UNITED STATES SECURITIES AND EXCHANGE COMMISSION
|
|||
Washington, D.C. 20549
|
|||
FORM 10-Q
|
|||
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|||
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|||
For the quarterly period ended: June 30, 2016
|
|||
OR
|
|||
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|||
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|||
For the transition period from __________ to __________
|
|||
PEOPLES BANCORP OF NORTH CAROLINA, INC.
|
|||
(Exact name of registrant as specified in its charter)
|
|||
North Carolina
|
|||
(State or other jurisdiction of incorporation or organization)
|
|||
000-27205
|
56-2132396
|
||
(Commission File No.)
|
(IRS Employer Identification No.)
|
||
518 West C Street, Newton, North Carolina
|
28658
|
||
(Address of principal executive offices)
|
(Zip Code)
|
||
(828) 464-5620
|
|||
(Registrant's telephone number, including area code)
|
|||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
|
Yes
|
X
|
|
No
|
|
|
|
Yes
|
X
|
|
No
|
|
|
Large Accelerate Filer
|
|
|
Accelerated Filer
|
X
|
|
Non-Accelerated Filer
|
|
|
Smaller Reporting Company
|
|
|
|
Yes
|
|
|
No
|
X
|
|
INDEX
|
|||
PART I.
|
FINANCIAL INFORMATION
|
PAGE(S)
|
|
Item 1.
|
Financial Statements
|
||
Consolidated Balance Sheets at June 30, 2016 (Unaudited) and December
|
|||
31, 2015 (Audited)
|
3
|
||
Consolidated Statements of Earnings for the three and six months ended
|
|||
June 30, 2016 and 2015 (Unaudited)
|
4
|
||
Consolidated Statements of Comprehensive Income for the three and six
|
|||
months ended June 30, 2016 and 2015 (Unaudited)
|
5
|
||
Consolidated Statements of Changes in Shareholders' Equity for the six | 6 | ||
months ended June 30, 2016 and 2015 (Unaudited) | |||
Consolidated Statements of Cash Flows for the six months ended
|
|||
June 30, 2016 and 2015 (Unaudited)
|
7-8
|
||
Item 2.
|
Notes to Consolidated Financial Statements (Unaudited)
|
9-24
|
|
Item 3.
|
Management's Discussion and Analysis of Financial Condition
|
||
and Results of Operations
|
25-38
|
||
Item 4T.
|
Quantitative and Qualitative Disclosures About Market Risk
|
39
|
|
Controls and Procedures
|
40
|
||
PART II.
|
OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings
|
41
|
|
Item 1A.
|
Risk Factors
|
41
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
41
|
|
Item 3.
|
Defaults upon Senior Securities
|
42
|
|
Item 5.
|
Other Information
|
42
|
|
Item 6.
|
Exhibits
|
42-44
|
|
Signatures
|
45
|
||
Certifications
|
46-48
|
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements |
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Balance Sheets
|
||||||||
June 30, 2016 and December 31, 2015
|
||||||||
(Dollars in thousands)
|
||||||||
June 30,
|
December 31,
|
|||||||
Assets
|
2016
|
2015
|
||||||
(Unaudited)
|
(Audited)
|
|||||||
Cash and due from banks, including reserve requirements
|
$
|
47,524
|
29,194
|
|||||
of $14,288 at 6/30/16 and $14,587 at 12/31/15
|
||||||||
Interest-bearing deposits
|
17,150
|
10,569
|
||||||
Cash and cash equivalents
|
64,674
|
39,763
|
||||||
Investment securities available for sale
|
265,114
|
268,530
|
||||||
Other investments
|
3,634
|
3,636
|
||||||
Total securities
|
268,748
|
272,166
|
||||||
Mortgage loans held for sale
|
3,024
|
4,149
|
||||||
Loans
|
702,031
|
689,091
|
||||||
Less allowance for loan losses
|
(8,540
|
)
|
(9,589
|
)
|
||||
Net loans
|
693,491
|
679,502
|
||||||
Premises and equipment, net
|
16,209
|
16,976
|
||||||
Cash surrender value of life insurance
|
14,753
|
14,546
|
||||||
Other real estate
|
235
|
739
|
||||||
Accrued interest receivable and other assets
|
9,215
|
10,640
|
||||||
Total assets
|
$
|
1,070,349
|
1,038,481
|
|||||
Liabilities and Shareholders' Equity
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing demand
|
$
|
238,542
|
244,231
|
|||||
NOW, MMDA & savings
|
452,247
|
431,052
|
||||||
Time, $250,000 or more
|
25,675
|
26,891
|
||||||
Other time
|
124,936
|
130,001
|
||||||
Total deposits
|
841,400
|
832,175
|
||||||
Securities sold under agreements to repurchase
|
42,715
|
27,874
|
||||||
FHLB borrowings
|
43,500
|
43,500
|
||||||
Junior subordinated debentures
|
20,619
|
20,619
|
||||||
Accrued interest payable and other liabilities
|
10,331
|
9,449
|
||||||
Total liabilities
|
958,565
|
933,617
|
||||||
Commitments
|
||||||||
Shareholders' equity:
|
||||||||
Series A preferred stock, $1,000 stated value; authorized
|
||||||||
5,000,000 shares; no shares issued and outstanding
|
-
|
-
|
||||||
Common stock, no par value; authorized
|
||||||||
20,000,000 shares; issued and outstanding 5,510,538
|
||||||||
shares at June 30, 2016 and December 31, 2015
|
46,171
|
46,171
|
||||||
Retained earnings
|
57,594
|
53,183
|
||||||
Accumulated other comprehensive income
|
8,019
|
5,510
|
||||||
Total shareholders' equity
|
111,784
|
104,864
|
||||||
Total liabilities and shareholders' equity
|
$
|
1,070,349
|
1,038,481
|
|||||
See accompanying Notes to Consolidated Financial Statements.
|
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||||||||||
Consolidated Statements of Earnings
|
||||||||||||||||
Three and Six Months Ended June 30, 2016 and 2015
|
||||||||||||||||
(Dollars in thousands, except per share amounts)
|
||||||||||||||||
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Interest income:
|
||||||||||||||||
Interest and fees on loans
|
$
|
7,973
|
7,333
|
15,996
|
14,926
|
|||||||||||
Interest on due from banks
|
18
|
7
|
35
|
17
|
||||||||||||
Interest on investment securities:
|
||||||||||||||||
U.S. Government sponsored enterprises
|
649
|
613
|
1,307
|
1,326
|
||||||||||||
State and political subdivisions
|
1,118
|
1,157
|
2,245
|
2,320
|
||||||||||||
Other
|
57
|
81
|
137
|
169
|
||||||||||||
Total interest income
|
9,815
|
9,191
|
19,720
|
18,758
|
||||||||||||
Interest expense:
|
||||||||||||||||
NOW, MMDA & savings deposits
|
121
|
106
|
241
|
218
|
||||||||||||
Time deposits
|
148
|
226
|
310
|
474
|
||||||||||||
FHLB borrowings
|
416
|
433
|
822
|
851
|
||||||||||||
Junior subordinated debentures
|
118
|
99
|
231
|
196
|
||||||||||||
Other
|
10
|
11
|
18
|
20
|
||||||||||||
Total interest expense
|
813
|
875
|
1,622
|
1,759
|
||||||||||||
Net interest income
|
9,002
|
8,316
|
18,098
|
16,999
|
||||||||||||
Provision for (reduction of provision for) loan losses
|
(531
|
)
|
(214
|
)
|
(748
|
)
|
(41
|
)
|
||||||||
Net interest income after provision for loan losses
|
9,533
|
8,530
|
18,846
|
17,040
|
||||||||||||
Non-interest income:
|
||||||||||||||||
Service charges
|
1,087
|
1,171
|
2,128
|
2,305
|
||||||||||||
Other service charges and fees
|
202
|
190
|
536
|
545
|
||||||||||||
Gain on sale of securities
|
324
|
-
|
324
|
-
|
||||||||||||
Mortgage banking income
|
292
|
271
|
661
|
510
|
||||||||||||
Insurance and brokerage commissions
|
156
|
203
|
314
|
365
|
||||||||||||
Gain/(loss) on sale and write-down of
|
||||||||||||||||
other real estate
|
3
|
79
|
80
|
166
|
||||||||||||
Miscellaneous
|
1,508
|
1,383
|
2,853
|
2,651
|
||||||||||||
Total non-interest income
|
3,572
|
3,297
|
6,896
|
6,542
|
||||||||||||
Non-interest expense:
|
||||||||||||||||
Salaries and employee benefits
|
4,704
|
4,286
|
9,285
|
9,086
|
||||||||||||
Occupancy
|
1,734
|
1,482
|
3,488
|
2,966
|
||||||||||||
Professional fees
|
239
|
301
|
1,174
|
556
|
||||||||||||
Advertising
|
148
|
218
|
310
|
403
|
||||||||||||
Debit card expense
|
333
|
246
|
599
|
482
|
||||||||||||
FDIC Insurance
|
164
|
172
|
335
|
348
|
||||||||||||
Other
|
1,787
|
1,632
|
3,410
|
3,244
|
||||||||||||
Total non-interest expense
|
9,109
|
8,337
|
18,601
|
17,085
|
||||||||||||
Earnings before income taxes
|
3,996
|
3,490
|
7,141
|
6,497
|
||||||||||||
Income tax expense
|
1,032
|
866
|
1,723
|
1,545
|
||||||||||||
Net earnings
|
$
|
2,964
|
2,624
|
5,418
|
4,952
|
|||||||||||
Basic net earnings per share
|
$
|
0.54
|
0.47
|
0.98
|
0.89
|
|||||||||||
Diluted net earnings per share
|
$
|
0.53
|
0.47
|
0.97
|
0.88
|
|||||||||||
Cash dividends declared per share
|
$
|
0.10
|
0.06
|
0.18
|
0.12
|
|||||||||||
See accompanying Notes to Consolidated Financial Statements.
|
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||||||||||
Consolidated Statements of Comprehensive Income
|
||||||||||||||||
Three and Six Months Ended June 30, 2016 and 2015
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Net earnings
|
$
|
2,964
|
2,624
|
5,418
|
4,952
|
|||||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Unrealized holding (losses) gains on securities
|
||||||||||||||||
available for sale
|
2,844
|
(3,399
|
)
|
4,273
|
(1,985
|
)
|
||||||||||
Reclassification adjustment for gains on
|
||||||||||||||||
securities available for sale
|
||||||||||||||||
included in net earnings
|
(324
|
)
|
-
|
(324
|
)
|
-
|
||||||||||
Total other comprehensive (loss) income,
|
||||||||||||||||
before income taxes
|
2,520
|
(3,399
|
)
|
3,949
|
(1,985
|
)
|
||||||||||
Income tax (benefit) expense related to other
|
||||||||||||||||
comprehensive (loss) income:
|
||||||||||||||||
Unrealized holding (losses) gains on securities
|
||||||||||||||||
available for sale
|
1,026
|
(1,324
|
)
|
1,565
|
(773
|
)
|
||||||||||
Reclassification adjustment for gains
|
||||||||||||||||
on securities available for sale
|
||||||||||||||||
included in net earnings
|
(126
|
)
|
-
|
(126
|
)
|
-
|
||||||||||
Total income tax expense (benefit) related to
|
||||||||||||||||
other comprehensive income (loss)
|
900
|
(1,324
|
)
|
1,439
|
(773
|
)
|
||||||||||
Total other comprehensive (loss) income,
|
||||||||||||||||
net of tax
|
1,620
|
(2,075
|
)
|
2,509
|
(1,212
|
)
|
||||||||||
Total comprehensive income
|
$
|
4,584
|
549
|
7,928
|
3,740
|
|||||||||||
See accompanying Notes to Consolidated Financial Statements.
|
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||||||||||||||
Consolidated Statements of Changes in Shareholders' Equity
|
||||||||||||||||||||
Six Months Ended June 30, 2016 and 2015
|
||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Other
|
||||||||||||||||||||
Common Stock
|
Retained | Comprehensive | ||||||||||||||||||
Shares
|
Amount
|
Earnings
|
Income
|
Total
|
||||||||||||||||
Balance, December 31, 2015
|
5,510,538
|
$
|
46,171
|
53,183
|
5,510
|
104,864
|
||||||||||||||
Cash dividends declared on
|
||||||||||||||||||||
common stock
|
-
|
-
|
(1,007
|
)
|
-
|
(1,007
|
)
|
|||||||||||||
Net earnings
|
-
|
-
|
5,418
|
-
|
5,418
|
|||||||||||||||
Change in accumulated other
|
||||||||||||||||||||
comprehensive income, net of tax
|
-
|
-
|
-
|
2,509
|
2,509
|
|||||||||||||||
Balance, June 30, 2016
|
5,510,538
|
$
|
46,171
|
57,594
|
8,019
|
111,784
|
||||||||||||||
Balance, December 31, 2014
|
5,612,588
|
$
|
48,088
|
45,124
|
5,453
|
98,665
|
||||||||||||||
Common stock repurchase
|
(71,750
|
)
|
(1,340
|
)
|
-
|
-
|
(1,340
|
) | ||||||||||||
Cash dividends declared on
|
||||||||||||||||||||
common stock
|
-
|
-
|
(679
|
)
|
-
|
(679
|
)
|
|||||||||||||
Net earnings
|
-
|
-
|
4,952
|
-
|
4,952
|
|||||||||||||||
Change in accumulated other
|
||||||||||||||||||||
comprehensive loss, net of tax
|
-
|
-
|
-
|
(1,212
|
)
|
(1,212
|
)
|
|||||||||||||
Balance, June 30, 2015
|
5,540,838
|
$
|
46,748
|
49,397
|
4,241
|
100,386
|
||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
|
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Statements of Cash Flows
|
||||||||
Six Months Ended June 30, 2016 and 2015
|
||||||||
(Dollars in thousands)
|
||||||||
2016
|
2015
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$
|
5,418
|
4,952
|
|||||
Adjustments to reconcile net earnings to
|
||||||||
net cash provided by operating activities:
|
||||||||
Depreciation, amortization and accretion
|
2,862
|
3,000
|
||||||
(Reduction)/Provision for loan losses
|
(748
|
)
|
(41
|
)
|
||||
Deferred income taxes
|
(532
|
)
|
-
|
|||||
Gain on sale of investment securities
|
(324
|
)
|
-
|
|||||
Gain on sale of other real estate
|
(83
|
)
|
(183
|
)
|
||||
Write-down of other real estate
|
3
|
17
|
||||||
Restricted stock expense
|
252
|
218
|
||||||
Change in:
|
||||||||
Mortgage loans held for sale
|
1,125
|
(688
|
)
|
|||||
Cash surrender value of life insurance
|
(207
|
)
|
(208
|
)
|
||||
Other assets
|
518
|
56
|
||||||
Other liabilities
|
630
|
1,040
|
||||||
Net cash provided by operating activities
|
8,914
|
8,163
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of investment securities available for sale
|
(6,686
|
)
|
(10,485
|
)
|
||||
Proceeds from sales, calls and maturities of investment securities
|
||||||||
available for sale
|
2,774
|
2,250
|
||||||
Proceeds from paydowns of investment securities available for sale
|
9,949
|
11,983
|
||||||
Purchases of FHLB stock
|
-
|
(5
|
)
|
|||||
FHLB stock redemption
|
2
|
125
|
||||||
Net change in loans
|
(13,512
|
)
|
(19,362
|
)
|
||||
Purchases of premises and equipment
|
(444
|
)
|
(606
|
)
|
||||
Proceeds from sale of other real estate and repossessions
|
855
|
2,581
|
||||||
Net cash provided (used) by investing activities
|
(7,062
|
)
|
(13,519
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Net change in deposits
|
9,225
|
(5,899
|
)
|
|||||
Net change in securities sold under agreement to repurchase
|
14,841
|
(145
|
)
|
|||||
Proceeds from FHLB borrowings
|
-
|
20,000
|
||||||
Repayments of FHLB borrowings
|
-
|
(20,000
|
)
|
|||||
Common stock repurchased
|
-
|
(1,340
|
)
|
|||||
Cash dividends paid on common stock
|
(1,007
|
)
|
(679
|
)
|
||||
Net cash provided (used) by financing activities
|
23,059
|
(8,063
|
)
|
|||||
Net change in cash and cash equivalents
|
24,911
|
(13,419
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
39,763
|
69,098
|
||||||
Cash and cash equivalents at end of period
|
$
|
64,674
|
55,679
|
PEOPLES BANCORP OF NORTH CAROLINA, INC. AND SUBSIDIARIES
|
||||||||
Consolidated Statements of Cash Flows, continued
|
||||||||
Six Months Ended June 30, 2016 and 2015
|
||||||||
(Dollars in thousands)
|
||||||||
2016
|
2015
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
1,608
|
1,747
|
|||||
Income taxes
|
$
|
2,851
|
749
|
|||||
Noncash investing and financing activities:
|
||||||||
Change in unrealized gain (loss) on investment securities
|
||||||||
available for sale, net
|
$
|
2,509
|
(1,212
|
)
|
||||
Transfers of loans to other real estate and repossessions
|
$
|
271
|
3,823
|
|||||
See accompanying Notes to Consolidated Financial Statements.
|
(1) | Summary of Significant Accounting Policies |
(2) | Investment Securities |
(Dollars in thousands)
|
|||||||||||||||
June 30, 2016
|
|||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
Mortgage-backed securities
|
$
|
70,509
|
2,269
|
-
|
72,778
|
||||||||||
U.S. Government
|
|||||||||||||||
sponsored enterprises
|
39,913
|
790
|
218
|
40,485
|
|||||||||||
State and political subdivisions
|
139,193
|
9,925
|
2
|
149,116
|
|||||||||||
Corporate bonds
|
1,511
|
8
|
3
|
1,516
|
|||||||||||
Trust preferred securities
|
750
|
-
|
-
|
750
|
|||||||||||
Equity securities
|
264
|
205
|
-
|
469
|
|||||||||||
Total
|
$
|
252,140
|
13,197
|
223
|
265,114
|
||||||||||
(Dollars in thousands)
|
|||||||||||||||
December 31, 2015
|
|||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair Value
|
||||||||||||
Mortgage-backed securities
|
$
|
76,406
|
1,526
|
45
|
77,887
|
||||||||||
U.S. Government
|
|||||||||||||||
sponsored enterprises
|
38,173
|
399
|
155
|
38,417
|
|||||||||||
State and political subdivisions
|
141,500
|
6,817
|
72
|
148,245
|
|||||||||||
Corporate bonds
|
1,928
|
-
|
22
|
1,906
|
|||||||||||
Trust preferred securities
|
750
|
-
|
-
|
750
|
|||||||||||
Equity securities
|
748
|
577
|
-
|
1,325
|
|||||||||||
Total
|
$
|
259,505
|
9,319
|
294
|
268,530
|
(Dollars in thousands)
|
|||||||||||||||||||||||
June 30, 2016
|
|||||||||||||||||||||||
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
U.S. Government
|
|||||||||||||||||||||||
sponsored enterprises
|
$
|
7,709
|
65
|
10,218
|
153
|
17,927
|
218
|
||||||||||||||||
State and political subdivisions
|
-
|
-
|
593
|
2
|
593
|
2
|
|||||||||||||||||
Corporate bonds
|
997
|
3
|
-
|
-
|
997
|
3
|
|||||||||||||||||
Total
|
$
|
8,706
|
68
|
10,811
|
155
|
19,517
|
223
|
||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
December 31, 2015
|
|||||||||||||||||||||||
Less than 12 Months
|
12 Months or More
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||
Mortgage-backed securities
|
$
|
7,891
|
45
|
-
|
-
|
7,891
|
45
|
||||||||||||||||
U.S. Government
|
|||||||||||||||||||||||
sponsored enterprises
|
3,074
|
13
|
10,828
|
142
|
13,902
|
155
|
|||||||||||||||||
State and political subdivisions
|
2,198
|
4
|
3,930
|
68
|
6,128
|
72
|
|||||||||||||||||
Corporate bonds
|
1,500
|
22
|
-
|
-
|
1,500
|
22
|
|||||||||||||||||
Total
|
$
|
14,663
|
84
|
14,758
|
210
|
29,421
|
294
|
June 30, 2016
|
|||||||
(Dollars in thousands)
|
|||||||
Amortized
Cost
|
Estimated
Fair Value
|
||||||
Due within one year
|
$
|
5,196
|
5,218
|
||||
Due from one to five years
|
73,590
|
78,304
|
|||||
Due from five to ten years
|
88,245
|
93,409
|
|||||
Due after ten years
|
14,336
|
14,936
|
|||||
Mortgage-backed securities
|
70,509
|
72,778
|
|||||
Equity securities
|
264
|
469
|
|||||
Total
|
$
|
252,140
|
265,114
|
(3) | Loans |
(Dollars in thousands)
|
|||||||
June 30, 2016
|
December 31, 2015
|
||||||
Real estate loans:
|
|||||||
Construction and land development
|
$
|
60,075
|
65,791
|
||||
Single-family residential
|
229,586
|
220,690
|
|||||
Single-family residential -
|
|||||||
Banco de la Gente stated income
|
41,910
|
43,733
|
|||||
Commercial
|
232,035
|
228,526
|
|||||
Multifamily and farmland
|
18,688
|
18,080
|
|||||
Total real estate loans
|
582,294
|
576,820
|
|||||
Loans not secured by real estate:
|
|||||||
Commercial loans
|
91,347
|
91,010
|
|||||
Farm loans
|
1
|
3
|
|||||
Consumer loans
|
9,776
|
10,027
|
|||||
All other loans
|
18,613
|
11,231
|
|||||
Total loans
|
702,031
|
689,091
|
|||||
Less allowance for loan losses
|
8,540
|
9,589
|
|||||
Total net loans
|
$
|
693,491
|
679,502
|
·
|
Construction and land development loans – The risk of loss is largely dependent on the initial estimate of whether the property's value at completion equals or exceeds the cost of property construction and the availability of take-out financing. During the construction phase, a number of factors can result in delays or cost overruns. If the estimate is inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan, sale of the property, or by seizure of collateral. As of June 30, 2016, construction and land development loans comprised approximately 9% of the Bank's total loan portfolio.
|
·
|
Single-family residential loans – Declining home sales volumes, decreased real estate values and higher than normal levels of unemployment could contribute to losses on these loans. As of June 30, 2016, single-family residential loans comprised approximately 39% of the Bank's total loan portfolio, and include Banco's single-family residential stated income loans, which were approximately 6% of the Bank's total loan portfolio.
|
·
|
Commercial real estate loans – Repayment is dependent on income being generated in amounts sufficient to cover operating expenses and debt service. These loans also involve greater risk because they are generally not fully amortizing over a loan period, but rather have a balloon payment due at maturity. A borrower's ability to make a balloon payment typically will depend on being able to either refinance the loan or timely sell the underlying property. As of June 30, 2016, commercial real estate loans comprised approximately 33% of the Bank's total loan portfolio.
|
·
|
Commercial loans – Repayment is generally dependent upon the successful operation of the borrower's business. In addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid or fluctuate in value based on the success of the business. As of June 30, 2016, commercial loans comprised approximately 13% of the Bank's total loan portfolio.
|
June 30,2016
|
|||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
Loans 30-89
Days Past
Due
|
Loans 90 or
More Days
Past Due
|
Total
Past Due
Loans
|
Total
Current
Loans
|
Total
Loans
|
Accruing
Loans 90 or
More Days
Past Due
|
||||||||||||||||||
Real estate loans:
|
|||||||||||||||||||||||
Construction and land development
|
$
|
215
|
28
|
243
|
59,832
|
60,075
|
-
|
||||||||||||||||
Single-family residential
|
1,934
|
465
|
2,399
|
227,187
|
229,586
|
-
|
|||||||||||||||||
Single-family residential -
|
|||||||||||||||||||||||
Banco de la Gente stated income
|
1,582
|
173
|
1,755
|
40,155
|
41,910
|
-
|
|||||||||||||||||
Commercial
|
1,061
|
824
|
1,885
|
230,150
|
232,035
|
-
|
|||||||||||||||||
Multifamily and farmland
|
-
|
-
|
-
|
18,688
|
18,688
|
-
|
|||||||||||||||||
Total real estate loans
|
4,792
|
1,490
|
6,282
|
576,012
|
582,294
|
-
|
|||||||||||||||||
Loans not secured by real estate:
|
|||||||||||||||||||||||
Commercial loans
|
63
|
21
|
84
|
91,263
|
91,347
|
-
|
|||||||||||||||||
Farm loans
|
-
|
-
|
-
|
1
|
1
|
-
|
|||||||||||||||||
Consumer loans
|
87
|
7
|
94
|
9,682
|
9,776
|
-
|
|||||||||||||||||
All other loans
|
-
|
-
|
-
|
18,613
|
18,613
|
-
|
|||||||||||||||||
Total loans
|
$
|
4,942
|
1,518
|
6,460
|
695,571
|
702,031
|
-
|
December 31, 2015
|
|||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
Loans 30-89
Days Past
Due
|
Loans 90 or
More Days
Past Due
|
Total
Past Due
Loans
|
Total
Current
Loans
|
Total
Loans
|
Accruing
Loans 90 or
More Days
Past Due
|
||||||||||||||||||
Real estate loans:
|
|||||||||||||||||||||||
Construction and land development
|
$
|
330
|
17
|
347
|
65,444
|
65,791
|
-
|
||||||||||||||||
Single-family residential
|
2,822
|
1,385
|
4,207
|
216,483
|
220,690
|
-
|
|||||||||||||||||
Single-family residential -
|
|||||||||||||||||||||||
Banco de la Gente stated income
|
7,021
|
114
|
7,135
|
36,598
|
43,733
|
-
|
|||||||||||||||||
Commercial
|
2,619
|
157
|
2,776
|
225,750
|
228,526
|
-
|
|||||||||||||||||
Multifamily and farmland
|
-
|
-
|
-
|
18,080
|
18,080
|
-
|
|||||||||||||||||
Total real estate loans
|
12,792
|
1,673
|
14,465
|
562,355
|
576,820
|
-
|
|||||||||||||||||
Loans not secured by real estate:
|
|||||||||||||||||||||||
Commercial loans
|
185
|
40
|
225
|
90,785
|
91,010
|
17
|
|||||||||||||||||
Farm loans
|
-
|
-
|
-
|
3
|
3
|
-
|
|||||||||||||||||
Consumer loans
|
136
|
8
|
144
|
9,883
|
10,027
|
-
|
|||||||||||||||||
All other loans
|
-
|
-
|
-
|
11,231
|
11,231
|
-
|
|||||||||||||||||
Total loans
|
$
|
13,113
|
1,721
|
14,834
|
674,257
|
689,091
|
17
|
(Dollars in thousands)
|
|||||||
June 30, 2016
|
December 31, 2015
|
||||||
Real estate loans:
|
|||||||
Construction and land development
|
$
|
36
|
146
|
||||
Single-family residential
|
3,055
|
4,023
|
|||||
Single-family residential -
|
|||||||
Banco de la Gente stated income
|
265
|
1,106
|
|||||
Commercial
|
2,445
|
2,992
|
|||||
Multifamily and farmland
|
-
|
-
|
|||||
Total real estate loans
|
5,801
|
8,267
|
|||||
Loans not secured by real estate:
|
|||||||
Commercial loans
|
140
|
113
|
|||||
Consumer loans
|
44
|
52
|
|||||
Total
|
$
|
5,985
|
8,432
|
June 30, 2016
|
|||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
Unpaid
Contractual
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Recorded
Investment
in Impaired
Loans
|
Related
Allowance
|
Average
Outstanding
Impaired
Loans
|
||||||||||||||||||
Real estate loans:
|
|||||||||||||||||||||||
Construction and land development
|
$
|
341
|
-
|
295
|
295
|
14
|
405
|
||||||||||||||||
Single-family residential
|
5,886
|
888
|
4,682
|
5,570
|
149
|
9,769
|
|||||||||||||||||
Single-family residential -
|
|||||||||||||||||||||||
Banco de la Gente stated income
|
19,470
|
-
|
18,886
|
18,886
|
1,117
|
17,875
|
|||||||||||||||||
Commercial
|
4,641
|
1,746
|
2,582
|
4,328
|
182
|
5,978
|
|||||||||||||||||
Multifamily and farmland
|
78
|
-
|
78
|
78
|
-
|
79
|
|||||||||||||||||
Total impaired real estate loans
|
30,416
|
2,634
|
26,523
|
29,157
|
1,462
|
34,106
|
|||||||||||||||||
Loans not secured by real estate:
|
|||||||||||||||||||||||
Commercial loans
|
192
|
-
|
160
|
160
|
2
|
139
|
|||||||||||||||||
Consumer loans
|
240
|
-
|
231
|
231
|
4
|
241
|
|||||||||||||||||
Total impaired loans
|
$
|
30,848
|
2,634
|
26,914
|
29,548
|
1,468
|
34,486
|
December 31, 2015
|
|||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||
Unpaid
Contractual
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Recorded
Investment
in Impaired
Loans
|
Related
Allowance
|
Average
Outstanding
Impaired
Loans
|
||||||||||||||||||
Real estate loans:
|
|||||||||||||||||||||||
Construction and land development
|
$
|
643
|
216
|
226
|
442
|
12
|
705
|
||||||||||||||||
Single-family residential
|
8,828
|
1,489
|
6,805
|
8,294
|
189
|
10,852
|
|||||||||||||||||
Single-family residential -
|
|||||||||||||||||||||||
Banco de la Gente stated income
|
20,375
|
-
|
19,215
|
19,215
|
1,143
|
18,414
|
|||||||||||||||||
Commercial
|
4,556
|
-
|
4,893
|
4,893
|
179
|
5,497
|
|||||||||||||||||
Multifamily and farmland
|
96
|
-
|
83
|
83
|
-
|
93
|
|||||||||||||||||
Total impaired real estate loans
|
34,498
|
1,705
|
31,222
|
32,927
|
1,523
|
35,561
|
|||||||||||||||||
Loans not secured by real estate:
|
|||||||||||||||||||||||
Commercial loans
|
180
|
-
|
161
|
161
|
3
|
132
|
|||||||||||||||||
Consumer loans
|
286
|
-
|
260
|
260
|
4
|
283
|
|||||||||||||||||
Total impaired loans
|
$
|
34,964
|
1,705
|
31,643
|
33,348
|
1,530
|
35,976
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Real Estate Loans
|
||||||||||||||||||||||||||||||||||||||||
Construction
and Land Development
|
Single-
Family Residential
|
Single-
Family Residential - Banco de la Gente
Stated
Income
|
Commercial
|
Multifamily and
Farmland
|
Commercial
|
Farm
|
Consumer
and All
Other
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
Six months ended June 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
2,185
|
2,534
|
1,460
|
1,917
|
-
|
842
|
-
|
172
|
479
|
9,589
|
|||||||||||||||||||||||||||||
Charge-offs
|
-
|
(123
|
)
|
-
|
(106
|
)
|
-
|
(39
|
)
|
-
|
(240
|
)
|
-
|
(508
|
)
|
|||||||||||||||||||||||||
Recoveries
|
6
|
13
|
-
|
11
|
-
|
105
|
-
|
72
|
-
|
207
|
||||||||||||||||||||||||||||||
Provision
|
(609
|
)
|
(191
|
)
|
(106
|
)
|
(172
|
)
|
46
|
(105
|
)
|
-
|
230
|
159
|
(748
|
)
|
||||||||||||||||||||||||
Ending balance
|
$
|
1,582
|
2,233
|
1,354
|
1,650
|
46
|
803
|
-
|
234
|
638
|
8,540
|
|||||||||||||||||||||||||||||
Three months ended June 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
1,844
|
2,475
|
1,423
|
1,788
|
-
|
810
|
-
|
190
|
586
|
9,116
|
|||||||||||||||||||||||||||||
Charge-offs
|
-
|
(64
|
)
|
-
|
-
|
-
|
(10
|
)
|
-
|
(112
|
)
|
-
|
(186
|
)
|
||||||||||||||||||||||||||
Recoveries
|
3
|
5
|
-
|
6
|
-
|
99
|
-
|
28
|
-
|
141
|
||||||||||||||||||||||||||||||
Provision
|
(265
|
)
|
(183
|
)
|
(69
|
)
|
(144
|
)
|
46
|
(96
|
)
|
-
|
128
|
52
|
(531
|
)
|
||||||||||||||||||||||||
Ending balance
|
$
|
1,582
|
2,233
|
1,354
|
1,650
|
46
|
803
|
-
|
234
|
638
|
8,540
|
|||||||||||||||||||||||||||||
Allowance for loan losses at June 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance: individually
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
-
|
94
|
1,092
|
177
|
-
|
-
|
-
|
-
|
-
|
1,363
|
|||||||||||||||||||||||||||||
Ending balance: collectively
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
1,582
|
2,139
|
262
|
1,473
|
46
|
803
|
-
|
234
|
638
|
7,177
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
1,582
|
2,233
|
1,354
|
1,650
|
46
|
803
|
-
|
234
|
638
|
8,540
|
|||||||||||||||||||||||||||||
Loans at June 30, 2016:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$
|
60,075
|
229,586
|
41,910
|
232,035
|
18,688
|
91,347
|
1
|
28,389
|
-
|
702,031
|
|||||||||||||||||||||||||||||
Ending balance: individually
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
-
|
1,116
|
17,430
|
4,716
|
-
|
-
|
-
|
-
|
-
|
23,262
|
|||||||||||||||||||||||||||||
Ending balance: collectively
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
60,075
|
228,470
|
24,480
|
227,319
|
18,688
|
91,347
|
1
|
28,389
|
-
|
678,769
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Real Estate Loans
|
||||||||||||||||||||||||||||||||||||||||
Construction
and Land Development
|
Single-
Family Residential
|
Single-
Family Residential - Banco de la Gente
Stated
Income
|
Commercial
|
Multifamily and
Farmland
|
Commercial
|
Farm
|
Consumer
and All
Other
|
Unallocated
|
Total
|
|||||||||||||||||||||||||||||||
Six months ended June 30, 2015:
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
2,785
|
2,566
|
1,610
|
1,902
|
7
|
1,098
|
-
|
233
|
881
|
11,082
|
|||||||||||||||||||||||||||||
Charge-offs
|
(73
|
)
|
(400
|
)
|
(59
|
)
|
(62
|
)
|
-
|
(15
|
)
|
-
|
(253
|
)
|
-
|
(862
|
)
|
|||||||||||||||||||||||
Recoveries
|
23
|
10
|
22
|
10
|
-
|
53
|
-
|
81
|
-
|
199
|
||||||||||||||||||||||||||||||
Provision
|
189
|
280
|
(45
|
)
|
(101
|
)
|
(5
|
)
|
(234
|
)
|
-
|
170
|
(295
|
)
|
(41
|
)
|
||||||||||||||||||||||||
Ending balance
|
$
|
2,924
|
2,456
|
1,528
|
1,749
|
2
|
902
|
-
|
231
|
586
|
10,378
|
|||||||||||||||||||||||||||||
Three months ended June 30, 2015:
|
||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
2,758
|
2,599
|
1,586
|
1,786
|
6
|
1,181
|
-
|
208
|
719
|
10,843
|
|||||||||||||||||||||||||||||
Charge-offs
|
-
|
(109
|
)
|
(17
|
)
|
(59
|
)
|
-
|
(15
|
)
|
-
|
(132
|
)
|
-
|
(332
|
)
|
||||||||||||||||||||||||
Recoveries
|
18
|
4
|
-
|
5
|
-
|
17
|
-
|
37
|
-
|
81
|
||||||||||||||||||||||||||||||
Provision
|
148
|
(38
|
)
|
(41
|
)
|
17
|
(4
|
)
|
(281
|
)
|
-
|
118
|
(133
|
)
|
(214
|
)
|
||||||||||||||||||||||||
Ending balance
|
$
|
2,924
|
2,456
|
1,528
|
1,749
|
2
|
902
|
-
|
231
|
586
|
10,378
|
|||||||||||||||||||||||||||||
Allowance for loan losses at June 30, 2015:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance: individually
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
-
|
92
|
1,135
|
235
|
-
|
-
|
-
|
-
|
-
|
1,462
|
|||||||||||||||||||||||||||||
Ending balance: collectively
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
2,924
|
2,364
|
393
|
1,514
|
2
|
902
|
-
|
231
|
586
|
8,916
|
||||||||||||||||||||||||||||||
Ending balance
|
$
|
2,924
|
2,456
|
1,528
|
1,749
|
2
|
902
|
-
|
231
|
586
|
10,378
|
|||||||||||||||||||||||||||||
Loans at June 30, 2015:
|
||||||||||||||||||||||||||||||||||||||||
Ending balance
|
$
|
60,066
|
208,653
|
45,252
|
231,684
|
12,402
|
85,124
|
4
|
23,582
|
-
|
666,767
|
|||||||||||||||||||||||||||||
Ending balance: individually
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
241
|
2,998
|
18,346
|
3,575
|
-
|
-
|
-
|
-
|
-
|
25,160
|
|||||||||||||||||||||||||||||
Ending balance: collectively
|
||||||||||||||||||||||||||||||||||||||||
evaluated for impairment
|
$
|
59,825
|
205,655
|
26,906
|
228,109
|
12,402
|
85,124
|
4
|
23,582
|
-
|
641,607
|
·
|
Risk Grade 1 – Excellent Quality: Loans are well above average quality and a minimal amount of credit risk exists. CD or cash secured loans or properly margined actively traded stock or bond secured loans would fall in this grade.
|
·
|
Risk Grade 2 – High Quality: Loans are of good quality with risk levels well within the Company's range of acceptability. The organization or individual is established with a history of successful performance though somewhat susceptible to economic changes.
|
·
|
Risk Grade 3 – Good Quality: Loans of average quality with risk levels within the Company's range of acceptability but higher than normal. This may be a new organization or an existing organization in a transitional phase (e.g. expansion, acquisition, market change).
|
·
|
Risk Grade 4 – Management Attention: These loans have higher risk and servicing needs but still are acceptable. Evidence of marginal performance or deteriorating trends is observed. These are not problem credits presently, but may be in the future if the borrower is unable to change its present course.
|
·
|
Risk Grade 5 – Watch: These loans are currently performing satisfactorily, but there has been some recent past due history on repayment and there are potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Company's position at some future date.
|
·
|
Risk Grade 6 – Substandard: A Substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged (if there is any). There is a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
|
·
|
Risk Grade 7 – Doubtful: Loans classified as Doubtful have all the weaknesses inherent in loans classified as Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off.
|
·
|
Risk Grade 8 – Loss: Loans classified as Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be realized in the future. Loss is a temporary grade until the appropriate authority is obtained to charge the loan off.
|
June 30, 2016
|
|||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||||||
Real Estate Loans
|
|||||||||||||||||||||||||||||||||||||||
Construction and Land Development
|
Single-
Family Residential
|
Single-
Family Residential - Banco de la Gente
Stated
Income
|
Commercial
|
Multifamily
and
Farmland
|
Commercial
|
Farm
|
Consumer
|
All Other
|
Total
|
||||||||||||||||||||||||||||||
1- Excellent Quality
|
$
|
-
|
13,196
|
-
|
-
|
-
|
492
|
-
|
1,028
|
50
|
14,766
|
||||||||||||||||||||||||||||
2- High Quality
|
7,507
|
93,770
|
-
|
39,397
|
2,942
|
27,341
|
-
|
3,327
|
2,799
|
177,083
|
|||||||||||||||||||||||||||||
3- Good Quality
|
32,970
|
86,587
|
17,597
|
158,036
|
11,873
|
57,190
|
1
|
4,677
|
13,982
|
382,913
|
|||||||||||||||||||||||||||||
4- Management Attention
|
12,456
|
27,771
|
16,258
|
27,113
|
1,221
|
5,870
|
-
|
647
|
1,782
|
93,118
|
|||||||||||||||||||||||||||||
5- Watch
|
6,911
|
3,436
|
2,828
|
3,708
|
2,652
|
252
|
-
|
41
|
-
|
19,828
|
|||||||||||||||||||||||||||||
6- Substandard
|
231
|
4,826
|
5,227
|
3,781
|
-
|
202
|
-
|
56
|
-
|
14,323
|
|||||||||||||||||||||||||||||
7- Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
8- Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Total
|
$
|
60,075
|
229,586
|
41,910
|
232,035
|
18,688
|
91,347
|
1
|
9,776
|
18,613
|
702,031
|
December 31, 2015
|
|||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||||||||||||||
Real Estate Loans
|
|||||||||||||||||||||||||||||||||||||||
Construction and Land Development
|
Single-
Family Residential
|
Single-
Family Residential - Banco de la Gente
Stated
Income
|
Commercial
|
Multifamily
and
Farmland
|
Commercial
|
Farm
|
Consumer
|
All Other
|
Total
|
||||||||||||||||||||||||||||||
1- Excellent Quality
|
$
|
-
|
15,189
|
-
|
-
|
-
|
700
|
-
|
1,091
|
-
|
16,980
|
||||||||||||||||||||||||||||
2- High Quality
|
10,144
|
86,061
|
-
|
38,647
|
2,998
|
24,955
|
-
|
3,647
|
1,665
|
168,117
|
|||||||||||||||||||||||||||||
3- Good Quality
|
35,535
|
78,843
|
19,223
|
148,805
|
12,058
|
58,936
|
3
|
4,571
|
7,828
|
365,802
|
|||||||||||||||||||||||||||||
4- Management Attention
|
12,544
|
30,259
|
15,029
|
31,824
|
335
|
5,905
|
-
|
620
|
1,738
|
98,254
|
|||||||||||||||||||||||||||||
5- Watch
|
7,265
|
4,322
|
3,308
|
4,561
|
2,689
|
332
|
-
|
43
|
-
|
22,520
|
|||||||||||||||||||||||||||||
6- Substandard
|
303
|
6,016
|
6,173
|
4,689
|
-
|
182
|
-
|
55
|
-
|
17,418
|
|||||||||||||||||||||||||||||
7- Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
8- Loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Total
|
$
|
65,791
|
220,690
|
43,733
|
228,526
|
18,080
|
91,010
|
3
|
10,027
|
11,231
|
689,091
|
Six months ended June 30, 2015
|
|||||||||||
(Dollars in thousands)
|
|||||||||||
Number of
Contracts
|
Pre-Modification Outstanding
Recorded
Investment
|
Post-Modification Outstanding
Recorded
Investment
|
|||||||||
Real estate loans
|
|||||||||||
Single-family residential
|
1
|
$
|
146
|
144
|
|||||||
Total real estate TDR loans
|
1
|
146
|
144
|
||||||||
Total TDR loans
|
1
|
$
|
146
|
144
|
(4) | Net Earnings Per Share |
For the three months ended June 30, 2016
|
|||||||||||
Net Earnings
(Dollars in
thousands)
|
Shares
|
Per Share
Amount
|
|||||||||
Basic earnings per share
|
$
|
2,964
|
5,510,538
|
$
|
0.54
|
||||||
Effect of dilutive securities:
|
|||||||||||
Restricted stock units
|
-
|
67,660
|
|||||||||
Diluted earnings per share
|
$
|
2,964
|
5,578,198
|
$
|
0.53
|
||||||
For the six months ended June 30, 2016
|
|||||||||||
Net Earnings
(Dollars in
thousands)
|
Shares
|
Per Share
Amount
|
|||||||||
Basic earnings per share
|
$
|
5,418
|
5,510,538
|
$
|
0.98
|
||||||
Effect of dilutive securities:
|
|||||||||||
Restricted stock units
|
-
|
65,129
|
|||||||||
Diluted earnings per share
|
$
|
5,418
|
5,575,667
|
$
|
0.97
|
For the three months ended June 30, 2015
|
|||||||||||
Net Earnings
(Dollars in
thousands)
|
Shares
|
Per Share
Amount
|
|||||||||
Basic earnings per share
|
$
|
2,624
|
5,574,915
|
$
|
0.47
|
||||||
Effect of dilutive securities:
|
|||||||||||
Restricted stock units
|
-
|
44,910
|
|||||||||
Diluted earnings per share
|
$
|
2,624
|
5,619,825
|
$
|
0.47
|
For the six months ended June 30, 2015
|
|||||||||||
Net Earnings
(Dollars in
thousands)
|
Shares
|
Per Share
Amount
|
|||||||||
Basic earnings per share
|
$
|
4,952
|
5,593,648
|
$
|
0.89
|
||||||
Effect of dilutive securities:
|
|||||||||||
Restricted stock units
|
-
|
41,708
|
|||||||||
Diluted earnings per share
|
$
|
4,952
|
5,635,356
|
$
|
0.88
|
(5) | Stock-Based Compensation |
(6) | Fair Value |
·
|
Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.
|
·
|
Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
·
|
Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
(Dollars in thousands)
|
|||||||||||||||
June 30, 2016
|
|||||||||||||||
Fair Value Measurements
|
Level 1
Valuation
|
Level 2
Valuation
|
Level 3
Valuation
|
||||||||||||
Mortgage-backed securities
|
$
|
72,778
|
-
|
72,778
|
-
|
||||||||||
U.S. Government
|
|||||||||||||||
sponsored enterprises
|
$
|
40,485
|
-
|
40,485
|
-
|
||||||||||
State and political subdivisions
|
$
|
149,116
|
-
|
149,116
|
-
|
||||||||||
Corporate bonds
|
$
|
1,516
|
-
|
1,516
|
-
|
||||||||||
Trust preferred securities
|
$
|
750
|
-
|
-
|
750
|
||||||||||
Equity securities
|
$
|
469
|
469
|
-
|
-
|
(Dollars in thousands)
|
|||||||||||||||
December 31, 2015
|
|||||||||||||||
Fair Value Measurements
|
Level 1
Valuation
|
Level 2
Valuation
|
Level 3
Valuation
|
||||||||||||
Mortgage-backed securities
|
$
|
77,887
|
-
|
77,887
|
-
|
||||||||||
U.S. Government
|
|||||||||||||||
sponsored enterprises
|
$
|
38,417
|
-
|
38,417
|
-
|
||||||||||
State and political subdivisions
|
$
|
148,245
|
-
|
148,245
|
-
|
||||||||||
Corporate bonds
|
$
|
1,906
|
-
|
1,906
|
-
|
||||||||||
Trust preferred securities
|
$
|
750
|
-
|
-
|
750
|
||||||||||
Equity securities
|
$
|
1,325
|
1,325
|
-
|
-
|
(Dollars in thousands)
|
|||
Investment Securities
Available for Sale
|
|||
Level 3 Valuation
|
|||
Balance, beginning of period
|
$
|
750
|
|
Change in book value
|
-
|
||
Change in gain/(loss) realized and unrealized
|
-
|
||
Purchases/(sales and calls)
|
-
|
||
Transfers in and/or (out) of Level 3
|
-
|
||
Balance, end of period
|
$
|
750
|
|
Change in unrealized gain/(loss) for assets still held in Level 3
|
$
|
-
|
(Dollars in thousands)
|
|||||||||||||||
Fair Value Measurements
June 30, 2016
|
Level 1
Valuation
|
Level 2
Valuation
|
Level 3
Valuation
|
||||||||||||
Mortgage loans held for sale
|
$
|
3,024
|
-
|
-
|
3,024
|
||||||||||
Impaired loans
|
$
|
28,080
|
-
|
-
|
28,080
|
||||||||||
Other real estate
|
$
|
235
|
-
|
-
|
235
|
||||||||||
(Dollars in thousands)
|
|||||||||||||||
Fair Value Measurements December 31, 2015
|
Level 1
Valuation
|
Level 2
Valuation
|
Level 3
Valuation
|
||||||||||||
Mortgage loans held for sale
|
$
|
4,149
|
-
|
-
|
4,149
|
||||||||||
Impaired loans
|
$
|
31,818
|
-
|
-
|
31,818
|
||||||||||
Other real estate
|
$
|
739
|
-
|
-
|
739
|
(Dollars in thousands)
|
||||||||||||||||
Fair Value
June 30, 2016
|
Fair Value
December 31, 2015
|
Valuation
Technique
|
Significant
Unobservable
Inputs
|
General Range
of Significant Unobservable
Input Values
|
||||||||||||
Mortgage loans held for sale
|
$
|
3,024
|
4,149
|
Rate lock
commitment
|
N/A
|
|
N/A
|
|||||||||
Impaired loans
|
$
|
28,080
|
31,818
|
Appraised value
and discounted
cash flows
|
Discounts to
reflect current
market conditions
and ultimate
collectability
|
0 - 25%
|
||||||||||
Other real estate
|
$
|
235
|
739
|
Appraised value
|
Discounts to
reflect current
market conditions
and estimated
costs to sell
|
0 - 25%
|
(Dollars in thousands)
|
|||||||||||||||||||
Fair Value Measurements at June 30, 2016
|
|||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Assets:
|
|||||||||||||||||||
Cash and cash equivalents
|
$
|
64,674
|
64,674
|
-
|
-
|
64,674
|
|||||||||||||
Investment securities available for sale
|
$
|
265,114
|
469
|
263,895
|
750
|
265,114
|
|||||||||||||
Other investments
|
$
|
3,634
|
-
|
-
|
3,634
|
3,634
|
|||||||||||||
Mortgage loans held for sale
|
$
|
3,024
|
-
|
-
|
3,024
|
3,024
|
|||||||||||||
Loans, net
|
$
|
693,491
|
-
|
-
|
696,822
|
696,822
|
|||||||||||||
Cash surrender value of life insurance
|
$
|
14,753
|
-
|
14,753
|
-
|
14,753
|
|||||||||||||
Liabilities:
|
|||||||||||||||||||
Deposits
|
$
|
841,400
|
-
|
-
|
836,283
|
836,283
|
|||||||||||||
Securities sold under agreements
|
|||||||||||||||||||
to repurchase
|
$
|
42,715
|
-
|
42,715
|
-
|
42,715
|
|||||||||||||
FHLB borrowings
|
$
|
43,500
|
-
|
43,110
|
-
|
43,110
|
|||||||||||||
Junior subordinated debentures
|
$
|
20,619
|
-
|
20,619
|
-
|
20,619
|
(Dollars in thousands)
|
|||||||||||||||||||
Fair Value Measurements at December 31, 2015
|
|||||||||||||||||||
Carrying
Amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||
Assets:
|
|||||||||||||||||||
Cash and cash equivalents
|
$
|
39,763
|
39,763
|
-
|
-
|
39,763
|
|||||||||||||
Investment securities available for sale
|
$
|
268,530
|
1,325
|
266,455
|
750
|
268,530
|
|||||||||||||
Other investments
|
$
|
3,636
|
-
|
-
|
3,636
|
3,636
|
|||||||||||||
Mortgage loans held for sale
|
$
|
4,149
|
-
|
-
|
4,149
|
4,149
|
|||||||||||||
Loans, net
|
$
|
679,502
|
-
|
-
|
683,540
|
683,540
|
|||||||||||||
Cash surrender value of life insurance
|
$
|
14,546
|
-
|
14,546
|
-
|
14,546
|
|||||||||||||
Liabilities:
|
|||||||||||||||||||
Deposits
|
$
|
832,175
|
-
|
-
|
827,874
|
827,874
|
|||||||||||||
Securities sold under agreements
|
|||||||||||||||||||
to repurchase
|
$
|
27,874
|
-
|
27,874
|
-
|
27,874
|
|||||||||||||
FHLB borrowings
|
$
|
43,500
|
-
|
43,144
|
-
|
43,144
|
|||||||||||||
Junior subordinated debentures
|
$
|
20,619
|
-
|
20,619
|
-
|
20,619
|
(7) | Regulatory Matters |
(8) | Subsequent Events |
Three months ended
|
Three months ended
|
|||||||||||||||||||||||
June 30, 2016
|
June 30, 2015
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
|
Yield /
Rate
|
Average
Balance
|
Interest
|
Yield /
Rate
|
||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans receivable
|
$
|
693,238
|
7,973
|
4.63
|
%
|
$
|
659,712
|
7,333
|
4.46
|
%
|
||||||||||||||
Investments - taxable
|
78,333
|
485
|
2.49
|
%
|
91,695
|
563
|
2.46
|
%
|
||||||||||||||||
Investments - nontaxable*
|
179,145
|
1,910
|
4.29
|
%
|
182,306
|
1,872
|
4.12
|
%
|
||||||||||||||||
Other
|
15,130
|
18
|
0.48
|
%
|
12,472
|
7
|
0.23
|
%
|
||||||||||||||||
Total interest-earning assets
|
965,846
|
10,386
|
4.32
|
%
|
946,185
|
9,775
|
4.14
|
%
|
||||||||||||||||
Non-interest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
47,337
|
46,452
|
||||||||||||||||||||||
Allowance for loan losses
|
(9,222
|
)
|
(10,827
|
)
|
||||||||||||||||||||
Other assets
|
55,589
|
56,089
|
||||||||||||||||||||||
Total assets
|
$
|
1,059,550
|
$
|
1,037,899
|
||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW, MMDA & savings deposits
|
$
|
434,846
|
122
|
0.11
|
%
|
$
|
417,573
|
106
|
0.10
|
%
|
||||||||||||||
Time deposits
|
151,901
|
148
|
0.39
|
%
|
176,997
|
226
|
0.51
|
%
|
||||||||||||||||
FHLB borrowings
|
43,500
|
415
|
3.84
|
%
|
50,000
|
433
|
3.47
|
%
|
||||||||||||||||
Trust preferred securities
|
20,619
|
118
|
2.30
|
%
|
20,619
|
99
|
1.93
|
%
|
||||||||||||||||
Other
|
39,389
|
10
|
0.10
|
%
|
44,702
|
11
|
0.10
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
690,255
|
813
|
0.47
|
%
|
709,891
|
875
|
0.49
|
%
|
||||||||||||||||
Non-interest bearing liabilities and shareholders' equity:
|
||||||||||||||||||||||||
Demand deposits
|
257,622
|
221,933
|
||||||||||||||||||||||
Other liabilities
|
543
|
3,938
|
||||||||||||||||||||||
Shareholders' equity
|
111,130
|
102,137
|
||||||||||||||||||||||
Total liabilities and shareholder's equity
|
$
|
1,059,550
|
$
|
1,037,899
|
||||||||||||||||||||
Net interest spread
|
$
|
9,573
|
3.85
|
%
|
8,900
|
3.69
|
%
|
|||||||||||||||||
Net yield on interest-earning assets
|
3.99
|
%
|
3.77
|
%
|
||||||||||||||||||||
Taxable equivalent adjustment
|
||||||||||||||||||||||||
Investment securities
|
$
|
569
|
584
|
|||||||||||||||||||||
Net interest income
|
$
|
9,004
|
8,316
|
|||||||||||||||||||||
*Includes U.S. Government agency securities that are non-taxable for state income tax purposes of $39.1 million in 2016 and $37.4 million in 2015. Tax rates of 4.00% and 5.00% were used to calculate the tax equivalent yield on these securities in 2016 and 2015, respectively.
|
Six months ended
|
Six months ended
|
|||||||||||||||||||||||
June 30, 2016
|
June 30, 2015
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Average
Balance
|
Interest
|
Yield /
Rate
|
Average
Balance
|
Interest
|
Yield /
Rate
|
||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans receivable
|
$
|
692,536
|
15,996
|
4.64
|
%
|
$
|
657,234
|
14,926
|
4.58
|
%
|
||||||||||||||
Investments - taxable
|
80,205
|
1,030
|
2.58
|
%
|
94,404
|
1,185
|
2.53
|
%
|
||||||||||||||||
Investments - nontaxable*
|
179,134
|
3,802
|
4.27
|
%
|
180,963
|
3,804
|
4.24
|
%
|
||||||||||||||||
Other
|
15,020
|
36
|
0.48
|
%
|
14,625
|
17
|
0.23
|
%
|
||||||||||||||||
Total interest-earning assets
|
966,895
|
20,864
|
4.34
|
%
|
947,226
|
19,932
|
4.24
|
%
|
||||||||||||||||
Non-interest earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
40,920
|
45,387
|
||||||||||||||||||||||
Allowance for loan losses
|
(9,416
|
)
|
(10,963
|
)
|
||||||||||||||||||||
Other assets
|
54,883
|
55,453
|
||||||||||||||||||||||
Total assets
|
$
|
1,053,282
|
$
|
1,037,103
|
||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW, MMDA & savings deposits
|
$
|
435,173
|
241
|
0.11
|
%
|
$
|
418,598
|
218
|
0.11
|
%
|
||||||||||||||
Time deposits
|
153,129
|
310
|
0.41
|
%
|
181,606
|
474
|
0.53
|
%
|
||||||||||||||||
FHLB borrowings
|
43,720
|
822
|
3.78
|
%
|
50,000
|
851
|
3.43
|
%
|
||||||||||||||||
Trust preferred securities
|
20,619
|
231
|
2.25
|
%
|
20,619
|
196
|
1.92
|
%
|
||||||||||||||||
Other
|
36,263
|
18
|
0.10
|
%
|
43,178
|
20
|
0.09
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
688,904
|
1,622
|
0.47
|
%
|
714,001
|
1,759
|
0.50
|
%
|
||||||||||||||||
Non-interest bearing liabilities and shareholders' equity:
|
||||||||||||||||||||||||
Demand deposits
|
253,375
|
217,866
|
||||||||||||||||||||||
Other liabilities
|
(63
|
)
|
2,196
|
|||||||||||||||||||||
Shareholders' equity
|
111,066
|
103,040
|
||||||||||||||||||||||
Total liabilities and shareholder's equity
|
$
|
1,053,282
|
$
|
1,037,103
|
||||||||||||||||||||
Net interest spread
|
$
|
19,242
|
3.87
|
%
|
18,173
|
3.75
|
%
|
|||||||||||||||||
Net yield on interest-earning assets
|
4.00
|
%
|
3.87
|
%
|
||||||||||||||||||||
Taxable equivalent adjustment
|
||||||||||||||||||||||||
Investment securities
|
$
|
1,144
|
1,174
|
|||||||||||||||||||||
Net interest income
|
$
|
18,098
|
16,999
|
|||||||||||||||||||||
*Includes U.S. Government agency securities that are non-taxable for state income tax purposes of $38.5 million in 2016 and $35.6 million in 2015. Tax rates of 4.00% and 5.00% were used to calculate the tax equivalent yield on these securities in 2016 and 2015, respectively.
|
Three months ended June 30, 2016
compared to three months ended June 30,
2015
|
Six months ended June 30, 2016
compared to six months ended June 30,
2015
|
|||||||||||||||||||||||
(Dollars in thousands)
|
Changes in
average
volume
|
Changes in
average
rates
|
Total
Increase
(Decrease)
|
Changes in
average
volume
|
Changes in
average
rates
|
Total
Increase
(Decrease)
|
||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||
Loans: Net of unearned income
|
$
|
379
|
261
|
640
|
$
|
808
|
262
|
1,070
|
||||||||||||||||
Investments - taxable
|
(82
|
)
|
4
|
(78
|
)
|
(180
|
)
|
25
|
(155
|
)
|
||||||||||||||
Investments - nontaxable
|
(33
|
)
|
71
|
38
|
(39
|
)
|
37
|
(2
|
)
|
|||||||||||||||
Other
|
2
|
9
|
11
|
-
|
19
|
19
|
||||||||||||||||||
Total interest income
|
266
|
345
|
611
|
589
|
343
|
932
|
||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||
NOW, MMDA & savings deposits
|
5
|
11
|
16
|
9
|
14
|
23
|
||||||||||||||||||
Time deposits
|
(28
|
)
|
(50
|
)
|
(78
|
)
|
(66
|
)
|
(98
|
)
|
(164
|
)
|
||||||||||||
FHLB borrowings
|
(59
|
)
|
41
|
(18
|
)
|
(112
|
)
|
83
|
(29
|
)
|
||||||||||||||
Trust preferred securities
|
-
|
19
|
19
|
-
|
35
|
35
|
||||||||||||||||||
Other
|
(1
|
)
|
-
|
(1
|
)
|
(2
|
)
|
-
|
(2
|
)
|
||||||||||||||
Total interest expense
|
(83
|
)
|
21
|
(62
|
)
|
(171
|
)
|
34
|
(137
|
)
|
||||||||||||||
Net interest income
|
$
|
349
|
324
|
673
|
$
|
760
|
309
|
1,069
|
(Dollars in thousands)
|
|||||||||||
Number of
Loans
|
Balance
Outstanding
|
Non-accrual
Balance
|
|||||||||
Land acquisition and development - commercial purposes
|
62
|
$
|
10,504
|
$
|
-
|
||||||
Land acquisition and development - residential purposes
|
232
|
25,647
|
36
|
||||||||
1 to 4 family residential construction
|
81
|
14,682
|
-
|
||||||||
Commercial construction
|
16
|
9,242
|
-
|
||||||||
Total construction and land development
|
391
|
$
|
60,075
|
$
|
36
|
·
|
the Bank's loan loss experience;
|
·
|
the amount of past due and non-performing loans;
|
·
|
specific known risks;
|
·
|
the status and amount of other past due and non-performing assets;
|
·
|
underlying estimated values of collateral securing loans;
|
·
|
current and anticipated economic conditions; and
|
·
|
other factors which management believes affect the allowance for potential credit losses.
|
Percentage of Loans
|
|||||
By Risk Grade
|
|||||
Risk Grade
|
6/30/2016
|
12/31/2015
|
|||
Risk Grade 1 (Excellent Quality)
|
1.49%
|
1.66%
|
|||
Risk Grade 2 (High Quality)
|
25.22%
|
24.40%
|
|||
Risk Grade 3 (Good Quality)
|
54.87%
|
53.64%
|
|||
Risk Grade 4 (Management Attention)
|
13.26%
|
14.26%
|
|||
Risk Grade 5 (Watch)
|
2.81%
|
3.26%
|
|||
Risk Grade 6 (Substandard)
|
2.04%
|
2.53%
|
|||
Risk Grade 7 (Doubtful)
|
0.00%
|
0.00%
|
|||
Risk Grade 8 (Loss)
|
0.00%
|
0.00%
|
(Dollars in thousands)
|
|||||||
June 30, 2016
|
December 31, 2015
|
||||||
Contractual Cash Obligations
|
|||||||
Long-term borrowings
|
$
|
43,500
|
43,500
|
||||
Junior subordinated debentures
|
20,619
|
20,619
|
|||||
Operating lease obligations
|
3,844
|
4,175
|
|||||
Total
|
$
|
67,963
|
68,294
|
||||
Other Commitments
|
|||||||
Commitments to extend credit
|
$
|
185,745
|
189,351
|
||||
Standby letters of credit and financial guarantees written
|
3,924
|
3,872
|
|||||
Total
|
$
|
189,669
|
193,223
|
PART II.
|
OTHER INFORMATION
|
Item 1.
|
Legal Proceedings
|
On April 2, 2013, the Bank received notice that a lawsuit was filed against it in the General Court of Justice, Superior Court Division, Lincoln County, North Carolina. The complaint alleged (i) breach of contract and the covenants of good faith and fair dealing by the Bank, (ii) conversion, (iii) unjust enrichment and (iv) violations of the North Carolina Unfair and Deceptive Trade Practices Act in its assessment and collection of overdraft fees. It sought the refund of overdraft fees, treble damages, attorneys' fees and injunctive relief. The Plaintiff sought to have the lawsuit certified as a class action. On June 10, 2015, the North Carolina Business Court granted summary judgment in favor of the Bank on all claims and ordered the case dismissed with prejudice. The Plaintiff appealed to the North Carolina Court of Appeals which, on May 3, 2016, in a unanimous opinion, affirmed the dismissal of the lawsuit by the North Carolina Business Court. On June 16, 2016, the North Carolina Business Court entered an order dissolving the appellate stay, effectively ending the suit against the Bank.
The discussion of the Order issued by the FDIC and the Commissioner in connection with compliance by the Bank with the BSA and its implementing regulations on August 31, 2015 as set forth in Note (7) of the Consolidated Financial Statements included in Item 1 hereof is incorporated herein by reference.
|
|
Item 1A.
|
Risk Factors
|
Not required for smaller reporting companies.
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
|||||||||||
Period
|
Total
Number of
Shares
Purchased
|
Average
Price Paid
per Share
|
Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs (2)
|
Maximum
Number (or
Approximate
Dollar Value) of
Shares that
May Yet Be
Purchased
Under the Plans
or Programs (3)
|
|||||||
April 1 - 30, 2016
|
-
|
$
|
-
|
-
|
$
|
2,000,000
|
|||||
May 1 - 31, 2016
|
1,298
|
19.35
|
-
|
$
|
2,000,000
|
||||||
June 1 - 30, 2016
|
497
|
19.45
|
-
|
$
|
2,000,000
|
||||||
Total
|
1,795
|
(1)
|
$
|
19.38
|
-
|
||||||
(1) The Company purchased 1,795 shares on the open market in the three months ended June 30, 2016 for its deferred compensation plan. All purchases were funded by participant contributions to the plan.
|
|||||||||||
(2) Reflects shares purchased under the Stock Repurchase Plan authorized by the Company's Board of Directors in 2016.
|
|||||||||||
(3) Reflects dollar value of shares that may yet be purchased under the Stock Repurchase Plan authorized by the Company's Board of Directors in 2016.
|
Item 3.
|
Defaults Upon Senior Securities
|
|
Not applicable
|
||
Item 5.
|
Other Information
|
|
Not applicable
|
||
Item 6.
|
Exhibits
|
|
Exhibit (3)(i)(a)
|
Articles of Incorporation of the Registrant, incorporated by reference to
|
|
Exhibit (3)(i) to the Form 8-A filed with the Securities and Exchange
|
||
Commission on September 2, 1999
|
||
Exhibit (3)(i)(b)
|
Articles of Amendment dated December 19, 2008, regarding the Series A
|
|
Preferred Stock, incorporated by reference to Exhibit (3)(1) to the Form 8-K filed
|
||
with the Securities and Exchange Commission on December 29, 2008
|
||
Exhibit (3)(i)(c)
|
Articles of Amendment dated February 26, 2010, incorporated by reference to
|
|
Exhibit (3)(2) to the Form 10-K filed with the Securities and Exchange
|
||
Commission on March 25, 2010
|
||
Exhibit (3)(ii)
|
Second Amended and Restated Bylaws of the Registrant, incorporated by
|
|
reference to Exhibit (3)(ii) to the Form 8-K filed with the Securities and
|
||
Exchange Commission on June 24, 2015
|
||
Exhibit (4)
|
Specimen Stock Certificate, incorporated by reference to Exhibit (4) to the Form
|
|
8-A filed with the Securities and Exchange Commission on September 2, 1999
|
||
Exhibit (10)(i)
|
Amended and Restated Executive Salary Continuation Agreement between
|
|
Peoples Bank and Tony W. Wolfe dated December 18, 2008, incorporated by
|
||
reference to Exhibit (10)(a)(iii) to the Form 8-K filed with the Securities and
|
||
Exchange Commission on December 29, 2008
|
||
Exhibit (10)(ii)
|
Amended and Restated Executive Salary Continuation Agreement between
|
|
Peoples Bank and Joseph F. Beaman, Jr. dated December 18, 2008, incorporated
|
||
by reference to Exhibit (10)(b)(iii) to the Form 8-K filed with the Securities and
|
||
Exchange Commission on December 29, 2008
|
||
Exhibit (10)(iii)
|
Amended and Restated Executive Salary Continuation Agreement between
|
|
Peoples Bank and William D. Cable, Sr. dated December 18, 2008, incorporated
|
||
by reference to Exhibit (10)(c)(iii) to the Form 8-K filed with the Securities and
|
||
Exchange Commission on December 29, 2008
|
||
Exhibit (10)(iv)
|
Employment agreement dated January 22, 2015 between the Registrant and
|
|
William D. Cable, Sr., incorporated by reference to Exhibit (10)(c) to the Form 8-K
|
||
filed with the Securities and Exchange Commission on February 9, 2015
|
||
Exhibit (10)(v)
|
Amended and Restated Executive Salary Continuation Agreement between
|
|
Peoples Bank and Lance A. Sellers dated December 18, 2008, incorporated by
|
||
reference to Exhibit (10)(d)(iii) to the Form 8-K filed with the Securities and
|
||
Exchange Commission on December 29, 2008
|
||
Exhibit (10)(vi)
|
Employment agreement dated January 22, 2015 between the Registrant and
|
|
Lance A. Sellers, incorporated by reference to Exhibit (10)(a) to the Form 8-K
|
||
filed with the Securities and Exchange Commission on February 9, 2015
|
||
Exhibit (10)(vii)
|
Amended and Restated Executive Salary Continuation Agreement between
|
|
Peoples Bank and A. Joseph Lampron, Jr. dated December 18, 2008,
|
||
incorporated by reference to Exhibit (10)(f)(iii) to the Form 8-K filed with the | ||
Securities and Exchange Commission on December 29, 2008
|
Exhibit (10)(viii)
|
Employment agreement dated January 22, 2015 between the Registrant and A.
|
|
Joseph Lampron, Jr., incorporated by reference to Exhibit (10)(b) to the Form 8-K
|
||
filed with the Securities and Exchange Commission on February 9, 2015
|
||
Exhibit (10)(ix)
|
Peoples Bank Directors' and Officers' Deferral Plan, incorporated by reference
|
|
to Exhibit (10)(h) to the Form 10-K filed with the Securities and Exchange
|
||
Commission on March 28, 2002
|
||
Exhibit (10)(x)
|
Rabbi Trust for the Peoples Bank Directors' and Officers' Deferral Plan,
|
|
incorporated by reference to Exhibit (10)(i) to the Form 10-K filed with the
|
||
Securities and Exchange Commission on March 28, 2002
|
||
Exhibit (10)(xi)
|
Description of Service Recognition Program maintained by Peoples Bank,
|
|
incorporated by reference to Exhibit (10)(i) to the Form 10-K filed with the
|
||
Securities and Exchange Commission on March 27, 2003
|
||
Exhibit (10)(xii)
|
Capital Securities Purchase Agreement dated as of June 26, 2006, by and among
|
|
the Registrant, PEBK Capital Trust II and Bear, Sterns Securities Corp.,
|
||
incorporated by reference to Exhibit (10)(j) to the Form 10-Q filed with the
|
||
Securities and Exchange Commission on November 13, 2006
|
||
Exhibit (10)(xiii)
|
Amended and Restated Trust Agreement of PEBK Capital Trust II, dated as of
|
|
June 28, 2006, incorporated by reference to Exhibit (10)(k) to the Form 10-Q filed
|
||
with the Securities and Exchange Commission on November 13, 2006
|
||
Exhibit (10)(xiv)
|
Guarantee Agreement of the Registrant dated as of June 28, 2006, incorporated
|
|
by reference to Exhibit (10)(l) to the Form 10-Q filed with the Securities and
|
||
Exchange Commission on November 13, 2006
|
||
Exhibit (10)(xv)
|
Indenture, dated as of June 28, 2006, by and between the Registrant and LaSalle
|
|
Bank National Association, as Trustee, relating to Junior Subordinated Debt
|
||
Securities Due September 15, 2036, incorporated by reference to Exhibit (10)(m)
|
||
to the Form 10-Q filed with the Securities and Exchange Commission on
|
||
November 13, 2006
|
||
Exhibit (10)(xvi)
|
Form of Amended and Restated Director Supplemental Retirement Agreement
|
|
between Peoples Bank and Directors Robert C. Abernethy, James S. Abernethy,
|
||
Douglas S. Howard, John W. Lineberger, Jr., Gary E. Matthews, Dr. Billy L.
|
||
Price, Jr., Larry E. Robinson, W. Gregory Terry, Dan Ray Timmerman, Sr. and
|
||
Benjamin I. Zachary, incorporated by reference to Exhibit (10)(n) to the Form
|
||
8-K filed with the Securities and Exchange Commission on December 29, 2008
|
||
Exhibit (10)(xvii)
|
2009 Omnibus Stock Ownership and Long Term Incentive Plan incorporated
|
|
by reference to Exhibit (10)(o) to the Form 10-K filed with the Securities and
|
||
Exchange Commission on March 20, 2009
|
||
Exhibit (14)
|
Code of Business Conduct and Ethics of Peoples Bancorp of North Carolina,
|
|
Inc., incorporated by reference to Exhibit (14) to the Form 10-K filed with the
|
||
Securities and Exchange Commission on March 25, 2005
|
||
Exhibit (31)(a)
|
Certification of principal executive officer pursuant to section 302 of the
|
|
Sarbanes-Oxley Act of 2002
|
||
Exhibit (31)(b)
|
Certification of principal financial officer pursuant to section 302 of the
|
|
Sarbanes-Oxley Act of 2002
|
||
Exhibit (32)
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
|
|
906 of the Sarbanes-Oxley Act of 2002
|
Exhibit (101)
|
The following materials from the Company's 10-Q Report for the quarterly
|
|
period ended June 30, 2016, formatted in XBRL: (i) the Condensed Consolidated
|
||
Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the
|
||
Condensed Consolidated Statements of Changes in Shareholders' Equity, (iv) the
|
||
Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the
|
||
Condensed Consolidated Financial Statements, tagged as blocks of text.*
|
||
*Furnished, not filed.
|
Peoples Bancorp of North Carolina, Inc.
|
||
August 5, 2016
|
/s/ Lance A. Sellers
|
|
Date
|
Lance A. Sellers
|
|
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
August 5, 2016
|
/s/ A. Joseph Lampron, Jr.
|
|
Date
|
A. Joseph Lampron, Jr.
|
|
Executive Vice President and Chief Financial Officer
|
||
(Principal Financial and Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Peoples Bancorp of North Carolina Inc.;
|
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 quarterly 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 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.
|
August 5, 2016
|
/s/ Lance A. Sellers
|
|
Date
|
Lance A. Sellers
|
|
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Peoples Bancorp of North Carolina Inc.;
|
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 quarterly 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 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.
|
August 5, 2016
|
/s/ A. Joseph Lampron, Jr.
|
|
Date
|
A. Joseph Lampron, Jr.
|
|
Executive Vice President and Chief Financial Officer
|
||
(Principal Financial and Principal Accounting Officer)
|
August 5, 2016
|
/s/ Lance A. Sellers
|
|
Date
|
Lance A. Sellers
|
|
Chief Executive Officer
|
||
August 5, 2016
|
/s/ A. Joseph Lampron, Jr.
|
|
Date
|
A. Joseph Lampron, Jr.
|
|
Chief Financial Officer
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 31, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | PEOPLES BANCORP OF NORTH CAROLINA INC | |
Entity Central Index Key | 0001093672 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,510,538 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2016 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets | ||
Cash and due from banks, reserve requirements | $ 14,288 | $ 14,587 |
Shareholders' equity: | ||
Series A preferred stock, stated value (in dollars per share) | $ 1,000 | $ 1,000 |
Series A preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Series A preferred stock, shares issued (in shares) | 0 | 0 |
Series A preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00 | $ 0.00 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 5,510,538 | 5,510,538 |
Common stock, shares outstanding (in shares) | 5,510,538 | 5,510,538 |
1. Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
1. Summary of Significant Accounting Policies | The consolidated financial statements include the financial statements of Peoples Bancorp of North Carolina, Inc. and its wholly owned subsidiaries, Peoples Bank (the "Bank") and Community Bank Real Estate Solutions, LLC, along with the Bank's wholly owned subsidiaries, Peoples Investment Services, Inc., Real Estate Advisory Services, Inc. ("REAS") and PB Real Estate Holdings, LLC (collectively called the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.
The Bank operates four banking offices focused on the Latino population under the name Banco de la Gente ("Banco"). These offices are operated as a division of the Bank. Banco offers normal and customary banking services as are offered in the Bank's other branches such as the taking of deposits and the making of loans and therefore is not considered a reportable segment of the Company. The Bank operates one Banco loan production office in Durham County and one Banco loan production office in Forsyth County specifically designed to serve the growing Latino market.
The consolidated financial statements in this report (other than the Consolidated Balance Sheet at December 31, 2015) are unaudited. In the opinion of management, all adjustments (none of which were other than normal accruals) necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP"). Actual results could differ from those estimates.
The Company's accounting policies are fundamental to understanding management's discussion and analysis of results of operations and financial condition. Many of the Company's accounting policies require significant judgment regarding valuation of assets and liabilities and/or significant interpretation of the specific accounting guidance. A description of the Company's significant accounting policies can be found in Note 1 of the Notes to Consolidated Financial Statements in the Company's 2015 Annual Report to Shareholders which is Appendix A to the Proxy Statement for the May 5, 2016 Annual Meeting of Shareholders.
Recently Issued Accounting Pronouncements In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU No. 2016-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases. ASU No. 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-07, (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU No. 2016-07 eliminates the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. ASU No. 2016-07 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-08, (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net). ASU No. 2016-08 addresses how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. ASU No. 2016-08 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-09, (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 was issued in an effort to improve the accounting for employee share-based payments. ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In April 2016, FASB issued ASU No. 2016-10, (Topic 606): Identifying Performance Obligations and Licensing. ASU No. 2016-10 clarifies guidance on the recognition of revenue from contracts with customers. ASU No. 2016-10 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In May 2016, FASB issued ASU No. 2016-12, (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification ("ASC") to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. ASU No. 2016-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. ASU No. 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its results of operations, financial position and disclosures.
Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company's results of operations, financial position or disclosures. |
2. Investment Securities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. Investment Securities | Investment securities available for sale at June 30, 2016 and December 31, 2015 are as follows:
The current fair value and associated unrealized losses on investments in securities with unrealized losses at June 30, 2016 and December 31, 2015 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position.
At June 30, 2016, unrealized losses in the investment securities portfolio relating to debt securities totaled $223,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the June 30, 2016 tables above, one out of 170 securities issued by state and political subdivisions contained unrealized losses, nine out of 77 securities issued by U.S. Government sponsored enterprises contained unrealized losses, and one out of two securities issued by corporations contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations of entities that issued each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed.
The amortized cost and estimated fair value of investment securities available for sale at June 30, 2016, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Proceeds from sales of securities available for sale during the six months ended June 30, 2016 were $804,000 and resulted in gross gains of $324,000. No securities available for sale were sold during the six months ended June 30, 2015.
Securities with a fair value of approximately $83.1 million and $91.0 million at June 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes as required by law. |
3. Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. Loans | Major classifications of loans at June 30, 2016 and December 31, 2015 are summarized as follows:
The Bank grants loans and extensions of credit primarily within the Catawba Valley region of North Carolina, which encompasses Catawba, Alexander, Iredell and Lincoln counties, and also in Mecklenburg, Union, Wake, Durham and Forsyth counties of North Carolina. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate, the value of which is dependent upon the real estate market. Risk characteristics of the major components of the Bank's loan portfolio are discussed below:
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The following tables present an age analysis of past due loans, by loan type, as of June 30, 2016 and December 31, 2015:
The following table presents non-accrual loans as of June 30, 2016 and December 31, 2015:
At each reporting period, the Bank determines which loans are impaired. Accordingly, the Bank's impaired loans are reported at their estimated fair value on a non-recurring basis. An allowance for each impaired loan that is collateral-dependent is calculated based on the fair value of its collateral. The fair value of the collateral is based on appraisals performed by REAS, a subsidiary of the Bank. REAS is staffed by certified appraisers that also perform appraisals for other companies. Factors, including the assumptions and techniques utilized by the appraiser, are considered by management. If the recorded investment in the impaired loan exceeds the measure of fair value of the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. An allowance for each impaired loan that is not collateral dependent is calculated based on the present value of projected cash flows. If the recorded investment in the impaired loan exceeds the present value of projected cash flows, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans under $250,000 are not individually evaluated for impairment with the exception of the Bank's troubled debt restructured ("TDR") loans in the residential mortgage loan portfolio, which are individually evaluated for impairment. Accruing impaired loans were $23.7 million, $25.0 million and $26.2 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively. Interest income recognized on accruing impaired loans was $596,000, $662,000 and $1.3 million for the six months ended June 30, 2016, the six months ended June 30, 2015 and the year ended December 31, 2015, respectively. No interest income is recognized on non-accrual impaired loans subsequent to their classification as non-accrual.
The following tables present impaired loans as of June 30, 2016 and December 31, 2015:
Changes in the allowance for loan losses for the three and six months ended June 30, 2016 and 2015 were as follows:
The provision for loan losses for the three months ended June 30, 2016 was a credit of $531,000, as compared to a credit of $214,000 for the three months ended June 30, 2015. The increase in the credit to the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses resulting from lower historical loss rates used to calculate the ASC 450-20 reserve as the elevated level of loan losses incurred in 2011 and 2012 are no longer included in the historical loss calculations.
The provision for loan losses for the six months ended June 30, 2016 was a credit of $748,000, as compared to a credit of $41,000 for the six months ended June 30, 2015. The increase in the credit to the provision for loan losses is primarily attributable to a reduction in the required level of the allowance for loan losses resulting from lower historical loss rates used to calculate the ASC 450-20 reserve as the elevated level of loan losses incurred in 2011 and 2012 are no longer included in the historical loss calculations.
The Company utilizes an internal risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. These risk grades are evaluated on an ongoing basis. A description of the general characteristics of the eight risk grades is as follows:
The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of June 30, 2016 and December 31, 2015:
Current year TDR modifications, past due TDR loans and non-accrual TDR loans totaled $4.7 million and $8.8 million at June 30, 2016 and December 31, 2015, respectively. The terms of these loans have been renegotiated to provide a concession to original terms, including a reduction in principal or interest as a result of the deteriorating financial position of the borrower. There were no performing loans classified as TDR loans at June 30, 2016. There were $354,000 performing loans classified as TDR loans at December 31, 2015.
There were no TDR modifications during the six months ended June 30, 2016.
The following table presents an analysis of loan modifications during the six months ended June 30, 2015:
During the six months ended June 30, 2015, one loan was modified that was considered to be a new TDR loan. The interest rate was modified on this TDR loan.
There were no loans modified as TDR that defaulted during the three months ended June 30, 2016 and 2015, which were within 12 months of their modification date. Generally, a TDR loan is considered to be in default once it becomes 90 days or more past due following a modification. |
4. Net Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4. Net Earnings Per Share | Net earnings per share is based on the weighted average number of shares outstanding during the period while the effects of potential shares outstanding during the period are included in diluted earnings per share. The average market price during the year is used to compute equivalent shares.
The reconciliation of the amounts used in the computation of both "basic earnings per share" and "diluted earnings per share" for the three and six months ended June 30, 2016 and 2015 is as follows:
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5. Stock-Based Compensation |
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Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
5. Stock-Based Compensation | The Company has an Omnibus Stock Ownership and Long Term Incentive Plan that was approved by shareholders on May 7, 2009 (the "Plan") whereby certain stock-based rights, such as stock options, restricted stock, restricted stock units, performance units, stock appreciation rights or book value shares, may be granted to eligible directors and employees. A total of 262,520 shares are currently reserved for possible issuance under the Plan. All stock-based rights under the Plan must be granted or awarded by May 7, 2019 (or ten years from the Plan effective date).
The Company granted 29,514 restricted stock units under the Plan at a grant date fair value of $7.90 per share during the first quarter of 2012, of which 5,355 restricted stock units were forfeited by the executive officers of the Company as required by the agreement with the U.S. Department of the Treasury ("UST") in conjunction with the Company's participation in the Capital Purchase Program ("CPP") under the Troubled Asset Relief Program ("TARP"). In July 2012, the Company granted 5,355 restricted stock units at a grant date fair value of $8.25 per share. The Company granted 26,795 restricted stock units under the Plan at a grant date fair value of $11.90 per share during the second quarter of 2013. The Company granted 21,056 restricted stock units under the Plan at a grant date fair value of $15.70 per share during the first quarter of 2014. The Company granted 15,075 restricted stock units under the Plan at a grant date fair value of $17.97 per share during the first quarter of 2015. The Company granted 5,040 restricted stock units under the Plan at a grant date fair value of $18.60 per share during the first quarter of 2016. The Company recognizes compensation expense on the restricted stock units over the period of time the restrictions are in place (five years from the grant date for the 2012 grants, four years from the grant date for the 2013, 2015 and 2016 grants and three years from the grant date for the 2014 grants). The amount of expense recorded each period reflects the changes in the Company's stock price during such period. As of June 30, 2016, the total unrecognized compensation expense related to the restricted stock unit grants under the Plan was $549,000.
The Company recognized compensation expense for restricted stock unit awards granted under the Plan of $252,000 and $218,000 for the six months ended June 30, 2016 and 2015, respectively. |
6. Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6. Fair Value |
The Company is required to disclose fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of the Company's financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good faith estimate of the increase or decrease in the value of financial instruments held by the Company since purchase, origination or issuance.
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
Cash and Cash Equivalents For cash, due from banks and interest-bearing deposits, the carrying amount is a reasonable estimate of fair value. Cash and cash equivalents are reported in the Level 1 fair value category.
Investment Securities Available for Sale Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities. Fair values for investment securities with quoted market prices are reported in the Level 1 fair value category. Fair value measurements obtained from independent pricing services are reported in the Level 2 fair value category. All other fair value measurements are reported in the Level 3 fair value category.
Other Investments For other investments, the carrying value is a reasonable estimate of fair value. Other investments are reported in the Level 3 fair value category.
Mortgage Loans Held for Sale Mortgage loans held for sale are carried at the lower of aggregate cost or market value. The cost of mortgage loans held for sale approximates the market value. Mortgage loans held for sale are reported in the Level 3 fair value category.
Loans The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value. Loans are reported in the Level 3 fair value category, as the pricing of loans is more subjective than the pricing of other financial instruments.
Cash Surrender Value of Life Insurance For cash surrender value of life insurance, the carrying value is a reasonable estimate of fair value. Cash surrender value of life insurance is reported in the Level 2 fair value category.
Other Real Estate The fair value of other real estate is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. Other real estate is reported in the Level 3 fair value category.
Deposits The fair value of demand deposits, interest-bearing demand deposits and savings is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Deposits are reported in the Level 2 fair value category.
Securities Sold Under Agreements to Repurchase For securities sold under agreements to repurchase, the carrying value is a reasonable estimate of fair value. Securities sold under agreements to repurchase are reported in the Level 2 fair value category. Federal Home Loan Bank ("FHLB") Borrowings The fair value of FHLB borrowings is estimated based upon discounted future cash flows using a discount rate comparable to the current market rate for such borrowings. FHLB borrowings are reported in the Level 2 fair value category.
Junior Subordinated Debentures Because the Company's junior subordinated debentures were issued at a floating rate, the carrying amount is a reasonable estimate of fair value. Junior subordinated debentures are reported in the Level 2 fair value category.
Commitments to Extend Credit and Standby Letters of Credit Commitments to extend credit and standby letters of credit are generally short-term and at variable interest rates. Therefore, both the carrying value and estimated fair value associated with these instruments are immaterial.
Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The table below presents the balance of securities available for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy, as of June 30, 2016 and December 31, 2015.
The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the six months ended June 30, 2016.
The fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis at June 30, 2016 and December 31, 2015 are presented below. The fair value measurement process uses certified appraisals and other market-based information; however, in many cases, it also requires significant input based on management's knowledge of, and judgment about, current market conditions, specific issues relating to the collateral and other matters. As a result, all fair value measurements for impaired loans and other real estate are considered Level 3.
The carrying amount and estimated fair value of financial instruments at June 30, 2016 and December 31, 2015 are as follows:
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7. Regulatory Matters |
6 Months Ended |
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Jun. 30, 2016 | |
Regulatory Matters | |
7. Regulatory Matters | On August 31, 2015, the Federal Deposit Insurance Corporation ("FDIC") and the North Carolina Office of the Commissioner of Banks ("Commissioner") issued a Consent Order (the "Order") in connection with compliance by the Bank with the Bank Secrecy Act and its implementing regulations (collectively, the "BSA"). The Order was issued pursuant to the consent of the Bank. In consenting to the issuance of the Order, the Bank did not admit or deny any unsafe or unsound banking practices or violations of law or regulation.
The Order requires the Bank to take certain affirmative actions to comply with its obligations under the BSA, including, without limitation, strengthening its Board of Directors' oversight of BSA activities; reviewing, enhancing, adopting and implementing a revised BSA compliance program; completing a BSA risk assessment; developing a revised system of internal controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment processes, policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing needs and resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports required by the BSA are accurately and properly filed and engaging an independent firm to review past account activity to determine whether suspicious activity was properly identified and reported. Prior to implementation, certain of the actions described above are subject to review by, and approval or non-objection from, the FDIC and the Commissioner. The Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the FDIC and the Commissioner.
The Bank continues to make progress in addressing the issues identified in the Order and expects that it will be able to undertake and implement all required actions within the time period specified in the Order. The Bank has incurred and will continue to incur additional non-interest expenses associated with the implementation of corrective actions; however, these expenses are not expected to have a significant impact on the results of operations or financial position of the Company. Operating under the Order will limit the Bank's and the Company's ability to participate in acquisitions, to open new branches, and to allocate funds to its stock repurchase plan until such time as the Order has been modified, terminated, suspended or set aside by the FDIC and the Commissioner. |
8. Subsequent Events |
6 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
8. Subsequent Events | The Company has reviewed and evaluated subsequent events and transactions for material subsequent events through the date the financial statements are issued. Management has concluded that there were no material subsequent events.
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1. Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU No. 2016-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In February 2016, FASB issued ASU No. 2016-02, (Topic 842): Leases. ASU No. 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-07, (Topic 323): Simplifying the Transition to the Equity Method of Accounting. ASU No. 2016-07 eliminates the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. ASU No. 2016-07 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-08, (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net). ASU No. 2016-08 addresses how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. ASU No. 2016-08 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In March 2016, FASB issued ASU No. 2016-09, (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 was issued in an effort to improve the accounting for employee share-based payments. ASU No. 2016-09 is effective for annual periods beginning after December 15, 2016. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In April 2016, FASB issued ASU No. 2016-10, (Topic 606): Identifying Performance Obligations and Licensing. ASU No. 2016-10 clarifies guidance on the recognition of revenue from contracts with customers. ASU No. 2016-10 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In May 2016, FASB issued ASU No. 2016-12, (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU No. 2016-12 amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification ("ASC") to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. ASU No. 2016-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Company's results of operations, financial position or disclosures.
In June 2016, FASB issued ASU No. 2016-13, (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU No. 2016-13 provides guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. ASU No. 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its results of operations, financial position and disclosures.
Other accounting standards that have been issued or proposed by FASB or other standards-setting bodies are not expected to have a material impact on the Company's results of operations, financial position or disclosures. |
2. Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities available for sale |
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Amortized cost and estimated fair value of investment securities available for sale by contractual maturity |
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3. Loans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Major classifications of loans |
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Age analysis of past due loans, by loan type |
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Non-accrual loans |
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Impaired loans |
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Changes in the allowance for loan losses |
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Credit risk profile of each loan type based on internally assigned risk grade |
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Analysis of loan modifications |
|
4. Net Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliations of the amounts used in the computation of both basic earnings per common share and diluted earnings per common share |
|
6. Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available for sale securities measured at fair value on a recurring basis |
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Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs |
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Fair value measurements for mortgage loans held for sale, impaired loans and other real estate on a non-recurring basis |
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Carrying amount and estimated fair value of the Company's financial instruments |
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2. Investment securities, Contractual Maturity (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Amortized Cost | |
Due within one year | $ 5,196 |
Due from one to five years | 73,590 |
Due from five to ten years | 88,245 |
Due after ten years | 14,336 |
Mortgage-backed securities | 70,509 |
Equity securities | 264 |
Total | 252,140 |
Estimated Fair Value | |
Due within one year | 5,218 |
Due from one to five years | 78,304 |
Due from five to ten years | 93,409 |
Due after ten years | 14,936 |
Mortgage-backed securities | 72,778 |
Equity securities | 469 |
Total | $ 265,114 |
2. Investment Securities (Details Narrative) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Pledged to secure public deposits | $ 83,100 | $ 91,000 |
3. Loans, Nonaccrual (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Non-accrual loans | ||
Non-accrual loans | $ 5,985 | $ 8,432 |
Construction and land development | ||
Non-accrual loans | ||
Non-accrual loans | 36 | 146 |
Single-family residential | ||
Non-accrual loans | ||
Non-accrual loans | 3,055 | 4,023 |
Single-family residential - Banco de la Gente stated income | ||
Non-accrual loans | ||
Non-accrual loans | 265 | 1,106 |
Commercial | ||
Non-accrual loans | ||
Non-accrual loans | 2,445 | 2,992 |
Multifamily and Farmland | ||
Non-accrual loans | ||
Non-accrual loans | 0 | 0 |
Total real estate loans | ||
Non-accrual loans | ||
Non-accrual loans | 5,801 | 8,267 |
Commercial loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | 140 | 113 |
Consumer loans (not secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | $ 44 | $ 52 |
3. Loans, TDR Loan Modifications (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2015
USD ($)
Integer
| |
Real estate loans, TDR | |
Number of Contracts | Integer | 1 |
Pre-Modification Outstanding Recorded Investment | $ 146 |
Post-Modification Outstanding Recorded Investment | $ 144 |
Single-family residential | |
Real estate loans, TDR | |
Number of Contracts | Integer | 1 |
Pre-Modification Outstanding Recorded Investment | $ 146 |
Post-Modification Outstanding Recorded Investment | $ 144 |
Total real estate loans | |
Real estate loans, TDR | |
Number of Contracts | Integer | 1 |
Pre-Modification Outstanding Recorded Investment | $ 146 |
Post-Modification Outstanding Recorded Investment | $ 144 |
3. Loans (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Receivables [Abstract] | |||||
Percentage of construction and land development loans in Bank's loan portfolio | 9.00% | 9.00% | |||
Percentage of single-family residential loans in Bank's loan portfolio | 39.00% | 39.00% | |||
Percentage of Single-family residential - Banco de la Gente stated income loans in Bank's loan portfolio | 6.00% | 6.00% | |||
Percentage of commercial real estate loans in Bank's loan portfolio | 33.00% | 33.00% | |||
Percentage of commercial loans in Bank's loan portfolio | 13.00% | 13.00% | |||
Accruing impaired loans | $ 23,700 | $ 26,200 | $ 23,700 | $ 26,200 | $ 25,000 |
Interest income recognized on accruing impaired loans | 596 | 662 | 1,300 | ||
Provision for loan losses | (531) | $ (214) | (748) | $ (41) | |
TDR loans modified, past-due TDR loans and non-accrual TDR Loans | 4,700 | 4,700 | 8,800 | ||
Amount of performing TDR loans included | $ 0 | $ 0 | $ 354 |
4. Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net Earnings | ||||
Basic earnings per share | $ 2,964 | $ 2,624 | $ 5,418 | $ 4,952 |
Effect of dilutive securities: Restricted stock units | 0 | 0 | 0 | 0 |
Diluted earnings per share | $ 2,964 | $ 2,624 | $ 5,418 | $ 4,952 |
Shares | ||||
Basic earnings per share (in shares) | 5,510,538 | 5,574,915 | 5,510,538 | 5,593,648 |
Effect of dilutive securities: Restricted stock units (in shares) | 67,660 | 44,910 | 65,129 | 41,708 |
Diluted earnings per share (in shares) | 5,578,198 | 5,619,825 | 5,575,667 | 5,635,356 |
Per Share Amount | ||||
Basic earnings per share | $ 0.54 | $ 0.47 | $ 0.98 | $ 0.89 |
Diluted earnings per share | $ 0.53 | $ 0.47 | $ 0.97 | $ 0.88 |
5. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Unrecognized compensation cost | $ 549 | |
Recognized compensation expense | $ 252 | $ 218 |
6. Fair Value, Level 3 Valuation (Details) - Level 3 $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Investment Securities Available for Sale Level 3 Valuation | |
Balance, beginning of period | $ 750 |
Change in book value | 0 |
Change in gain/(loss) realized and unrealized | 0 |
Purchases/(sales and calls) | 0 |
Transfers in and/or (out) of Level 3 | 0 |
Balance, end of period | 750 |
Change in unrealized gain/(loss) for assets still held in Level 3 | $ 0 |
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