FORM 10-Q |
GUARANTY BANCSHARES, INC. (Exact name of registrant as specified in its charter) |
Texas | 75-1656431 | |
(State or other jurisdiction of | (I.R.S. employer | |
incorporation or organization) | identification no.) | |
201 South Jefferson Avenue | ||
Mount Pleasant, Texas | 75455 | |
(Address of principal executive offices) | (Zip code) |
(903) 572 - 9881 (Registrant’s telephone number, including area code) |
Large accelerated filer ☐ | Accelerated filer ☐ | |||
Non-accelerated filer ☒ | Smaller reporting company ☐ | |||
(Do not check if a smaller reporting company) | ||||
Emerging growth company ☒ | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ |
Page | ||
GUARANTY BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share amounts) | ||||||||
(Unaudited) | (Audited) | |||||||
September 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 33,736 | $ | 39,605 | ||||
Federal funds sold | 34,250 | 60,600 | ||||||
Interest-bearing deposits | 27,075 | 27,338 | ||||||
Total cash and cash equivalents | 95,061 | 127,543 | ||||||
Securities available for sale | 238,133 | 156,925 | ||||||
Securities held to maturity | 179,081 | 189,371 | ||||||
Loans held for sale | 3,400 | 2,563 | ||||||
Loans, net | 1,294,847 | 1,233,651 | ||||||
Accrued interest receivable | 6,440 | 7,419 | ||||||
Premises and equipment, net | 43,958 | 44,810 | ||||||
Other real estate owned | 1,929 | 1,692 | ||||||
Cash surrender value of life insurance | 18,376 | 17,804 | ||||||
Deferred tax asset | 4,267 | 4,892 | ||||||
Core deposit intangible, net | 2,870 | 3,308 | ||||||
Goodwill | 18,742 | 18,742 | ||||||
Other assets | 16,949 | 19,616 | ||||||
Total assets | $ | 1,924,053 | $ | 1,828,336 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities | ||||||||
Deposits | ||||||||
Noninterest-bearing | $ | 405,678 | $ | 358,752 | ||||
Interest-bearing | 1,211,624 | 1,218,039 | ||||||
Total deposits | 1,617,302 | 1,576,791 | ||||||
Securities sold under agreements to repurchase | 12,920 | 10,859 | ||||||
Accrued interest and other liabilities | 7,601 | 6,006 | ||||||
Other debt | — | 18,286 | ||||||
Federal Home Loan Bank advances | 65,157 | 55,170 | ||||||
Subordinated debentures | 13,810 | 19,310 | ||||||
Total liabilities | 1,716,790 | 1,686,422 | ||||||
Commitments and contingent liabilities | ||||||||
KSOP-owned shares | — | 31,661 | ||||||
GUARANTY BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share amounts) | ||||||||
(Unaudited) | (Audited) | |||||||
September 30, 2017 | December 31, 2016 | |||||||
Shareholders' equity | ||||||||
Preferred stock, $5.00 par value, 15,000,000 shares authorized, no shares issued | — | — | ||||||
Common stock, $1.00 par value, 50,000,000 shares authorized, 11,921,298 and 9,616,275 shares issued, 11,058,956 and 8,751,923 shares outstanding, respectively | 11,921 | 9,616 | ||||||
Additional paid-in capital | 155,493 | 101,736 | ||||||
Retained earnings | 64,778 | 57,160 | ||||||
Treasury stock, 862,342 and 864,352 shares at cost | (20,087 | ) | (20,111 | ) | ||||
Accumulated other comprehensive loss | (4,842 | ) | (6,487 | ) | ||||
207,263 | 141,914 | |||||||
Less KSOP-owned shares | — | 31,661 | ||||||
Total shareholders' equity | 207,263 | 110,253 | ||||||
Total liabilities and shareholders' equity | $ | 1,924,053 | $ | 1,828,336 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Interest income | |||||||||||||||
Loans, including fees | $ | 15,486 | $ | 14,294 | $ | 45,115 | $ | 40,857 | |||||||
Securities | |||||||||||||||
Taxable | 1,545 | 1,038 | 4,257 | 4,298 | |||||||||||
Nontaxable | 919 | 923 | 2,761 | 2,308 | |||||||||||
Federal funds sold and interest-bearing deposits | 215 | 172 | 960 | 528 | |||||||||||
Total interest income | 18,165 | 16,427 | 53,093 | 47,991 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 2,730 | 2,329 | 7,761 | 6,791 | |||||||||||
FHLB advances and federal funds purchased | 157 | 109 | 294 | 277 | |||||||||||
Subordinated debentures | 164 | 217 | 559 | 656 | |||||||||||
Other borrowed money | 12 | 104 | 337 | 452 | |||||||||||
Total interest expense | 3,063 | 2,759 | 8,951 | 8,176 | |||||||||||
Net interest income | 15,102 | 13,668 | 44,142 | 39,815 | |||||||||||
Provision for loan losses | 800 | 840 | 2,250 | 3,240 | |||||||||||
Net interest income after provision for loan losses | 14,302 | 12,828 | 41,892 | 36,575 | |||||||||||
Noninterest income | |||||||||||||||
Service charges | 986 | 914 | 2,801 | 2,625 | |||||||||||
Net realized gain on securities transactions | — | 64 | 25 | 82 | |||||||||||
Net realized gain on sale of loans | 589 | 486 | 1,490 | 1,231 | |||||||||||
Other income | 2,127 | 1,938 | 6,184 | 5,664 | |||||||||||
Total noninterest income | 3,702 | 3,402 | 10,500 | 9,602 | |||||||||||
Noninterest expense | |||||||||||||||
Employee compensation and benefits | 6,729 | 6,370 | 20,156 | 19,057 | |||||||||||
Occupancy expenses | 1,938 | 1,720 | 5,552 | 5,196 | |||||||||||
Other expenses | 3,499 | 3,390 | 10,409 | 10,087 | |||||||||||
Total noninterest expense | 12,166 | 11,480 | 36,117 | 34,340 | |||||||||||
Income before income taxes | 5,838 | 4,750 | 16,275 | 11,837 | |||||||||||
Income tax provision | 1,699 | 1,380 | 4,644 | 3,290 | |||||||||||
Net earnings | $ | 4,139 | $ | 3,370 | $ | 11,631 | $ | 8,547 | |||||||
Basic earnings per share | $ | 0.37 | $ | 0.38 | $ | 1.17 | $ | 0.95 | |||||||
Diluted earnings per share | $ | 0.37 | $ | 0.38 | $ | 1.16 | $ | 0.95 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net earnings | $ | 4,139 | $ | 3,370 | $ | 11,631 | $ | 8,547 | ||||||||
Other comprehensive income: | ||||||||||||||||
Unrealized (losses) gains on securities | ||||||||||||||||
Unrealized holding (losses) gains arising during the period | (264 | ) | (115 | ) | 2,422 | 3,990 | ||||||||||
Amortization of net unrealized gains on held to maturity securities | 23 | 48 | 58 | 98 | ||||||||||||
Reclassification adjustment for net gains included in net earnings | — | (105 | ) | (25 | ) | (123 | ) | |||||||||
Tax effect | 92 | — | (839 | ) | (1,083 | ) | ||||||||||
Unrealized (losses) gains on securities, net of tax | (149 | ) | (172 | ) | 1,616 | 2,882 | ||||||||||
Unrealized holding gains (losses) arising during the period on interest rate swaps | 35 | 34 | 29 | (289 | ) | |||||||||||
Total other comprehensive (loss) income | (114 | ) | (138 | ) | 1,645 | 2,593 | ||||||||||
Comprehensive income | $ | 4,025 | $ | 3,232 | $ | 13,276 | $ | 11,140 |
Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Less: KSOP-Owned Shares | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | $ | — | $ | 9,616 | $ | 101,525 | $ | 49,654 | $ | (16,486 | ) | $ | (6,573 | ) | $ | (35,384 | ) | $ | 102,352 | |||||||||||||||||
Net earnings | — | — | — | 8,547 | — | — | — | 8,547 | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 2,593 | — | 2,593 | ||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | (7,261 | ) | — | (3,000 | ) | (10,261 | ) | |||||||||||||||||||||||||
Sale of treasury stock | — | — | — | — | 8,557 | — | — | 8,557 | ||||||||||||||||||||||||||||
Stock based compensation | — | — | 162 | — | — | — | — | 162 | ||||||||||||||||||||||||||||
Net change in fair value of KSOP shares | — | — | — | — | — | — | (1,539 | ) | (1,539 | ) | ||||||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||||||||||
Common - $0.26 per share | — | — | — | (2,328 | ) | — | — | — | (2,328 | ) | ||||||||||||||||||||||||||
Balance at September 30, 2016 | $ | — | $ | 9,616 | $ | 101,687 | $ | 55,873 | $ | (15,190 | ) | $ | (3,980 | ) | $ | (39,923 | ) | $ | 108,083 | |||||||||||||||||
For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | — | $ | 9,616 | $ | 101,736 | $ | 57,160 | $ | (20,111 | ) | $ | (6,487 | ) | $ | (31,661 | ) | $ | 110,253 | |||||||||||||||||
Net earnings | — | — | — | 11,631 | — | — | — | 11,631 | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 1,645 | — | 1,645 | ||||||||||||||||||||||||||||
Terminated KSOP put option | — | — | — | — | — | — | 34,300 | 34,300 | ||||||||||||||||||||||||||||
Exercise of stock options | — | 5 | 55 | — | 24 | — | — | 84 | ||||||||||||||||||||||||||||
Sale of common stock | — | 2,300 | 53,455 | — | — | — | — | 55,755 | ||||||||||||||||||||||||||||
Stock based compensation | — | — | 247 | — | — | — | — | 247 | ||||||||||||||||||||||||||||
Net change in fair value of KSOP shares | — | — | — | — | — | — | (2,639 | ) | (2,639 | ) | ||||||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||||||||||
Common - $0.39 per share | — | — | — | (4,013 | ) | — | — | — | (4,013 | ) | ||||||||||||||||||||||||||
Balance at September 30, 2017 | $ | — | $ | 11,921 | — | $ | 155,493 | — | $ | 64,778 | — | $ | (20,087 | ) | — | $ | (4,842 | ) | $ | — | $ | 207,263 |
GUARANTY BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) | ||||||||
For the Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net earnings | $ | 11,631 | $ | 8,547 | ||||
Adjustments to reconcile net earnings to net cash provided from operating activities: | ||||||||
Depreciation | 2,385 | 2,262 | ||||||
Amortization | 782 | 779 | ||||||
Deferred taxes | (214 | ) | (1,228 | ) | ||||
Premium amortization, net of discount accretion | 3,581 | 3,528 | ||||||
Net realized gain on securities transactions | (25 | ) | (82 | ) | ||||
Gain on sale of loans | (1,490 | ) | (1,231 | ) | ||||
Provision for loan losses | 2,250 | 3,240 | ||||||
Origination of loans held for sale | (50,230 | ) | (43,146 | ) | ||||
Proceeds from loans held for sale | 50,883 | 45,158 | ||||||
Write-down of other real estate and repossessed assets | 9 | 107 | ||||||
Net loss (gain) on sale of premises, equipment, other real estate owned and other assets | 111 | (1,214 | ) | |||||
Stock based compensation | 247 | 162 | ||||||
Net change in accrued interest receivable and other assets | 1,680 | (1,633 | ) | |||||
Net change in accrued interest payable and other liabilities | 1,624 | 1,342 | ||||||
Net cash provided by operating activities | 23,224 | 16,591 | ||||||
Cash flows from investing activities | ||||||||
Securities available for sale: | ||||||||
Purchases | (313,177 | ) | (26,140 | ) | ||||
Proceeds from sales | 213,813 | 103,942 | ||||||
Proceeds from maturities and principal repayments | 18,925 | 54,021 | ||||||
Securities held to maturity: | ||||||||
Purchases | — | (86,642 | ) | |||||
Proceeds from sales | 923 | 1,866 | ||||||
Proceeds from maturities and principal repayments | 7,497 | 15,121 | ||||||
Acquisition of Denton branch, net of cash paid | — | 2,399 | ||||||
Net purchases of premises and equipment | (1,678 | ) | (634 | ) | ||||
Net proceeds from sale of premises, equipment, other real estate owned and other assets | 1,830 | 2,826 | ||||||
Net increase in loans | (64,438 | ) | (168,154 | ) | ||||
Net cash used in investing activities | (136,305 | ) | (101,395 | ) | ||||
Cash flows from financing activities | ||||||||
Net change in deposits | 40,511 | 64,536 | ||||||
Net change in securities sold under agreements to repurchase | 2,061 | (254 | ) | |||||
Proceeds from FHLB advances | 60,000 | 120,178 | ||||||
Repayment of FHLB advances | (50,013 | ) | (81,346 | ) | ||||
Proceeds from other debt | 2,000 | 10,000 | ||||||
Repayment of other debt | (20,286 | ) | (18,357 | ) | ||||
Repayments of debentures | (5,500 | ) | (1,000 | ) | ||||
Purchase of treasury stock | — | (7,261 | ) |
GUARANTY BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands) | ||||||||
For the Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Sale of treasury stock | — | 8,557 | ||||||
Exercise of stock options | 84 | — | ||||||
Sale of common stock | 55,755 | — | ||||||
Cash dividends | (4,013 | ) | (2,329 | ) | ||||
Net cash provided by financing activities | 80,599 | 92,724 | ||||||
Net change in cash and cash equivalents | (32,482 | ) | 7,920 | |||||
Cash and cash equivalents at beginning of period | 127,543 | 111,379 | ||||||
Cash and cash equivalents at end of period | $ | 95,061 | $ | 119,299 | ||||
Supplemental disclosures of cash flow information | ||||||||
Interest paid | $ | 8,958 | $ | 1,839 | ||||
Income taxes paid | 4,910 | 4,610 | ||||||
Supplemental schedule of noncash investing and financing activities | ||||||||
Transfer loans to other real estate owned and repossessed assets | $ | 992 | $ | 5,862 | ||||
Terminated KSOP put option | 34,300 | — | ||||||
Net change in fair value of KSOP shares | 2,639 | 1,539 |
September 30, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
Available for sale: | |||||||||||||||
Corporate bonds | $ | 18,842 | $ | 178 | $ | — | $ | 19,020 | |||||||
Municipal securities | 7,769 | — | 305 | 7,464 | |||||||||||
Mortgage-backed securities | 91,801 | 20 | 863 | 90,958 | |||||||||||
Collateralized mortgage obligations | 120,580 | 493 | 382 | 120,691 | |||||||||||
Total available for sale | $ | 238,992 | $ | 691 | $ | 1,550 | $ | 238,133 | |||||||
Held to maturity: | |||||||||||||||
Municipal securities | $ | 146,993 | $ | 2,696 | $ | 516 | $ | 149,173 | |||||||
Mortgage-backed securities | 23,337 | 278 | 66 | 23,549 | |||||||||||
Collateralized mortgage obligations | 8,751 | 181 | 503 | 8,429 | |||||||||||
Total held to maturity | $ | 179,081 | $ | 3,155 | $ | 1,085 | $ | 181,151 |
December 31, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
Available for sale: | |||||||||||||||
Corporate bonds | $ | 25,254 | $ | 6 | $ | 377 | $ | 24,883 | |||||||
Municipal securities | 7,841 | — | 622 | 7,219 | |||||||||||
Mortgage-backed securities | 61,298 | — | 1,608 | 59,690 | |||||||||||
Collateralized mortgage obligations | 65,789 | 10 | 666 | 65,133 | |||||||||||
Total available for sale | $ | 160,182 | $ | 16 | $ | 3,273 | $ | 156,925 | |||||||
Held to maturity: | |||||||||||||||
Municipal securities | $ | 149,420 | $ | 901 | $ | 3,889 | $ | 146,432 | |||||||
Mortgage-backed securities | 28,450 | 318 | 290 | 28,478 | |||||||||||
Collateralized mortgage obligations | 11,501 | 265 | 521 | 11,245 | |||||||||||
Total held to maturity | $ | 189,371 | $ | 1,484 | $ | 4,700 | $ | 186,155 |
Less Than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
September 30, 2017 | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||
Available for sale: | |||||||||||||||||||||||
Corporate bonds | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Municipal securities | — | — | (305 | ) | 7,464 | (305 | ) | 7,464 | |||||||||||||||
Mortgage-backed securities | (556 | ) | 72,802 | (307 | ) | 13,913 | (863 | ) | 86,715 | ||||||||||||||
Collateralized mortgage obligations | (244 | ) | 42,825 | (138 | ) | 7,522 | (382 | ) | 50,347 | ||||||||||||||
Total available for sale | $ | (800 | ) | $ | 115,627 | $ | (750 | ) | $ | 28,899 | $ | (1,550 | ) | $ | 144,526 | ||||||||
Held to maturity: | |||||||||||||||||||||||
Municipal securities | $ | (258 | ) | $ | 39,090 | $ | (258 | ) | $ | 13,085 | $ | (516 | ) | $ | 52,175 | ||||||||
Mortgage-backed securities | (66 | ) | 10,562 | — | — | (66 | ) | 10,562 | |||||||||||||||
Collateralized mortgage obligations | — | — | (503 | ) | 2,272 | (503 | ) | 2,272 | |||||||||||||||
Total held to maturity | $ | (324 | ) | $ | 49,652 | $ | (761 | ) | $ | 15,357 | $ | (1,085 | ) | $ | 65,009 |
Less Than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
December 31, 2016 | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||
Available for sale: | |||||||||||||||||||||||
Corporate bonds | $ | (377 | ) | $ | 22,529 | $ | — | $ | — | $ | (377 | ) | $ | 22,529 | |||||||||
Municipal securities | (622 | ) | 7,219 | — | — | (622 | ) | 7,219 | |||||||||||||||
Mortgage-backed securities | (1,047 | ) | 44,420 | (561 | ) | 15,270 | (1,608 | ) | 59,690 | ||||||||||||||
Collateralized mortgage obligations | (437 | ) | 55,435 | (229 | ) | 9,049 | (666 | ) | 64,484 | ||||||||||||||
Total available for sale | $ | (2,483 | ) | $ | 129,603 | $ | (790 | ) | $ | 24,319 | $ | (3,273 | ) | $ | 153,922 | ||||||||
Held to maturity: | |||||||||||||||||||||||
Municipal securities | $ | (3,889 | ) | $ | 98,943 | $ | — | $ | — | $ | (3,889 | ) | $ | 98,943 | |||||||||
Mortgage-backed securities | (290 | ) | 19,983 | — | — | (290 | ) | 19,983 | |||||||||||||||
Collateralized mortgage obligations | — | — | (521 | ) | 2,350 | (521 | ) | 2,350 | |||||||||||||||
Total held to maturity | $ | (4,179 | ) | $ | 118,926 | $ | (521 | ) | $ | 2,350 | $ | (4,700 | ) | $ | 121,276 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Proceeds | $ | 199,974 | $ | 31,969 | $ | 214,736 | $ | 109,056 | |||||||
Gross gains | — | 96 | 38 | 243 | |||||||||||
Gross losses | — | (32 | ) | (13 | ) | (161 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Proceeds from sales | $ | — | $ | — | $ | 923 | $ | 1,866 | |||||||
Amortized cost | — | — | 907 | 1,842 | |||||||||||
Gross realized gains | — | — | 16 | 24 | |||||||||||
Tax expense related to securities gains/losses | — | — | (4 | ) | (7 | ) |
Available for Sale | Held to Maturity | ||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | ||||||||||||
Due within one year | $ | — | $ | — | $ | 2,683 | $ | 2,693 | |||||||
Due after one year through five years | 1,086 | 1,096 | 5,126 | 5,292 | |||||||||||
Due after five years through ten years | 17,756 | 17,924 | 43,228 | 44,785 | |||||||||||
Due after ten years | 7,769 | 7,464 | 95,956 | 96,403 | |||||||||||
Mortgage-backed securities | 91,801 | 90,958 | 23,337 | 23,549 | |||||||||||
Collateralized mortgage obligations | 120,580 | 120,691 | 8,751 | 8,429 | |||||||||||
Total Securities | $ | 238,992 | $ | 238,133 | $ | 179,081 | $ | 181,151 |
September 30, 2017 | December 31, 2016 | ||||||
Commercial and industrial | $ | 192,663 | $ | 223,997 | |||
Real estate: | |||||||
Construction and development | 201,067 | 129,366 | |||||
Commercial real estate | 393,314 | 367,656 | |||||
Farmland | 54,349 | 62,362 | |||||
1-4 family residential | 365,889 | 362,952 | |||||
Multi-family residential | 23,235 | 26,079 | |||||
Consumer | 51,711 | 53,505 | |||||
Agricultural | 24,449 | 18,901 | |||||
Overdrafts | 698 | 317 | |||||
Total loans | 1,307,375 | 1,245,135 | |||||
Less: | |||||||
Allowance for loan losses | 12,528 | 11,484 | |||||
Total net loans | $ | 1,294,847 | $ | 1,233,651 |
For the nine months ended September 30, 2017 | Commercial and industrial | Construction and development | Commercial real estate | Farmland | 1-4 family residential | Multi-family residential | Consumer | Agricultural | Overdrafts | Total | |||||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 1,592 | $ | 1,161 | $ | 3,264 | $ | 482 | $ | 3,960 | $ | 281 | $ | 585 | $ | 153 | $ | 6 | $ | 11,484 | |||||||||||||||||||
Provision for loan losses | 602 | 762 | 1,019 | (24 | ) | (585 | ) | (15 | ) | 149 | 258 | 84 | 2,250 | ||||||||||||||||||||||||||
Loans charged-off | (737 | ) | — | (84 | ) | — | (307 | ) | — | (230 | ) | (4 | ) | (117 | ) | (1,479 | ) | ||||||||||||||||||||||
Recoveries | 116 | — | — | — | 21 | — | 95 | — | 41 | 273 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,573 | $ | 1,923 | $ | 4,199 | $ | 458 | $ | 3,089 | $ | 266 | $ | 599 | $ | 407 | $ | 14 | $ | 12,528 | |||||||||||||||||||
Allowance ending balance: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 19 | $ | — | $ | 31 | $ | 85 | $ | 145 | $ | — | $ | — | $ | 240 | $ | — | $ | 520 | |||||||||||||||||||
Collectively evaluated for impairment | 1,554 | 1,923 | 4,168 | 373 | 2,944 | 266 | 599 | 167 | 14 | 12,008 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,573 | $ | 1,923 | $ | 4,199 | $ | 458 | $ | 3,089 | $ | 266 | $ | 599 | $ | 407 | $ | 14 | $ | 12,528 | |||||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 354 | $ | — | $ | 4,029 | $ | 276 | $ | 1,097 | $ | 228 | $ | — | $ | 696 | $ | — | $ | 6,680 | |||||||||||||||||||
Collectively evaluated for impairment | 192,309 | 201,067 | 389,285 | 54,073 | 364,792 | 23,007 | 51,711 | 23,753 | 698 | 1,300,695 | |||||||||||||||||||||||||||||
Ending balance | $ | 192,663 | $ | 201,067 | $ | 393,314 | $ | 54,349 | $ | 365,889 | $ | 23,235 | $ | 51,711 | $ | 24,449 | $ | 698 | $ | 1,307,375 |
For the year ended December 31, 2016 | Commercial and industrial | Construction and development | Commercial real estate | Farmland | 1-4 family residential | Multi-family residential | Consumer | Agricultural | Overdrafts | Total | |||||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 1,878 | $ | 1,004 | $ | 2,106 | $ | 400 | $ | 2,839 | $ | 325 | $ | 562 | $ | 138 | $ | 11 | $ | 9,263 | |||||||||||||||||||
Provision for loan losses | 910 | 162 | 1,158 | 82 | 1,117 | (44 | ) | 171 | 15 | 69 | 3,640 | ||||||||||||||||||||||||||||
Loans charged-off | (1,213 | ) | (9 | ) | — | — | (71 | ) | — | (269 | ) | — | (200 | ) | (1,762 | ) | |||||||||||||||||||||||
Recoveries | 17 | 4 | — | — | 75 | — | 121 | — | 126 | 343 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,592 | $ | 1,161 | $ | 3,264 | $ | 482 | $ | 3,960 | $ | 281 | $ | 585 | $ | 153 | $ | 6 | $ | 11,484 | |||||||||||||||||||
Allowance ending balance: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 64 | $ | — | $ | — | $ | 47 | $ | 108 | $ | — | $ | 34 | $ | — | $ | — | $ | 253 | |||||||||||||||||||
Collectively evaluated for impairment | 1,528 | 1,161 | 3,264 | 435 | 3,852 | 281 | 551 | 153 | 6 | 11,231 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,592 | $ | 1,161 | $ | 3,264 | $ | 482 | $ | 3,960 | $ | 281 | $ | 585 | $ | 153 | $ | 6 | $ | 11,484 | |||||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 231 | $ | 1,825 | $ | 1,196 | $ | 258 | $ | 2,588 | $ | 5 | $ | 200 | $ | 15 | $ | — | $ | 6,318 | |||||||||||||||||||
Collectively evaluated for impairment | 223,766 | 127,541 | 366,460 | 62,104 | 360,364 | 26,074 | 53,305 | 18,886 | 317 | 1,238,817 | |||||||||||||||||||||||||||||
Ending balance | $ | 223,997 | $ | 129,366 | $ | 367,656 | $ | 62,362 | $ | 362,952 | $ | 26,079 | $ | 53,505 | $ | 18,901 | $ | 317 | $ | 1,245,135 |
For the nine months ended September 30, 2016 | Commercial and industrial | Construction and development | Commercial real estate | Farmland | 1-4 family residential | Multi-family residential | Consumer | Agricultural | Overdrafts | Total | |||||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 1,878 | $ | 1,004 | $ | 2,106 | $ | 400 | $ | 2,839 | $ | 325 | $ | 562 | $ | 138 | $ | 11 | $ | 9,263 | |||||||||||||||||||
Provision for loan losses | 949 | 134 | 993 | 74 | 916 | 46 | 74 | (10 | ) | 64 | 3,240 | ||||||||||||||||||||||||||||
Loans charged-off | (1,196 | ) | (9 | ) | — | — | (25 | ) | — | (170 | ) | — | (119 | ) | (1,519 | ) | |||||||||||||||||||||||
Recoveries | 14 | 4 | — | — | — | — | 103 | — | 61 | 182 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,645 | $ | 1,133 | $ | 3,099 | $ | 474 | $ | 3,730 | $ | 371 | $ | 569 | $ | 128 | $ | 17 | $ | 11,166 | |||||||||||||||||||
Allowance ending balance: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 139 | $ | — | $ | — | $ | 47 | $ | 82 | $ | — | $ | 29 | $ | 1 | $ | — | $ | 298 | |||||||||||||||||||
Collectively evaluated for impairment | 1,506 | 1,133 | 3,099 | 427 | 3,648 | 371 | 540 | 127 | 17 | 10,868 | |||||||||||||||||||||||||||||
Ending balance | $ | 1,645 | $ | 1,133 | $ | 3,099 | $ | 474 | $ | 3,730 | $ | 371 | $ | 569 | $ | 128 | $ | 17 | $ | 11,166 | |||||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 236 | $ | — | $ | 1,464 | $ | 259 | $ | 2,177 | $ | — | $ | 208 | $ | 319 | $ | — | $ | 4,663 | |||||||||||||||||||
Collectively evaluated for impairment | 224,381 | 125,045 | 359,212 | 61,643 | 346,224 | 34,538 | 54,137 | 18,904 | 594 | 1,224,678 | |||||||||||||||||||||||||||||
Ending balance | $ | 224,617 | $ | 125,045 | $ | 360,676 | $ | 61,902 | $ | 348,401 | $ | 34,538 | $ | 54,345 | $ | 19,223 | $ | 594 | $ | 1,229,341 |
September 30, 2017 | Commercial and industrial | Construction and development | Commercial real estate | Farmland | 1-4 family residential | Multi-family residential | Consumer and Overdrafts | Agricultural | Total | ||||||||||||||||||||||||||
Grade: | |||||||||||||||||||||||||||||||||||
Pass | $ | 188,440 | $ | 181,879 | $ | 388,007 | $ | 53,649 | $ | 357,814 | $ | 21,659 | $ | 51,631 | $ | 22,525 | $ | 1,265,604 | |||||||||||||||||
Special mention | 3,705 | 19,188 | 1,030 | 413 | 3,059 | 1,348 | 362 | 1,147 | 30,252 | ||||||||||||||||||||||||||
Substandard | 518 | — | 4,277 | 287 | 5,016 | 228 | 416 | 777 | 11,519 | ||||||||||||||||||||||||||
Total | $ | 192,663 | $ | 201,067 | $ | 393,314 | $ | 54,349 | $ | 365,889 | $ | 23,235 | $ | 52,409 | $ | 24,449 | $ | 1,307,375 |
December 31, 2016 | Commercial and industrial | Construction and development | Commercial real estate | Farmland | 1-4 family residential | Multi-family residential | Consumer and Overdrafts | Agricultural | Total | ||||||||||||||||||||||||||
Grade: | |||||||||||||||||||||||||||||||||||
Pass | $ | 218,975 | $ | 127,537 | $ | 360,264 | $ | 61,713 | $ | 353,483 | $ | 25,871 | $ | 52,648 | $ | 17,965 | $ | 1,218,456 | |||||||||||||||||
Special mention | 4,299 | 4 | 1,927 | 248 | 4,311 | — | 524 | 478 | 11,791 | ||||||||||||||||||||||||||
Substandard | 706 | 1,825 | 5,465 | 401 | 5,121 | 208 | 568 | 458 | 14,752 | ||||||||||||||||||||||||||
Doubtful | 17 | — | — | — | 37 | — | 82 | — | 136 | ||||||||||||||||||||||||||
Total | $ | 223,997 | $ | 129,366 | $ | 367,656 | $ | 62,362 | $ | 362,952 | $ | 26,079 | $ | 53,822 | $ | 18,901 | $ | 1,245,135 |
September 30, 2017 | 30 to 59 Days Past Due | 60 to 89 Days Past Due | 90 Days and Greater Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days and Accruing | ||||||||||||||||||||
Commercial and industrial | $ | 246 | $ | 60 | $ | 30 | $ | 336 | $ | 192,327 | $ | 192,663 | $ | — | |||||||||||||
Real estate: | |||||||||||||||||||||||||||
Construction and development | 77 | — | — | 77 | 200,990 | 201,067 | — | ||||||||||||||||||||
Commercial real estate | — | 38 | 1,521 | 1,559 | 391,755 | 393,314 | — | ||||||||||||||||||||
Farmland | 2 | — | 6 | 8 | 54,341 | 54,349 | — | ||||||||||||||||||||
1-4 family residential | 2,701 | 838 | 1,894 | 5,433 | 360,456 | 365,889 | — | ||||||||||||||||||||
Multi-family residential | — | — | 228 | 228 | 23,007 | 23,235 | — | ||||||||||||||||||||
Consumer | 617 | 201 | 94 | 912 | 50,799 | 51,711 | — | ||||||||||||||||||||
Agricultural | 66 | — | 4 | 70 | 24,379 | 24,449 | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | 698 | 698 | — | ||||||||||||||||||||
Total | $ | 3,709 | $ | 1,137 | $ | 3,777 | $ | 8,623 | $ | 1,298,752 | $ | 1,307,375 | $ | — |
December 31, 2016 | 30 to 59 Days Past Due | 60 to 89 Days Past Due | 90 Days and Greater Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days and Accruing | ||||||||||||||||||||
Commercial and industrial | $ | 941 | $ | 105 | $ | 25 | $ | 1,071 | $ | 222,926 | $ | 223,997 | $ | — | |||||||||||||
Real estate: | |||||||||||||||||||||||||||
Construction and development | 73 | — | 1,825 | 1,898 | 127,468 | 129,366 | — | ||||||||||||||||||||
Commercial real estate | 1,629 | 32 | 134 | 1,795 | 365,861 | 367,656 | — | ||||||||||||||||||||
Farmland | 100 | 26 | 7 | 133 | 62,229 | 62,362 | — | ||||||||||||||||||||
1-4 family residential | 3,724 | 803 | 1,041 | 5,568 | 357,384 | 362,952 | — | ||||||||||||||||||||
Multi-family residential | 207 | 49 | — | 256 | 25,823 | 26,079 | — | ||||||||||||||||||||
Consumer | 613 | 205 | 87 | 905 | 52,600 | 53,505 | — | ||||||||||||||||||||
Agricultural | 59 | — | 15 | 74 | 18,827 | 18,901 | — | ||||||||||||||||||||
Overdrafts | — | — | — | — | 317 | 317 | — | ||||||||||||||||||||
Total | $ | 7,346 | $ | 1,220 | $ | 3,134 | $ | 11,700 | $ | 1,233,435 | $ | 1,245,135 | $ | — |
September 30, 2017 | December 31, 2016 | ||||||
Commercial and industrial | $ | 57 | $ | 82 | |||
Real estate: | |||||||
Construction and development | — | 1,825 | |||||
Commercial real estate | 2,113 | 415 | |||||
Farmland | 162 | 176 | |||||
1-4 family residential | 2,716 | 1,699 | |||||
Multi-family residential | 228 | 5 | |||||
Consumer | 164 | 192 | |||||
Agricultural | 315 | 15 | |||||
Total | $ | 5,755 | $ | 4,409 |
September 30, 2017 | December 31, 2016 | ||||||
Nonaccrual TDRs | $ | — | $ | 43 | |||
Performing TDRs | 316 | 462 | |||||
Total | $ | 316 | $ | 505 | |||
Specific reserves on TDRs | $ | 19 | $ | 4 |
Nine Months Ended September 30, 2017 | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | ||||||
Commercial and industrial | 1 | $ | 34 | $ | 15 | ||||
1-4 family residential | 1 | 11 | 11 | ||||||
Total | 2 | $ | 45 | $ | 26 |
Nine Months Ended September 30, 2016 | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||
Commercial and industrial | 1 | $ | 90 | $ | 90 | |||||
Commercial real estate | 1 | 796 | 796 | |||||||
1-4 family residential | 2 | 189 | 189 | |||||||
Total | 4 | $ | 1,075 | $ | 1,075 |
September 30, 2017 | Unpaid Principal Balance | Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||
With no related allowance recorded: | |||||||||||||||
Commercial and industrial | $ | 325 | $ | 325 | $ | — | $ | 381 | |||||||
Real estate: | |||||||||||||||
Construction and development | — | — | — | 415 | |||||||||||
Commercial real estate | 3,746 | 3,746 | — | 4,363 | |||||||||||
Farmland | 120 | 120 | — | 106 | |||||||||||
1-4 family residential | 231 | 231 | — | 1,288 | |||||||||||
Multi-family residential | 228 | 228 | — | 166 | |||||||||||
Consumer | — | — | — | 81 | |||||||||||
Agricultural | 397 | 397 | — | 380 | |||||||||||
Subtotal | 5,047 | 5,047 | — | 7,180 | |||||||||||
With allowance recorded: | |||||||||||||||
Commercial and industrial | 29 | 29 | 19 | 411 | |||||||||||
Real estate: | |||||||||||||||
Construction and development | — | — | — | 10 | |||||||||||
Commercial real estate | 283 | 283 | 31 | 580 | |||||||||||
Farmland | 156 | 156 | 85 | 122 | |||||||||||
1-4 family residential | 866 | 866 | 145 | 867 | |||||||||||
Multi-family residential | — | — | — | 26 | |||||||||||
Consumer | — | — | — | 56 | |||||||||||
Agricultural | 299 | 299 | 240 | 176 | |||||||||||
Subtotal | 1,633 | 1,633 | 520 | 2,248 | |||||||||||
Total | $ | 6,680 | $ | 6,680 | $ | 520 | $ | 9,428 |
December 31, 2016 | Unpaid Principal Balance | Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||
With no related allowance recorded: | |||||||||||||||
Commercial and industrial | $ | 28 | $ | 28 | $ | — | $ | 809 | |||||||
Real estate: | |||||||||||||||
Construction and development | 1,825 | 1,825 | — | 172 | |||||||||||
Commercial real estate | 1,196 | 1,196 | — | 871 | |||||||||||
Farmland | 89 | 89 | — | 109 | |||||||||||
1-4 family residential | 1,799 | 1,799 | — | 1,575 | |||||||||||
Multi-family residential | 5 | 5 | — | 2 | |||||||||||
Consumer | 105 | 105 | — | 89 | |||||||||||
Agricultural | 15 | 15 | — | 68 | |||||||||||
Subtotal | 5,062 | 5,062 | — | 3,695 | |||||||||||
With allowance recorded: | |||||||||||||||
Commercial and industrial | 203 | 203 | 64 | 3,153 | |||||||||||
Real estate: | |||||||||||||||
Farmland | 169 | 169 | 47 | 169 | |||||||||||
1-4 family residential | 789 | 789 | 108 | 639 | |||||||||||
Consumer | 95 | 95 | 34 | 155 | |||||||||||
Agricultural | — | — | — | 2 | |||||||||||
Subtotal | 1,256 | 1,256 | 253 | 4,118 | |||||||||||
Total | $ | 6,318 | $ | 6,318 | $ | 253 | $ | 7,813 |
September 30, 2017 | December 31, 2016 | ||||||
Trust II Debentures | $ | 3,093 | $ | 3,093 | |||
Trust III Debentures | 2,062 | 2,062 | |||||
DCB Trust I Debentures | 5,155 | 5,155 | |||||
Other debentures | 3,500 | 9,000 | |||||
$ | 13,810 | $ | 19,310 |
Trust II | Trust III | DCB Trust I | |||||||||
Formation date | October 30, 2002 | July 25, 2006 | March 29, 2007 | ||||||||
Capital trust pass-through securities | |||||||||||
Number of shares | 3,000 | 2,000 | 5,000 | ||||||||
Original liquidation value | $ | 3,000 | $ | 2,000 | $ | 5,000 | |||||
Common securities liquidation value | 93 | 62 | 155 |
Trust II Debentures | Trust III Debentures | DCB Trust I Debentures | |||||||||
Original amount | $ | 3,093 | $ | 2,062 | $ | 5,155 | |||||
Maturity date | October 30, 2032 | October 1, 2036 | June 15, 2037 | ||||||||
Interest due | Quarterly | Quarterly | Quarterly |
Nine Months Ended September 30, 2017 | Number of Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | 340,377 | $ | 23.43 | 7.34 | $ | 194 | |||||||
Granted | 150,598 | 27.64 | 9.62 | 657 | |||||||||
Exercised | (7,033 | ) | 11.94 | 4.48 | 141 | ||||||||
Forfeited | (6,000 | ) | 23.17 | 7.13 | 53 | ||||||||
Balance, September 30, 2017 | 477,942 | $ | 24.93 | 7.57 | $ | 3,376 | |||||||
Exercisable at end of period | 98,044 | $ | 23.45 | 6.17 | $ | 838 |
Nine Months Ended September 30, 2016 | Number of Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | 314,391 | $ | 23.28 | 8.00 | $ | 225 | |||||||
Granted | 37,500 | 23.44 | 9.50 | 21 | |||||||||
Forfeited | (19,000 | ) | 23.16 | 8.15 | 16 | ||||||||
Balance, September 30, 2016 | 332,891 | $ | 23.31 | 7.45 | $ | 230 | |||||||
Exercisable at end of period | 58,491 | $ | 21.24 | 6.53 | $ | 161 |
Nine Months Ended September 30, 2017 | Number of Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | 250,700 | $ | 23.73 | 7.65 | $ | 69 | |||||||
Granted | 150,598 | 27.64 | 9.62 | 657 | |||||||||
Vested | (17,400 | ) | 23.13 | 7.91 | 154 | ||||||||
Forfeited | (4,000 | ) | 23.17 | 7.13 | 53 | ||||||||
Balance, September 30, 2017 | 379,898 | $ | 25.31 | 7.93 | $ | 2,538 |
Nine Months Ended September 30, 2016 | Number of Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||
Outstanding at beginning of year | 267,200 | $ | 23.72 | 8.22 | $ | 76 | |||||||
Granted | 37,500 | 23.44 | 9.50 | 21 | |||||||||
Vested | (13,500 | ) | 23.00 | 8.59 | 14 | ||||||||
Forfeited | (16,800 | ) | 23.16 | 8.15 | 16 | ||||||||
Balance, September 30, 2016 | 274,400 | $ | 23.75 | 7.65 | $ | 69 |
September 30, 2017 | ||||
Intrinsic value of options exercised | $ | 141 | ||
Cash received from options exercised | 84 | |||
Tax benefit realized from options exercised | — | |||
Weighted average fair value of options granted | 5.40 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Income tax expense for the period | $ | 4,644 | $ | 3,290 | |||
Effective tax rate | 28.54 | % | 27.79 | % |
September 30, 2017: | |||||||||||||||
Notional Amount | Pay Rate | Receive Rate | Effective Date | Maturity in Years | Unrealized Losses | ||||||||||
$ | 2,000 | 5.979 | % | 3 month LIBOR plus 1.67% | October 1, 2016 | 8.51 | $ | 340 | |||||||
$ | 3,000 | 7.505 | % | 3 month LIBOR plus 3.35% | October 30, 2012 | 5.08 | $ | 326 |
December 31, 2016: | |||||||||||||||
Notional Amount | Pay Rate | Receive Rate | Effective Date | Maturity in Years | Unrealized Losses | ||||||||||
$ | 2,000 | 5.979 | % | 3 month LIBOR plus 1.67% | October 1, 2016 | 9.25 | $ | 342 | |||||||
$ | 3,000 | 7.505 | % | 3 month LIBOR plus 3.35% | October 30, 2012 | 5.83 | $ | 353 |
Contract or Notional Amount | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Commitments to extend credit | $ | 339,872 | $ | 297,607 | |||
Letters of credit | 9,334 | 8,879 |
Actual | Minimum Required For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
September 30, 2017 | |||||||||||||||||||||
Total capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | $ | 213,905 | 14.62 | % | $ | 117,065 | 8.00 | % | n/a | ||||||||||||
Bank | 202,722 | 13.85 | % | 117,078 | 8.00 | % | $ | 146,348 | 10.00 | % | |||||||||||
Tier 1 capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | 201,377 | 13.76 | % | 87,799 | 6.00 | % | n/a | ||||||||||||||
Bank | 190,194 | 13.00 | % | 87,809 | 6.00 | % | 117,078 | 8.00 | % | ||||||||||||
Tier 1 capital to average assets: | |||||||||||||||||||||
Consolidated | 201,377 | 10.68 | % | 75,457 | 4.00 | % | n/a | ||||||||||||||
Bank | 190,194 | 10.08 | % | 75,465 | 4.00 | % | 94,331 | 5.00 | % | ||||||||||||
Common equity tier 1 capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | 191,067 | 13.06 | % | 65,849 | 4.50 | % | n/a | ||||||||||||||
Bank | 190,195 | 13.11 | % | 65,307 | 4.50 | % | 94,333 | 6.50 | % |
Actual | Minimum Required For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
December 31, 2016 | |||||||||||||||||||||
Total capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | $ | 149,468 | 10.86 | % | $ | 110,083 | 8.00 | % | n/a | ||||||||||||
Bank | 173,528 | 12.63 | % | 109,947 | 8.00 | % | $ | 137,434 | 10.00 | % | |||||||||||
Tier 1 capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | 137,984 | 10.03 | % | 82,562 | 6.00 | % | n/a | ||||||||||||||
Bank | 162,044 | 11.79 | % | 82,460 | 6.00 | % | 109,947 | 8.00 | % | ||||||||||||
Tier 1 capital to average assets: | |||||||||||||||||||||
Consolidated | 137,984 | 7.71 | % | 71,560 | 4.00 | % | n/a | ||||||||||||||
Bank | 162,044 | 9.06 | % | 71,505 | 4.00 | % | 89,381 | 5.00 | % | ||||||||||||
Common equity tier 1 capital to risk-weighted assets: | |||||||||||||||||||||
Consolidated | 127,674 | 9.28 | % | 61,922 | 4.50 | % | n/a | ||||||||||||||
Bank | 162,044 | 11.79 | % | 61,845 | 4.50 | % | 89,332 | 6.50 | % |
As of September 30, 2017 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||
Assets (liabilities) at fair value on a recurring basis: | |||||||||||||||
Available for sale securities | |||||||||||||||
Mortgage-backed securities | $ | 90,958 | $ | — | $ | 90,958 | $ | — | |||||||
Collateralized mortgage obligations | 120,691 | — | 120,691 | — | |||||||||||
Municipal securities | 7,464 | — | 7,464 | — | |||||||||||
Corporate bonds | 19,020 | — | 19,020 | — | |||||||||||
Derivative instruments | (666 | ) | — | (666 | ) | — | |||||||||
Assets at fair value on a nonrecurring basis: | |||||||||||||||
Impaired loans | 6,160 | — | — | 6,160 | |||||||||||
Other real estate owned | 1,929 | — | — | 1,929 |
As of December 31, 2016 | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||||
Assets (liabilities) at fair value on a recurring basis: | |||||||||||||||
Available for sale securities | |||||||||||||||
Mortgage-backed securities | $ | 59,690 | $ | — | $ | 59,690 | $ | — | |||||||
Collateralized mortgage obligations | 65,133 | — | 65,133 | — | |||||||||||
Municipal securities | 7,219 | — | 7,219 | — | |||||||||||
Corporate bonds | 24,883 | — | 24,883 | — | |||||||||||
U.S. treasury securities | — | — | — | — | |||||||||||
Derivative instruments | (695 | ) | — | (695 | ) | — | |||||||||
Assets at fair value on a nonrecurring basis: | |||||||||||||||
Impaired loans | 6,065 | — | — | 6,065 | |||||||||||
Other real estate owned | 1,692 | — | — | 1,692 |
September 30, 2017 | December 31, 2016 | September 30, 2016 | |||||||||
Foreclosed assets remeasured at initial recognition: | |||||||||||
Carrying value of foreclosed assets prior to remeasurement | $ | 544 | $ | 78 | $ | 67 | |||||
Charge-offs recognized in the allowance for loan losses | (175 | ) | (11 | ) | (11 | ) | |||||
Fair value of foreclosed assets remeasured at initial recognition | $ | 369 | $ | 67 | $ | 56 | |||||
Foreclosed assets remeasured subsequent to initial recognition: | |||||||||||
Carrying value of foreclosed assets prior to remeasurement | $ | — | $ | 170 | $ | 180 | |||||
Write-downs included in collection and other real estate owned expense | — | (69 | ) | (79 | ) | ||||||
Fair value of foreclosed assets remeasured subsequent to initial recognition | $ | — | $ | 101 | $ | 101 |
Fair Value | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||||
September 30, 2017 | ||||||||||
Impaired loans | $ | 6,160 | Fair value of collateral - sales comparison approach | Selling costs or other normal adjustments: Real estate Equipment | 10%-20% (16%) 10%-20% (5.3%) | |||||
Other real estate owned | $ | 1,929 | Appraisal value of collateral | Selling costs or other normal adjustments | 10%-20% (16%) |
Fair Value | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||||
December 31, 2016 | ||||||||||
Impaired loans | $ | 6,065 | Fair value of collateral - sales comparison approach | Selling costs or other normal adjustments: Real estate Equipment | 10%-20% (16%) 40%-50% (42%) | |||||
Other real estate owned | $ | 1,692 | Appraisal value of collateral | Selling costs or other normal adjustments | 10%-20% (16%) |
Fair value measurements as of September 30, 2017 using: | ||||||||||||||||||||
Carrying Amount | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash, due from banks, federal funds sold and interest-bearing deposits | $ | 95,061 | $ | 67,986 | $ | 27,075 | $ | — | $ | 95,061 | ||||||||||
Marketable securities held to maturity | 179,081 | — | 181,151 | — | 181,151 | |||||||||||||||
Loans, net | 1,294,847 | — | — | 1,293,992 | 1,293,992 | |||||||||||||||
Accrued interest receivable | 6,440 | — | 6,440 | — | 6,440 | |||||||||||||||
Nonmarketable equity securities | 9,379 | — | 9,379 | — | 9,379 | |||||||||||||||
Cash surrender value of life insurance | 18,376 | — | 18,376 | — | 18,376 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 1,617,302 | $ | 1,305,206 | $ | 305,084 | $ | — | $ | 1,610,290 | ||||||||||
Securities sold under repurchase agreements | 12,920 | — | 12,920 | — | 12,920 | |||||||||||||||
Accrued interest payable | 883 | — | 883 | — | 883 | |||||||||||||||
Federal Home Loan Bank advances | 65,157 | — | 64,856 | — | 64,856 | |||||||||||||||
Subordinated debentures | 13,810 | — | 11,445 | — | 11,445 |
Fair value measurements as of December 31, 2016 using: | ||||||||||||||||||||
Carrying Amount | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash, due from banks, federal funds sold and interest-bearing deposits | $ | 127,543 | $ | 100,205 | $ | 27,338 | $ | — | $ | 127,543 | ||||||||||
Marketable securities held to maturity | 189,371 | — | 186,155 | — | 186,155 | |||||||||||||||
Loans, net | 1,233,651 | — | — | 1,235,306 | 1,235,306 | |||||||||||||||
Accrued interest receivable | 7,419 | — | 7,419 | — | 7,419 | |||||||||||||||
Nonmarketable equity securities | 10,500 | — | 10,500 | — | 10,500 | |||||||||||||||
Cash surrender value of life insurance | 17,804 | — | 17,804 | — | 17,804 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | $ | 1,576,791 | $ | 1,234,875 | $ | 342,615 | $ | — | $ | 1,577,490 | ||||||||||
Securities sold under repurchase agreements | 10,859 | — | 10,859 | — | 10,859 | |||||||||||||||
Accrued interest payable | 889 | — | 889 | — | 889 | |||||||||||||||
Other debt | 18,286 | — | 18,286 | — | 18,286 | |||||||||||||||
Federal Home Loan Bank advances | 55,170 | — | 55,160 | — | 55,160 | |||||||||||||||
Subordinated debentures | 19,310 | — | 16,809 | — | 16,809 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net earnings (basic) | $ | 4,139 | $ | 3,370 | $ | 11,631 | $ | 8,547 | |||||||
Net earnings (diluted) | $ | 4,139 | $ | 3,370 | $ | 11,631 | $ | 8,547 | |||||||
Denominator: | |||||||||||||||
Weighted-average shares outstanding (basic) | 11,058,956 | 8,955,476 | 9,951,767 | 8,991,671 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Common stock equivalent shares from stock options | 105,473 | 9,581 | 75,505 | 9,581 | |||||||||||
Weighted-average shares outstanding (diluted) | 11,164,429 | 8,965,057 | 10,027,272 | 9,001,252 | |||||||||||
Net earnings per share | |||||||||||||||
Basic | $ | 0.37 | $ | 0.38 | $ | 1.17 | $ | 0.95 | |||||||
Diluted | $ | 0.37 | $ | 0.38 | $ | 1.16 | $ | 0.95 |
For the Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(Dollars in thousands, except per share data) | |||||||
Net earnings | $ | 11,631 | $ | 8,547 | |||
Net earnings per common share | |||||||
-basic | 1.17 | 0.95 | |||||
-diluted | 1.16 | 0.95 | |||||
Net interest margin(1) | 3.37 | % | 3.25 | % | |||
Net interest rate spread(2) | 3.15 | % | 3.06 | % | |||
Return on average assets | 0.82 | % | 0.65 | % | |||
Return on average equity | 8.74 | % | 7.89 | % | |||
Average equity to average total assets | 9.42 | % | 8.19 | % | |||
Dividend payout ratio | 33.33 | % | 27.37 | % |
For the Nine Months Ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
Average Outstanding Balance | Interest Earned/ Interest Paid | Average Yield/ Rate | Average Outstanding Balance | Interest Earned/ Interest Paid | Average Yield/ Rate | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest-earnings assets: | |||||||||||||||||||||
Total loans(1) | $ | 1,269,387 | $ | 45,115 | 4.75 | % | $ | 1,158,807 | $ | 40,857 | 4.71 | % | |||||||||
Securities available for sale | 216,908 | 3,678 | 2.27 | % | 216,744 | 3,057 | 1.88 | % | |||||||||||||
Securities held to maturity | 184,269 | 3,340 | 2.42 | % | 179,963 | 3,549 | 2.63 | % | |||||||||||||
Nonmarketable equity securities | 7,012 | 379 | 7.23 | % | 8,452 | 193 | 3.05 | % | |||||||||||||
Interest-bearing deposits in other banks | 72,948 | 581 | 1.06 | % | 74,525 | 335 | 0.60 | % | |||||||||||||
Total interest-earning assets | 1,750,524 | $ | 53,093 | 4.06 | % | 1,638,491 | $ | 47,991 | 3.91 | % | |||||||||||
Allowance for loan losses | (12,040 | ) | (10,654 | ) | |||||||||||||||||
Noninterest-earnings assets | 144,937 | 137,796 | |||||||||||||||||||
Total assets | $ | 1,883,421 | $ | 1,765,633 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing deposits | $ | 1,243,536 | $ | 7,761 | 0.83 | % | $ | 1,169,468 | $ | 6,791 | 0.78 | % | |||||||||
Advances from FHLB and fed funds purchased | 41,661 | 294 | 0.94 | % | 65,503 | 240 | 0.49 | % | |||||||||||||
Other debt | 8,973 | 300 | 4.48 | % | 13,650 | 452 | 4.42 | % | |||||||||||||
Subordinated debentures | 16,607 | 559 | 4.50 | % | 20,642 | 656 | 4.25 | % | |||||||||||||
Securities sold under agreements to repurchase | 12,937 | 37 | 0.38 | % | 12,264 | 37 | 0.40 | % | |||||||||||||
Total interest-bearing liabilities | 1,323,714 | $ | 8,951 | 0.90 | % | 1,281,527 | $ | 8,176 | 0.85 | % | |||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||
Noninterest-bearing deposits | 375,655 | 333,640 | |||||||||||||||||||
Accrued interest and other liabilities | 6,650 | 5,939 | |||||||||||||||||||
Total noninterest-bearing liabilities | 382,305 | 339,579 | |||||||||||||||||||
Shareholders’ equity | 177,402 | 144,527 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,883,421 | $ | 1,765,633 | |||||||||||||||||
Net interest rate spread(2) | 3.15 | % | 3.06 | % | |||||||||||||||||
Net interest income | $ | 44,142 | $ | 39,815 | |||||||||||||||||
Net interest margin(3) | 3.37 | % | 3.25 | % |
For the Nine Months Ended September 30, 2017 vs. 2016 | |||||||||||
Increase (Decrease) | |||||||||||
Due to Change in | Total Increase | ||||||||||
Volume | Rate | (Decrease) | |||||||||
(Dollars in thousands) | |||||||||||
Interest-earning assets: | |||||||||||
Total loans | $ | 5,255 | $ | (997 | ) | $ | 4,258 | ||||
Securities available for sale | 4 | 617 | 621 | ||||||||
Securities held to maturity | 104 | (313 | ) | (209 | ) | ||||||
Nonmarketable equity securities | (104 | ) | 290 | 186 | |||||||
Interest-earning deposits in other banks | (17 | ) | 263 | 246 | |||||||
Total increase (decrease) in interest income | $ | 5,242 | $ | (140 | ) | $ | 5,102 | ||||
Interest-bearing liabilities: | |||||||||||
Interest-bearing deposits | $ | 618 | $ | 352 | $ | 970 | |||||
Advances from FHLB and fed funds purchased | (225 | ) | 279 | 54 | |||||||
Other debt | (209 | ) | 58 | (151 | ) | ||||||
Subordinated debentures | (182 | ) | 84 | (98 | ) | ||||||
Securities sold under agreements to repurchase | 3 | (3 | ) | — | |||||||
Total increase in interest expense | 5 | 770 | 775 | ||||||||
Increase (decrease) in net interest income | $ | 5,237 | $ | (910 | ) | $ | 4,327 |
For the Nine Months Ended September 30, | Increase (Decrease) | ||||||||||
2017 | 2016 | 2017 v. 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Noninterest income: | |||||||||||
Service charges on deposit accounts | $ | 2,801 | $ | 2,625 | $ | 176 | |||||
Merchant and debit card fees | 2,301 | 2,026 | 275 | ||||||||
Fiduciary income | 1,055 | 1,058 | (3 | ) | |||||||
Gain on sales of loans | 1,490 | 1,231 | 259 | ||||||||
Bank-owned life insurance income | 347 | 337 | 10 | ||||||||
Gain on sales of investment securities | 25 | 82 | (57 | ) | |||||||
Loan processing fee income | 454 | 473 | (19 | ) | |||||||
Other noninterest income | 2,027 | 1,770 | 257 | ||||||||
Total noninterest income | $ | 10,500 | $ | 9,602 | $ | 898 |
For the Nine Months Ended September 30, | Increase (Decrease) | ||||||||||
2017 | 2016 | 2017 v. 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Employee compensation and benefits | $ | 20,156 | $ | 19,057 | $ | 1,099 | |||||
Non-staff expenses: | |||||||||||
Occupancy expenses | 5,552 | 5,196 | 356 | ||||||||
Amortization | 781 | 719 | 62 | ||||||||
Software and Technology | 1,533 | 1,368 | 165 | ||||||||
FDIC insurance assessment fees | 527 | 900 | (373 | ) | |||||||
Legal and professional fees | 1,472 | 1,358 | 114 | ||||||||
Advertising and promotions | 879 | 752 | 127 | ||||||||
Telecommunication expense | 412 | 438 | (26 | ) | |||||||
ATM and debit card expense | 766 | 705 | 61 | ||||||||
Director and committee fees | 760 | 680 | 80 | ||||||||
Other noninterest expense | 3,279 | 3,167 | 112 | ||||||||
Total noninterest expense | $ | 36,117 | $ | 34,340 | $ | 1,777 |
For the Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(Dollars in thousands, except per share data) | |||||||
Net earnings | $ | 4,139 | $ | 3,370 | |||
Net earnings per common share | |||||||
-basic | 0.37 | 0.38 | |||||
-diluted | 0.37 | 0.38 | |||||
Net interest margin(1) | 3.38 | % | 3.26 | % | |||
Net interest rate spread(2) | 3.13 | % | 3.07 | % | |||
Return on average assets | 0.87 | % | 0.75 | % | |||
Return on average equity | 7.99 | % | 9.20 | % | |||
Average equity to average total assets | 10.86 | % | 8.16 | % |
For the Three Months Ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
Average Outstanding Balance | Interest Earned/ Interest Paid | Average Yield/ Rate | Average Outstanding Balance | Interest Earned/ Interest Paid | Average Yield/ Rate | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest-earnings assets: | |||||||||||||||||||||
Total loans(1) | $ | 1,300,307 | $ | 15,486 | 4.72 | % | $ | 1,223,611 | $ | 14,294 | 4.65 | % | |||||||||
Securities available for sale | 245,409 | 1,376 | 2.22 | % | 163,563 | 709 | 1.72 | % | |||||||||||||
Securities held to maturity | 180,737 | 1,088 | 2.39 | % | 196,003 | 1,252 | 2.54 | % | |||||||||||||
Nonmarketable equity securities | 6,541 | 59 | 3.58 | % | 8,816 | 61 | 2.75 | % | |||||||||||||
Interest-bearing deposits in other banks | 40,997 | 156 | 1.51 | % | 75,112 | 111 | 0.59 | % | |||||||||||||
Total interest-earning assets | 1,773,991 | $ | 18,165 | 4.06 | % | 1,667,105 | $ | 16,427 | 3.92 | % | |||||||||||
Allowance for loan losses | (12,492 | ) | (11,843 | ) | |||||||||||||||||
Noninterest-earnings assets | 145,958 | 140,087 | |||||||||||||||||||
Total assets | $ | 1,907,457 | $ | 1,795,349 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing deposits | $ | 1,224,991 | $ | 2,730 | 0.88 | % | $ | 1,162,060 | $ | 2,329 | 0.80 | % | |||||||||
Advances from FHLB and fed funds purchased | 50,420 | 157 | 1.24 | % | 93,001 | 97 | 0.41 | % | |||||||||||||
Other debt | — | — | — | % | 10,000 | 104 | 4.14 | % | |||||||||||||
Subordinated debentures | 13,821 | 164 | 4.71 | % | 20,310 | 217 | 4.25 | % | |||||||||||||
Securities sold under agreements to repurchase | 14,262 | 12 | 0.33 | % | 11,952 | 12 | 0.40 | % | |||||||||||||
Total interest-bearing liabilities | 1,303,494 | $ | 3,063 | 0.93 | % | 1,297,323 | $ | 2,759 | 0.85 | % | |||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||
Noninterest-bearing deposits | 390,043 | 344,721 | |||||||||||||||||||
Accrued interest and other liabilities | 6,798 | 6,752 | |||||||||||||||||||
Total noninterest-bearing liabilities | 396,841 | 351,473 | |||||||||||||||||||
Shareholders’ equity | 207,122 | 146,553 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,907,457 | $ | 1,795,349 | |||||||||||||||||
Net interest rate spread(2) | 3.13 | % | 3.07 | % | |||||||||||||||||
Net interest income | $ | 15,102 | $ | 13,668 | |||||||||||||||||
Net interest margin(3) | 3.38 | % | 3.26 | % |
For the Three Months Ended September 30, 2017 vs. 2016 | |||||||||||
Increase (Decrease) | |||||||||||
Due to Change in | Total Increase | ||||||||||
Volume | Rate | (Decrease) | |||||||||
(Dollars in thousands) | |||||||||||
Interest-earning assets: | |||||||||||
Total loans | $ | 3,624 | $ | (2,432 | ) | $ | 1,192 | ||||
Securities available for sale | 1,821 | (1,154 | ) | 667 | |||||||
Securities held to maturity | (365 | ) | 201 | (164 | ) | ||||||
Nonmarketable equity securities | (81 | ) | 79 | (2 | ) | ||||||
Interest-earning deposits in other banks | (515 | ) | 560 | 45 | |||||||
Total increase (decrease) in interest income | $ | 4,484 | $ | (2,746 | ) | $ | 1,738 | ||||
Interest-bearing liabilities: | |||||||||||
Interest-bearing deposits | $ | 556 | $ | (155 | ) | $ | 401 | ||||
Advances from FHLB and fed funds purchased | (526 | ) | 586 | 60 | |||||||
Other debt | — | (104 | ) | (104 | ) | ||||||
Subordinated debentures | (305 | ) | 252 | (53 | ) | ||||||
Securities sold under agreements to repurchase | 8 | (8 | ) | — | |||||||
Total increase (decrease) in interest expense | (267 | ) | 571 | 304 | |||||||
Increase (decrease) in net interest income | $ | 4,751 | $ | (3,317 | ) | $ | 1,434 |
For the Three Months Ended September 30, | Increase (Decrease) | ||||||||||
2017 | 2016 | 2017 v. 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Noninterest income: | |||||||||||
Service charges on deposit accounts | $ | 986 | $ | 914 | $ | 72 | |||||
Merchant and debit card fees | 778 | 690 | 88 | ||||||||
Fiduciary income | 362 | 364 | (2 | ) | |||||||
Gain on sales of loans | 589 | 486 | 103 | ||||||||
Bank-owned life insurance income | 116 | 112 | 4 | ||||||||
Gain (loss) on sales of investment securities | — | 64 | (64 | ) | |||||||
Loan processing fee income | 146 | 161 | (15 | ) | |||||||
Other noninterest income | 725 | 611 | 114 | ||||||||
Total noninterest income | $ | 3,702 | $ | 3,402 | $ | 300 |
For the Three Months Ended September 30, | Increase (Decrease) | ||||||||||
2017 | 2016 | 2017 v. 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Employee compensation and benefits | $ | 6,729 | $ | 6,370 | $ | 359 | |||||
Non-staff expenses: | |||||||||||
Occupancy expenses | 1,938 | 1,720 | 218 | ||||||||
Amortization | 258 | 240 | 18 | ||||||||
Software and Technology | 533 | 451 | 82 | ||||||||
FDIC insurance assessment fees | 162 | 300 | (138 | ) | |||||||
Legal and professional fees | 692 | 481 | 211 | ||||||||
Advertising and promotions | 303 | 278 | 25 | ||||||||
Telecommunication expense | 128 | 130 | (2 | ) | |||||||
ATM and debit card expense | 253 | 203 | 50 | ||||||||
Director and committee fees | 253 | 222 | 31 | ||||||||
Other noninterest expense | 917 | 1,085 | (168 | ) | |||||||
Total noninterest expense | $ | 12,166 | $ | 11,480 | $ | 686 |
As of September 30, 2017 | As of December 31, 2016 | Dollar Change | Percent Change | |||||||||||
(Dollars in thousands) | ||||||||||||||
Commercial and industrial | $ | 192,663 | $ | 223,997 | $ | (31,334 | ) | (13.99 | )% | |||||
Real estate: | ||||||||||||||
Construction and development | 201,067 | 129,366 | 71,701 | 55.42 | % | |||||||||
Commercial real estate | 393,314 | 367,656 | 25,658 | 6.98 | % | |||||||||
Farmland | 54,349 | 62,362 | (8,013 | ) | (12.85 | )% | ||||||||
1-4 family residential | 365,889 | 362,952 | 2,937 | 0.81 | % | |||||||||
Multi-family residential | 23,235 | 26,079 | (2,844 | ) | (10.91 | )% | ||||||||
Consumer and overdrafts | 52,409 | 53,822 | (1,413 | ) | (2.63 | )% | ||||||||
Agricultural | 24,449 | 18,901 | 5,548 | 29.35 | % | |||||||||
Total loans held for investment | $ | 1,307,375 | $ | 1,245,135 | $ | 62,240 | 5.00 | % | ||||||
Total loans held for sale | $ | 3,400 | $ | 2,563 | $ | 837 | 32.66 | % |
September 30, 2017 | December 31, 2016 | ||||||
(Dollars in thousands) | |||||||
Nonaccrual loans | $ | 5,755 | $ | 4,409 | |||
Accruing loans 90 or more days past due | — | — | |||||
Total nonperforming loans | 5,755 | 4,409 | |||||
Other real estate owned: | |||||||
Commercial real estate, construction and development, and farmland | 1,003 | 1,074 | |||||
Residential real estate | 926 | 618 | |||||
Total other real estate owned | 1,929 | 1,692 | |||||
Repossessed assets owned | 2,479 | 3,530 | |||||
Total other assets owned | 4,408 | 5,222 | |||||
Total nonperforming assets | $ | 10,163 | $ | 9,631 | |||
Restructured loans-nonaccrual | $ | — | $ | 43 | |||
Restructured loans-accruing | 316 | 462 | |||||
Ratio of nonperforming loans to total loans(1)(2) | 0.44 | % | 0.35 | % | |||
Ratio of nonperforming assets to total assets | 0.53 | % | 0.53 | % |
September 30, 2017 | December 31, 2016 | ||||||
(Dollars in thousands) | |||||||
Nonaccrual loans by category: | |||||||
Real estate: | |||||||
Construction and development | $ | — | $ | 1,825 | |||
Commercial real estate | 2,113 | 415 | |||||
Farmland | 162 | 176 | |||||
1-4 family residential | 2,716 | 1,699 | |||||
Multi-family residential | 228 | 5 | |||||
Commercial and industrial | 57 | 82 | |||||
Consumer | 164 | 192 | |||||
Agricultural | 315 | 15 | |||||
Total | $ | 5,755 | $ | 4,409 |
September 30, 2017 | |||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Real estate: | |||||||||||||||||||||||
Construction and development | $ | 181,879 | $ | 19,188 | $ | — | $ | — | $ | — | $ | 201,067 | |||||||||||
Commercial real estate | 388,007 | 1,030 | 4,277 | — | — | 393,314 | |||||||||||||||||
Farmland | 53,649 | 413 | 287 | — | — | 54,349 | |||||||||||||||||
1-4 family residential | 357,814 | 3,059 | 5,016 | — | — | 365,889 | |||||||||||||||||
Multi-family residential | 21,659 | 1,348 | 228 | — | — | 23,235 | |||||||||||||||||
Commercial and industrial | 188,440 | 3,705 | 518 | — | — | 192,663 | |||||||||||||||||
Consumer and overdrafts | 51,631 | 362 | 416 | — | — | 52,409 | |||||||||||||||||
Agricultural | 22,525 | 1,147 | 777 | — | — | 24,449 | |||||||||||||||||
Total | $ | 1,265,604 | $ | 30,252 | $ | 11,519 | $ | — | $ | — | $ | 1,307,375 |
December 31, 2016 | |||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | Loss | Total | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Real estate: | |||||||||||||||||||||||
Construction and development | $ | 127,537 | $ | 4 | $ | 1,825 | $ | — | $ | — | $ | 129,366 | |||||||||||
Commercial real estate | 360,264 | 1,927 | 5,465 | — | — | 367,656 | |||||||||||||||||
Farmland | 61,713 | 248 | 401 | — | — | 62,362 | |||||||||||||||||
1-4 family residential | 353,483 | 4,311 | 5,121 | 37 | — | 362,952 | |||||||||||||||||
Multi-family residential | 25,871 | — | 208 | — | — | 26,079 | |||||||||||||||||
Commercial and industrial | 218,975 | 4,299 | 706 | 17 | — | 223,997 | |||||||||||||||||
Consumer and overdrafts | 52,648 | 524 | 568 | 82 | — | 53,822 | |||||||||||||||||
Agricultural | 17,965 | 478 | 458 | — | — | 18,901 | |||||||||||||||||
Total | $ | 1,218,456 | $ | 11,791 | $ | 14,752 | $ | 136 | $ | — | $ | 1,245,135 |
• | for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral; |
• | for commercial mortgage loans and multifamily residential loans, the debt service coverage ratio, operating results of the owner in the case of owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type; |
• | for 1-4 family residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and |
• | for construction and development loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio. |
For the Nine Months Ended September 30, | For the Year Ended December 31, | ||||||||||
2017 | 2016 | 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Average loans outstanding(1) | $ | 1,269,387 | $ | 1,158,807 | $ | 1,179,938 | |||||
Gross loans outstanding at end of period(2) | $ | 1,307,375 | $ | 1,229,341 | $ | 1,245,135 | |||||
Allowance for loan losses at beginning of the period | 11,484 | 9,263 | 9,263 | ||||||||
Provision for loan losses | 2,250 | 3,240 | 3,640 | ||||||||
Charge-offs: | |||||||||||
Real Estate: | |||||||||||
Construction and development | — | 9 | 9 | ||||||||
Commercial real estate | 84 | — | — | ||||||||
Farmland | — | — | — | ||||||||
1-4 family residential | 307 | 25 | 71 | ||||||||
Multi-family residential | — | — | — | ||||||||
Commercial and industrial | 737 | 1,196 | 1,213 | ||||||||
Consumer | 230 | 170 | 269 | ||||||||
Agriculture | 4 | — | — | ||||||||
Overdrafts | 117 | 119 | 200 | ||||||||
Total charge-offs | 1,479 | 1,519 | 1,762 | ||||||||
Recoveries: | |||||||||||
Real Estate: | |||||||||||
Construction and development | — | 4 | 4 | ||||||||
Commercial real estate | — | — | — | ||||||||
Farmland | — | — | — | ||||||||
1-4 family residential | 21 | — | 75 | ||||||||
Multi-family residential | — | — | — | ||||||||
Commercial and industrial | 116 | 14 | 17 | ||||||||
Consumer | 95 | 103 | 121 | ||||||||
Agriculture | — | — | — | ||||||||
Overdrafts | 41 | 61 | 126 | ||||||||
Total recoveries | 273 | 182 | 343 | ||||||||
Net charge-offs | 1,206 | 1,337 | 1,419 | ||||||||
Allowance for loan losses at end of period | $ | 12,528 | $ | 11,166 | $ | 11,484 | |||||
Ratio of allowance to end of period loans(2) | 0.96 | % | 0.91 | % | 0.92 | % | |||||
Ratio of net charge-offs to average loans(1) | 0.13 | % | 0.15 | % | 0.12 | % |
As of September 30, 2017 | As of December 31, 2016 | ||||||||||||
Amount | Percent to Total Loans | Amount | Percent to Total Loans | ||||||||||
(Dollars in thousands) | |||||||||||||
Real estate: | |||||||||||||
Construction and development | $ | 1,923 | 0.15 | % | $ | 1,161 | 0.09 | % | |||||
Commercial real estate | 4,199 | 0.32 | % | 3,264 | 0.26 | % | |||||||
Farmland | 458 | 0.04 | % | 482 | 0.04 | % | |||||||
1-4 family residential | 3,089 | 0.24 | % | 3,960 | 0.32 | % | |||||||
Multi-family residential | 266 | 0.02 | % | 281 | 0.02 | % | |||||||
Total real estate | 9,935 | 0.77 | % | 9,148 | 0.73 | % | |||||||
Commercial and industrial | 1,573 | 0.12 | % | 1,592 | 0.13 | % | |||||||
Consumer | 613 | 0.05 | % | 591 | 0.05 | % | |||||||
Agricultural | 407 | 0.03 | % | 153 | 0.01 | % | |||||||
Total allowance for loan losses | $ | 12,528 | 0.97 | % | $ | 11,484 | 0.92 | % |
As of September 30, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Corporate bonds | $ | 18,842 | $ | 178 | $ | — | $ | 19,020 | |||||||
Municipal securities | 154,762 | 2,696 | 821 | 156,637 | |||||||||||
Mortgage-backed securities | 115,138 | 298 | 929 | 114,507 | |||||||||||
Collateralized mortgage obligations | 129,331 | 674 | 885 | 129,120 | |||||||||||
Total | $ | 418,073 | $ | 3,846 | $ | 2,635 | $ | 419,284 |
As of December 31, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Corporate bonds | $ | 25,254 | $ | 6 | $ | 377 | $ | 24,883 | |||||||
Municipal securities | 157,261 | 901 | 4,511 | 153,651 | |||||||||||
Mortgage-backed securities | 89,748 | 318 | 1,898 | 88,168 | |||||||||||
Collateralized mortgage obligations | 77,290 | 275 | 1,187 | 76,378 | |||||||||||
Total | $ | 349,553 | $ | 1,500 | $ | 7,973 | $ | 343,080 |
As of September 30, 2017 | ||||||||||||||||||||||||||||||||||
Within One Year | After One Year but Within Five Years | After Five Years but Within Ten Years | After Ten Years | Total | ||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Total | Yield | |||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Corporate bonds | $ | — | — | % | $ | 1,096 | 2.59 | % | $ | 17,924 | 2.93 | % | $ | — | — | % | $ | 19,020 | 2.91 | % | ||||||||||||||
Municipal securities | 2,683 | 2.27 | % | 5,126 | 3.56 | % | 43,228 | 3.63 | % | 103,420 | 3.63 | % | $ | 154,457 | 3.60 | % | ||||||||||||||||||
Mortgage-backed securities | — | — | % | 58,496 | 2.25 | % | 55,799 | 2.54 | % | — | — | % | $ | 114,295 | 2.39 | % | ||||||||||||||||||
Collateralized mortgage obligations | 381 | — | % | 84,374 | 2.55 | % | 44,687 | 2.67 | % | — | 2.69 | % | $ | 129,442 | 2.61 | % | ||||||||||||||||||
Total | $ | 3,064 | 2.27 | % | $ | 149,092 | 2.46 | % | $ | 161,638 | 2.89 | % | $ | 103,420 | 3.48 | % | $ | 417,214 | 2.92 | % |
As of December 31, 2016 | ||||||||||||||||||||||||||||||||||
Within One Year | After One Year but Within Five Years | After Five Years but Within Ten Years | After Ten Years | Total | ||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Total | Yield | |||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Corporate bonds | $ | — | — | % | $ | 7,453 | 2.30 | % | $ | 17,430 | 2.93 | % | $ | — | — | % | $ | 24,883 | 2.75 | % | ||||||||||||||
Municipal securities | 732 | 3.98 | % | 6,103 | 3.45 | % | 38,634 | 3.49 | % | 111,170 | 3.62 | % | $ | 156,639 | 3.58 | % | ||||||||||||||||||
Mortgage-backed securities | — | — | % | 74,047 | 2.02 | % | 14,093 | 2.27 | % | — | — | % | $ | 88,140 | 2.06 | % | ||||||||||||||||||
Collateralized mortgage obligations | — | — | % | 27,668 | 2.92 | % | 26,184 | 2.68 | % | 22,782 | 2.98 | % | $ | 76,634 | 2.81 | % | ||||||||||||||||||
Total | $ | 732 | 3.98 | % | $ | 115,271 | 2.33 | % | $ | 96,341 | 3.00 | % | $ | 133,952 | 3.50 | % | $ | 346,296 | 2.97 | % |
For the Nine Months Ended September 30, 2017 | For the Year Ended December 31, 2016 | Dollar Change | Percent Change | |||||||||||
(Dollars in thousands) | ||||||||||||||
Now and interest-bearing demand accounts | $ | 264,502 | $ | 278,521 | $ | (14,019 | ) | (5.03 | )% | |||||
Savings accounts | 64,705 | 59,961 | 4,744 | 7.91 | % | |||||||||
Money market accounts | 589,763 | 482,089 | 107,674 | 22.33 | % | |||||||||
Certificates and other time deposits | 324,566 | 354,949 | (30,383 | ) | (8.56 | )% | ||||||||
Total interest-bearing deposits | 1,243,536 | 1,175,520 | 68,016 | 5.79 | % | |||||||||
Noninterest-bearing demand accounts | 375,655 | 340,240 | 35,415 | 10.41 | % | |||||||||
Total deposits | $ | 1,619,191 | $ | 1,515,760 | $ | 103,431 | 6.82 | % |
As of September 30, 2017 | ||||||
Amount | Weighted Average Interest Rate | |||||
(Dollars in thousands) | ||||||
Under 3 months | $ | 41,718 | 0.95 | % | ||
3 to 6 months | 42,231 | 1.02 | % | |||
6 to 12 months | 61,233 | 1.04 | % | |||
12 to 24 months | 24,091 | 1.24 | % | |||
24 to 36 months | 4,574 | 1.49 | % | |||
36 to 48 months | 11,936 | 1.56 | % | |||
Over 48 months | 4,638 | 1.63 | % | |||
Total | $ | 190,421 | 1.10 | % |
Balance | Weighted Average Rate | |||||
(Dollars in thousands) | ||||||
Less than 90 days | $ | 20,000 | 1.17 | % | ||
90 days to less than one year | 25,000 | 1.12 | % | |||
Three to five years | 20,157 | 1.11 | % | |||
Total | $ | 65,157 | 1.13 | % |
For the Nine Months Ended | For the Year Ended | ||||
September 30, 2017 | December 31, 2016 | ||||
Sources of Funds: | |||||
Deposits: | |||||
Noninterest-bearing | 19.95 | % | 19.15 | % | |
Interest-bearing | 66.03 | % | 66.16 | % | |
Federal funds purchased | — | % | 0.01 | % | |
Advances from FHLB | 2.21 | % | 3.53 | % | |
Other debt | 0.48 | % | 0.74 | % | |
Subordinated denentures | 0.88 | % | 1.14 | % | |
Securities sold under agreements to repurchase | 0.69 | % | 0.73 | % | |
Accrued interest and other liabilities | 0.34 | % | 0.36 | % | |
Shareholders’ equity | 9.42 | % | 8.18 | % | |
Total | 100.00 | % | 100.00 | % | |
Uses of Funds: | |||||
Loans | 66.76 | % | 65.80 | % | |
Securities available for sale | 11.52 | % | 11.17 | % | |
Securities held to maturity | 9.78 | % | 10.29 | % | |
Nonmarketable equity securities | 0.37 | % | 0.48 | % | |
Federal funds sold | 2.61 | % | 2.96 | % | |
Interest-bearing deposits in other banks | 1.26 | % | 1.44 | % | |
Other noninterest-earning assets | 7.70 | % | 7.86 | % | |
Total | 100.00 | % | 100.00 | % | |
Average noninterest-bearing deposits to average deposits | 23.20 | % | 22.45 | % | |
Average loans to average deposits | 78.40 | % | 77.84 | % |
September 30, 2017 | December 31, 2016 | ||||||||||||
Amount | Ratio | Amount | Ratio | ||||||||||
(Dollars in thousands) | |||||||||||||
Guaranty Bancshares, Inc. | |||||||||||||
Total capital (to risk weighted assets) | $ | 213,905 | 14.62 | % | $ | 149,468 | 10.86 | % | |||||
Tier 1 capital (to risk weighted assets) | 201,377 | 13.76 | % | 137,984 | 10.03 | % | |||||||
Tier 1 capital (to average assets) | 201,377 | 10.68 | % | 137,984 | 7.71 | % | |||||||
Common equity tier 1 risk-based capital | 191,067 | 13.06 | % | 127,674 | 9.28 | % | |||||||
Guaranty Bank & Trust | |||||||||||||
Total capital (to risk weighted assets) | $ | 202,722 | 13.85 | % | $ | 173,528 | 12.63 | % | |||||
Tier 1 capital (to risk weighted assets) | 190,194 | 13.00 | % | 162,044 | 11.79 | % | |||||||
Tier 1 capital (to average assets) | 190,194 | 10.08 | % | 162,044 | 9.06 | % | |||||||
Common equity tier 1 risk-based capital | 190,195 | 13.00 | % | 162,044 | 11.79 | % |
As of September 30, 2017 | |||||||||||||||||||
1 year or less | More than 1 year but less than 3 years | 3 years or more but less than 5 years | 5 years or more | Total | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Time deposits | $ | 232,964 | $ | 46,392 | $ | 23,726 | $ | — | $ | 303,082 | |||||||||
Advances from FHLB | 45,000 | — | 20,157 | — | 65,157 | ||||||||||||||
Subordinated debentures | 1,000 | 2,500 | — | 10,310 | 13,810 | ||||||||||||||
Total | $ | 278,964 | $ | 48,892 | $ | 43,883 | $ | 10,310 | $ | 382,049 |
As of September 30, 2017 | |||||||||||||||||||
1 year or less | More than 1 year but less than 3 years | 3 years or more but less than 5 years | 5 years or more | Total | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Standby and commercial letters of credit | $ | 7,465 | $ | 212 | $ | 91 | $ | 1,566 | $ | 9,334 | |||||||||
Commitments to extend credit | 154,305 | 45,252 | 74,833 | 65,482 | 339,872 | ||||||||||||||
Total | $ | 161,770 | $ | 45,464 | $ | 74,924 | $ | 67,048 | $ | 349,206 |
September 30, 2017 | December 31, 2016 | ||||||||||
Change in Interest Rates (Basis Points) | Percent Change in Net Interest Income | Percent Change in Fair Value of Equity | Percent Change in Net Interest Income | Percent Change in Fair Value of Equity | |||||||
+300 | 1.83 | % | (15.87%) | 1.44 | % | (18.99%) | |||||
+200 | 1.92 | % | (7.71%) | 1.42 | % | (9.58%) | |||||
+100 | 1.71 | % | (2.41%) | 1.19 | % | (3.45%) | |||||
Base | — | % | — | % | — | % | — | % | |||
-100 | (0.54%) | (4.72%) | (0.29%) | (1.80%) |
As of September 30, | As of December 31, | ||||||||||
2017 | 2016 | 2016 | |||||||||
(Dollars in thousands, except per share data) | |||||||||||
Tangible Common Equity | |||||||||||
Total shareholders’ equity, including KSOP-owned shares | $ | 207,263 | $ | 148,005 | $ | 141,914 | |||||
Adjustments: | |||||||||||
Goodwill | (18,742 | ) | (18,742 | ) | (18,742 | ) | |||||
Core deposit and other intangibles | (2,870 | ) | (3,453 | ) | (3,308 | ) | |||||
Total tangible common equity | $ | 185,651 | $ | 125,810 | $ | 119,864 | |||||
Common shares outstanding(1) | 11,058,956 | 8,955,476 | 8,751,923 | ||||||||
Book value per common share | $ | 18.74 | $ | 16.53 | $ | 16.22 | |||||
Tangible book value per common share | $ | 16.79 | $ | 14.05 | $ | 13.70 |
As of September 30, 2017 | As of December 31, 2016 | ||||||
(Dollars in thousands) | |||||||
Tangible Common Equity | |||||||
Total shareholders’ equity, including KSOP-owned shares | $ | 207,263 | $ | 141,914 | |||
Adjustments: | |||||||
Goodwill | (18,742 | ) | (18,742 | ) | |||
Core deposit and other intangibles | (2,870 | ) | (3,308 | ) | |||
Total tangible common equity | $ | 185,651 | $ | 119,864 | |||
Tangible Assets | |||||||
Total assets | $ | 1,924,053 | $ | 1,828,336 | |||
Adjustments: | |||||||
Goodwill | (18,742 | ) | (18,742 | ) | |||
Core deposit and other intangibles | $ | (2,870 | ) | $ | (3,308 | ) | |
Total tangible assets | $ | 1,902,441 | $ | 1,806,286 |
• | our ability to prudently manage our growth and execute our strategy; |
• | risks associated with our acquisition and de novo branching strategy; |
• | business and economic conditions generally and in the financial services industry, nationally and within our primary Texas markets; |
• | concentration of our business within our geographic areas of operation in Texas; |
• | deterioration of our asset quality and higher loan charge-offs; |
• | changes in the value of collateral securing our loans; |
• | inaccuracies in the assumptions and estimate we make in establishing the allowance for loan losses reserve and other estimates; |
• | changes in management personnel and our ability to attract, motivate and retain qualified personnel; |
• | liquidity risks associated with our business; |
• | interest rate risk associated with our business that could decrease net interest income; |
• | our ability to maintain important deposit customer relationships and our reputation; |
• | operational risks associated with our business; |
• | volatility and direction of market interest rates; |
• | change in regulatory requirements to maintain minimum capital levels; |
• | increased competition in the financial services industry, particularly from regional and national institutions; |
• | institution and outcome of litigation and other legal proceeding against us or to which we become subject; |
• | changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters; |
• | further government intervention in the U.S. financial system; |
• | changes in the scope and cost of FDIC insurance and other coverage; |
• | natural disasters and adverse weather, acts of terrorism (including cyber attacks), an outbreak of hostilities or other international or domestic calamities, catastrophic events including storms, droughts, tornados and flooding, and other matters beyond our control; |
• | risks that the financial institutions we may acquire or de novo branches we may open will not be integrated successfully, or the integrations may be more time consuming or costly than expected; |
• | technology related changes are difficult to make or are more expensive than expected; |
• | the other factors that are described or referenced in our IPO Prospectus under the caption “Risk Factors”; |
Exhibit Number | Description of Exhibit | |
Amended and Restated Certificate of Formation of Guaranty Bancshares, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 1 to the Company’s Registration Statement on Form S-1 filed May 1, 2017 (File No. 333-217176)). | ||
Amended and Restated Bylaws of Guaranty Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed April 6, 2017 (File No. 333-217176)). | ||
31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2** | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101* | The following materials from Guaranty Bancshares’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language), furnished herewith: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. |
GUARANTY BANCSHARES, INC. | ||
(Registrant) | ||
Date: November 13, 2017 | /s/ Tyson T. Abston | |
Tyson T. Abston | ||
Chairman of the Board & Chief Executive Officer | ||
Date: November 13, 2017 | /s/ Clifton A. Payne | |
Clifton A. Payne | ||
Chief Financial Officer & Director | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Guaranty Bancshares, Inc. for the quarter ended September 30, 2017; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Guaranty Bancshares, Inc. for the quarter ended September 30, 2017; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
DOCUMENT AND ENTITY INFORMATION - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 13, 2017 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | GUARANTY BANCSHARES INC /TX/ | |
Entity Central Index Key | 0001058867 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Entity Common Stock, Shares Outstanding | 11,058,956 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 5.00 | $ 5.00 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 11,921,298 | 9,616,275 |
Common stock, shares outstanding (in shares) | 11,058,956 | 8,751,923 |
Treasury stock (in shares) | 862,342 | 864,352 |
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Interest income | ||||
Loans, including fees | $ 15,486 | $ 14,294 | $ 45,115 | $ 40,857 |
Securities | ||||
Taxable | 1,545 | 1,038 | 4,257 | 4,298 |
Nontaxable | 919 | 923 | 2,761 | 2,308 |
Federal funds sold and interest-bearing deposits | 215 | 172 | 960 | 528 |
Total interest income | 18,165 | 16,427 | 53,093 | 47,991 |
Interest expense | ||||
Deposits | 2,730 | 2,329 | 7,761 | 6,791 |
FHLB advances and federal funds purchased | 157 | 109 | 294 | 277 |
Subordinated debentures | 164 | 217 | 559 | 656 |
Other borrowed money | 12 | 104 | 337 | 452 |
Total interest expense | 3,063 | 2,759 | 8,951 | 8,176 |
Net interest income | 15,102 | 13,668 | 44,142 | 39,815 |
Provision for loan losses | 800 | 840 | 2,250 | 3,240 |
Net interest income after provision for loan losses | 14,302 | 12,828 | 41,892 | 36,575 |
Noninterest income | ||||
Service charges | 986 | 914 | 2,801 | 2,625 |
Net realized gain on securities transactions | 0 | 64 | 25 | 82 |
Net realized gain on sale of loans | 589 | 486 | 1,490 | 1,231 |
Other income | 2,127 | 1,938 | 6,184 | 5,664 |
Total noninterest income | 3,702 | 3,402 | 10,500 | 9,602 |
Noninterest expense | ||||
Employee compensation and benefits | 6,729 | 6,370 | 20,156 | 19,057 |
Occupancy expenses | 1,938 | 1,720 | 5,552 | 5,196 |
Other expenses | 3,499 | 3,390 | 10,409 | 10,087 |
Total noninterest expense | 12,166 | 11,480 | 36,117 | 34,340 |
Income before income taxes | 5,838 | 4,750 | 16,275 | 11,837 |
Income tax provision | 1,699 | 1,380 | 4,644 | 3,290 |
Net earnings | $ 4,139 | $ 3,370 | $ 11,631 | $ 8,547 |
Basic earnings per share (in USD per share) | $ 0.37 | $ 0.38 | $ 1.17 | $ 0.95 |
Diluted earnings per share (in USD per share) | $ 0.37 | $ 0.38 | $ 1.16 | $ 0.95 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 4,139 | $ 3,370 | $ 11,631 | $ 8,547 |
Unrealized (losses) gains on securities | ||||
Unrealized holding (losses) gains arising during the period | (264) | (115) | 2,422 | 3,990 |
Amortization of net unrealized gains on held to maturity securities | 23 | 48 | 58 | 98 |
Reclassification adjustment for net gains included in net earnings | 0 | (105) | (25) | (123) |
Tax effect | 92 | 0 | (839) | (1,083) |
Unrealized (losses) gains on securities, net of tax | (149) | (172) | 1,616 | 2,882 |
Unrealized holding gains (losses) arising during the period on interest rate swaps | 35 | 34 | 29 | (289) |
Total other comprehensive (loss) income | (114) | (138) | 1,645 | 2,593 |
Comprehensive income | $ 4,025 | $ 3,232 | $ 13,276 | $ 11,140 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Stockholders' Equity [Abstract] | ||
Common stock dividends (in USD per share) | $ 0.39 | $ 0.26 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations: Guaranty Bancshares, Inc. (“Guaranty”) is a bank holding company headquartered in Mount Pleasant, Texas that provides, through its wholly-owned subsidiary, Guaranty Bank & Trust, N.A. (the “Bank”), a broad array of financial products and services to individuals and corporate customers, primarily in its markets of East Texas, Bryan/College Station and the Dallas/Fort Worth metroplex. The terms “the Company,” “we,” “us” and “our” mean Guaranty and its subsidiaries, when appropriate. The Company’s main sources of income are derived from granting loans throughout its markets and investing in securities issued by the U.S. Treasury, U.S. government agencies and state and political subdivisions. The Company’s primary lending products are real estate, commercial and consumer loans. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ abilities to honor contracts is dependent on the economy of the State of Texas and primarily the economies of East Texas, Bryan/College Station and the Dallas/Fort Worth metroplex. The Company primarily funds its lending activities with deposit operations. The Company’s primary deposit products are checking accounts, money market accounts and certificates of deposit. Basis of Presentation: The consolidated financial statements in this Quarterly Report on Form 10-Q (this “Report”) include the accounts of Guaranty, the Bank, and their respective other direct and indirect subsidiaries and any other entities in which Guaranty has a controlling interest. The Bank has five wholly-owned non-bank subsidiaries, Guaranty Company, Inc., G B COM, INC., 2800 South Texas Avenue LLC, Pin Oak Realty Holdings, Inc. and Pin Oak Energy Holdings, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and financial reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the financial services industry. The consolidated financial statements in this Report have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s financial position and results of operations. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the year ended December 31, 2016, included in the Guaranty’s Prospectus filed with the SEC under Rule 424(b) on May 9, 2017, relating to its initial public offering. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. All dollar amounts referenced and discussed in the notes to the consolidated financial statements in this Report are presented in thousands, unless noted otherwise. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect 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 these estimates. KSOP Repurchase Right: In accordance with applicable provisions of the Internal Revenue Code, the terms of Guaranty’s employee stock ownership plan with 401(k) provisions (“KSOP”), provided that, for so long as Guaranty was a privately-held company without a public market for its common stock, KSOP participants would have the right, for a specified period of time, to require Guaranty to repurchase shares of its common stock that are distributed to them by the KSOP. This repurchase obligation terminated upon the consummation of Guaranty’s initial public offering and listing of its common stock on the NASDAQ Global Select Market in May 2017. However, because Guaranty was privately-held without a public market for its common stock as of and for the year ended December 31, 2016, the shares of common stock held by the KSOP are reflected in the Company’s consolidated balance sheet as of December 31, 2016 as a line item called “KSOP-owned shares,” appearing between total liabilities and shareholders’ equity. As a result, the KSOP-owned shares are deducted from shareholders’ equity in the Company’s consolidated balance sheet as of December 31, 2016. For all periods following Guaranty’s initial public offering and continued listing of the Company’s common stock on the NASDAQ Global Select Market, the KSOP-owned shares will be included in, and not be deducted from, shareholders’ equity. The termination of the repurchase obligation following the listing of Guaranty’s common stock on the NASDAQ Global Select Market is also reflected in the statement of changes in shareholders’ equity as “terminated KSOP put option.” Recent Accounting Pronouncements: In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU is intended to 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. In addition, the amendments in this ASU provide a detailed framework to assist entities in evaluating whether a set of assets and activities constitutes a business, as well as clarify the definition of the term output so the term is consistent with how outputs are described in Topic 606. ASU 2017-01 is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect this pronouncement to have a significant impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment changes to be based on the first step in today’s two-step impairment test, thus eliminating step two from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill impairment test. For pubic companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. For public companies, ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In August 2016, the FASB issued ASU 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 provide guidance on the following nine specific cash flow issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned; 6) life insurance policies; 7) distributions received from equity method investees; 8) beneficial interests in securitization transactions; and 9) separately identifiable cash flows and application of the predominance principle. The amendments are effective for public companies for fiscal years beginning after December 31, 2017, 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 this guidance to be material to its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which sets forth a "current expected credit loss" ("CECL") model requiring the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has assembled a transition team to assess the adoption of this ASU, and has developed a project plan regarding implementation. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption of this ASU is permitted for all entities. The Company is currently evaluating the impact of adopting the new guidance on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities, which is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating 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 on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU permits early adoption of the instrument-specific credit risk provision. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), followed by various amendments: ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in these updates amend existing guidance related to revenue from contracts with customers. The amendments supersede and replace nearly all existing revenue recognition guidance, including industry-specific guidance, establish a new control-based revenue recognition model, change the basis for deciding when revenue is recognized over a time or point in time, provide new and more detailed guidance on specific topics and expand and improve disclosures about revenue. In addition, these amendments specify the accounting for some costs to obtain or fulfill a contract with a customer. The amendments are effective for annual and interim periods beginning after December 15, 2017, and must be retrospectively applied. The majority of the Company's income consists of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of the amendments. The Company continues to evaluate the impact of the amendments on the components of noninterest income that have recurring revenue streams; however, the Company does not expect any recognition changes to have a significant impact to its consolidated financial statements. |
ACQUISITIONS |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On August 6, 2016, the Company purchased certain assets and assumed certain liabilities associated with a former branch location of a non-related bank in Denton, Texas (Denton), which resulted in the addition of approximately $4,659 in assets and the assumption of approximately $4,658 in liabilities. The Company acquired the bank premises at 4101 Wind River Lane in Denton and recorded it at fair market value of $2,075. Other assets acquired, at fair value, included cash of $2,399, core deposit intangible of $42, goodwill of $141 and loans of $2. Liabilities assumed included non-interest bearing deposits of $581, interest bearing deposits of $4,047 and other liabilities of $30. As a result of the transaction, the Company paid $66 to the seller, representing the difference in the value of the acquired assets less the value of the liabilities assumed by the Company in the transaction. Goodwill of $141 arising from the Denton acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies and is expected to be deductible for income taxes purposes. |
MARKETABLE SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES | MARKETABLE SECURITIES The following tables summarize the amortized cost and fair value of securities available for sale and securities held to maturity as of September 30, 2017 and December 31, 2016 and the corresponding amounts of gross unrealized gains and losses:
The Company’s held to maturity mortgage-backed securities portfolio includes non-agency collateralized mortgage obligations with a carrying value of $1,470, which had unrealized losses of $503 as of September 30, 2017. These non-agency mortgage-backed securities were rated AAA at purchase. The Company monitors these securities to ensure it has adequate credit support, and the Company records other than temporary impairment (OTTI) as appropriate. The Company does not have the intent to sell these securities and does not expect to sell the securities before their anticipated recovery. Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than 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 in fair value. The Company did not record any OTTI losses on any of its securities during the nine months ended September 30, 2017 or for the year ended December 31, 2016. Information pertaining to securities with gross unrealized losses as of September 30, 2017 and December 31, 2016 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:
The number of investment positions in an unrealized loss position totaled 104 and 177 at September 30, 2017 and December 31, 2016, respectively. The securities in a loss position were composed of tax-exempt municipal bonds, corporate bonds, collateralized mortgage obligations and mortgage backed securities. Management believes the unrealized loss on the remaining securities is a function of the movement of interest rates since the time of purchase. Based on evaluation of available evidence, including recent changes in interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment would be reduced and the resulting loss recognized in net income in the period the OTTI is identified. The Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company does not consider these securities to be OTTI at September 30, 2017. Mortgage-backed securities and collateralized mortgage obligations are backed by pools of mortgages that are insured or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the Government National Mortgage Association. As of September 30, 2017, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity. Securities with fair values of approximately $221,777 and $259,499 at September 30, 2017 and December 31, 2016, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law. The proceeds from sales of securities and the associated gains and losses are listed below for:
During the nine months ended September 30, 2017 and 2016, the Company sold three held-to-maturity securities each year. The Company sold these municipal securities based upon internal credit analysis, under the belief that they had experienced significant deterioration in creditworthiness. The risk exposure presented by these municipalities had increased beyond acceptable levels, and the Company determined that it was reasonably possible that all amounts due would not be collected. The credit analysis determined that the municipalities had been significantly impacted because their tax bases are heavily reliant on the energy industry relative to other sectors of the economy. Specifically, the revenues of these municipalities have been adversely impacted by the significant decline in energy prices since 2014. The Company believes the sale of these securities were merited and permissible under the applicable accounting guidelines because of the significant deterioration in the creditworthiness of the issuers. Sale of securities held to maturity were as follows for:
The contractual maturities at September 30, 2017 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.
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LOANS AND ALLOWANCE FOR LOAN LOSSES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES The following table summarizes the Company’s loan portfolio by type of loan as of:
As of September 30, 2017 and December 31, 2016, included in total loans above were $1,089 and $1,210 in unamortized loan costs, net of loan fees, respectively. The following tables present the activity in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended September 30, 2017, for the year ended December 31, 2016 and for the nine months ended September 30, 2016:
Credit Quality The Company closely monitors economic conditions and loan performance trends to manage and evaluate the exposure to credit risk. Key factors tracked by the Company and utilized in evaluating the credit quality of the loan portfolio include trends in delinquency ratios, the level of nonperforming assets, borrower’s repayment capacity, and collateral coverage. Assets are graded “pass” when the relationship exhibits acceptable credit risk and indicates repayment ability, tolerable collateral coverage and reasonable performance history. Lending relationships exhibiting potentially significant credit risk and marginal repayment ability and/or asset protection are graded “special mention.” Assets classified as “substandard” are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness that jeopardizes the liquidation of the debt. Substandard graded loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets graded “doubtful” are substandard graded loans that have added characteristics that make collection or liquidation in full improbable. The Company typically measures impairment based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or based on the loan's observable market price or the fair value of the collateral if the loan is collateral-dependent. The following tables summarize the credit exposure in the Company’s consumer and commercial loan portfolios as of:
The following tables summarize the payment status of loans in the Company’s total loan portfolio, including an aging of delinquent loans, loans 90 days or more past due continuing to accrue interest and loans classified as nonperforming as of:
The following table presents information regarding nonaccrual loans as of:
Impaired Loans and Troubled Debt Restructurings A troubled debt restructuring (“TDR”) is a restructuring in which a bank, for economic or legal reasons related to a borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with original contractual terms of the loan. Loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired. Loans defined as individually impaired, based on applicable accounting guidance, include larger balance nonperforming loans and TDRs. The outstanding balances of TDRs are shown below:
The following tables present loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and 2016:
There were no TDRs that have subsequently defaulted through September 30, 2017. The TDRs described above increased the allowance for loan losses by $19 and resulted in no charge-offs during the nine months ended September 30, 2017.
There were no TDRs that subsequently defaulted in 2016. The TDRs described above did not increase the allowance for loan losses and resulted in no charge-offs during the nine months ended September 30, 2016. The following table presents information about the Company’s impaired loans as of:
The following table presents information about the Company’s impaired loans as of:
During the nine months ended September 30, 2017 and 2016, total interest income and cash-based interest income recognized on impaired loans was minimal. |
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT | SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT At September 30, 2017 and December 31, 2016, securities sold under agreements to repurchase totaled $12,920 and $10,859, respectively. The Company has a $25.0 million revolving line of credit, which had an outstanding balance of $0 at quarter end, bears interest at the prime rate plus 0.50%, with interest payable quarterly, and matures in March 2018. SUBORDINATED DEBENTURES Subordinated debentures are made up of the following as of:
The Company has three trusts, Guaranty (TX) Capital Trust II (“Trust II”), Guaranty (TX) Capital Trust III (“Trust III”), and DCB Financial Trust I (“DCB Trust I”) (“Trust II”, “Trust III” and together with “DCB Trust I,” the “Trusts”). Upon formation, the Trusts issued pass-through securities (“TruPS”) with a liquidation value of $1,000 per share to third parties in private placements. Concurrently with the issuance of the TruPS, the Trusts issued common securities to the Company. The Trusts invested the proceeds of the sales of securities to the Company (“Debentures”). The Debentures mature approximately 30 years after the formation date, which may be shortened if certain conditions are met (including the Company having received prior approval of the Federal Reserve and any other required regulatory approvals).
The securities held by the Trusts qualify as Tier 1 capital for the Company under Federal Reserve Board guidelines. The Federal Reserve’s guidelines restrict core capital elements (including trust preferred securities and qualifying perpetual preferred stock) to 25% of all core capital elements, net of goodwill less any associated deferred tax liability. Because the Company’s aggregate amount of trust preferred securities is less than the limit of 25% of Tier 1 capital, net of goodwill, the full amount is includable in Tier 1 capital at September 30, 2017 and December 31, 2016. Additionally, the terms provide that trust preferred securities would no longer qualify for Tier 1 capital within five years of their maturity, but would be included as Tier 2 capital. However, the trust preferred securities would be amortized out of Tier 2 capital by one-fifth each year and excluded from Tier 2 capital completely during the year prior to maturity of the junior subordinated debentures. With certain exceptions, the amount of the principal and any accrued and unpaid interest on the Debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of the Company. Interest on the Debentures is payable quarterly. The interest is deferrable on a cumulative basis for up to five consecutive years following a suspension of dividend payments on all other capital stock. No principal payments are due until maturity for each of the Debentures.
In accordance with ASC 810, "Consolidation," the junior subordinated debentures issued by the Company to the subsidiary trusts are shown as liabilities in the consolidated balance sheets and interest expense associated with the junior subordinated debentures is shown in the consolidated statements of earnings. Trust II Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 3.35%. On any interest payment date on or after October 30, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Trust III Debentures Interest was payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.67%. On any interest payment date on or after October 1, 2016 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. DCB Trust I Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.80%. On any interest payment date on or after June 15, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Other debentures In July 2015, the Company issued $4,000 in debentures, of which $3,000 were issued to directors and other related parties. The $3,000 of debentures to related parties were repaid in May 2017 and a $500 par value debenture, which carried a rate of 2.5%, matured and was repaid in July 2017. The remaining $500 debenture has a rate of 4.00% and a maturity date of January 1, 2019. At the Company’s option, and with 30 days advanced notice to the holder, the entire principal amount and all accrued interest may be paid to the holder on or before the due date of any debenture. The redemption price is equal to 100% of the face amount of the debenture redeemed, plus all accrued interest. In December 2015, the Company issued $5,000 in debentures, of which $2,500 were issued to directors and other related parties. In May 2017, $2,000 of the related party debentures were repaid with a portion of the proceeds of Guaranty’s initial public offering. The remaining $3,000 of debentures were issued at par value of $500 each with rates ranging from 3.00% to 5.00% and maturity dates from July 1, 2018 to July 1, 2020. At the Company’s option, and with 30 days advanced notice to the holder, the entire principal amount and all accrued interest may be paid to the holder on or before the due date of any debenture. The redemption price is equal to 100% of the face amount of the debenture redeemed, plus all accrued interest. |
SUBORDINATED DEBENTURES |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUBORDINATED DEBENTURES | SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT At September 30, 2017 and December 31, 2016, securities sold under agreements to repurchase totaled $12,920 and $10,859, respectively. The Company has a $25.0 million revolving line of credit, which had an outstanding balance of $0 at quarter end, bears interest at the prime rate plus 0.50%, with interest payable quarterly, and matures in March 2018. SUBORDINATED DEBENTURES Subordinated debentures are made up of the following as of:
The Company has three trusts, Guaranty (TX) Capital Trust II (“Trust II”), Guaranty (TX) Capital Trust III (“Trust III”), and DCB Financial Trust I (“DCB Trust I”) (“Trust II”, “Trust III” and together with “DCB Trust I,” the “Trusts”). Upon formation, the Trusts issued pass-through securities (“TruPS”) with a liquidation value of $1,000 per share to third parties in private placements. Concurrently with the issuance of the TruPS, the Trusts issued common securities to the Company. The Trusts invested the proceeds of the sales of securities to the Company (“Debentures”). The Debentures mature approximately 30 years after the formation date, which may be shortened if certain conditions are met (including the Company having received prior approval of the Federal Reserve and any other required regulatory approvals).
The securities held by the Trusts qualify as Tier 1 capital for the Company under Federal Reserve Board guidelines. The Federal Reserve’s guidelines restrict core capital elements (including trust preferred securities and qualifying perpetual preferred stock) to 25% of all core capital elements, net of goodwill less any associated deferred tax liability. Because the Company’s aggregate amount of trust preferred securities is less than the limit of 25% of Tier 1 capital, net of goodwill, the full amount is includable in Tier 1 capital at September 30, 2017 and December 31, 2016. Additionally, the terms provide that trust preferred securities would no longer qualify for Tier 1 capital within five years of their maturity, but would be included as Tier 2 capital. However, the trust preferred securities would be amortized out of Tier 2 capital by one-fifth each year and excluded from Tier 2 capital completely during the year prior to maturity of the junior subordinated debentures. With certain exceptions, the amount of the principal and any accrued and unpaid interest on the Debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of the Company. Interest on the Debentures is payable quarterly. The interest is deferrable on a cumulative basis for up to five consecutive years following a suspension of dividend payments on all other capital stock. No principal payments are due until maturity for each of the Debentures.
In accordance with ASC 810, "Consolidation," the junior subordinated debentures issued by the Company to the subsidiary trusts are shown as liabilities in the consolidated balance sheets and interest expense associated with the junior subordinated debentures is shown in the consolidated statements of earnings. Trust II Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 3.35%. On any interest payment date on or after October 30, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Trust III Debentures Interest was payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.67%. On any interest payment date on or after October 1, 2016 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. DCB Trust I Debentures Interest is payable at a variable rate per annum, reset quarterly, equal to 3 month LIBOR plus 1.80%. On any interest payment date on or after June 15, 2012 and prior to maturity date, the debentures are redeemable for cash at the option of the Company, on at least 30, but not more than 60 days’ notice, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption. Other debentures In July 2015, the Company issued $4,000 in debentures, of which $3,000 were issued to directors and other related parties. The $3,000 of debentures to related parties were repaid in May 2017 and a $500 par value debenture, which carried a rate of 2.5%, matured and was repaid in July 2017. The remaining $500 debenture has a rate of 4.00% and a maturity date of January 1, 2019. At the Company’s option, and with 30 days advanced notice to the holder, the entire principal amount and all accrued interest may be paid to the holder on or before the due date of any debenture. The redemption price is equal to 100% of the face amount of the debenture redeemed, plus all accrued interest. In December 2015, the Company issued $5,000 in debentures, of which $2,500 were issued to directors and other related parties. In May 2017, $2,000 of the related party debentures were repaid with a portion of the proceeds of Guaranty’s initial public offering. The remaining $3,000 of debentures were issued at par value of $500 each with rates ranging from 3.00% to 5.00% and maturity dates from July 1, 2018 to July 1, 2020. At the Company’s option, and with 30 days advanced notice to the holder, the entire principal amount and all accrued interest may be paid to the holder on or before the due date of any debenture. The redemption price is equal to 100% of the face amount of the debenture redeemed, plus all accrued interest. |
STOCK OPTIONS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK OPTIONS | STOCK OPTIONS The Company’s 2015 Equity Incentive Plan (the “Plan”) which was adopted by the Company and approved by its shareholders in April 2015, amended and restated the Company’s 2014 Stock Option Plan. The maximum number of shares of common stock that may be issued pursuant to stock-based awards under the Plan equals 1,000,000 shares, all of which may be subject to incentive stock option treatment. Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. Currently outstanding option awards have vesting periods ranging from 5 to 10 years and have 10-year contractual terms. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer group averages. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes in to account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on U.S. Treasury yield curve in effect at the time of the grant. A summary of activity in the Plan during the nine months ended September 30, 2017 and 2016 follows:
A summary of nonvested activity in the Plan during the nine months ended September 30, 2017 and 2016 follows:
Information related to the Plan is as follows for the nine months ended:
As of September 30, 2017, there was $1,963 of total unrecognized compensation expense related to unvested stock options granted under the Plan. The expense is expected to be recognized over a weighted-average period of 4.43 years. The Company granted options under the Plan during the first nine months of 2016 and 2017. Expense of $247 and $162 was recorded during the nine months ended September 30, 2017 and 2016, respectively. |
EMPLOYEE BENEFITS |
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Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFITS | EMPLOYEE BENEFITS KSOP The Company maintains an Employee Stock Ownership Plan containing Section 401(k) provisions covering substantially all employees (“KSOP”). The plan provides for a matching contribution of up to 5% of a participant’s qualified compensation starting January 1, 2016. As of December 31, 2016, the plan included a repurchase obligation, or “put option”, which is a right to demand that the sponsor repurchase shares of employer stock distributed to the participant under the terms of the plan, for which there was no public market for such shares, of an established cash price. This put option was terminated upon completion of Guaranty’s initial public offering and listing of its common stock on the NASDAQ Global Select Market in May 2017. Guaranty’s total contributions accrued or paid during the nine months ended September 30, 2017 and 2016 totaled $739 and $727, respectively. Benefits under the KSOP generally are distributed to participants in the form of cash, although participants have the right to receive distributions in the form of shares of common stock. As of December 31, 2016, the fair value of shares of common stock, held by the KSOP, was deducted from permanent shareholders’ equity in the consolidated balance sheets, and reflected in a line item below liabilities and above shareholders’ equity. This presentation was necessary in order to recognize the put option within the KSOP-owned shares, consistent with SEC guidelines, because the Company was not yet publicly traded. The Company used a valuation by an external third party to determine the maximum possible cash obligation related to those securities. Increases or decreases in the value of the cash obligation were included in a separate line item in the statements of changes in shareholders’ equity. The fair value of allocated and unallocated shares subject to the repurchase obligation totaled $31,661 as of December 31, 2016. As of September 30, 2017 and December 31, 2016, the number of shares held by the KSOP were 1,314,277 and 1,319,225, respectively. There were no unallocated shares to plan participants as of September 30, 2017 and there were 50,000 shares unallocated to plan participants as of December 31, 2016. During the nine months ended September 30, 2017 and 2016, the Company did not repurchase any shares from KSOP participants that received distributions of shares from the KSOP which were subject to the put option that applied to the KSOP shares before we were publicly traded. All shares held by the KSOP were treated as outstanding at each of the respective period ends. Executive Incentive Retirement Plan The Company established a non-qualified, non-contributory executive incentive retirement plan covering a selected group of key personnel to provide benefits equal to amounts computed under an “award criteria” at various targeted salary levels as adjusted for annual earnings performance of the Company. The plan is non-funded. In connection with the Executive Incentive Retirement Plan, the Company has purchased life insurance policies on the respective officers. The cash surrender value of life insurance policies held by the Company totaled $18,376 and $17,804 as of September 30, 2017 and December 31, 2016, respectively. Expense related to these plans totaled $381 and $329 for the nine months ended September 30, 2017 and 2016, respectively, and is included in employee compensation and benefits on the Company’s consolidated statements of earnings. The recorded liability totaled approximately $2,361 and $2,002 as of September 30, 2017 and December 31, 2016, respectively and is included in accrued interest and other liabilities on the Company’s consolidated balance sheets. Bonus Plan The Company has a bonus plan that rewards officers and employees based on performance of individual business units of the Company. Earnings and growth performance goals for each business unit and for the Company as a whole are established at the beginning of the calendar year and approved annually by Guaranty’s board of directors. The Bonus Plan provides for a predetermined bonus amount to be contributed to the employee bonus pool based on (i) earnings target and growth for individual business units and (ii) achieving certain pre-tax return on average equity and pre-tax return on average asset levels for the Company as a whole. These bonus amounts are established annually by Guaranty’s board of directors. The bonus expense under this plan for the nine months ended September 30, 2017 and 2016 totaled $1,718 and $1,451, respectively and is included in employee compensation and benefits on the consolidated statements of earnings. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income tax expenses were as follows for:
The effective tax rates differ from the statutory federal tax rate of 35% largely due to tax exempt interest income earned on certain investment securities and loans and the nontaxable earnings on bank owned life insurance. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company utilizes certain derivative financial instruments. Stand-alone derivative financial instruments such as interest rate swaps, are used to economically hedge interest rate risk related to the Company’s liabilities. These derivative instruments 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 consolidated balance sheet in other liabilities. The Company is exposed to credit related losses in the event of nonperformance by the counterparties to those 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 to perform their respective obligations. The Company entered into interest rate swaps to receive payments at a fixed rate in exchange for paying a floating rate on the debentures discussed in Note 6. Management believes that entering into the interest rate swaps exposed the Company to variability in their fair value due to changes in the level of interest rates. It is the Company’s objective to hedge the change in fair value of floating rate debentures at coverage levels that are appropriate, given anticipated or existing interest rate levels and other market considerations, as well as the relationship of change in this liability to other liabilities of the Company. To meet this objective, the Company utilizes interest rate swaps as an asset/liability management strategy to hedge the change in value of the cash flows due to changes in expected interest rate assumptions. Interest rate swaps with notional amounts totaling $5,000 as of September 30, 2017 and December 31, 2016, were designated as cash flow hedges of the debentures and were determined to be fully effective during all periods presented. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the swaps is recorded in accrued interest and other liabilities within the Company’s consolidated balance sheets with changes in fair value recorded in other comprehensive income. The amount included in accumulated other comprehensive income would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swaps. The information pertaining to outstanding interest rate swap agreements used to hedge floating rate debentures was as follows as of:
Interest expense recorded on these swap transactions totaled $559 and $656 during the nine months ended September 30, 2017 and 2016, respectively, and is reported as a component of interest expense on the debentures. At September 30, 2017, the Company expected none of the unrealized loss to be reclassified as a reduction of interest expense during the remainder of 2017. |
COMMITMENTS AND CONTINGENCIES |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company enters into various transactions, which, in accordance with GAAP, are not included in its consolidated balance sheets. These transactions are referred to as “off-balance sheet commitments.” The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and letters of credit, which involve elements of credit risk in excess of the amounts recognized in the consolidated balance sheets. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Customers use credit commitments to ensure that funds will be available for working capital purposes, for capital expenditures and to ensure access to funds at specified terms and conditions. Substantially all of the Company’s commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for credit losses. Letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that letters of credit arrangements contain security and debt covenants similar to those contained in loan agreements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the table below. If the commitment were funded, the Company would be entitled to seek recovery from the customer. As of September 30, 2017 and December 31, 2016, no amounts have been recorded as liabilities for the Bank’s potential obligations under these guarantees. Commitments and letters of credit outstanding were as follows as of:
Litigation The Company is involved in certain claims and lawsuits occurring in the normal course of business. Management, after consultation with legal counsel, does not believe that the outcome of these actions, if determined adversely, would have a material impact on the consolidated financial statements of the Company. FHLB Letters of Credit At September 30, 2017, the Company had letters of credit of $52,000 pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law. |
REGULATORY MATTERS |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS | REGULATORY MATTERS The Company on a consolidated basis and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios are presented in the following tables as of:
In July 2013, the Federal Reserve published final rules for the adoption of the Basel III regulatory capital framework (the “Basel III Capital Rules”). The Basel III Capital Rules, among other things, (1) introduce a new capital measure called “Common Equity Tier 1” (“CETI”), (2) specify that Tier 1 capital consist of Common Equity Tier 1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (3) define Common Equity Tier 1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to Common Equity Tier 1 and not to the other components of capital and (4) expand the scope of the deductions/adjustments as compared to existing regulations. The Basel III Capital Rules became effective for the Company on January 1, 2015, with certain transition provisions to be fully phased in by January 1, 2019. Starting in January 2016, the implementation of the capital conservation buffer became effective for the Company starting at the 0.625% level and increases 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and effectively increases the minimum required risk-weighted capital ratios. Failure to meet the full amount of the buffer will result in restrictions on the Company’s ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers. Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table above) of total, CETI and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of September 30, 2017 and December 31, 2016 that the Company met all capital adequacy requirements to which it was subject. As of September 30, 2017 and December 31, 2016, the Bank’s capital ratios exceeded those levels necessary to be 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, CETI, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table above. There are no conditions or events since September 30, 2017 that management believes have changed the Bank’s capital category under the regulatory framework for prompt corrective action. The Federal Reserve’s guidelines regarding the capital treatment of trust preferred securities limits restricted core capital elements (including trust preferred securities and qualifying perpetual preferred stock) to 25% of all core capital elements, net of goodwill less any associated deferred tax liability. Because the Company’s aggregate amount of trust preferred securities is less than the limit of 25% of Tier 1 capital, net of goodwill, the rules permit the inclusion of $10,310 of trust preferred securities in Tier 1 capital at September 30, 2017 and December 31, 2016. Additionally, the rules provide that trust preferred securities would no longer qualify for Tier 1 capital within five years of their maturity, but would be included as Tier 2 capital. However, the trust preferred securities would be amortized out of Tier 2 capital by one-fifth each year and excluded from Tier 2 capital completely during the year prior to maturity of the subordinated debentures. Dividends paid by Guaranty are mainly provided by dividends from its subsidiaries. However, certain regulatory restrictions exist regarding the ability of its bank subsidiary to transfer funds to Guaranty in the form of cash dividends, loans or advances. The amount of dividends that a subsidiary bank organized as a national banking association, such as the Bank, may declare in a calendar year is the subsidiary bank’s net profits for that year combined with its retained net profits for the preceding two years. |
FAIR VALUE |
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FAIR VALUE | FAIR VALUE Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate fair value: Marketable Securities: The fair values for marketable securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Loans Held For Sale: Loans held for sale are carried at the lower of cost or fair value, which is evaluated on a pool-level basis. The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2). Derivative Instruments: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Impaired Loans: The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on the present value of estimated future cash flows using the loan's existing rate or, if repayment is expected solely from the collateral, the fair value of collateral, less costs to sell. The fair value of real estate collateral is determined using recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant (Level 3). Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business (Level 3). Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly (Level 3). The following tables summarize quantitative disclosures about the fair value measurements for each category of financial assets (liabilities) carried at fair value:
There were no transfers between Level 2 and Level 3 during the nine months ended September 30, 2017 or for the year ended December 31, 2016. Nonfinancial Assets and Nonfinancial Liabilities Nonfinancial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2017 and 2016 include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in current earnings. The fair value of a foreclosed asset is estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. The following table presents foreclosed assets that were remeasured and recorded at fair value as of:
The following tables present quantitative information about nonrecurring Level 3 fair value measurements as of:
The carrying amounts and estimated fair values of financial instruments not previously discussed in this note, as of September 30, 2017 and December 31, 2016, are as follows:
The methods and assumptions, not previously presented, used to estimate fair values are described as follows: Cash and Cash Equivalents The carrying amounts of cash and short-term instruments approximate fair values (Level 1). Loans, net The fair value of fixed-rate loans and variable-rate loans that reprice on an infrequent basis is estimated by discounting future cash flows using the current interest rates at which similar loans with similar terms would be made to borrowers of similar credit quality (Level 3). Cash Surrender Value of Life Insurance The carrying amounts of bank-owned life insurance approximate their fair value. Nonmarketable Equity Securities It is not practical to determine the fair value of Independent Bankers Financial Corporation, Federal Home Loan Bank, Federal Reserve Bank and other stock due to restrictions placed on its transferability. Deposits and Securities Sold Under Repurchase Agreements The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) (Level 1). The fair values of deposit liabilities with defined maturities are estimated by discounting future cash flows using interest rates currently offered for deposits of similar remaining maturities (Level 2). Other Borrowings The fair value of borrowings, consisting of lines of credit, Federal Home Loan Bank advances and Subordinated debentures is estimated by discounting future cash flows using currently available rates for similar financing (Level 2). Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate their fair values (Level 2). Off-balance Sheet Instruments Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material. |
EARNINGS PER SHARE |
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EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted-average common shares outstanding for the period. Diluted earnings per share reflects the maximum potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and would then share in the net earnings of the Company. Dilutive share equivalents include stock-based awards issued to employees. Stock options granted by the Company are treated as potential shares in computing earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money awards which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount that the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax impact that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares. The computations of basic and diluted earnings per share for the Company were as follows for the:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The consolidated financial statements in this Quarterly Report on Form 10-Q (this “Report”) include the accounts of Guaranty, the Bank, and their respective other direct and indirect subsidiaries and any other entities in which Guaranty has a controlling interest. The Bank has five wholly-owned non-bank subsidiaries, Guaranty Company, Inc., G B COM, INC., 2800 South Texas Avenue LLC, Pin Oak Realty Holdings, Inc. and Pin Oak Energy Holdings, LLC. All significant intercompany balances and transactions have been eliminated in consolidation. The accounting and financial reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the financial services industry. The consolidated financial statements in this Report have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s financial position and results of operations. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements, and notes thereto, for the year ended December 31, 2016, included in the Guaranty’s Prospectus filed with the SEC under Rule 424(b) on May 9, 2017, relating to its initial public offering. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. All dollar amounts referenced and discussed in the notes to the consolidated financial statements in this Report are presented in thousands, unless noted otherwise. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect 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 these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU is intended to 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. In addition, the amendments in this ASU provide a detailed framework to assist entities in evaluating whether a set of assets and activities constitutes a business, as well as clarify the definition of the term output so the term is consistent with how outputs are described in Topic 606. ASU 2017-01 is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect this pronouncement to have a significant impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies the accounting for goodwill impairment for all entities by requiring impairment changes to be based on the first step in today’s two-step impairment test, thus eliminating step two from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step two of the goodwill impairment test. For pubic companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. For public companies, ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In August 2016, the FASB issued ASU 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 provide guidance on the following nine specific cash flow issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned; 6) life insurance policies; 7) distributions received from equity method investees; 8) beneficial interests in securitization transactions; and 9) separately identifiable cash flows and application of the predominance principle. The amendments are effective for public companies for fiscal years beginning after December 31, 2017, 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 this guidance to be material to its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which sets forth a "current expected credit loss" ("CECL") model requiring the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has assembled a transition team to assess the adoption of this ASU, and has developed a project plan regarding implementation. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet by lessees for those leases classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. The amendments in this ASU are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption of this ASU is permitted for all entities. The Company is currently evaluating the impact of adopting the new guidance on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities, which is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating 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 on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This ASU is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU permits early adoption of the instrument-specific credit risk provision. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), followed by various amendments: ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in these updates amend existing guidance related to revenue from contracts with customers. The amendments supersede and replace nearly all existing revenue recognition guidance, including industry-specific guidance, establish a new control-based revenue recognition model, change the basis for deciding when revenue is recognized over a time or point in time, provide new and more detailed guidance on specific topics and expand and improve disclosures about revenue. In addition, these amendments specify the accounting for some costs to obtain or fulfill a contract with a customer. The amendments are effective for annual and interim periods beginning after December 15, 2017, and must be retrospectively applied. The majority of the Company's income consists of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of the amendments. The Company continues to evaluate the impact of the amendments on the components of noninterest income that have recurring revenue streams; however, the Company does not expect any recognition changes to have a significant impact to its consolidated financial statements. |
MARKETABLE SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amortized Cost and Fair Value of Available for Sale and Held to Maturity Securities | The following tables summarize the amortized cost and fair value of securities available for sale and securities held to maturity as of September 30, 2017 and December 31, 2016 and the corresponding amounts of gross unrealized gains and losses:
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Schedule of Securities with Gross Unrealized Losses | Information pertaining to securities with gross unrealized losses as of September 30, 2017 and December 31, 2016 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:
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Schedule of Proceeds from Sales of Securities | The proceeds from sales of securities and the associated gains and losses are listed below for:
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Schedule of Sale of Held To Maturity Securities | Sale of securities held to maturity were as follows for:
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Investments Classified by Contractual Maturity Date | The contractual maturities at September 30, 2017 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.
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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loan Portfolio by Type of Loan | The following table summarizes the Company’s loan portfolio by type of loan as of:
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Schedule of Allowance for Loan Losses Activity | The following tables present the activity in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended September 30, 2017, for the year ended December 31, 2016 and for the nine months ended September 30, 2016:
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Summary of Credit Exposure by Internally Assigned Grade | The following tables summarize the credit exposure in the Company’s consumer and commercial loan portfolios as of:
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Summary of Payment Status of Loans | The following tables summarize the payment status of loans in the Company’s total loan portfolio, including an aging of delinquent loans, loans 90 days or more past due continuing to accrue interest and loans classified as nonperforming as of:
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Schedule of Nonaccrual Loans | The following table presents information regarding nonaccrual loans as of:
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Summary of Troubled Debt Restructuring |
The following tables present loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and 2016:
The outstanding balances of TDRs are shown below:
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Summary of Impaired Loans | The following table presents information about the Company’s impaired loans as of:
The following table presents information about the Company’s impaired loans as of:
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SUBORDINATED DEBENTURES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Debentures and Other Debentures | Subordinated debentures are made up of the following as of:
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Schedule of Trusts |
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STOCK OPTIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | A summary of activity in the Plan during the nine months ended September 30, 2017 and 2016 follows:
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Schedule of Nonvested Stock Option Activity | A summary of nonvested activity in the Plan during the nine months ended September 30, 2017 and 2016 follows:
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Plan Information | Information related to the Plan is as follows for the nine months ended:
|
INCOME TAXES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Expense and Effective Tax Rate | Income tax expenses were as follows for:
|
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rates Swap Agreements | The information pertaining to outstanding interest rate swap agreements used to hedge floating rate debentures was as follows as of:
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COMMITMENTS AND CONTINGENCIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Commitments and Letters of Credit Outstanding | Commitments and letters of credit outstanding were as follows as of:
|
REGULATORY MATTERS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparison of the Company's and Bank's Actual Capital Amounts and Ratios to Required Capital Amounts and Ratios | A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios are presented in the following tables as of:
|
FAIR VALUE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Assets (Liabilities) Measured at Fair Value | The following tables summarize quantitative disclosures about the fair value measurements for each category of financial assets (liabilities) carried at fair value:
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Schedule of Foreclosed Assets Measured at Fair Value | The following table presents foreclosed assets that were remeasured and recorded at fair value as of:
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Schedule of Quantitative Information About Nonrecurring Level 3 Fair Value Measurements | The following tables present quantitative information about nonrecurring Level 3 fair value measurements as of:
|
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Schedule of Carrying Amounts And Estimated Fair Values of Financial Instruments | The carrying amounts and estimated fair values of financial instruments not previously discussed in this note, as of September 30, 2017 and December 31, 2016, are as follows:
|
EARNINGS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | The computations of basic and diluted earnings per share for the Company were as follows for the:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) |
Sep. 30, 2017
subsidary
|
---|---|
The Bank | |
Subsequent Event [Line Items] | |
Number of wholly-owned non-bank subsidiaries | 5 |
ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands |
Aug. 06, 2016 |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 18,742 | $ 18,742 | |
Denton, Texas Branch Location | |||
Business Acquisition [Line Items] | |||
Assets acquired | $ 4,659 | ||
Liabilities assumed | 4,658 | ||
Bank premises acquired | 2,075 | ||
Cash acquired | 2,399 | ||
Core deposit intangibles acquired | 42 | ||
Goodwill | 141 | ||
Loans acquired | 2 | ||
Non-interest bearing deposits assumed | 581 | ||
Interest bearing deposits assumed | 4,047 | ||
Other liabilities assumed | 30 | ||
Consideration paid | 66 | ||
Goodwill expected to be deducted | $ 141 |
MARKETABLE SECURITIES - Narrative (Details) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017
USD ($)
security
position
|
Sep. 30, 2016
security
|
Dec. 31, 2016
USD ($)
position
|
|
Schedule of Available-for-sale Securities [Line Items] | |||
Carrying value | $ 179,081,000 | $ 189,371,000 | |
Unrealized losses | 1,085,000 | 4,700,000 | |
Other than temporary impairment losses on debt securities related to credit losses | $ 0 | $ 0 | |
Number of investment positions in an unrealized loss position | position | 104 | 177 | |
Fair value of securities pledged as collateral | $ 221,777,000 | $ 259,499,000 | |
Number of held-to-maturity securities sold | security | 3 | 3 | |
Non-Agency Collateralized Mortgage Obligations | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Carrying value | $ 1,470,000 | ||
Unrealized losses | $ 503,000 |
MARKETABLE SECURITIES - Sale of Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Sale of Marketable Securities [Abstract] | ||||
Proceeds | $ 199,974 | $ 31,969 | $ 214,736 | $ 109,056 |
Gross gains | 0 | 96 | 38 | 243 |
Gross losses | 0 | (32) | (13) | (161) |
Held-to-maturity Securities, Sales, Excluding Other than Temporary Impairments [Abstract] | ||||
Proceeds from sales | 0 | 0 | 923 | 1,866 |
Amortized cost | 0 | 0 | 907 | 1,842 |
Gross realized gains | 0 | 0 | 16 | 24 |
Tax expense related to securities gains/losses | $ 0 | $ 0 | $ (4) | $ (7) |
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER DEBT - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Line of Credit Facility [Line Items] | ||
Securities sold under agreements to repurchase | $ 12,920 | $ 10,859 |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, current borrowing capacity | 25,000 | |
Outstanding balance | $ 0 | |
Revolving Credit Facility | Prime Rate | ||
Line of Credit Facility [Line Items] | ||
Spread on variable rate | 0.50% |
SUBORDINATED DEBENTURES - Schedule of Subordinated Debentures (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Subordinated debentures | $ 13,810 | $ 19,310 |
Trust II Debentures | ||
Debt Instrument [Line Items] | ||
Subordinated debentures | 3,093 | 3,093 |
Trust III Debentures | ||
Debt Instrument [Line Items] | ||
Subordinated debentures | 2,062 | 2,062 |
DCB Trust I Debentures | ||
Debt Instrument [Line Items] | ||
Subordinated debentures | 5,155 | 5,155 |
Other debentures | ||
Debt Instrument [Line Items] | ||
Subordinated debentures | $ 3,500 | $ 9,000 |
SUBORDINATED DEBENTURES - Schedule of Terms of Subordinated Debentures (Details) - Subordinated Debentures $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Trust II Debentures | |
Debt Instrument [Line Items] | |
Original amount | $ 3,093 |
Trust III Debentures | |
Debt Instrument [Line Items] | |
Original amount | 2,062 |
DCB Trust I Debentures | |
Debt Instrument [Line Items] | |
Original amount | $ 5,155 |
STOCK OPTIONS - Schedule of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Number of Shares | ||||
Outstanding at beginning of year (in shares) | 340,377 | 314,391 | 314,391 | |
Granted (in shares) | 150,598 | 37,500 | ||
Exercised (in shares) | (7,033) | |||
Forfeited (in shares) | (6,000) | (19,000) | ||
Balance (in shares) | 477,942 | 332,891 | 340,377 | 314,391 |
Weighted-Average Exercise Price | ||||
Outstanding at beginning of year (in USD per share) | $ 23.43 | $ 23.28 | $ 23.28 | |
Granted (in USD per share) | 27.64 | 23.44 | ||
Exercised (in USD per share) | 11.94 | |||
Forfeited (in USD per share) | 23.17 | 23.16 | ||
Balance (in USD per share) | $ 24.93 | $ 23.31 | $ 23.43 | $ 23.28 |
Weighted-Average Remaining Contractual Life in Years | ||||
Outstanding | 7 years 6 months 26 days | 7 years 5 months 12 days | 7 years 4 months 2 days | 8 years |
Granted | 9 years 7 months 14 days | 9 years 6 months | ||
Exercised | 4 years 5 months 23 days | |||
Forfeited | 7 years 1 month 17 days | 8 years 1 month 24 days | ||
Aggregate Intrinsic Value | ||||
Outstanding | $ 3,376 | $ 230 | $ 194 | $ 225 |
Granted | 657 | 21 | ||
Exercised | 141 | |||
Forfeited | $ 53 | $ 16 | ||
Exercisable | ||||
Outstanding (in shares) | 98,044 | 58,491 | ||
Weighted-average exercise price (in USD per share) | $ 23.45 | $ 21.24 | ||
Weighted-Average Remaining Contractual Life in Years | 6 years 2 months 1 day | 6 years 6 months 11 days | ||
Aggregate Intrinsic Value | $ 838 | $ 161 |
STOCK OPTIONS - Schedule of Nonvested Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Number of Shares | ||||
Outstanding at beginning of year (in shares) | 250,700 | 267,200 | 267,200 | |
Granted (in shares) | 150,598 | 37,500 | ||
Vested (in shares) | (17,400) | (13,500) | ||
Forfeited (in shares) | (4,000) | (16,800) | ||
Balance (in shares) | 379,898 | 274,400 | 250,700 | 267,200 |
Weighted-Average Exercise Price | ||||
Outstanding at beginning of year (in USD per share) | $ 23.73 | $ 23.72 | $ 23.72 | |
Granted (in USD per share) | 27.64 | 23.44 | ||
Vested (in USD per share) | 23.13 | 23.00 | ||
Forfeited (in USD per share) | 23.17 | 23.16 | ||
Balance (in USD per share) | $ 25.31 | $ 23.75 | $ 23.73 | $ 23.72 |
Weighted-Average Remaining Contractual Life in Years | ||||
Outstanding | 7 years 11 months 5 days | 7 years 7 months 24 days | 7 years 7 months 24 days | 8 years 2 months 19 days |
Granted | 9 years 7 months 14 days | 9 years 6 months | ||
Vested | 7 years 10 months 28 days | 8 years 7 months 2 days | ||
Forfeited | 7 years 1 month 17 days | 8 years 1 month 24 days | ||
Aggregate Intrinsic Value | ||||
Outstanding | $ 69 | $ 76 | $ 76 | |
Granted | 657 | 21 | ||
Vested | 154 | 14 | ||
Forfeited | 53 | 16 | ||
Outstanding | $ 2,538 | $ 69 | $ 69 | $ 76 |
STOCK OPTIONS - Information Related to Plan (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Intrinsic value of options exercised | $ 141 | |
Cash received from options exercised | 84 | $ 0 |
Tax benefit realized from options exercised | $ 0 | |
Weighted average fair value of options granted (in USD per share) | $ 5.40 |
EMPLOYEE BENEFITS - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Retirement Benefits [Abstract] | |||
Employee stock ownership plan, maximum employer contribution as a percentage of participant's qualified compensation | 5.00% | ||
Employee stock ownership plan, total contributions accrued or paid | $ 739 | $ 727 | |
Employee stock ownership plan, fair value of shares subject to repurchase obligation | $ 31,661 | ||
Employee stock ownership plan, shares held under plan (in shares) | 1,314,277 | 1,319,225 | |
Employee stock ownership plan, unallocated shares (in shares) | 0 | 50,000 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Cash surrender value of life insurance | $ 18,376 | $ 17,804 | |
Bonus expense | 1,718 | 1,451 | |
Unfunded Plan | Nonqualified Plan | Executive Incentive Retirement Plan | Postretirement Life Insurance | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Cash surrender value of life insurance | 18,376 | 17,804 | |
Plan cost | 381 | $ 329 | |
Plan obligation | $ 2,361 | $ 2,002 |
INCOME TAXES - Schedule of Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense for the period | $ 1,699 | $ 1,380 | $ 4,644 | $ 3,290 |
Effective tax rate | 28.54% | 27.79% |
INCOME TAXES - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Statutory federal rate | 35.00% |
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Derivative [Line Items] | |||||
Ineffectiveness included in net income | $ 0 | $ 0 | |||
Interest expense | $ 3,063,000 | $ 2,759,000 | 8,951,000 | $ 8,176,000 | |
Unrealized loss to be reclassified as a reduction of interest expense | 0 | ||||
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Notional amount | $ 5,000,000 | 5,000,000 | $ 5,000,000 | ||
Interest expense | $ 559,000 | $ 656,000 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Commitments [Line Items] | ||
FHLB letters of credit | $ 52,000,000 | |
Letters of credit | ||
Other Commitments [Line Items] | ||
Potential guarantee obligation | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES - Schedule of Commitments and Letters of Credit (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Commitments to extend credit | ||
Other Commitments [Line Items] | ||
Off-balance sheet liability | $ 339,872 | $ 297,607 |
Letters of credit | ||
Other Commitments [Line Items] | ||
Off-balance sheet liability | $ 9,334 | $ 8,879 |
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Numerator: | ||||
Net earnings (basic) | $ 4,139 | $ 3,370 | $ 11,631 | $ 8,547 |
Net earnings (diluted) | $ 4,139 | $ 3,370 | $ 11,631 | $ 8,547 |
Denominator: | ||||
Weighted-average shares outstanding (basic) (in shares) | 11,058,956 | 8,955,476 | 9,951,767 | 8,991,671 |
Effect of dilutive securities: | ||||
Common stock equivalent shares from stock options (in shares) | 105,473 | 9,581 | 75,505 | 9,581 |
Weighted-average shares outstanding (diluted) (in shares) | 11,164,429 | 8,965,057 | 10,027,272 | 9,001,252 |
Net earnings per share | ||||
Basic (in USD per share) | $ 0.37 | $ 0.38 | $ 1.17 | $ 0.95 |
Diluted (in USD per share) | $ 0.37 | $ 0.38 | $ 1.16 | $ 0.95 |
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