☒
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Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
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◻
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Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
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North
Carolina
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56-2278662
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(State or other
jurisdiction of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3535
Glenwood Avenue
Raleigh,
North Carolina
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27612
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(Address of
principal executive offices)
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(Zip
Code)
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Large Accelerated Filer
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◻
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Accelerated Filer
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◻
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||||
Non-accelerated
Filer
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☒ (Do
not check if smaller reporting company)
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Smaller Reporting Company
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◻
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Page
No.
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Part
I.
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FINANCIAL
INFORMATION
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Item
1.
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Financial
Statements
|
|
|
|
|
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|
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Consolidated
Balance Sheets (Unaudited) as of September 30, 2016 and December
31, 2015
|
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1
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Consolidated
Statements of Income (Unaudited) for the Three and Nine Months
Ended September 30, 2016 and 2015
|
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2
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Consolidated
Statements of Comprehensive Income (Unaudited) for the Three and
Nine Months Ended September 30, 2016 and 2015
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3
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Consolidated
Statement of Changes in Stockholders' Equity (Unaudited) for the
Nine Months Ended September 30, 2016 and 2015
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4
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Consolidated
Statements of Cash Flows (Unaudited) for the Nine Months Ended
September 30, 2016 and 2015
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5
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Notes to
Consolidated Financial Statements (Unaudited)
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6
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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35
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Item
3.
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Quantitative and
Qualitative Disclosures about Market Risk
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62
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Item
4.
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Controls and
Procedures
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64
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PART
2.
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OTHER
INFORMATION
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Item
1.
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Legal
Proceedings
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64
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|
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Item
1A.
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Risk
Factors
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|
64
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|
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Item
2.
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Unregistered Sales
of Equity Securities and Use of Proceeds
|
|
64
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|
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Item
3.
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Defaults Upon
Senior Securities
|
|
64
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|
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Item
4.
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Mine Safety
Disclosures
|
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64
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|
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Item
5.
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Other
Information
|
|
64
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|
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Item
6.
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Exhibits
|
|
65
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|
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|
SIGNATURES
|
|
66
|
|
(in thousands, except share data)
|
2016
|
2015
|
Assets
|
|
|
Cash
and due from banks:
|
|
|
Interest-earning
|
$59,080
|
$30,993
|
Noninterest-earning
|
14,626
|
24,537
|
Investment
securities - available-for-sale, at fair value
|
178,606
|
168,896
|
Federal
Home Loan Bank stock, at cost
|
5,425
|
8,061
|
Loans
- net of unearned income and deferred fees
|
1,165,345
|
1,016,156
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Allowance
for loan losses
|
(7,925)
|
(7,641)
|
Net
loans
|
1,157,420
|
1,008,515
|
Accrued
interest receivable
|
4,022
|
3,795
|
Bank
premises and equipment, net
|
15,858
|
16,433
|
Bank
owned life insurance
|
28,943
|
28,274
|
Other
real estate owned
|
5,183
|
5,453
|
Deferred
tax assets
|
3,361
|
4,118
|
Other
assets
|
6,335
|
6,836
|
Total
assets
|
$1,478,859
|
$1,305,911
|
|
|
|
Liabilities and stockholders' equity
|
|
|
Deposits:
|
|
|
Noninterest-bearing
demand
|
$188,398
|
$158,974
|
Interest-bearing
checking and money market
|
767,124
|
504,092
|
Time
deposits
|
243,563
|
319,781
|
Total
deposits
|
1,199,085
|
982,847
|
Repurchase
agreements and federal funds purchased
|
19,796
|
30,580
|
Federal
Home Loan Bank advances
|
100,000
|
165,000
|
Other
borrowings
|
-
|
4,800
|
Subordinated
debentures
|
18,558
|
18,558
|
Other
liabilities
|
6,398
|
6,468
|
Total
liabilities
|
1,343,837
|
1,208,253
|
Stockholders'
equity:
|
|
|
Common
stock, $0.008 par value; 20,000,000 shares
|
44
|
37
|
authorized;
5,450,042 and 4,581,334 issued and
|
|
|
outstanding
as of September 30, 2016 and December 31, 2015
|
|
|
Additional
paid-in-capital
|
80,015
|
53,147
|
Accumulated
other comprehensive loss
|
(165)
|
(886)
|
Retained
earnings
|
55,128
|
45,360
|
Total
stockholders' equity
|
135,022
|
97,658
|
Total
liabilities and stockholders' equity
|
$1,478,859
|
$1,305,911
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
(in thousands, except per share data)
|
2016
|
2015
|
2016
|
2015
|
Interest income
|
|
|
|
|
Loans
and fees on loans
|
$12,544
|
$11,223
|
$35,574
|
$32,189
|
Investment
securities and FHLB stock
|
1,214
|
1,249
|
3,802
|
3,548
|
Federal
funds and other
|
97
|
38
|
218
|
104
|
Total
interest income
|
13,855
|
12,510
|
39,594
|
35,841
|
Interest expense
|
|
|
|
|
Interest-bearing
checking and money market
|
966
|
727
|
2,659
|
1,987
|
Time
deposits
|
588
|
799
|
1,711
|
2,609
|
Borrowings
and repurchase agreements
|
534
|
328
|
1,605
|
924
|
Total
interest expense
|
2,088
|
1,854
|
5,975
|
5,520
|
Net
interest income
|
11,767
|
10,656
|
33,619
|
30,321
|
Provision for loan losses
|
391
|
-
|
391
|
750
|
Net
interest income after provision for loan losses
|
11,376
|
10,656
|
33,228
|
29,571
|
Non-interest income
|
|
|
|
|
Increase
in cash surrender value of bank owned life insurance
|
220
|
225
|
669
|
632
|
Net
gain on sale of securities
|
-
|
145
|
85
|
568
|
Service
charges and fees
|
65
|
58
|
179
|
163
|
Mortgage
origination fees and gains on sale of loans
|
59
|
44
|
124
|
156
|
Net
loss on sale or impairment of foreclosed assets
|
-
|
(9)
|
(257)
|
(472)
|
Other
fees and income
|
94
|
81
|
285
|
305
|
Total
non-interest income
|
438
|
544
|
1,085
|
1,352
|
Non-interest expense
|
|
|
|
|
Salaries
and employee benefits
|
3,912
|
3,378
|
11,521
|
9,714
|
Furniture,
equipment and software costs
|
456
|
482
|
1,450
|
1,383
|
Occupancy
|
362
|
366
|
1,048
|
1,203
|
Data
processing
|
270
|
267
|
845
|
846
|
Director
related fees and expenses
|
219
|
253
|
690
|
670
|
Professional
fees
|
208
|
159
|
627
|
614
|
FDIC
and other supervisory assessments
|
220
|
231
|
632
|
710
|
Advertising
and public relations
|
239
|
116
|
661
|
537
|
Unreimbursed
loan costs and foreclosure related expenses
|
172
|
281
|
383
|
750
|
Other
|
720
|
647
|
2,009
|
2,033
|
Total
non-interest expense
|
6,778
|
6,180
|
19,866
|
18,460
|
Income
before income taxes
|
5,036
|
5,020
|
14,447
|
12,463
|
Income tax expense
|
1,581
|
1,707
|
4,679
|
4,192
|
Net
income
|
$3,455
|
$3,313
|
$9,768
|
$8,271
|
|
|
|
|
|
Net income per common share
|
|
|
|
|
Basic
|
$0.64
|
$0.73
|
$2.02
|
$1.84
|
|
|
|
|
|
Diluted
|
$0.64
|
$0.73
|
$2.00
|
$1.82
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
Net
income
|
$3,455
|
$3,313
|
$9,768
|
$8,271
|
|
|
|
|
|
Other
comprehensive income (loss) items:
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
Unrealized
gains (losses)
|
(1,058)
|
876
|
2,856
|
(366)
|
Reclassification
of gains recognized in net income
|
-
|
(145)
|
(85)
|
(568)
|
Other
comprehensive income (loss)
|
(1,058)
|
731
|
2,771
|
(934)
|
Deferred
tax expense (benefit)
|
(405)
|
280
|
1,057
|
(357)
|
Other
comprehensive income (loss), net of tax
|
(653)
|
451
|
1,714
|
(577)
|
|
|
|
|
|
Cash
flow hedges:
|
|
|
|
|
Unrealized
gains (losses)
|
544
|
(1,483)
|
(1,592)
|
(2,753)
|
Other
comprehensive income (loss)
|
544
|
(1,483)
|
(1,592)
|
(2,753)
|
Deferred
tax expense (benefit)
|
204
|
(568)
|
(599)
|
(1,054)
|
Other
comprehensive income (loss), net of tax
|
340
|
(915)
|
(993)
|
(1,699)
|
|
|
|
|
|
Total
other comprehensive income (loss), net of tax
|
(313)
|
(464)
|
721
|
(2,276)
|
|
|
|
|
|
Comprehensive
income
|
$3,142
|
$2,849
|
$10,489
|
$5,995
|
|
|
|
|
AccumulatedOther
|
|
|
|
|
Additional
|
Comprehensive
|
|
Total
|
|
|
Common Stock
|
Paid-in
|
Income
|
Retained
|
Stockholders'
|
|
(in thousands, except share data)
|
Shares
|
Amount
|
Capital
|
(Loss)
|
Earnings
|
Equity
|
Balance at December 31, 2015
|
4,581,334
|
$37
|
$53,147
|
$(886)
|
$45,360
|
$97,658
|
|
|
|
|
|
|
|
Net income
|
-
|
-
|
-
|
-
|
9,768
|
9,768
|
Unrealized gain on securities, net of
|
|
|
|
|
|
|
tax expense of $1,057
|
-
|
-
|
-
|
1,714
|
-
|
1,714
|
Unrealized loss on cash flow hedges,
|
|
|
|
|
|
|
net of tax benefit of $599
|
-
|
-
|
-
|
(993)
|
-
|
(993)
|
Issuance of stock for public offering
|
845,588
|
6
|
26,392
|
|
|
26,398
|
Issuance of restricted stock awards
|
17,793
|
1
|
-
|
-
|
-
|
1
|
Restricted stock expense recognized
|
-
|
-
|
319
|
-
|
-
|
319
|
Issuance of stock for employee stock
|
|
|
|
|
|
|
purchase plan
|
5,327
|
-
|
157
|
-
|
-
|
157
|
Balance at September 30, 2016
|
5,450,042
|
$44
|
$80,015
|
$(165)
|
$55,128
|
$135,022
|
|
|
|
|
AccumulatedOther
|
|
|
|
|
Additional
|
Comprehensive
|
|
Total
|
|
|
Common Stock
|
Paid-in
|
Income
|
Retained
|
Stockholders'
|
|
(in thousands, except share data)
|
Shares
|
Amount
|
Capital
|
(Loss)
|
Earnings
|
Equity
|
Balance at December 31, 2014
|
4,530,000
|
$36
|
$52,358
|
$1,142
|
$34,126
|
$87,662
|
|
|
|
|
|
|
|
Net income
|
-
|
-
|
-
|
-
|
8,271
|
8,271
|
Unrealized gain on securities, net of
|
|
|
|
|
|
|
tax benefit of $357
|
-
|
-
|
-
|
(577)
|
-
|
(577)
|
Unrealized loss on cash flow hedges,
|
|
|
|
|
|
|
net of tax benefit of $1,054
|
-
|
-
|
-
|
(1,699)
|
-
|
(1,699)
|
Exercise of stock options
|
10,000
|
-
|
176
|
-
|
-
|
176
|
Issuance of restricted stock awards
|
30,656
|
1
|
-
|
-
|
-
|
1
|
Restricted stock expense recognized
|
-
|
-
|
278
|
-
|
-
|
278
|
Issuance of stock for employee stock
|
|
|
|
|
|
|
purchase plan
|
9,778
|
-
|
181
|
-
|
-
|
181
|
Balance at September 30, 2015
|
4,580,434
|
$37
|
$52,993
|
$(1,134)
|
$42,397
|
$94,293
|
(in thousands)
|
2016
|
2015
|
Cash
flows from operating activities:
|
|
|
Net
income
|
$9,768
|
$8,271
|
Adjustments
to reconcile net income to net cash provided by
|
|
|
operating
activities:
|
|
|
Depreciation
and amortization
|
1,072
|
1,045
|
Provision
for loan losses
|
391
|
750
|
Net
loss on sale or impairment of foreclosed assets
|
257
|
472
|
Increase
in cash surrender value of life insurance
|
(669)
|
(631)
|
Accretion
of premiums/discounts on securities, net
|
567
|
685
|
Net
gain on sale of securities
|
(85)
|
(568)
|
Loss
on sale of property and equipment
|
-
|
(1)
|
Deferred
tax expense
|
299
|
1,195
|
Restricted
stock expense
|
320
|
279
|
Changes
in assets and liabilities:
|
|
|
Accrued
interest receivable and other assets
|
(1,318)
|
97
|
Accrued
interest payable and other liabilities
|
(70)
|
505
|
Net
cash provided by operating activities
|
10,532
|
12,099
|
Cash
flows from investing activities:
|
|
|
Net
decrease in Federal Home Loan Bank stock
|
2,636
|
(630)
|
Purchase
of securities available for sale
|
(39,434)
|
(55,832)
|
Proceeds
from maturities and paydowns of securities available for
sale
|
16,299
|
13,299
|
Proceeds
from sales of securities available for sale
|
15,714
|
52,644
|
Net
increase in loans
|
(149,296)
|
(133,128)
|
Proceeds
from sale of foreclosed real estate
|
13
|
4,876
|
Additions
to bank premises and equipment
|
(497)
|
(511)
|
Other
investing activites, net
|
-
|
(74)
|
Net
cash used in investing activities
|
(154,565)
|
(119,356)
|
Cash
flows from financing activities:
|
|
|
Net
increase in demand and money market deposit accounts
|
292,456
|
168,972
|
Net
decrease in time deposits
|
(76,218)
|
3,168
|
Net
decrease in repurchase agreements
|
(10,784)
|
(1,504)
|
Net
increase in FHLB and other borrowings
|
(69,800)
|
18,166
|
Net
proceeds from sale of common stock
|
26,398
|
-
|
Exercise
of stock options
|
-
|
176
|
Issuance
of common stock for employee stock purchase plan
|
157
|
181
|
Net
cash provided by financing activities
|
162,209
|
189,159
|
Net
change in cash and cash equivalents
|
18,176
|
81,902
|
Cash
and cash equivalents at beginning of year
|
55,530
|
36,395
|
|
|
|
Cash
and cash equivalents at end of year
|
$73,706
|
$118,297
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
Shares
used in the computation of earnings per share:
|
|
|
|
|
Weighted
average number of shares outstanding - basic
|
5,406,867
|
4,520,749
|
4,846,574
|
4,502,293
|
Dilutive
effect of restricted shares
|
32,729
|
45,214
|
35,867
|
47,796
|
Weighted
average number of shares outstanding - diluted
|
5,439,596
|
4,565,963
|
4,882,441
|
4,550,089
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
|
2016
|
2015
|
2016
|
2015
|
Anti-dilutive
stock options
|
80,500
|
91,000
|
80,500
|
91,000
|
Unvested
restricted shares
|
38,445
|
52,284
|
38,445
|
52,284
|
|
September 30,
|
December 31,
|
(in thousands)
|
2016
|
2015
|
Unrealized
gains on securities available-for-sale
|
$4,149
|
$1,378
|
Deferred
tax expense
|
(1,587)
|
(530)
|
Other
comprehensive income, net of tax
|
2,562
|
848
|
Unrealized
losses on cash flow hedges
|
(4,371)
|
(2,779)
|
Deferred
tax benefit
|
1,644
|
1,045
|
Other
comprehensive loss, net of tax
|
(2,727)
|
(1,734)
|
Total
other accumulated comprehensive income (loss)
|
$(165)
|
$(886)
|
|
Unrealized
|
Unrealized
|
|
|
Gains and
|
Gains and
|
|
|
Losses on
|
Losses on
|
|
|
Available-for
|
Cash Flow
|
|
Sale Securities
|
Hedges
|
Total
|
|
Balance
as of December 31, 2015
|
$848
|
$(1,734)
|
$(886)
|
Other
comprehensive income (loss) before reclassification
|
1,799
|
(993)
|
806
|
Amounts
reclassified from accumulated other
|
|
|
|
comprehensive
income
|
(85)
|
-
|
(85)
|
Net
current-period other comprehensive income (loss)
|
1,714
|
(993)
|
721
|
Balance
as of September 30, 2016
|
$2,562
|
$(2,727)
|
$(165)
|
|
|
|
|
Balance
as of December 31, 2014
|
$1,645
|
$(503)
|
$1,142
|
Other
comprehensive loss before reclassification
|
(9)
|
(1,699)
|
(1,708)
|
Amounts
reclassified from accumulated other
|
|
|
|
comprehensive
income
|
(568)
|
-
|
(568)
|
Net
current-period other comprehensive loss
|
(577)
|
(1,699)
|
(2,276)
|
Balance
as of September 30, 2015
|
$1,068
|
$(2,202)
|
$(1,134)
|
|
|
Gross
|
Gross
|
Estimated
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
(in thousands)
|
Cost
|
Gains
|
Losses
|
Value
|
September 30, 2016
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
U.S.
Agency obligations
|
$17,673
|
$503
|
$-
|
$18,176
|
Collateralized
mortgage obligations
|
45,802
|
740
|
-
|
46,542
|
Mortgage-backed
securities
|
46,999
|
829
|
-
|
47,828
|
Municipal
bonds
|
61,304
|
2,286
|
-
|
63,590
|
Other
|
2,679
|
19
|
228
|
2,470
|
|
$174,457
|
$4,377
|
$228
|
$178,606
|
December 31,
2015
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
U.S.
Agency obligations
|
$19,778
|
$196
|
$73
|
$19,901
|
Collateralized
mortgage obligations
|
60,826
|
321
|
206
|
60,941
|
Mortgage-backed
securities
|
31,074
|
326
|
90
|
31,310
|
Municipal
bonds
|
53,163
|
1,346
|
75
|
54,434
|
Other
|
2,677
|
10
|
377
|
2,310
|
|
$167,518
|
$2,199
|
$821
|
$168,896
|
|
|
After One
|
After Five
|
|
No Stated
|
|
|
Within
|
Within
|
Within
|
After
|
Maturity
|
|
(in thousands)
|
1 Year
|
Five Years
|
Ten Years
|
Ten Years
|
Date
|
Total
|
U.S.
Agency obligations
|
$-
|
$-
|
$-
|
$18,176
|
$-
|
$18,176
|
Collateralized
mortgage obligations
|
-
|
-
|
-
|
46,542
|
-
|
46,542
|
Mortgage-backed
securities
|
-
|
-
|
13,666
|
34,162
|
-
|
47,828
|
Municipal
bonds
|
-
|
1,812
|
6,342
|
55,436
|
-
|
63,590
|
Other
|
-
|
-
|
500
|
-
|
1,970
|
2,470
|
|
$-
|
$1,812
|
$20,508
|
$154,316
|
$1,970
|
$178,606
|
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
|||
(in thousands)
|
|
Unrealized
|
|
Unrealized
|
|
Unrealized
|
September 30, 2016
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Securities
available-for-sale:
|
|
|
|
|
|
|
U.S.
Agency obligations
|
$-
|
$-
|
$-
|
$-
|
$-
|
$-
|
Collateralized
mortgage obligations
|
-
|
-
|
-
|
-
|
-
|
-
|
Mortgage-backed
securities
|
-
|
-
|
-
|
-
|
-
|
-
|
Municipal
bonds
|
-
|
-
|
-
|
-
|
-
|
-
|
Other
|
1,925
|
228
|
-
|
-
|
1,925
|
228
|
Total
temporarily impaired
|
|
|
|
|
|
|
securities
|
$1,925
|
$228
|
$-
|
$-
|
$1,925
|
$228
|
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
|||
(in thousands)
|
|
Unrealized
|
|
Unrealized
|
|
Unrealized
|
December 31, 2015
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Fair Value
|
Losses
|
Securities
available-for-sale:
|
|
|
|
|
|
|
U.S.
Agency obligations
|
$3,007
|
$-
|
$3,178
|
$73
|
$6,185
|
$73
|
Collateralized
mortgage obligations
|
26,086
|
159
|
2,983
|
47
|
29,069
|
206
|
Mortgage-backed
securities
|
18,575
|
90
|
-
|
-
|
18,575
|
90
|
Municipal
bonds
|
3,896
|
6
|
7,990
|
69
|
11,886
|
75
|
Other
|
1,774
|
377
|
-
|
-
|
1,774
|
377
|
Total
temporarily impaired
|
|
|
|
|
|
|
securities
|
$53,338
|
$632
|
$14,151
|
$189
|
$67,489
|
$821
|
|
September 30,
|
December 31,
|
Available-for-sale:
|
2016
|
2015
|
U.S.
Agency obligations
|
-
|
3
|
Collateralized
mortgage obligations
|
-
|
7
|
Mortgage-backed
securities
|
-
|
6
|
Municipal
bonds
|
-
|
22
|
Other
|
1
|
1
|
|
1
|
39
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
Gross
gains on sales of securities available for sale
|
$-
|
$158
|
$136
|
$585
|
Gross
losses on sales of securities available for sale
|
-
|
(13)
|
(51)
|
(17)
|
Total
securities gains
|
$-
|
$145
|
$85
|
$568
|
(in thousands)
|
September 30,
2016
|
December 31,
2015
|
Construction
and land development
|
$74,605
|
$64,702
|
Commercial
real estate:
|
|
|
Non-farm,
non-residential
|
356,833
|
307,722
|
Owner
occupied
|
178,631
|
147,017
|
Multifamily,
nonresidential and junior liens
|
96,643
|
79,170
|
Total
commercial real estate
|
632,107
|
533,909
|
Consumer
real estate:
|
|
|
Home
equity lines
|
86,361
|
78,943
|
Secured
by 1-4 family residential, secured by first deeds of
trust
|
190,913
|
167,053
|
Secured
by 1-4 family residential, secured by second deeds of
trust
|
4,358
|
3,711
|
Total
consumer real estate
|
281,632
|
249,707
|
Commercial
and industrial loans (except those secured by real
estate)
|
164,913
|
153,669
|
Consumer
and other
|
11,558
|
13,539
|
Total
loans
|
1,164,815
|
1,015,526
|
Deferred
loan (fees) costs
|
530
|
630
|
Allowance
for loan losses
|
(7,925)
|
(7,641)
|
Net
loans
|
$1,157,420
|
$1,008,515
|
(in thousands)
|
September 30,
2016
|
December 31,
2015
|
Construction
and land development:
|
|
|
Land
|
$15,650
|
$16,026
|
Residential
|
31,370
|
29,864
|
Commercial
|
27,585
|
18,812
|
Total
construction and land development
|
$74,605
|
$64,702
|
|
|
|
Commercial
real estate:
|
|
|
Non-farm,
non-residential:
|
|
|
Office
|
$102,065
|
$92,991
|
Industrial
|
41,710
|
38,518
|
Hotel/motel
|
21,453
|
18,935
|
Retail
|
161,447
|
135,200
|
Special
purpose/Other
|
30,158
|
22,078
|
|
356,833
|
307,722
|
Owner
occupied :
|
|
|
Office
|
59,358
|
51,775
|
Industrial
|
43,027
|
40,337
|
Retail
|
26,216
|
12,157
|
Special
purpose/Other
|
50,030
|
42,748
|
|
178,631
|
147,017
|
|
|
|
Multifamily,
nonresidential and junior liens
|
96,643
|
79,170
|
Total
commercial real estate
|
$632,107
|
$533,909
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
& Industrial
|
|
|
|
Construction
|
|
Consumer
|
Loans Not
|
|
|
|
and Land
|
Commercial
|
Real
|
Secured By
|
Consumer
|
Total
|
(in thousands)
|
Development
|
Real Estate
|
Estate
|
Real Estate
|
& Other
|
Loans
|
Three months ended September 30, 2016
|
|
|
|
|
|
|
Beginning
balance
|
$406
|
$3,278
|
$1,887
|
$2,307
|
$108
|
$7,986
|
Provision
for loan losses
|
(64)
|
128
|
204
|
147
|
(24)
|
391
|
Loans
charged off
|
-
|
-
|
-
|
(682)
|
-
|
(682)
|
Recoveries
|
58
|
3
|
1
|
168
|
-
|
230
|
Net
(chargeoffs) recoveries
|
58
|
3
|
1
|
(514)
|
-
|
(452)
|
Ending
balance
|
$400
|
$3,409
|
$2,092
|
$1,940
|
$84
|
$7,925
|
|
|
|
|
|
|
|
Nine months ended September 30, 2016
|
|
|
|
|
|
|
Beginning
balance
|
$509
|
$3,156
|
$2,046
|
$1,786
|
$144
|
$7,641
|
Provision
for loan losses
|
(404)
|
194
|
39
|
632
|
(70)
|
391
|
Loans
charged off
|
-
|
-
|
-
|
(682)
|
(1)
|
(683)
|
Recoveries
|
295
|
59
|
7
|
204
|
11
|
576
|
Net
(chargeoffs) recoveries
|
295
|
59
|
7
|
(478)
|
10
|
(107)
|
Ending
balance
|
$400
|
$3,409
|
$2,092
|
$1,940
|
$84
|
$7,925
|
|
|
|
|
|
|
|
Three months ended September 30, 2015
|
|
|
|
|
|
|
Beginning
balance
|
$801
|
$2,086
|
$2,237
|
$2,388
|
$57
|
$7,569
|
Provision
for loan losses
|
(230)
|
624
|
125
|
(520)
|
1
|
-
|
Loans
charged off
|
(14)
|
-
|
-
|
-
|
-
|
(14)
|
Recoveries
|
10
|
11
|
42
|
-
|
-
|
63
|
Net
(chargeoffs) recoveries
|
(4)
|
11
|
42
|
-
|
-
|
49
|
Ending
balance
|
$567
|
$2,721
|
$2,404
|
$1,868
|
$58
|
$7,618
|
|
|
|
|
|
|
|
Nine months ended September 30, 2015
|
|
|
|
|
|
|
Beginning
balance
|
$960
|
$2,510
|
$1,594
|
$1,662
|
$143
|
$6,869
|
Provision
for loan losses
|
(442)
|
476
|
768
|
33
|
(85)
|
750
|
Loans
charged off
|
(14)
|
(276)
|
-
|
-
|
-
|
(290)
|
Recoveries
|
63
|
11
|
42
|
173
|
-
|
289
|
Net
(chargeoffs) recoveries
|
49
|
(265)
|
42
|
173
|
-
|
(1)
|
Ending
balance
|
$567
|
$2,721
|
$2,404
|
$1,868
|
$58
|
$7,618
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
& Industrial
|
|
|
|
Construction
|
|
Consumer
|
Loans Not
|
|
|
|
and Land
|
Commercial
|
Real
|
Secured By
|
Consumer
|
Total
|
(in thousands)
|
Development
|
Real Estate
|
Estate
|
Real Estate
|
& Other
|
Loans
|
September 30, 2016
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
Individually
evaluated for impairment
|
$1
|
$6
|
$233
|
$516
|
$-
|
$756
|
Collectively
evaluated for impairment
|
399
|
3,403
|
1,859
|
1,424
|
84
|
7,169
|
Total
ending allowance
|
$400
|
$3,409
|
$2,092
|
$1,940
|
$84
|
$7,925
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
Individually
evaluated for impairment
|
$128
|
$860
|
$946
|
$1,516
|
$-
|
$3,450
|
Collectively
evaluated for impairment
|
74,477
|
631,247
|
280,686
|
163,397
|
11,558
|
1,161,365
|
Total
ending loans
|
$74,605
|
$632,107
|
$281,632
|
$164,913
|
$11,558
|
$1,164,815
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
Individually
evaluated for impairment
|
$4
|
$72
|
$115
|
$297
|
$21
|
$509
|
Collectively
evaluated for impairment
|
505
|
3,084
|
1,931
|
1,489
|
123
|
7,132
|
Total
ending allowance
|
$509
|
$3,156
|
$2,046
|
$1,786
|
$144
|
$7,641
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
Individually
evaluated for impairment
|
$238
|
$2,619
|
$411
|
$602
|
$21
|
$3,891
|
Collectively
evaluated for impairment
|
64,464
|
531,290
|
249,296
|
153,067
|
13,518
|
1,011,635
|
Total
ending loans
|
$64,702
|
$533,909
|
$249,707
|
$153,669
|
$13,539
|
$1,015,526
|
|
September 30,
|
December 31,
|
(in thousands)
|
2016
|
2015
|
Performing
TDRs:
|
|
|
Commercial
real estate
|
$533
|
$2,220
|
Consumer
real estate
|
339
|
346
|
Commercial
and industrial loans
|
-
|
47
|
Total
performing TDRs
|
872
|
2,613
|
|
|
|
Nonperforming
TDRs:
|
|
|
Construction
and land development
|
128
|
104
|
Consumer
real estate
|
60
|
65
|
Consumer
and other
|
-
|
21
|
Total
nonperformingTDRs
|
188
|
190
|
Total
TDRs
|
$1,060
|
$2,803
|
|
|
Unpaid
|
|
|
|
Contractual
|
|
(in thousands) |
Recorded
|
Principal
|
Allocated
|
September 30, 2016
|
Investment
|
Balance
|
Allowance
|
Loans
without a specific valuation allowance:
|
|
|
|
Construction
and land development
|
$127
|
$166
|
$-
|
Commercial
real estate
|
534
|
536
|
-
|
Commercial
and industrial loans
|
91
|
356
|
-
|
Loans
with a specific valuation allowance:
|
|
|
|
Construction
and land development
|
1
|
29
|
1
|
Commercial
real estate
|
326
|
327
|
6
|
Consumer
real estate
|
946
|
975
|
233
|
Commercial
and industrial loans
|
1,425
|
1,457
|
516
|
Total
|
$3,450
|
$3,846
|
$756
|
|
|
Unpaid
|
|
|
|
Contractual
|
|
(in thousands) |
Recorded
|
Principal
|
Allocated
|
December 31, 2015
|
Investment
|
Balance
|
Allowance
|
Loans
without a specific valuation allowance:
|
|
|
|
Construction
and land development
|
$234
|
$397
|
$-
|
Commercial
real estate
|
2,220
|
2,319
|
-
|
Loans
with a specific valuation allowance:
|
|
|
|
Construction
and land development
|
4
|
29
|
4
|
Commercial
real estate
|
399
|
480
|
72
|
Consumer
real estate
|
411
|
474
|
115
|
Commercial
and industrial loans (except
|
|
|
|
those
secured by real estate)
|
602
|
895
|
297
|
Consumer
and other
|
21
|
26
|
21
|
Total
|
$3,891
|
$4,620
|
$509
|
|
Three months ended September 30,
|
|||
|
2016
|
|
2015
|
|
|
Average
|
Interest
|
Average
|
Interest
|
(in thousands)
|
Balance
|
Income
|
Balance
|
Income
|
Construction
and land development
|
$130
|
$-
|
$252
|
$-
|
Commercial
real estate
|
867
|
10
|
4,030
|
48
|
Consumer
real estate
|
947
|
7
|
820
|
7
|
Commercial
and industrial loans
|
2,149
|
18
|
657
|
10
|
Consumer
and other
|
-
|
-
|
23
|
-
|
|
$4,093
|
$35
|
$5,782
|
$65
|
|
Nine months ended September 30,
|
|||
|
2016
|
|
2015
|
|
|
Average
|
Interest
|
Average
|
Interest
|
(in thousands)
|
Balance
|
Income
|
Balance
|
Income
|
Construction
and land development
|
$229
|
$-
|
$330
|
$1
|
Commercial
real estate
|
2,398
|
37
|
9,170
|
139
|
Consumer
real estate
|
951
|
15
|
825
|
21
|
Commercial
and industrial loans
|
2,802
|
48
|
739
|
32
|
Consumer
and other
|
20
|
-
|
24
|
-
|
|
$6,400
|
$100
|
$11,088
|
$193
|
|
Nonaccrual
|
|
|
September 30,
|
December 31,
|
(in thousands)
|
2016
|
2015
|
Construction
and land development
|
$128
|
$238
|
Consumer
real estate
|
604
|
65
|
Commercial
and industrial loans
|
216
|
189
|
Consumer
and other
|
-
|
21
|
Total
|
$948
|
$513
|
|
|
|
Greater
|
|
|
|
|
|
30 - 59
|
60 - 89
|
than 90
|
|
|
|
|
|
Days
|
Days
|
Days
|
|
Total
|
|
|
(in thousands)
|
Past
|
Past
|
Past
|
Non-
|
Past
|
|
Total
|
September 30, 2016
|
Due
|
Due
|
Due
|
Accrual
|
Due
|
Current
|
Loans
|
Construction
and land development
|
$-
|
$-
|
$-
|
$128
|
$128
|
$74,477
|
$74,605
|
Commercial
real estate
|
-
|
-
|
-
|
-
|
-
|
632,107
|
632,107
|
Consumer
real estate
|
194
|
-
|
-
|
604
|
798
|
280,834
|
281,632
|
Commercial
and industrial loans
|
305
|
-
|
-
|
216
|
521
|
164,392
|
164,913
|
Consumer
and other
|
-
|
-
|
-
|
-
|
-
|
11,558
|
11,558
|
Total
|
$499
|
$-
|
$-
|
$948
|
$1,447
|
$1,163,368
|
$1,164,815
|
|
|
|
Greater
|
|
|
|
|
|
30 - 59
|
60 - 89
|
than 90
|
|
|
|
|
|
Days
|
Days
|
Days
|
|
Total
|
|
|
(in thousands)
|
Past
|
Past
|
Past
|
Non-
|
Past
|
|
Total
|
December 31, 2015
|
Due
|
Due
|
Due
|
Accrual
|
Due
|
Current
|
Loans
|
Construction
and land development
|
$-
|
$-
|
$-
|
$238
|
$238
|
$64,464
|
$64,702
|
Commercial
real estate
|
-
|
-
|
-
|
-
|
-
|
533,909
|
533,909
|
Consumer
real estate
|
-
|
-
|
-
|
65
|
65
|
249,642
|
249,707
|
Commercial
and industrial loans
|
-
|
-
|
-
|
189
|
189
|
153,480
|
153,669
|
Consumer
and other
|
-
|
-
|
-
|
21
|
21
|
13,518
|
13,539
|
Total
|
$-
|
$-
|
$-
|
$513
|
$513
|
$1,015,013
|
$1,015,526
|
|
Risk Grade
|
|
||||||
(in thousands)
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
Total
|
September 30, 2016
|
|
|
|
|
|
|
|
|
Construction
and land development
|
$-
|
$676
|
$714
|
$21,173
|
$51,708
|
$205
|
$-
|
$74,476
|
Commercial
real estate
|
-
|
560
|
219,780
|
302,865
|
104,621
|
3,415
|
-
|
631,241
|
Consumer
real estate
|
52
|
19,926
|
128,522
|
96,324
|
34,574
|
1,292
|
-
|
280,690
|
Commercial
and industrial loans
|
2,263
|
1,340
|
29,806
|
100,638
|
28,700
|
652
|
-
|
163,399
|
Consumer
and other
|
1,161
|
485
|
1,113
|
7,836
|
964
|
-
|
-
|
11,559
|
Total
|
$3,476
|
$22,987
|
$379,935
|
$528,836
|
$220,567
|
$5,564
|
$-
|
$1,161,365
|
|
Risk Grade
|
|
||||||
(in thousands)
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
Total
|
December 31, 2015
|
|
|
|
|
|
|
|
|
Construction
and land development
|
$26
|
$200
|
$2,545
|
$14,318
|
$47,133
|
$242
|
$-
|
$64,464
|
Commercial
real estate
|
-
|
619
|
195,935
|
243,771
|
87,492
|
3,473
|
-
|
531,290
|
Consumer
real estate
|
53
|
10,933
|
111,123
|
92,127
|
34,346
|
714
|
-
|
249,296
|
Commercial
and industrial loans
|
2,168
|
1,909
|
24,675
|
96,900
|
26,802
|
612
|
-
|
153,066
|
Consumer
and other
|
980
|
1,069
|
960
|
8,392
|
1,936
|
182
|
-
|
13,519
|
Total
|
$3,227
|
$14,730
|
$335,238
|
$455,508
|
$197,709
|
$5,223
|
$-
|
$1,011,635
|
|
September 30,
|
December 31,
|
(in thousands)
|
2016
|
2015
|
Financial
instruments whose contract amounts
|
|
|
represent
credit risk:
|
|
|
Undisbursed
lines of credit
|
$202,012
|
$163,572
|
Standby
letters of credit
|
3,899
|
3,188
|
Total
|
$205,911
|
$166,760
|
|
September 30, 2016
|
December 31, 2015
|
||
|
Notational
|
Fair
|
Notational
|
Fair
|
(in thousands)
|
Amount
|
Value
|
Amount
|
Value
|
Included
in other assets:
|
|
|
|
|
Cap
1 - maturing August 2019
|
$35,000
|
$590
|
$35,000
|
$1,334
|
Cap
2 - maturing September 2019
|
35,000
|
603
|
35,000
|
1,360
|
Cap
3 - maturing October 2019
|
30,000
|
529
|
30,000
|
1,216
|
|
$100,000
|
$1,722
|
$100,000
|
$3,910
|
(in
thousands)
|
|
2016
(remaining quarter)
|
$315
|
2017
|
1,779
|
2018
|
2,247
|
2019
|
1,752
|
|
$6,093
|
(in thousands)
|
|
2016
(remaining quarter)
|
$19
|
2017
|
74
|
2018
|
74
|
Thereafter
|
147
|
|
$314
|
|
|
Fair Value Measurements Using
|
||
|
|
Quoted Prices
|
Significant
|
|
|
|
in Active
|
Other
|
Significant
|
|
|
Markets for
|
Observable
|
Unobservable
|
(in thousands)
|
Total
|
Identical Assets
|
Inputs
|
Inputs
|
Description
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
September 30, 2016
|
|
|
|
|
Securities
available-for-sale:
|
|
|
|
|
U.S.
Agency obligations
|
$18,176
|
$-
|
$18,176
|
$-
|
Collateralized
mortgage obligations
|
46,542
|
-
|
46,542
|
-
|
Mortgage-backed
securities
|
47,828
|
-
|
47,828
|
-
|
Municipal
bonds
|
63,590
|
-
|
63,590
|
|
Other
|
2,470
|
1,970
|
-
|
500
|
|
178,606
|
1,970
|
176,136
|
500
|
Interest
rate caps
|
1,722
|
-
|
1,722
|
-
|
Total
assets at fair value
|
$180,328
|
$1,970
|
$177,858
|
$500
|
December 31, 2015
|
|
|
|
|
Securities
available-for-sale:
|
|
|
|
|
U.S.
Agency obligations
|
$19,901
|
$-
|
$19,901
|
$-
|
Collateralized
mortgage obligations
|
60,941
|
-
|
60,941
|
-
|
Mortgage-backed
securities
|
31,310
|
-
|
31,310
|
-
|
Municipal
bonds
|
54,434
|
-
|
54,434
|
|
Other
|
2,310
|
1,810
|
-
|
500
|
|
168,896
|
1,810
|
166,586
|
500
|
Interest
rate caps
|
3,910
|
-
|
3,910
|
-
|
Total
assets at fair value
|
$172,806
|
$1,810
|
$170,496
|
$500
|
|
Level 3
|
|
Investment
|
(in thousands)
|
Securities
|
Balance
at December 31, 2015
|
$500
|
Purchases
|
-
|
Balance
at September 30, 2016
|
$500
|
|
|
Fair Value Measurements Using
|
||
|
|
Quoted Prices
|
Significant
|
|
|
|
in Active
|
Other
|
Significant
|
|
|
Markets for
|
Observable
|
Unobservable
|
(in thousands)
|
Total
|
Identical Assets
|
Inputs
|
Inputs
|
September 30, 2016
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Impaired
loans
|
$2,694
|
$-
|
$-
|
$2,694
|
Other
real estate owned
|
5,183
|
-
|
-
|
5,183
|
Total
|
$7,877
|
$-
|
$-
|
$7,877
|
|
|
Fair Value Measurements Using
|
||
|
|
Quoted Prices
|
Significant
|
|
|
|
in Active
|
Other
|
Significant
|
|
|
Markets for
|
Observable
|
Unobservable
|
(in thousands)
|
Total
|
Identical Assets
|
Inputs
|
Inputs
|
December 31, 2015
|
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Impaired
loans
|
$3,382
|
$-
|
$-
|
$3,382
|
Other
real estate owned
|
5,453
|
-
|
-
|
5,453
|
Total
|
$8,835
|
$-
|
$-
|
$8,835
|
|
|
|
|
|
|
|
September 30, 2016 and December 31,
2015
|
||||
|
|
|
|
|
|
|
Valuation
|
|
Significant
|
|
Significant
|
|
|
|
|
|
|
|
Technique
|
|
Observable Inputs
|
|
unobservable Inputs
|
Impaired loans
|
|
Appraisal value
|
|
Appraisals and/or sales of
|
|
Appraisals discounted 5% to 10% for
|
|||||
|
|
|
|
|
|
|
|
|
comparable properties
|
|
sales commissions and other holding costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
Appraisal value/
|
|
Appraisals and/or sales of
|
|
Appraisals discounted 5% to 10% for
|
||||||
|
|
|
|
|
|
|
Comparison sale/
|
|
comparable properties
|
|
sales commissions and other holding costs
|
|
|
|
|
|
|
|
Other estimates
|
|
|
|
|
|
Saptember 30, 2016
|
||||
|
Carrying
|
Fair Value
|
|||
(in thousands)
|
Amount
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Financial
assets:
|
|
|
|
|
|
Cash
and due from banks
|
$73,706
|
$73,706
|
$73,706
|
$-
|
$-
|
Investment
securities available-for-
|
|
|
|
|
|
sale
|
178,606
|
178,606
|
1,969
|
176,137
|
500
|
Loans,
net
|
1,157,420
|
1,158,081
|
-
|
1,155,387
|
2,694
|
Accrued
interest receivable
|
4,022
|
4,022
|
4,022
|
-
|
-
|
Federal
Home Loan Bank stock
|
5,425
|
5,425
|
-
|
-
|
5,425
|
Bank-owned
life insurance
|
28,943
|
28,943
|
-
|
28,943
|
-
|
Interest
rate caps
|
1,722
|
1,722
|
-
|
1,722
|
-
|
Financial
liabilities:
|
|
|
|
|
|
Non-maturing
deposits
|
955,522
|
955,522
|
-
|
955,522
|
-
|
Time
deposits
|
243,563
|
244,160
|
-
|
244,160
|
-
|
Accrued
interest payable
|
259
|
259
|
259
|
-
|
-
|
Repurchase
agreements and
|
|
|
|
|
|
federal
funds purchased
|
19,796
|
19,796
|
-
|
19,796
|
-
|
FHLB
Advances and other borrowings
|
100,000
|
100,012
|
-
|
100,012
|
-
|
Subordinated
debt
|
18,558
|
14,203
|
-
|
14,203
|
-
|
|
December 31, 2015
|
||||
|
Carrying
|
Fair Value
|
|||
(in thousands)
|
Amount
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Financial
assets:
|
|
|
|
|
|
Cash
and due from banks
|
$55,530
|
$55,530
|
$55,530
|
$-
|
$-
|
Investment
securities available-for-
|
|
|
|
|
|
sale
|
168,896
|
168,896
|
1,810
|
166,586
|
500
|
Loans,
net
|
1,008,515
|
1,013,415
|
-
|
1,010,033
|
3,382
|
Accrued
interest receivable
|
3,795
|
3,795
|
3,795
|
-
|
-
|
Federal
Home Loan Bank stock
|
8,061
|
8,061
|
-
|
-
|
8,061
|
Bank-owned
life insurance
|
28,274
|
28,274
|
-
|
28,274
|
-
|
Interest
rate caps
|
3,910
|
3,910
|
-
|
3,910
|
-
|
Financial
liabilities:
|
|
|
|
|
|
Non-maturing
deposits
|
663,066
|
663,066
|
-
|
663,066
|
-
|
Time
deposits
|
319,781
|
320,246
|
-
|
320,246
|
-
|
Accrued
interest payable
|
356
|
356
|
356
|
-
|
-
|
Repurchase
agreements and
|
|
|
|
|
|
federal
funds purchased
|
30,580
|
30,580
|
-
|
30,580
|
-
|
FHLB
Advances and other borrowings
|
169,800
|
169,800
|
-
|
169,800
|
-
|
Subordinated
debt
|
18,558
|
15,591
|
-
|
15,591
|
-
|
|
For the nine-months
|
|
|
ended September 30,
|
|
(in thousands)
|
2016
|
2015
|
Supplemental
Disclosures of Cash Flow Information:
|
|
|
|
|
|
Interest
paid
|
$6,072
|
$5,576
|
|
|
|
Income
taxes paid
|
$4,485
|
$3,185
|
|
|
|
Supplemental Schedule of Noncash Investing and Financing
Activites:
|
|
|
|
|
|
Change
in fair value of securities available-for-sale, net of
taxes
|
$2,771
|
$(934)
|
|
|
|
Change
in fair value of cash flow hedges, net of taxes
|
$(1,592)
|
$(2,753)
|
|
|
|
Transfer
from loans to foreclosed real estate
|
$-
|
$3,300
|
|
Three-Month Periods
|
Nine-Month Periods
|
||
|
Ended September 30,
|
Ended September 30,
|
||
(Dollars in
thousands)
|
2016
|
2015
|
2016
|
2015
|
Efficiency Ratio
|
|
|
|
|
Non-interest
expense
|
$6,778
|
$6,180
|
$19,866
|
$18,460
|
|
|
|
|
|
Net
interest taxable equivalent income
|
$12,026
|
$10,853
|
$33,878
|
$30,518
|
Non-interest
income
|
438
|
544
|
1,085
|
1,352
|
Less
gain on investment securities
|
-
|
(145)
|
(85)
|
(568)
|
Plus
loss on sale or writedown of foreclosed real estate
|
-
|
9
|
257
|
472
|
Adjusted
operating revenue
|
$12,464
|
$11,261
|
$35,135
|
$31,774
|
|
|
|
|
|
Efficiency
ratio
|
54.38%
|
54.88%
|
56.54%
|
58.10%
|
|
For the
Three Months Ended September 30,
|
|||||
|
2016
|
2015
|
||||
|
Average
|
|
Average
|
Average
|
|
Average
|
(Dollars
in thousands)
|
Amount
|
Interest
|
Rate
|
Amount
|
Interest
|
Rate
|
Loans,
net of allowance (1)
|
$1,135,448
|
$12,544
|
4.40%
|
$999,857
|
$11,223
|
4.45%
|
Investment
securities (2)
|
186,060
|
1,473
|
3.15%
|
174,653
|
1,446
|
3.28%
|
Other
interest-earning assets
|
56,573
|
97
|
0.68%
|
66,130
|
38
|
0.23%
|
Total interest-earning assets
|
1,378,081
|
14,114
|
4.07%
|
1,240,640
|
12,707
|
4.06%
|
Other
assets
|
74,443
|
|
|
101,471
|
|
|
Total assets
|
$1,452,524
|
|
|
$1,342,111
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Interest-bearing
checking accounts
|
$186,369
|
167
|
0.36%
|
$129,297
|
165
|
0.51%
|
Money
markets
|
491,805
|
799
|
0.65%
|
333,957
|
562
|
0.67%
|
Time
deposits less than $100,000
|
11,208
|
29
|
1.04%
|
22,458
|
105
|
1.86%
|
Time
deposits greater than or
|
|
|
|
|
|
|
equal
to $100,000
|
243,150
|
559
|
0.91%
|
367,251
|
694
|
0.75%
|
Borrowings
|
185,211
|
534
|
1.15%
|
213,845
|
328
|
0.61%
|
Total interest-bearing liabilities
|
1,117,743
|
2,088
|
0.74%
|
1,066,808
|
1,854
|
0.69%
|
Noninterest-bearing
deposits
|
190,745
|
|
|
157,435
|
|
|
Other
liabilities
|
10,558
|
|
|
24,370
|
|
|
Stockholders
equity
|
133,478
|
|
|
93,498
|
|
|
Total liabilities and stockholders
|
|
|
|
|
|
|
equity
|
$1,452,524
|
|
|
$1,342,111
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate
|
|
|
|
|
|
|
spread (taxable-equivalent basis) (3)
|
|
$12,026
|
3.33%
|
|
$10,853
|
3.37%
|
|
|
|
|
|
|
|
Net interest margin (taxable-
|
|
|
|
|
|
|
equivalent basis) (4)
|
|
|
3.47%
|
|
|
3.47%
|
|
|
|
|
|
|
|
Ratio of interest-bearing assets to
|
|
|
|
|
|
|
interest-bearing liabilities
|
123.29%
|
|
|
116.29%
|
|
|
|
|
|
|
|
|
|
Reported net interest income
|
|
|
|
|
|
|
Net
interest income (taxable-equivalent
|
|
|
|
|
|
|
basis)
|
|
$12,026
|
|
|
$10,853
|
|
Less:
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
|
259
|
|
|
197
|
|
Net
interest income
|
|
$11,767
|
|
|
$10,656
|
|
|
Three Months Ended
|
||
|
September 30, 2016 vs. 2015
|
||
|
Increase (Decrease) Due to
|
||
(in thousands)
|
Volume
|
Rate
|
Total
|
Interest
income
|
|
|
|
Loans,
net of allowance
|
$1,518
|
$(197)
|
$1,321
|
Investment
securities
|
94
|
(67)
|
27
|
Other
interest-earning assets
|
(5)
|
64
|
59
|
Total
interest income (taxable-
|
|
|
|
equivalent
basis)
|
1,607
|
(200)
|
1,407
|
|
|
|
|
Interest
expense
|
|
|
|
Deposits:
|
|
|
|
Interest-bearing
checking accounts
|
73
|
(71)
|
2
|
Money
markets
|
265
|
(28)
|
237
|
Time
deposits less than $100,000
|
(53)
|
(23)
|
(76)
|
Time
deposits greater than or
|
|
|
|
equal
to $100,000
|
(234)
|
99
|
(135)
|
Borrowings
|
(44)
|
250
|
206
|
Total
interest expense
|
7
|
227
|
234
|
|
|
|
|
Net
interest income increase/
|
|
|
|
(decrease)(taxable
equivalent basis)
|
$1,600
|
$(427)
|
1,173
|
|
|
|
|
Less:
|
|
|
|
Taxable-equivalent
adjustment
|
|
|
62
|
Net
interest income increase/
|
|
|
|
(decrease)
|
|
|
$1,111
|
|
For the Nine Months Ended September 30,
|
|||||
|
2016
|
2015
|
||||
|
Average
|
|
Average
|
Average
|
|
Average
|
(Dollars in thousands)
|
Amount
|
Interest
|
Rate
|
Amount
|
Interest
|
Rate
|
Loans,
net of allowance (1)
|
$1,075,390
|
$35,574
|
4.42%
|
$958,662
|
$32,189
|
4.49%
|
Investment
securities (2)
|
185,721
|
4,554
|
3.28%
|
165,882
|
4,097
|
3.30%
|
Other
interest-earning assets
|
46,832
|
218
|
0.62%
|
58,645
|
104
|
0.24%
|
Total interest-earning assets
|
1,307,943
|
40,346
|
4.12%
|
1,183,189
|
36,390
|
4.11%
|
Other
assets
|
81,939
|
|
|
91,623
|
|
|
Total assets
|
$1,389,882
|
|
|
$1,274,812
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Interest-bearing
checking accounts
|
$165,655
|
515
|
0.42%
|
$123,377
|
454
|
0.49%
|
Money
markets
|
432,362
|
2,144
|
0.66%
|
301,604
|
1,533
|
0.68%
|
Time
deposits less than $100,000
|
11,496
|
89
|
1.04%
|
28,859
|
369
|
1.71%
|
Time
deposits greater than or
|
|
|
|
|
|
|
equal
to $100,000
|
255,407
|
1,622
|
0.85%
|
343,462
|
2,240
|
0.87%
|
Borrowings
|
219,461
|
1,605
|
0.98%
|
230,458
|
924
|
0.54%
|
Total interest-bearing liabilities
|
1,084,381
|
5,975
|
0.74%
|
1,027,759
|
5,520
|
0.72%
|
Noninterest-bearing
deposits
|
180,623
|
|
|
145,181
|
|
|
Other
liabilities
|
12,790
|
|
|
10,847
|
|
|
Stockholders
equity
|
112,088
|
|
|
91,025
|
|
|
Total liabilities and stockholders
|
|
|
|
|
|
|
equity
|
$1,389,882
|
|
|
$1,274,812
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate
|
|
|
|
|
|
|
spread (taxable-equivalent basis) (3)
|
|
$34,371
|
3.38%
|
|
$30,870
|
3.39%
|
|
|
|
|
|
|
|
Net interest margin (taxable-
|
|
|
|
|
|
|
equivalent basis) (4)
|
|
|
3.51%
|
|
|
3.49%
|
|
|
|
|
|
|
|
Ratio of interest-bearing assets to
|
|
|
|
|
|
|
interest-bearing liabilities
|
120.62%
|
|
|
115.12%
|
|
|
|
|
|
|
|
|
|
Reported net interest income
|
|
|
|
|
|
|
Net
interest income (taxable-equivalent
|
|
|
|
|
|
|
basis)
|
|
$34,371
|
|
|
$30,870
|
|
Less:
|
|
|
|
|
|
|
Taxable-equivalent
adjustment
|
|
752
|
|
|
549
|
|
Net
interest income
|
|
$33,619
|
|
|
$30,321
|
|
|
Nine Months Ended
|
||
|
September 30, 2016 vs. 2015
|
||
|
Increase (Decrease) Due to
|
||
(in thousands)
|
Volume
|
Rate
|
Total
|
Interest
income
|
|
|
|
Loans,
net of allowance
|
$3,923
|
$(538)
|
$3,385
|
Investment
securities
|
490
|
(33)
|
457
|
Other
interest-earning assets
|
(21)
|
135
|
114
|
Total
interest income (taxable-
|
|
|
|
equivalent
basis)
|
4,392
|
(436)
|
3,956
|
|
|
|
|
Interest
expense
|
|
|
|
Deposits:
|
|
|
|
Interest-bearing
checking accounts
|
156
|
(95)
|
61
|
Money
markets
|
665
|
(54)
|
611
|
Time
deposits less than $100,000
|
(222)
|
(58)
|
(280)
|
Time
deposits greater than or
|
|
|
|
equal
to $100,000
|
(575)
|
(43)
|
(618)
|
Borrowings
|
(44)
|
725
|
681
|
Total
interest expense
|
(20)
|
475
|
455
|
|
|
|
|
Net
interest income increase/
|
|
|
|
(decrease)(taxable
equivalent basis)
|
$4,412
|
$(911)
|
3,501
|
|
|
|
|
Less:
|
|
|
|
Taxable-equivalent
adjustment
|
|
|
203
|
Net
interest income increase/
|
|
|
|
(decrease)
|
|
|
$3,298
|
(in thousands)
|
|
Three months ended September 30, 2016
|
|
Beginning
balance
|
$7,986
|
Provision
for loan losses
|
391
|
Loans
charged off
|
(682)
|
Recoveries
|
230
|
Net
chargeoffs
|
(452)
|
Ending
balance
|
$7,925
|
|
|
Three months ended September 30, 2015
|
|
Beginning
balance
|
$7,569
|
Provision
for loan losses
|
-
|
Loans
charged off
|
(14)
|
Recoveries
|
63
|
Net
recoveries
|
49
|
Ending
balance
|
$7,618
|
(in
thousands)
|
|
Nine months ended September 30, 2016
|
|
Beginning
balance
|
$7,641
|
Provision
for loan losses
|
391
|
Loans
charged off
|
(683)
|
Recoveries
|
576
|
Net
chargeoffs
|
(107)
|
Ending
balance
|
$7,925
|
|
|
Nine months ended September 30, 2015
|
|
Beginning
balance
|
$6,869
|
Provision
for loan losses
|
750
|
Loans
charged off
|
(290)
|
Recoveries
|
289
|
Net
chargeoffs
|
(1)
|
Ending
balance
|
$7,618
|
|
Three months
|
Nine
months
|
||
|
ended September 30,
|
ended September 30,
|
||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
Non-interest income
|
|
|
|
|
Increase
in cash surrender value of bank owned
|
|
|
|
|
life
insurance
|
$220
|
$225
|
$669
|
$632
|
Net
gain on sale of securities
|
-
|
145
|
85
|
568
|
Service
charges and fees
|
65
|
58
|
179
|
163
|
Mortgage
origination fees and gains on sale of loans
|
59
|
44
|
124
|
156
|
Net
loss on sale or impairment of foreclosed assets
|
-
|
(9)
|
(257)
|
(472)
|
Other
fees and income
|
94
|
81
|
285
|
305
|
Total
non-interest income
|
$438
|
$544
|
$1,085
|
$1,352
|
|
Three months
|
Nine months
|
||
|
ended September 30,
|
ended September 30,
|
||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
Non-interest expense
|
|
|
|
|
Salaries
and employee benefits
|
$3,912
|
$3,378
|
$11,521
|
$9,714
|
Furniture,
equipment and software costs
|
456
|
482
|
1,450
|
1,383
|
Occupancy
|
362
|
366
|
1,048
|
1,203
|
Data
processing
|
270
|
267
|
845
|
846
|
Director
related fees and expenses
|
219
|
253
|
690
|
670
|
Professional
fees
|
208
|
159
|
627
|
614
|
FDIC
and other supervisory assessments
|
220
|
231
|
632
|
710
|
Advertising
and public relations
|
239
|
116
|
661
|
537
|
Unreimbursed
loan costs and foreclosure related expenses
|
172
|
281
|
383
|
750
|
Other
|
720
|
647
|
2,009
|
2,033
|
Total
non-interest expense
|
$6,778
|
$6,180
|
$19,866
|
$18,460
|
|
September 30, 2016
|
December 31, 2015
|
||
|
Amortized
|
Fair
|
Amortized
|
Fair
|
(in thousands)
|
Cost
|
Value
|
Cost
|
Value
|
Available-for-sale:
|
|
|
|
|
U.S.
Agency obligations
|
$17,673
|
$18,176
|
$19,778
|
$19,901
|
Collateralized
mortgage obligations
|
45,802
|
46,542
|
60,826
|
60,941
|
Mortgage-backed
securities
|
46,999
|
47,828
|
31,074
|
31,310
|
Municipal
bonds
|
61,304
|
63,590
|
53,163
|
54,434
|
Other
|
2,679
|
2,470
|
2,677
|
2,310
|
|
$174,457
|
$178,606
|
$167,518
|
$168,896
|
|
September 30, 2016
|
December
31, 2015
|
||||
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
Average Tax
|
|
|
Average Tax
|
|
Amortized
|
Fair
|
Equivalent
|
Amortized
|
Fair
|
Equivalent
|
(Dollars in thousands)
|
Cost
|
Value
|
Yield (1)
|
Cost
|
Value
|
Yield (1)
|
U.S.
government agency obligations
|
|
|
|
|
|
|
Due
within one year
|
$-
|
$-
|
-
|
$-
|
$-
|
-
|
Due
after one but within five years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after five but within ten years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after ten years
|
17,673
|
18,176
|
2.61%
|
19,778
|
19,901
|
2.59%
|
|
17,673
|
18,176
|
2.61%
|
19,778
|
19,901
|
2.59%
|
Collateralized
mortgage obligations
|
|
|
|
|
|
|
Due
within one year
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after one but within five years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after five but within ten years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after ten years
|
45,802
|
46,542
|
2.17%
|
60,826
|
60,941
|
2.34%
|
|
45,802
|
46,542
|
2.17%
|
60,826
|
60,941
|
2.34%
|
Mortgage-backed
securities
|
|
|
|
|
|
|
Due
within one year
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after one but within five years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after five but within ten years
|
13,159
|
13,666
|
2.75%
|
13,361
|
13,591
|
2.74%
|
Due
after ten years
|
33,840
|
34,162
|
2.09%
|
17,713
|
17,719
|
2.61%
|
|
46,999
|
47,828
|
2.27%
|
31,074
|
31,310
|
2.67%
|
Municipal
bonds
|
|
|
|
|
|
|
Due
within one year
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after one but within five years
|
1,735
|
1,812
|
3.23%
|
1,740
|
1,786
|
3.23%
|
Due
after five but within ten years
|
6,085
|
6,342
|
3.22%
|
4,325
|
4,412
|
3.06%
|
Due
after ten years
|
53,484
|
55,436
|
3.93%
|
47,098
|
48,236
|
3.99%
|
|
61,304
|
63,590
|
3.84%
|
53,163
|
54,434
|
3.89%
|
Other
investments
|
|
|
|
|
|
|
Due
within one year
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after one but within five years
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after five but within ten years
|
500
|
500
|
6.50%
|
500
|
500
|
6.50%
|
Due
after ten years (2)
|
2,179
|
1,970
|
0.00%
|
2,177
|
1,810
|
0.00%
|
|
2,679
|
2,470
|
1.21%
|
2,677
|
2,310
|
1.21%
|
Total
securities available for sale
|
|
|
|
|
|
|
Due
within one year
|
-
|
-
|
-
|
-
|
-
|
-
|
Due
after one but within five years
|
1,735
|
1,812
|
3.23%
|
1,740
|
1,786
|
3.23%
|
Due
after five but within ten years
|
19,744
|
20,508
|
2.99%
|
18,186
|
18,503
|
2.82%
|
Due
after ten years (2)
|
152,978
|
156,286
|
2.79%
|
147,592
|
148,607
|
2.91%
|
|
$174,457
|
$178,606
|
2.81%
|
$167,518
|
$168,896
|
2.90%
|
|
At September 30,
|
At December 31,
|
||
|
2016
|
2015
|
||
|
|
% of
|
|
% of
|
|
|
Total
|
|
Total
|
(Dollars in thousands)
|
Amount
|
Loans
|
Amount
|
Loans
|
Construction
and land development
|
$74,605
|
6.4%
|
$64,702
|
6.4%
|
Commercial
real estate:
|
|
|
|
|
Non-farm,
non-residential
|
356,833
|
30.6%
|
307,722
|
30.3%
|
Owner
occupied
|
178,631
|
15.3%
|
147,017
|
14.5%
|
Multifamily,
nonresidential and junior liens
|
96,643
|
8.3%
|
79,170
|
7.8%
|
Total
commercial real estate
|
632,107
|
54.2%
|
533,909
|
52.5%
|
Consumer
real estate:
|
|
|
|
|
Home
equity lines
|
86,361
|
7.4%
|
78,943
|
7.8%
|
Secured
by 1-4 family residential, secured by
|
|
|
|
|
first
deeds of trust
|
190,913
|
16.4%
|
167,053
|
16.4%
|
Secured
by 1-4 family residential, secured by
|
|
|
|
|
second
deeds of trust
|
4,358
|
0.4%
|
3,711
|
0.4%
|
Total
consumer real estate
|
281,632
|
24.2%
|
249,707
|
24.6%
|
Commercial
and industrial loans (except those
|
|
|
|
|
secured
by real estate)
|
164,913
|
14.2%
|
153,669
|
15.1%
|
Consumer
and other
|
11,558
|
1.0%
|
13,539
|
1.3%
|
Less:
|
|
|
|
|
Deferred
loan origination (fees) costs
|
530
|
0.0%
|
630
|
0.1%
|
Total
loans
|
1,165,345
|
100%
|
1,016,156
|
100%
|
Allowance
for loan losses
|
(7,925)
|
|
(7,641)
|
|
Total
net loans
|
$1,157,420
|
|
$1,008,515
|
|
|
At September 30, 2016
|
|||
|
|
Due after one
|
|
|
|
Due within
|
year but within
|
Due after
|
|
(in thousands)
|
one year
|
five years
|
five years
|
Total
|
Fixed rate loans (1):
|
|
|
|
|
Construction
and land development
|
$16,625
|
$20,983
|
$4,748
|
$42,356
|
Commercial
real estate
|
18,131
|
198,694
|
63,234
|
280,059
|
Commercial
real estate owner occupied
|
4,097
|
97,096
|
68,360
|
169,553
|
Multifamily,
nonresidential and junior liens
|
2,872
|
36,502
|
24,355
|
63,729
|
Home
equity lines
|
-
|
741
|
-
|
741
|
Secured
by 1-4 family residential, secured by first
|
|
|
|
|
deeds
of trust
|
8,895
|
64,238
|
110,245
|
183,378
|
Secured
by 1-4 family residential, secured by
|
|
|
|
|
second
deeds of trust
|
148
|
2,155
|
1,194
|
3,497
|
Commercial
and industrial loans (except those
|
|
|
|
|
secured
by real estate)
|
3,371
|
62,332
|
16,666
|
82,369
|
Consumer
and other
|
1,205
|
2,209
|
367
|
3,781
|
Total
at fixed rates
|
55,344
|
484,950
|
289,169
|
829,463
|
Variable rate loans (1):
|
|
|
|
|
Construction
and land development
|
13,557
|
18,416
|
148
|
32,121
|
Commercial
real estate
|
7,011
|
49,008
|
20,755
|
76,774
|
Commercial
real estate owner occupied
|
2,569
|
3,147
|
3,362
|
9,078
|
Multifamily,
nonresidential and junior liens
|
2,911
|
14,886
|
15,117
|
32,914
|
Home
equity lines
|
2,873
|
10,464
|
72,283
|
85,620
|
Secured
by 1-4 family residential, secured by first
|
|
|
|
-
|
deeds
of trust
|
1,715
|
3,971
|
1,307
|
6,993
|
Secured
by 1-4 family residential, secured by
|
|
|
|
-
|
second
deeds of trust
|
38
|
415
|
346
|
799
|
Commercial
and industrial loans (except those
|
|
|
|
-
|
secured
by real estate)
|
59,926
|
22,118
|
284
|
82,328
|
Consumer
and other
|
978
|
6,671
|
128
|
7,777
|
Total
at variable rates
|
91,578
|
129,096
|
113,730
|
334,404
|
Subtotal
|
146,922
|
614,046
|
402,899
|
1,163,867
|
Non-accrual
loans (2)
|
208
|
740
|
-
|
948
|
Gross
Loans
|
$147,130
|
$614,786
|
$402,899
|
1,164,815
|
Deferred
origination costs
|
|
|
|
530
|
Total
loans
|
|
|
|
$1,165,345
|
|
30+
|
Non-
|
Total
|
|
|
|
Days
|
Accrual
|
Past
|
|
Total
|
(in thousands)
|
Past Due
|
Loans
|
Due
|
Current
|
Loans
|
At September 30, 2016
|
|
|
|
|
|
Construction
and land development
|
$-
|
$128
|
$128
|
$74,477
|
$74,605
|
Non-farm,
non-residential
|
-
|
-
|
-
|
356,833
|
356,833
|
Owner
occupied
|
-
|
-
|
-
|
178,631
|
178,631
|
Multifamily,
nonresidential and junior liens
|
-
|
-
|
-
|
96,643
|
96,643
|
Home
equity lines
|
194
|
-
|
194
|
86,167
|
86,361
|
Secured
by 1-4 family residential, secured
|
|
|
|
|
|
by
first deeds of trust
|
-
|
542
|
542
|
190,371
|
190,913
|
Secured
by 1-4 family residential,
|
|
|
|
|
|
secured
by second deeds of trust
|
-
|
62
|
62
|
4,296
|
4,358
|
Commercial
and industrial loans (except
|
|
|
|
|
|
those
secured by real estate)
|
305
|
216
|
521
|
164,392
|
164,913
|
Consumer
and other
|
-
|
-
|
-
|
11,558
|
11,558
|
|
$499
|
$948
|
$1,447
|
$1,163,368
|
$1,164,815
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
|
|
|
Construction
and land development
|
$-
|
$238
|
$238
|
$64,464
|
$64,702
|
Non-farm,
non-residential
|
-
|
-
|
-
|
453,407
|
307,722
|
Owner
occupied
|
-
|
-
|
-
|
1,332
|
147,017
|
Multifamily,
nonresidential and junior liens
|
-
|
-
|
-
|
79,170
|
79,170
|
Home
equity lines
|
-
|
-
|
-
|
78,943
|
78,943
|
Secured
by 1-4 family residential, secured
|
|
|
|
|
|
by
first deeds of trust
|
-
|
-
|
-
|
167,053
|
167,053
|
Secured
by 1-4 family residential,
|
|
|
|
|
|
secured
by second deeds of trust
|
-
|
65
|
65
|
3,646
|
3,711
|
Commercial
and industrial loans (except
|
|
|
|
|
|
those
secured by real estate)
|
-
|
189
|
189
|
153,480
|
153,669
|
Consumer
and other
|
-
|
21
|
21
|
13,518
|
13,539
|
|
$-
|
$513
|
$513
|
$1,015,013
|
$1,015,526
|
|
At September 30,
|
At December 31,
|
(Dollars in thousands)
|
2016
|
2015
|
Non-accrual
loans
|
$760
|
$323
|
Restructured
loans (1)
|
188
|
190
|
Total
nonperforming loans
|
948
|
513
|
Foreclosed
real estate
|
5,183
|
5,453
|
Total
nonperforming assets
|
$6,131
|
$5,966
|
|
|
|
Accruing
loans past due 90 days or more
|
$-
|
$-
|
Allowance
for loan losses
|
7,925
|
7,641
|
|
|
|
Nonperforming
loans to period end loans
|
0.08%
|
0.05%
|
Allowance
for loan losses to period end
|
|
|
loans
|
0.68%
|
0.75%
|
Allowance
for loan losses to
|
|
|
nonperforming
loans
|
835.97%
|
1489.47%
|
Allowance
for loan losses to
|
|
|
nonperforming
assets
|
129.26%
|
128.08%
|
Nonperforming
assets to total assets
|
0.41%
|
0.46%
|
|
At September 30,
|
At December 31,
|
||
|
2016
|
2015
|
||
|
|
% of
|
|
% of
|
|
|
Total
|
|
Total
|
(Dollars in thousands)
|
Amount
|
Loans
|
Amount
|
Loans
|
Construction
and land development
|
$400
|
6.4%
|
$509
|
6.4%
|
Commercial
real estate
|
3,409
|
54.2%
|
3,156
|
52.6%
|
Consumer
real estate
|
2,092
|
24.2%
|
2,046
|
24.6%
|
Commercial
and industrial loans (except those
|
|
|
|
|
secured
by real estate)
|
1,940
|
14.2%
|
1,786
|
15.1%
|
Consumer
and other
|
84
|
1.0%
|
144
|
1.3%
|
Total
|
$7,925
|
100.0%
|
$7,641
|
100.0%
|
|
Three months ended
|
Nine months ended
|
||
|
September 30,
|
September 30,
|
||
(in thousands)
|
2016
|
2015
|
2016
|
2015
|
Allowance
for loan losses at beginning of the period
|
$7,986
|
$7,569
|
$7,641
|
$6,869
|
Provision
for loan losses
|
391
|
-
|
391
|
750
|
|
|
|
|
|
Loans
charged off:
|
|
|
|
|
Construction
and land development
|
-
|
(14)
|
-
|
(14)
|
Commercial
real estate
|
-
|
-
|
-
|
(276)
|
Consumer
real estate
|
-
|
-
|
-
|
-
|
Commercial
and industrial loans (except those
|
|
|
|
|
secured
by real estate)
|
(682)
|
-
|
(682)
|
-
|
Consumer
and other
|
-
|
-
|
(1)
|
-
|
Total
charge-offs
|
(682)
|
(14)
|
(683)
|
(290)
|
Recoveries
of loans previously charged off:
|
|
|
|
|
Construction
and land development
|
58
|
10
|
295
|
63
|
Commercial
real estate
|
3
|
11
|
59
|
11
|
Consumer
real estate
|
1
|
42
|
7
|
42
|
Commercial
and industrial loans (except those
|
|
|
|
|
secured
by real estate)
|
168
|
-
|
204
|
173
|
Consumer
and other
|
-
|
-
|
11
|
-
|
Total
recoveries
|
230
|
63
|
576
|
289
|
Net
recoveries (charge-offs)
|
(452)
|
49
|
(107)
|
(1)
|
Allowance
for loan losses at end of the period
|
$7,925
|
$7,618
|
$7,925
|
$7,618
|
|
|
|
|
|
Ratio
of net charge-offs during the period
|
|
|
|
|
to
average loans outstanding during
|
|
|
|
|
the
period
|
-0.16%
|
0.02%
|
-0.01%
|
0.00%
|
|
As of
|
|
|
September 30,
|
December 31,
|
Composition of Deposit Portfolio
|
2016
|
2015
|
Non-interest
bearing
|
15.7%
|
16.2%
|
Interest-bearing
checking accounts
|
19.5%
|
21.5%
|
Money
markets
|
44.5%
|
29.8%
|
Time
deposits
|
20.3%
|
32.5%
|
Total
|
100.0%
|
100.0%
|
|
For the Three Month Period Ended September 30,
|
|||||
|
2016
|
2015
|
||||
|
Average
|
% of
|
Average
|
Average
|
% of
|
Average
|
(Dollars in thousands)
|
Amount
|
Total
|
Rate
|
Amount
|
Total
|
Rate
|
Interest-bearing
checking accounts
|
$186,369
|
16.6%
|
0.36%
|
$129,297
|
12.8%
|
0.51%
|
Money
markets
|
491,805
|
43.8%
|
0.65%
|
333,957
|
33.1%
|
0.67%
|
Time
deposits
|
254,358
|
22.6%
|
0.92%
|
389,709
|
38.6%
|
0.81%
|
Total
interest-bearing deposits
|
932,532
|
83.0%
|
0.66%
|
852,963
|
84.4%
|
0.71%
|
Noninterest-bearing
deposits
|
190,745
|
17.0%
|
-
|
157,435
|
15.6%
|
-
|
Total
deposits
|
$1,123,277
|
100.0%
|
0.55%
|
$1,010,398
|
100.0%
|
0.60%
|
|
For the Nine Month Period Ended September 30,
|
|||||
|
2016
|
2015
|
||||
|
Average
|
% of
|
Average
|
Average
|
% of
|
Average
|
(Dollars in thousands)
|
Amount
|
Total
|
Rate
|
Amount
|
Total
|
Rate
|
Interest-bearing
checking accounts
|
$165,655
|
15.8%
|
0.42%
|
$123,377
|
13.1%
|
0.49%
|
Money
markets
|
432,362
|
41.4%
|
0.66%
|
301,604
|
32.0%
|
0.68%
|
Time
deposits
|
266,903
|
25.5%
|
0.86%
|
372,321
|
39.5%
|
0.94%
|
Total
interest-bearing deposits
|
864,920
|
82.7%
|
0.67%
|
797,302
|
84.6%
|
0.77%
|
Noninterest-bearing
deposits
|
180,623
|
17.3%
|
-
|
145,181
|
15.4%
|
-
|
Total
deposits
|
$1,045,543
|
100.0%
|
0.56%
|
$942,483
|
100.0%
|
0.65%
|
|
September 30, 2016
|
||||
|
1 Year
|
Over 1 to
|
Over 3 to
|
More Than
|
|
(in thousands)
|
or Less
|
3 Years
|
5 Years
|
5 Years
|
Total
|
Time
deposits
|
$158,525
|
$79,003
|
$6,035
|
$-
|
$243,563
|
Short
term borrowings
|
100,000
|
-
|
-
|
-
|
100,000
|
Subordinated
debentures
|
-
|
-
|
-
|
18,558
|
18,558
|
Operating
leases
|
701
|
1,302
|
355
|
4,036
|
6,394
|
Total
contractual obligations
|
$259,226
|
$80,305
|
$6,390
|
$22,594
|
$368,515
|
|
|
|
Minimum Requirements To Be:
|
|||
|
|
|
"Adequately Capitalized"
|
"Well Capitalized" (2)
|
||
|
|
|
for Capital Adequacy
|
Under Prompt Corrective
|
||
|
Actual
|
Purposes
|
|
Action Provisions
|
||
(Dollars in thousands)
|
Amount
|
Ratio (1)
|
Amount
|
Ratio (1)
|
Amount
|
Ratio (1)
|
September 30, 2016
|
|
|
|
|
|
|
The Company
|
|
|
|
|
|
|
Common
equity Tier 1
|
$135,078
|
11.035%
|
$55,083
|
4.500%
|
N/A
|
N/A
|
Total
risk-based capital ratio
|
161,003
|
13.153%
|
97,925
|
8.000%
|
N/A
|
N/A
|
Tier
1 risk-based capital ratio
|
153,078
|
12.506%
|
73,444
|
6.000%
|
N/A
|
N/A
|
Tier
1 leverage ratio
|
153,078
|
10.378%
|
59,000
|
4.000%
|
N/A
|
N/A
|
Tangible
equity to tangible assets ratio
|
135,078
|
9.134%
|
N/A
|
N/A
|
N/A
|
N/A
|
Tangible
equity to risk-weighted assets ratio
|
135,078
|
11.035%
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
|
The Bank
|
|
|
|
|
|
|
Common
equity Tier 1
|
$150,214
|
12.279%
|
$55,050
|
4.500%
|
$79,517
|
6.500%
|
Total
risk-based capital ratio
|
158,139
|
12.927%
|
97,867
|
8.000%
|
122,334
|
10.000%
|
Tier
1 risk-based capital ratio
|
150,214
|
12.279%
|
73,400
|
6.000%
|
97,867
|
8.000%
|
Tier
1 leverage ratio
|
150,214
|
10.416%
|
63,944
|
4.000%
|
72,110
|
5.000%
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
|
|
|
The Company
|
|
|
|
|
|
|
Common
equity Tier 1
|
$97,853
|
8.92%
|
$49,384
|
4.50%
|
N/A
|
N/A
|
Total
risk-based capital ratio
|
123,028
|
11.21%
|
87,794
|
8.00%
|
N/A
|
N/A
|
Tier
1 risk-based capital ratio
|
115,387
|
10.51%
|
65,845
|
6.00%
|
N/A
|
N/A
|
Tier
1 leverage ratio
|
115,387
|
8.66%
|
53,274
|
4.00%
|
N/A
|
N/A
|
|
|
|
|
|
|
|
The Bank
|
|
|
|
|
|
|
Common
equity Tier 1
|
$119,454
|
10.90%
|
$50,425
|
4.50%
|
$71,253
|
6.50%
|
Total
risk-based capital ratio
|
127,095
|
11.59%
|
87,696
|
8.00%
|
109,621
|
10.00%
|
Tier
1 risk-based capital ratio
|
119,454
|
10.90%
|
65,772
|
6.00%
|
87,696
|
8.00%
|
Tier
1 leverage ratio
|
119,454
|
9.15%
|
52,193
|
4.00%
|
65,241
|
5.00%
|
Hypothetical
|
% change in projected
|
||
shift in interest
|
net interest income
|
||
rates (in bps)
|
August 31, 2016
|
May 31, 2016
|
February 29, 2016
|
200
|
-3.72%
|
-3.22%
|
-4.24%
|
(100)
|
0.03%
|
0.13%
|
0.33%
|
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification of
Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of
Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of
Principal Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
|
|
Certification of
Principal Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
101
|
|
Interactive data
files pursuant to Rule 405 of Regulation S-T: (i) Consolidated
Balance Sheets (Unaudited) as of September 30, 2016 and December
31, 2015; (ii) Consolidated Statements of Income (Unaudited) for
the Three and Nine Months Ended September 30, 2016 and 2015; (iii)
Consolidated Statements of Comprehensive Income (Unaudited) for the
Three and Nine Months Ended September 30, 2016 and 2015; (iv)
Consolidated Statements of Stockholders’ Equity (Unaudited)
for the Nine Months Ended September 30, 2016 and 2015; (v)
Consolidated Statements of Cash Flows (Unaudited) for the Nine
Months Ended September 30, 2016 and 2015; and (vi) Notes to
Consolidated Financial Statements (Unaudited)
|
|
PARAGON
COMMERCIAL CORPORATION
|
|
|
|
|
|
|
Date:
November 7, 2016 |
By:
|
/s/
Steven
E. Crouse
|
|
|
|
Steven E.
Crouse
|
|
|
|
Executive Vice
President and Chief Financial Officer (Principal Financial and
Accounting Officer)
|
|
Exhibit
No.
|
|
Description
|
|
|
|
31.1
|
|
Certification of
Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of
Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of
Principal Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
|
|
Certification of
Principal Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
101
|
|
Interactive data
files pursuant to Rule 405 of Regulation S-T: (i) Consolidated
Balance Sheets (Unaudited) as of September 30, 2016 and December
31, 2015; (ii) Consolidated Statements of Income (Unaudited) for
the Three and Nine Months Ended September 30, 2016 and 2015; (iii)
Consolidated Statements of Comprehensive Income (Unaudited) for the
Three and Nine Months Ended September 30, 2016 and 2015; (iv)
Consolidated Statements of Stockholders’ Equity (Unaudited)
for the Nine Months Ended September 30, 2016 and 2015; (v)
Consolidated Statements of Cash Flows (Unaudited) for the Nine
Months Ended September 30, 2016 and 2015; and (vi) Notes to
Consolidated Financial Statements (Unaudited)
|
|
|
|
|
Date:
November 7, 2016
|
By:
|
/s/
Robert
C. Hatley
|
|
|
|
Robert C.
Hatley
|
|
|
|
President and Chief
Executive Officer
|
|
|
|
|
|
Date:
November 7, 2016 |
By:
|
/s/
Steven
E. Crouse
|
|
|
|
Steven E.
Crouse
|
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
|
|
|
|
Date:
November 7, 2016 |
By:
|
/s/
Robert
C. Hatley
|
|
|
|
Robert C.
Hatley
|
|
|
|
President and Chief Executive Officer |
|
|
|
|
|
Date:
November 7, 2016
|
By:
|
/s/
Steven
E. Crouse
|
|
|
|
Steven E.
Crouse
|
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 02, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | Paragon Commercial CORP | |
Entity Central Index Key | 0001414374 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,450,042 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2016 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ .008 | $ .008 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 5,450,042 | 4,581,334 |
Common stock, shares outstanding (in shares) | 5,450,042 | 4,581,334 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Consolidated Statements Of Comprehensive Income | ||||
Net income | $ 3,455 | $ 3,313 | $ 9,768 | $ 8,271 |
Securities available for sale: | ||||
Unrealized gains (losses) | (1,058) | 876 | 2,856 | (366) |
Reclassification of gains recognized in net income | 0 | (145) | (85) | (568) |
Other comprehensive income (loss) | (1,058) | 731 | 2,771 | (934) |
Deferred tax expense (benefit) | (405) | 280 | 1,057 | (357) |
Other comprehensive income (loss), net of tax | (653) | 451 | 1,714 | (577) |
Cash flow hedges: | ||||
Unrealized gains (losses) | 544 | (1,483) | (1,592) | (2,753) |
Other comprehensive income (loss) | 204 | (568) | (599) | (1,054) |
Deferred tax expense (benefit) | 204 | (568) | (599) | (1,054) |
Other comprehensive income (loss), net of tax | 340 | (915) | (993) | (1,699) |
Total other comprehensive income (loss), net of tax | (313) | (464) | 721 | (2,276) |
Comprehensive income | $ 3,142 | $ 2,849 | $ 10,489 | $ 5,995 |
1. ORGANIZATION AND OPERATIONS |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization And Operations | |
ORGANIZATION AND OPERATIONS | On April 2, 2001, Paragon Commercial Corporation (the “Company”) was incorporated for the purpose of serving as a holding company for Paragon Commercial Bank (the “Bank”). The Company currently has no operations and conducts no business on its own other than owning the Bank and two statutory business trusts, Paragon Commercial Capital Trust I and II.
The Bank was incorporated on May 4, 1999 and began banking operations on May 10, 1999. The Bank is engaged in general commercial banking in Wake and Mecklenburg Counties, NC, operating under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks. The Bank undergoes periodic examinations by those regulatory authorities. In addition, the Company undergoes periodic examinations by the Federal Reserve.
The Company formed Paragon Commercial Capital Trust I (“Trust I”) during 2004 in order to facilitate the issuance of trust preferred securities. Trust I is a statutory business trust formed under the laws of the state of Delaware, of which all common securities are owned by the Company. The Company formed Paragon Commercial Capital Trust II (“Trust II”) during 2006 to serve the same purpose. The junior subordinated debentures issued by the Company to the trusts are classified as debt and the Company’s equity interest in the trusts are included in other assets.
The trust preferred securities presently qualify as Tier 1 regulatory capital and are reported in Federal Reserve regulatory reports as minority interests in unconsolidated subsidiaries. The junior subordinated debentures do not qualify as Tier 1 regulatory capital.
In June 2016, the Company completed its initial public offering in which it issued and sold 845,588 shares of common stock at a public offering price of $34.00 per share. The Company received net proceeds of $26.4 million after deducting underwriting discounts and commissions of approximately $1.7 million and other offering expenses of approximately $615,000.
In addition to its headquarters and operations center in Raleigh, North Carolina, the Bank has locations in Charlotte and Cary, North Carolina. |
2. BASIS OF PRESENTATION |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis Of Presentation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION | The accompanying unaudited consolidated financial statements include the accounts and transactions of Paragon Commercial Corporation and Paragon Commercial Bank. All significant intercompany transactions and balances are eliminated in consolidation. Paragon Commercial Capital Trusts I and II are not consolidated subsidiaries of the Company.
The consolidated financial information included herein as of and for the three and nine month periods ended September 30, 2016 and 2015 is unaudited. Accordingly, it does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. However, such information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the financial condition and results of operations for the interim periods. The December 31, 2015 consolidated balance sheet was derived from the Company’s December 31, 2015 audited consolidated financial statements as of and for the periods ended December 31, 2015. These unaudited interim consolidated financial statements as of and for the three and nine month periods ended September 30, 2016 and 2015 should be read in conjunction with the audited consolidated financial statements as of and for the periods ended December 31, 2015.
The accounting policies followed by the Company and other relevant information is contained in the notes to the audited consolidated financial statements as of and for the periods ended December 31, 2015.
Earnings Per Common Share
Basic and diluted net income per common share have been computed by dividing net income for each period by the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share reflects the potential dilution that could occur if outstanding stock options were exercised.
Basic and diluted net income per common share have been computed based upon net income as presented in the accompanying unaudited consolidated statements of income divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below:
Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows:
Comprehensive Income
The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income.
The Company’s only two components of other comprehensive income are unrealized gains and losses on investment securities available-for-sale, net of income taxes and unrealized gains and losses on cash flow hedges, net of income taxes. Information concerning the Company’s accumulated other comprehensive income for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively is as follows:
The accumulated balances related to each component of other accumulated comprehensive income (loss) are as follows:
Recent Accounting Pronouncements
In February 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.
In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.
In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.
In August 2015, the FASB deferred the effective date of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.
In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification (the “ASC”) to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements.
In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements.
In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect that implementation of the new standard will have on its financial statements.
In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will apply the guidance prospectively to each period presented. The Company does not expect these amendments to have a material effect on its financial statements.
In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.
In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its financial statements.
In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.
In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
Reclassifications
Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 presentation. The reclassifications had no effect on total assets, net income or stockholders' equity as previously reported. |
3. INVESTMENT SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | The following is a summary of the securities portfolio by major classification at September 30, 2016 and December 31, 2015.
The fair values of securities available-for-sale at September 30, 2016 by contractual maturity are shown below. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.
The following tables show gross unrealized losses and fair values of investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position on September 30, 2016 and December 31, 2015.
The table below summarizes the number of investment securities in an unrealized loss position:
The unrealized losses primarily relate to debt securities that have incurred fair value reductions due to higher market interest rates since the securities were purchased. The unrealized losses are not likely to reverse unless and until market interest rates decline to the levels that existed when the securities were purchased. Since none of the unrealized losses on the debt securities in 2016 or 2015 relate to the marketability of the securities or the issuer’s ability to honor redemption obligations and since management has the intent to hold these securities until maturity and believes it is more likely than not that the Company will not have to sell any such securities before a recovery of cost given the current liquidity position, none of those debt securities are deemed to be other than temporarily impaired.
The following table summarizes securities gains for the periods presented:
Securities with a fair value of $52.2 million and $78.4 million were pledged as of September 30, 2016 and December 31, 2015, respectively, to secure repurchase agreements, lines of credit and other borrowings. |
4. LOANS AND ALLOWANCE FOR LOAN LOSSES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3. LOANS AND ALLOWANCE FOR LOAN LOSSES | Following is a summary of loans at September 30, 2016 and December 31, 2015:
A further breakdown of the make-up of the construction and development and commercial real estate portfolio at September 30, 2016 and December 31, 2015 is as follows:
Loans are primarily made in the Research Triangle and Charlotte areas of North Carolina. Real estate loans can be affected by the condition of the local real estate market. Commercial and installment loans can be affected by the local economic conditions.
Changes in the allowance for loan losses for the three and nine months ended September 30, 2016 and 2015 were as follows:
The balance in the allowance for loan losses and the recorded investment in loans by portfolio segment are based on the impairment method as of September 30, 2016 and December 31, 2015 and were as follows:
Loans are charged down or off as soon as the Company determines that the full principal balance due under any loan becomes uncollectible. The amount of the charge is determined as follows:
• If unsecured, the loan must be charged off in full. • If secured, the outstanding principal balance of the loan should be charged down to the net realizable value of the collateral.
Loans are considered uncollectible when:
Impaired loans totaled $3.5 million and $3.9 million at September 30, 2016 and December 31, 2015, respectively. Included in the $3.5 million at September 30, 2016 is $1.1 million of loans classified as troubled debt restructurings (“TDRs”). Included in the $3.9 million at December 31, 2015 is $2.8 million of loans classified as TDRs. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. All TDRs are considered impaired.
The following table provides information on performing and nonperforming TDRs as of September 30, 2016 and December 31, 2015:
During the first nine months of 2016, there were five new loans totaling $1.3 million identified as TDRs. There were no loans considered as TDRs in 2015 that subsequently defaulted in 2016. Of the five new loans identified as a TDR, three were to the same borrower in the amount of $1.1 million within the commercial and industrial (“C&I”) portfolio. The designation of TDR to this same borrower was given due to the Bank extending the maturity date of the three loans during a forbearance agreement; the market would not support terms for this type of loan and was classified as a TDR. The borrower subsequently defaulted on the revised terms. The Bank has since liquidated these loans and they are no longer included in the TDR total. Another loan in the amount of $127,000 that is a real estate construction and land development loan was coded a TDR due to renewal of interest only terms; these are not terms that would be provided in the market hence the TDR designation. The last loan was for $37,000 is a C&I loan and was coded a TDR due to change in interest rate and repayment terms that would not be provided in the market. The borrower subsequently defaulted on the revised loans and the Bank charged the balance of the loan to the loan loss reserve. That loan is no longer included in the Bank’s TDR total.
In order to quantify the value of any impairment, the Company evaluates loans individually. At September 30, 2016, the Company had $3.5 million of impaired loans. The detail of loans evaluated for impairment as of September 30, 2016 is presented below:
At December 31, 2015, the Company had $3.9 million of impaired loans. The detail of loans evaluated for impairment as of December 31, 2015 is presented below:
The average recorded investment balance of impaired loans for the three- and nine-month periods ending September 30, 2016 and 2015 are as follows:
When the Company cannot reasonably expect full and timely repayment of its loan, the loan is placed on nonaccrual status. The Company will continue to track the contractual interest for purposes of customer reporting and any potential litigation or later collection of the loan but accrual of interest for the Company’s financial statement purposes is to be discontinued. Subsequent payments of interest can be recognized as income on a cash basis provided that full collection of principal is expected. Otherwise, all payments received are to be applied to principal only. At the time of nonaccrual, past due or accrued interest is reversed from income.
Loans over 90 days past due will automatically be placed on nonaccrual status. Loans that are less delinquent may also be placed on nonaccrual status if full collection of principal and interest is unlikely.
The following table presents the recorded investment in nonaccrual loans by portfolio segment as of September 30, 2016 and December 31, 2015:
There were no loans 90 days or more past due and accruing interest at September 30, 2016 or December 31, 2015.
The following table presents the aging of the recorded investment in past due loans as of September 30, 2016 and December 31, 2015 by portfolio segment:
Credit Quality Indicators
The Company utilizes a nine point grading system in order to evaluate the level of inherent risk in the loan portfolio as part of its allowance for loan losses methodology. Loans collectively evaluated for impairment are grouped by loan type and, in the case of commercial and construction loans, by risk rating. Each loan type is assigned an allowance factor based on risk grade, historical loss experience, economic conditions, overall portfolio quality including delinquency rates and commercial real estate loan concentrations (as applicable). As risk grades increase, additional reserves are applied stated in basis points in order to account for the added inherent risk.
The Company categorizes all business and commercial purpose loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by setting the risk grade at the inception of a loan through the approval process. A certain percentage of loan dollars is reviewed each year by a third party loan review function. The risk rating process is inherently subjective and based upon management’s evaluation of the specific facts and circumstances for individual borrowers. As such, the assigned risk ratings are subject to change based upon changes in borrower status and changes in the external environment affecting the borrower. The Company uses the following definitions for risk ratings:
· Risk Grade 1 – Minimal - Credits in this category are virtually risk-free and are well-collateralized by cash-equivalent instruments. The repayment program is well-defined and achievable. Repayment sources are numerous.
· Risk Grade 2 – Modest - Loans to borrowers of significantly better than average financial strength or loans secured by readily marketable securities. Earnings performance is consistent and primary and secondary sources of repayment are well established. The borrower exhibits excellent asset quality and liquidity with very strong debt servicing capacity and coverage. Company management has depth, is experienced and well regarded in the industry.
· Risk Grade 3 – Average - Loans in this category are to borrowers of satisfactory financial strength. Earnings performance is consistent. Primary and secondary sources of repayment are well defined and adequate to retire the debt in a timely and orderly fashion. These borrowers would generally exhibit satisfactory asset quality and liquidity. They have moderate leverage and experienced management in key positions.
· Risk Grade 4 – Acceptable - Loans in this category are to borrowers involving more than average risk which contain certain characteristics that require some supervision and attention by the lender. Asset quality is acceptable, but debt capacity is modest. Little excess liquidity is available. The borrower may be fully leveraged and unable to sustain major setbacks. Covenants are structured to ensure adequate protection. Management may have limited experience and depth. This category includes loans which are highly leveraged transactions due to regulatory constraints and also includes loans involving reasonable exceptions to policy.
· Risk Grade 5 - Acceptable with Care - A loan in this category is sound and collectible but contains considerable risk. Although asset quality remains acceptable, the borrower has a smaller and/or less diverse asset base, very little liquidity and limited debt capacity. Earnings performance is inconsistent and the borrower is not strong enough to sustain major setbacks. The borrower may be highly leveraged and below average size or a lower-tier competitor. There might be limited management experience and depth. These loans may be to a well-conceived start-up venture but repayment is still dependent upon a successful operation. This category includes loans with significant documentation or policy exceptions, improper loan structure, or inadequate loan servicing procedures and may also include a loan in which strong reliance for a secondary repayment source is placed on a guarantor who exhibits the ability and willingness to repay or loans which are highly leveraged transactions due to the obligor’s financial status.
· Risk Grade 6 - Special Mention or Critical - Loans in this category have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. These may also include loans of marginal quality and liquidity that if not corrected may jeopardize the liquidation of the debt and the Company’s credit position. These loans require close supervision and must be monitored to ensure there is not a pattern of deterioration in the credit that may lead to further downgrade. These characteristics include but are not limited to:
· Risk Grade 7 – Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
· Risk Grade 8 – Doubtful - Loans classified doubtful have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt. Among these events are:
The ability of the borrower to service the debt is extremely weak, overdue status is constant, the debt has been placed on nonaccrual status and no definite repayment schedule exists. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off. There were no loans rated as doubtful as of September 30, 2016 or December 31, 2015.
· Risk Grade 9 – Loss - Loans classified Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value but rather that it is not practical or desirable to defer writing off the worthless loan even though partial recovery may be affected in the future. Probable loss portions of doubtful assets should be charged against the allowance for loan losses. Loans may reside in this classification for administrative purposes for a period not to exceed the earlier of thirty days or calendar quarter-end. There were no loans rated as loss as of September 30, 2016 or December 31, 2015.
As of September 30, 2016 and December 31, 2015 and based on the most recent analysis performed, the risk category of unimpaired loans by class of loans is as follows:
Loans with a carrying value of $810.5 million and $689.0 million were pledged as of September 30, 2016 and December 31, 2015, respectively, to secure lines of credit with the Federal Reserve and the Federal Home Loan Bank.
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5. OFF-BALANCE SHEET RISK |
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OFF-BALANCE SHEET RISK | The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit is based on management’s credit evaluation of the borrower. Collateral obtained varies but may include real estate, stocks, bonds, and certificates of deposit.
A summary of the contract amounts of the Company’s exposure to off-balance sheet credit risk as of September 30, 2016 and December 31, 2015 is as follows:
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6. DERIVATIVES AND FINANCIAL INSTRUMENTS |
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DERIVATIVES AND FINANCIAL INSTRUMENTS | To mitigate exposure to variability in expected future cash flows resulting from changes in interest rates, in May 2013 the Company entered into two forward swap arrangements (the “Swaps”) whereby the Company would pay fixed rates on two short-term borrowings at some point in the future for a determined period of time. For both agreements, the Company would renew advances with the Federal Home Loan Bank (“FHLB”) for 3-month terms as a primary funding source and pay the prevailing 3-month rate. The first swap, a “2-5 Swap”, was a $20 million agreement whereby 2 years from the May 2013 execution date, the Company would begin to swap out the 3-month FHLB advance pricing at that date for a fixed rate of 1.964% for a period of 5 years. The second swap, a “3-5 Swap”, was similar in terms except that it was a $30 million agreement whereby 3 years from the May 2013 execution date, the Company would begin to swap out the 3-month FHLB advance pricing at that date for a fixed rate of 2.464% for a period of 5 years.
The Company designated the forward-starting interest rate swaps (the hedging instruments) as cash flow hedges of the risk of changes attributable to the benchmark 3-Month LIBOR interest rate risk for the forecasted issuances of FHLB advances arising from a rollover strategy. The Company intended to sequentially issue a series of 3-month fixed rate debt as part of a planned roll-over of short-term debt for the next seven to eight years.
In September 2014, as a result of continued increasing fixed rate exposure, the Company determined that an additional strategy was needed and, as a result, exited from the Swaps for a deferred gain of $372,000. In their place, the Company purchased three interest rate caps with a strike price of 3-month LIBOR at 0.50% and a five-year term. The instruments hedged were $100 million of FHLB borrowings maturing quarterly on the same reset dates. The Company executed three separate agreements between $30 million and $35 million maturing between August 2019 and October 2019.
The following table reflects the cash flow hedges included in the consolidated balance sheets as of September 30, 2016 and December 31, 2015:
Remaining amortization of the premium on the interest rate caps is as follows:
The Company recorded $257,000 and $45,000 for the three-month periods ended September 30, 2016 and 2015, respectively, in amortization associated with the interest rate caps. The Company recorded $598,000 and $64,000 for the nine-month periods ended September 30, 2016 and 2015, respectively, in amortization associated with the interest rate caps. Those expenses are reflected in the consolidated statements of income as a component of borrowings and repurchase agreements interest expense.
Remaining amortization of the gain associated with the exit of the Swaps is as follows:
The Company realized $19,000 and $38,000 in gains on the Swaps during the three- and nine-month periods ended September 30, 2016, respectively, shown as a reduction of borrowings and repurchase agreements interest expense.
The Company anticipates little to no ineffectiveness in this hedging relationship as long as the terms are matched at each forecasted debt issuance. The Company notes that the actual interest cost incurred at each rollover will be a function of market rates at that time. However the Company is only hedging the benchmark interest rate risk in each rollover.
The Company does not use derivatives for trading or speculative purposes. |
7. FAIR VALUE OF FINANCIAL INSTRUMENTS |
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Fair Value Of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | Fair value is a market-based measurement and is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. In general, the transaction price will equal the exit price and, therefore, represent the fair value of the asset or liability at initial recognition. In determining whether a transaction price represents the fair value of the asset or liability at initial recognition, each reporting entity is required to consider factors specific to the transaction and the asset or liability, the principal or most advantageous market for the asset or liability, and market participants with whom the entity would transact in the market.
Outlined below is the application of the fair value hierarchy applied to the Company’s financial assets that are carried at fair value.
Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. An active market for the asset or liability is a market in which the transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. As of September 30, 2016, the types of financial assets and liabilities the Company carried at fair value hierarchy Level 1 included marketable equity securities with readily available market values.
Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. As of September 30, 2016, the types of financial assets and liabilities the Company carried at fair value hierarchy Level 2 included agency bonds, collateralized mortgage obligations, mortgage backed securities, municipal bonds and derivatives.
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are supported by little or no market activity or by the entity’s own assumptions. As of September 30, 2016, the Company valued certain financial assets including one corporate subordinated debenture, measured on both a recurring and a non-recurring basis, at fair value hierarchy Level 3.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.
Fair Value on a Recurring Basis
The Company measures certain assets at fair value on a recurring basis, as described below.
Investment Securities Available-for-Sale
Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include U.S. agency securities, mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.
Derivative Assets and Liabilities
Derivative instruments held or issued by the Company for risk management purposes are traded in over-the-counter markets where quoted market prices are not readily available. For those derivatives, the Company measures fair value using models that use primarily market observable inputs, such as yield curves and option volatilities, and include the value associated with counterparty credit risk. The Company classifies derivative instruments held or issued for risk management purposes as Level 2. As of September 30, 2016 and December 31, 2015, the Company’s derivative instruments consist solely of interest rate caps.
Below is a table that presents information about assets measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
The table below summarizes the Company’s activity in investment securities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2016.
Fair Value on a Nonrecurring Basis
The Company measures certain assets at fair value on a nonrecurring basis, as described below.
Impaired Loans
The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures the impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. Impaired loans require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2. When current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3. Impaired loans totaled $3.5 million and $3.9 million at September 30, 2016 and December 31, 2015, respectively.
Other Real Estate Owned
Other real estate owned, which includes foreclosed assets, is adjusted to fair value upon transfer of loans and premises to other real estate. Subsequently, other real estate owned is carried at the lower of carrying value or fair value.
At the date of transfer, losses are charged to the allowance for credit losses. Subsequent write-downs are charged to expense in the period they are incurred.
Below is a table that presents information about assets measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015:
For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of September 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:
The Company provides certain disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.
In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Accordingly, certain financial instruments and all nonfinancial instruments are excluded from disclosure. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
Cash and Due from Banks
The carrying amounts for cash and due from banks approximate fair value because of the short maturities of those instruments.
Federal Home Loan Bank Stock
The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of such Federal Home Loan Bank stock.
Bank-owned life insurance
The carrying value of bank-owned life insurance approximates fair value because this investment is carried at cash surrender value, as determined by the insurer.
Loans
The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Deposits
The fair value of demand deposits is the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting expected cash flows using the rates currently offered for instruments of similar remaining maturities.
Accrued Interest
The carrying amount is a reasonable estimate of fair value.
Short-Term Borrowings and Long-Term Debt
The fair values are based on discounting expected cash flows using the current interest rates for debt with the same or similar remaining maturities and collateral requirements.
Financial Instruments with Off-Balance Sheet Risk
With regard to financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments.
The following table presents the estimated fair values and carrying amounts of the Company’s financial instruments, none of which are held for trading purposes, at September 30, 2016 and December 31, 2015:
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8. SUPPLEMENTAL CASH FLOW DISCLOSURE |
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9. HOLDING COMPANY LINE |
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Sep. 30, 2016 | |
Holding Company Line | |
HOLDING COMPANY LINE | In the third quarter of 2016, the Company entered into a $20.0 million secured holding company line of credit with an unaffiliated institution. The terms of the note include interest at prime plus 0.50% and will expire in September 2017. The line is secured by 100% of the stock of the Bank owned by the Company. The Company has not drawn on the note and has no balance at September 30, 2016. |
10. ISSUANCE OF COMMON STOCK |
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Sep. 30, 2016 | |
Issuance Of Common Stock | |
ISSUANCE OF COMMON STOCK | During the second quarter of 2016, the Company issued 19,145 shares of common stock to certain employees under its long-term stock-based incentive compensation plan. During the third quarter of 2016, there were 1,352 shares of common stock previously issued to certain employees under its long-term stock-based incentive compensation plan which were forfeited.
In addition, during the third quarter of 2016, the Company issued 1,528 shares to employees under its employee stock purchase plan.
On June 21, 2016, the Company sold a total of 845,588 shares of common stock in our initial public offering at an initial public offering price of $34.00 per share. The Company received net proceeds as a result of the offering of $26.4 million. Of the net proceeds, $3.8 million was deployed to repay the remaining balance on corporate borrowings with the remainder deposited into the Bank for utilization in strategic growth and initiatives. |
11. SUBSEQUENT EVENTS |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date the financial statements were available to be issued and no subsequent events occurred requiring accrual or disclosure. |
2. BASIS OF PRESENTATION (Policies) |
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Earnings Per Common Share | Basic and diluted net income per common share have been computed by dividing net income for each period by the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share reflects the potential dilution that could occur if outstanding stock options were exercised.
Basic and diluted net income per common share have been computed based upon net income as presented in the accompanying unaudited consolidated statements of income divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below:
Weighted average anti-dilutive stock options and unvested restricted shares excluded from the computation of diluted earnings per share are as follows:
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Comprehensive Income | The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income.
The Company’s only two components of other comprehensive income are unrealized gains and losses on investment securities available-for-sale, net of income taxes and unrealized gains and losses on cash flow hedges, net of income taxes. Information concerning the Company’s accumulated other comprehensive income for the nine months ended September 30, 2016 and for the year ended December 31, 2015, respectively is as follows:
The accumulated balances related to each component of other accumulated comprehensive income (loss) are as follows:
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Recent Accounting Pronouncements | In February 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted (including during an interim period), provided that the guidance is applied as of the beginning of the annual period containing the adoption date. The Company does not expect these amendments to have a material effect on its financial statements.
In April 2015, the FASB issued guidance that will require debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This update affects disclosures related to debt issuance costs but does not affect existing recognition and measurement guidance for these items. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company does not expect these amendments to have a material effect on its financial statements.
In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.
In August 2015, the FASB deferred the effective date of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a full retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.
In August 2015, the FASB issued amendments to the Interest topic of the Accounting Standards Codification (the “ASC”) to clarify the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The amendments were effective upon issuance. The Company does not expect these amendments to have a material effect on its financial statements.
In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its financial statements.
In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effect that implementation of the new standard will have on its financial statements.
In March 2016, the FASB amended the Derivatives and Hedging topic of the Accounting Standards Codification to clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments will be effective for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company will apply the guidance prospectively to each period presented. The Company does not expect these amendments to have a material effect on its financial statements.
In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.
In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its financial statements.
In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.
In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
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Reclassifications | Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 presentation. The reclassifications had no effect on total assets, net income or stockholders' equity as previously reported. |
2. BASIS OF PRESENTATION (Tables) |
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Basis Of Presentation Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares used in the computation of earnings per share |
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Anti-dilutive shares |
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Accumulated other comprehensive income |
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Balances related to each component of other comprehensive income (loss) |
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3. INVESTMENT SECURITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investment Securities Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of available-for-sale securities |
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Fair value of investment securities available for sale by contractual maturity |
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Current fair value and associated unrealized losses on investments in securities with unrealized losses |
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Investment securities in an unrealized loss position |
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Securities gains for the periods |
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4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) |
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Loans And Allowance For Loan Losses Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of loans |
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Changes in the allowance for loan losses |
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Allowance for loan losses |
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Performing and nonperforming TDRs |
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Impaired loans |
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Average recorded investment balance of impaired loans |
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Non-accrual loans |
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Age analysis of past due loans, by loan type |
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Credit risk profile of each loan type based on internally assigned risk grade |
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5. OFF-BALANCE SHEET RISK (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off-balance Sheet Risk Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the contract amounts exposed to off-balance sheet credit risk |
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6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives And Financial Instruments Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash flow hedges |
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Amortization of the premium on the interest rate caps |
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Remaining amortization of the gain associated with the exit of the swaps |
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7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available for sale securities measured at fair value on a recurring basis |
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Fair value measurements of investment securities available for sale using Level 3 significant unobservable inputs |
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Fair value measurements for impaired loans and other real estate on a non-recurring basis |
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Significant unobservable inputs used in the fair value measurements |
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Carrying amount fair value of the Company's financial instruments |
|
8. SUPPLEMENTAL CASH FLOW DISCLOSURE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Disclosure Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow disclosure |
|
2. BASIS OF PRESENTATION (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Shares used in the computation of earnings per share: | ||||
Weighted average number of shares outstanding - basic | 5,406,867 | 4,520,749 | 4,846,574 | 4,502,293 |
Dilutive effect of restricted shares | 32,729 | 45,214 | 35,867 | 47,796 |
Weighted average number of shares outstanding - diluted | 5,439,596 | 4,565,963 | 4,882,441 | 4,550,089 |
2. BASIS OF PRESENTATION (Details 1) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Stock Options | ||||
Anti-dilutive shares excluded from the computation of earnings per share | 80,500 | 91,000 | 80,500 | 91,000 |
Unvested Restricted Shares | ||||
Anti-dilutive shares excluded from the computation of earnings per share | 38,445 | 52,284 | 38,445 | 52,284 |
2. BASIS OF PRESENTATION (Details 2) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Dec. 31, 2014 |
|
Basis Of Presentation Details 2 | ||||
Unrealized gains on securities available-for-sale | $ 4,149 | $ 1,378 | ||
Deferred tax expense | (1,587) | (530) | ||
Other comprehensive income, net of tax | 2,562 | 848 | ||
Unrealized losses on cash flow hedges | (4,371) | (2,779) | ||
Deferred tax benefit | 1,644 | 1,045 | ||
Other comprehensive loss, net of tax | (2,727) | (1,734) | ||
Total other comprehensive income (loss) | $ (165) | $ (886) | $ (1,134) | $ 1,142 |
3. INVESTMENT SECURITIES (Details 4) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Investment Securities Details 4 | ||||
Gross gains on sales of securities available for sale | $ 0 | $ 158 | $ 136 | $ 585 |
Gross losses on sales of securities available for sale | 0 | (13) | (51) | (17) |
Total securities gains | $ 0 | $ 145 | $ 85 | $ 568 |
3. INVESTMENT SECURITIES (Details Narrative) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Pledged to secure repurchase agreements, lines of credit and other borrowings | $ 52,200 | $ 78,400 |
4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Performing TDRs | $ 872 | $ 2,613 |
Nonperforming TDRs | 188 | 190 |
Total TDRs | 1,060 | 2,803 |
Consumer Real Estate | ||
Performing TDRs | 339 | 346 |
Nonperforming TDRs | 60 | 65 |
Commercial and industrial loans (except those secured by real estate) | ||
Performing TDRs | 0 | 47 |
Nonperforming TDRs | 0 | 0 |
Consumer and other | ||
Nonperforming TDRs | 21 | |
Construction and land development | ||
Nonperforming TDRs | 128 | 104 |
Commercial Real Estate | ||
Performing TDRs | $ 533 | $ 2,220 |
4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Average balance | $ 4,093 | $ 5,782 | $ 6,400 | $ 11,088 |
Interest income | 35 | 65 | 100 | 193 |
Construction and land development | ||||
Average balance | 130 | 252 | 229 | 330 |
Interest income | 0 | 0 | 0 | 1 |
Commercial Real Estate | ||||
Average balance | 867 | 4,030 | 2,398 | 9,170 |
Interest income | 10 | 48 | 37 | 139 |
Consumer Real Estate | ||||
Average balance | 947 | 820 | 951 | 825 |
Interest income | 7 | 7 | 15 | 21 |
Commercial and industrial loans (except those secured by real estate) | ||||
Average balance | 2,149 | 657 | 2,802 | 739 |
Interest income | 18 | 10 | 48 | 32 |
Consumer and other | ||||
Average balance | 0 | 23 | 20 | 24 |
Interest income | $ 0 | $ 0 | $ 0 | $ 0 |
4. LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Non-accrual loans | ||
Non-accrual loans | $ 948 | $ 513 |
Consumer Real Estate | ||
Non-accrual loans | ||
Non-accrual loans | 604 | 65 |
Commercial and industrial loans (except those secured by real estate) | ||
Non-accrual loans | ||
Non-accrual loans | 216 | 189 |
Construction and land development | ||
Non-accrual loans | ||
Non-accrual loans | 128 | 238 |
Consumer and other | ||
Non-accrual loans | ||
Non-accrual loans | $ 0 | $ 21 |
5. OFF-BALANCE SHEET RISK (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Line of credit | $ 205,911 | $ 166,760 |
Undisbursed Lines of Credit | ||
Line of credit | 202,012 | 163,572 |
Standby Letters of Credit | ||
Line of credit | $ 3,899 | $ 3,188 |
6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Notational amount | $ 100,000 | $ 100,000 |
Fair value | 1,722 | 3,910 |
Cap 1 - maturing August 2019 | ||
Notational amount | 35,000 | 35,000 |
Fair value | 590 | 1,334 |
Cap 2 - maturing September 2019 | ||
Notational amount | 35,000 | 35,000 |
Fair value | 603 | 1,360 |
Cap 3 - maturing October 2019 | ||
Notational amount | 30,000 | 30,000 |
Fair value | $ 529 | $ 1,216 |
6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 1) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Derivatives And Financial Instruments Details 1 | |
2016 (remaining quarter) | $ 315 |
2017 | 1,779 |
2018 | 2,247 |
2019 | 1,752 |
Total | $ 6,093 |
6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details 2) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Derivatives And Financial Instruments Details 2 | |
2016 (remaining quarter) | $ 19 |
2017 | 74 |
2018 | 74 |
Thereafter | 147 |
Total | $ 314 |
6. DERIVATIVES AND FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Derivatives And Financial Instruments Details Narrative | ||||
Amortization associated with the interest rate caps | $ 257 | $ 45 | $ 598 | $ 64 |
Gains on swaps | $ 19 | $ 38 |
7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Significant Unobservable (Level 3) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Investment Securities Level 3 Valuation | |
Balance, beginning of period | $ 500 |
Purchases | 0 |
Balance, end of period | $ 500 |
7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Impaired loans | $ 2,694 | $ 3,382 |
Other real estate | 5,183 | 5,453 |
Total | $ 7,877 | 8,835 |
Impaired loans [Member] | ||
Valuation Technique | Appraisal value | |
Significant Unobservable Inputs | Appraisals and/or sales of comparable properties | |
Significant Unobservable Inputs | Appraisals discounted 5% to 10% for sales commissions and other holding costs | |
Other real estate [Member] | ||
Valuation Technique | Appraisal value/Comparison sale/Other estimates | |
Significant Unobservable Inputs | Appraisals and/or sales of comparable properties | |
Significant Unobservable Inputs | Appraisals discounted 5% to 10% for sales commissions and other holding costs | |
Level 1 | ||
Impaired loans | $ 0 | 0 |
Other real estate | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Impaired loans | 0 | 0 |
Other real estate | 0 | 0 |
Total | 0 | 0 |
Level 3 | ||
Impaired loans | 2,694 | 3,382 |
Other real estate | 5,183 | 5,453 |
Total | $ 7,877 | $ 8,835 |
8. SUPPLEMENTAL CASH FLOW DISCLOSURE (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Supplemental Disclosures of Cash Flow Information: | ||
Interest paid | $ 6,072 | $ 5,576 |
Income taxes paid | 4,485 | 3,185 |
Supplemental Schedule of Noncash Investing and Financing Activites: | ||
Change in fair value of securities available-for-sale, net of taxes | 2,771 | (934) |
Change in fair value of cash flow hedges, net of taxes | (1,592) | (2,753) |
Transfer from loans to foreclosed real estate | $ 0 | $ 3,300 |
10. ISSUANCE OF COMMON STOCK (Details Narrative) - shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Common stock issued | 5,450,042 | 4,581,334 |
Long-Term Stock Based Compensation Plan | ||
Common stock issued | 19,145 | |
Employee Stock Purchase Plan | ||
Common stock issued | 1,352 |
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