California | 77-0539125 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
7100 N. Financial Dr., Suite 101, Fresno, California | 93720 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer o | Accelerated filer ý | |
Non-accelerated filer o | Small reporting company o | |
(Do not check if a smaller reporting company) |
(In thousands, except share amounts) | September 30, 2016 | December 31, 2015 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 23,274 | $ | 23,339 | ||||
Interest-earning deposits in other banks | 21,803 | 70,988 | ||||||
Federal funds sold | 1 | 290 | ||||||
Total cash and cash equivalents | 45,078 | 94,617 | ||||||
Available-for-sale investment securities (Amortized cost of $533,044 at September 30, 2016 and $470,080 at December 31, 2015) | 551,075 | 477,554 | ||||||
Held-to-maturity investment securities (Fair value of $35,142 at December 31, 2015) | — | 31,712 | ||||||
Loans, less allowance for credit losses of $9,299 at September 30, 2016 and $9,610 at December 31, 2015 | 620,528 | 588,501 | ||||||
Bank premises and equipment, net | 8,906 | 9,292 | ||||||
Bank-owned life insurance | 20,377 | 20,702 | ||||||
Federal Home Loan Bank stock | 4,823 | 4,823 | ||||||
Goodwill | 29,917 | 29,917 | ||||||
Core deposit intangibles | 922 | 1,024 | ||||||
Accrued interest receivable and other assets | 26,149 | 18,594 | ||||||
Total assets | $ | 1,307,775 | $ | 1,276,736 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Non-interest bearing | $ | 423,183 | $ | 428,773 | ||||
Interest bearing | 704,314 | 687,494 | ||||||
Total deposits | 1,127,497 | 1,116,267 | ||||||
Junior subordinated deferrable interest debentures | 5,155 | 5,155 | ||||||
Accrued interest payable and other liabilities | 18,801 | 15,991 | ||||||
Total liabilities | 1,151,453 | 1,137,413 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value, $1,000 per share liquidation preference; 10,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 11,081,854 at September 30, 2016 and 10,996,773 at December 31, 2015 | 54,846 | 54,424 | ||||||
Retained earnings | 91,026 | 80,437 | ||||||
Accumulated other comprehensive income, net of tax | 10,450 | 4,462 | ||||||
Total shareholders’ equity | 156,322 | 139,323 | ||||||
Total liabilities and shareholders’ equity | $ | 1,307,775 | $ | 1,276,736 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(In thousands, except share and per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
INTEREST INCOME: | ||||||||||||||||
Interest and fees on loans | $ | 8,112 | $ | 7,747 | $ | 24,208 | $ | 22,677 | ||||||||
Interest on deposits in other banks | 71 | 49 | 210 | 147 | ||||||||||||
Interest and dividends on investment securities: | ||||||||||||||||
Taxable | 1,500 | 1,234 | 4,486 | 3,477 | ||||||||||||
Exempt from Federal income taxes | 1,582 | 1,593 | 4,680 | 4,627 | ||||||||||||
Total interest income | 11,265 | 10,623 | 33,584 | 30,928 | ||||||||||||
INTEREST EXPENSE: | ||||||||||||||||
Interest on deposits | 240 | 246 | 690 | 718 | ||||||||||||
Interest on junior subordinated deferrable interest debentures | 30 | 25 | 88 | 73 | ||||||||||||
Total interest expense | 270 | 271 | 778 | 791 | ||||||||||||
Net interest income before provision for credit losses | 10,995 | 10,352 | 32,806 | 30,137 | ||||||||||||
(REVERSAL OF) PROVISION FOR CREDIT LOSSES | (1,000 | ) | 100 | (5,850 | ) | 600 | ||||||||||
Net interest income after provision for credit losses | 11,995 | 10,252 | 38,656 | 29,537 | ||||||||||||
NON-INTEREST INCOME: | ||||||||||||||||
Service charges | 743 | 700 | 2,227 | 2,321 | ||||||||||||
Appreciation in cash surrender value of bank-owned life insurance | 131 | 142 | 411 | 451 | ||||||||||||
Interchange fees | 312 | 297 | 904 | 881 | ||||||||||||
Net gain on disposal of other real estate owned | — | — | — | 11 | ||||||||||||
Net realized gains on sales of investment securities | 286 | — | 1,836 | 1,459 | ||||||||||||
Other-than-temporary impairment loss on investment securities | — | — | (136 | ) | — | |||||||||||
Federal Home Loan Bank dividends | 110 | 120 | 314 | 474 | ||||||||||||
Loan placement fees | 347 | 241 | 792 | 794 | ||||||||||||
Other income | 206 | 222 | 1,005 | 1,117 | ||||||||||||
Total non-interest income | 2,135 | 1,722 | 7,353 | 7,508 | ||||||||||||
NON-INTEREST EXPENSES: | ||||||||||||||||
Salaries and employee benefits | 5,608 | 5,254 | 16,304 | 15,472 | ||||||||||||
Occupancy and equipment | 1,124 | 1,204 | 3,511 | 3,522 | ||||||||||||
Professional services | 346 | 395 | 971 | 1,212 | ||||||||||||
Data processing | 390 | 287 | 1,145 | 862 | ||||||||||||
Regulatory assessments | 134 | 223 | 469 | 821 | ||||||||||||
ATM/Debit card expenses | 159 | 145 | 469 | 411 | ||||||||||||
License and maintenance contracts | 125 | 123 | 388 | 392 | ||||||||||||
Directors’ expenses | 163 | 124 | 474 | 316 | ||||||||||||
Advertising | 131 | 157 | 444 | 474 | ||||||||||||
Internet banking expense | 170 | 167 | 497 | 541 | ||||||||||||
Acquisition and integration | 363 | — | 515 | — | ||||||||||||
Amortization of core deposit intangibles | 34 | 85 | 102 | 253 | ||||||||||||
Other | 908 | 864 | 2,719 | 2,737 | ||||||||||||
Total non-interest expenses | 9,655 | 9,028 | 28,008 | 27,013 | ||||||||||||
Income before provision for income taxes | 4,475 | 2,946 | 18,001 | 10,032 | ||||||||||||
Provision for income taxes | 1,361 | 429 | 5,426 | 1,971 | ||||||||||||
Net income available to common shareholders | $ | 3,114 | $ | 2,517 | $ | 12,575 | $ | 8,061 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic earnings per share | $ | 0.28 | $ | 0.23 | $ | 1.15 | $ | 0.74 | ||||||||
Weighted average common shares used in basic computation | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 | ||||||||||||
Diluted earnings per share | $ | 0.28 | $ | 0.23 | $ | 1.14 | $ | 0.73 | ||||||||
Weighted average common shares used in diluted computation | 11,092,674 | 11,024,954 | 11,068,045 | 11,012,024 | ||||||||||||
Cash dividend per common share | $ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.12 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 3,114 | $ | 2,517 | $ | 12,575 | $ | 8,061 | ||||||||
Other Comprehensive Income: | ||||||||||||||||
Unrealized gains on securities: | ||||||||||||||||
Unrealized holdings gains (losses) arising during the period | (4,453 | ) | 3,946 | 8,914 | 677 | |||||||||||
Less: reclassification for net gains included in net income | 286 | — | 1,140 | 1,459 | ||||||||||||
Less: reclassification for other-than-temporary impairment loss included in net income | — | — | (136 | ) | — | |||||||||||
Transfer of investment securities from held-to-maturity to available-for-sale | — | — | 2,647 | — | ||||||||||||
Amortization of net unrealized gains transferred | — | (2 | ) | (64 | ) | (4 | ) | |||||||||
Other comprehensive income (loss), before tax | (4,739 | ) | 3,944 | 10,493 | (786 | ) | ||||||||||
Tax (expense) benefit related to items of other comprehensive income | 1,790 | (1,624 | ) | (4,505 | ) | 322 | ||||||||||
Total other comprehensive income (loss) | (2,949 | ) | 2,320 | 5,988 | (464 | ) | ||||||||||
Comprehensive income | $ | 165 | $ | 4,837 | $ | 18,563 | $ | 7,597 |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 12,575 | $ | 8,061 | ||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
Net decrease in deferred loan fees | (557 | ) | (111 | ) | ||||
Depreciation | 989 | 1,043 | ||||||
Accretion | (889 | ) | (881 | ) | ||||
Amortization | 5,769 | 5,995 | ||||||
Stock-based compensation | 196 | 184 | ||||||
Excess tax benefit from exercise of stock options | (19 | ) | (4 | ) | ||||
(Reversal of) provision for credit losses | (5,850 | ) | 600 | |||||
Other than temporary impairment losses on investment securities | 136 | — | ||||||
Net realized gains on sales of available-for-sale investment securities | (1,140 | ) | (1,459 | ) | ||||
Net realized gains on sales of held-to-maturity securities | (696 | ) | — | |||||
Net loss on disposal of premises and equipment | 5 | 6 | ||||||
Net gain on sale of other real estate owned | — | (11 | ) | |||||
Increase in bank-owned life insurance, net of expenses | (414 | ) | (451 | ) | ||||
Net gain on bank-owned life insurance | (190 | ) | (345 | ) | ||||
Net (increase) decrease in accrued interest receivable and other assets | (1,240 | ) | 2,079 | |||||
Net increase (decrease) in accrued interest payable and other liabilities | 2,810 | (421 | ) | |||||
Provision for deferred income taxes | (977 | ) | 6 | |||||
Net cash provided by operating activities | 10,508 | 14,291 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of available-for-sale investment securities | (167,751 | ) | (156,905 | ) | ||||
Proceeds from sales or calls of available-for-sale investment securities | 84,283 | 92,647 | ||||||
Proceeds from sales or calls of held-to-maturity investment securities | 9,257 | — | ||||||
Proceeds from maturity and principal repayments of available-for-sale investment securities | 39,826 | 39,359 | ||||||
Net increase in loans | (25,983 | ) | (26,633 | ) | ||||
Deposit on acquisition of bank | (9,470 | ) | — | |||||
Proceeds from sale of other real estate owned | — | 359 | ||||||
Purchases of premises and equipment | (608 | ) | (594 | ) | ||||
Purchases of bank-owned life insurance | — | (325 | ) | |||||
FHLB stock purchased | — | (32 | ) | |||||
Proceeds from bank-owned life insurance | 928 | 1,365 | ||||||
Net cash used in investing activities | (69,518 | ) | (50,759 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net increase in demand, interest bearing and savings deposits | 23,212 | 40,301 | ||||||
Net decrease in time deposits | (11,982 | ) | (4,599 | ) | ||||
Proceeds from exercise of stock options | 208 | 38 | ||||||
Excess tax benefit from exercise of stock options | 19 | 4 | ||||||
Cash dividend payments on common stock | (1,986 | ) | (1,318 | ) | ||||
Net cash provided by financing activities | 9,471 | 34,426 | ||||||
Decrease in cash and cash equivalents | (49,539 | ) | (2,042 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 94,617 | 77,328 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 45,078 | $ | 75,286 |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 776 | $ | 798 | ||||
Income taxes | $ | 4,540 | $ | 845 | ||||
Non-cash investing and financing activities: | ||||||||
Foreclosure of loan collateral and recognition of other real estate owned | $ | — | $ | 227 | ||||
Assumption of other real estate owned liabilities | $ | — | $ | 121 | ||||
Transfer of loans to other assets | $ | 363 | $ | — | ||||
Transfer of securities from held-to-maturity to available-for-sale | $ | 23,131 | $ | — | ||||
Unrealized gain on transfer of securities from held-to-maturity to available-for-sale | $ | 526 | $ | — |
September 30, 2016 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 23,274 | $ | 23,274 | $ | — | $ | — | $ | 23,274 | ||||||||||
Interest-earning deposits in other banks | 21,803 | 21,803 | — | — | 21,803 | |||||||||||||||
Federal funds sold | 1 | 1 | — | — | 1 | |||||||||||||||
Available-for-sale investment securities | 551,075 | 7,676 | 543,399 | — | 551,075 | |||||||||||||||
Loans, net | 620,528 | — | — | 625,587 | 625,587 | |||||||||||||||
Federal Home Loan Bank stock | 4,823 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 6,428 | 19 | 3,281 | 3,128 | 6,428 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,127,497 | 999,635 | 127,678 | — | 1,127,313 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,088 | 3,088 | |||||||||||||||
Accrued interest payable | 104 | — | 74 | 30 | 104 |
December 31, 2015 | ||||||||||||||||||||
Carrying Amount | Fair Value | |||||||||||||||||||
(In thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 23,339 | $ | 23,339 | $ | — | $ | — | $ | 23,339 | ||||||||||
Interest-earning deposits in other banks | 70,988 | 70,988 | — | — | 70,988 | |||||||||||||||
Federal funds sold | 290 | 290 | — | — | 290 | |||||||||||||||
Available-for-sale investment securities | 477,554 | 7,536 | 470,018 | — | 477,554 | |||||||||||||||
Held-to-maturity investment securities | 31,712 | — | 35,142 | — | 35,142 | |||||||||||||||
Loans, net | 588,501 | — | — | 585,737 | 585,737 | |||||||||||||||
Federal Home Loan Bank stock | 4,823 | N/A | N/A | N/A | N/A | |||||||||||||||
Accrued interest receivable | 6,355 | 27 | 3,414 | 2,914 | 6,355 | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 1,116,267 | 976,433 | 139,353 | — | 1,115,786 | |||||||||||||||
Junior subordinated deferrable interest debentures | 5,155 | — | — | 3,200 | 3,200 | |||||||||||||||
Accrued interest payable | 101 | — | 76 | 25 | 101 |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Debt Securities: | ||||||||||||||||
U.S. Government agencies | $ | 48,266 | $ | — | $ | 48,266 | $ | — | ||||||||
Obligations of states and political subdivisions | 242,208 | — | 242,208 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 249,966 | — | 249,966 | — | ||||||||||||
Private label residential mortgage backed securities | 2,959 | — | 2,959 | — | ||||||||||||
Other equity securities | 7,676 | 7,676 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 551,075 | $ | 7,676 | $ | 543,399 | $ | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
Impaired loans: | ||||||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | $ | 23 | $ | — | $ | — | $ | 23 | ||||||||
Total impaired loans | 23 | — | — | 23 | ||||||||||||
Other repossessed assets | 363 | — | — | 363 | ||||||||||||
Total assets measured at fair value on a non-recurring basis | $ | 386 | $ | — | $ | — | $ | 386 |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Debt Securities: | ||||||||||||||||
U.S. Government agencies | $ | 52,901 | $ | — | $ | 52,901 | $ | — | ||||||||
Obligations of states and political subdivisions | 188,268 | — | 188,268 | — | ||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 225,259 | — | 225,259 | — | ||||||||||||
Private label residential mortgage backed securities | 3,590 | — | 3,590 | — | ||||||||||||
Other equity securities | 7,536 | 7,536 | — | — | ||||||||||||
Total assets measured at fair value on a recurring basis | $ | 477,554 | $ | 7,536 | $ | 470,018 | $ | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Impaired loans: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | ||||||||
Total commercial | — | — | — | — | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | $ | 132 | $ | — | $ | — | $ | 132 | ||||||||
Total consumer | 132 | — | — | 132 | ||||||||||||
Total impaired loans | 132 | — | — | 132 | ||||||||||||
Total assets measured at fair value on a non-recurring basis | $ | 132 | $ | — | $ | — | $ | 132 |
September 30, 2016 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 48,007 | $ | 411 | $ | (152 | ) | $ | 48,266 | |||||||
Obligations of states and political subdivisions | 227,321 | 15,078 | (191 | ) | 242,208 | |||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 248,321 | 2,886 | (1,241 | ) | 249,966 | |||||||||||
Private label residential mortgage backed securities | 1,895 | 1,064 | — | 2,959 | ||||||||||||
Other equity securities | 7,500 | 176 | — | 7,676 | ||||||||||||
Total available-for-sale | $ | 533,044 | $ | 19,615 | $ | (1,584 | ) | $ | 551,075 |
December 31, 2015 | ||||||||||||||||
Available-for-Sale Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. Government agencies | $ | 52,803 | $ | 315 | $ | (217 | ) | $ | 52,901 | |||||||
Obligations of states and political subdivisions | 181,785 | 6,779 | (296 | ) | 188,268 | |||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 225,636 | 1,042 | (1,419 | ) | 225,259 | |||||||||||
Private label residential mortgage backed securities | 2,356 | 1,234 | — | 3,590 | ||||||||||||
Other equity securities | 7,500 | 36 | — | 7,536 | ||||||||||||
Total available-for-sale | $ | 470,080 | $ | 9,406 | $ | (1,932 | ) | $ | 477,554 |
December 31, 2015 | ||||||||||||||||
Held-to-Maturity Securities | Amortized Cost | Gross Unrecognized Gains | Gross Unrecognized Losses | Estimated Fair Value | ||||||||||||
Debt securities: | ||||||||||||||||
Obligations of states and political subdivisions | $ | 31,712 | $ | 3,431 | $ | (1 | ) | $ | 35,142 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
Available-for-Sale Securities | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Proceeds from sales or calls | $ | 21,239 | $ | — | $ | 84,283 | $ | 92,647 | ||||||||
Gross realized gains from sales or calls | 306 | — | 1,277 | 1,692 | ||||||||||||
Gross realized losses from sales or calls | (20 | ) | — | (137 | ) | (233 | ) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
Held-to-Maturity Securities | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Proceeds from sales or calls | $ | — | $ | — | $ | 9,257 | $ | — | ||||||||
Gross realized gains from sales or calls | — | — | 696 | — | ||||||||||||
Gross realized losses from sales or calls | — | — | — | — |
September 30, 2016 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Available-for-Sale Securities | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
U.S. Government agencies | $ | 21,070 | $ | (99 | ) | $ | 5,105 | $ | (53 | ) | $ | 26,175 | $ | (152 | ) | |||||||||
Obligations of states and political subdivisions | 17,195 | (191 | ) | — | — | 17,195 | (191 | ) | ||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 90,478 | (1,105 | ) | 7,838 | (136 | ) | 98,316 | (1,241 | ) | |||||||||||||||
Total available-for-sale | $ | 128,743 | $ | (1,395 | ) | $ | 12,943 | $ | (189 | ) | $ | 141,686 | $ | (1,584 | ) |
December 31, 2015 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Available-for-Sale Securities | Value | Losses | Value | Losses | Value | Losses | ||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
U.S. Government agencies | $ | 21,348 | $ | (125 | ) | $ | 3,954 | $ | (92 | ) | $ | 25,302 | $ | (217 | ) | |||||||||
Obligations of states and political subdivisions | 40,016 | (296 | ) | — | — | 40,016 | (296 | ) | ||||||||||||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 124,688 | (1,109 | ) | 16,234 | (310 | ) | 140,922 | (1,419 | ) | |||||||||||||||
Total available-for-sale | $ | 186,052 | $ | (1,530 | ) | $ | 20,188 | $ | (402 | ) | $ | 206,240 | $ | (1,932 | ) |
December 31, 2015 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Held-to-Maturity Securities | Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | ||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Obligations of states and political subdivisions | $ | 1,053 | $ | (1 | ) | $ | — | $ | — | $ | 1,053 | $ | (1 | ) |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
(In thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Beginning balance | $ | 874 | $ | 747 | $ | 747 | $ | 747 | ||||||||
Amounts related to credit loss for which an OTTI charge was not previously recognized | — | — | 136 | — | ||||||||||||
Increases to the amount related to credit loss for which OTTI was previously recognized | — | — | — | — | ||||||||||||
Realized gain for securities sold | — | — | (9 | ) | — | |||||||||||
Ending balance | $ | 874 | $ | 747 | $ | 874 | $ | 747 |
September 30, 2016 | ||||||||
Available-for-Sale Securities | Amortized Cost | Estimated Fair Value | ||||||
Within one year | $ | — | $ | — | ||||
After one year through five years | 15,359 | 16,027 | ||||||
After five years through ten years | 42,334 | 44,764 | ||||||
After ten years | 169,628 | 181,417 | ||||||
227,321 | 242,208 | |||||||
Investment securities not due at a single maturity date: | ||||||||
U.S. Government agencies | 48,007 | 48,266 | ||||||
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations | 248,321 | 249,966 | ||||||
Private label residential mortgage backed securities | 1,895 | 2,959 | ||||||
Other equity securities | 7,500 | 7,676 | ||||||
Total available-for-sale | $ | 533,044 | $ | 551,075 |
Loan Type (Dollars in thousands) | September 30, 2016 | % of Total Loans | December 31, 2015 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 89,037 | 14.1 | % | $ | 102,197 | 17.1 | % | ||||||
Agricultural land and production | 25,600 | 4.1 | % | 30,472 | 5.1 | % | ||||||||
Total commercial | 114,637 | 18.2 | % | 132,669 | 22.2 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 169,455 | 26.9 | % | 168,910 | 28.2 | % | ||||||||
Real estate construction and other land loans | 42,639 | 6.8 | % | 38,685 | 6.5 | % | ||||||||
Commercial real estate | 129,691 | 20.6 | % | 117,244 | 19.6 | % | ||||||||
Agricultural real estate | 96,101 | 15.3 | % | 74,867 | 12.5 | % | ||||||||
Other real estate | 11,873 | 1.9 | % | 10,520 | 1.8 | % | ||||||||
Total real estate | 449,759 | 71.5 | % | 410,226 | 68.6 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 40,693 | 6.5 | % | 42,296 | 7.1 | % | ||||||||
Consumer and installment | 23,765 | 3.8 | % | 12,503 | 2.1 | % | ||||||||
Total consumer | 64,458 | 10.3 | % | 54,799 | 9.2 | % | ||||||||
Net deferred origination costs | 973 | 417 | ||||||||||||
Total gross loans | 629,827 | 100.0 | % | 598,111 | 100.0 | % | ||||||||
Allowance for credit losses | (9,299 | ) | (9,610 | ) | ||||||||||
Total loans | $ | 620,528 | $ | 588,501 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, July 1, 2016 | $ | 2,972 | $ | 5,660 | $ | 948 | $ | 292 | $ | 9,872 | ||||||||||
(Reversal) Provision charged to operations | (963 | ) | 259 | (23 | ) | (273 | ) | (1,000 | ) | |||||||||||
Losses charged to allowance | (494 | ) | — | (36 | ) | — | (530 | ) | ||||||||||||
Recoveries | 803 | 131 | 23 | — | 957 | |||||||||||||||
Ending balance, September 30, 2016 | $ | 2,318 | $ | 6,050 | $ | 912 | $ | 19 | $ | 9,299 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, July 1, 2015 | $ | 3,553 | $ | 4,429 | $ | 732 | $ | — | $ | 8,714 | ||||||||||
(Reversal) Provision charged to operations | (186 | ) | 154 | 27 | 105 | 100 | ||||||||||||||
Losses charged to allowance | (11 | ) | — | (22 | ) | — | (33 | ) | ||||||||||||
Recoveries | 267 | 8 | 37 | — | 312 | |||||||||||||||
Ending balance, September 30, 2015 | $ | 3,623 | $ | 4,591 | $ | 774 | $ | 105 | $ | 9,093 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2016 | $ | 3,562 | $ | 5,204 | $ | 734 | $ | 110 | $ | 9,610 | ||||||||||
(Reversal) Provision charged to operations | (5,787 | ) | (136 | ) | 164 | (91 | ) | (5,850 | ) | |||||||||||
Losses charged to allowance | (499 | ) | — | (148 | ) | — | (647 | ) | ||||||||||||
Recoveries | 5,042 | 982 | 162 | — | 6,186 | |||||||||||||||
Ending balance, September 30, 2016 | $ | 2,318 | $ | 6,050 | $ | 912 | $ | 19 | $ | 9,299 | ||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Beginning balance, January 1, 2015 | $ | 3,130 | $ | 4,058 | $ | 1,078 | $ | 42 | $ | 8,308 | ||||||||||
Provision charged to operations | 731 | 509 | (703 | ) | 63 | 600 | ||||||||||||||
Losses charged to allowance | (708 | ) | — | (95 | ) | — | (803 | ) | ||||||||||||
Recoveries | 470 | 24 | 494 | — | 988 | |||||||||||||||
Ending balance, September 30, 2015 | $ | 3,623 | $ | 4,591 | $ | 774 | $ | 105 | $ | 9,093 |
Commercial | Real Estate | Consumer | Unallocated | Total | ||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||
Ending balance, September 30, 2016 | $ | 2,318 | $ | 6,050 | $ | 912 | $ | 19 | $ | 9,299 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 13 | $ | 96 | $ | 83 | $ | — | $ | 192 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,305 | $ | 5,954 | $ | 829 | $ | 19 | $ | 9,107 | ||||||||||
Ending balance, December 31, 2015 | $ | 3,562 | $ | 5,204 | $ | 734 | $ | 110 | $ | 9,610 | ||||||||||
Ending balance: individually evaluated for impairment | $ | 1 | $ | 128 | $ | 35 | $ | — | $ | 164 | ||||||||||
Ending balance: collectively evaluated for impairment | $ | 3,561 | $ | 5,076 | $ | 699 | $ | 110 | $ | 9,446 |
Commercial | Real Estate | Consumer | Total | |||||||||||||
Loans: | ||||||||||||||||
Ending balance, September 30, 2016 | $ | 114,637 | $ | 449,759 | $ | 64,458 | $ | 628,854 | ||||||||
Ending balance: individually evaluated for impairment | $ | 134 | $ | 3,898 | $ | 374 | $ | 4,406 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 114,503 | $ | 445,861 | $ | 64,084 | $ | 624,448 | ||||||||
Loans: | ||||||||||||||||
Ending balance, December 31, 2015 | $ | 132,669 | $ | 410,226 | $ | 54,799 | $ | 597,694 | ||||||||
Ending balance: individually evaluated for impairment | $ | 30 | $ | 5,199 | $ | 1,470 | $ | 6,699 | ||||||||
Ending balance: collectively evaluated for impairment | $ | 132,639 | $ | 405,027 | $ | 53,329 | $ | 590,995 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 75,494 | $ | 7,613 | $ | 5,930 | $ | — | $ | 89,037 | ||||||||||
Agricultural land and production | 19,631 | 4,209 | 1,760 | — | 25,600 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 164,295 | 3,982 | 1,178 | — | 169,455 | |||||||||||||||
Real estate construction and other land loans | 40,384 | — | 2,255 | — | 42,639 | |||||||||||||||
Commercial real estate | 128,184 | 804 | 703 | — | 129,691 | |||||||||||||||
Agricultural real estate | 60,709 | 8,320 | 27,072 | — | 96,101 | |||||||||||||||
Other real estate | 11,873 | — | — | — | 11,873 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 39,702 | 97 | 894 | — | 40,693 | |||||||||||||||
Consumer and installment | 23,744 | — | 21 | — | 23,765 | |||||||||||||||
Total | $ | 564,016 | $ | 25,025 | $ | 39,813 | $ | — | $ | 628,854 |
Pass | Special Mention | Sub-Standard | Doubtful | Total | ||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 77,783 | $ | 22,607 | $ | 1,807 | $ | — | $ | 102,197 | ||||||||||
Agricultural land and production | 20,422 | — | 10,050 | — | 30,472 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Owner occupied | 163,570 | 3,785 | 1,555 | — | 168,910 | |||||||||||||||
Real estate construction and other land loans | 34,916 | 644 | 3,125 | — | 38,685 | |||||||||||||||
Commercial real estate | 110,833 | 1,683 | 4,728 | — | 117,244 | |||||||||||||||
Agricultural real estate | 66,347 | — | 8,520 | — | 74,867 | |||||||||||||||
Other real estate | 10,520 | — | — | — | 10,520 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Equity loans and lines of credit | 40,332 | — | 1,964 | — | 42,296 | |||||||||||||||
Consumer and installment | 12,488 | — | 15 | — | 12,503 | |||||||||||||||
Total | $ | 537,211 | $ | 28,719 | $ | 31,764 | $ | — | $ | 597,694 |
30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days Accruing | Non-accrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | 89,037 | $ | 89,037 | $ | — | $ | 92 | ||||||||||||||||
Agricultural land and production | — | — | — | — | 25,600 | 25,600 | — | — | ||||||||||||||||||||||||
Real estate: | — | — | — | — | ||||||||||||||||||||||||||||
Owner occupied | — | 92 | — | 92 | 169,363 | 169,455 | — | 112 | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | — | — | 42,639 | 42,639 | — | 166 | ||||||||||||||||||||||||
Commercial real estate | — | — | — | — | 129,691 | 129,691 | — | 530 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 96,101 | 96,101 | — | — | ||||||||||||||||||||||||
Other real estate | — | — | — | — | 11,873 | 11,873 | — | — | ||||||||||||||||||||||||
Consumer: | — | — | — | |||||||||||||||||||||||||||||
Equity loans and lines of credit | — | — | — | — | 40,693 | 40,693 | — | 367 | ||||||||||||||||||||||||
Consumer and installment | 43 | — | — | 43 | 23,722 | 23,765 | — | 7 | ||||||||||||||||||||||||
Total | $ | 43 | $ | 92 | $ | — | $ | 135 | $ | 628,719 | $ | 628,854 | $ | — | $ | 1,274 |
30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current | Total Loans | Recorded Investment > 90 Days Accruing | Non- accrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | — | $ | 102,197 | $ | 102,197 | $ | — | $ | 29 | ||||||||||||||||
Agricultural land and production | — | — | — | — | 30,472 | 30,472 | — | — | ||||||||||||||||||||||||
Real estate: | — | |||||||||||||||||||||||||||||||
Owner occupied | — | — | — | — | 168,910 | 168,910 | — | 347 | ||||||||||||||||||||||||
Real estate construction and other land loans | — | — | — | — | 38,685 | 38,685 | — | — | ||||||||||||||||||||||||
Commercial real estate | 98 | — | — | 98 | 117,146 | 117,244 | — | 567 | ||||||||||||||||||||||||
Agricultural real estate | — | — | — | — | 74,867 | 74,867 | — | — | ||||||||||||||||||||||||
Other real estate | — | — | — | — | 10,520 | 10,520 | — | — | ||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||||
Equity loans and lines of credit | — | 166 | — | 166 | 42,130 | 42,296 | — | 1,457 | ||||||||||||||||||||||||
Consumer and installment | 38 | — | — | 38 | 12,465 | 12,503 | — | 13 | ||||||||||||||||||||||||
Total | $ | 136 | $ | 166 | $ | — | $ | 302 | $ | 597,392 | $ | 597,694 | $ | — | $ | 2,413 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Real estate: | ||||||||||||
Owner occupied | $ | 279 | $ | 323 | $ | — | ||||||
Real estate construction and other land loans | 2,255 | 2,255 | — | |||||||||
Commercial real estate | 835 | 975 | — | |||||||||
Total real estate | 3,369 | 3,553 | — | |||||||||
Consumer: | ||||||||||||
Consumer and installment | 7 | 10 | — | |||||||||
Total with no related allowance recorded | 3,376 | 3,563 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 134 | 134 | 13 | |||||||||
Real estate: | ||||||||||||
Commercial real estate | 529 | 565 | 96 | |||||||||
Total real estate | 529 | 565 | 96 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 367 | 370 | 83 | |||||||||
Total with an allowance recorded | 1,030 | 1,069 | 192 | |||||||||
Total | $ | 4,406 | $ | 4,632 | $ | 192 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||
With no related allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | $ | — | $ | 1 | $ | — | ||||||
Total commercial | — | 1 | — | |||||||||
Real estate: | ||||||||||||
Owner occupied | 166 | 245 | — | |||||||||
Real estate construction and other land loans | 3,125 | 3,125 | — | |||||||||
Commercial real estate | 1,162 | 1,302 | — | |||||||||
Total real estate | 4,453 | 4,672 | — | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 1,291 | 1,991 | — | |||||||||
Total with no related allowance recorded | 5,744 | 6,664 | — | |||||||||
With an allowance recorded: | ||||||||||||
Commercial: | ||||||||||||
Commercial and industrial | 30 | 33 | 1 | |||||||||
Real estate: | ||||||||||||
Owner occupied | 180 | 212 | 18 | |||||||||
Commercial real estate | 566 | 588 | 110 | |||||||||
Total real estate | 746 | 800 | 128 | |||||||||
Consumer: | ||||||||||||
Equity loans and lines of credit | 166 | 179 | 33 | |||||||||
Consumer and installment | 13 | 15 | 2 | |||||||||
Total consumer | 179 | 194 | 35 | |||||||||
Total with an allowance recorded | 955 | 1,027 | 164 | |||||||||
Total | $ | 6,699 | $ | 7,691 | $ | 164 |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | |||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | 143 | $ | — | ||||||||
Real estate: | ||||||||||||||||
Owner occupied | 108 | — | 556 | — | ||||||||||||
Real estate construction and other land loans | 2,686 | 51 | 1,064 | 57 | ||||||||||||
Commercial real estate | 838 | 14 | 2,020 | — | ||||||||||||
Agricultural real estate | — | — | 72 | — | ||||||||||||
Total real estate | 3,632 | 65 | 3,712 | 57 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | — | — | 1,595 | — | ||||||||||||
Consumer and installment | 8 | — | — | — | ||||||||||||
Total consumer | 8 | — | 1,595 | — | ||||||||||||
Total with no related allowance recorded | 3,640 | 65 | 5,450 | 57 | ||||||||||||
With an allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 519 | 1 | 55 | — | ||||||||||||
Real estate: | ||||||||||||||||
Owner occupied | 127 | — | 187 | — | ||||||||||||
Real estate construction and other land loans | — | — | 2,123 | — | ||||||||||||
Commercial real estate | 540 | — | 660 | 20 | ||||||||||||
Total real estate | 667 | — | 2,970 | 20 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 160 | — | 209 | — | ||||||||||||
Consumer and installment | 15 | — | 14 | — | ||||||||||||
Total consumer | 175 | — | 223 | — | ||||||||||||
Total with an allowance recorded | 1,361 | 1 | 3,248 | 20 | ||||||||||||
Total | $ | 5,001 | $ | 66 | $ | 8,698 | $ | 77 |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||
With no related allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | 104 | $ | — | $ | 3,797 | $ | — | ||||||||
Real estate: | ||||||||||||||||
Owner occupied | 189 | — | 950 | — | ||||||||||||
Real estate construction and other land loans | 2,884 | 156 | 706 | 175 | ||||||||||||
Commercial real estate | 997 | 41 | 2,171 | — | ||||||||||||
Agricultural real estate | — | — | 274 | — | ||||||||||||
Total real estate | 4,070 | 197 | 4,101 | 175 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 745 | — | 2,032 | — | ||||||||||||
Consumer and installment | 6 | — | — | — | ||||||||||||
Total consumer | 751 | — | 2,032 | — | ||||||||||||
Total with no related allowance recorded | 4,925 | 197 | 9,930 | 175 | ||||||||||||
With an allowance recorded: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 559 | 2 | 307 | — | ||||||||||||
Total commercial | 559 | 2 | 307 | — | ||||||||||||
Real estate: | ||||||||||||||||
Owner occupied | 156 | — | 193 | — | ||||||||||||
Real estate construction and other land loans | — | — | 2,986 | — | ||||||||||||
Commercial real estate | 552 | — | 807 | 59 | ||||||||||||
Total real estate | 708 | — | 3,986 | 59 | ||||||||||||
Consumer: | ||||||||||||||||
Equity loans and lines of credit | 162 | — | 373 | — | ||||||||||||
Consumer and installment | 10 | — | 17 | — | ||||||||||||
Total consumer | 172 | — | 390 | — | ||||||||||||
Total with an allowance recorded | 1,439 | 2 | 4,683 | 59 | ||||||||||||
Total | $ | 6,364 | $ | 199 | $ | 14,613 | $ | 234 |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification (2) | Post Modification Outstanding Recorded Investment (3) | Outstanding Recorded Investment | ||||||||||||||
Commercial and Industrial | 2 | $ | 45 | $ | — | $ | 45 | $ | 42 |
(1) | Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any. |
(2) | Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate. |
(3) | Balance outstanding after principal modification, if any borrower reduction to recorded investment. |
Troubled Debt Restructurings: | Number of Loans | Pre-Modification Outstanding Recorded Investment (1) | Principal Modification (2) | Post Modification Outstanding Recorded Investment (3) | Outstanding Recorded Investment | ||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and Industrial | 2 | $ | 42 | $ | — | $ | 42 | $ | 34 |
Years Ending | Estimated Core Deposit Intangible Amortization | |||
2016 | $ | 34 | ||
2017 | 137 | |||
2018 | 137 | |||
2019 | 137 | |||
2020 | 137 | |||
Thereafter | 340 | |||
$ | 922 |
Basic Earnings Per Share | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Income | $ | 3,114 | $ | 2,517 | $ | 12,575 | $ | 8,061 | ||||||||
Less: Preferred stock dividends and accretion | — | — | — | — | ||||||||||||
Net income available to common shareholders | $ | 3,114 | $ | 2,517 | $ | 12,575 | $ | 8,061 | ||||||||
Weighted average shares outstanding | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 | ||||||||||||
Basic earnings per share | $ | 0.28 | $ | 0.23 | $ | 1.15 | $ | 0.74 |
Diluted Earnings Per Share | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income available to common shareholders | $ | 3,114 | $ | 2,517 | $ | 12,575 | $ | 8,061 | ||||||||
Weighted average shares outstanding | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 | ||||||||||||
Effect of dilutive stock options | 108,533 | 86,794 | 98,412 | 83,244 | ||||||||||||
Weighted average shares of common stock and common stock equivalents | 11,092,674 | 11,024,954 | 11,068,045 | 11,012,024 | ||||||||||||
Diluted earnings per share | $ | 0.28 | $ | 0.23 | $ | 1.14 | $ | 0.73 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | ||||||||||
Options outstanding at January 1, 2016 | 240,695 | $ | 6.83 | ||||||||||
Options exercised | (32,050 | ) | $ | 6.50 | |||||||||
Options forfeited | (3,090 | ) | $ | 8.80 | |||||||||
Options outstanding at September 30, 2016 | 205,555 | $ | 6.87 | 3.53 | $ | 1,847 | |||||||
Options vested or expected to vest at September 30, 2016 | 204,655 | $ | 6.87 | 3.52 | $ | 1,840 | |||||||
Options exercisable at September 30, 2016 | 190,135 | $ | 6.78 | 3.33 | $ | 1,726 |
For the Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Intrinsic value of options exercised | $ | 197 | $ | 26 | ||||
Cash received from options exercised | $ | 208 | $ | — | ||||
Excess tax benefit realized for option exercises | $ | 19 | $ | — |
Shares | Weighted Average Grant-Date Fair Value | ||||||
Nonvested outstanding shares at January 1, 2016 | 53,028 | $ | 12.34 | ||||
Granted | 54,650 | $ | 14.10 | ||||
Vested | (12,438 | ) | $ | 12.38 | |||
Forfeited | (1,619 | ) | $ | 12.95 | |||
Nonvested outstanding shares at September 30, 2016 | 93,621 | $ | 13.35 |
For the Nine Months Ended September 30, 2016 | For the Nine Months Ended September 30, 2015 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-earning deposits in other banks | $ | 53,613 | $ | 210 | 0.52 | % | $ | 62,664 | $ | 147 | 0.31 | % | ||||||||||
Securities: | ||||||||||||||||||||||
Taxable securities | 313,620 | 4,486 | 1.91 | % | 277,262 | 3,477 | 1.67 | % | ||||||||||||||
Non-taxable securities (1) | 185,457 | 7,091 | 5.10 | % | 176,075 | 7,010 | 5.31 | % | ||||||||||||||
Total investment securities | 499,077 | 11,577 | 3.09 | % | 453,337 | 10,487 | 3.08 | % | ||||||||||||||
Federal funds sold | 150 | — | 0.50 | % | 242 | — | 0.25 | % | ||||||||||||||
Total securities and interest-earning deposits | 552,840 | 11,787 | 2.84 | % | 516,243 | 10,634 | 2.75 | % | ||||||||||||||
Loans (2) (3) | 610,932 | 24,208 | 5.29 | % | 576,356 | 22,677 | 5.26 | % | ||||||||||||||
Federal Home Loan Bank stock | 4,825 | 314 | 8.69 | % | 4,810 | 474 | 13.14 | % | ||||||||||||||
Total interest-earning assets | 1,168,597 | $ | 36,309 | 4.14 | % | 1,097,409 | $ | 33,785 | 4.10 | % | ||||||||||||
Allowance for credit losses | (10,353 | ) | (8,782 | ) | ||||||||||||||||||
Nonaccrual loans | 2,449 | 9,677 | ||||||||||||||||||||
Other real estate owned | 50 | 45 | ||||||||||||||||||||
Cash and due from banks | 23,722 | 24,991 | ||||||||||||||||||||
Bank premises and equipment | 8,969 | 9,733 | ||||||||||||||||||||
Other non-earning assets | 82,780 | 76,070 | ||||||||||||||||||||
Total average assets | $ | 1,276,214 | $ | 1,209,143 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings and NOW accounts | $ | 321,224 | $ | 230 | 0.10 | % | $ | 297,590 | $ | 194 | 0.09 | % | ||||||||||
Money market accounts | 243,176 | 96 | 0.05 | % | 223,530 | 108 | 0.06 | % | ||||||||||||||
Time certificates of deposit, under $100,000 | 49,774 | 114 | 0.31 | % | 55,712 | 137 | 0.33 | % | ||||||||||||||
Time certificates of deposit, $100,000 and over | 82,725 | 250 | 0.40 | % | 94,822 | 279 | 0.39 | % | ||||||||||||||
Total interest-bearing deposits | 696,899 | 690 | 0.13 | % | 671,654 | 718 | 0.14 | % | ||||||||||||||
Other borrowed funds | 5,155 | 88 | 2.28 | % | 5,156 | 73 | 1.89 | % | ||||||||||||||
Total interest-bearing liabilities | 702,054 | $ | 778 | 0.15 | % | 676,810 | $ | 791 | 0.16 | % | ||||||||||||
Non-interest bearing demand deposits | 406,856 | 381,653 | ||||||||||||||||||||
Other liabilities | 17,756 | 16,571 | ||||||||||||||||||||
Shareholders’ equity | 149,548 | 134,109 | ||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,276,214 | $ | 1,209,143 | ||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 36,309 | 4.14 | % | $ | 33,785 | 4.10 | % | ||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 778 | 0.15 | % | 791 | 0.16 | % | ||||||||||||||||
Net interest income and net interest margin (4) | $ | 35,531 | 4.05 | % | $ | 32,994 | 4.01 | % |
(1) | Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $2,411 and $2,383 in 2016 and 2015, respectively. |
(2) | Loan interest income includes loan (costs) fees of $(31) in 2016 and $96 in 2015 |
(3) | Average loans do not include nonaccrual loans but do include interest income recovered from previously charged off loans. |
(4) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
Changes in Volume/Rate | For the Nine Months Ended September 30, 2016 and 2015 | |||||||||||
(In thousands) | Volume | Rate | Net | |||||||||
Increase (decrease) due to changes in: | ||||||||||||
Interest income: | ||||||||||||
Interest-earning deposits in other banks | $ | (21 | ) | $ | 84 | $ | 63 | |||||
Investment securities: | ||||||||||||
Taxable | 455 | 554 | 1,009 | |||||||||
Non-taxable (1) | 373 | (292 | ) | 81 | ||||||||
Total investment securities | 828 | 262 | 1,090 | |||||||||
Loans | 1,361 | 170 | 1,531 | |||||||||
FHLB Stock | 1 | (161 | ) | (160 | ) | |||||||
Total earning assets (1) | 2,169 | 355 | 2,524 | |||||||||
Interest expense: | ||||||||||||
Deposits: | ||||||||||||
Savings, NOW and MMA | 25 | (1 | ) | 24 | ||||||||
Certificates of deposit under $100,000 | (15 | ) | (8 | ) | (23 | ) | ||||||
Certificates of deposit $100,000 and over | (35 | ) | 6 | (29 | ) | |||||||
Total interest-bearing deposits | (25 | ) | (3 | ) | (28 | ) | ||||||
Other borrowed funds | — | 15 | 15 | |||||||||
Total interest bearing liabilities | (25 | ) | 12 | (13 | ) | |||||||
Net interest income (1) | $ | 2,194 | $ | 343 | $ | 2,537 |
Loan Type (dollars in thousands) | September 30, 2016 | December 31, 2015 | ||||||
Commercial: | ||||||||
Commercial and industrial | $ | 1,967 | $ | 3,143 | ||||
Agricultural land and production | 351 | 419 | ||||||
Total commercial | 2,318 | 3,562 | ||||||
Real estate: | ||||||||
Owner occupied | 1,648 | 1,556 | ||||||
Real estate construction and other land loans | 623 | 694 | ||||||
Commercial real estate | 2,017 | 1,686 | ||||||
Agricultural real estate | 1,628 | 1,149 | ||||||
Other real estate | 134 | 119 | ||||||
Total real estate | 6,050 | 5,204 | ||||||
Consumer: | ||||||||
Equity loans and lines of credit | 544 | 500 | ||||||
Consumer and installment | 368 | 234 | ||||||
Total consumer | 912 | 734 | ||||||
Unallocated reserves | 19 | 110 | ||||||
Total allowance for credit losses | $ | 9,299 | $ | 9,610 |
For the Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Other Expense | % Average Assets | Other Expense | % Average Assets | ||||||||||
Stationery/supplies | $ | 175 | 0.02 | % | $ | 211 | 0.02 | % | ||||||
Amortization of software | 197 | 0.02 | % | 174 | 0.02 | % | ||||||||
Postage | 151 | 0.02 | % | 158 | 0.02 | % | ||||||||
Risk management expense | 113 | 0.01 | % | 121 | 0.01 | % | ||||||||
Personnel other | 134 | 0.01 | % | 128 | 0.01 | % | ||||||||
Armored courier fees | 165 | 0.02 | % | 163 | 0.02 | % | ||||||||
Credit card expense | 142 | 0.01 | % | 96 | 0.01 | % | ||||||||
Telephone | 283 | 0.03 | % | 209 | 0.02 | % | ||||||||
Donations | 133 | 0.01 | % | 134 | 0.01 | % | ||||||||
Education/training | 115 | 0.01 | % | 113 | 0.01 | % | ||||||||
General insurance | 111 | 0.01 | % | 112 | 0.01 | % | ||||||||
Operating losses | 67 | 0.01 | % | 35 | — | % | ||||||||
Other | 933 | 0.10 | % | 1,083 | 0.12 | % | ||||||||
Total other non-interest expense | $ | 2,719 | 0.28 | % | $ | 2,737 | 0.30 | % |
For the Three Months Ended September 30, 2016 | For the Three Months Ended September 30, 2015 | |||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Income/ Expense | Average Interest Rate | Average Balance | Interest Income/ Expense | Average Interest Rate | ||||||||||||||||
ASSETS | ||||||||||||||||||||||
Interest-earning deposits in other banks | $ | 54,618 | $ | 71 | 0.52 | % | $ | 60,569 | $ | 49 | 0.32 | % | ||||||||||
Securities | ||||||||||||||||||||||
Taxable securities | 313,769 | 1,500 | 1.91 | % | 285,655 | 1,234 | 1.73 | % | ||||||||||||||
Non-taxable securities (1) | 191,866 | 2,397 | 5.00 | % | 181,233 | 2,413 | 5.33 | % | ||||||||||||||
Total investment securities | 505,635 | 3,897 | 3.08 | % | 466,888 | 3,647 | 3.12 | % | ||||||||||||||
Federal funds sold | 74 | — | 0.50 | % | 249 | — | 0.25 | % | ||||||||||||||
Total securities and interest-earning deposits | 560,327 | 3,968 | 2.83 | % | 527,706 | 3,696 | 2.80 | % | ||||||||||||||
Loans (2) (3) | 622,955 | 8,112 | 5.18 | % | 593,395 | 7,747 | 5.18 | % | ||||||||||||||
Federal Home Loan Bank stock | 4,823 | 110 | 9.07 | % | 4,823 | 120 | 9.87 | % | ||||||||||||||
Total interest-earning assets | 1,188,105 | $ | 12,190 | 4.10 | % | 1,125,924 | $ | 11,563 | 4.11 | % | ||||||||||||
Allowance for credit losses | (9,982 | ) | (8,857 | ) | ||||||||||||||||||
Non-accrual loans | 1,329 | 4,333 | ||||||||||||||||||||
Other real estate owned | 150 | — | ||||||||||||||||||||
Cash and due from banks | 23,262 | 24,482 | ||||||||||||||||||||
Bank premises and equipment | 8,801 | 9,517 | ||||||||||||||||||||
Other non-earning assets | 85,542 | 75,288 | ||||||||||||||||||||
Total average assets | $ | 1,297,207 | $ | 1,230,687 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings and NOW accounts | $ | 327,124 | $ | 86 | 0.10 | % | $ | 300,076 | $ | 71 | 0.09 | % | ||||||||||
Money market accounts | 249,355 | 34 | 0.05 | % | 223,912 | 37 | 0.07 | % | ||||||||||||||
Time certificates of deposit, under $100,000 | 44,708 | 40 | 0.36 | % | 52,765 | 47 | 0.35 | % | ||||||||||||||
Time certificates of deposit, $100,000 and over | 83,893 | 80 | 0.38 | % | 96,520 | 91 | 0.37 | % | ||||||||||||||
Total interest-bearing deposits | 705,080 | 240 | 0.14 | % | 673,273 | 246 | 0.14 | % | ||||||||||||||
Other borrowed funds | 5,155 | 30 | 2.33 | % | 5,155 | 25 | 1.90 | % | ||||||||||||||
Total interest-bearing liabilities | 710,235 | $ | 270 | 0.15 | % | 678,428 | $ | 271 | 0.16 | % | ||||||||||||
Non-interest bearing demand deposits | 412,043 | 401,385 | ||||||||||||||||||||
Other liabilities | 19,334 | 16,165 | ||||||||||||||||||||
Shareholders’ equity | 155,595 | 134,709 | ||||||||||||||||||||
Total average liabilities and shareholders’ equity | $ | 1,297,207 | $ | 1,230,687 | ||||||||||||||||||
Interest income and rate earned on average earning assets | $ | 12,190 | 4.10 | % | $ | 11,563 | 4.11 | % | ||||||||||||||
Interest expense and interest cost related to average interest-bearing liabilities | 270 | 0.15 | % | 271 | 0.16 | % | ||||||||||||||||
Net interest income and net interest margin (4) | $ | 11,920 | 4.01 | % | $ | 11,292 | 4.01 | % |
(1) | Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $815 and $820 in 2016 and 2015, respectively. |
(2) | Loan interest income includes loan (costs) fees of $(53) in 2016 and $(54) in 2015 |
(3) | Average loans do not include non-accrual loans but do include interest income recovered from previously charged off loans. |
(4) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
Changes in Volume/Rate | For the Three Months Ended September 30, 2016 and 2015 | |||||||||||
(In thousands) | Volume | Rate | Net | |||||||||
Increase (decrease) due to changes in: | ||||||||||||
Interest income: | ||||||||||||
Interest-earning deposits in other banks | $ | (4 | ) | $ | 26 | $ | 22 | |||||
Investment securities: | ||||||||||||
Taxable | 121 | 145 | 266 | |||||||||
Non-taxable (1) | 141 | (157 | ) | (16 | ) | |||||||
Total investment securities | 262 | (12 | ) | 250 | ||||||||
Federal funds sold | — | — | — | |||||||||
Loans | 385 | (20 | ) | 365 | ||||||||
FHLB Stock | — | (10 | ) | (10 | ) | |||||||
Total earning assets (1) | 643 | (16 | ) | 627 | ||||||||
Interest expense: | ||||||||||||
Deposits: | ||||||||||||
Savings, NOW and MMA | 11 | 1 | 12 | |||||||||
Certificates of deposit under $100,000 | (7 | ) | — | (7 | ) | |||||||
Certificates of deposit $100,000 and over | (11 | ) | — | (11 | ) | |||||||
Total interest-bearing deposits | (7 | ) | 1 | (6 | ) | |||||||
Other borrowed funds | — | 5 | 5 | |||||||||
Total interest bearing liabilities | (7 | ) | 6 | (1 | ) | |||||||
Net interest income (1) | $ | 650 | $ | (22 | ) | $ | 628 |
Loan Type (dollars in thousands) | September 30, 2016 | % of Total Loans | December 31, 2015 | % of Total Loans | ||||||||||
Commercial: | ||||||||||||||
Commercial and industrial | $ | 89,037 | 14.1 | % | $ | 102,197 | 17.1 | % | ||||||
Agricultural land and production | 25,600 | 4.1 | % | 30,472 | 5.1 | % | ||||||||
Total commercial | 114,637 | 18.2 | % | 132,669 | 22.2 | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied | 169,455 | 26.9 | % | 168,910 | 28.2 | % | ||||||||
Real estate construction and other land loans | 42,639 | 6.8 | % | 38,685 | 6.5 | % | ||||||||
Commercial real estate | 129,691 | 20.6 | % | 117,244 | 19.6 | % | ||||||||
Agricultural real estate | 96,101 | 15.3 | % | 74,867 | 12.5 | % | ||||||||
Other real estate | 11,873 | 1.9 | % | 10,520 | 1.8 | % | ||||||||
Total real estate | 449,759 | 71.5 | % | 410,226 | 68.6 | % | ||||||||
Consumer: | ||||||||||||||
Equity loans and lines of credit | 40,693 | 6.5 | % | 42,296 | 7.1 | % | ||||||||
Consumer and installment | 23,765 | 3.8 | % | 12,503 | 2.1 | % | ||||||||
Total consumer | 64,458 | 10.3 | % | 54,799 | 9.2 | % | ||||||||
Net deferred origination costs | 973 | 417 | ||||||||||||
Total gross loans | 629,827 | 100.0 | % | 598,111 | 100.0 | % | ||||||||
Allowance for credit losses | (9,299 | ) | (9,610 | ) | ||||||||||
Total loans | $ | 620,528 | $ | 588,501 |
(In thousands) | September 30, 2016 | December 31, 2015 | ||||||
Nonaccrual loans: | ||||||||
Commercial and industrial | $ | 92 | $ | — | ||||
Owner occupied | 92 | 324 | ||||||
Real estate construction and other land loans | 166 | — | ||||||
Commercial real estate | 529 | 567 | ||||||
Equity loans and lines of credit | 368 | 172 | ||||||
Consumer and installment | 7 | 13 | ||||||
Troubled debt restructured loans (non-accruing): | ||||||||
Commercial and industrial | — | 29 | ||||||
Owner occupied | 20 | 23 | ||||||
Equity loans and lines of credit | — | 1,285 | ||||||
Total nonaccrual | 1,274 | 2,413 | ||||||
Accruing loans past due 90 days or more | — | — | ||||||
Total nonperforming loans | $ | 1,274 | $ | 2,413 | ||||
Nonperforming loans to total loans | 0.20 | % | 0.40 | % | ||||
Ratio of allowance for credit losses to nonperforming loans | 729.9 | % | 398.3 | % | ||||
Loans considered to be impaired | $ | 4,406 | $ | 6,699 | ||||
Related allowance for credit losses on impaired loans | $ | 192 | $ | 164 |
(In thousands) | Balance, December 31, 2015 | Additions to Nonaccrual Loans | Net Pay Downs | Transfers to Foreclosed Collateral and OREO | Returns to Accrual Status | Charge- Offs | Balance, September 30, 2016 | |||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||||||||||
Commercial and industrial | $ | — | $ | 1,185 | $ | (279 | ) | $ | (321 | ) | $ | — | $ | (493 | ) | $ | 92 | |||||||||||
Real estate | 891 | 263 | (367 | ) | — | — | — | 787 | ||||||||||||||||||||
Equity loans and lines of credit | 172 | 373 | (80 | ) | — | — | (97 | ) | 368 | |||||||||||||||||||
Consumer | 13 | 60 | (6 | ) | (42 | ) | — | (18 | ) | 7 | ||||||||||||||||||
Restructured loans (non-accruing): | ||||||||||||||||||||||||||||
Commercial and industrial | 29 | — | (29 | ) | — | — | — | — | ||||||||||||||||||||
Real estate | 23 | — | (3 | ) | — | — | — | 20 | ||||||||||||||||||||
Equity loans and lines of credit | 1,285 | — | (1,285 | ) | — | — | — | — | ||||||||||||||||||||
Total nonaccrual | $ | 2,413 | $ | 1,881 | $ | (2,049 | ) | $ | (363 | ) | $ | — | $ | (608 | ) | $ | 1,274 |
For the Nine Months Ended September 30, | ||||||||
(In thousands) | 2016 | 2015 | ||||||
Beginning balance | $ | — | $ | — | ||||
Additions | — | 227 | ||||||
1st lien assumed | — | 121 | ||||||
Dispositions | — | (359 | ) | |||||
Write-downs | — | — | ||||||
Net gain on disposition | — | 11 | ||||||
Ending balance | $ | — | $ | — |
For the Nine Months Ended September 30, | For the Year Ended December 31, | For the Nine Months Ended September 30, | ||||||||||
(Dollars in thousands) | 2016 | 2015 | 2015 | |||||||||
Balance, beginning of period | $ | 9,610 | 8,308 | 8,308 | ||||||||
(Reversal) Provision charged to operations | (5,850 | ) | 600 | 600 | ||||||||
Losses charged to allowance | (647 | ) | (961 | ) | (803 | ) | ||||||
Recoveries | 6,186 | 1,663 | 988 | |||||||||
Balance, end of period | $ | 9,299 | $ | 9,610 | $ | 9,093 | ||||||
Allowance for credit losses to total loans at end of period | 1.48 | % | 1.61 | % | 1.52 | % |
September 30, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||||||||
(Dollars in thousands) | Balance | % to Total Loans | Balance | % to Total Loans | Balance | % to Total Loans | |||||||||||||||
Impaired loans with specific reserves | $ | 1,030 | 0.16 | % | $ | 955 | 0.16 | % | $ | 4,221 | 0.70 | % | |||||||||
Past due loans | 135 | 0.02 | % | 302 | 0.05 | % | 1,335 | 0.22 | % | ||||||||||||
Nonaccrual loans | 1,274 | 0.20 | % | 2,413 | 0.40 | % | 2,494 | 0.42 | % |
Years Ended | Estimated Core Deposit Intangible Amortization | |||
2016 | $ | 34 | ||
2017 | 137 | |||
2018 | 137 | |||
2019 | 137 | |||
2020 | 137 | |||
Thereafter | 340 | |||
$ | 922 |
(Dollars in thousands) | September 30, 2016 | % of Total Deposits | Average Effective Rate | December 31, 2015 | % of Total Deposits | Average Effective Rate | ||||||||||||||
NOW accounts | $ | 235,427 | 21.0 | % | 0.12 | % | $ | 227,167 | 20.4 | % | 0.10 | % | ||||||||
MMA accounts | 247,050 | 21.9 | % | 0.05 | % | 239,241 | 21.4 | % | 0.06 | % | ||||||||||
Time deposits | 127,721 | 11.3 | % | 0.37 | % | 139,703 | 12.5 | % | 0.37 | % | ||||||||||
Savings deposits | 94,116 | 8.3 | % | 0.03 | % | 81,383 | 7.3 | % | 0.04 | % | ||||||||||
Total interest-bearing | 704,314 | 62.5 | % | 0.13 | % | 687,494 | 61.6 | % | 0.14 | % | ||||||||||
Non-interest bearing | 423,183 | 37.5 | % | 428,773 | 38.4 | % | ||||||||||||||
Total deposits | $ | 1,127,497 | 100.0 | % | $ | 1,116,267 | 100.0 | % |
• | introduces as a new capital measure, Common Equity Tier 1 (“CET1”), more commonly known in the United States as “Tier 1 Common,” and defines CET1 narrowly by requiring that most adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and expands the scope of the adjustments as compared to existing regulations; |
• | when fully phased in, requires banks to maintain: (i) a newly adopted international standard, a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%); (ii) an additional “SIFI buffer” for those large institutions deemed to be systemically important, ranging from 1.0% to 2.5%, and up to 3.5% under certain conditions; (iii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation); (iv) a minimum ratio of Total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation); and (v) as a newly adopted international standard, a minimum |
• | an additional “countercyclical capital buffer,” generally to be imposed when national regulators determine that excess aggregate credit growth becomes associated with a buildup of systemic risk, that would be a CET1 add-on to the capital conservation buffer in the range of 0% to 2.5% when fully implemented. |
September 30, 2016 | December 31, 2015 | |||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | ||||||||||
Tier 1 Leverage Ratio | ||||||||||||||
Central Valley Community Bancorp and Subsidiary | $ | 117,061 | 9.35 | % | $ | 105,825 | 8.65 | % | ||||||
Minimum regulatory requirement | $ | 50,072 | 4.00 | % | $ | 48,950 | 4.00 | % | ||||||
Central Valley Community Bank | $ | 105,044 | 8.40 | % | $ | 104,878 | 8.58 | % | ||||||
Minimum requirement for “Well-Capitalized” institution | $ | 62,563 | 5.00 | % | $ | 61,148 | 5.00 | % | ||||||
Minimum regulatory requirement | $ | 50,050 | 4.00 | % | $ | 48,918 | 4.00 | % | ||||||
Common Equity Tier 1 Ratio | ||||||||||||||
Central Valley Community Bancorp and Subsidiary | $ | 113,488 | 13.80 | % | 103,152 | 13.44 | % | |||||||
Minimum regulatory requirement | $ | 37,061 | 4.50 | % | 34,650 | 4.50 | % | |||||||
Central Valley Community Bank | $ | 105,044 | 12.93 | % | 104,878 | 13.67 | % | |||||||
Minimum requirement for “Well-Capitalized” institution | $ | 52,889 | 6.50 | % | 50,017 | 6.50 | % | |||||||
Minimum regulatory requirement | $ | 36,616 | 4.50 | % | 34,627 | 4.50 | % | |||||||
Tier 1 Risk-Based Capital Ratio | ||||||||||||||
Central Valley Community Bancorp and Subsidiary | $ | 117,061 | 14.24 | % | $ | 105,825 | 13.79 | % | ||||||
Minimum regulatory requirement | $ | 49,415 | 6.00 | % | $ | 46,200 | 6.00 | % | ||||||
Central Valley Community Bank | $ | 105,044 | 12.93 | % | $ | 104,878 | 13.67 | % | ||||||
Minimum requirement for “Well-Capitalized” institution | $ | 65,094 | 8.00 | % | $ | 61,560 | 8.00 | % | ||||||
Minimum regulatory requirement | $ | 48,821 | 6.00 | % | $ | 46,170 | 6.00 | % | ||||||
Total Risk-Based Capital Ratio | ||||||||||||||
Central Valley Community Bancorp and Subsidiary | $ | 126,565 | 15.39 | % | $ | 115,466 | 15.04 | % | ||||||
Minimum regulatory requirement | $ | 65,887 | 8.00 | % | $ | 61,601 | 8.00 | % | ||||||
Central Valley Community Bank | $ | 114,548 | 14.10 | % | $ | 114,513 | 14.93 | % | ||||||
Minimum requirement for “Well-Capitalized” institution | $ | 81,368 | 10.00 | % | $ | 76,949 | 10.00 | % | ||||||
Minimum regulatory requirement | $ | 65,094 | 8.00 | % | $ | 61,560 | 8.00 | % |
Credit Lines (In thousands) | September 30, 2016 | December 31, 2015 | ||||||
Unsecured Credit Lines | ||||||||
(interest rate varies with market): | ||||||||
Credit limit | $ | 40,000 | $ | 40,000 | ||||
Balance outstanding | $ | — | $ | — | ||||
Federal Home Loan Bank | ||||||||
(interest rate at prevailing interest rate): | ||||||||
Credit limit | $ | 322,592 | $ | 308,356 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 173,769 | $ | 215,223 | ||||
Fair value of collateral | $ | 173,832 | $ | 215,307 | ||||
Federal Reserve Bank | ||||||||
(interest rate at prevailing discount interest rate): | ||||||||
Credit limit | $ | 9,724 | $ | 2,328 | ||||
Balance outstanding | $ | — | $ | — | ||||
Collateral pledged | $ | 2,468 | $ | 2,578 | ||||
Fair value of collateral | $ | 2,514 | $ | 2,598 |
31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. | ||
31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. | ||
32.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | ||
32.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Taxonomy Extension labels Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Link Document |
Central Valley Community Bancorp | |
Date: November 8, 2016 | /s/ James M. Ford |
James M. Ford | |
President and Chief Executive Officer | |
Date: November 8, 2016 | /s/ David A. Kinross |
David A. Kinross | |
Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX | |||
Exhibit Number | Description | ||
31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. (1) | ||
31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(d) / 15d-14(a) of the Securities Exchange Act of 1934. (1) | ||
32.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. (1) | ||
32.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. (1) | ||
101.INS | XBRL Instance Document (1) | ||
101.SCH | XBRL Taxonomy Extension Schema Document (1) | ||
101.CAL | XBRL Taxonomy Extension Calculation Document (1) | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase (1) | ||
101.LAB | XBRL Taxonomy Extension labels Linkbase Document (1) | ||
101.PRE | XBRL Taxonomy Extension Presentation Link Document (1) |
/s/ James M. Ford | Date: November 8, 2016 | |
James M. Ford, |
/s/ David A. Kinross | Date: November 8, 2016 | |
David A. Kinross, |
/s/ James M. Ford | |
JAMES M. FORD | |
President and Chief Executive Officer |
/s/ David A. Kinross | |
DAVID A. KINROSS | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CENTRAL VALLEY COMMUNITY BANCORP | |
Entity Central Index Key | 0001127371 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 12,140,705 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Available-for-sale investment securities, Amortized cost | $ 533,044 | $ 470,080 |
Fair value of held-to-maturity investment securities | 31,712 | |
Loans, allowance for credit losses | $ 9,299 | $ 9,610 |
Preferred stock, liquidation preference | $ 1,000 | $ 1,000 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, authorized | 80,000,000 | 80,000,000 |
Common stock, issued | 11,081,854 | 10,996,773 |
Common stock, outstanding | 11,081,854 | 10,996,773 |
Common stock, par value | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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INTEREST INCOME: | |||||||
Interest and fees on loans | $ 8,112,000 | $ 7,747,000 | $ 24,208,000 | $ 22,677,000 | |||
Interest on deposits in other banks | 71,000 | 49,000 | 210,000 | 147,000 | |||
Interest and dividends on investment securities: | |||||||
Taxable | 1,500,000 | 1,234,000 | 4,486,000 | 3,477,000 | |||
Exempt from Federal income taxes | 1,582,000 | 1,593,000 | 4,680,000 | 4,627,000 | |||
Total interest income | 11,265,000 | 10,623,000 | 33,584,000 | 30,928,000 | |||
INTEREST EXPENSE: | |||||||
Interest on deposits | 240,000 | 246,000 | 690,000 | 718,000 | |||
Interest on junior subordinated deferrable interest debentures | 30,000 | 25,000 | 88,000 | 73,000 | |||
Total interest expense | 270,000 | 271,000 | 778,000 | 791,000 | |||
Net interest income before provision for credit losses | 10,995,000 | 10,352,000 | 32,806,000 | 30,137,000 | |||
PROVISION FOR CREDIT LOSSES | (1,000,000) | 100,000 | (5,850,000) | 600,000 | |||
Net interest income after provision for credit losses | 11,995,000 | 10,252,000 | 38,656,000 | 29,537,000 | |||
NON-INTEREST INCOME: | |||||||
Service charges | 743,000 | 700,000 | 2,227,000 | 2,321,000 | |||
Appreciation in cash surrender value of bank owned life insurance | 131,000 | 142,000 | 411,000 | 451,000 | |||
Interchange fees | 312,000 | 297,000 | 904,000 | 881,000 | |||
Net gain on disposal of other real estate owned | 0 | $ 0 | $ 0 | $ 11,000 | |||
Net realized gains on sales of investment securities | 286,000 | 0 | 1,836,000 | 1,459,000 | |||
Other-than-temporary impairment loss on investment securities | 0 | 0 | (136,000) | 0 | |||
Federal Home Loan Bank dividends | 110,000 | 120,000 | 314,000 | 474,000 | |||
Loan placement fees | 347,000 | 241,000 | 792,000 | 794,000 | |||
Other income | 206,000 | 222,000 | 1,005,000 | 1,117,000 | |||
Total non-interest income | 2,135,000 | 1,722,000 | 7,353,000 | 7,508,000 | |||
NON-INTEREST EXPENSES: | |||||||
Salaries and employee benefits | 5,608,000 | 5,254,000 | 16,304,000 | 15,472,000 | |||
Occupancy and equipment | 1,124,000 | 1,204,000 | 3,511,000 | 3,522,000 | |||
Professional services | 346,000 | 395,000 | 971,000 | 1,212,000 | |||
Data processing expense | 390,000 | 287,000 | 1,145,000 | 862,000 | |||
Regulatory assessments | 134,000 | 223,000 | 469,000 | 821,000 | |||
ATM and Debit card expenses | 159,000 | 145,000 | 469,000 | 411,000 | |||
License and maintenance contract | 125,000 | 123,000 | 388,000 | 392,000 | |||
Directors' Expenses | 163,000 | 124,000 | 474,000 | 316,000 | |||
Advertising | 131,000 | 157,000 | 444,000 | 474,000 | |||
Internet banking expense | 170,000 | 167,000 | 497,000 | 541,000 | |||
Acquisition and integration | 363,000 | 0 | 515,000 | 0 | |||
Amortization of core deposit intangibles | 34,000 | 85,000 | 102,000 | 253,000 | |||
Other expense | 908,000 | 864,000 | 2,719,000 | 2,737,000 | |||
Total non-interest expenses | 9,655,000 | 9,028,000 | 28,008,000 | 27,013,000 | |||
Income before provision for income taxes | 4,475,000 | 2,946,000 | 18,001,000 | 10,032,000 | |||
Provision for income taxes | 1,361,000 | 429,000 | 5,426,000 | 1,971,000 | |||
Net income available to common shareholders | $ 3,114,000 | $ 2,517,000 | $ 12,575,000 | $ 8,061,000 | |||
Net income per common share: | |||||||
Basic earnings per common share (in dollars per share) | $ 0.28 | $ 0.23 | $ 1.15 | $ 0.74 | |||
Weighted average common shares used in basic computation (in shares) | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 | |||
Diluted earnings per common share (in dollars per share) | $ 0.28 | $ 0.23 | $ 1.14 | $ 0.73 | |||
Weighted average common shares used in diluted computation (in shares) | 11,092,674 | 11,024,954 | 11,068,045 | 11,012,024 | |||
Cash dividend per common share | $ 0.06 | $ 0.06 | $ 0.18 | $ 0.12 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,114 | $ 2,517 | $ 12,575 | $ 8,061 |
Unrealized gains on securities: | ||||
Unrealized holdings gains (losses) arising during the period | (4,453) | 3,946 | 8,914 | 677 |
Less: reclassification for net gains included in net income | 286 | 0 | 1,140 | 1,459 |
Less: reclassification for other-than-temporary impairment loss included in net income | 0 | 0 | (136) | 0 |
Transfer of investment securities from held-to-maturity to available-for-sale | 0 | 0 | 2,647 | 0 |
Amortization of net unrealized gains transferred | 0 | (2) | (64) | (4) |
Other comprehensive income (loss), before tax | (4,739) | 3,944 | 10,493 | (786) |
Tax (expense) benefit related to items of other comprehensive income | 1,790 | (1,624) | (4,505) | 322 |
Total other comprehensive income (loss) | (2,949) | 2,320 | 5,988 | (464) |
Comprehensive income | $ 165 | $ 4,837 | $ 18,563 | $ 7,597 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2015 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at September 30, 2016, and the results of its operations and its cash flows for the three and nine month interim periods ended September 30, 2016 and 2015 have been included. Certain reclassifications have been made to prior year amounts to conform to the 2016 presentation. Reclassifications had no effect on prior period net income or shareholders’ equity. The results of operations for interim periods are not necessarily indicative of results for the full year. The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank. The Company terminated its interest in Central Valley Community Insurance Service, LLC (CVCIS) at the beginning of the third quarter of 2015. The Bank’s interest in CVCIS was originally established in 2006 for the purpose of providing health, commercial property and casualty insurance products and services primarily to business customers. The termination of this entity did not have a material impact on the Company’s financial statements. Impact of New Financial Accounting Standards: FASB Accounting Standards Update (ASU) 2015-03 - Interest-Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs: ASU 2015-03 requires the debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs is not affected by the amendments in ASU 2015-03. ASU 2015-03 was effective for the Company on January 1, 2016, and did not have a significant impact on the Company’s consolidated financial statements, results of operations, cash flows, or disclosures. FASB Accounting Standards Update (ASU) 2015-16 - Business Combinations (Subtopic 805) - Simplifying the Accounting for Measurement-Period Adjustments: ASU 2015-16 requires that adjustments to provisional amounts that are identified during the measurement period of a business combination be recognized in the reporting period in which the adjustment amounts are determined. Furthermore, the income statement effects of such adjustments, if any, must be calculated as if the accounting had been completed at the acquisition date. The portion of the amount recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date is required to be reported separately on the face of the income statement, or disclosed within the footnotes to the financial statements. Under previous guidance, adjustments to provisional amounts identified during the measurement period are to be recognized retrospectively. ASU 2015-16 was effective for the Company on January 1, 2016, and did not have a significant impact on the Company’s consolidated financial statements, results of operations, cash flows, or disclosures. FASB Accounting Standards Update (ASU) 2016-01 - Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, was issued January 2016. ASU 2016-01 addresses certain aspects of recognition, measurement presentation, and disclosure of financial instruments. Most notably the ASU changes the income statement impact of equity investments held by the Company and the requirement for the Company to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The Company will be required to adopt the provisions of ASU 2016-01 on January 1, 2018. Management is evaluating the impact that this ASU will have on the Company’s financial statements. FASB Accounting Standards Update (ASU) 2016-02 - Leases - Overall (Subtopic 845): was issued February 2016. ASU 2016-02 requires the lessee to recognize most leases on the balance sheet thereby resulting in the recognition of lease assets and liabilities for those leases currently classified as operating leases. The accounting for lessors is largely unchanged. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. Management is evaluating the impact that this ASU will have on the Company’s financial statements. FASB Accounting Standards Update (ASU) 2016-09 - Compensation - Stock Compensation (Subtopic 718): Improvements to Employee Share-Based Payment Accounting, was issued March 2016. ASU 2016-09 addresses simplification of several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. Management is evaluating the impact that this ASU will have on the Company’s financial statements. FASB Accounting Standards Update (ASU) 2016-13 - Measurement of Credit Losses on Financial Instruments (Subtopic 326): Financial Instruments - Credit Losses was issued June 2016. The amendments in ASU 2016-13 to Topic 326, require that an organization measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on AFS debt securities and purchased financial assets with credit deterioration. The amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management is evaluating the impact that this ASU will have on the Company’s financial statements. FASB Accounting Standards Update (ASU) 2016-15 - Statement of Cash Flows (Subtopic 230): Classification of Certain Cash Receipts and Cash Payments was issued August 2016. The amendments in ASU 2016-15 to Topic 230, seek to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. For public entities, the ASU becomes effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. Management is evaluating the impact that this ASU will have on the Company’s financial statements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In accordance with applicable guidance, the Company groups its assets and liabilities measured 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. Valuations within these levels are based upon: Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active exchange markets that the Company has the ability to access as of the measurement date. Level 2 — 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 or can be corroborated by observable market data. Level 3 — Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability. Valuation techniques include management judgment and estimation which may be significant. Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period. The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. 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 any of these estimates. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. 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 fair values presented. The methods and assumptions used to estimate fair values are described as follows: (a) Cash and Cash Equivalents — The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1. (b) Investment Securities — Investment securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for investment securities classified in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. (c) Loans — Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Purchased credit impaired (PCI) loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are initially valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. (d) FHLB Stock — It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. (e) Other real estate owned — OREO is measured at fair value less estimated costs to sell when acquired, establishing a new cost basis. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. The Company records OREO as non-recurring with level 3 measurement inputs. (f) Deposits — Fair value of demand deposit, savings, and money market accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 1 classification. Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification. (g) Short-Term Borrowings — The fair values of the Company’s federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, are based on the market rates for similar types of borrowing arrangements resulting in a Level 2 classification. (h) Other Borrowings — The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. (i) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability. (j) Off-Balance Sheet Instruments — Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not considered significant for financial reporting purposes. Assets Recorded at Fair Value The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2016: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis as of September 30, 2016 (in thousands).
Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the nine months ended September 30, 2016, no transfers between levels occurred. There were no Level 3 assets measured at fair value on a recurring basis at or during the nine months ended September 30, 2016. Also there were no liabilities measured at fair value on a recurring basis at September 30, 2016. Non-recurring Basis The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at September 30, 2016 (in thousands).
At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow methods as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the nine month period ended September 30, 2016. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $58,000 with a valuation allowance of $35,000 at September 30, 2016, resulting in fair value of $23,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans. During the nine months ended September 30, 2016, specific allocation for the allowance for credit losses related to loans carried at fair value was $35,000 compared to none during 2015 related to loans carried at fair value. There were no charge-offs related to loans carried at fair value at September 30, 2016 and 2015. In 2016, other repossessed assets were recorded at their estimated realizable value of $363,000. There were no liabilities measured at fair value on a non-recurring basis at September 30, 2016. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2015: Recurring Basis The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2015 (in thousands).
Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators. Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the year ended December 31, 2015, no transfers between levels occurred. There were no Level 3 assets measured at fair value on a recurring basis at or during the year ended December 31, 2015. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2015. Non-recurring Basis The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2015 (in thousands).
At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow method as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the year ended December 31, 2015. Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics. Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $166,000 with a valuation allowance of $34,000 at December 31, 2015, resulting in fair value of $132,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans. During the year ended December 31, 2015, there was no provision for credit losses related to loans carried at fair value. During the year ended December 31, 2015, there was no net charge-offs related to loans carried at fair value. There were no liabilities measured at fair value on a non-recurring basis at December 31, 2015. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label residential mortgage backed securities (PLRMBS), and obligations of states and political subdivisions securities. As of September 30, 2016, $110,723,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes. The fair value of the available-for-sale investment portfolio reflected a net unrealized gain of $18,031,000 at September 30, 2016 compared to an unrealized gain of $7,474,000 at December 31, 2015. The unrealized gain recorded is net of $7,581,000 and $3,076,000 in tax liabilities as accumulated other comprehensive income within shareholders’ equity at September 30, 2016 and December 31, 2015, respectively. The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2016 and 2015 are shown below (in thousands):
During 2014, to better manage our interest rate risk, the Company transferred from available-for-sale to held-to-maturity selected municipal securities in our portfolio having a book value of approximately $31 million, a market value of approximately $32 million, and a net unrecognized gain of approximately $163,000. This transfer was completed after careful consideration of our intent and ability to hold these securities to maturity. During the first quarter of 2016, management sold certain investment securities of which management discovered, through the proper operation of the Company’s internal control, that five of the 13 securities sold were previously designated as held-to-maturity (HTM). Through an oversight during the portfolio restructuring analysis related to this transaction, management unintentionally sold these five HTM securities. The book value of the HTM securities sold was $8.5 million. The gain realized on the sale of the HTM securities was $696,000. As such, management was required to reclassify the remaining HTM securities with a fair value of $23.1 million to the AFS designation. At September 30, 2016 and December 31, 2015 the remaining unaccreted balance of these HTM securities associated with the original transfer from AFS to HTM and included in accumulated other comprehensive income was $0 and $64,000, respectively. Losses recognized in 2016 and 2015 were incurred in order to reposition the investment securities portfolio based on the current rate environment. The securities which were sold at a loss were acquired when the rate environment was not as volatile. The securities which were sold were primarily purchased several years ago to serve a purpose in the rate environment in which the securities were purchased. The Company is addressing risks in the security portfolio by selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile. The provision for income taxes includes $469,000 and $601,000 income tax impact from the reclassification of unrealized net gains on securities to realized net gains on securities for the nine months ended September 30, 2016 and 2015, respectively. The provision for income taxes includes $142,000 and $301,000 income tax impact from the reclassification of unrealized net gains on available-for-sale securities to realized net gains on available-for-sale securities for the three months ended September 30, 2016 and 2015, respectively. Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):
We periodically evaluate each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions and interest rate fluctuations. The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings. The discount rate in this analysis is the original yield expected at time of purchase. As of September 30, 2016, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). Management evaluated all individual available-for-sale investment securities with an unrealized loss at September 30, 2016 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at September 30, 2016 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $10,000. Management also analyzed any securities that may have been downgraded by credit rating agencies. For those bonds that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those bonds. For those bonds that were obligations of states and political subdivisions with an investment grade rating by the rating agencies, management also evaluated the financial condition of the municipality and any applicable municipal bond insurance provider and concluded during March 2016 that a $136,000 credit related impairment related to one security with a fair value of $2,995,000 and a pre-impairment amortized cost of $3,131,000 existed. The Company recorded an other-than-temporary impairment loss of $136,000 during the nine months ended September 30, 2016. There were no OTTI losses recorded during the three months ended September 30, 2016 or during the three or nine months ended September 30, 2015. U.S. Government Agencies At September 30, 2016, the Company held 17 U.S. Government agency securities, of which 6 were in a loss position for less than 12 months and two were in a loss position or had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in direct obligations of U.S. government agencies were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2016. Obligations of States and Political Subdivisions At September 30, 2016, the Company held 158 obligations of states and political subdivision securities of which 13 were in a loss position for less than 12 months and none were in a loss position or had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2016. U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations At September 30, 2016, the Company held 168 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 28 were in a loss position for less than 12 months and 11 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2016. Private Label Residential Mortgage Backed Securities At September 30, 2016, the Company had a total of 16 PLRMBS with a remaining principal balance of $1,895,000 and a net unrealized gain of approximately $1,064,000. None of these securities was recorded with an unrealized loss at September 30, 2016. 11 of these PLRMBS with a remaining principal balance of $1,711,000 had credit ratings below investment grade. The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary. Other Equity Securities At September 30, 2016, the Company had one mutual fund equity investment which had an unrealized gain at September 30, 2016. The following tables provide a roll forward for the nine month periods ended September 30, 2016 and 2015 of investment securities credit losses recorded in earnings. The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods. Additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred on securities for which OTTI credit losses have been previously recognized.
The amortized cost and estimated fair value of available-for-sale investment securities at September 30, 2016 by contractual maturity is shown below (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.
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Loans and Allowance for Credit Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance For Credit Losses | ce for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The Allowance is established through a provision for credit losses which is charged to expense. Additions to the Allowance are expected to maintain the adequacy of the total Allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the Allowance. Cash received on previously charged-off credits is recorded as a recovery to the Allowance. The overall Allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired. For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. The following table shows the summary of activities for the Allowance as of and for the three months ended September 30, 2016 and 2015 by portfolio segment (in thousands):
The following table shows the summary of activities for the allowance for loan losses as of and for the nine months ended September 30, 2016 and 2015 by portfolio segment of loans (in thousands):
The following is a summary of the Allowance by impairment methodology and portfolio segment as of September 30, 2016 and December 31, 2015 (in thousands):
The following table shows the ending balances of loans as of September 30, 2016 and December 31, 2015 by portfolio segment and by impairment methodology (in thousands):
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at September 30, 2016 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2015 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at September 30, 2016 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2015 (in thousands):
The following table shows information related to impaired loans by class at September 30, 2016 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following table shows information related to impaired loans by class at December 31, 2015 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2016 and 2015.
Foregone interest on nonaccrual loans totaled $104,000 and $366,000 for the nine month periods ended September 30, 2016 and 2015, respectively. For the three month periods ended September 30, 2016 and 2015, foregone interest on nonaccrual loans totaled $12,000 and $91,000, respectively. Troubled Debt Restructurings: As of September 30, 2016 and December 31, 2015, the Company has a recorded investment in troubled debt restructurings of $3,153,000 and $5,623,000, respectively. The Company has allocated $3,000 and $1,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of September 30, 2016 and December 31, 2015, respectively. The Company has committed to lend no additional amounts as of September 30, 2016 to customers with outstanding loans that are classified as troubled debt restructurings. During the nine month period ended September 30, 2016 two loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses. The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2016 (in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2015 (in thousands):
During the nine month period ended September 30, 2015 two loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses. During the quarter ended September 30, 2016 and 2015 no loans were modified as troubled debt restructuring. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the nine months ended September 30, 2016 or September 30, 2015. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill. Total goodwill at September 30, 2016 was $29,917,000 consisting of $14,643,000, $8,934,000, and $6,340,000 representing the excess of the cost of Service 1st Bancorp, Bank of Madera County, and Visalia Community Bank, respectively, over the net amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the purchase method of accounting. The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes. A decline in net earnings could be indicative of a decline in the fair value of goodwill and result in impairment. For that reason, goodwill is assessed at least annually for impairment. The Company has selected September 30 as the date to perform the annual impairment test. As of September 30, 2016, management assessed qualitative factors including performance trends and noted no factors indicating goodwill impairment. Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount. No such events or circumstances arose during the first nine months of 2016. The intangible assets at September 30, 2016 represent the estimated fair value of the core deposit relationships acquired in the 2013 acquisition of Visalia Community Bank of $1,365,000, and Service 1st Bancorp in 2008 of $1,400,000. Core deposit intangibles are being amortized by the straight-line method (which approximates the effective interest method) over an estimated life of seven to ten years from the date of acquisition. The carrying value of intangible assets at September 30, 2016 was $922,000 net of $1,843,000 in accumulated amortization expense. Management evaluates the remaining useful lives quarterly to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Based on the evaluation, no changes to the remaining useful lives was required in the third quarter of 2016. Management performed an annual impairment test on core deposit intangibles as of September 30, 2016 and determined no impairment was necessary. Amortization expense recognized was $102,000 and $253,000 for the nine month periods ended September 30, 2016 and 2015, respectively. Amortization expense recognized was $34,000 and $85,000 for the three month periods ended September 30, 2016 and 2015, respectively. The Service 1st Bancorp core deposit became fully amortized in the fourth quarter of 2015. The following table summarizes the Company’s estimated remaining core deposit intangible amortization expense for each of the next five years (in thousands):
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Borrowing Arrangements |
9 Months Ended |
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Sep. 30, 2016 | |
Banking and Thrift [Abstract] | |
Borrowing Arrangements | Borrowing Arrangements As of September 30, 2016 and December 31, 2015, the Company had no Federal Home Loan Bank (FHLB) of San Francisco advances. FHLB advances are secured under the standard credit and securities-backed credit programs. Investment securities with amortized costs totaling $631,000 and $750,000, and market values totaling $694,000 and $825,000 at September 30, 2016 and December 31, 2015, respectively, were pledged under the securities-backed credit program. The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral. As of September 30, 2016 and December 31, 2015, the Company had no Federal funds purchased. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files its income taxes on a consolidated basis with its subsidiary. The allocation of income tax expense (benefit) represents each entity’s proportionate share of the consolidated provision for income taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On the consolidated balance sheets, net deferred tax assets are included in accrued interest receivable and other assets. The Company establishes a tax valuation allowance when it is more likely than not that a recorded tax benefit is not expected to be fully realized. The expense to create the tax valuation allowance is recorded as an additional income tax expense in the period the tax valuation allowance is created. The California capital loss carry-forward expired in 2015 unutilized; thus, the deferred balance as well as the related valuation allowance was written off as of December 31, 2015. Accounting for uncertainty in income taxes - The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense in the consolidated statements of income. As of September 30, 2016 and December 31, 2015, the reserve for uncertain tax positions attributable to tax deductions related to enterprise zone activities in California was $301,000 and $286,000, respectively. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next 12 months. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract or notional amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for loans. Commitments to extend credit amounting to $223,393,000 and $217,166,000 were outstanding at September 30, 2016 and December 31, 2015, respectively. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract unless waived by the Bank. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Included in commitments to extend credit are undisbursed lines of credit totaling $222,015,000 and $215,952,000 at September 30, 2016 and December 31, 2015, respectively. Undisbursed lines of credit include credits whereby customers can repay principal and request principal advances during the term of the loan at their discretion and most expire between one and 12 months. Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $32,126,000 and $25,856,000 as of September 30, 2016 and December 31, 2015, respectively. These commitments are agreements to lend to customers, subject to meeting certain construction progress requirements established in the contracts. The underlying construction loans have fixed expiration dates. Standby letters of credit and financial guarantees amounting to $1,378,000 and $1,214,000 were outstanding at September 30, 2016 and December 31, 2015, respectively. Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements. Most standby letters of credit and guarantees carry a one year term or less. The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at September 30, 2016 or December 31, 2015. The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used. The Company generally requires collateral or other security to support financial instruments with credit risk. Management does not anticipate any material loss will result from the outstanding commitments to extend credit, standby letters of credit and financial guarantees. At September 30, 2016 and December 31, 2015, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $125,000 and$150,000, respectively. The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process. While related to credit losses, this allocation is not a part of the allowance for credit losses and is considered separately as a liability for accounting and regulatory reporting purposes, and is included in Other Liabilities on the Company’s balance sheet. The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share (EPS), which excludes dilution, is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, stock appreciation rights settled in stock or restricted stock awards, result in the issuance of common stock which shares in the earnings of the Company. A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:
During the nine months month periods ended September 30, 2016 and 2015, options to purchase 54,650 and 26,704 shares of common stock, respectively, were not factored into the calculation of dilutive stock options because they were anti-dilutive. During the three month periods ended September 30, 2016 and 2015, options to purchase 45,800 and 36,636 shares of common stock, respectively, were not factored into the calculation of dilutive stock options because they were anti-dilutive. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation The Company has three share-based compensation plans as described below. Share-based compensation cost recognized for those plans was $196,000 and $184,000 for the nine months ended September 30, 2016 and 2015, respectively. For the quarters ended September 30, 2016 and 2015, share-based compensation was $89,000 and $61,000, respectively. The recognized tax benefits for the share based compensation expense was $38,000 and $11,000, respectively, for the nine month periods ended September 30, 2016 and 2015. For the quarters ended September 30, 2016 and 2015, recognized tax benefits were $10,000 and $1,000, respectively. The Central Valley Community Bancorp 2000 Stock Option Plan (2000 Plan) expired on November 15, 2010. The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015. While outstanding arrangements to issue shares under these plans, including options, continue in force until their expiration, no new options will be granted under these plans. The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015. The plan provides for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. The plan also allows for performance awards that may be in the form of cash or shares of the Company, including restricted stock. Outstanding arrangements to issue shares under this plan including options, will continue in force until expiration according to their respective terms. Stock Option Plan The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield. The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant. The compensation cost for options granted is based on the weighted average grant date fair value per share. No options to purchase shares of the Company’s common stock were granted during the nine month periods ended September 30, 2016 and 2015. A summary of the combined activity of the Company’s Stock Option Compensation Plans for the nine month periods ended September 30, 2016 follows (in thousands, except per share amounts):
Information related to the stock option plan is as follows (in thousands):
As of September 30, 2016, there was $45,000 of total unrecognized compensation cost related to nonvested stock options granted under all plans. The cost is expected to be recognized over a weighted average period of 0.97 years. No options vested during the nine months ended September 30, 2016 and 2015. Restricted Common Stock Awards The 2005 and 2015 Plans provide for the issuance of restricted common stock to directors and officers. Restricted common stock grants typically vest over a five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant. The following table summarizes restricted stock activity for the nine month period ended September 30, 2016 as follows:
During the quarter ended September 30, 2016, 45,800 shares of restricted stock were granted compared to none during 2015. During the nine month period ended September 30, 2016, 54,650 shares of restricted common stock were issued from outstanding grants under the 2005 and 2015 Plans. The restricted common stock had a fair market value of $14.10 per share on the date of issuance. During the nine month period ended September 30, 2015, 9,268 shares of restricted common stock were issued from outstanding grants under the 2005 Plan. The restricted common stock had a fair market value of $12.95 per share on the date of issuance. These restricted common stock awards vest 20% after Year 1, and thereafter, 20% of the remaining restricted stock will vest on each anniversary of the initial award commencement date and will be fully vested on the fifth such anniversary. As of September 30, 2016, there were 93,621 shares of restricted stock that are nonvested and expected to vest. As of September 30, 2016, there was $1,115,000 of total unrecognized compensation cost related to nonvested restricted common stock awards. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted-average remaining period of 3.97 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $1,485,000 at September 30, 2016. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Effective October 1, 2016, the Company and Sierra Vista Bank, headquartered in Folsom, California, completed a merger under which Sierra Vista Bank, with three full-service offices in Folsom and Fair Oaks (Sacramento County), and Cameron Park (El Dorado County), merged with and into Central Valley Community Bancorp’s subsidiary, Central Valley Community Bank, in a combined cash and stock transaction. Sierra Vista Bank’s assets (unaudited) as of September 30, 2016 totaled approximately $155 million. The acquired assets and liabilities will be recorded at fair value at the date of acquisition and will be reflected in the Company’s December 31, 2016 financial statements. The Company also expects to record goodwill and a core deposit intangible related to this transaction, but those amounts are not yet known as the initial fair value accounting is incomplete. The goodwill will not be deductible for tax purposes. Under the terms of the merger agreement, the Company issued 1,058,851 shares of its common stock and cash totaling approximately $9.469 million to the former shareholders of Sierra Vista Bank. |
Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy | The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2015 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at September 30, 2016, and the results of its operations and its cash flows for the three and nine month interim periods ended September 30, 2016 and 2015 have been included. Certain reclassifications have been made to prior year amounts to conform to the 2016 presentation. Reclassifications had no effect on prior period net income or shareholders’ equity. The results of operations for interim periods are not necessarily indicative of results for the full year. The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Segment Reporting, Policy | Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. |
Concentration Risk, Credit Risk, Policy | No customer accounts for more than 10 percent of revenues for the Company or the Bank. |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):
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Fair Value of Assets on a Recurring Basis | The Company is required or permitted to record the following assets at fair value on a recurring basis as of September 30, 2016 (in thousands).
The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2015 (in thousands).
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Fair Value of Assets on a Non-recurring Basis | The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at September 30, 2016 (in thousands).
The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2015 (in thousands).
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale securities reconciliation | The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):
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Realized gains and losses | Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2016 and 2015 are shown below (in thousands):
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Securities in a continuous unrealized loss position | Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):
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Credit losses recorded in earnings | Other Equity Securities At September 30, 2016, the Company had one mutual fund equity investment which had an unrealized gain at September 30, 2016. The following tables provide a roll forward for the nine month periods ended September 30, 2016 and 2015 of investment securities credit losses recorded in earnings. The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods. Additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred on securities for which OTTI credit losses have been previously recognized.
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Investments by contractual maturity |
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Loans and Allowance for Credit Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding loans | Outstanding loans are summarized as follows:
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Allowance for credit losses | The following table shows the summary of activities for the Allowance as of and for the three months ended September 30, 2016 and 2015 by portfolio segment (in thousands):
The following table shows the summary of activities for the allowance for loan losses as of and for the nine months ended September 30, 2016 and 2015 by portfolio segment of loans (in thousands):
The following is a summary of the Allowance by impairment methodology and portfolio segment as of September 30, 2016 and December 31, 2015 (in thousands):
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Loans by impairment methdology | The following table shows the ending balances of loans as of September 30, 2016 and December 31, 2015 by portfolio segment and by impairment methodology (in thousands):
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Loan portfolio by internal risk rating | The following table shows the loan portfolio by class allocated by management’s internal risk ratings at September 30, 2016 (in thousands):
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2015 (in thousands):
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Loan portfolio by time past due | The following table shows an aging analysis of the loan portfolio by class and the time past due at September 30, 2016 (in thousands):
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2015 (in thousands):
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Impaired loans | The following table shows information related to impaired loans by class at September 30, 2016 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following table shows information related to impaired loans by class at December 31, 2015 (in thousands):
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2016 and 2015.
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Troubled debt restructurings | The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2016 (in thousands):
The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2015 (in thousands):
During the nine month period ended September 30, 2015 two loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses. During the quarter ended September 30, 2016 and 2015 no loans were modified as troubled debt restructuring. |
Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Expected Amortization Expense | The following table summarizes the Company’s estimated remaining core deposit intangible amortization expense for each of the next five years (in thousands):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | A reconciliation of the numerators and denominators of the basic and diluted EPS computations is as follows:
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Share-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option activity | A summary of the combined activity of the Company’s Stock Option Compensation Plans for the nine month periods ended September 30, 2016 follows (in thousands, except per share amounts):
Information related to the stock option plan is as follows (in thousands):
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Restricted common stock activity | The following table summarizes restricted stock activity for the nine month period ended September 30, 2016 as follows:
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Investments - Realized gains and losses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Available-for-sale Securities [Abstract] | ||||
Proceeds from sales or calls | $ 21,239 | $ 0 | $ 84,283 | $ 92,647 |
Gross realized gains from sales or calls | 306 | 0 | 1,277 | 1,692 |
Gross realized losses from sales or calls | (20) | 0 | (137) | (233) |
Held-to-maturity Securities [Abstract] | ||||
Proceeds from sales or calls | 0 | 0 | 9,257 | 0 |
Gross realized gains from sales or calls | 0 | 0 | 696 | 0 |
Gross realized losses from sales or calls | $ 0 | $ 0 | $ 0 | $ 0 |
Investments - Below investment grade securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities | ||
Debt securities, amortized cost | $ 533,044 | |
Available-for-sale investment securities | 551,075 | $ 477,554 |
Private label residential mortgage backed securities | ||
Schedule of Available-for-sale Securities | ||
Debt securities, amortized cost | 1,895 | $ 2,356 |
Below investment grade | Private label residential mortgage backed securities | ||
Schedule of Available-for-sale Securities | ||
Debt securities, amortized cost | $ 1,711 |
Investments - Credit loss rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||||
Beginning balance | $ 874 | $ 747 | $ 747 | $ 747 |
Amounts related to credit loss for which an OTTI charge was not previously recognized | 0 | 0 | 136 | 0 |
Increases to the amount related to credit loss for which OTTI was previously recognized | 0 | 0 | 0 | 0 |
Realized losses for securities sold | 0 | 0 | (9) | 0 |
Ending balance | $ 874 | $ 747 | $ 874 | $ 747 |
Loans and Allowance for Credit Losses - Purchased credit-impaired loans (Details) $ in Thousands |
Sep. 30, 2015
USD ($)
|
---|---|
Loans | |
Allowance for loan losses | $ 0 |
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2016 | $ 34 | |
2017 | 137 | |
2018 | 137 | |
2019 | 137 | |
2020 | 137 | |
Thereafter | 340 | |
Finite-Lived Intangible Assets, Net | $ 922 | $ 1,024 |
Borrowing Arrangements (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Borrowing Arrangements | ||
Investments securing FHLB advances, amortized cost | $ 533,044 | |
San Fransisco Branch | ||
Borrowing Arrangements | ||
Advances from FHLB | 0 | $ 0 |
Federal Home Loan Bank Advances [Member] | Securities Pledged as Collateral | ||
Borrowing Arrangements | ||
Investments securing FHLB advances, amortized cost | 631 | 750 |
Estimated Fair Value | $ 694 | $ 825 |
Income Taxes (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
CALIFORNIA | ||
Income Taxes | ||
Unrecognized Tax Benefits | $ 301 | $ 286 |
Earnings Per Share - Basic (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Basic Earnings Per share | ||||
Net Income | $ 3,114 | $ 2,517 | $ 12,575 | $ 8,061 |
Less: Preferred stock dividends and accretion | 0 | 0 | 0 | 0 |
Net income available to common shareholders | $ 3,114 | $ 2,517 | $ 12,575 | $ 8,061 |
Weighted average shares outstanding (in shares) | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 |
Basic earnings per share (in dollars per share) | $ 0.28 | $ 0.23 | $ 1.15 | $ 0.74 |
Earnings Per Share - Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Diluted Earnings Per share | ||||
Net income available to common shareholders | $ 3,114 | $ 2,517 | $ 12,575 | $ 8,061 |
Weighted average shares outstanding (in shares) | 10,984,141 | 10,938,160 | 10,969,633 | 10,928,780 |
Effect of dilutive stock options (in shares) | 108,533 | 86,794 | 98,412 | 83,244 |
Weighted average shares of common stock and common stock equivalents (in shares) | 11,092,674 | 11,024,954 | 11,068,045 | 11,012,024 |
Diluted earnings per share (in dollars per share) | $ 0.28 | $ 0.23 | $ 1.14 | $ 0.73 |
Anti-dilutive options and warrants (in shares) | 45,800 | 36,636 | 54,650 | 26,704 |
Share-Based Compensation - Restricted Common Stock Awards (Details) - Restricted Common Stock [Member] - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested outstanding shares beginning balance (in shares) | 53,028 | |
Granted (in shares) | 54,650 | |
Vested (in shares) | (12,438) | |
Forfeited (in shares) | (1,619) | |
Nonvested outstanding shares ending balance (in shares) | 93,621 | |
Weighted Average Grant Date Fair Value | ||
Nonvested outstanding shares beginning balance (in dollars per share) | $ 12.34 | |
Granted (in dollars per share) | 14.10 | $ 12.95 |
Vested (in dollars per share) | 12.38 | |
Forfeited (in dollars per share) | 12.95 | |
Nonvested outstanding shares ending balance (in dollars per share) | $ 13.35 |
Subsequent Events (Details) - USD ($) shares in Thousands, $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Oct. 01, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
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Business Acquisition [Line Items] | ||||
Total assets | $ 1,307,775 | $ 1,276,736 | ||
Payments to acquire businesses, gross | 9,470 | $ 0 | ||
Sierra Vista Bank [Member] | Subsequent Event [Member] | ||||
Business Acquisition [Line Items] | ||||
Payments to acquire businesses, gross | $ 9,469 | |||
Sierra Vista Bank [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||
Business Acquisition [Line Items] | ||||
Equity interest issued, number of shares | 1,059 | |||
Sierra Vista Bank [Member] | ||||
Business Acquisition [Line Items] | ||||
Total assets | $ 155,000 |
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