | 48 | 45 |
Current | 6,585 | 6,598 |
Total Loans Receivable | 6,633 | 6,643 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment Greater than 90 days and accruing | 0 | 0 |
Dealer Finance [Member] | ||
30-59 Days Past due | 1,300 | 797 |
60-89 Days Past due | 252 | 187 |
Greater than 90 Days (excluding non-accrual) | 189 | 183 |
Total past due | 1,741 | 1,167 |
Current | 73,428 | 64,328 |
Total Loans Receivable | 75,169 | 65,495 |
Non-Accrual Loans | 226 | 178 |
Recorded Investment Greater than 90 days and accruing | 54 | 26 |
Credit Cards [Member] | ||
30-59 Days Past due | 30 | 18 |
60-89 Days Past due | 8 | 4 |
Greater than 90 Days (excluding non-accrual) | 1 | 0 |
Total past due | 39 | 22 |
Current | 2,900 | 2,800 |
Total Loans Receivable | 2,939 | 2,822 |
Non-Accrual Loans | 0 | 0 |
Recorded Investment Greater than 90 days and accruing | $ 1 | $ 0 |
5. LOANS (Details Narrative)
5. LOANS (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Loans Details Narrative | ||
Pledged loans | $ 218,323 | $ 199,401 |
Loans held for sale | $ 39,775 | $ 62,735 |
6. ALLOWANCE FOR LOAN LOSSES (D
6. ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Beginning Balance | $ 7,543 | $ 8,781 |
Charge-offs | 2,872 | 2,261 |
Recoveries | 1,373 | 1,023 |
Provision for Loan Losses | 0 | 0 |
Ending Balance | 6,044 | 7,543 |
Individually Evaluated for Impairment | 1,882 | 2,154 |
Collectively Evaluated for Impairment | 4,162 | 5,389 |
Construction/Land Development [Member] | ||
Beginning Balance | 3,381 | 4,442 |
Charge-offs | 620 | 356 |
Recoveries | 0 | 7 |
Provision for Loan Losses | (214) | (712) |
Ending Balance | 2,547 | 3,381 |
Individually Evaluated for Impairment | 1,661 | 1,853 |
Collectively Evaluated for Impairment | 886 | 1,528 |
Farmland [Member] | ||
Beginning Balance | 34 | 95 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for Loan Losses | (9) | (61) |
Ending Balance | 25 | 34 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 25 | 34 |
Real Estate [Member] | ||
Beginning Balance | 843 | 806 |
Charge-offs | 0 | 23 |
Recoveries | 2 | 4 |
Provision for Loan Losses | (126) | 56 |
Ending Balance | 719 | 843 |
Individually Evaluated for Impairment | 209 | 221 |
Collectively Evaluated for Impairment | 510 | 622 |
Multi-Family [Member] | ||
Beginning Balance | 23 | 71 |
Charge-offs | 0 | 0 |
Recoveries | 0 | 0 |
Provision for Loan Losses | (6) | (48) |
Ending Balance | 19 | 23 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 19 | 23 |
Commercial Real Estate [Member] | ||
Beginning Balance | 705 | 445 |
Charge-offs | 0 | 19 |
Recoveries | 13 | 135 |
Provision for Loan Losses | (236) | 144 |
Ending Balance | 482 | 705 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 482 | 705 |
Home Equity - Closed End [Member] | ||
Beginning Balance | 75 | 174 |
Charge-offs | 7 | 8 |
Recoveries | 25 | 0 |
Provision for Loan Losses | (27) | (91) |
Ending Balance | 66 | 75 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 66 | 75 |
Home Equity - Open End [Member] | ||
Beginning Balance | 470 | 634 |
Charge-offs | 26 | 370 |
Recoveries | 53 | 120 |
Provision for Loan Losses | (288) | 86 |
Ending Balance | 209 | 470 |
Individually Evaluated for Impairment | 0 | 60 |
Collectively Evaluated for Impairment | 209 | 410 |
Commercial and Industrial Non-Real Estate [Member] | ||
Beginning Balance | 586 | 1,055 |
Charge-offs | 179 | 293 |
Recoveries | 72 | 267 |
Provision for Loan Losses | (142) | (443) |
Ending Balance | 337 | 586 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 337 | 586 |
Consumer [Member] | ||
Beginning Balance | 78 | 108 |
Charge-offs | 136 | 37 |
Recoveries | 28 | 19 |
Provision for Loan Losses | 178 | (12) |
Ending Balance | 148 | 78 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | 148 | 78 |
Dealer Finance [Member] | ||
Beginning Balance | 1,289 | 836 |
Charge-offs | 1,806 | 1,081 |
Recoveries | 1,143 | 417 |
Provision for Loan Losses | 814 | 1,117 |
Ending Balance | 1,440 | 1,289 |
Individually Evaluated for Impairment | 12 | 20 |
Collectively Evaluated for Impairment | 1,428 | 1,269 |
Credit Cards [Member] | ||
Beginning Balance | 59 | 115 |
Charge-offs | 98 | 74 |
Recoveries | 37 | 54 |
Provision for Loan Losses | 54 | (36) |
Ending Balance | 52 | 59 |
Individually Evaluated for Impairment | 0 | 0 |
Collectively Evaluated for Impairment | $ 52 | $ 59 |
6. ALLOWANCE FOR LOAN LOSSES 69
6. ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Loan Receivable | $ 616,974 | $ 591,636 |
Individually evaluated for impairment | 20,110 | 15,042 |
Collectively evaluated for impairment | 596,864 | 576,594 |
Construction/Land Development [Member] | ||
Loan Receivable | 71,620 | 76,172 |
Individually evaluated for impairment | 9,350 | 9,888 |
Collectively evaluated for impairment | 62,270 | 66,284 |
Farmland [Member] | ||
Loan Receivable | 13,606 | 12,901 |
Individually evaluated for impairment | 1,984 | 0 |
Collectively evaluated for impairment | 11,622 | 12,901 |
Real Estate [Member] | ||
Loan Receivable | 184,546 | 172,758 |
Individually evaluated for impairment | 2,461 | 1,974 |
Collectively evaluated for impairment | 182,085 | 170,784 |
Multi-Family [Member] | ||
Loan Receivable | 10,298 | 7,605 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 10,298 | 7,605 |
Commercial Real Estate [Member] | ||
Loan Receivable | 148,906 | 150,061 |
Individually evaluated for impairment | 6,229 | 2,910 |
Collectively evaluated for impairment | 142,677 | 147,151 |
Home Equity - Closed End [Member] | ||
Loan Receivable | 11,606 | 11,453 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 11,606 | 11,453 |
Home Equity - Open End [Member] | ||
Loan Receivable | 54,739 | 54,420 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | 54,739 | 54,420 |
Commercial and Industrial Non-Real Estate [Member] | ||
Loan Receivable | 36,912 | 31,306 |
Individually evaluated for impairment | 0 | 170 |
Collectively evaluated for impairment | 36,912 | 31,136 |
Consumer [Member] | ||
Loan Receivable | 6,633 | 6,643 |
Individually evaluated for impairment | 8 | 13 |
Collectively evaluated for impairment | 6,625 | 6,630 |
Dealer Finance [Member] | ||
Loan Receivable | 75,169 | 65,495 |
Individually evaluated for impairment | 78 | 87 |
Collectively evaluated for impairment | 75,091 | 65,408 |
Credit Cards [Member] | ||
Loan Receivable | 2,939 | 2,822 |
Individually evaluated for impairment | 0 | 0 |
Collectively evaluated for impairment | $ 2,939 | $ 2,822 |
6. ALLOWANCE FOR LOAN LOSSES 70
6. ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Construction/Land Development | $ 71,620 | $ 76,172 |
Farmland | 13,606 | 12,901 |
Real Estate | 184,546 | 172,758 |
Multi-Family | 10,298 | 7,605 |
Commercial Real Estate | 148,906 | 150,061 |
Home Equity - closed end | 11,606 | 11,453 |
Home Equity - open end | 54,739 | 54,420 |
Commercial & Industrial (Non-Real Estate) | 36,912 | 31,306 |
Consumer (excluding dealer) | 6,633 | 6,643 |
Total | 538,866 | 523,319 |
Grade 1 Minimal Risk [Member] | ||
Construction/Land Development | 0 | 0 |
Farmland | 63 | 65 |
Real Estate | 0 | 0 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 0 | 0 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 235 | 124 |
Commercial & Industrial (Non-Real Estate) | 262 | 1,375 |
Consumer (excluding dealer) | 34 | 67 |
Total | 594 | 1,631 |
Grade 2 Modest Risk [Member] | ||
Construction/Land Development | 690 | 1,478 |
Farmland | 0 | 0 |
Real Estate | 1,512 | 1,149 |
Multi-Family | 228 | 311 |
Commercial Real Estate | 3,525 | 2,793 |
Home Equity - closed end | 0 | 150 |
Home Equity - open end | 1,598 | 1,724 |
Commercial & Industrial (Non-Real Estate) | 1,595 | 1,267 |
Consumer (excluding dealer) | 490 | 174 |
Total | 9,638 | 9,046 |
Grade 3 Average Risk [Member] | ||
Construction/Land Development | 12,974 | 10,870 |
Farmland | 3,153 | 3,073 |
Real Estate | 53,764 | 62,168 |
Multi-Family | 4,780 | 3,009 |
Commercial Real Estate | 45,384 | 32,986 |
Home Equity - closed end | 3,535 | 3,966 |
Home Equity - open end | 17,383 | 16,415 |
Commercial & Industrial (Non-Real Estate) | 13,297 | 6,827 |
Consumer (excluding dealer) | 2,226 | 1,837 |
Total | 156,496 | 141,151 |
Grade 4 Acceptable Risk [Member] | ||
Construction/Land Development | 30,197 | 43,863 |
Farmland | 4,120 | 3,456 |
Real Estate | 101,606 | 74,242 |
Multi-Family | 5,111 | 4,099 |
Commercial Real Estate | 89,195 | 91,157 |
Home Equity - closed end | 5,410 | 4,139 |
Home Equity - open end | 30,888 | 30,974 |
Commercial & Industrial (Non-Real Estate) | 19,442 | 19,530 |
Consumer (excluding dealer) | 88 | 607 |
Total | 286,057 | 272,065 |
Grade 5 Marginally Acceptable [Member] | ||
Construction/Land Development | 9,165 | 8,399 |
Farmland | 3,793 | 4,446 |
Real Estate | 19,734 | 28,266 |
Multi-Family | 179 | 186 |
Commercial Real Estate | 9,012 | 19,181 |
Home Equity - closed end | 1,279 | 1,746 |
Home Equity - open end | 3,945 | 4,547 |
Commercial & Industrial (Non-Real Estate) | 1,480 | 2,198 |
Consumer (excluding dealer) | 1,065 | 1,242 |
Total | 49,652 | 70,211 |
Grade 6 Watch [Member] | ||
Construction/Land Development | 3,520 | 2,473 |
Farmland | 494 | 1,861 |
Real Estate | 4,660 | 4,680 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 634 | 1,840 |
Home Equity - closed end | 1,379 | 1,414 |
Home Equity - open end | 176 | 125 |
Commercial & Industrial (Non-Real Estate) | 207 | 39 |
Consumer (excluding dealer) | 2,254 | 2,252 |
Total | 13,324 | 14,684 |
Grade 7 Substandard [Member] | ||
Construction/Land Development | 15,074 | 9,089 |
Farmland | 1,983 | 0 |
Real Estate | 3,270 | 2,253 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 1,156 | 2,104 |
Home Equity - closed end | 3 | 38 |
Home Equity - open end | 514 | 511 |
Commercial & Industrial (Non-Real Estate) | 629 | 70 |
Consumer (excluding dealer) | 476 | 466 |
Total | 23,105 | 14,531 |
Grade 8 Doubtful [Member] | ||
Construction/Land Development | 0 | 0 |
Farmland | 0 | 0 |
Real Estate | 0 | 0 |
Multi-Family | 0 | 0 |
Commercial Real Estate | 0 | 0 |
Home Equity - closed end | 0 | 0 |
Home Equity - open end | 0 | 0 |
Commercial & Industrial (Non-Real Estate) | 0 | 0 |
Consumer (excluding dealer) | 0 | 0 |
Total | $ 0 | $ 0 |
6. ALLOWANCE FOR LOAN LOSSES 71
6. ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Credit cards | $ 2,939 | $ 2,822 |
Consumer | 75,169 | 65,495 |
Performing Financing Receivable [Member] | ||
Credit cards | 2,938 | 2,822 |
Consumer | 75,116 | 65,291 |
Nonperforming Financing Receivable [Member] | ||
Credit cards | 1 | 0 |
Consumer | $ 53 | $ 204 |
7. TROUBLED DEBT RESTRUCTURIN72
7. TROUBLED DEBT RESTRUCTURING (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017USD ($)Integer | Dec. 31, 2016USD ($)Integer | |
Troubled Debt Restructurings | ||
Number of Contracts | Integer | 3 | 6 |
Pre-Modification Outstanding Recorded Investment | $ 32 | $ 180 |
Post-Modification Outstanding Recorded Investment | $ 32 | $ 180 |
Past Due Troubled Debt Restructurings | ||
Number of Contracts | Integer | 3 | |
Pre-Modification Outstanding Recorded Investment | $ 1,569 | |
Post-Modification Outstanding Recorded Investment | $ 1,569 | |
Real Estate [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | Integer | 2 | |
Pre-Modification Outstanding Recorded Investment | $ 141 | |
Post-Modification Outstanding Recorded Investment | $ 141 | |
Past Due Troubled Debt Restructurings | ||
Number of Contracts | Integer | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 67 | |
Post-Modification Outstanding Recorded Investment | $ 67 | |
Construction/Land Development [Member] | ||
Past Due Troubled Debt Restructurings | ||
Number of Contracts | Integer | 2 | |
Pre-Modification Outstanding Recorded Investment | $ 1,502 | |
Post-Modification Outstanding Recorded Investment | $ 1,502 | |
Consumer [Member] | ||
Troubled Debt Restructurings | ||
Number of Contracts | Integer | 3 | 4 |
Pre-Modification Outstanding Recorded Investment | $ 32 | $ 39 |
Post-Modification Outstanding Recorded Investment | $ 32 | $ 39 |
8. BANK PREMISES AND EQUIPMEN73
8. BANK PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Notes to Financial Statements | ||
Land | $ 3,883 | $ 3,091 |
Buildings and improvements | 12,384 | 7,877 |
Furniture and equipment | 9,454 | 8,257 |
Gross | 25,721 | 19,225 |
Less - accumulated depreciation | (9,827) | (8,885) |
Net | $ 15,894 | $ 10,340 |
8. BANK PREMISES AND EQUIPMEN74
8. BANK PREMISES AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | |||
Provisions for depreciation | $ 930 | $ 827 | $ 727 |
9. OTHER REAL ESTATE OWNED (Det
9. OTHER REAL ESTATE OWNED (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Other Real Estate Owned Details | ||
Balance as of January 1 | $ 2,076 | $ 2,128 |
Loans transferred to OREO | 231 | 566 |
Capital improvements | 2 | 24 |
Sale of OREO | (281) | (623) |
Write down of OREO or losses on sale | (44) | (19) |
Balance as of December 31 | $ 1,984 | $ 2,076 |
9. OTHER REAL ESTATE OWNED (D76
9. OTHER REAL ESTATE OWNED (Details Narrative) $ in Thousands | Dec. 31, 2017USD ($) |
Other Real Estate Owned Details Narrative | |
Foreclosed residential real estate properties | $ 207 |
10. DEPOSITS (Details)
10. DEPOSITS (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Banking and Thrift [Abstract] | |
2,018 | $ 66,749 |
2,019 | 51,434 |
2,020 | 30,151 |
2,021 | 9,296 |
2022 and after | 7,640 |
Total | $ 165,270 |
10. DEPOSITS (Details Narrative
10. DEPOSITS (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deposits Details Narrative | ||
Insurance limit | $ 250 | $ 250 |
Time deposits | $ 13,637 | $ 7,841 |
11. SHORT-TERM DEBT (Details)
11. SHORT-TERM DEBT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Outstanding at Year End | $ 25,296 | $ 40,000 |
Average Balance Outstanding | $ 20,398 | $ 37,510 |
Year End Interest Rate | 0.31% | 0.15% |
Federal funds purchased [Member] | ||
Maximum Outstanding at any Month End | $ 8,964 | $ 11,421 |
Outstanding at Year End | 5,296 | 0 |
Average Balance Outstanding | $ 97 | $ 637 |
Year End Interest Rate | 0.17% | 0.98% |
FHLB short term [Member] | ||
Maximum Outstanding at any Month End | $ 50,000 | $ 50,000 |
Outstanding at Year End | 20,000 | 40,000 |
Average Balance Outstanding | $ 20,301 | $ 34,740 |
Year End Interest Rate | 0.30% | 0.12% |
Securities sold under agreements to repurchase [Member] | ||
Maximum Outstanding at any Month End | $ 4,272 | |
Outstanding at Year End | 0 | |
Average Balance Outstanding | $ 2,133 | |
Year End Interest Rate | 0.25% |
12. LONG-TERM DEBT (Details)
12. LONG-TERM DEBT (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 9,428 |
2,019 | 6,929 |
2,020 | 14,429 |
2,021 | 5,929 |
2,022 | 2,714 |
Thereafter | 10,125 |
Total | $ 49,554 |
12.LONG-TERM DEBT (Details Narr
12.LONG-TERM DEBT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Balance of obligations | $ 49,554 | $ 63,982 |
Minimum [Member] | ||
Weighted average interest | 1.86% | |
long-term debt interest rate | 1.16% | |
Maximum [Member] | ||
Weighted average interest | 1.80% | |
long-term debt interest rate | 2.56% |
13. INCOME TAX EXPENSE (Details
13. INCOME TAX EXPENSE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Current expense | $ 3,671 | $ 3,046 | $ 3,227 |
Deferred expense (benefit) | (152) | 53 | (341) |
Adjustments to deferred tax asset due to change in federal tax rate | 811 | 0 | 0 |
Total deferred (benefit) expense | 659 | 53 | (341) |
Total Income Tax Expense | $ 4,330 | $ 3,099 | $ 2,886 |
13. INCOME TAX EXPENSE (Detai83
13. INCOME TAX EXPENSE (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets: | ||
Allowance for loan losses | $ 1,265 | $ 2,354 |
Split Dollar Life Insurance | 3 | 4 |
Nonqualified deferred compensation | 546 | 856 |
Low income housing partnerships losses | 203 | 94 |
Core deposit amortization | 108 | 165 |
Other real estate owned | 173 | 280 |
Unfunded pension benefit obligation | 1,096 | 1,633 |
Total Assets | 3,394 | 5,386 |
Deferred Tax Liabilities: | ||
Unearned low income housing credits | 180 | 307 |
Depreciation | 340 | 437 |
Prepaid pension | 1,010 | 1,840 |
Goodwill tax amortization | 559 | 901 |
Net unrealized gain (loss) on securities available for sale | (5) | 3 |
Total Liabilities | 2,084 | 3,488 |
Net Deferred Tax Asset (included in Other Assets on Balance Sheet) | $ 1,310 | $ 1,898 |
13. INCOME TAX EXPENSE (Detai84
13. INCOME TAX EXPENSE (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Tax expense at federal statutory rates | $ 4,511 | $ 4,307 | $ 3,843 |
Increases (decreases) in taxes resulting from: | |||
State income taxes, net of federal benefit | 0 | 6 | 8 |
Partially tax-exempt income | (59) | (41) | (46) |
Tax-exempt income | (212) | (217) | (223) |
LIH and historic credits | (633) | (896) | (701) |
Deferred Tax Asset rate change | 811 | 0 | 0 |
Other | (88) | (60) | 5 |
Total Income Tax Expense | $ 4,330 | $ 3,099 | $ 2,886 |
14. EMPLOYEE BENEFITS (Details)
14. EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in Benefit Obligation | |||
Benefit obligation, beginning | $ 12,475 | $ 10,944 | $ 10,777 |
Service cost | 696 | 632 | 648 |
Interest cost | 487 | 452 | 411 |
Actuarial (gain loss) | 1,620 | 872 | (137) |
Benefits paid | (175) | (426) | (754) |
Benefit obligation, ending | 15,103 | 12,475 | 10,944 |
Change in Plan Assets | |||
Fair value of plan assets, beginning | 12,032 | 11,678 | 11,684 |
Actual return on plan assets | 1,788 | 780 | (1) |
Employer contribution | 0 | 0 | 750 |
Benefits paid | (175) | (426) | (755) |
Fair value of plan assets, ending | 13,645 | 12,032 | 11,678 |
Funded status at the end of the year | $ (1,458) | $ (443) | $ 733 |
14. EMPLOYEE BENEFITS (Details
14. EMPLOYEE BENEFITS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amount recognized in the Consolidated Balance Sheet | |||
Prepaid benefit cost | $ 3,760 | $ 4,361 | $ 4,799 |
Unfunded pension benefit obligation under ASC 325-960 | (5,218) | (4,804) | (4,065) |
Deferred taxes | 1,096 | 1,633 | 1,382 |
Amount recognized in accumulated other comprehensive income (loss) | |||
Net loss | (5,260) | (4,861) | (4,137) |
Prior service cost | 42 | 57 | 72 |
Amount recognized | (5,218) | (4,804) | (4,065) |
Deferred Taxes | 1,096 | 1,633 | 1,382 |
Amount recognized in accumulated comprehensive income | (4,122) | (3,171) | (2,683) |
Prepaid benefit detail | |||
Benefit obligation | (15,103) | (12,475) | (10,945) |
Fair value of assets | 13,645 | 12,032 | 11,678 |
Unrecognized net actuarial loss | 5,260 | 4,861 | 4,138 |
Unrecognized prior service cost | (42) | (57) | (72) |
Prepaid (accrued) benefits | 3,760 | 4,361 | 4,799 |
Components of net periodic benefit cost Comprehensive income (loss) | |||
Service cost | 696 | 632 | 648 |
Interest cost | 487 | 452 | 411 |
Expected return on plan assets | (851) | (854) | (839) |
Amortization of prior service cost | (15) | (15) | (15) |
Recognized net acutuarial (gain)loss | 284 | 223 | 181 |
Net periodic benefit cost | 601 | 438 | 386 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) | |||
Net loss | 399 | 724 | 522 |
Amortization of prior service cost | 15 | 15 | 15 |
Total recognized in other comprehensive income | 414 | 739 | 537 |
Total recognized in net periodic benefit cost and other | 1,015 | 1,177 | 923 |
Additional disclosure information | |||
Accumulated benefit obligation | 10,760 | 8,789 | 7,601 |
Vested benefit obligation | $ 10,750 | $ 8,780 | $ 7,539 |
Discount rate used for net pension cost | 4.00% | 4.25% | 4.00% |
Discount rate used for disclosure | 3.50% | 4.00% | 4.25% |
Expected return on plan assets | 7.25% | 7.50% | 7.50% |
Rate of compensation increase | 3.00% | 3.00% | 3.00% |
Average remaining service -years) | 12 years | 13 years | 13 years |
14. EMPLOYEE BENEFITS (Detail87
14. EMPLOYEE BENEFITS (Details 2) $ in Thousands | Dec. 31, 2017USD ($) |
Notes to Financial Statements | |
2,018 | $ 1,862 |
2,019 | 698 |
2,020 | 264 |
2,021 | 179 |
2,022 | 2,867 |
2023-2027 | 7,151 |
Total | $ 13,021 |
14. EMPLOYEE BENEFITS (Detail88
14. EMPLOYEE BENEFITS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension contributions | $ 0 | $ 0 | $ 750 |
Shares held by ESOP | 194,018 | 190,271 | |
Contributions under employee benefit plan - 401K Plan | 263 | $ 242 | $ 212 |
ESOP Contributions | 430 | 407 | 270 |
Deferred Compensation Plan [Member] | |||
Contributions to employee benefit plan - Deferred Compensation Plan | $ 125 | $ 125 | $ 110 |
15. CONCENTRATIONS OF CREDIT (D
15. CONCENTRATIONS OF CREDIT (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Concentrations Of Credit Details Narrative | ||
Cash deposits in other commercial banks | $ 1,798 | $ 680 |
16. COMMITMENTS (Details)
16. COMMITMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Commitments Details | ||
Commitments to extend credit | $ 170,798 | $ 148,060 |
Standby letters of credit | $ 1,533 | $ 1,089 |
16. COMMITMENTS (Details 1)
16. COMMITMENTS (Details 1) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leases | |
2,018 | $ 177 |
2,019 | 150 |
2,020 | 128 |
2,021 | 110 |
2,022 | $ 105 |
16. COMMITMENTS (Details Narrat
16. COMMITMENTS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments Details Narrative | |||
Lease expense | $ 355 | $ 291 | $ 281 |
17. ON BALANCE SHEET DERIVATI93
17. ON BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
On Balance Sheet Derivative Instruments And Hedging Activities Details | ||
Notional amount | $ 184 | $ 190 |
Fair market value of contracts | $ 59 | $ 26 |
18. TRANSACTIONS WITH RELATED94
18. TRANSACTIONS WITH RELATED PARTIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Transactions With Related Parties Details | ||
Total loans, beginning of year | $ 7,486 | $ 7,180 |
New loans | 6,803 | 4,701 |
Relationship Change | 10,403 | 611 |
Repayments | (4,315) | (5,006) |
Total loans, end of year | $ 20,377 | $ 7,486 |
18. TRANSACTIONS WITH RELATED95
18. TRANSACTIONS WITH RELATED PARTIES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Transactions With Related Parties Details Narrative | ||
Deposits of executive officers, directors and their affiliates | $ 7,757 | $ 4,524 |
19. DIVIDEND LIMITATIONS ON S96
19. DIVIDEND LIMITATIONS ON SUBSIDIARY BANK (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Dividend Limitations On Subsidiary Bank Details Narrative | |||
Dividends paid | $ 5,000 | $ 5,000 | $ 2,500 |
20 FAIR VALUE MEASUREMENTS (Det
20 FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U. S. Treasuries | $ 19,998 | $ 24,014 |
U. S. Government sponsored enterprises | 7,980 | |
Mortgage-backed obligations of federal agencies | 502 | 634 |
Equity securities | 135 | 135 |
Total securities available for sale | 28,615 | 24,783 |
Fair Value Inputs Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U. S. Treasuries | 19,998 | 24,014 |
U. S. Government sponsored enterprises | 0 | |
Mortgage-backed obligations of federal agencies | 0 | 0 |
Equity securities | 0 | 0 |
Total securities available for sale | 19,998 | 24,014 |
Fair Value Inputs Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U. S. Treasuries | 0 | 0 |
U. S. Government sponsored enterprises | 7,980 | |
Mortgage-backed obligations of federal agencies | 502 | 634 |
Equity securities | 135 | 135 |
Total securities available for sale | 8,617 | 769 |
Fair Value Inputs Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
U. S. Treasuries | 0 | 0 |
U. S. Government sponsored enterprises | 0 | |
Mortgage-backed obligations of federal agencies | 0 | 0 |
Equity securities | 0 | 0 |
Total securities available for sale | $ 0 | $ 0 |
20 FAIR VALUE MEASUREMENTS (D98
20 FAIR VALUE MEASUREMENTS (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Impaired loans | $ 4,351 | $ 6,683 |
Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 4,351 | 6,683 |
Construction/Land Development [Member] | ||
Impaired loans | 3,337 | 4,739 |
Construction/Land Development [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Construction/Land Development [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Construction/Land Development [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 3,337 | 4,739 |
Real Estate [Member] | ||
Impaired loans | 979 | 985 |
Real Estate [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Real Estate [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 979 | 985 |
Commercial Real Estate [Member] | ||
Impaired loans | 892 | |
Commercial Real Estate [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | |
Commercial Real Estate [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | |
Commercial Real Estate [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | 892 | |
Dealer Finance [Member] | ||
Impaired loans | 35 | 67 |
Dealer Finance [Member] | Fair Value Inputs Level 1 [Member] | ||
Impaired loans | 0 | 0 |
Dealer Finance [Member] | Fair Value Inputs Level 2 [Member] | ||
Impaired loans | 0 | 0 |
Dealer Finance [Member] | Fair Value Inputs Level 3 [Member] | ||
Impaired loans | $ 35 | $ 67 |
20 FAIR VALUE MEASUREMENTS (D99
20 FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Impaired Loans | $ 4,351 | $ 6,683 |
Other Real Estate Owned | 1,984 | 2,076 |
Fair Value Inputs Level 3 [Member] | ||
Impaired Loans | 4,351 | 6,683 |
Other Real Estate Owned | $ 1,984 | $ 2,076 |
Valuation Technique Impaired Loans | Discounted appraised value | Discounted appraised value |
Valuation Technique Other Real Estate Owned | Discounted appraised value | Discounted appraised value |
Significant Unobservable Inputs Impaired Loans | Discount for selling costs | Discount for selling costs |
Significant Unobservable Inputs Other Real Estate Owned | Discount for selling costs | Discount for selling costs |
Fair Value Inputs Level 3 [Member] | Minimum [Member] | ||
Range Impaired Loans | 3.00% | 2.00% |
Range Other Real Estate Owned | 5.00% | 5.00% |
Fair Value Inputs Level 3 [Member] | Maximum [Member] | ||
Range Impaired Loans | 19.00% | 50.00% |
Range Other Real Estate Owned | 15.00% | 15.00% |
20 FAIR VALUE MEASUREMENTS (100
20 FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Real estate owned | $ 1,984 | $ 2,076 |
Fair Value Inputs Level 1 [Member] | ||
Other Real estate owned | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Other Real estate owned | 0 | 0 |
Fair Value Inputs Level 3 [Member] | ||
Other Real estate owned | $ 1,984 | $ 2,076 |
20 FAIR VALUE MEASUREMENTS (101
20 FAIR VALUE MEASUREMENTS (Details 4) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Cash and cash equivalents, Carrying amount | $ 11,907 | $ 16,355 |
Cash and cash equivalents, Fair value | 11,907 | 16,355 |
Securities, Carrying amount | 28,740 | 24,908 |
Securities, Fair value | 28,740 | 24,908 |
Loans held for sale, Carrying Amount | 39,775 | 62,735 |
Loans held for sale, Fair Value | 39,775 | 62,735 |
Loans held for investment, net, Carrying Amount | 610,930 | 584,093 |
Loans held for investment, net, Fair Value | 646,703 | 598,991 |
Interest receivable, Carrying Amount | 2,007 | 1,785 |
Interest receivable, Fair Value | 2,007 | 1,785 |
Bank owned life insurance, Carrying Amount | 13,950 | 13,513 |
Bank owned life insurance, Fair Value | 13,950 | 13,513 |
Total Assets, Carrying Amount | 707,309 | 703,389 |
Total Assets, Fair Value | 743,082 | 718,287 |
Liabilities | ||
Deposits, Carrying Amount | 569,177 | 537,085 |
Deposits, Fair Value | 571,117 | 537,930 |
Short-term debt, Carrying Amount | 25,296 | 40,000 |
Short-term debt, Fair Value | 25,296 | 40,000 |
Long-term debt, Carrying Amount | 49,733 | 64,237 |
Long-term debt, Fair Value | 49,869 | 63,945 |
Interest payable, Carrying Amount | 260 | 228 |
Interest payable, Fair Value | 260 | 228 |
Total Liabilities, Carrying Amount | 644,466 | 641,550 |
Total Liabilities, Fair Value | 646,542 | 642,103 |
Quoted Prices in Active Markets for Identical Assets (Level 1) for selling costs | ||
Assets: | ||
Cash and cash equivalents, Fair value | 11,907 | 16,355 |
Securities, Fair value | 19,998 | 24,014 |
Loans held for sale, Fair Value | 0 | 0 |
Loans held for investment, net, Fair Value | 0 | 0 |
Interest receivable, Fair Value | 0 | 0 |
Bank owned life insurance, Fair Value | 0 | 0 |
Total Assets, Fair Value | 31,905 | 40,369 |
Liabilities | ||
Deposits, Fair Value | 0 | 0 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | 0 | 0 |
Interest payable, Fair Value | 0 | 0 |
Total Liabilities, Fair Value | 0 | 0 |
Fair Value Inputs Level 2 [Member] | ||
Assets: | ||
Cash and cash equivalents, Fair value | 0 | 0 |
Securities, Fair value | 8,742 | 894 |
Loans held for sale, Fair Value | 39,775 | 62,735 |
Loans held for investment, net, Fair Value | 0 | 0 |
Interest receivable, Fair Value | 2,007 | 1,785 |
Bank owned life insurance, Fair Value | 13,950 | 13,513 |
Total Assets, Fair Value | 64,474 | 78,927 |
Liabilities | ||
Deposits, Fair Value | 403,907 | 379,857 |
Short-term debt, Fair Value | 25,296 | 40,000 |
Long-term debt, Fair Value | 0 | 0 |
Interest payable, Fair Value | 260 | 228 |
Total Liabilities, Fair Value | 429,463 | 420,085 |
Fair Value Inputs Level 3 [Member] | ||
Assets: | ||
Cash and cash equivalents, Fair value | 0 | 0 |
Securities, Fair value | 0 | 0 |
Loans held for sale, Fair Value | 0 | 0 |
Loans held for investment, net, Fair Value | 646,703 | 598,991 |
Interest receivable, Fair Value | 0 | 0 |
Bank owned life insurance, Fair Value | 0 | 0 |
Total Assets, Fair Value | 646,703 | 598,991 |
Liabilities | ||
Deposits, Fair Value | 167,210 | 158,073 |
Short-term debt, Fair Value | 0 | 0 |
Long-term debt, Fair Value | 49,869 | 63,945 |
Interest payable, Fair Value | 0 | 0 |
Total Liabilities, Fair Value | $ 217,079 | $ 222,018 |
21. REGULATORY MATTERS (Details
21. REGULATORY MATTERS (Details) $ in Thousands | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Total risk-based ratio [Member] | ||
Bank actual capital Amount | $ 95,563 | $ 93,519 |
Bank actual capital Ratio | 0.1541 | 0.1508 |
Minimum Capital Requirement Amount | $ 49,614 | $ 49,615 |
Minimum Capital Requirement Ratio | 0.08 | 0.08 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 62,018 | $ 62,019 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Ratio | 0.1 | 0.1 |
Tier 1 risk-based ratio [Member] | ||
Bank actual capital Amount | $ 89,519 | $ 85,976 |
Bank actual capital Ratio | 0.1443 | 0.1386 |
Minimum Capital Requirement Amount | $ 37,211 | $ 37,212 |
Minimum Capital Requirement Ratio | 0.06 | 0.06 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 49,614 | $ 49,615 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Ratio | 0.08 | 0.08 |
Common equity tier 1 [Member] | ||
Bank actual capital Amount | $ 89,519 | $ 85,976 |
Bank actual capital Ratio | 0.1443 | 0.1386 |
Minimum Capital Requirement Amount | $ 27,908 | $ 27,909 |
Minimum Capital Requirement Ratio | 0.045 | 0.045 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 40,312 | $ 40,312 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Ratio | 0.065 | 0.065 |
Total assets leverage ratio [Member] | ||
Bank actual capital Amount | $ 89,519 | $ 85,976 |
Bank actual capital Ratio | 0.1207 | 0.1183 |
Minimum Capital Requirement Amount | $ 29,656 | $ 29,065 |
Minimum Capital Requirement Ratio | 0.04 | 0.04 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Amount | $ 37,070 | $ 36,331 |
Minimum to be Well Capitalized Under Prompt Corrective Action Provisions Ratio | 0.05 | 0.05 |
22. BUSINESS SEGMENTS (Details)
22. BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest Income | $ 30,198 | $ 28,551 | $ 26,528 |
Gain on prepayment of long-term debt | (504) | 0 | 0 |
Income from bank owned life insurance | 449 | 476 | 473 |
Loss on sale of investments | (42) | 0 | 0 |
Other operating income | 2,109 | 1,657 | 1,401 |
Expenses: | |||
Interest Expense | 3,897 | 3,599 | 2,876 |
Provision for loan losses | 0 | 0 | 300 |
Salaries and benefits | 11,482 | 9,986 | 9,018 |
Employee benefit expense | 3,372 | 2,814 | 2,439 |
Occupancy expense | 1,035 | 868 | 801 |
Equipment expense | 836 | 735 | 715 |
FDIC insurance assessment | 190 | 388 | 587 |
Income tax expense (benefit) | 4,330 | 3,099 | 2,886 |
Net income | 9,041 | 9,762 | 8,581 |
Total Assets | 753,270 | 744,889 | |
Goodwill | 2,881 | 2,670 | |
F&M Bank Member | |||
Interest Income | 33,904 | 31,949 | 29,206 |
Service charges on deposits | 1,360 | 1,174 | 963 |
Investment services and insurance income | 1 | 1 | 2 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 504 | 0 | 0 |
Loss on sale of investments | 0 | 0 | 0 |
Other operating income | 2,128 | 2,353 | 2,142 |
Total income | 37,897 | 35,477 | 32,313 |
Expenses: | |||
Interest Expense | 3,904 | 3,605 | 2,881 |
Provision for loan losses | 0 | 0 | 300 |
Salaries and benefits | 12,092 | 11,123 | 10,056 |
Other operating expenses | 8,942 | 8,139 | 7,887 |
Total expense | 24,938 | 22,867 | 21,124 |
Income before income taxes | 12,959 | 12,610 | 11,189 |
Income tax expense (benefit) | 4,316 | 3,290 | 2,948 |
Net income | 8,643 | 9,320 | 8,241 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 8,643 | 9,320 | 8,241 |
Total Assets | 754,375 | 748,273 | 669,968 |
Goodwill | 2,670 | 2,670 | 2,670 |
VBS Mortgage | |||
Interest Income | 125 | 55 | 51 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 0 | 0 | 0 |
Mortgage banking income, net | 2,220 | 2,565 | 2,066 |
Title insurance income | 279 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | 0 |
Loss on sale of investments | (40) | 0 | 0 |
Other operating income | 0 | 0 | 0 |
Total income | 2,584 | 2,620 | 2,117 |
Expenses: | |||
Interest Expense | 75 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 1,733 | 1,387 | 1,103 |
Other operating expenses | 672 | 586 | 466 |
Total expense | 2,480 | 1,973 | 1,569 |
Income before income taxes | 104 | 647 | 548 |
Income tax expense (benefit) | 0 | 0 | 0 |
Net income | 104 | 647 | 548 |
Net income attributable to noncontrolling interest | 31 | 194 | 164 |
Net income attributable to F & M Bank Corp. | 73 | 453 | 384 |
Total Assets | 7,018 | 7,487 | 2,180 |
Goodwill | 47 | 0 | 0 |
TEB Life/FMFS | |||
Interest Income | 148 | 152 | 152 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 772 | 470 | 522 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | 0 |
Loss on sale of investments | (2) | 0 | 0 |
Other operating income | 0 | 0 | 0 |
Total income | 918 | 622 | 674 |
Expenses: | |||
Interest Expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 474 | 290 | 298 |
Other operating expenses | 51 | 66 | 35 |
Total expense | 525 | 356 | 333 |
Income before income taxes | 393 | 266 | 341 |
Income tax expense (benefit) | 109 | 58 | 129 |
Net income | 284 | 208 | 212 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 284 | 208 | 212 |
Total Assets | 6,749 | 6,476 | 6,269 |
Goodwill | 0 | 0 | 0 |
VS Title | |||
Interest Income | 0 | 0 | 0 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 0 | 0 | 0 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 883 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | 0 |
Loss on sale of investments | 0 | 0 | 0 |
Other operating income | 0 | 0 | 0 |
Total income | 883 | 0 | 0 |
Expenses: | |||
Interest Expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 555 | 0 | 0 |
Other operating expenses | 172 | 0 | 0 |
Total expense | 727 | 0 | 0 |
Income before income taxes | 156 | 0 | 0 |
Income tax expense (benefit) | 0 | 0 | 0 |
Net income | 156 | 0 | 0 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 156 | 0 | 0 |
Total Assets | 811 | 0 | 0 |
Goodwill | 0 | 0 | 0 |
Parent Only | |||
Interest Income | 0 | 0 | 0 |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | 0 | 0 | 0 |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | 0 |
Loss on sale of investments | 0 | 0 | 0 |
Other operating income | 162 | 0 | 5 |
Total income | 162 | 0 | 5 |
Expenses: | |||
Interest Expense | 0 | 0 | 0 |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 0 | 0 | 0 |
Other operating expenses | 46 | 1 | 21 |
Total expense | 46 | 1 | 21 |
Income before income taxes | 116 | (1) | (16) |
Income tax expense (benefit) | (95) | (249) | (191) |
Net income | 211 | 248 | 175 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | 211 | 248 | 175 |
Total Assets | 90,964 | 87,449 | 84,897 |
Goodwill | 164 | 0 | 0 |
Eliminations | |||
Interest Income | (82) | (6) | (5) |
Service charges on deposits | 0 | 0 | 0 |
Investment services and insurance income | (18) | (30) | (14) |
Mortgage banking income, net | 0 | 0 | 0 |
Title insurance income | 0 | 0 | 0 |
Gain on prepayment of long-term debt | 0 | 0 | 0 |
Loss on sale of investments | 0 | 0 | 0 |
Other operating income | (357) | (951) | (893) |
Total income | (457) | (987) | (912) |
Expenses: | |||
Interest Expense | (82) | (6) | (5) |
Provision for loan losses | 0 | 0 | 0 |
Salaries and benefits | 0 | 0 | 0 |
Other operating expenses | (18) | (320) | (312) |
Total expense | (100) | (326) | (317) |
Income before income taxes | (357) | (661) | (595) |
Income tax expense (benefit) | 0 | 0 | 0 |
Net income | (357) | (661) | (595) |
Net income attributable to noncontrolling interest | 0 | 0 | 0 |
Net income attributable to F & M Bank Corp. | (357) | (661) | (595) |
Total Assets | (106,647) | (104,796) | (97,957) |
Goodwill | 0 | 0 | 0 |
F&M Bank Corp Consolidated | |||
Interest Income | 34,095 | 32,150 | 29,404 |
Service charges on deposits | 1,360 | 1,174 | 963 |
Investment services and insurance income | 755 | 441 | 510 |
Mortgage banking income, net | 2,220 | 2,565 | 2,066 |
Title insurance income | 1,162 | 0 | 0 |
Gain on prepayment of long-term debt | 504 | 0 | 0 |
Loss on sale of investments | (42) | 0 | 0 |
Other operating income | 1,933 | 1,402 | 1,254 |
Total income | 41,987 | 37,732 | 34,197 |
Expenses: | |||
Interest Expense | 3,897 | 3,599 | 2,876 |
Provision for loan losses | 0 | 0 | 300 |
Salaries and benefits | 14,854 | 12,800 | 11,457 |
Other operating expenses | 9,865 | 8,472 | 8,097 |
Total expense | 28,616 | 24,871 | 22,730 |
Income before income taxes | 13,371 | 12,861 | 11,467 |
Income tax expense (benefit) | 4,330 | 3,099 | 2,886 |
Net income | 9,041 | 9,762 | 8,581 |
Net income attributable to noncontrolling interest | 31 | 194 | 164 |
Net income attributable to F & M Bank Corp. | 9,010 | 9,568 | 8,417 |
Total Assets | 753,270 | 744,889 | 665,357 |
Goodwill | $ 2,881 | $ 2,670 | $ 2,670 |
23. PARENT_COMPANY ONLY FINANCI
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||||
Cash and cash equivalents | $ 11,907 | $ 16,355 | ||
Total Assets | 753,270 | 744,889 | ||
Liabilities | ||||
Total Liabilities | 661,995 | 658,207 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $5 per share, 400,000 shares authorized, 324,150 and 327,350 issued and outstanding at December 31, 2017 and 2016, respectively. | 7,529 | 7,609 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,255,036 and 3,270,315 shares issued and outstanding for 2016 and 2015, respectively | 16,275 | 16,352 | ||
Retained earnings | 60,814 | 54,509 | ||
Accumulated other comprehensive income (loss) | (4,142) | (3,165) | ||
Total Stockholders' Equity | 91,275 | 86,682 | $ 82,950 | $ 77,797 |
Total Liabilities and Stockholders' Equity | 753,270 | 744,889 | ||
Parent [Member] | ||||
Assets | ||||
Cash and cash equivalents | 917 | 1,155 | $ 1,907 | $ 1,214 |
Investment in subsidiaries | 88,967 | 85,481 | ||
Securities available for sale | 135 | 135 | ||
Income tax receivable (including due from subsidiary) | 565 | 0 | ||
Goodwill and intangibles | 380 | 0 | ||
Total Assets | 90,964 | 86,771 | ||
Liabilities | ||||
Income tax payable (including due form subsidiary) | 0 | 313 | ||
Deferred income taxes | 177 | 307 | ||
Accrued expenses | 86 | 0 | ||
Demand obligations for low income housing investment | 0 | 162 | ||
Total Liabilities | 263 | 782 | ||
STOCKHOLDERS EQUITY: | ||||
Preferred stock par value $5 per share, 400,000 shares authorized, 324,150 and 327,350 issued and outstanding at December 31, 2017 and 2016, respectively. | 7,529 | 7,609 | ||
Common stock par value $5 per share, 6,000,000 shares authorized, 3,255,036 and 3,270,315 shares issued and outstanding for 2016 and 2015, respectively | 16,275 | 16,352 | ||
Additional paid in capital | 10,225 | 10,684 | ||
Retained earnings | 60,814 | 54,509 | ||
Accumulated other comprehensive income (loss) | (4,142) | (3,165) | ||
Total Stockholders' Equity | 90,701 | 85,989 | ||
Total Liabilities and Stockholders' Equity | $ 90,964 | $ 86,771 |
23. PARENT_COMPANY ONLY FINA105
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Expenses | |||
Income Tax Expense (Benefit) | $ 4,330 | $ 3,099 | $ 2,886 |
Income before undistributed subsidiary Net income | 9,041 | 9,762 | 8,581 |
Undistributed subsidiary net income | (31) | (194) | (164) |
Net income | 9,010 | 9,568 | 8,417 |
Parent [Member] | |||
Income | |||
Dividends from affiliate | 5,000 | 5,000 | 2,500 |
Net limited partnership income (loss) | 162 | 0 | 5 |
Total Income | 5,162 | 5,000 | 2,505 |
Expenses | |||
Total Expenses | 47 | 1 | 21 |
Net income before income tax expense (benefit) and undistributed subsidiary net income | 5,115 | 4,999 | 2,484 |
Income Tax Expense (Benefit) | (95) | (249) | (191) |
Income before undistributed subsidiary Net income | 5,210 | 5,248 | 2,675 |
Undistributed subsidiary net income | 3,800 | 4,320 | 5,742 |
Net income | $ 9,010 | $ 9,568 | $ 8,417 |
23. PARENT_COMPANY ONLY FINA106
23. PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash Flows from Operating Activities | |||
Net income | $ 9,010 | $ 9,568 | $ 8,417 |
Deferred tax (benefit) expense | (222) | 9 | 341 |
Net Cash Provided by Operating Activities | 6,155 | 15,512 | 9,777 |
Cash Flows from Investing Activities | |||
Net Cash Used in Investing Activities | (9,484) | (75,742) | (73,449) |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock | 197 | 183 | 147 |
Net Cash Used in Financing Activities | (1,119) | 68,066 | 48,989 |
Net (Decrease) increase in Cash and Cash Equivalents | (4,448) | 7,836 | (14,683) |
Cash and Cash Equivalents, End of Year | 11,907 | 16,355 | |
Cash and Cash Equivalents, Beginning of Year | 16,355 | ||
Parent [Member] | |||
Cash Flows from Operating Activities | |||
Net income | 9,010 | 9,568 | 8,417 |
Undistributed subsidiary income | (3,800) | (4,320) | (5,742) |
Deferred tax (benefit) expense | (112) | 5 | (81) |
Decrease (increase) in other assets | (1,256) | 0 | 1,300 |
Increase (decrease) in other liabilities | (77) | (535) | (143) |
Net Cash Provided by Operating Activities | 3,765 | 4,718 | 3,751 |
Cash Flows from Investing Activities | |||
Net Cash Used in Investing Activities | 0 | 0 | 0 |
Cash Flows from Financing Activities | |||
Repurchase of preferred stock | (101) | (1,961) | 0 |
Repurchase of common stock | (712) | (577) | (289) |
Proceeds from issuance of common stock | 197 | 183 | 146 |
Dividends paid in cash | (3,387) | (3,115) | (2,915) |
Net Cash Used in Financing Activities | (4,003) | (5,470) | (3,058) |
Net (Decrease) increase in Cash and Cash Equivalents | (238) | (752) | 693 |
Cash and Cash Equivalents, End of Year | 917 | 1,155 | 1,907 |
Cash and Cash Equivalents, Beginning of Year | $ 1,155 | $ 1,907 | $ 1,214 |
26. ACCUMULATED OTHER COMPRE107
26. ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Unrealized Securities Gains Losses [Member] | |||
Beginning Balance | $ 6 | $ 4 | $ 3 |
Change in unrealized securities gains (losses), net of tax | (26) | 2 | 1 |
Change in unfunded pension liability, net of tax | 0 | 0 | 0 |
Ending Balance | (20) | 6 | 4 |
Adjustments Related to Pension Plan | |||
Beginning Balance | (3,171) | (2,684) | (2,330) |
Change in unrealized securities gains (losses), net of tax | 0 | 0 | 0 |
Change in unfunded pension liability, net of tax | (951) | (487) | (354) |
Ending Balance | (4,122) | (3,171) | (2,684) |
Accumulated Other comprehensive Income (Loss) | |||
Beginning Balance | (3,165) | (2,680) | (2,327) |
Change in unrealized securities gains (losses), net of tax | (26) | 2 | 1 |
Change in unfunded pension liability, net of tax | (951) | (487) | (354) |
Ending Balance | $ (4,142) | $ (3,165) | $ (2,680) |