FORM 10-Q | ||
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001-35968 |
Iowa | 42-1206172 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | o | Accelerated filer | x | |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page No. | ||||
PART I | ||||
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Part II | ||||
Item 1. | ||||
Item 1A. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 5. | ||||
Item 6. | ||||
June 30, 2015 | December 31, 2014 | ||||||
(dollars in thousands, except per share amounts) | (unaudited) | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 40,071 | $ | 23,028 | |||
Interest-bearing deposits in banks | 6,231 | 381 | |||||
Federal funds sold | 302 | — | |||||
Cash and cash equivalents | 46,604 | 23,409 | |||||
Investment securities: | |||||||
Available for sale | 429,868 | 474,942 | |||||
Held to maturity (fair value of $97,075 as of June 30, 2015 and $51,253 as of December 31, 2014) | 98,749 | 51,524 | |||||
Loans held for sale | 8,506 | 801 | |||||
Loans | 2,108,358 | 1,132,519 | |||||
Allowance for loan losses | (17,167 | ) | (16,363 | ) | |||
Net loans | 2,091,191 | 1,116,156 | |||||
Loan pool participations, net | — | 19,332 | |||||
Premises and equipment, net | 71,266 | 37,770 | |||||
Accrued interest receivable | 12,421 | 10,898 | |||||
Goodwill | 56,488 | — | |||||
Other intangible assets, net | 22,482 | 8,259 | |||||
Bank-owned life insurance | 45,629 | 38,142 | |||||
Other real estate owned | 8,894 | 1,916 | |||||
Deferred income taxes | 3,229 | 3,078 | |||||
Other assets | 27,123 | 14,075 | |||||
Total assets | $ | 2,922,450 | $ | 1,800,302 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing demand | $ | 528,005 | $ | 214,461 | |||
Interest-bearing checking | 994,432 | 618,540 | |||||
Savings | 187,375 | 102,527 | |||||
Certificates of deposit under $100,000 | 375,702 | 235,395 | |||||
Certificates of deposit $100,000 and over | 318,832 | 237,619 | |||||
Total deposits | 2,404,346 | 1,408,542 | |||||
Federal funds purchased | 24,700 | 17,408 | |||||
Securities sold under agreements to repurchase | 67,114 | 60,821 | |||||
Federal Home Loan Bank borrowings | 78,000 | 93,000 | |||||
Junior subordinated notes issued to capital trusts | 23,523 | 15,464 | |||||
Long-term debt | 25,000 | — | |||||
Deferred compensation liability | 5,112 | 3,393 | |||||
Accrued interest payable | 2,009 | 863 | |||||
Other liabilities | 14,680 | 8,080 | |||||
Total liabilities | 2,644,484 | 1,607,571 | |||||
Shareholders' equity: | |||||||
Preferred stock, no par value; authorized 500,000 shares; no shares issued and outstanding at June 30, 2015 and December 31, 2014 | $ | — | $ | — | |||
Common stock, $1.00 par value; authorized 15,000,000 shares at June 30, 2015 and December 31, 2014; issued 11,713,481 shares at June 30, 2015 and 8,690,398 shares at December 31, 2014; outstanding 11,405,931 shares at June 30, 2015 and 8,355,666 shares at December 31, 2014 | 11,713 | 8,690 | |||||
Additional paid-in capital | 157,899 | 80,537 | |||||
Treasury stock at cost, 307,550 shares as of June 30, 2015 and 334,732 shares at December 31, 2014 | (6,390 | ) | (6,945 | ) | |||
Retained earnings | 111,471 | 105,127 | |||||
Accumulated other comprehensive income | 3,273 | 5,322 | |||||
Total shareholders' equity | 277,966 | 192,731 | |||||
Total liabilities and shareholders' equity | $ | 2,922,450 | $ | 1,800,302 |
(unaudited) (dollars in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans | $ | 21,685 | $ | 12,005 | $ | 34,262 | $ | 23,945 | ||||||||
Interest and discount on loan pool participations | 178 | 532 | 798 | 812 | ||||||||||||
Interest on bank deposits | 15 | 5 | 16 | 9 | ||||||||||||
Interest on investment securities: | ||||||||||||||||
Taxable securities | 1,913 | 2,274 | 3,807 | 4,590 | ||||||||||||
Tax-exempt securities | 1,394 | 1,360 | 2,784 | 2,741 | ||||||||||||
Total interest income | 25,185 | 16,176 | 41,667 | 32,097 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits: | ||||||||||||||||
Interest-bearing checking | 662 | 547 | 1,197 | 1,092 | ||||||||||||
Savings | 44 | 36 | 80 | 72 | ||||||||||||
Certificates of deposit under $100,000 | 491 | 634 | 1,117 | 1,331 | ||||||||||||
Certificates of deposit $100,000 and over | 467 | 449 | 993 | 894 | ||||||||||||
Total interest expense on deposits | 1,664 | 1,666 | 3,387 | 3,389 | ||||||||||||
Interest on federal funds purchased | 2 | 5 | 14 | 6 | ||||||||||||
Interest on securities sold under agreements to repurchase | 43 | 29 | 73 | 59 | ||||||||||||
Interest on Federal Home Loan Bank borrowings | 353 | 545 | 752 | 1,107 | ||||||||||||
Interest on other borrowings | 6 | 7 | 10 | 13 | ||||||||||||
Interest on junior subordinated notes issued to capital trusts | 136 | 69 | 208 | 141 | ||||||||||||
Interest on subordinated notes | 162 | — | 162 | — | ||||||||||||
Interest on long-term debt | 96 | — | 96 | — | ||||||||||||
Total interest expense | 2,462 | 2,321 | 4,702 | 4,715 | ||||||||||||
Net interest income | 22,723 | 13,855 | 36,965 | 27,382 | ||||||||||||
Provision for loan losses | 901 | 300 | 1,501 | 750 | ||||||||||||
Net interest income after provision for loan losses | 21,822 | 13,555 | 35,464 | 26,632 | ||||||||||||
Noninterest income: | ||||||||||||||||
Trust, investment, and insurance fees | 1,633 | 1,430 | 3,214 | 2,948 | ||||||||||||
Service charges and fees on deposit accounts | 1,068 | 848 | 1,801 | 1,476 | ||||||||||||
Mortgage origination and loan servicing fees | 833 | 318 | 1,071 | 755 | ||||||||||||
Other service charges, commissions and fees | 785 | 552 | 1,388 | 1,171 | ||||||||||||
Bank-owned life insurance income | 325 | 225 | 620 | 454 | ||||||||||||
Gain on sale or call of available for sale securities | 456 | 191 | 1,011 | 974 | ||||||||||||
Loss on sale of premises and equipment | (13 | ) | (8 | ) | (10 | ) | (5 | ) | ||||||||
Total noninterest income | 5,087 | 3,556 | 9,095 | 7,773 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 9,994 | 6,060 | 16,863 | 12,194 | ||||||||||||
Net occupancy and equipment expense | 2,342 | 1,634 | 3,866 | 3,239 | ||||||||||||
Professional fees | 2,229 | 779 | 2,909 | 1,354 | ||||||||||||
Data processing expense | 668 | 391 | 1,100 | 815 | ||||||||||||
FDIC insurance expense | 388 | 240 | 627 | 483 | ||||||||||||
Amortization of intangible assets | 1,228 | 137 | 1,336 | 274 | ||||||||||||
Other operating expense | 2,997 | 1,398 | 4,324 | 2,672 | ||||||||||||
Total noninterest expense | 19,846 | 10,639 | 31,025 | 21,031 | ||||||||||||
Income before income tax expense | 7,063 | 6,472 | 13,534 | 13,374 | ||||||||||||
Income tax expense | 2,594 | 1,719 | 4,269 | 3,648 | ||||||||||||
Net income | $ | 4,469 | $ | 4,753 | $ | 9,265 | $ | 9,726 | ||||||||
Share and per share information: | ||||||||||||||||
Ending number of shares outstanding | 11,405,931 | 8,396,191 | 11,405,931 | 8,396,191 | ||||||||||||
Average number of shares outstanding | 10,229,355 | 8,428,307 | 9,301,761 | 8,451,819 | ||||||||||||
Diluted average number of shares | 10,254,279 | 8,452,291 | 9,328,941 | 8,479,989 | ||||||||||||
Earnings per common share - basic | $ | 0.43 | $ | 0.56 | $ | 1.00 | $ | 1.15 | ||||||||
Earnings per common share - diluted | 0.42 | 0.56 | 0.99 | 1.14 | ||||||||||||
Dividends paid per common share | 0.150 | 0.145 | 0.300 | 0.290 |
(unaudited) (dollars in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income | $ | 4,469 | $ | 4,753 | $ | 9,265 | $ | 9,726 | ||||||||
Other comprehensive income, available for sale securities: | ||||||||||||||||
Unrealized holding gains arising during period | (4,430 | ) | 2,965 | (2,274 | ) | 6,853 | ||||||||||
Reclassification adjustment for gains included in net income | (456 | ) | (191 | ) | (1,011 | ) | (974 | ) | ||||||||
Income tax expense | 1,853 | (1,052 | ) | 1,236 | (2,229 | ) | ||||||||||
Other comprehensive income on available for sale securities | (3,033 | ) | 1,722 | (2,049 | ) | 3,650 | ||||||||||
Other comprehensive income, net of tax | (3,033 | ) | 1,722 | (2,049 | ) | 3,650 | ||||||||||
Comprehensive income | $ | 1,436 | $ | 6,475 | $ | 7,216 | $ | 13,376 |
(unaudited) (dollars in thousands, except per share amounts) | Preferred Stock | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (loss) | Total | |||||||||||||||||||||
Balance at December 31, 2013 | $ | — | $ | 8,690 | $ | 80,506 | $ | (3,702 | ) | $ | 91,473 | $ | 1,049 | $ | 178,016 | |||||||||||||
Net income | — | — | — | — | 9,726 | — | 9,726 | |||||||||||||||||||||
Dividends paid on common stock ($0.29 per share) | — | — | — | — | (2,445 | ) | — | (2,445 | ) | |||||||||||||||||||
Stock options exercised (3,310 shares) | — | — | (10 | ) | 60 | — | — | 50 | ||||||||||||||||||||
Release/lapse of restriction on RSUs (26,641 shares) | — | — | (418 | ) | 443 | — | — | 25 | ||||||||||||||||||||
Repurchase of common stock (113,566 shares) | — | — | — | (2,751 | ) | — | — | (2,751 | ) | |||||||||||||||||||
Stock compensation | — | — | 245 | — | — | — | 245 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | 3,650 | 3,650 | |||||||||||||||||||||
Balance at June 30, 2014 | $ | — | $ | 8,690 | $ | 80,323 | $ | (5,950 | ) | $ | 98,754 | $ | 4,699 | $ | 186,516 | |||||||||||||
Balance at December 31, 2014 | $ | — | $ | 8,690 | $ | 80,537 | $ | (6,945 | ) | $ | 105,127 | $ | 5,322 | $ | 192,731 | |||||||||||||
Net income | — | — | — | — | 9,265 | — | 9,265 | |||||||||||||||||||||
Issuance of common stock due to business combination (2,723,083 shares) | — | 2,723 | 69,915 | — | — | — | 72,638 | |||||||||||||||||||||
Issuance of common stock - private placement (300,000 shares), net of expenses | — | 300 | 7,600 | — | — | — | 7,900 | |||||||||||||||||||||
Dividends paid on common stock ($0.30 per share) | — | — | — | — | (2,921 | ) | — | (2,921 | ) | |||||||||||||||||||
Stock options exercised (5,269 shares) | — | — | (26 | ) | 110 | — | — | 84 | ||||||||||||||||||||
Release/lapse of restriction on RSUs (23,123 shares) | — | — | (416 | ) | 445 | — | — | 29 | ||||||||||||||||||||
Stock compensation | — | — | 289 | — | — | — | 289 | |||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | (2,049 | ) | (2,049 | ) | |||||||||||||||||||
Balance at June 30, 2015 | $ | — | $ | 11,713 | $ | 157,899 | $ | (6,390 | ) | $ | 111,471 | $ | 3,273 | $ | 277,966 |
(unaudited) (dollars in thousands) | Six Months Ended June 30, | ||||||
2015 | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 9,265 | $ | 9,726 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for loan losses | 1,501 | 750 | |||||
Depreciation, amortization and accretion | 3,730 | 2,179 | |||||
Loss on sale of premises and equipment | 10 | 5 | |||||
Deferred income taxes | (501 | ) | 2,588 | ||||
Stock-based compensation | 289 | 245 | |||||
Net gain on sale or call of available for sale securities | (1,011 | ) | (974 | ) | |||
Net loss on sale of other real estate owned | 33 | 8 | |||||
Net gain on sale of loans held for sale | (582 | ) | (189 | ) | |||
Writedown of other real estate owned | — | 49 | |||||
Origination of loans held for sale | (61,657 | ) | (16,381 | ) | |||
Proceeds from sales of loans held for sale | 54,534 | 14,980 | |||||
Decrease in accrued interest receivable | 1,148 | 1,099 | |||||
Increase in cash surrender value of bank-owned life insurance | (620 | ) | (454 | ) | |||
(Increase) decrease in other assets | (129 | ) | 228 | ||||
Increase (decrease) in deferred compensation liability | 63 | (35 | ) | ||||
Increase (decrease) in accrued interest payable, accounts payable, accrued expenses, and other liabilities | (3,220 | ) | 1,155 | ||||
Net cash provided by operating activities | 2,853 | 14,979 | |||||
Cash flows from investing activities: | |||||||
Proceeds from sales of available for sale securities | 106,389 | 15,870 | |||||
Proceeds from maturities and calls of available for sale securities | 54,481 | 36,210 | |||||
Purchases of available for sale securities | (9 | ) | (19,606 | ) | |||
Proceeds from maturities and calls of held to maturity securities | 1,235 | 465 | |||||
Purchase of held to maturity securities | (6,322 | ) | (10,533 | ) | |||
(Increase) decrease in loans | (59,973 | ) | 1,675 | ||||
Decrease in loan pool participations, net | 19,332 | 4,061 | |||||
Purchases of premises and equipment | (6,958 | ) | (5,892 | ) | |||
Proceeds from sale of other real estate owned | 1,217 | 212 | |||||
Proceeds from sale of premises and equipment | 25 | 3 | |||||
Net cash paid in business acquisition (Note 2) | (35,596 | ) | — | ||||
Net cash provided by investing activities | 73,821 | 22,465 | |||||
Cash flows from financing activities: | |||||||
Net decrease in deposits | (53,363 | ) | (27,290 | ) | |||
Increase (decrease) in federal funds purchased | 7,292 | (751 | ) | ||||
Decrease in securities sold under agreements to repurchase | (9,831 | ) | (3,890 | ) | |||
Proceeds from Federal Home Loan Bank borrowings | 10,000 | 19,000 | |||||
Repayment of Federal Home Loan Bank borrowings | (25,000 | ) | (22,000 | ) | |||
Stock options exercised | 113 | 75 | |||||
Redemption of subordinated note | (12,669 | ) | — | ||||
Proceeds from long-term debt | 25,000 | — | |||||
Dividends paid | (2,921 | ) | (2,445 | ) | |||
Issuance of common stock, net of expenses | 7,900 | — | |||||
Repurchase of common stock | — | (2,751 | ) | ||||
Net cash used in financing activities | (53,479 | ) | (40,052 | ) | |||
Net increase (decrease) in cash and cash equivalents | 23,195 | (2,608 | ) | ||||
Cash and cash equivalents at beginning of period | 23,409 | 24,890 | |||||
Cash and cash equivalents at end of period | $ | 46,604 | $ | 22,282 |
(unaudited) (dollars in thousands) | Six Months Ended June 30, | ||||||
2015 | 2014 | ||||||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for interest | $ | 3,556 | $ | 4,735 | |||
Cash paid during the period for income taxes | $ | 2,550 | $ | 464 | |||
Supplemental schedule of non-cash investing activities: | |||||||
Transfer of loans to other real estate owned | $ | 410 | $ | 319 | |||
Supplemental Schedule of non-cash Investing Activities from Acquisition: | |||||||
Noncash assets acquired: | |||||||
Investment securities | $ | 161,243 | — | ||||
Loans | 916,973 | — | |||||
Premises and equipment | 27,908 | — | |||||
Goodwill | 56,488 | — | |||||
Core deposit intangible | 12,773 | — | |||||
Other intangibles | 2,786 | ||||||
FDIC indemnification asset | 4,933 | — | |||||
Other real estate owned | 7,818 | — | |||||
Other assets | 15,944 | — | |||||
Total noncash assets acquired | 1,206,866 | — | |||||
Liabilities assumed: | |||||||
Deposits | 1,049,167 | — | |||||
Short-term borrowings | 16,124 | — | |||||
Junior subordinated notes issued to capital trusts | 8,050 | — | |||||
Subordinated note payable | 12,669 | — | |||||
Other liabilities | 12,622 | — | |||||
Total liabilities assumed | 1,098,632 | — |
(in thousands) | May 1, 2015 | ||||
ASSETS | |||||
Cash and due from banks | $ | 28,404 | |||
Investment securities | 161,243 | ||||
Loans | 916,973 | ||||
Premises and equipment | 27,908 | ||||
Goodwill | 56,488 | ||||
Core deposit intangible | 12,773 | ||||
Trade name intangible | 2,786 | ||||
FDIC indemnification asset | 4,933 | ||||
Other real estate owned | 7,818 | ||||
Other assets | 15,944 | ||||
Total assets | 1,235,270 | ||||
LIABILITIES | |||||
Deposits | 1,049,167 | ||||
Short-term borrowings | 16,124 | ||||
Junior subordinated notes issued to capital trusts | 8,050 | ||||
Subordinated notes payable | 12,669 | ||||
Accrued expenses and other liabilities | 12,622 | ||||
Total liabilities | 1,098,632 | ||||
Total identifiable net assets | 136,638 | ||||
Consideration: | |||||
Market value of common stock at $29.31 per share at May 1, 2015 (2,723,083 shares of common stock issued) | 79,814 | ||||
Stock illiquidity discount due to restrictions | (7,176 | ) | |||
Cash paid | 64,000 | ||||
Total fair value of consideration | $ | 136,638 |
• | Purchased credit impaired loans are accounted for in accordance with ASC 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" as they display significant credit deterioration since origination and it is probable, as of the acquisition date, that the Company will be unable to collect all contractually required payments from the borrower. |
• | Purchased non-credit impaired loans are accounted for in accordance with ASC 310-20 “Nonrefundable Fees and Other Costs” as these loans do not have evidence of significant credit deterioration since origination and it is probable all contractually required payments will be received from the borrower. |
(in thousands) | Purchased Credit Impaired Loans | Purchased Non-Credit Impaired Loans | |||||||
Contractually required principal payments | $ | 36,886 | $ | 905,314 | |||||
Nonaccretable difference | (6,675 | ) | — | ||||||
Principal cash flows expected to be collected | 30,211 | 905,314 | |||||||
Accretable difference | (1,882 | ) | (16,670 | ) | |||||
Fair value of acquired loans | $ | 28,329 | $ | 888,644 |
Pro Forma | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||
Total revenues (net interest income plus noninterest income) | 31,634 | 32,551 | 65,078 | 64,924 | |||||||||
Net income | 5,236 | 4,694 | 12,875 | 10,797 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
(dollars in thousands, except per share amounts) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Basic earnings per common share computation | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 4,469 | $ | 4,753 | $ | 9,265 | $ | 9,726 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding | 10,229,355 | 8,428,307 | 9,301,761 | 8,451,819 | |||||||||||||
Basic earnings per common share | $ | 0.43 | $ | 0.56 | $ | 1.00 | $ | 1.15 | |||||||||
Diluted earnings per common share computation | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 4,469 | $ | 4,753 | $ | 9,265 | $ | 9,726 | |||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding, including all dilutive potential shares | 10,254,279 | 8,452,291 | 9,328,941 | 8,479,989 | |||||||||||||
Diluted earnings per common share | $ | 0.42 | $ | 0.56 | $ | 0.99 | $ | 1.14 |
As of June 30, 2015 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Government agencies and corporations | $ | 28,441 | $ | 191 | $ | 11 | $ | 28,621 | ||||||||
State and political subdivisions | 175,432 | 6,130 | 449 | 181,113 | ||||||||||||
Mortgage-backed securities | 62,904 | 776 | 597 | 63,083 | ||||||||||||
Collateralized mortgage obligations | 115,439 | 592 | 1,594 | 114,437 | ||||||||||||
Corporate debt securities | 41,135 | 241 | 13 | 41,363 | ||||||||||||
Total debt securities | 423,351 | 7,930 | 2,664 | 428,617 | ||||||||||||
Other equity securities | 1,246 | 40 | 35 | 1,251 | ||||||||||||
Total | $ | 424,597 | $ | 7,970 | $ | 2,699 | $ | 429,868 |
As of December 31, 2014 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
U.S. Government agencies and corporations | $ | 49,392 | $ | 248 | $ | 265 | $ | 49,375 | ||||||||
State and political subdivisions | 187,276 | 8,113 | 190 | 195,199 | ||||||||||||
Mortgage-backed securities | 30,965 | 1,498 | — | 32,463 | ||||||||||||
Collateralized mortgage obligations | 147,412 | 813 | 2,093 | 146,132 | ||||||||||||
Corporate debt securities | 48,656 | 188 | 103 | 48,741 | ||||||||||||
Total debt securities | 463,701 | 10,860 | 2,651 | 471,910 | ||||||||||||
Other equity securities | 2,686 | 380 | 34 | 3,032 | ||||||||||||
Total | $ | 466,387 | $ | 11,240 | $ | 2,685 | $ | 474,942 |
As of June 30, 2015 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
State and political subdivisions | $ | 51,399 | $ | 178 | $ | 763 | $ | 50,814 | ||||||||
Mortgage-backed securities | 4,805 | 6 | 75 | 4,736 | ||||||||||||
Collateralized mortgage obligations | 24,987 | 2 | 495 | 24,494 | ||||||||||||
Corporate debt securities | 17,558 | — | 527 | 17,031 | ||||||||||||
Total | $ | 98,749 | $ | 186 | $ | 1,860 | $ | 97,075 |
As of December 31, 2014 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
State and political subdivisions | $ | 39,704 | $ | 370 | $ | 252 | $ | 39,822 | ||||||||
Mortgage-backed securities | 22 | 3 | — | 25 | ||||||||||||
Collateralized mortgage obligations | 8,531 | — | 233 | 8,298 | ||||||||||||
Corporate debt securities | 3,267 | — | 159 | 3,108 | ||||||||||||
Total | $ | 51,524 | $ | 373 | $ | 644 | $ | 51,253 |
As of June 30, 2015 | |||||||||||||||||||||||||||
Number of Securities | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||
Available for Sale | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||||
(in thousands, except number of securities) | |||||||||||||||||||||||||||
U.S. Government agencies and corporations | 1 | $ | 5,018 | $ | 11 | $ | — | $ | — | $ | 5,018 | $ | 11 | ||||||||||||||
State and political subdivisions | 65 | 17,773 | 268 | 2,847 | 181 | 20,620 | 449 | ||||||||||||||||||||
Mortgage-backed securities | 31 | 42,873 | 597 | — | — | 42,873 | 597 | ||||||||||||||||||||
Collateralized mortgage obligations | 19 | 38,429 | 279 | 38,874 | 1,315 | 77,303 | 1,594 | ||||||||||||||||||||
Corporate debt securities | 3 | 8,298 | 13 | — | — | 8,298 | 13 | ||||||||||||||||||||
Other equity securities | 1 | — | — | 965 | 35 | 965 | 35 | ||||||||||||||||||||
Total | 120 | $ | 112,391 | $ | 1,168 | $ | 42,686 | $ | 1,531 | $ | 155,077 | $ | 2,699 |
As of December 31, 2014 | |||||||||||||||||||||||||||
Number of Securities | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||
(in thousands, except number of securities) | |||||||||||||||||||||||||||
U.S. Government agencies and corporations | 4 | $ | 9,946 | $ | 11 | $ | 15,018 | $ | 254 | $ | 24,964 | $ | 265 | ||||||||||||||
State and political subdivisions | 46 | 3,024 | 18 | 10,728 | 172 | 13,752 | 190 | ||||||||||||||||||||
Collateralized mortgage obligations | 14 | 14,971 | 123 | 68,370 | 1,970 | 83,341 | 2,093 | ||||||||||||||||||||
Corporate debt securities | 7 | 23,024 | 50 | 3,400 | 53 | 26,424 | 103 | ||||||||||||||||||||
Other equity securities | 1 | — | — | 966 | 34 | 966 | 34 | ||||||||||||||||||||
Total | 72 | $ | 50,965 | $ | 202 | $ | 98,482 | $ | 2,483 | $ | 149,447 | $ | 2,685 |
As of June 30, 2015 | |||||||||||||||||||||||||||
Number of Securities | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||
Held to Maturity | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||||
(in thousands, except number of securities) | |||||||||||||||||||||||||||
State and political subdivisions | 75 | $ | 30,935 | $ | 702 | $ | 1,637 | $ | 61 | $ | 32,572 | $ | 763 | ||||||||||||||
Mortgage-backed securities | 5 | 4,551 | 75 | — | — | 4,551 | 75 | ||||||||||||||||||||
Collateralized mortgage obligations | 6 | 16,651 | 247 | 7,775 | 248 | 24,426 | 495 | ||||||||||||||||||||
Corporate debt securities | 6 | 15,588 | 343 | 700 | 184 | 16,288 | 527 | ||||||||||||||||||||
Total | 92 | $ | 67,725 | $ | 1,367 | $ | 10,112 | $ | 493 | $ | 77,837 | $ | 1,860 |
As of December 31, 2014 | |||||||||||||||||||||||||||
Number of Securities | Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||
(in thousands, except number of securities) | |||||||||||||||||||||||||||
State and political subdivisions | 29 | $ | 5,322 | $ | 190 | $ | 9,144 | $ | 62 | $ | 14,466 | $ | 252 | ||||||||||||||
Collateralized mortgage obligations | 1 | — | — | 8,298 | 233 | 8,298 | 233 | ||||||||||||||||||||
Corporate debt securities | 2 | 2,358 | 27 | 750 | 132 | 3,108 | 159 | ||||||||||||||||||||
Total | 32 | $ | 7,680 | $ | 217 | $ | 18,192 | $ | 427 | $ | 25,872 | $ | 644 |
For the Six Months Ended June 30, | ||||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Beginning balance | $ | — | $ | 6,639 | ||||
Additional credit losses: | ||||||||
Reductions to credit losses: | ||||||||
Securities with other than temporary impairment, due to liquidation | — | — | ||||||
Securities with other than temporary impairment, due to sale | — | (6,639 | ) | |||||
Ending balance | $ | — | $ | — |
Available For Sale | Held to Maturity | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Due in one year or less | $ | 33,880 | $ | 34,346 | $ | 190 | $ | 190 | ||||||||
Due after one year through five years | 80,530 | 82,256 | 5,558 | 5,540 | ||||||||||||
Due after five years through ten years | 101,917 | 105,549 | 40,648 | 40,043 | ||||||||||||
Due after ten years | 28,681 | 28,946 | 22,561 | 22,072 | ||||||||||||
Debt securities without a single maturity date | 178,343 | 177,520 | 29,792 | 29,230 | ||||||||||||
Total | $ | 423,351 | $ | 428,617 | $ | 98,749 | $ | 97,075 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
Available for sale fixed maturity securities: | ||||||||||||||||
Gross realized gains | $ | 824 | $ | 191 | $ | 1,265 | $ | 1,120 | ||||||||
Gross realized losses | (368 | ) | — | (442 | ) | (146 | ) | |||||||||
Other-than-temporary impairment | — | — | — | — | ||||||||||||
456 | 191 | 823 | 974 | |||||||||||||
Equity securities: | ||||||||||||||||
Gross realized gains | — | — | 188 | — | ||||||||||||
Gross realized losses | — | — | — | — | ||||||||||||
Other-than-temporary impairment | — | — | — | — | ||||||||||||
— | — | 188 | — | |||||||||||||
Total net realized gains and losses | $ | 456 | $ | 191 | $ | 1,011 | $ | 974 |
Allowance for Loan Losses and Recorded Investment in Loan Receivables | ||||||||||||||||||||||||||||
As of June 30, 2015 and December 31, 2014 | ||||||||||||||||||||||||||||
(in thousands) | Agricultural | Commercial and Industrial | Commercial Real Estate | Residential Real Estate | Consumer | Unallocated | Total | |||||||||||||||||||||
June 30, 2015 | ||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 69 | $ | 254 | $ | 273 | $ | 217 | $ | 1 | $ | — | $ | 814 | ||||||||||||||
Collectively evaluated for impairment | 1,411 | 5,171 | 5,493 | 3,007 | 336 | 935 | 16,353 | |||||||||||||||||||||
Total | $ | 1,480 | $ | 5,425 | $ | 5,766 | $ | 3,224 | $ | 337 | $ | 935 | $ | 17,167 | ||||||||||||||
Loans receivable | ||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,069 | $ | 2,289 | $ | 4,254 | $ | 2,485 | $ | 29 | $ | — | $ | 12,126 | ||||||||||||||
Collectively evaluated for impairment | 110,781 | 448,114 | 944,544 | 529,329 | 35,612 | — | 2,068,380 | |||||||||||||||||||||
Purchased credit impaired loans | — | 393 | 19,562 | 7,895 | 2 | — | 27,852 | |||||||||||||||||||||
Total | $ | 113,850 | $ | 450,796 | $ | 968,360 | $ | 539,709 | $ | 35,643 | $ | — | $ | 2,108,358 |
(in thousands) | Agricultural | Commercial and Industrial | Commercial Real Estate | Residential Real Estate | Consumer | Unallocated | Total | |||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 88 | $ | 206 | $ | 226 | $ | 623 | $ | 2 | $ | — | $ | 1,145 | ||||||||||||||
Collectively evaluated for impairment | 1,418 | 5,574 | 4,173 | 2,544 | 321 | 1,188 | 15,218 | |||||||||||||||||||||
Total | $ | 1,506 | $ | 5,780 | $ | 4,399 | $ | 3,167 | $ | 323 | $ | 1,188 | $ | 16,363 | ||||||||||||||
Loans receivable | ||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,027 | $ | 3,168 | $ | 3,916 | $ | 3,341 | $ | 34 | $ | — | $ | 13,486 | ||||||||||||||
Collectively evaluated for impairment | 101,782 | 301,732 | 422,605 | 269,270 | 23,644 | — | 1,119,033 | |||||||||||||||||||||
Total | $ | 104,809 | $ | 304,900 | $ | 426,521 | $ | 272,611 | $ | 23,678 | $ | — | $ | 1,132,519 |
Allowance for Loan Loss Activity | ||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2015 and 2014 | ||||||||||||||||||||||||||||
(in thousands) | Agricultural | Commercial and Industrial | Commercial Real Estate | Residential Real Estate | Consumer | Unallocated | Total | |||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,612 | $ | 5,518 | $ | 5,756 | $ | 3,083 | $ | 285 | $ | 272 | $ | 16,526 | ||||||||||||||
Charge-offs | — | (44 | ) | (191 | ) | (38 | ) | (19 | ) | — | (292 | ) | ||||||||||||||||
Recoveries | — | 12 | 6 | 8 | 6 | — | 32 | |||||||||||||||||||||
Provision | (132 | ) | (61 | ) | 195 | 171 | 65 | 663 | 901 | |||||||||||||||||||
Ending balance | $ | 1,480 | $ | 5,425 | $ | 5,766 | $ | 3,224 | $ | 337 | $ | 935 | $ | 17,167 | ||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,034 | $ | 5,404 | $ | 4,490 | $ | 2,989 | $ | 294 | $ | 2,214 | $ | 16,425 | ||||||||||||||
Charge-offs | — | (103 | ) | (80 | ) | (139 | ) | (22 | ) | — | (344 | ) | ||||||||||||||||
Recoveries | — | 41 | — | 1 | 9 | — | 51 | |||||||||||||||||||||
Provision | 111 | (159 | ) | 324 | 178 | (52 | ) | (102 | ) | 300 | ||||||||||||||||||
Ending balance | $ | 1,145 | $ | 5,183 | $ | 4,734 | $ | 3,029 | $ | 229 | $ | 2,112 | $ | 16,432 |
Allowance for Loan Loss Activity | ||||||||||||||||||||||||||||
For the Six Months Ended June 30, 2015 and 2014 | ||||||||||||||||||||||||||||
(in thousands) | Agricultural | Commercial and Industrial | Commercial Real Estate | Residential Real Estate | Consumer | Unallocated | Total | |||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,506 | $ | 5,780 | $ | 4,399 | $ | 3,167 | $ | 323 | $ | 1,188 | $ | 16,363 | ||||||||||||||
Charge-offs | — | (291 | ) | (191 | ) | (548 | ) | (52 | ) | — | (1,082 | ) | ||||||||||||||||
Recoveries | — | 351 | 6 | 12 | 16 | — | 385 | |||||||||||||||||||||
Provision | (26 | ) | (415 | ) | 1,552 | 593 | 50 | (253 | ) | 1,501 | ||||||||||||||||||
Ending balance | $ | 1,480 | $ | 5,425 | $ | 5,766 | $ | 3,224 | $ | 337 | $ | 935 | $ | 17,167 | ||||||||||||||
2014 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,358 | $ | 4,980 | $ | 5,294 | $ | 3,185 | $ | 275 | $ | 1,087 | $ | 16,179 | ||||||||||||||
Charge-offs | — | (273 | ) | (153 | ) | (201 | ) | (45 | ) | — | (672 | ) | ||||||||||||||||
Recoveries | 5 | 154 | — | 4 | 12 | — | 175 | |||||||||||||||||||||
Provision | (218 | ) | 322 | (407 | ) | 41 | (13 | ) | 1,025 | 750 | ||||||||||||||||||
Ending balance | $ | 1,145 | $ | 5,183 | $ | 4,734 | $ | 3,029 | $ | 229 | $ | 2,112 | $ | 16,432 |
• | The borrower receives a reduction of the stated interest rate for the remaining original life of the debt. |
• | The borrower receives an extension of the maturity date or dates at a stated interest rate lower that the current market interest rate for new debt with similar risk characteristics. |
• | The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement. |
• | The borrower receives a deferral of required payments (principal and/or interest). |
• | The borrower receives a reduction of the accrued interest. |
Three Months Ended June 30, | ||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||
Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Troubled Debt Restructurings: | ||||||||||||||||||||||
Total | — | $ | — | $ | — | — | $ | — | $ | — | ||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||
Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number of Contracts | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Troubled Debt Restructurings(1): | ||||||||||||||||||||||
Total | — | $ | — | $ | — | — | $ | — | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | Number of Contracts | Recorded Investment | |||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||
Troubled Debt Restructurings(1) That Subsequently Defaulted: | ||||||||||||||||||||||||||||
Total | — | $ | — | — | $ | — | — | $ | — | — | $ | — |
• | Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses. |
• | Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments. |
• | Changes in the nature and volume of the portfolio and in the terms of loans. |
• | Changes in the experience, ability and depth of lending management and other relevant staff. |
• | Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans. |
• | Changes in the quality of our loan review system. |
• | Changes in the value of underlying collateral for collateral-dependent loans. |
• | The existence and effect of any concentrations of credit, and changes in the level of such concentrations. |
• | The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the banks' existing portfolios. |
Pass | Special Mention/ Watch | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
June 30, 2015 | ||||||||||||||||||||||||
Agricultural | $ | 107,780 | $ | 4,372 | $ | 1,698 | $ | — | $ | — | $ | 113,850 | ||||||||||||
Commercial and industrial | 419,071 | 8,305 | 21,003 | 27 | — | 448,406 | ||||||||||||||||||
Credit cards | 1,334 | 14 | — | — | — | 1,348 | ||||||||||||||||||
Overdrafts | 1,048 | 333 | 69 | — | — | 1,450 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 109,163 | 3,409 | 4,830 | — | — | 117,402 | ||||||||||||||||||
Farmland | 83,849 | 1,564 | 2,730 | — | — | 88,143 | ||||||||||||||||||
Multifamily | 109,417 | 378 | 1,818 | — | — | 111,613 | ||||||||||||||||||
Commercial real estate-other | 591,159 | 24,227 | 35,816 | — | — | 651,202 | ||||||||||||||||||
Total commercial real estate | 893,588 | 29,578 | 45,194 | — | — | 968,360 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 420,168 | 4,114 | 11,038 | 311 | — | 435,631 | ||||||||||||||||||
One- to four- family junior liens | 98,614 | 1,953 | 3,428 | 83 | — | 104,078 | ||||||||||||||||||
Total residential real estate | 518,782 | 6,067 | 14,466 | 394 | — | 539,709 | ||||||||||||||||||
Consumer | 34,975 | 5 | 211 | 44 | — | 35,235 | ||||||||||||||||||
Total | $ | 1,976,578 | $ | 48,674 | $ | 82,641 | $ | 465 | $ | — | $ | 2,108,358 |
Pass | Special Mention/ Watch | Substandard | Doubtful | Loss | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||
Agricultural | $ | 98,096 | $ | 5,032 | $ | 1,681 | $ | — | $ | — | $ | 104,809 | ||||||||||||
Commercial and industrial | 273,290 | 7,468 | 22,350 | — | — | 303,108 | ||||||||||||||||||
Credit cards | 1,240 | 6 | — | — | — | 1,246 | ||||||||||||||||||
Overdrafts | 373 | 262 | 109 | — | — | 744 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 56,963 | 1,151 | 1,269 | — | — | 59,383 | ||||||||||||||||||
Farmland | 79,629 | 1,778 | 2,293 | — | — | 83,700 | ||||||||||||||||||
Multifamily | 54,708 | 178 | — | — | — | 54,886 | ||||||||||||||||||
Commercial real estate-other | 215,268 | 11,216 | 2,068 | — | — | 228,552 | ||||||||||||||||||
Total commercial real estate | 406,568 | 14,323 | 5,630 | — | — | 426,521 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 211,390 | 3,933 | 3,991 | — | — | 219,314 | ||||||||||||||||||
One- to four- family junior liens | 53,039 | 48 | 210 | — | — | 53,297 | ||||||||||||||||||
Total residential real estate | 264,429 | 3,981 | 4,201 | — | — | 272,611 | ||||||||||||||||||
Consumer | 23,431 | 8 | 41 | — | — | 23,480 | ||||||||||||||||||
Total | $ | 1,067,427 | $ | 31,080 | $ | 34,012 | $ | — | $ | — | $ | 1,132,519 |
June 30, 2015 | December 31, 2014 | |||||||||||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | Recorded Investment | Unpaid Principal Balance | Related Allowance | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Agricultural | $ | 1,508 | $ | 2,008 | $ | — | $ | 1,410 | $ | 1,910 | $ | — | ||||||||||||
Commercial and industrial | 1,340 | 1,340 | — | 2,169 | 2,270 | — | ||||||||||||||||||
Credit cards | — | — | — | — | — | — | ||||||||||||||||||
Overdrafts | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 49 | 176 | — | 49 | 176 | — | ||||||||||||||||||
Farmland | 2,206 | 2,365 | — | 2,270 | 2,433 | — | ||||||||||||||||||
Multifamily | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate-other | 1,541 | 1,851 | — | 939 | 1,064 | — | ||||||||||||||||||
Total commercial real estate | 3,796 | 4,392 | — | 3,258 | 3,673 | — | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 1,239 | 1,789 | — | 535 | 773 | — | ||||||||||||||||||
One- to four- family junior liens | 90 | 113 | — | 134 | 157 | — | ||||||||||||||||||
Total residential real estate | 1,329 | 1,902 | — | 669 | 930 | — | ||||||||||||||||||
Consumer | 20 | 36 | — | 6 | 22 | — | ||||||||||||||||||
Total | $ | 7,993 | $ | 9,678 | $ | — | $ | 7,512 | $ | 8,805 | $ | — | ||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||
Agricultural | $ | 1,561 | $ | 1,561 | $ | 69 | $ | 1,617 | $ | 1,617 | $ | 88 | ||||||||||||
Commercial and industrial | 949 | 979 | 254 | 999 | 999 | 206 | ||||||||||||||||||
Credit cards | — | — | — | — | — | — | ||||||||||||||||||
Overdrafts | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 34 | 34 | 34 | 34 | 34 | 34 | ||||||||||||||||||
Farmland | 69 | 69 | 66 | 74 | 74 | 4 | ||||||||||||||||||
Multifamily | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate-other | 355 | 355 | 173 | 550 | 550 | 188 | ||||||||||||||||||
Total commercial real estate | 458 | 458 | 273 | 658 | 658 | 226 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 1,086 | 1,086 | 185 | 2,600 | 2,600 | 594 | ||||||||||||||||||
One- to four- family junior liens | 70 | 70 | 32 | 72 | 72 | 29 | ||||||||||||||||||
Total residential real estate | 1,156 | 1,156 | 217 | 2,672 | 2,672 | 623 | ||||||||||||||||||
Consumer | 9 | 9 | 1 | 28 | 28 | 2 | ||||||||||||||||||
Total | $ | 4,133 | $ | 4,163 | $ | 814 | $ | 5,974 | $ | 5,974 | $ | 1,145 | ||||||||||||
Total: | ||||||||||||||||||||||||
Agricultural | $ | 3,069 | $ | 3,569 | $ | 69 | $ | 3,027 | $ | 3,527 | $ | 88 | ||||||||||||
Commercial and industrial | 2,289 | 2,319 | 254 | 3,168 | 3,269 | 206 | ||||||||||||||||||
Credit cards | — | — | — | — | — | — | ||||||||||||||||||
Overdrafts | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 83 | 210 | 34 | 83 | 210 | 34 | ||||||||||||||||||
Farmland | 2,275 | 2,434 | 66 | 2,344 | 2,507 | 4 | ||||||||||||||||||
Multifamily | — | — | — | — | — | — | ||||||||||||||||||
Commercial real estate-other | 1,896 | 2,206 | 173 | 1,489 | 1,614 | 188 | ||||||||||||||||||
Total commercial real estate | 4,254 | 4,850 | 273 | 3,916 | 4,331 | 226 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 2,325 | 2,875 | 185 | 3,135 | 3,373 | 594 | ||||||||||||||||||
One- to four- family junior liens | 160 | 183 | 32 | 206 | 229 | 29 | ||||||||||||||||||
Total residential real estate | 2,485 | 3,058 | 217 | 3,341 | 3,602 | 623 | ||||||||||||||||||
Consumer | 29 | 45 | 1 | 34 | 50 | 2 | ||||||||||||||||||
Total | $ | 12,126 | $ | 13,841 | $ | 814 | $ | 13,486 | $ | 14,779 | $ | 1,145 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||||||||||
Agricultural | $ | 1,517 | $ | 71 | $ | 1,410 | $ | 65 | $ | 1,541 | $ | 86 | $ | 1,414 | $ | 80 | ||||||||||||||||
Commercial and industrial | 1,063 | 52 | 2,151 | 40 | 1,695 | 82 | 2,169 | 64 | ||||||||||||||||||||||||
Credit cards | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Overdrafts | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Construction and development | 49 | — | 90 | 1 | 49 | — | 90 | 1 | ||||||||||||||||||||||||
Farmland | 2,358 | 128 | 87 | 3 | 2,377 | 155 | 89 | 4 | ||||||||||||||||||||||||
Multifamily | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate-other | 1,542 | 4 | 442 | 1 | 1,547 | 12 | 450 | (7 | ) | |||||||||||||||||||||||
Total commercial real estate | 3,949 | 132 | 619 | 5 | 3,973 | 167 | 629 | (2 | ) | |||||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||||||
One- to four- family first liens | 1,241 | 3 | 798 | 6 | 1,239 | (1 | ) | 803 | 5 | |||||||||||||||||||||||
One- to four- family junior liens | 90 | — | 75 | — | 90 | — | 75 | — | ||||||||||||||||||||||||
Total residential real estate | 1,331 | 3 | 873 | 6 | 1,329 | (1 | ) | 878 | 5 | |||||||||||||||||||||||
Consumer | 21 | 1 | 8 | — | 22 | 1 | 9 | — | ||||||||||||||||||||||||
Total | $ | 7,881 | $ | 259 | $ | 5,061 | $ | 116 | $ | 8,560 | $ | 335 | $ | 5,099 | $ | 147 | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||||||||||
Agricultural | $ | 1,561 | $ | 61 | 1,642 | 63 | $ | 1,579 | $ | 73 | $ | 1,669 | $ | 76 | ||||||||||||||||||
Commercial and industrial | 3,118 | 18 | 1,446 | 24 | 2,426 | 27 | 1,475 | 38 | ||||||||||||||||||||||||
Credit cards | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Overdrafts | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Construction and development | 34 | — | — | — | 34 | — | — | — | ||||||||||||||||||||||||
Farmland | 69 | 3 | 2,418 | 139 | 71 | 4 | 2,433 | 166 | ||||||||||||||||||||||||
Multifamily | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate-other | 356 | 9 | 1,608 | 18 | 357 | 12 | 1,612 | 27 | ||||||||||||||||||||||||
Total commercial real estate | 459 | 12 | 4,026 | 157 | 462 | 16 | 4,045 | 193 | ||||||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||||||
One- to four- family first liens | 1,089 | 16 | 838 | 17 | 1,092 | 25 | 839 | 26 | ||||||||||||||||||||||||
One- to four- family junior liens | 71 | — | 74 | — | 71 | — | 75 | — | ||||||||||||||||||||||||
Total residential real estate | 1,160 | 16 | 912 | 17 | 1,163 | 25 | 914 | 26 | ||||||||||||||||||||||||
Consumer | 9 | — | 20 | 1 | 10 | — | 20 | 1 | ||||||||||||||||||||||||
Total | $ | 6,307 | $ | 107 | $ | 8,046 | $ | 262 | $ | 5,640 | $ | 141 | $ | 8,123 | $ | 334 | ||||||||||||||||
Total: | ||||||||||||||||||||||||||||||||
Agricultural | $ | 3,078 | $ | 132 | 3,052 | 128 | $ | 3,120 | $ | 159 | $ | 3,083 | $ | 156 | ||||||||||||||||||
Commercial and industrial | 4,181 | 70 | 3,597 | 64 | 4,121 | 109 | 3,644 | 102 | ||||||||||||||||||||||||
Credit cards | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Overdrafts | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||
Construction and development | 83 | — | 90 | 1 | 83 | — | 90 | 1 | ||||||||||||||||||||||||
Farmland | 2,427 | 131 | 2,505 | 142 | 2,448 | 159 | 2,522 | 170 | ||||||||||||||||||||||||
Multifamily | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Commercial real estate-other | 1,898 | 13 | 2,050 | 19 | 1,904 | 24 | 2,062 | 20 | ||||||||||||||||||||||||
Total commercial real estate | 4,408 | 144 | 4,645 | 162 | 4,435 | 183 | 4,674 | 191 | ||||||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||||||||||
One- to four- family first liens | 2,330 | 19 | 1,636 | 23 | 2,331 | 24 | 1,642 | 31 | ||||||||||||||||||||||||
One- to four- family junior liens | 161 | — | 149 | — | 161 | — | 150 | — | ||||||||||||||||||||||||
Total residential real estate | 2,491 | 19 | 1,785 | 23 | 2,492 | 24 | 1,792 | 31 | ||||||||||||||||||||||||
Consumer | 30 | 1 | 28 | 1 | 32 | 1 | 29 | 1 | ||||||||||||||||||||||||
Total | $ | 14,188 | $ | 366 | $ | 13,107 | $ | 378 | $ | 14,200 | $ | 476 | $ | 13,222 | $ | 481 |
30 - 59 Days Past Due | 60 - 89 Days Past Due | 90 Days or More Past Due | Total Past Due | Current | Total Loans Receivable | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
June 30, 2015 | ||||||||||||||||||||||||
Agricultural | $ | 383 | $ | 345 | $ | — | $ | 728 | $ | 113,122 | $ | 113,850 | ||||||||||||
Commercial and industrial | 1,953 | 315 | 482 | 2,750 | 445,656 | 448,406 | ||||||||||||||||||
Credit cards | — | 13 | — | 13 | 1,335 | 1,348 | ||||||||||||||||||
Overdrafts | 50 | 19 | — | 69 | 1,381 | 1,450 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | 250 | — | 168 | 418 | 116,984 | 117,402 | ||||||||||||||||||
Farmland | — | 101 | — | 101 | 88,042 | 88,143 | ||||||||||||||||||
Multifamily | — | — | — | — | 111,613 | 111,613 | ||||||||||||||||||
Commercial real estate-other | 894 | 394 | 2,791 | 4,079 | 647,123 | 651,202 | ||||||||||||||||||
Total commercial real estate | 1,144 | 495 | 2,959 | 4,598 | 963,762 | 968,360 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 2,302 | 471 | 1,897 | 4,670 | 430,961 | 435,631 | ||||||||||||||||||
One- to four- family junior liens | 200 | 252 | 243 | 695 | 103,383 | 104,078 | ||||||||||||||||||
Total residential real estate | 2,502 | 723 | 2,140 | 5,365 | 534,344 | 539,709 | ||||||||||||||||||
Consumer | 35 | 5 | 30 | 70 | 35,165 | 35,235 | ||||||||||||||||||
Total | $ | 6,067 | $ | 1,915 | $ | 5,611 | $ | 13,593 | $ | 2,094,765 | $ | 2,108,358 | ||||||||||||
Included in the totals above are the following purchased credit impaired loans | $ | 1,026 | $ | 82 | $ | 3,670 | $ | 4,778 | $ | 23,074 | $ | 27,852 | ||||||||||||
December 31, 2014 | ||||||||||||||||||||||||
Agricultural | $ | 58 | $ | 30 | $ | — | $ | 88 | $ | 104,721 | $ | 104,809 | ||||||||||||
Commercial and industrial | 897 | 603 | 515 | 2,015 | 301,093 | 303,108 | ||||||||||||||||||
Credit cards | 3 | 3 | — | 6 | 1,240 | 1,246 | ||||||||||||||||||
Overdrafts | 104 | 2 | 4 | 110 | 634 | 744 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction and development | — | — | 83 | 83 | 59,300 | 59,383 | ||||||||||||||||||
Farmland | 503 | — | — | 503 | 83,197 | 83,700 | ||||||||||||||||||
Multifamily | — | — | — | — | 54,886 | 54,886 | ||||||||||||||||||
Commercial real estate-other | 168 | 57 | 1,200 | 1,425 | 227,127 | 228,552 | ||||||||||||||||||
Total commercial real estate | 671 | 57 | 1,283 | 2,011 | 424,510 | 426,521 | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
One- to four- family first liens | 1,481 | 581 | 2,023 | 4,085 | 215,229 | 219,314 | ||||||||||||||||||
One- to four- family junior liens | 105 | 48 | 192 | 345 | 52,952 | 53,297 | ||||||||||||||||||
Total residential real estate | 1,586 | 629 | 2,215 | 4,430 | 268,181 | 272,611 | ||||||||||||||||||
Consumer | 35 | 8 | 23 | 66 | 23,414 | 23,480 | ||||||||||||||||||
Total | $ | 3,354 | $ | 1,332 | $ | 4,040 | $ | 8,726 | $ | 1,123,793 | $ | 1,132,519 |
June 30, 2015 | December 31, 2014 | |||||||||||||||
Non-Accrual | Loans Past Due 90 Days or More and Still Accruing | Non-Accrual | Loans Past Due 90 Days or More and Still Accruing | |||||||||||||
(in thousands) | ||||||||||||||||
Agricultural | $ | 168 | $ | — | $ | — | $ | — | ||||||||
Commercial and industrial | 414 | — | 479 | 66 | ||||||||||||
Credit cards | — | — | — | — | ||||||||||||
Overdrafts | — | — | — | — | ||||||||||||
Commercial real estate: | ||||||||||||||||
Construction and development | 83 | — | 83 | — | ||||||||||||
Farmland | 22 | — | 24 | — | ||||||||||||
Multifamily | — | — | — | — | ||||||||||||
Commercial real estate-other | 1,597 | 924 | 1,200 | — | ||||||||||||
Total commercial real estate | 1,702 | 924 | 1,307 | — | ||||||||||||
Residential real estate: | ||||||||||||||||
One- to four- family first liens | 1,274 | 324 | 1,261 | 780 | ||||||||||||
One- to four- family junior liens | 146 | — | 192 | — | ||||||||||||
Total residential real estate | 1,420 | 324 | 1,453 | 780 | ||||||||||||
Consumer | 13 | 2 | 16 | 2 | ||||||||||||
Total | $ | 3,717 | $ | 1,250 | $ | 3,255 | $ | 848 |
• | Purchased credit impaired loans are accounted for in accordance with ASC 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" as they display significant credit deterioration since origination and it is probable, as of the acquisition date, that the Company will be unable to collect all contractually required payments from the borrower. |
• | Purchased non-credit impaired loans are accounted for in accordance with ASC 310-20 “Nonrefundable Fees and Other Costs” as these loans do not have evidence of significant credit deterioration since origination and it is probable all contractually required payments will be received from the borrower. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
(in thousands) | ||||||||||||
Balance at beginning of period | — | — | — | — | ||||||||
Purchases | 1,882 | — | 1,882 | — | ||||||||
Accretion | (43 | ) | — | (43 | ) | — | ||||||
Reclassification from nonaccretable difference | — | — | — | — | ||||||||
Balance at end of period | 1,839 | — | 1,839 | — |
Insurance Agency Intangible | Core Deposit Intangible | Trade Names Intangible | Customer List Intangible | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
For the Six Months Ended June 30, 2015 | |||||||||||||||||||||
Balance, beginning of period | $ | 364 | $ | 691 | $ | 7,040 | $ | 164 | $ | 8,259 | |||||||||||
Amortization expense | (44 | ) | (1,235 | ) | (46 | ) | (11 | ) | (1,336 | ) | |||||||||||
Additions from business combination | — | 12,773 | 2,786 | — | 15,559 | ||||||||||||||||
Balance at end of period | $ | 320 | $ | 12,229 | $ | 9,780 | $ | 153 | $ | 22,482 | |||||||||||
Gross carrying amount | $ | 1,320 | $ | 18,206 | $ | 9,826 | $ | 330 | $ | 29,682 | |||||||||||
Accumulated amortizations | (1,000 | ) | (5,977 | ) | (46 | ) | (177 | ) | (7,200 | ) | |||||||||||
Net book value | $ | 320 | $ | 12,229 | $ | 9,780 | $ | 153 | $ | 22,482 |
June 30, 2015 | December 31, 2014 | |||||||
(in thousands) | ||||||||
Federal Home Loan Bank Stock | $ | 10,441 | $ | 8,582 | ||||
FDIC indemnification asset, net | 5,147 | — | ||||||
Prepaid expenses | 2,218 | 1,350 | ||||||
Mortgage servicing rights | 2,217 | 2,308 | ||||||
Accounts receivable & other miscellaneous assets | 7,100 | 1,835 | ||||||
$ | 27,123 | $ | 14,075 |
June 30, 2015 | December 31, 2014 | ||||||||||||||
(in thousands) | Weighted Average Cost | Balance | Weighted Average Cost | Balance | |||||||||||
Federal Reserve Bank advances | — | % | $ | — | — | % | $ | — | |||||||
Federal funds purchased | 0.29 | % | 24,700 | — | % | — | |||||||||
Securities sold under agreements to repurchase | 0.30 | % | 67,114 | 0.21 | % | 60,821 | |||||||||
Line of credit | — | % | — | — | % | — | |||||||||
Total | 0.30 | % | 91,814 | 0.21 | % | $ | 60,821 |
Face Value | Book Value | Interest Rate | Interest Rate at | Maturity Date | Callable Date | |||||||||||||
(in thousands) | 6/30/2015 | |||||||||||||||||
Central Bancshares Capital Trust II(1) (2) | $ | 7,217 | $ | 6,514 | Three-month LIBOR + 3.50% | 3.78 | % | 03/15/2038 | 03/15/2013 | |||||||||
Barron Investment Capital Trust I(1) (2) | 2,062 | 1,545 | Three-month LIBOR + 2.15% | 2.43 | % | 09/30/2036 | 09/23/2011 | |||||||||||
MidWestOne Statutory Trust II(1) | 15,464 | 15,464 | Three-month LIBOR + 1.59% | 1.87 | % | 12/15/2037 | 12/15/2012 | |||||||||||
Total | $ | 24,743 | $ | 23,523 |
June 30, 2015 | December 31, 2014 | ||||||||||||||
(in thousands) | Weighted Average Cost | Balance | Weighted Average Cost | Balance | |||||||||||
FHLB Borrowings | 1.74 | % | $ | 78,000 | 1.88 | % | $ | 93,000 | |||||||
Note payable to unaffiliated bank | 2.19 | % | 25,000 | — | % | — | |||||||||
Total | 1.85 | % | $ | 103,000 | 1.88 | % | $ | 93,000 |
• | Level 1 Inputs – Unadjusted quoted prices for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date. |
• | Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
• | Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. |
Fair Value Measurement at June 30, 2015 Using | ||||||||||||||||
(in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Available for sale debt securities: | ||||||||||||||||
U.S. Government agencies and corporations | $ | 28,621 | $ | — | $ | 28,621 | $ | — | ||||||||
State and political subdivisions | 181,113 | — | 181,113 | — | ||||||||||||
Mortgage-backed securities | 63,083 | — | 63,083 | — | ||||||||||||
Collateralized mortgage obligations | 114,437 | — | 114,437 | — | ||||||||||||
Corporate debt securities | 41,363 | — | 41,363 | — | ||||||||||||
Total available for sale debt securities | 428,617 | — | 428,617 | — | ||||||||||||
Available for sale equity securities: | ||||||||||||||||
Other equity securities | 1,251 | 1,251 | — | — | ||||||||||||
Total available for sale equity securities | 1,251 | 1,251 | — | — | ||||||||||||
Total securities available for sale | $ | 429,868 | $ | 1,251 | $ | 428,617 | $ | — |
Fair Value Measurement at December 31, 2014 Using | ||||||||||||||||
(in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Available for sale debt securities: | ||||||||||||||||
U.S. Government agencies and corporations | $ | 49,375 | $ | — | $ | 49,375 | $ | — | ||||||||
State and political subdivisions | 195,199 | — | 195,199 | — | ||||||||||||
Mortgage-backed securities | 32,463 | — | 32,463 | — | ||||||||||||
Collateralized mortgage obligations | 146,132 | — | 146,132 | — | ||||||||||||
Corporate debt securities | 48,741 | — | 48,741 | — | ||||||||||||
Total available for sale debt securities | 471,910 | — | 471,910 | — | ||||||||||||
Available for sale equity securities: | ||||||||||||||||
Other equity securities | 3,032 | 3,032 | — | — | ||||||||||||
Total available for sale equity securities | 3,032 | 3,032 | — | — | ||||||||||||
Total securities available for sale | $ | 474,942 | $ | 3,032 | $ | 471,910 | $ | — |
For the Six Months Ended June 30, | |||||||||
2015 | 2014 | ||||||||
Collateralized Debt Obligations | Collateralized Debt Obligations | ||||||||
(in thousands) | |||||||||
Beginning balance | $ | — | $ | 1,317 | |||||
Transfers into Level 3 | — | — | |||||||
Transfers out of Level 3 | — | — | |||||||
Total gains (losses): | |||||||||
Included in earnings | — | 782 | |||||||
Included in other comprehensive income | — | 794 | |||||||
Purchases, issuances, sales, and settlements: | |||||||||
Purchases | — | — | |||||||
Issuances | — | — | |||||||
Sales | — | (2,893 | ) | ||||||
Settlements | — | — | |||||||
Ending balance | $ | — | $ | — |
For the Six Months Ended June 30, | |||||||||
2015 | 2014 | ||||||||
Collateralized Debt Obligations | Collateralized Debt Obligations | ||||||||
(in thousands) | |||||||||
Total gains for the period in earnings* | $ | — | $ | 782 | |||||
Change in unrealized gains for the period included in other comprehensive income | — | 794 |
Fair Value Measurement at June 30, 2015 Using | ||||||||||||||||
(in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Collateral dependent impaired loans | $ | 7,713 | $ | — | $ | — | $ | 7,713 | ||||||||
Other real estate owned | $ | 8,894 | $ | — | $ | — | $ | 8,894 |
Fair Value Measurement at December 31, 2014 Using | ||||||||||||||||
(in thousands) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | ||||||||||||||||
Collateral dependent impaired loans | $ | 3,412 | $ | — | $ | — | $ | 3,412 | ||||||||
Other real estate owned | $ | 1,916 | $ | — | $ | — | $ | 1,916 |
June 30, 2015 | ||||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 46,604 | $ | 46,604 | $ | 46,604 | $ | — | $ | — | ||||||||||
Investment securities: | ||||||||||||||||||||
Available for sale | 429,868 | 429,868 | 1,251 | 428,617 | — | |||||||||||||||
Held to maturity | 98,749 | 97,075 | — | 97,075 | — | |||||||||||||||
Total investment securities | 528,617 | 526,943 | 1,251 | 525,692 | — | |||||||||||||||
Loans held for sale | 8,506 | 8,486 | — | — | 8,486 | |||||||||||||||
Loans, net | 2,091,191 | 2,090,695 | — | 2,090,695 | — | |||||||||||||||
Loan pool participations, net | — | — | — | — | — | |||||||||||||||
Accrued interest receivable | 12,421 | 12,421 | 12,421 | — | — | |||||||||||||||
Federal Home Loan Bank stock | 10,441 | 10,441 | — | 10,441 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing demand | 528,005 | 528,005 | 528,005 | — | — | |||||||||||||||
Interest-bearing checking | 994,432 | 994,432 | 994,432 | — | — | |||||||||||||||
Savings | 187,375 | 187,375 | 187,375 | — | — | |||||||||||||||
Certificates of deposit under $100,000 | 375,702 | 375,739 | — | 375,739 | — | |||||||||||||||
Certificates of deposit $100,000 and over | 318,832 | 319,964 | — | 319,964 | — | |||||||||||||||
Total deposits | 2,404,346 | 2,405,515 | 1,709,812 | 695,703 | — | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 91,814 | 91,814 | 91,814 | — | — | |||||||||||||||
Federal Home Loan Bank borrowings | 78,000 | 78,245 | — | 78,245 | — | |||||||||||||||
Junior subordinated notes issued to capital trusts | 25,353 | 18,335 | — | 18,335 | — | |||||||||||||||
Long-term debt | 25,000 | 25,000 | — | 25,000 | — | |||||||||||||||
Accrued interest payable | 2,009 | 2,009 | 2,009 | — | — |
December 31, 2014 | ||||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 23,409 | $ | 23,409 | $ | 23,409 | $ | — | $ | — | ||||||||||
Investment securities: | ||||||||||||||||||||
Available for sale | 474,942 | 474,942 | 3,032 | 471,910 | — | |||||||||||||||
Held to maturity | 51,524 | 51,253 | — | 51,253 | — | |||||||||||||||
Total investment securities | 526,466 | 526,195 | 3,032 | 523,163 | — | |||||||||||||||
Loans held for sale | 801 | 812 | — | — | 812 | |||||||||||||||
Loans, net | 1,116,156 | 1,116,285 | — | 1,116,285 | — | |||||||||||||||
Loan pool participations, net | 19,332 | 19,332 | — | — | 19,332 | |||||||||||||||
Accrued interest receivable | 10,898 | 10,898 | 10,898 | — | — | |||||||||||||||
Federal Home Loan Bank stock | 8,582 | 8,582 | — | 8,582 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing demand | 214,461 | 214,461 | 214,461 | — | — | |||||||||||||||
Interest-bearing checking | 618,540 | 618,540 | 618,540 | — | — | |||||||||||||||
Savings | 102,527 | 102,527 | 102,527 | — | — | |||||||||||||||
Certificates of deposit under $100,000 | 235,395 | 235,401 | — | 235,401 | — | |||||||||||||||
Certificates of deposit $100,000 and over | 237,619 | 238,480 | — | 238,480 | — | |||||||||||||||
Total deposits | 1,408,542 | 1,409,409 | 935,528 | 473,881 | — | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 78,229 | 78,229 | 78,229 | — | — | |||||||||||||||
Federal Home Loan Bank borrowings | 93,000 | 93,051 | — | 93,051 | — | |||||||||||||||
Junior subordinated notes issued to capital trusts | 15,464 | 10,021 | — | 10,021 | — | |||||||||||||||
Long-term debt | — | — | — | — | — | |||||||||||||||
Accrued interest payable | 863 | 863 | 863 | — | — |
• | Cash and cash equivalents, federal funds purchased, securities sold under repurchase agreements, and accrued interest are instruments with carrying values that approximate fair value. |
• | Investment securities available for sale are measured at fair value on a recurring basis. Held to maturity securities are carried at amortized cost. Fair value is based upon quoted prices, if available. If a quoted price is not available, the fair value is obtained from benchmarking the security against similar securities by using a third-party pricing service. |
• | Loans held for sale are carried at the lower of cost or fair value, with fair value being based on recent observable loan sales. The portfolio has historically consisted primarily of residential real estate loans. |
• | For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans are determined using estimated future cash flows, discounted at the interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The Company does record nonrecurring fair value adjustments to loans to reflect (1) partial write-downs and allowances that are based on the observable market price or appraised value of the collateral or (2) the full charge-off of the loan carrying value. |
• | Loan pool participation carrying values represent the discounted price paid by us to acquire our participation interests in the various loan pool participations purchased, which approximates fair value. |
• | The fair value of FHLB stock is estimated at its carrying value and redemption price of $100 per share. |
• | Deposit liabilities are carried at historical cost. The fair value of demand deposits, savings accounts and certain money market account deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. If the fair value of the fixed maturity certificates of deposit is calculated at less than the carrying amount, the carrying value of these deposits is reported as the fair value. |
• | FHLB borrowings, Junior subordinated notes issued to capital trusts, subordinated notes, and long-term debt are recorded at historical cost. The fair value of these items is estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. |
Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||||
(dollars in thousands) | Fair Value at June 30, 2015 | Valuation Techniques(s) | Unobservable Input | Range of Inputs | Weighted Average | |||||||||
Collateral dependent impaired loans: | $ | 7,713 | Modified appraised value | Third party appraisal | NM * | NM * | NM * | |||||||
Appraisal discount | NM * | NM * | NM * | |||||||||||
Other real estate owned | 8,894 | Modified appraised value | Third party appraisal | NM * | NM * | NM * | ||||||||
Appraisal discount | NM * | NM * | NM * |
Commercial Banking | |||||||||||||||||||||
(in thousands) | MidWestOne Bank | Central Bank | All Other | Intercompany Eliminations | Consolidated Total | ||||||||||||||||
Three months ended June 30, 2015 | |||||||||||||||||||||
Net interest income | 13,864 | 9,281 | 44,578 | (45,000 | ) | 22,723 | |||||||||||||||
Provision for loan losses | 450 | 451 | — | — | 901 | ||||||||||||||||
Noninterest income | 3,978 | 1,216 | (107 | ) | — | 5,087 | |||||||||||||||
Noninterest expense(1) | 9,838 | 6,631 | 3,377 | — | 19,846 | ||||||||||||||||
Income tax expense | 2,092 | 1,295 | (793 | ) | — | 2,594 | |||||||||||||||
Net income | $ | 5,462 | $ | 2,120 | $ | 41,887 | $ | (45,000 | ) | $ | 4,469 | ||||||||||
Goodwill | $ | — | $ | 56,488 | $ | — | $ | — | $ | 56,488 | |||||||||||
Total assets | $ | 1,684,181 | $ | 1,239,052 | $ | 327,809 | $ | (328,592 | ) | $ | 2,922,450 | ||||||||||
Three months ended June 30, 2014 | |||||||||||||||||||||
Net interest income | 14,048 | — | (193 | ) | — | 13,855 | |||||||||||||||
Provision for loan losses | 300 | — | — | — | 300 | ||||||||||||||||
Noninterest income | 3,219 | — | 337 | — | 3,556 | ||||||||||||||||
Noninterest expense | 10,011 | — | 628 | — | 10,639 | ||||||||||||||||
Income tax expense | 1,928 | — | (209 | ) | — | 1,719 | |||||||||||||||
Net income | $ | 5,028 | $ | — | $ | (275 | ) | $ | — | $ | 4,753 | ||||||||||
Goodwill | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Total assets | $ | 1,722,350 | $ | — | $ | 203,663 | $ | (196,106 | ) | $ | 1,729,907 | ||||||||||
Six months ended June 30, 2015 | |||||||||||||||||||||
Net interest income | 28,198 | 9,281 | 49,486 | (50,000 | ) | 36,965 | |||||||||||||||
Provision for loan losses | 1,050 | 451 | — | — | 1,501 | ||||||||||||||||
Noninterest income | 7,398 | 1,216 | 481 | — | 9,095 | ||||||||||||||||
Noninterest expense(1) | 19,864 | 6,631 | 4,530 | — | 31,025 | ||||||||||||||||
Income tax expense | 4,011 | 1,295 | (1,037 | ) | — | 4,269 | |||||||||||||||
Net income | $ | 10,671 | $ | 2,120 | $ | 46,474 | $ | (50,000 | ) | $ | 9,265 | ||||||||||
Goodwill | $ | — | $ | 56,488 | $ | — | $ | — | $ | 56,488 | |||||||||||
Total assets | $ | 1,684,181 | $ | 1,239,052 | $ | 327,809 | $ | (328,592 | ) | $ | 2,922,450 | ||||||||||
Six months ended June 30, 2014 | |||||||||||||||||||||
Net interest income | 27,705 | — | 4,677 | (5,000 | ) | 27,382 | |||||||||||||||
Provision for loan losses | 750 | — | — | — | 750 | ||||||||||||||||
Noninterest income | 7,103 | — | 670 | — | 7,773 | ||||||||||||||||
Noninterest expense | 19,769 | — | 1,262 | — | 21,031 | ||||||||||||||||
Income tax expense | 3,998 | — | (350 | ) | — | 3,648 | |||||||||||||||
Net income | $ | 10,291 | $ | — | $ | 4,435 | $ | (5,000 | ) | $ | 9,726 | ||||||||||
Goodwill | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Total assets | $ | 1,722,350 | $ | — | $ | 203,663 | $ | (196,106 | ) | $ | 1,729,907 |
As of and for the Three Months Ended June 30, | |||||||
(dollars in thousands) | 2015 | 2014 | |||||
Net Income | $ | 4,469 | $ | 4,753 | |||
Average Assets | 2,559,052 | 1,741,354 | |||||
Average Shareholders' Equity | 246,594 | 185,297 | |||||
Return on Average Assets* (ROAA) | 0.70 | % | 1.09 | % | |||
Return on Average Shareholders' Equity* (ROAE) | 7.27 | 10.29 | |||||
Return on Average Tangible Equity* (ROATE) | 11.21 | 10.99 | |||||
Total Equity to Assets (end of period) | 9.51 | 10.78 | |||||
Tangible Equity to Tangible Assets (end of period) | 7.21 | 10.34 | |||||
* Annualized |
For the Three Months Ended June 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Net Income: | |||||||
Net income | $ | 4,469 | $ | 4,753 | |||
Plus: Intangible amortization, net of tax (1) | 798 | 89 | |||||
Adjusted net income | $ | 5,267 | $ | 4,842 | |||
Average Tangible Equity: | |||||||
Average total shareholders' equity | $ | 246,594 | $ | 185,297 | |||
Less: Average intangibles | (58,203 | ) | (8,586 | ) | |||
Average tangible equity | $ | 188,391 | $ | 176,711 | |||
ROATE (annualized) | 11.21 | % | 10.99 | % | |||
Net Income: | |||||||
Net income | $ | 4,469 | $ | 4,753 | |||
Plus: Merger-related expenses | 2,667 | — | |||||
Net tax effect of merger-related expenses(2) | (344 | ) | — | ||||
Net income exclusive of merger-related expenses | $ | 6,792 | $ | 4,753 | |||
Diluted average number of shares | 10,254,279 | 8,452,291 | |||||
Earnings Per Common Share-Diluted | $ | 0.42 | $ | 0.56 | |||
Earnings Per Common Share-Diluted, exclusive of merger-related expenses | $ | 0.66 | $ | 0.56 | |||
(1) Computed on a tax-equivalent basis, assuming a federal income tax rate of 35%. | |||||||
(2) Computed based on qualifying tax deductible expenses, assuming a federal income tax rate of 35% |
As of June 30, | |||||
(in thousands) | 2015 | 2014 | |||
Tangible Equity: | |||||
Total shareholders' equity | 277,966 | 186,516 | |||
Less: Intangible assets, net of amortization and associated deferred tax liability | (72,381 | ) | (8,532 | ) | |
Tangible equity | 205,585 | 177,984 | |||
Tangible Assets: | |||||
Total assets | 2,922,450 | 1,729,907 | |||
Less: Intangible assets, net of amortization and associated deferred tax liability | (72,381 | ) | (8,532 | ) | |
Tangible assets | 2,850,069 | 1,721,375 | |||
Tangible Equity/Tangible Assets | 7.21 | % | 10.34 | % |
Three Months Ended June 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Rate/ Yield | Average Balance | Interest Income/ Expense | Average Rate/ Yield | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Average Earning Assets: | |||||||||||||||||||||
Loans (1)(2)(3) | $ | 1,799,070 | $ | 22,048 | 4.92 | % | $ | 1,083,978 | $ | 12,283 | 4.55 | % | |||||||||
Loan pool participations (4) | 19,496 | 178 | 3.66 | 24,812 | 532 | 8.60 | |||||||||||||||
Investment securities: | |||||||||||||||||||||
Taxable investments | 338,840 | 1,913 | 2.26 | 366,118 | 2,274 | 2.49 | |||||||||||||||
Tax exempt investments (2) | 180,622 | 2,130 | 4.73 | 168,094 | 2,078 | 4.96 | |||||||||||||||
Total investment securities | 519,462 | 4,043 | 3.12 | 534,212 | 4,352 | 3.27 | |||||||||||||||
Federal funds sold and interest-bearing balances | 17,921 | 15 | 0.34 | 9,044 | 5 | 0.22 | |||||||||||||||
Total interest-earning assets | $ | 2,355,949 | $ | 26,284 | 4.47 | % | $ | 1,652,046 | $ | 17,172 | 4.17 | % | |||||||||
Cash and due from banks | 34,198 | 18,895 | |||||||||||||||||||
Premises and equipment | 60,883 | 31,184 | |||||||||||||||||||
Allowance for loan losses | (18,822 | ) | (18,630 | ) | |||||||||||||||||
Other assets | 126,844 | 57,859 | |||||||||||||||||||
Total assets | $ | 2,559,052 | $ | 1,741,354 | |||||||||||||||||
Average Interest-Bearing Liabilities: | |||||||||||||||||||||
Savings and interest-bearing demand deposits | $ | 1,034,981 | $ | 706 | 0.27 | % | $ | 705,853 | $ | 583 | 0.33 | % | |||||||||
Certificates of deposit | 620,347 | 958 | 0.62 | 450,558 | 1,083 | 0.96 | |||||||||||||||
Total deposits | 1,655,328 | 1,664 | 0.40 | 1,156,411 | 1,666 | 0.58 | |||||||||||||||
Federal funds purchased and repurchase agreements | 65,055 | 45 | 0.28 | 59,937 | 34 | 0.23 | |||||||||||||||
Federal Home Loan Bank borrowings | 97,150 | 353 | 1.46 | 107,559 | 545 | 2.03 | |||||||||||||||
Long-term debt and other | 45,306 | 400 | 3.54 | 15,917 | 76 | 1.92 | |||||||||||||||
Total borrowed funds | 207,511 | 798 | 1.54 | 183,413 | 655 | 1.43 | |||||||||||||||
Total interest-bearing liabilities | $ | 1,862,839 | $ | 2,462 | 0.53 | % | $ | 1,339,824 | $ | 2,321 | 0.69 | % | |||||||||
Net interest spread(2) | 3.94 | % | 3.48 | % | |||||||||||||||||
Demand deposits | 429,492 | 204,903 | |||||||||||||||||||
Other liabilities | 20,127 | 11,330 | |||||||||||||||||||
Shareholders' equity | 246,594 | 185,297 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,559,052 | $ | 1,741,354 | |||||||||||||||||
Interest income/earning assets (2) | $ | 2,355,949 | $ | 26,284 | 4.47 | % | $ | 1,652,046 | $ | 17,172 | 4.17 | % | |||||||||
Interest expense/earning assets | $ | 2,355,949 | $ | 2,462 | 0.42 | % | $ | 1,652,046 | $ | 2,321 | 0.56 | % | |||||||||
Net interest margin (2)(5) | $ | 23,822 | 4.05 | % | $ | 14,851 | 3.61 | % | |||||||||||||
Non-GAAP to GAAP Reconciliation: | |||||||||||||||||||||
Tax Equivalent Adjustment: | |||||||||||||||||||||
Loans | $ | 363 | $ | 278 | |||||||||||||||||
Securities | 736 | 718 | |||||||||||||||||||
Total tax equivalent adjustment | 1,099 | 996 | |||||||||||||||||||
Net Interest Income | $ | 22,723 | $ | 13,855 |
(1) | Loan fees included in interest income are not material. | |
(2) | Computed on a tax-equivalent basis, assuming a federal income tax rate of 35%. | |
(3) | Non-accrual loans have been included in average loans, net of unearned discount. | |
(4) | Includes interest income and discount realized on loan pool participations. | |
(5) | Net interest margin is tax-equivalent net interest income as a percentage of average earning assets. |
Three Months Ended June 30, | |||||||||||
2015 Compared to 2014 Change due to | |||||||||||
Volume | Rate/Yield | Net | |||||||||
(in thousands) | |||||||||||
Increase (decrease) in interest income: | |||||||||||
Loans, tax equivalent | $ | 8,693 | $ | 1,072 | $ | 9,765 | |||||
Loan pool participations | (96 | ) | (258 | ) | (354 | ) | |||||
Investment securities: | |||||||||||
Taxable investments | (161 | ) | (200 | ) | (361 | ) | |||||
Tax exempt investments | 509 | (457 | ) | 52 | |||||||
Total investment securities | 348 | (657 | ) | (309 | ) | ||||||
Federal funds sold and interest-bearing balances | 6 | 4 | 10 | ||||||||
Change in interest income | 8,951 | 161 | 9,112 | ||||||||
Increase (decrease) in interest expense: | |||||||||||
Savings and interest-bearing demand deposits | 698 | (575 | ) | 123 | |||||||
Certificates of deposit | 1,515 | (1,640 | ) | (125 | ) | ||||||
Total deposits | 2,213 | (2,215 | ) | (2 | ) | ||||||
Federal funds purchased and repurchase agreements | 3 | 8 | 11 | ||||||||
Federal Home Loan Bank borrowings | (49 | ) | (143 | ) | (192 | ) | |||||
Other long-term debt | 222 | 102 | 324 | ||||||||
Total borrowed funds | 176 | (33 | ) | 143 | |||||||
Change in interest expense | 2,389 | (2,248 | ) | 141 | |||||||
Increase in net interest income | $ | 6,562 | $ | 2,409 | $ | 8,971 | |||||
Percentage increase in net interest income over prior period | 60.4 | % |
Three Months Ended June 30, | ||||||||||||||
2015 | 2014 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Trust, investment, and insurance fees | $ | 1,633 | $ | 1,430 | $ | 203 | 14.2 | % | ||||||
Service charges and fees on deposit accounts | 1,068 | 848 | 220 | 25.9 | ||||||||||
Mortgage origination and loan servicing fees | 833 | 318 | 515 | 161.9 | ||||||||||
Other service charges, commissions and fees | 785 | 552 | 233 | 42.2 | ||||||||||
Bank-owned life insurance income | 325 | 225 | 100 | 44.4 | ||||||||||
Gain on sale or call of available for sale securities | 456 | 191 | 265 | 138.7 | ||||||||||
Gain (loss) on sale of premises and equipment | (13 | ) | (8 | ) | (5 | ) | 62.5 | |||||||
Total noninterest income | $ | 5,087 | $ | 3,556 | $ | 1,531 | 43.1 | % | ||||||
Noninterest income as a % of total revenue* | 17.0 | % | 19.6 | % | ||||||||||
* Total revenue is net interest income plus noninterest income excluding gain/loss on securities and premises and equipment and impairment of investment securities. |
Three Months Ended June 30, | ||||||||||||||
2015 | 2014 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Salaries and employee benefits | $ | 9,994 | $ | 6,060 | $ | 3,934 | 64.9 | % | ||||||
Net occupancy and equipment expense | 2,342 | 1,634 | 708 | 43.3 | ||||||||||
Professional fees | 2,229 | 779 | 1,450 | 186.1 | ||||||||||
Data processing expense | 668 | 391 | 277 | 70.8 | ||||||||||
FDIC insurance expense | 388 | 240 | 148 | 61.7 | ||||||||||
Amortization of intangible assets | 1,228 | 137 | 1,091 | 796.4 | ||||||||||
Other operating expense | 2,997 | 1,398 | 1,599 | 114.4 | ||||||||||
Total noninterest expense | $ | 19,846 | $ | 10,639 | $ | 9,207 | 86.5 | % |
As of and for the Six Months Ended June 30, | |||||||
(dollars in thousands) | 2015 | 2014 | |||||
Net Income | $ | 9,265 | $ | 9,726 | |||
Average Assets | 2,164,844 | 1,744,221 | |||||
Average Shareholders' Equity | 220,821 | 183,297 | |||||
Return on Average Assets* (ROAA) | 0.86 | % | 1.12 | % | |||
Return on Average Shareholders' Equity* (ROAE) | 8.46 | 10.70 | |||||
Return on Average Tangible Equity* (ROATE) | 10.89 | 11.44 | |||||
Total Equity to Assets (end of period) | 9.51 | 10.78 | |||||
Tangible Equity to Tangible Assets (end of period) | 7.21 | 10.34 | |||||
* Annualized |
For the Six Months Ended June 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Net Income: | |||||||
Net income | $ | 9,265 | $ | 9,726 | |||
Plus: Intangible amortization, net of tax (1) | 868 | 178 | |||||
Adjusted net income | $ | 10,133 | $ | 9,904 | |||
Average Tangible Equity: | |||||||
Average total shareholders' equity | $ | 220,821 | $ | 183,297 | |||
Less: Average intangibles | (33,220 | ) | (8,641 | ) | |||
Average tangible equity | $ | 187,601 | $ | 174,656 | |||
ROATE (annualized) | 10.89 | % | 11.44 | % | |||
Net Income: | |||||||
Net income | $ | 9,265 | $ | 9,726 | |||
Plus: Merger-related expenses | 3,177 | — | |||||
Net tax effect of merger-related expenses(2) | (457 | ) | — | ||||
Net income exclusive of merger-related expenses | $ | 11,985 | $ | 9,726 | |||
Diluted average number of shares | 9,328,941 | 8,479,989 | |||||
Earnings Per Common Share-Diluted | $ | 0.99 | $ | 1.14 | |||
Earnings Per Common Share-Diluted, exclusive of merger-related expenses | $ | 1.28 | $ | 1.14 | |||
(1) Computed on a tax-equivalent basis, assuming a federal income tax rate of 35%. | |||||||
(2) Computed based on qualifying tax deductible expenses, assuming a federal income tax rate of 35% |
As of June 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Tangible Equity: | |||||||
Total shareholders' equity | $ | 277,966 | $ | 186,516 | |||
Less: Intangible assets, net of amortization and associated deferred tax liability | (72,381 | ) | (8,532 | ) | |||
Tangible equity | $ | 205,585 | $ | 177,984 | |||
Tangible Assets: | |||||||
Total assets | $ | 2,922,450 | $ | 1,729,907 | |||
Less: Intangible assets, net of amortization and associated deferred tax liability | (72,381 | ) | (8,532 | ) | |||
Tangible assets | $ | 2,850,069 | $ | 1,721,375 | |||
Tangible Equity/Tangible Assets | 7.21 | % | 10.34 | % |
Six Months Ended June 30, | |||||||||||||||||||||
2015 | 2014 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Rate/ Yield | Average Balance | Interest Income/ Expense | Average Rate/ Yield | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Average Earning Assets: | |||||||||||||||||||||
Loans (1)(2)(3) | $ | 1,476,719 | $ | 34,947 | 4.77 | % | $ | 1,083,227 | $ | 24,497 | 4.56 | % | |||||||||
Loan pool participations (4) | 20,231 | 798 | 7.95 | 25,931 | 812 | 6.31 | |||||||||||||||
Investment securities: | |||||||||||||||||||||
Taxable investments | 325,989 | 3,807 | 2.36 | 369,125 | 4,590 | 2.51 | |||||||||||||||
Tax exempt investments (2) | 179,651 | 4,254 | 4.78 | 168,227 | 4,188 | 5.02 | |||||||||||||||
Total investment securities | 505,640 | 8,061 | 3.21 | 537,352 | 8,778 | 3.29 | |||||||||||||||
Federal funds sold and interest-bearing balances | 9,602 | 16 | 0.34 | 7,929 | 9 | 0.23 | |||||||||||||||
Total interest-earning assets | $ | 2,012,192 | $ | 43,822 | 4.39 | % | $ | 1,654,439 | $ | 34,096 | 4.16 | % | |||||||||
Cash and due from banks | 26,616 | 19,238 | |||||||||||||||||||
Premises and equipment | 49,841 | 30,004 | |||||||||||||||||||
Allowance for loan losses | (18,728 | ) | (18,561 | ) | |||||||||||||||||
Other assets | 94,923 | 59,101 | |||||||||||||||||||
Total assets | $ | 2,164,844 | $ | 1,744,221 | |||||||||||||||||
Average Interest-Bearing Liabilities: | |||||||||||||||||||||
Savings and interest-bearing demand deposits | $ | 876,190 | $ | 1,277 | 0.29 | % | $ | 703,289 | $ | 1,164 | 0.33 | % | |||||||||
Certificates of deposit | 543,020 | 2,110 | 0.78 | 452,225 | 2,225 | 0.99 | |||||||||||||||
Total deposits | 1,419,210 | 3,387 | 0.48 | 1,155,514 | 3,389 | 0.59 | |||||||||||||||
Federal funds purchased and repurchase agreements | 66,593 | 87 | 0.26 | 60,144 | 65 | 0.22 | |||||||||||||||
Federal Home Loan Bank borrowings | 91,193 | 752 | 1.66 | 107,972 | 1,107 | 2.07 | |||||||||||||||
Long-term debt and other | 30,620 | 476 | 3.13 | 15,930 | 154 | 1.95 | |||||||||||||||
Total borrowed funds | 188,406 | 1,315 | 1.41 | 184,046 | 1,326 | 1.45 | |||||||||||||||
Total interest-bearing liabilities | $ | 1,607,616 | $ | 4,702 | 0.59 | % | $ | 1,339,560 | $ | 4,715 | 0.71 | % | |||||||||
Net interest spread(2) | 3.80 | % | 3.45 | % | |||||||||||||||||
Demand deposits | 321,550 | 209,773 | |||||||||||||||||||
Other liabilities | 14,857 | 11,591 | |||||||||||||||||||
Shareholders' equity | 220,821 | 183,297 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,164,844 | $ | 1,744,221 | |||||||||||||||||
Interest income/earning assets (2) | $ | 2,012,192 | $ | 43,822 | 4.39 | % | $ | 1,654,439 | $ | 34,096 | 4.16 | % | |||||||||
Interest expense/earning assets | $ | 2,012,192 | $ | 4,702 | 0.47 | % | $ | 1,654,439 | $ | 4,715 | 0.57 | % | |||||||||
Net interest margin (2)(5) | $ | 39,120 | 3.92 | % | $ | 29,381 | 3.59 | % | |||||||||||||
Non-GAAP to GAAP Reconciliation: | |||||||||||||||||||||
Tax Equivalent Adjustment: | |||||||||||||||||||||
Loans | $ | 685 | $ | 552 | |||||||||||||||||
Securities | 1,470 | 1,447 | |||||||||||||||||||
Total tax equivalent adjustment | 2,155 | 1,999 | |||||||||||||||||||
Net Interest Income | $ | 36,965 | $ | 27,382 |
(1) | Loan fees included in interest income are not material. | |
(2) | Computed on a tax-equivalent basis, assuming a federal income tax rate of 35%. | |
(3) | Non-accrual loans have been included in average loans, net of unearned discount. | |
(4) | Includes interest income and discount realized on loan pool participations. | |
(5) | Net interest margin is tax-equivalent net interest income as a percentage of average earning assets. |
Six Months Ended June 30, | |||||||||||
2015 Compared to 2014 Change due to | |||||||||||
Volume | Rate/Yield | Net | |||||||||
(in thousands) | |||||||||||
Increase (decrease) in interest income: | |||||||||||
Loans, tax equivalent | $ | 9,274 | $ | 1,176 | $ | 10,450 | |||||
Loan pool participations | (396 | ) | 382 | (14 | ) | ||||||
Investment securities: | |||||||||||
Taxable investments | (518 | ) | (265 | ) | (783 | ) | |||||
Tax exempt investments | 513 | (447 | ) | 66 | |||||||
Total investment securities | (5 | ) | (712 | ) | (717 | ) | |||||
Federal funds sold and interest-bearing balances | 2 | 5 | 7 | ||||||||
Change in interest income | 8,875 | 851 | 9,726 | ||||||||
Increase (decrease) in interest expense: | |||||||||||
Savings and interest-bearing demand deposits | 453 | (340 | ) | 113 | |||||||
Certificates of deposit | 868 | (983 | ) | (115 | ) | ||||||
Total deposits | 1,321 | (1,323 | ) | (2 | ) | ||||||
Federal funds purchased and repurchase agreements | 8 | 14 | 22 | ||||||||
Federal Home Loan Bank borrowings | (156 | ) | (199 | ) | (355 | ) | |||||
Other long-term debt | 194 | 128 | 322 | ||||||||
Total borrowed funds | 46 | (57 | ) | (11 | ) | ||||||
Change in interest expense | 1,367 | (1,380 | ) | (13 | ) | ||||||
Change in net interest income | $ | 7,508 | $ | 2,231 | $ | 9,739 | |||||
Percentage change in net interest income over prior period | 33.2 | % |
Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Trust, investment, and insurance fees | $ | 3,214 | $ | 2,948 | $ | 266 | 9.0 | % | ||||||
Service charges and fees on deposit accounts | 1,801 | 1,476 | 325 | 22.0 | ||||||||||
Mortgage origination and loan servicing fees | 1,071 | 755 | 316 | 41.9 | ||||||||||
Other service charges, commissions and fees | 1,388 | 1,171 | 217 | 18.5 | ||||||||||
Bank-owned life insurance income | 620 | 454 | 166 | 36.6 | ||||||||||
Gain on sale or call of available for sale securities | 1,011 | 974 | 37 | 3.8 | ||||||||||
Loss on sale of premises and equipment | (10 | ) | (5 | ) | (5 | ) | 100.0 | |||||||
Total noninterest income | $ | 9,095 | $ | 7,773 | $ | 1,322 | 17.0 | % | ||||||
Noninterest income as a % of total revenue* | 18.0 | % | 19.9 | % | ||||||||||
* Total revenue is net interest income plus noninterest income excluding gain/loss on securities and premises and equipment and impairment of investment securities. |
Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | $ Change | % Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Salaries and employee benefits | $ | 16,863 | $ | 12,194 | $ | 4,669 | 38.3 | % | ||||||
Net occupancy and equipment expense | 3,866 | 3,239 | 627 | 19.4 | ||||||||||
Professional fees | 2,909 | 1,354 | 1,555 | 114.8 | ||||||||||
Data processing expense | 1,100 | 815 | 285 | 35.0 | ||||||||||
FDIC insurance expense | 627 | 483 | 144 | 29.8 | ||||||||||
Amortization of intangible assets | 1,336 | 274 | 1,062 | 387.6 | ||||||||||
Other operating expense | 4,324 | 2,672 | 1,652 | 61.8 | ||||||||||
Total noninterest expense | $ | 31,025 | $ | 21,031 | $ | 9,994 | 47.5 | % |
June 30, 2015 | December 31, 2014 | ||||||||||||
Balance | % of Total | Balance | % of Total | ||||||||||
(dollars in thousands) | |||||||||||||
Agricultural | $ | 113,850 | 5.4 | % | $ | 104,809 | 9.3 | % | |||||
Commercial and industrial | 448,406 | 21.3 | 303,108 | 26.7 | |||||||||
Credit cards | 1,348 | — | 1,246 | 0.1 | |||||||||
Overdrafts | 1,450 | 0.1 | 744 | 0.1 | |||||||||
Commercial real estate: | |||||||||||||
Construction and development | 117,402 | 5.5 | 59,383 | 5.2 | |||||||||
Farmland | 88,143 | 4.2 | 83,700 | 7.4 | |||||||||
Multifamily | 111,613 | 5.3 | 54,886 | 4.8 | |||||||||
Commercial real estate-other | 651,202 | 30.9 | 228,552 | 20.2 | |||||||||
Total commercial real estate | 968,360 | 45.9 | 426,521 | 37.6 | |||||||||
Residential real estate: | |||||||||||||
One- to four- family first liens | 435,631 | 20.7 | 219,314 | 19.4 | |||||||||
One- to four- family junior liens | 104,078 | 4.9 | 53,297 | 4.7 | |||||||||
Total residential real estate | 539,709 | 25.6 | 272,611 | 24.1 | |||||||||
Consumer | 35,235 | 1.7 | 23,480 | 2.1 | |||||||||
Total loans | $ | 2,108,358 | 100.0 | % | $ | 1,132,519 | 100.0 | % |
90 Days or More Past Due and Still Accruing Interest | Restructured | Nonaccrual | Total | ||||||||||||
(in thousands) | |||||||||||||||
June 30, 2015 | |||||||||||||||
Agricultural | $ | — | $ | 2,901 | $ | 168 | $ | 3,069 | |||||||
Commercial and industrial | — | 1,423 | 414 | 1,837 | |||||||||||
Credit cards | — | — | — | — | |||||||||||
Overdrafts | — | — | — | — | |||||||||||
Commercial real estate: | |||||||||||||||
Construction and development | — | — | 83 | 83 | |||||||||||
Farmland | — | 2,209 | 22 | 2,231 | |||||||||||
Multifamily | — | — | — | — | |||||||||||
Commercial real estate-other | 924 | — | 1,597 | 2,521 | |||||||||||
Total commercial real estate | 924 | 2,209 | 1,702 | 4,835 | |||||||||||
Residential real estate: | |||||||||||||||
One- to four- family first liens | 324 | 984 | 1,274 | 2,582 | |||||||||||
One- to four- family junior liens | — | 13 | 146 | 159 | |||||||||||
Total residential real estate | 324 | 997 | 1,420 | 2,741 | |||||||||||
Consumer | 2 | 16 | 13 | 31 | |||||||||||
Total | $ | 1,250 | $ | 7,546 | $ | 3,717 | $ | 12,513 |
90 Days or More Past Due and Still Accruing Interest | Restructured | Nonaccrual | Total | ||||||||||||
(in thousands) | |||||||||||||||
December 31, 2014 | |||||||||||||||
Agricultural | $ | — | $ | 3,027 | $ | — | $ | 3,027 | |||||||
Commercial and industrial | 66 | 2,217 | 479 | 2,762 | |||||||||||
Credit cards | — | — | — | — | |||||||||||
Overdrafts | — | — | — | — | |||||||||||
Commercial real estate: | |||||||||||||||
Construction and development | — | — | 83 | 83 | |||||||||||
Farmland | — | 2,268 | 24 | 2,292 | |||||||||||
Multifamily | — | — | — | — | |||||||||||
Commercial real estate-other | — | 255 | 1,200 | 1,455 | |||||||||||
Total commercial real estate | — | 2,523 | 1,307 | 3,830 | |||||||||||
Residential real estate: | |||||||||||||||
One- to four- family first liens | 780 | 1,119 | 1,261 | 3,160 | |||||||||||
One- to four- family junior liens | — | 14 | 192 | 206 | |||||||||||
Total residential real estate | 780 | 1,133 | 1,453 | 3,366 | |||||||||||
Consumer | 2 | 18 | 16 | 36 | |||||||||||
Total | $ | 848 | $ | 8,918 | $ | 3,255 | $ | 13,021 |
• | The borrower receives a reduction of the stated interest rate for the remaining original life of the debt. |
• | The borrower receives an extension of the maturity date or dates at a stated interest rate lower than the current market interest rate for new debt with similar risk characteristics. |
• | The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement. |
• | The borrower receives a deferral of required payments (principal and/or interest). |
• | The borrower receives a reduction of the accrued interest. |
June 30, | December 31, | ||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Restructured Loans (TDRs): | |||||||
In compliance with modified terms | $ | 7,546 | $ | 8,918 | |||
Not in compliance with modified terms - on nonaccrual status | 500 | 522 | |||||
Total restructured loans | $ | 8,046 | $ | 9,440 |
At June 30, | At December 31, | ||||||
(in thousands) | 2015 | 2014 | |||||
Tier 1 capital | |||||||
Total shareholders' equity | $ | 277,966 | $ | 192,731 | |||
Less: Net unrealized gains on securities available for sale | (3,273 | ) | (5,322 | ) | |||
Disallowed Intangibles | (65,502 | ) | (8,511 | ) | |||
Common equity tier 1 capital | $ | 209,191 | — | ||||
Plus: Long term debt (qualifying restricted core capital) | 23,523 | 15,464 | |||||
Tier 1 capital | $ | 232,714 | $ | 194,362 | |||
Risk-weighted assets | $ | 2,205,496 | $ | 1,442,585 | |||
Tier 1 capital to risk-weighted assets | 10.55 | % | 13.47 | % | |||
Common equity tier 1 capital to risk-weighted assets | 9.48 | % | N/A |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
At June 30, 2015 | ||||||||||||||||||||
Consolidated: | ||||||||||||||||||||
Total capital/risk based | $ | 250,007 | 11.34 | % | $ | 176,440 | 8.00 | % | N/A | N/A | ||||||||||
Tier 1 capital/risk based | 232,714 | 10.55 | 88,220 | 6.00 | N/A | N/A | ||||||||||||||
Common equity tier 1 capital/risk based | 209,191 | 9.48 | 99,247 | 4.50 | N/A | N/A | ||||||||||||||
Tier 1 capital/adjusted average | 232,714 | 9.45 | 98,536 | 4.00 | N/A | N/A | ||||||||||||||
MidWestOne Bank: | ||||||||||||||||||||
Total capital/risk based | $ | 161,700 | 11.95 | % | $ | 108,260 | 8.00 | % | $ | 135,325 | 10.00 | % | ||||||||
Tier 1 capital/risk based | 144,805 | 10.70 | 54,130 | 6.00 | 81,195 | 8.00 | ||||||||||||||
Common equity tier 1 capital/risk based | 144,805 | 10.70 | 60,896 | 4.50 | 87,961 | 6.50 | ||||||||||||||
Tier 1 capital/adjusted average | 144,805 | 8.42 | 68,767 | 4.00 | 85,958 | 5.00 | ||||||||||||||
Central Bank: | ||||||||||||||||||||
Total capital/risk based | $ | 95,865 | 11.34 | % | $ | 67,622 | 8.00 | % | $ | 84,527 | 10.00 | % | ||||||||
Tier 1 capital/risk based | 95,470 | 11.29 | 33,811 | 6.00 | 50,716 | 8.00 | ||||||||||||||
Common equity tier 1 capital/risk based | 95,470 | 11.29 | 38,037 | 4.50 | 54,942 | 6.50 | ||||||||||||||
Tier 1 capital/adjusted average | 95,470 | 8.31 | 45,940 | 4.00 | 57,425 | 5.00 | ||||||||||||||
At December 31, 2014 | ||||||||||||||||||||
Consolidated: | ||||||||||||||||||||
Total capital/risk based | $ | 212,559 | 14.73 | % | $ | 115,407 | 8.00 | % | N/A | N/A | ||||||||||
Tier 1 capital/risk based | 194,362 | 13.47 | 57,703 | 4.00 | N/A | N/A | ||||||||||||||
Tier 1 capital/adjusted average | 194,362 | 10.85 | 71,647 | 4.00 | N/A | N/A | ||||||||||||||
MidWestOne Bank: | ||||||||||||||||||||
Total capital/risk based | $ | 197,018 | 13.75 | % | $ | 114,624 | 8.00 | % | $ | 143,280 | 10.00 | % | ||||||||
Tier 1 capital/risk based | 179,098 | 12.50 | 57,312 | 4.00 | 85,968 | 6.00 | ||||||||||||||
Tier 1 capital/adjusted average | 179,098 | 10.05 | 71,249 | 4.00 | 89,061 | 5.00 |
Immediate Change in Rates | |||||||||||||||||
-200 | -100 | +100 | +200 | ||||||||||||||
(dollars in thousands) | |||||||||||||||||
June 30, 2015 | |||||||||||||||||
Dollar change | $ | (3,994 | ) | $ | (1,655 | ) | $ | 1,162 | $ | 3,590 | |||||||
Percent change | (4.1 | )% | (1.7 | )% | 1.2 | % | 3.7 | % | |||||||||
December 31, 2014 | |||||||||||||||||
Dollar change | $ | (315 | ) | $ | 171 | $ | (369 | ) | $ | (491 | ) | ||||||
Percent change | (0.6 | )% | 0.3 | % | (0.7 | )% | (0.9 | )% |
• | credit quality deterioration or pronounced and sustained reduction in real estate market values could cause an increase in our allowance for credit losses and a reduction in net earnings; |
• | the risks of mergers, including with Central, including, without limitation, the related time and costs of implementing such transactions, integrating operations as part of these transactions and possible failures to achieve expected gains, revenue growth and/or expense savings from such transactions; |
• | our management’s ability to reduce and effectively manage interest rate risk and the impact of interest rates in general on the volatility of our net interest income; |
• | changes in the economic environment, competition, or other factors that may affect our ability to acquire loans or influence the anticipated growth rate of loans and deposits and the quality of the loan portfolio and loan and deposit pricing; |
• | fluctuations in the value of our investment securities; |
• | governmental monetary and fiscal policies; |
• | legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators (particularly with respect to the Dodd-Frank Act and the extensive regulations promulgated and to be promulgated thereunder, as well as the Basel III Rules, which became effective January 1, 2015), and changes in the scope and cost of FDIC insurance and other coverages; |
• | the ability to attract and retain key executives and employees experienced in banking and financial services; |
• | the sufficiency of the allowance for loan losses to absorb the amount of actual losses inherent in our existing loan portfolio; |
• | our ability to adapt successfully to technological changes to compete effectively in the marketplace; |
• | credit risks and risks from concentrations (by geographic area and by industry) within our loan portfolio; |
• | the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds, and other financial institutions operating in our markets or elsewhere or providing similar services; |
• | the failure of assumptions underlying the establishment of allowances for loan losses and estimation of values of collateral and various financial assets and liabilities; |
• | volatility of rate-sensitive deposits; |
• | operational risks, including data processing system failures or fraud; |
• | asset/liability matching risks and liquidity risks; |
• | the costs, effects and outcomes of existing or future litigation; |
• | changes in general economic or industry conditions, nationally or in the communities in which we conduct business; |
• | changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the FASB; and |
• | other factors and risks described under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2014. |
Exhibit Number | Description | Incorporated by Reference to: | |||
3.1 | Amended and Restated Bylaws of MidWestOne Financial Group, Inc., dated May 1, 2015 | Current Report on Form 8-K filed May 1, 2015 | |||
10.1 | Credit Agreement by and between MidWestOne Financial Group, Inc. and U.S. Bank National Association, dated April 30, 2015 | Filed herewith | |||
10.2 | Form of Securities Purchase Agreement, dated June 22, 2015 | Current Report on Form 8-K filed June 23, 2015 | |||
10.3 | Form of Registration Rights Agreement, dated June 22, 2015 | Current Report on Form 8-K filed June 23, 2015 | |||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) | Filed herewith | |||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) | Filed herewith | |||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
101.INS | XBRL Instance Document | Filed herewith | |||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | |||
MIDWESTONE FINANCIAL GROUP, INC. | |||||||
Dated: | August 10, 2015 | By: | /s/ CHARLES N. FUNK | ||||
Charles N. Funk | |||||||
President and Chief Executive Officer | |||||||
By: | /s/ GARY J. ORTALE | ||||||
Gary J. Ortale | |||||||
Executive Vice President and Chief Financial Officer |
Article I. DEFINITIONS AND ACCOUNTING TERMS | 1 | |||
Section 1.1. Defined Terms | 1 | |||
Section 1.2. Accounting Terms and Calculations | 12 | |||
Section 1.3. Computation of Time Periods | 12 | |||
Section 1.4. Other Definitional Terms | 12 | |||
Article II. TERMS OF THE CREDIT FACILITIES | 12 | |||
Section 2.1. Lending Commitments | 12 | |||
Section 2.2. Procedure for Revolving Loans and Term Loan Advances | 13 | |||
Section 2.3. Notes | 13 | |||
Section 2.4. Interest Rate | 13 | |||
Section 2.5. Repayment of the Loan | 16 | |||
Section 2.6. Prepayments | 17 | |||
Section 2.7. Computations | 18 | |||
Section 2.8. Payments | 18 | |||
Section 2.9. Unused Revolving Commitment Fee | 18 | |||
Section 2.10. Yield Protection | 18 | |||
Section 2.11. Capital Adequacy | 19 | |||
Section 2.12. Advances and Paying Procedure | 19 | |||
Section 2.13. Resting Period | 19 | |||
Article III. CONDITIONS PRECEDENT | 19 | |||
Section 3.1. Conditions of Initial Transaction | 19 | |||
Section 3.2. Conditions Precedent to all Loans | 21 | |||
Article IV. REPRESENTATIONS AND WARRANTIES | 22 | |||
Section 4.1. Organization, Standing, Etc. | 22 | |||
Section 4.2. Authorization and Validity | 22 | |||
Section 4.3. No Conflict; No Default | 22 | |||
Section 4.4. Government Consent | 23 | |||
Section 4.5. Financial Condition | 23 | |||
Section 4.6. Litigation | 23 | |||
Section 4.7. Environmental, Health and Safety Laws | 23 | |||
Section 4.8. ERISA | 24 | |||
Section 4.9. Federal Reserve Regulations | 24 | |||
Section 4.10. Title to Property; Leases; Liens; Subordination | 24 | |||
Section 4.11. Taxes | 24 | |||
Section 4.12. Trademarks, Patents | 25 | |||
Section 4.13. Burdensome Restrictions | 25 |
Section 4.14. Force Majeure | 25 | |||
Section 4.15. Investment Company Act | 25 | |||
Section 4.16. Retirement Benefits | 25 | |||
Section 4.17. Full Disclosure | 25 | |||
Section 4.18. Subsidiaries | 25 | |||
Section 4.19. Labor Matters | 26 | |||
Section 4.20. Bank Holding Company Act | 26 | |||
Section 4.21. Capital Stock | 26 | |||
Section 4.22. Solvency | 26 | |||
Section 4.22. Solvency | 26 | |||
Section 4.24. Restrictive Agreements | 26 | |||
Section 4.25. Central Bancshares Acquisition | 27 | |||
Article V. AFFIRMATIVE COVENANTS | 27 | |||
Section 5.1. Financial Statements and Reports | 27 | |||
Section 5.2. Use of Loan Proceeds | 29 | |||
Section 5.3. Existence | 30 | |||
Section 5.4. Insurance | 30 | |||
Section 5.5. Payment of Taxes and Claims | 30 | |||
Section 5.6. Inspection | 30 | |||
Section 5.7. Maintenance of Properties | 31 | |||
Section 5.8. Books and Records | 31 | |||
Section 5.9. Compliance | 31 | |||
Section 5.10. ERISA | 31 | |||
Section 5.11. Environmental Matters; Reporting | 31 | |||
Section 5.12. Further Assurances | 31 | |||
Section 5.13. Compliance with Terms of Material Contracts | 32 | |||
Article VI. NEGATIVE COVENANTS | 32 | |||
Section 6.1. Merger; Acquisitions | 32 | |||
Section 6.2. Disposition of Assets | 32 | |||
Section 6.3. Plans | 33 | |||
Section 6.4. Change in Nature of Business | 33 | |||
Section 6.5. Loan Proceeds | 33 | |||
Section 6.6. Negative Pledges; Subsidiary Restrictions | 33 | |||
Section 6.7. Restricted Payments | 33 | |||
Section 6.8. Transactions with Affiliates | 33 | |||
Section 6.9. Accounting Changes | 34 | |||
Section 6.10. Subordinated Debt | 34 | |||
Section 6.11. Indebtedness | 34 | |||
Section 6.12. Liens | 35 | |||
Section 6.13. Contingent Liabilities | 36 | |||
Section 6.14. Non-Performing Loans and OREO to Tangible Capital | 36 | |||
Section 6.15. Loan Loss Reserves to Non-Performing Loans | 36 | |||
Section 6.16. Total Risk Based Capital | 36 |
Section 6.17. Regulatory Capital - Bank Subsidiaries | 36 | |||
Section 6.18. Fixed Charge Coverage Ratio | 37 | |||
Section 6.19. Hedging Agreements | 37 | |||
Section 6.20. Investments | 37 | |||
Section 6.21. Central Bancshares Acquisition Documents | 37 | |||
Article VII. EVENTS OF DEFAULT AND REMEDIES | 37 | |||
Section 7.1. Events of Default | 37 | |||
Section 7.2. Remedies | 40 | |||
Section 7.3. Deposit Accounts; Offset | 40 | |||
Article VIII. MISCELLANEOUS | 40 | |||
Section 8.1. Modifications | 40 | |||
Section 8.2. Expenses | 40 | |||
Section 8.3. Waivers, etc. | 41 | |||
Section 8.4. Notices | 41 | |||
Section 8.5. Taxes | 41 | |||
Section 8.6. Successors and Assigns; Participations; Purchasing Banks | 41 | |||
Section 8.7. Confidentiality of Information | 42 | |||
Section 8.8. Governing Law and Construction | 43 | |||
Section 8.9. Consent to Jurisdiction | 43 | |||
Section 8.10. Waiver of Jury Trial | 44 | |||
Section 8.11. Survival of Agreement | 44 | |||
Section 8.12. Indemnification | 44 | |||
Section 8.13. Captions | 45 | |||
Section 8.14. Entire Agreement | 45 | |||
Section 8.15. Counterparts | 45 | |||
Section 8.16. Borrower Acknowledgements | 45 | |||
Section 8.17. Interest Rate Limitation | 45 | |||
Section 8.18. Electronic Records | 46 | |||
Section 8.19. USA PATRIOT ACT NOTIFICATION | 46 |
(A) | An amount of the unpaid principal balance of the Term Loan as selected by the Borrower will accrue interest, upon a minimum of two New York Banking Days prior notice, at the per annum rate equal to the Applicable Margin plus the greater of (I) zero percent (0.0%) and (II) the 1, 3 or 6 month LIBOR rate (such period to be chosen by the Borrower) quoted by the Bank from Reuters Screen LIBOR01 Page or any successor thereto, which shall be the LIBOR rate in effect two New York Banking Days prior to commencement of such interest period, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation (a “LIBOR Rate Loan”). In the event the Borrower does not timely select another interest rate option at least two New York Banking Days before the end of the Loan Period for a LIBOR Rate Loan, the Bank may at any time after the end of the Loan Period convert the LIBOR Rate Loan to a Daily Reset LIBOR Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate Loan shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Loan prior to the end of the Loan Period. |
(B) | An amount of the unpaid principal balance of the Term Loan as selected by the Borrower on the Term Loan Advance Ending Date will accrue interest at a fixed per annum rate equal to the Applicable Margin plus the Cost of Funds Rate as determined as of the Term Loan Advance Ending Date, which interest rate will remain fixed through the Term Loan Maturity Date (the “Fixed Rate Loan”). The Borrower may only exercise this interest rate option on the Term Loan Advance Ending Date, and this interest rate option shall expire on the Term Loan Advance Ending Date if not selected on such date. |
Period | MidWestOne Bank, separately | Central Bank, separately | Subsidiary Banks Combined |
Closing Date to and including December 30, 2015 | 10.25% | 10.75% | 10.50% |
December 31, 2015 to and including December 30, 2016 | 10.40% | 10.90% | 10.60% |
December 31, 2016 to and including December 30, 2017 | 10.65% | 11.10% | 10.85% |
December 31, 2017 to and including December 30, 2018 | 10.90% | 11.25% | 11.05% |
December 31, 2018 to and including December 30, 2019 | 11.15% | 11.35% | 11.25% |
From and after December 31, 2019 | 11.40% | 11.50% | 11.45% |
MIDWESTONE FINANCIAL GROUP, | ||
INC. | ||
By: | /s/ CHARLES N. FUNK | |
Name: Charles N. Funk | ||
Title: President and Chief Executive Officer |
U.S. BANK NATIONAL ASSOCIATION | ||
By: | /s/ WILLIAM P. DORAN | |
Name: William P. Doran | ||
Title: Vice President |
MIDWESTONE FINANCIAL GROUP, | ||
INC. | ||
By: | ||
Name: Charles N. Funk | ||
Title: President and Chief Executive Officer |
MIDWESTONE FINANCIAL GROUP, | ||
INC. | ||
By: | ||
Name: Charles N. Funk | ||
Title: President and Chief Executive Officer |
MIDWESTONE FINANCIAL GROUP, | ||
INC. | ||
By: | ||
Name: | ||
Title: |
Period | MidWestOne Bank, separately | Central Bank, separately | Subsidiary Banks Combined |
Closing Date to and including December 30, 2015 | 10.25% | 10.75% | 10.50% |
December 31, 2015 to and including December 30, 2016 | 10.40% | 10.90% | 10.60% |
December 31, 2016 to and including December 30, 2017 | 10.65% | 11.10% | 10.85% |
December 31, 2017 to and including December 30, 2018 | 10.90% | 11.25% | 11.05% |
December 31, 2018 to and including December 30, 2019 | 11.15% | 11.35% | 11.25% |
From and after December 31, 2019 | 11.40% | 11.50% | 11.45% |
1) | I have reviewed this Quarterly Report on Form 10-Q of MidWestOne Financial Group, Inc.; | |||
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||
4) | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |||
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |||
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |||
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Charles N. Funk | |
Charles N. Funk | |
President and Chief Executive Officer | |
Date: | August 10, 2015 |
1) | I have reviewed this Quarterly Report on Form 10-Q of MidWestOne Financial Group, Inc.; | |||
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||
4) | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |||
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |||
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |||
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Gary J. Ortale | |
Gary J. Ortale | |
Executive Vice President and Chief Financial Officer | |
Date: | August 10, 2015 |
(a) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(b) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of MidWestOne Financial Group, Inc. |
/s/ Charles N. Funk | |
Charles N. Funk | |
President and Chief Executive Officer | |
Date: | August 10, 2015 |
(a) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(b) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of MidWestOne Financial Group, Inc. |
/s/ Gary J. Ortale | |
Gary J. Ortale | |
Executive Vice President and Chief Financial Officer | |
Date: | August 10, 2015 |
Fair Value Measurements (Tables) |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following table summarizes assets measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014. There were no liabilities subject to fair value measurement as of these dates. The assets are segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table presents additional information about assets measured at fair market value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value for the six months ended June 30, 2015 and 2014:
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Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings [Table Text Block] | The following table presents the amount of gains and losses on Level 3 assets noted above which were included in earnings and other comprehensive income for the six months ended June 30, 2015 and 2014 that are attributable to the change in unrealized gains and losses relating to those assets still held, and the line item in the consolidated financial statements in which they are included:
* Gains on collateralized debt obligations are included in gain on sale or call of available for sale securities in the consolidated statements of operations. |
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Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block] | The following table discloses the Company's estimated fair value amounts of its assets recorded at fair value on a nonrecurring basis. It is management's belief that the fair values presented below are reasonable based on the valuation techniques and data available to the Company as of June 30, 2015 and December 31, 2014, as more fully described above.
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The following presents the carrying amount and estimated fair value of the financial instruments held by the Company at June 30, 2015 and December 31, 2014. The information presented is subject to change over time based on a variety of factors. The operations of the Company are managed on a going concern basis and not a liquidation basis. As a result, the ultimate value realized from the financial instruments presented could be substantially different when actually recognized over time through the normal course of operations. Additionally, a substantial portion of the Company's inherent value is the capitalization and franchise value of MidWestOne Bank and Central Bank. Neither of these components has been given consideration in the presentation of fair values below.
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Table Text Block] | The following presents the valuation technique(s), observable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company at June 30, 2015, categorized within Level 3 of the fair value hierarchy:
* Not Meaningful. Third party appraisals are obtained as to the value of the underlying asset, but disclosure of this information would not provide meaningful information, as the range will vary widely from loan to loan. Types of discounts considered include age of the appraisal, local market conditions, current condition of the property, and estimated sales costs. These discounts will also vary from loan to loan, thus providing a range would not be meaningful. |
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
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Earnings Per Share, Basic, by Common Class, Including Two Class Method | ||||
Net income | $ 4,469 | $ 4,753 | $ 9,265 | $ 9,726 |
Weighted average number of shares outstanding during the period | 10,229,355 | 8,428,307 | 9,301,761 | 8,451,819 |
Earnings per common share - basic | $ 0.43 | $ 0.56 | $ 1.00 | $ 1.15 |
Weighted average number of shares outstanding during the period including all dilutive potential shares | 10,254,279 | 8,452,291 | 9,328,941 | 8,479,989 |
Earnings per common share - diluted | $ 0.42 | $ 0.56 | $ 0.99 | $ 1.14 |
Common | ||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method | ||||
Weighted average number of shares outstanding during the period | 10,229,355 | 8,428,307 | 9,301,761 | 8,451,819 |
Weighted average number of shares outstanding during the period including all dilutive potential shares | 10,254,279 | 8,452,291 | 9,328,941 | 8,479,989 |
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