☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland
|
52-1726127
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
|
200 Westgate Circle, Suite 200, Annapolis, Maryland
|
21401
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, par value $.01 per share
|
Nasdaq Capital Market
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐ (Do not
|
Smaller reporting company ☑
|
check if a smaller reporting company)
|
Section
|
Page No.
|
|
PART I
|
||
Item 1
|
1
|
|
Item 1A
|
32
|
|
Item 1B
|
41
|
|
Item 2
|
41
|
|
Item 3
|
41
|
|
Item 4
|
42
|
|
Item 4.1
|
42
|
|
PART II
|
||
Item 5
|
42
|
|
Item 6
|
44
|
|
Item 7
|
48
|
|
Item 7A
|
58
|
|
Item 8
|
58
|
|
Item 9
|
58
|
|
Item 9A
|
58
|
|
Item 9B
|
59
|
|
PART III
|
||
Item 10
|
59
|
|
Item 11
|
60
|
|
Item 12
|
60
|
|
Item 13
|
60
|
|
Item 14
|
60
|
|
PART IV
|
||
Item 15
|
61
|
|
63
|
· | Statements contained in “Item 1A. Risk Factors;” |
· | Statements contained in “Business” concerning strategy, competitive strengths, liquidity and business plans; |
· | Statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the notes to Bancorp’s consolidated financial statements, such as statements concerning allowance for loan losses, liquidity, capital adequacy requirements, unrealized losses, guarantees, the Bank being well-capitalized, and impact of accounting pronouncements; and |
· | Statements as to trends or Bancorp’s or management’s beliefs, expectations and opinions. |
· | Changes in general economic and political conditions and by governmental monetary and fiscal policies; |
· | Changes in the economic conditions of the geographic areas in which Bancorp conducts business; |
· | Changes in interest rates; |
· | A downturn in the real estate markets in which Bancorp conducts business; |
· | The high degree of risk exhibited by Bancorp’s loan portfolio; |
· | Environmental liabilities with respect to properties of which Bancorp has title; |
· | Changes in federal and state regulation, including recent changes in capital requirements; |
· | Bancorp’s ability to estimate loan losses; |
· | Competition; |
· | Breaches in security or interruptions in Bancorp’s information systems, including cyber security risks; |
· | Bancorp’s ability to timely develop and implement technology; |
· | Bancorp’s ability to retain its management team; |
· | Perception of Bancorp in the marketplace; |
· | Bancorp’s ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; and |
· | Terrorist attacks and threats or actual war. |
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Residential mortgage
|
$
|
285,930
|
45.00
|
%
|
$
|
309,461
|
44.91
|
%
|
$
|
258,919
|
39.56
|
%
|
$
|
269,405
|
38.60
|
%
|
$
|
295,876
|
39.78
|
%
|
||||||||||||||||||||
Construction, land acquisition and development
|
77,478
|
12.19
|
%
|
84,325
|
12.24
|
%
|
75,539
|
11.54
|
%
|
71,523
|
10.25
|
%
|
99,122
|
13.32
|
%
|
|||||||||||||||||||||||||
Land
|
28,677
|
4.51
|
%
|
30,426
|
4.42
|
%
|
34,429
|
5.26
|
%
|
50,900
|
7.29
|
%
|
59,649
|
8.02
|
%
|
|||||||||||||||||||||||||
Lines of credit
|
20,188
|
3.18
|
%
|
19,251
|
2.79
|
%
|
21,598
|
3.30
|
%
|
31,428
|
4.50
|
%
|
34,278
|
4.61
|
%
|
|||||||||||||||||||||||||
Commercial real estate
|
174,912
|
27.53
|
%
|
198,539
|
28.81
|
%
|
220,160
|
33.64
|
%
|
222,038
|
31.81
|
%
|
203,010
|
27.29
|
%
|
|||||||||||||||||||||||||
Commercial non-real estate
|
9,296
|
1.46
|
%
|
10,167
|
1.47
|
%
|
8,583
|
1.31
|
%
|
6,120
|
0.88
|
%
|
5,599
|
0.75
|
%
|
|||||||||||||||||||||||||
Home equity
|
24,529
|
3.86
|
%
|
28,750
|
4.17
|
%
|
30,339
|
4.64
|
%
|
34,609
|
4.96
|
%
|
41,309
|
5.56
|
%
|
|||||||||||||||||||||||||
Consumer
|
1,224
|
0.19
|
%
|
1,040
|
0.15
|
%
|
1,185
|
0.18
|
%
|
858
|
0.12
|
%
|
897
|
0.12
|
%
|
|||||||||||||||||||||||||
Loans held for sale
|
13,203
|
2.08
|
%
|
7,165
|
1.04
|
%
|
3,726
|
0.57
|
%
|
11,116
|
1.59
|
%
|
4,128
|
0.55
|
%
|
|||||||||||||||||||||||||
Total gross loans
|
635,437
|
100.00
|
%
|
689,124
|
100.00
|
%
|
654,478
|
100.00
|
%
|
697,997
|
100.00
|
%
|
743,868
|
100.00
|
%
|
|||||||||||||||||||||||||
Deferred loan origination fees and costs, net
|
(2,719
|
)
|
(2,480
|
)
|
(2,131
|
)
|
(2,047
|
)
|
(2,485
|
)
|
||||||||||||||||||||||||||||||
Loans in process
|
(21,101
|
)
|
(36,162
|
)
|
(34,069
|
)
|
(15,647
|
)
|
(18,014
|
)
|
||||||||||||||||||||||||||||||
Allowance for loan losses
|
(8,758
|
)
|
(9,435
|
)
|
(11,739
|
)
|
(17,478
|
)
|
(25,938
|
)
|
||||||||||||||||||||||||||||||
Total loans net
|
$
|
602,859
|
$
|
641,047
|
$
|
606,539
|
$
|
662,825
|
$
|
697,431
|
For the Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(dollars in thousands)
|
||||||||||||
Held for Sale:
|
||||||||||||
Beginning balance
|
$
|
7,165
|
$
|
3,726
|
$
|
11,116
|
||||||
Originations
|
163,347
|
93,999
|
116,788
|
|||||||||
Net sales
|
(157,309
|
)
|
(90,560
|
)
|
(124,178
|
)
|
||||||
Ending balance
|
$
|
13,203
|
$
|
7,165
|
$
|
3,726
|
||||||
Held for investment:
|
||||||||||||
Beginning balance
|
$
|
681,959
|
$
|
650,752
|
$
|
686,881
|
||||||
Originations and purchases
|
119,481
|
138,782
|
132,245
|
|||||||||
Transfers to foreclosed real estate
|
(2,234
|
)
|
(847
|
)
|
(10,341
|
)
|
||||||
Repayments/payoffs
|
(176,972
|
)
|
(106,728
|
)
|
(109,381
|
)
|
||||||
Bulk loan sales
|
-
|
-
|
(48,652
|
)
|
||||||||
Ending balance
|
$
|
622,234
|
$
|
681,959
|
$
|
650,752
|
Interest rate range
|
Percentage of Portfolio
|
|
Less than 5.00%
|
92.4%
|
|
5.00 – 6.00%
|
7.4%
|
|
6.01 – 7.00%
|
0.1%
|
|
7.01 – 8.00%
|
0.0%
|
|
Over 8.00%
|
0.1%
|
|
100.0%
|
Due
Within one
year or less
|
Due after
1 through
5 years
|
Due after
5 years
|
Total
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Residential mortgage*
|
$
|
23,140
|
$
|
27,994
|
$
|
247,999
|
$
|
299,133
|
*
|
|||||||
Construction, land acquisition and development
|
63,921
|
13,557
|
-
|
77,478
|
||||||||||||
Land
|
12,810
|
5,715
|
10,152
|
28,677
|
||||||||||||
Lines of credit
|
12,563
|
7,476
|
149
|
20,188
|
||||||||||||
Commercial real estate
|
13,984
|
46,897
|
114,031
|
174,912
|
||||||||||||
Commercial, non-real estate
|
160
|
2,550
|
6,586
|
9,296
|
||||||||||||
Home equity
|
-
|
-
|
24,529
|
24,529
|
||||||||||||
Consumer
|
29
|
986
|
209
|
1,224
|
||||||||||||
Total
|
$
|
126,607
|
$
|
105,175
|
$
|
403,655
|
$
|
635,437
|
Fixed
|
Floating
|
Total
|
||||||||||
(dollars in thousands)
|
||||||||||||
Residential mortgage*
|
$
|
121,240
|
$
|
154,753
|
$
|
275,993
|
*
|
|||||
Construction, land acquisition and development
|
6,492
|
7,065
|
13,557
|
|||||||||
Land
|
4,868
|
10,999
|
15,867
|
|||||||||
Lines of credit
|
-
|
7,625
|
7,625
|
|||||||||
Commercial real estate
|
61,989
|
98,939
|
160,928
|
|||||||||
Commercial, non-real estate
|
5,730
|
3,406
|
9,136
|
|||||||||
Home equity
|
-
|
24,529
|
24,529
|
|||||||||
Consumer
|
1,195
|
-
|
1,195
|
|||||||||
Total
|
$
|
201,514
|
$
|
307,316
|
$
|
508,830
|
· | Levels and trends in delinquencies and nonaccruals; |
· | Inherent risk in the loan portfolio; |
· | Trends in volume and terms of the loan; |
· | Effects of any change in lending policies and procedures; |
· | Experience, ability and depth of management; |
· | National and local economic trends and conditions; and |
· | Effect of any changes in concentration of credit. |
· | Loans that are 90 days or more in arrears (nonaccrual loans); or |
· | Loans where, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. |
At December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Loans accounted for on a non-accrual basis:
|
||||||||||||||||||||
Residential mortgage
|
$
|
3,191
|
$
|
6,052
|
$
|
6,802
|
$
|
14,436
|
$
|
8,912
|
||||||||||
Construction, land acquisition and development
|
244
|
115
|
814
|
8,564
|
10,997
|
|||||||||||||||
Land
|
277
|
847
|
183
|
4,688
|
6,813
|
|||||||||||||||
Lines of credit
|
483
|
388
|
304
|
1,877
|
2,019
|
|||||||||||||||
Commercial real estate
|
2,681
|
652
|
1,155
|
5,793
|
2,140
|
|||||||||||||||
Commercial non-real estate
|
-
|
1,775
|
-
|
111
|
5
|
|||||||||||||||
Home Equity
|
2,098
|
3,016
|
1,777
|
2,000
|
343
|
|||||||||||||||
Consumer
|
-
|
-
|
-
|
26
|
203
|
|||||||||||||||
Total non-accrual loans
|
$
|
8,974
|
$
|
12,845
|
$
|
11,035
|
$
|
37,495
|
$
|
31,432
|
||||||||||
Accruing loans greater than 90 days past due
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Foreclosed real-estate
|
$
|
1,744
|
$
|
1,947
|
$
|
8,972
|
$
|
11,441
|
$
|
19,932
|
||||||||||
Total non-performing assets
|
$
|
10,718
|
$
|
14,792
|
$
|
20,007
|
$
|
48,936
|
$
|
51,364
|
||||||||||
Nonaccrual troubled debt restructures (included above)
|
$
|
1,329
|
$
|
2,641
|
$
|
2,091
|
$
|
5,635
|
$
|
19,351
|
||||||||||
Accruing troubled debt restructurings
|
$
|
24,386
|
$
|
27,724
|
$
|
34,827
|
$
|
56,448
|
$
|
40,424
|
||||||||||
Total non-accrual loans to net loans
|
1.5
|
%
|
2.0
|
%
|
1.8
|
%
|
5.8
|
%
|
4.5
|
%
|
||||||||||
Allowance for loan losses to total non-performing loans, including loans contractually past due 90 days or more
|
97.6
|
%
|
73.5
|
%
|
106.4
|
%
|
46.6
|
%
|
82.5
|
%
|
||||||||||
Total non-accrual and accruing loans greater than 90 days past due to total assets
|
1.2
|
%
|
1.7
|
%
|
1.4
|
%
|
4.4
|
%
|
3.5
|
%
|
||||||||||
Total non-performing assets to total assets
|
1.4
|
%
|
1.9
|
%
|
2.5
|
%
|
5.7
|
%
|
5.7
|
%
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||||||||||||||||
Allowance
Amount |
Percentage of
Loans in each |
Allowance
Amount |
Percentage of
Loans in each |
Allowance
Amount |
Percentage of
Loans in each |
Allowance
Amount |
Percentage of
Loans in each |
Allowance
Amount |
Percentage of
Loans in each |
|||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
Residential mortgage
|
$
|
4,188
|
45.95
|
%
|
$
|
4,664
|
45.38
|
%
|
$
|
6,291
|
39.79
|
%
|
$
|
8,418
|
39.22
|
%
|
$
|
12,303
|
40.00
|
%
|
||||||||||||||||||||
Construction, land acquisition and development
|
446
|
12.45
|
%
|
362
|
12.37
|
%
|
414
|
11.61
|
%
|
2,120
|
10.41
|
%
|
3,916
|
13.40
|
%
|
|||||||||||||||||||||||||
Land
|
510
|
4.61
|
%
|
646
|
4.46
|
%
|
1,346
|
5.29
|
%
|
2,245
|
7.41
|
%
|
2,405
|
8.06
|
%
|
|||||||||||||||||||||||||
Lines of credit
|
57
|
3.24
|
%
|
12
|
2.82
|
%
|
36
|
3.32
|
%
|
87
|
4.57
|
%
|
725
|
4.63
|
%
|
|||||||||||||||||||||||||
Commercial real estate
|
2,792
|
28.11
|
%
|
2,504
|
29.11
|
%
|
2,512
|
33.83
|
%
|
3,295
|
32.33
|
%
|
4,157
|
27.44
|
%
|
|||||||||||||||||||||||||
Commercial non-real estate
|
234
|
1.50
|
%
|
280
|
1.49
|
%
|
135
|
1.32
|
%
|
46
|
0.89
|
%
|
169
|
0.76
|
%
|
|||||||||||||||||||||||||
Home equity
|
528
|
3.94
|
%
|
963
|
4.22
|
%
|
1,003
|
4.66
|
%
|
1,254
|
5.04
|
%
|
2,257
|
5.58
|
%
|
|||||||||||||||||||||||||
Consumer
|
3
|
0.20
|
%
|
4
|
0.15
|
%
|
2
|
0.18
|
%
|
13
|
0.13
|
%
|
6
|
0.13
|
%
|
|||||||||||||||||||||||||
Total
|
$
|
8,758
|
100.00
|
%
|
$
|
9,435
|
100.00
|
%
|
$
|
11,739
|
100.00
|
%
|
$
|
17,478
|
100.00
|
%
|
$
|
25,938
|
100.00
|
%
|
At of or for the Year Ended
December 31
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||
Average loans outstanding, net*
|
$
|
618,309
|
$
|
622,935
|
$
|
648,959
|
$
|
692,831
|
$
|
753,926
|
||||||||||
Total gross loans outstanding at end of period*
|
$
|
635,437
|
$
|
689,124
|
$
|
654,478
|
$
|
697,997
|
$
|
743,868
|
||||||||||
Total net loans outstanding at end of period*
|
$
|
602,859
|
$
|
641,047
|
$
|
606,539
|
$
|
662,825
|
$
|
697,431
|
||||||||||
Allowance balance at beginning of period*
|
$
|
9,435
|
$
|
11,739
|
$
|
17,478
|
$
|
25,938
|
$
|
29,871
|
||||||||||
Provision for loan losses
|
(280
|
)
|
831
|
16,520
|
765
|
4,612
|
||||||||||||||
Actual charge-offs
|
||||||||||||||||||||
Residential real estate
|
454
|
844
|
7,919
|
4,299
|
4,421
|
|||||||||||||||
Construction, land acquisition and development
|
-
|
63
|
2,439
|
1,395
|
1,503
|
|||||||||||||||
Land
|
-
|
-
|
4,529
|
1,624
|
1,054
|
|||||||||||||||
Lines of credit
|
-
|
1,324
|
521
|
182
|
-
|
|||||||||||||||
Commercial real estate
|
80
|
92
|
8,343
|
416
|
811
|
|||||||||||||||
Commercial non-real estate
|
154
|
1,410
|
687
|
20
|
-
|
|||||||||||||||
Home Equity
|
834
|
261
|
809
|
1,407
|
39
|
|||||||||||||||
Consumer
|
-
|
-
|
46
|
10
|
717
|
|||||||||||||||
Total charge-offs
|
1,522
|
3,994
|
25,293
|
9,353
|
8,545
|
|||||||||||||||
Recoveries
|
||||||||||||||||||||
Residential real estate
|
629
|
306
|
1,034
|
18
|
-
|
|||||||||||||||
Construction, land acquisition and development
|
-
|
-
|
66
|
-
|
-
|
|||||||||||||||
Land
|
49
|
349
|
1,773
|
-
|
-
|
|||||||||||||||
Lines of credit
|
235
|
15
|
60
|
-
|
-
|
|||||||||||||||
Commercial real estate
|
-
|
25
|
54
|
-
|
-
|
|||||||||||||||
Commercial non-real estate
|
49
|
159
|
8
|
110
|
-
|
|||||||||||||||
Home Equity
|
163
|
-
|
15
|
-
|
-
|
|||||||||||||||
Consumer
|
-
|
5
|
24
|
-
|
-
|
|||||||||||||||
Total recoveries
|
1,125
|
859
|
3,034
|
128
|
-
|
|||||||||||||||
Net charge offs
|
397
|
3,135
|
22,259
|
9,225
|
8,545
|
|||||||||||||||
Allowance balance at end of period
|
$
|
8,758
|
$
|
9,435
|
$
|
11,739
|
$
|
17,478
|
$
|
25,938
|
||||||||||
Net charge-offs as a percent of average loans*
|
0.06
|
%
|
0.50
|
%
|
3.43
|
%
|
1.33
|
%
|
1.13
|
%
|
||||||||||
Allowance for loan losses to total gross loans at end of period*
|
1.38
|
%
|
1.37
|
%
|
1.79
|
%
|
2.50
|
%
|
3.49
|
%
|
||||||||||
Allowance for loan losses to net loans at end of period*
|
1.45
|
%
|
1.47
|
%
|
1.94
|
%
|
2.64
|
%
|
3.72
|
%
|
At December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(dollars in thousands)
|
||||||||||||
US Treasury securities
|
$
|
21,057
|
$
|
27,140
|
$
|
31,235
|
||||||
US Agency securities
|
20,011
|
17,044
|
11,123
|
|||||||||
US Government sponsored mortgage-backed securities
|
35,065
|
15,432
|
2,303
|
|||||||||
Total Investment Securities Held to Maturity
|
$
|
76,133
|
$
|
59,616
|
$
|
44,661
|
One Year or Less
|
More than One to
Five Years
|
More than Five to
Ten Years
|
More than
Ten Years
|
Total Investment Securities
|
||||||||||||||||||||||||||||||||||||||||
Amortized
Cost |
Weighted
Average |
Amortized
Cost |
Weighted
Average |
Amortized
Cost |
Weighted
Average |
Amortized
Cost |
Weighted
Average |
Amortized
Cost |
Weighted
Average |
Fair
Value |
||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||||||
US Treasury securities
|
$
|
9,047
|
1.65
|
%
|
$
|
12,010
|
1.77
|
%
|
$
|
-
|
-
|
$
|
-
|
-
|
$
|
21,057
|
1.72
|
%
|
$
|
21,325
|
||||||||||||||||||||||||
US Agency securities
|
2,013
|
0.87
|
%
|
16,043
|
1.39
|
%
|
1,955
|
3.15
|
%
|
-
|
-
|
20,011
|
1.51
|
%
|
20,074
|
|||||||||||||||||||||||||||||
US Government sponsored mortgage-backed securities*
|
44
|
0.54
|
%
|
20,716
|
1.86
|
%
|
14,305
|
2.25
|
%
|
-
|
-
|
35,065
|
2.02
|
%
|
34,911
|
|||||||||||||||||||||||||||||
Total securities
|
$
|
11,104
|
1.50
|
%
|
$
|
48,769
|
1.68
|
%
|
$
|
16,260
|
2.36
|
%
|
-
|
-
|
$
|
76,133
|
1.80
|
%
|
$
|
76,310
|
2015
|
2014
|
2013
|
||||||||||
(dollars in thousands)
|
||||||||||||
NOW accounts
|
$
|
56,096
|
$
|
54,827
|
$
|
40,067
|
||||||
Money market accounts
|
47,690
|
39,579
|
38,619
|
|||||||||
Passbooks
|
111,992
|
126,062
|
164,504
|
|||||||||
Certificates of deposit
|
277,778
|
298,489
|
301,355
|
|||||||||
Non-interest bearing accounts
|
30,215
|
24,857
|
26,704
|
|||||||||
Total deposits
|
$
|
523,771
|
$
|
543,814
|
$
|
571,249
|
Jumbo Certificates
of Deposit
|
||||
Time Remaining Until Maturity
|
(dollars in thousands)
|
|||
Less than three months
|
$
|
21,635
|
||
3 months to 6 months
|
21,721
|
|||
6 months to 12 months
|
39,510
|
|||
Greater than 12 months
|
53,111
|
|||
Total
|
$
|
135,977
|
Actual
|
Required For Capital
Adequacy Purposes
|
Required To Be Well
Capitalized Under Prompt
Corrective Action Provisions
|
||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||
Tangible (1)
|
$
|
112,959
|
14.8
|
%
|
$
|
11,423
|
1.50
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Tier 1 capital (2)
|
112,959
|
19.6
|
%
|
34,626
|
6.00
|
%
|
$
|
46,168
|
8.00
|
%
|
||||||||||||||
Common Equity Tier 1(2) )
|
112,959
|
19.6
|
%
|
25,970
|
4.50
|
%
|
37,512
|
6.50
|
%
|
|||||||||||||||
Leverage (1)
|
112,959
|
14.8
|
%
|
30,461
|
4.00
|
%
|
38,076
|
5.00
|
%
|
|||||||||||||||
Total (2)
|
120,193
|
20.8
|
%
|
46,168
|
8.00
|
%
|
57,710
|
10.00
|
%
|
|||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||
Tangible (1)
|
$
|
106,916
|
13.8
|
%
|
$
|
11,590
|
1.50
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Tier 1 capital (2)
|
106,916
|
19.4
|
%
|
N/
|
A
|
N/
|
A
|
$
|
33,081
|
6.00
|
%
|
|||||||||||||
Leverage (1)
|
106,916
|
13.8
|
%
|
30,906
|
4.00
|
%
|
38,633
|
5.00
|
%
|
|||||||||||||||
Total (2)
|
113,848
|
20.6
|
%
|
44,108
|
8.00
|
%
|
55,135
|
10.00
|
%
|
· | An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a tier 1 risk-based capital ratio of 8.0% or greater, a common equity tier 1 risk-based capital ratio of 6.5% or greater and a leverage ratio of 5.0% or greater. |
· | An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a tier 1 risk-based capital ratio of 6.0% or greater, a common equity tier 1 risk-based capital ratio of 4.5% or greater and a leverage ratio of 4.0% or greater. |
· | An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a tier 1 risk-based capital ratio of less than 6.0%, a common equity tier 1 risk-based capital ratio of less than 4.5% or a leverage ratio of less than 4.0%. |
· | An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a tier 1 risk-based capital ratio of less than 4.0%, a common equity tier 1 risk-based capital ratio of less than 3.0% or a leverage ratio of less than 3.0%. |
· | An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. |
· | initial and annual notices to customers about their privacy policies, describing the conditions under which they may disclose nonpublic personal information to nonaffiliated third parties and affiliates; and |
· | a reasonable method for customers to “opt out” of disclosures to nonaffiliated third parties. |
· | the association is not eligible for expedited treatment of its filings with the OCC; |
· | the total amount of all of capital distributions, including the proposed capital distribution, for the applicable calendar year exceeds its net income for that year to date plus retained net income for the preceding two years; |
· | the association would not be at least adequately capitalized, as determined under the capital requirements described above under “Prompt Corrective Action,” following the distribution; or |
· | the proposed capital distribution would violate any applicable statute, regulation, or regulatory agreement or condition. |
· | would not be well capitalized, as determined under the capital requirements described above under “Prompt Corrective Action,” following the distribution; |
· | the proposed capital distribution would reduce the amount of or retire any part of the savings association's common or preferred stock or retire any part of debt instruments such as notes or debentures included in capital, other than regular payments required under a debt instrument; or |
· |
the savings association is a subsidiary of a savings and loan holding company, is filing a notice of the distribution with the FRB and is not otherwise required to file an application or notice regarding the proposed distribution with the OCC, in which case an information copy of the notice filed by the holding company with the FRB needs to be simultaneously provided to the OCC.
|
·
|
following the distribution, the savings association will be undercapitalized, significantly undercapitalized, or critically undercapitalized, as determined under the capital requirements described above under “Prompt Corrective Action;
|
·
|
the proposed distribution raises safety or soundness concerns; or
|
·
|
the proposed capital distribution would violate any applicable statute, regulation or regulatory agreement or condition.
|
· | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; |
· | Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one-to four family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; |
· | Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; |
· | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; |
· | Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; |
· | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; |
· | Truth in Savings Act; and |
· | rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws. |
· | Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; |
· | Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and |
· | The USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs, and due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and the Office of Foreign Assets Control regulations. |
· | an increase in loan delinquencies, problem assets and foreclosures; |
· | a decline in demand for our products and services; |
· | a decrease in low cost or non-interest-bearing deposits; and |
· | a decline in the value of the collateral for our loans, which in turn may reduce customers’ borrowing capacities, and reduce the value of assets and collateral supporting our existing loans. |
· | the ability of our mortgagors to make mortgage payments, |
· | the ability of our borrowers to attract and retain buyers or tenants, which may in turn be affected by local conditions such as an oversupply of space or a reduction in demand for rental space in the area, the attractiveness of properties to buyers and tenants, and competition from other available space, or by the ability of the owner to pay leasing commissions, provide adequate maintenance and insurance, pay tenant improvements costs and make other tenant concessions, |
· | interest rate levels and the availability of credit to refinance loans at or prior to maturity, and |
· | increased operating costs, including energy costs, real estate taxes and costs of compliance with environmental controls and regulations. |
· | a decrease in deposits; |
· | an increase in loan delinquencies; |
· | an increase in problem assets and foreclosures; |
· | a decrease in the demand for our products and services; and |
· | a decrease in the value of collateral for loans, especially real estate, and reduction in customers’ borrowing capacities. |
2015
|
2014
|
||||||||||||||||||||||||
Stock Price Range
|
Per Share
|
Stock Price Range
|
Per Share
|
||||||||||||||||||||||
Quarter
|
Low
|
High
|
Dividend
|
Quarter
|
Low
|
High
|
Dividend
|
||||||||||||||||||
1st
|
$
|
4.25
|
$
|
4.95
|
$
|
-
|
1st
|
$
|
4.31
|
$
|
5.12
|
$
|
-
|
||||||||||||
2nd
|
4.61
|
5.12
|
-
|
2nd
|
4.41
|
4.93
|
-
|
||||||||||||||||||
3rd
|
4.65
|
5.09
|
-
|
3rd
|
4.26
|
4.90
|
-
|
||||||||||||||||||
4th
|
4.66
|
5.88
|
-
|
4th
|
4.30
|
4.85
|
-
|
At December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(dollars in thousands, except per share information)
|
||||||||||||||||||||
Balance Sheet Data
|
||||||||||||||||||||
Total assets
|
$
|
762,079
|
$
|
776,328
|
$
|
799,603
|
$
|
852,118
|
$
|
901,163
|
||||||||||
Total loans, net
|
589,656
|
633,882
|
602,813
|
651,709
|
693,303
|
|||||||||||||||
Investment securities held to maturity
|
76,133
|
59,616
|
44,661
|
34,066
|
40,357
|
|||||||||||||||
Non-performing loans
|
8,974
|
12,845
|
11,035
|
37,495
|
31,432
|
|||||||||||||||
Total non-performing assets
|
10,718
|
14,792
|
20,007
|
48,936
|
51,364
|
|||||||||||||||
Deposits
|
523,771
|
543,814
|
571,249
|
599,394
|
652,757
|
|||||||||||||||
Long-term debt
|
115,000
|
115,000
|
115,000
|
115,000
|
115,000
|
|||||||||||||||
Total liabilities
|
675,623
|
692,518
|
716,834
|
743,122
|
794,698
|
|||||||||||||||
Stockholders’ equity
|
86,456
|
83,810
|
82,769
|
108,996
|
106,465
|
|||||||||||||||
Book value per common share
|
$
|
5.93
|
$
|
5.68
|
$
|
5.57
|
$
|
8.18
|
$
|
7.93
|
||||||||||
Common shares outstanding
|
10,088,879
|
10,067,379
|
10,066,679
|
10,066,679
|
10,066,679
|
|||||||||||||||
Other Data:
|
||||||||||||||||||||
Number of:
|
||||||||||||||||||||
Full service retail banking facilities
|
4
|
4
|
4
|
4
|
4
|
|||||||||||||||
Full-time equivalent employees
|
152
|
150
|
160
|
142
|
127
|
For the Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(dollars in thousands, except per share information)
|
||||||||||||||||||||
Interest income
|
$
|
31,153
|
$
|
31,816
|
$
|
33,792
|
$
|
39,057
|
$
|
44,501
|
||||||||||
Interest expense
|
8,992
|
8,634
|
9,184
|
12,502
|
15,587
|
|||||||||||||||
Net interest income
|
22,161
|
23,182
|
24,608
|
26,555
|
28,914
|
|||||||||||||||
Provision for loan losses
|
(280
|
)
|
831
|
16,520
|
765
|
4,612
|
||||||||||||||
Net interest income after provision for loan losses
|
22,441
|
22,351
|
8,088
|
25,790
|
24,302
|
|||||||||||||||
Non-interest income
|
6,110
|
4,325
|
5,529
|
4,123
|
2,510
|
|||||||||||||||
Non-interest expense
|
23,926
|
23,736
|
30,072
|
23,527
|
24,050
|
|||||||||||||||
Income (loss) before income tax provision
|
4,625
|
2,940
|
(16,455
|
)
|
6,386
|
2,762
|
||||||||||||||
Provision for income taxes
|
90
|
31
|
8,710
|
2,658
|
1,210
|
|||||||||||||||
Net income (loss)
|
$
|
4,535
|
$
|
2,909
|
$
|
(25,165
|
)
|
$
|
3,728
|
$
|
1,552
|
|||||||||
Per Common Share Data:
|
||||||||||||||||||||
Basic earnings (loss) per common share
|
$
|
0.21
|
$
|
0.06
|
$
|
(2.64
|
)
|
$
|
0.22
|
$
|
(0.02
|
)
|
||||||||
Diluted earnings (loss) per common share
|
$
|
0.21
|
$
|
0.06
|
$
|
(2.64
|
)
|
$
|
0.22
|
$
|
(0.02
|
)
|
||||||||
Cash dividends declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Weighted number of common shares outstanding basic
|
10,083,942
|
10,067,379
|
10,066,679
|
10,066,679
|
10,066,679
|
|||||||||||||||
Weighted number of common shares outstanding diluted
|
10,112,653
|
10,096,387
|
10,066,679
|
10,066,679
|
10,066,679
|
For the Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
Performance Ratios:
|
||||||||||||||||||||
Return on average assets
|
0.59
|
%
|
0.37
|
%
|
(3.00
|
%)
|
0.42
|
%
|
0.17
|
%
|
||||||||||
Return on average equity
|
5.45
|
%
|
3.55
|
%
|
(24.45
|
%)
|
3.50
|
%
|
1.47
|
%
|
||||||||||
Dividend payout ratio
|
-
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
-
|
%
|
||||||||||
Net interest margin
|
3.18
|
%
|
3.26
|
%
|
3.28
|
%
|
3.33
|
%
|
3.39
|
%
|
||||||||||
Interest rate spread
|
3.14
|
%
|
3.24
|
%
|
3.24
|
%
|
3.27
|
%
|
3.34
|
%
|
||||||||||
Non-interest expense to average assets
|
3.09
|
%
|
3.07
|
%
|
3.64
|
%
|
2.69
|
%
|
2.56
|
%
|
||||||||||
Efficiency ratio*
|
83.82
|
%
|
86.25
|
%
|
79.73
|
%
|
66.00
|
%
|
59.32
|
%
|
||||||||||
Asset Quality Ratios:
|
||||||||||||||||||||
Average equity to average assets
|
10.75
|
%
|
10.42
|
%
|
12.28
|
%
|
12.11
|
%
|
11.27
|
%
|
||||||||||
Nonperforming assets to total assets at end of period
|
1.41
|
%
|
1.91
|
%
|
2.50
|
%
|
5.74
|
%
|
5.70
|
%
|
||||||||||
Nonperforming loans to total gross loans at end of period**
|
1.41
|
%
|
1.86
|
%
|
1.69
|
%
|
5.37
|
%
|
4.23
|
%
|
||||||||||
Allowance for loan losses to net loans at end of period**
|
1.45
|
%
|
1.47
|
%
|
1.95
|
%
|
2.68
|
%
|
3.74
|
%
|
||||||||||
Allowance for loan losses to nonperforming loans at end of period**
|
97.59
|
%
|
73.45
|
%
|
106.38
|
%
|
46.61
|
%
|
82.52
|
%
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||||||||||||||
Average
Volume |
Interest
|
Yield/Cost
|
Average
Volume |
Interest
|
Yield/Cost
|
Average
Volume |
Interest
|
Yield/Cost
|
||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Loans (1)
|
$
|
618,309
|
$
|
29,734
|
4.81
|
%
|
$
|
622,935
|
$
|
30,574
|
4.91
|
%
|
$
|
648,959
|
$
|
32,838
|
5.06
|
%
|
||||||||||||||||||
Investments (2)
|
43,254
|
709
|
1.64
|
%
|
44,468
|
746
|
1.68
|
%
|
33,797
|
601
|
1.78
|
%
|
||||||||||||||||||||||||
Mortgage-backed securities
|
25,227
|
395
|
1.57
|
%
|
9,518
|
205
|
2.15
|
%
|
1,269
|
35
|
2.76
|
%
|
||||||||||||||||||||||||
Other interest-earning assets (3)
|
10,806
|
315
|
2.92
|
%
|
33,560
|
291
|
0.87
|
%
|
65,436
|
318
|
0.49
|
%
|
||||||||||||||||||||||||
Total interest-earning assets
|
697,596
|
31,153
|
4.47
|
%
|
710,481
|
31,816
|
4.48
|
%
|
749,461
|
33,792
|
4.51
|
%
|
||||||||||||||||||||||||
Non-interest earning assets
|
75,505
|
75,125
|
88,431
|
|||||||||||||||||||||||||||||||||
Total Assets
|
$
|
773,101
|
$
|
785,606
|
$
|
837,892
|
||||||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||||||
Savings and checking deposits
|
$
|
244,810
|
635
|
0.26
|
%
|
$
|
261,513
|
417
|
0.16
|
%
|
$
|
273,750
|
768
|
0.28
|
%
|
|||||||||||||||||||||
Certificates of deposits
|
293,174
|
3,415
|
1.16
|
%
|
293,682
|
3,511
|
1.20
|
%
|
311,654
|
3,938
|
1.26
|
%
|
||||||||||||||||||||||||
Borrowings
|
139,124
|
4,942
|
3.55
|
%
|
139,122
|
4,706
|
3.38
|
%
|
139,119
|
4,478
|
3.22
|
%
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
677,108
|
8,992
|
1.33
|
%
|
694,317
|
8,634
|
1.24
|
%
|
724,523
|
9,184
|
1.27
|
%
|
||||||||||||||||||||||||
Non-interest bearing liabilities
|
12,857
|
9,457
|
10,450
|
|||||||||||||||||||||||||||||||||
Stockholders' equity
|
83,136
|
81,832
|
102,919
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity
|
$
|
773,101
|
$
|
785,606
|
$
|
837,892
|
||||||||||||||||||||||||||||||
Net interest income and Interest rate spread
|
$
|
22,161
|
3.14
|
%
|
$
|
23,182
|
3.24
|
%
|
$
|
24,608
|
3.24
|
%
|
||||||||||||||||||||||||
Net interest margin
|
3.18
|
%
|
3.26
|
%
|
3.28
|
%
|
||||||||||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
103.03
|
%
|
102.33
|
%
|
103.44
|
%
|
Year ended December 31, 2015
|
Year ended December 31, 2014
|
|||||||||||||||||||||||
vs.
|
vs.
|
|||||||||||||||||||||||
Year ended December 31, 2014
|
Year ended December 31, 2013
|
|||||||||||||||||||||||
Total
|
Changes Due to
|
Total
|
Changes Due to
|
|||||||||||||||||||||
Change
|
Volume (1)
|
Rate (1)
|
Change
|
Volume (1)
|
Rate (1)
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Interest-earning assets
|
||||||||||||||||||||||||
Loans
|
$
|
(840
|
)
|
$
|
(223
|
)
|
$
|
(617
|
)
|
$
|
(2,264
|
)
|
$
|
(1,277
|
)
|
$
|
(987
|
)
|
||||||
Investments
|
(37
|
)
|
(20
|
)
|
(17
|
)
|
145
|
179
|
(34
|
)
|
||||||||||||||
Mortgage-backed securities
|
190
|
246
|
(56
|
)
|
170
|
178
|
(8
|
)
|
||||||||||||||||
Other interest-earning assets
|
24
|
(663
|
)
|
687
|
(27
|
)
|
(277
|
)
|
250
|
|||||||||||||||
Total interest income
|
(663
|
)
|
(660
|
)
|
(3
|
)
|
(1,976
|
)
|
(1,197
|
)
|
(779
|
)
|
||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||||||
Savings and checking deposits
|
218
|
(43
|
)
|
261
|
(351
|
)
|
(20
|
)
|
(331
|
)
|
||||||||||||||
Certificates of deposits
|
(96
|
)
|
(6
|
)
|
(90
|
)
|
(427
|
)
|
(215
|
)
|
(212
|
)
|
||||||||||||
Borrowings
|
236
|
-
|
236
|
228
|
-
|
228
|
||||||||||||||||||
Total interest expense
|
358
|
(49
|
)
|
407
|
(550
|
)
|
(235
|
)
|
(315
|
)
|
||||||||||||||
Net change in net interest income
|
$
|
(1,021
|
)
|
$
|
(611
|
)
|
$
|
(410
|
)
|
$
|
(1,426
|
)
|
$
|
(962
|
)
|
$
|
(464
|
)
|
Rate
|
Amount
|
Maturity
|
|||||||
1.81% to 1.83%
|
$
|
15,000
|
2016
|
||||||
2.43% to 4.05%
|
70,000
|
2017
|
|||||||
2.58% to 3.43%
|
15,000
|
2018
|
|||||||
4.00% |
15,000
|
2019
|
|||||||
$
|
115,000
|
Payments due by period
(dollars in thousands)
|
||||||||||||||||||||
Total
|
Less than
1 year |
1 to 3 years
|
3 to 5 years
|
More than
5 years |
||||||||||||||||
Long-term borrowings
|
$
|
115,000
|
$
|
15,000
|
$
|
85,000
|
$
|
15,000
|
$
|
-
|
||||||||||
Subordinated debentures
|
24,119
|
-
|
3,500
|
-
|
20,619
|
|||||||||||||||
Operating lease obligations
|
666
|
152
|
286
|
228
|
-
|
|||||||||||||||
Certificates of Deposit
|
277,778
|
169,298
|
78,234
|
30,246
|
-
|
|||||||||||||||
Total
|
$
|
417,563
|
$
|
184,450
|
$
|
167,020
|
$
|
45,474
|
$
|
20,619
|
Economic Value of Equity
|
|||||||||||||
Change In Rates
|
|
$ Amount |
|
$ Change |
% Change
|
||||||||
+400bp |
|
91,143
|
(18,573)
|
|
(16.9)%
|
|
|||||||
+300bp |
|
94,472
|
(15,244)
|
|
(13.9)%
|
|
|||||||
+200bp |
|
98,602
|
(11,114)
|
|
(10.1)%
|
|
|||||||
+100bp |
|
103,703
|
(4,013)
|
|
(5.5)%
|
|
|||||||
0bp |
|
109,716
|
|||||||||||
-100bp |
|
116,642
|
6,926
|
6.3%
|
|
||||||||
-200bp |
|
124,258
|
14,542
|
13.3%
|
|
||||||||
-300bp |
|
133,183
|
23,467
|
21.4%
|
|
||||||||
-400bp |
|
143,482
|
33,766
|
30.8%
|
|
Plan Category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
Number of
securities
remaining available
for future issuance
under equity
compensation
plans
|
Equity compensation
plan approved by security holders
|
|
339,800
|
|
$4.83
|
|
250,501
|
Equity compensation plans not approved by security holders
|
|
-
|
|
-
|
|
-
|
Total
|
|
339,800
|
|
$4.83
|
|
250,501
|
1. | Financial Statements |
●
|
Report of BDO USA, LLP, independent registered public accounting firm.
|
●
|
Consolidated statements of financial condition at December 31, 2015 and December 31, 2014
|
●
|
Consolidated statements of operations for the years ended December 31, 2015 and 2014,
|
●
|
Consolidated statements of stockholders’ equity for the years ended December 31, 2015 and 2014
|
●
|
Consolidated statements of cash flows for the years ended December 31, 2015 and 2014
|
● |
Notes to consolidated financial statements
|
2. | Financial Statement Schedules |
3. | Exhibits |
Exhibit No.
|
Description of Exhibit
|
3.1
|
Articles of Incorporation of Severn Bancorp, Inc., as amended (1)
|
3.2
|
Bylaws of Severn Bancorp, Inc., as amended (2)
|
4.1
|
Warrant for Purchase of Shares of Common Stock (3)
|
10.1+
|
Stock Option Plan (4)
|
10.2+
|
Employee Stock Ownership Plan (5)
|
10.3+
|
Form of Common Stock Option Agreement (6)
|
10.4+
|
2008 Equity Incentive Plan (7)
|
10.5+
|
Form of Subscription Agreement (8)
|
10.6
|
Form of Subordinated Note (8)
|
10.7
|
Purchase Agreement, dated November 21, 2008, between Bancorp and the United States Department of the Treasury (3)
|
10.8
|
Supervisory Agreement dated November 23, 2009 between Severn Savings Bank, FSB and the OTS (9)
|
10.9
|
Supervisory Agreement dated November 23, 2009 between Severn Bancorp, Inc. and the OTS (9)
|
10.10+
|
Form of Director Option Award (10)
|
10.11+
|
Form of Employee Option Award (10)
|
10.12
|
Formal Agreement between Severn Savings Bank, FSB and the Office of the Comptroller of the Currency, dated April 23, 2013. (11)
|
14.1
|
Code of Ethics (12)
|
Subsidiaries of Severn Bancorp, Inc.
|
|
Consent of BDO USA, LLP
|
|
Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|
|
Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|
|
Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley Act of 2002
|
|
101*
|
The following financial statements from Severn Bancorp, Inc. Annual Report on Form 10-K as of December 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Stockholders’ Equity; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements.
|
SEVERN BANCORP, INC.
|
|
March 17, 2016
|
/s/ Alan J. Hyatt
|
Alan J. Hyatt
|
|
Chairman of the Board, President,
|
|
Chief Executive Officer and Director
|
March 17, 2016
|
/s/ Alan J. Hyatt
|
Alan J. Hyatt
|
|
Chairman of the Board,
|
|
President, Chief Executive Officer
|
|
and Director
|
|
March 17, 2016
|
/s/ Thomas G. Bevivino
|
Thomas G. Bevivino, Executive Vice
|
|
President, and Chief Financial Officer
|
|
March 17, 2016
|
/s/ Konrad M. Wayson
|
Konrad M. Wayson, Director
|
|
Vice Chairman of the Board
|
|
March 17, 2016
|
/s/ Raymond S. Crosby
|
Raymond S. Crosby, Director
|
|
March 17, 2016
|
/s/ James H. Johnson, Jr.
|
James H. Johnson, Jr., Director
|
|
March 17, 2016
|
/s/ David S. Jones
|
David S. Jones, Director
|
|
March 17, 2016
|
/s/ Eric M. Keitz
|
Eric M. Keitz, Director
|
|
March 17, 2016
|
/s/ John A. Lamon III
|
John A. Lamon III, Director
|
|
March 17, 2016
|
/s/ Albert W. Shields
|
Albert W. Shields, Director
|
|
March 17, 2016
|
/s/ Mary Kathleen Sulick
|
Mary Kathleen Sulick, Director
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Cash and due from banks
|
$
|
28,366
|
$
|
24,866
|
||||
Interest bearing deposits in other banks
|
15,225
|
8,469
|
||||||
Cash and cash equivalents
|
43,591
|
33,335
|
||||||
Investment securities held to maturity (fair value: $76,310 at December 31, 2015; $60,123 at December 31, 2014)
|
76,133
|
59,616
|
||||||
Loans held for sale
|
13,203
|
7,165
|
||||||
Loans receivable, net of allowance for loan losses of $8,758 and $9,435 in 2015 and 2014, respectively
|
589,656
|
633,882
|
||||||
Premises and equipment, net
|
24,290
|
25,159
|
||||||
Foreclosed real estate
|
1,744
|
1,947
|
||||||
Federal Home Loan Bank stock, at cost
|
5,626
|
5,936
|
||||||
Accrued interest receivable and other assets
|
7,836
|
9,288
|
||||||
Total assets
|
$
|
762,079
|
$
|
776,328
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities
|
||||||||
Deposits
|
$
|
523,771
|
$
|
543,814
|
||||
Long-term borrowings
|
115,000
|
115,000
|
||||||
Subordinated debentures
|
24,119
|
24,119
|
||||||
Accrued interest payable and other liabilities
|
12,733
|
9,585
|
||||||
Total Liabilities
|
675,623
|
692,518
|
||||||
Stockholders’ Equity
|
||||||||
Preferred stock, $0.01 par value, 1,000,000 shares authorized:
|
||||||||
Preferred stock series “A”, 437,500 shares issued and outstanding; $3,500 liquidation preference at December 31, 2015 and December 31, 2014
|
4
|
4
|
||||||
Preferred stock series “B”, 23,393 shares issued and outstanding; $23,393 liquidation preference at December 31, 2015 and December 31, 2014
|
-
|
-
|
||||||
Common stock, $0.01 par value, 20,000,000 shares authorized; 10,088,879 and 10,067,379 shares issued and outstanding, respectively
|
101
|
101
|
||||||
Additional paid-in capital
|
76,335
|
75,848
|
||||||
Retained earnings
|
10,016
|
7,857
|
||||||
Total stockholders' equity
|
86,456
|
83,810
|
||||||
Total liabilities and stockholders' equity
|
$
|
762,079
|
$
|
776,328
|
Years Ended December 31,
|
||||||||
Interest Income
|
2015
|
2014
|
||||||
Loans, including fees
|
$
|
29,734
|
$
|
30,574
|
||||
Securities, taxable
|
1,104
|
951
|
||||||
Other
|
315
|
291
|
||||||
Total interest income
|
31,153
|
31,816
|
||||||
Interest Expense
|
||||||||
Deposits
|
4,050
|
3,928
|
||||||
Long-term borrowings and subordinated debentures
|
4,942
|
4,706
|
||||||
Total interest expense
|
8,992
|
8,634
|
||||||
Net interest income
|
22,161
|
23,182
|
||||||
Provision for loan losses
|
(280
|
)
|
831
|
|||||
Net interest income after provision for loan losses
|
22,441
|
22,351
|
||||||
Non-Interest Income
|
||||||||
Mortgage banking activities
|
2,928
|
1,600
|
||||||
Real estate commissions
|
1,319
|
1,034
|
||||||
Real estate management fees
|
658
|
742
|
||||||
Other
|
1,205
|
949
|
||||||
Total non-interest income
|
6,110
|
4,325
|
||||||
Non-Interest Expenses
|
||||||||
Compensation and related expenses
|
15,630
|
14,654
|
||||||
Occupancy
|
1,676
|
1,732
|
||||||
Foreclosed real estate expenses, net
|
230
|
10
|
||||||
Legal
|
354
|
316
|
||||||
FDIC assessments and regulatory expense
|
1,234
|
1,331
|
||||||
Professional fees
|
887
|
921
|
||||||
Advertising
|
760
|
687
|
||||||
Online charges
|
864
|
907
|
||||||
Credit reports and appraisal fees
|
773
|
890
|
||||||
Other
|
1,518
|
2,288
|
||||||
Total non-interest expenses
|
23,926
|
23,736
|
||||||
Income before income tax provision
|
4,625
|
2,940
|
||||||
Income tax provision
|
90
|
31
|
||||||
Net income
|
4,535
|
2,909
|
||||||
Amortization of discount on preferred stock
|
271
|
270
|
||||||
Dividends on preferred stock
|
2,105
|
2,072
|
||||||
Net income available to common stockholders
|
$
|
2,159
|
$
|
567
|
||||
Basic income per common share
|
$
|
0.21
|
$
|
0.06
|
||||
Diluted income per common share
|
$
|
0.21
|
$
|
0.06
|
Preferred
Stock
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total
Stockholders’
Equity
|
||||||||||||||||
Balance - December 31, 2013
|
$
|
4
|
$
|
101
|
$
|
75,374
|
$
|
7,290
|
$
|
82,769
|
||||||||||
Net Income
|
-
|
-
|
-
|
2,909
|
2,909
|
|||||||||||||||
Stock-based compensation
|
-
|
-
|
201
|
-
|
201
|
|||||||||||||||
Dividend declared on Series B preferred stock
|
-
|
-
|
-
|
(2,072
|
)
|
(2,072
|
)
|
|||||||||||||
Amortization of discount on Series B preferred stock
|
-
|
-
|
270
|
(270
|
)
|
-
|
||||||||||||||
Exercised Options (700 shares)
|
-
|
-
|
3
|
-
|
3
|
|||||||||||||||
Balance - December 31, 2014
|
4
|
101
|
75,848
|
7,857
|
83,810
|
|||||||||||||||
Net Income
|
-
|
-
|
-
|
4,535
|
4,535
|
|||||||||||||||
Stock-based compensation
|
-
|
-
|
120
|
-
|
120
|
|||||||||||||||
Dividend declared on Series B preferred stock
|
-
|
-
|
-
|
(2,105
|
)
|
(2,105
|
)
|
|||||||||||||
Amortization of discount on Series B preferred stock
|
271
|
(271
|
)
|
-
|
||||||||||||||||
Exercised Options (21,500 shares)
|
-
|
-
|
96
|
-
|
96
|
|||||||||||||||
Balance - December 31, 2015
|
$
|
4
|
$
|
101
|
$
|
76,335
|
$
|
10,016
|
$
|
86,456
|
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
4,535
|
$
|
2,909
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of deferred loan fees
|
(1,283
|
)
|
(995
|
)
|
||||
Net amortization of premiums and discounts
|
458
|
239
|
||||||
Provision for loan losses
|
(280
|
)
|
831
|
|||||
Provision for depreciation
|
1,137
|
1,110
|
||||||
Provision for foreclosed real estate
|
58
|
-
|
||||||
Gain on sale of loans
|
(2,927
|
)
|
(2,207
|
)
|
||||
Gain on sale of foreclosed real estate
|
(49
|
)
|
(302
|
)
|
||||
Proceeds from loans sold to others
|
160,236
|
92,767
|
||||||
Loans originated for sale
|
(163,347
|
)
|
(93,999
|
)
|
||||
Stock-based compensation expense
|
120
|
201
|
||||||
Decrease (increase) in accrued interest receivable and other assets
|
1,452
|
(261
|
)
|
|||||
Increase in accrued interest payable and other liabilities
|
1,043
|
1,047
|
||||||
Net cash provided by operating activities
|
1,153
|
1,340
|
||||||
Cash Flows from Investing Activities
|
||||||||
Purchase of investment securities held to maturity
|
(27,830
|
)
|
(21,549
|
)
|
||||
Proceeds from maturing investment securities held to maturity
|
7,000
|
5,000
|
||||||
Principal collected on mortgage-backed securities held to maturity
|
3,855
|
1,355
|
||||||
Net decrease (increase) in loans
|
43,555
|
(31,752
|
)
|
|||||
Proceeds from sale of foreclosed real estate
|
2,428
|
8,174
|
||||||
Investment in premises and equipment
|
(268
|
)
|
(431
|
)
|
||||
Redemption of FHLB stock
|
310
|
254
|
||||||
Net cash provided by (used in) investing activities
|
29,050
|
(38,949
|
)
|
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash Flows from Financing Activities
|
||||||||
Net decrease in deposits
|
$
|
(20,043
|
)
|
$
|
(27,435
|
)
|
||
Proceeds from exercise of options
|
96
|
3
|
||||||
Net cash used in financing activities
|
(19,947
|
)
|
(27,432
|
)
|
||||
Increase (decrease) in cash and cash equivalents
|
10,256
|
(65,041
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
33,335
|
98,376
|
||||||
Cash and cash equivalents at end of year
|
$
|
43,591
|
$
|
33,335
|
||||
Supplemental disclosure of cash flows information:
|
||||||||
Cash (received) paid during year for:
|
||||||||
Interest
|
$
|
7,991
|
$
|
7,874
|
||||
Income taxes
|
$
|
(273
|
)
|
$
|
9
|
|||
Transfer of net loans to foreclosed real estate
|
$
|
2,234
|
$
|
847
|
A. | Principles of Consolidation - The consolidated financial statements include the accounts of Severn Bancorp, Inc. ("Bancorp"), and its wholly-owned subsidiaries, SBI Mortgage Company and SBI Mortgage Company's subsidiary, Crownsville Development Corporation, and its subsidiary, Crownsville Holdings I, LLC, and Severn Savings Bank, FSB (the “Bank"), and the Bank's subsidiaries, Louis Hyatt, Inc., Homeowners Title and Escrow Corporation, Severn Financial Services Corporation, SSB Realty Holdings, LLC, SSB Realty Holdings II, LLC, and HS West, LLC. All intercompany accounts and transactions have been eliminated in the accompanying consolidated financial statements. |
B. | Business - The Bank's primary business activity is the acceptance of deposits from the general public and the use of the proceeds for investments and loan originations. The Bank is subject to competition from other financial institutions. In addition, the Bank is subject to the regulations of certain federal agencies and undergoes periodic examinations by those regulatory authorities. |
C. | Estimates - The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of financial condition and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, the fair value of foreclosed real estate, the evaluation of other than temporary impairment of investment securities and the valuation allowance of deferred tax assets. |
D. | Investment Securities Held to Maturity – Investment securities for which the Bank has the positive intent and ability to hold to maturity are reported at cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. Declines in the fair value of held to maturity securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other than temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer and (3) determines if the Bank does not intend to sell the security before recovery of its amortized cost. |
E. | Federal Home Loan Bank Stock – Federal Home Loan Bank of Atlanta (the “FHLB”) stock is an equity interest in the FHLB, which does not have a readily determinable fair value for purposes of generally accepted accounting principles, because its ownership is restricted and it lacks a market. FHLB stock can be sold back only at par value of $100 per share and only to the FHLB or another member institution. As of December 31, 2015 and 2014, the Bank owned shares totaling $5,626,000 and $5,936,000, respectively. |
F. | Loans Held for Sale - Loans held for sale are carried at lower of cost or market value in the aggregate based on investor quotes. Net unrealized losses are recognized through a valuation allowance by charges to income. |
G. | Derivative Financial Instruments – The Bank enters into commitments to fund residential loans with intentions of selling them in the secondary market. The Bank also enters into forward sales agreements for certain funded loans and loan commitments. The Bank records unfunded commitments intended for loans held for sale and forward sale agreements at fair value with changes in fair value recorded as a component of other income. Loans originated and intended for sale in the secondary market are carried at lower of cost or fair value based on those sales commitments. For pipeline loans which are not pre-sold to an investor, the Bank manages the interest rate risk on rate lock commitments by entering into forward sales contracts of mortgage backed securities, whereby the Bank obtains the right to deliver securities to investors in the future at a specific price. Such contracts are accounted for as derivatives and are recorded at fair value in derivative assets or liabilities, with changes in fair value recorded in other income. |
H. | Loan Servicing - Mortgage loans held for sale are sold either with the mortgage servicing rights released or retained by the Bank. Gains and losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying values of the loan servicing rights, if retained, and related mortgage loans sold. Mortgage servicing rights totaled $623,000 and $658,000 at December 31, 2015 and 2014, respectively. |
I. | Loans - Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. The Bank categorizes the loans into eight classifications: residential mortgage; construction; land acquisition and development; land; lines of credit; commercial real estate; commercial non-real estate; home equity; and consumer. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. |
J. | Allowance for Loan Losses - An allowance for loan losses is provided through charges to income in an amount that management believes will be adequate to absorb losses on existing loans that may become uncollectible, based on evaluations of the collectability of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers' ability to pay. Determining the amount of the allowance for loan losses requires the use of estimates and assumptions, which is permitted under generally accepted accounting principles. Actual results could differ significantly from those estimates. Management believes the allowance for losses on loans is adequate. While management uses available information to estimate losses on loans, future additions to the allowances may be necessary based on changes in economic conditions, particularly in the State of Maryland. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for losses on loans. Such agencies may require the Bank to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. |
· | Levels and trends in delinquencies and nonaccruals; |
· | Inherent risk in the loan portfolio; |
· | Trends in volume and terms of the loan; |
· | Effects of any change in lending policies and procedures; |
· | Experience, ability and depth of management; |
· | National and local economic trends and conditions; and |
· | Effect of any changes in concentration of credit. |
· | Loans that are 90 days or more in arrears (nonaccrual loans); or |
· | Loans where, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. |
K. | Foreclosed Real Estate - Real estate acquired through or in the process of foreclosure is recorded at fair value less estimated disposal costs. Management periodically evaluates the recoverability of the carrying value of the real estate acquired through foreclosure using estimates as described under the caption "Allowance for Loan Losses". In the event of a subsequent decline, management provides a specific reserve to reduce real estate acquired through foreclosure to fair value less estimated disposal cost. Expenses on foreclosed real estate incurred prior to the disposition of the property, such as maintenance, insurance and taxes, and physical security, are charged to expense. Material expenses that improve the property to its best use are capitalized to the property. Gains or losses on the sale of foreclosed real estate are recognized upon disposition of the property. |
L. | Transfers of Financial Assets – Transfers of financial assets, including loan and loan participation sales, are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from Bancorp, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) Bancorp does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return the specific assets. |
M. | Premises and Equipment - Premises and equipment are carried at cost less accumulated depreciation. Depreciation and amortization of premises and equipment is accumulated by the use of the straight-line method over the estimated useful lives of the assets. Additions and improvements are capitalized, and charges for repairs and maintenance are expensed when incurred. The related cost and accumulated depreciation are eliminated from the accounts when an asset is sold or retired and the resultant gain or loss is credited or charged to income. |
N.
|
Statement of Cash Flows - In the statement of cash flows, cash and cash equivalents include cash on hand, amounts due from banks, Federal Home Loan Bank of Atlanta overnight deposits, and federal funds sold. Generally, federal funds are sold for one day periods.
|
O. | Income Taxes - Deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets are recognized only to the extent that it is more likely than not that such amount will be realized based on consideration of available evidence. |
P. | Earnings Per Common Share - Basic earnings per share of common stock for the years ended December 31, 2015 and 2014 is computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for each year. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by Bancorp relate to outstanding stock options, warrants, and convertible preferred stock, and are determined using the treasury stock method. |
Year Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Common shares – weighted average (basic)
|
10,083,942
|
10,067,379
|
||||||
Common share equivalents – weighted average
|
28,711
|
29,008
|
||||||
Common shares – weighted average (diluted)
|
10,112,653
|
10,096,387
|
Q. | Advertising Cost - Advertising cost is expensed as incurred and totaled $760,000, and $687,000 for the years ended December 31, 2015, and 2014, respectively. |
R. | Troubled Debt Restructuring – Loans are classified as troubled debt restructurings if the Bank grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring may be modified by means of extending the maturity date of the loan, reducing the interest rate on the loan to a rate below market, a combination of rate adjustments and maturity extensions, or by other means including covenant modifications, forbearances or other concessions. All troubled debt restructurings, or TDRs, are considered impaired. |
S. | Significant Group Concentrations of Credit Risk – Most of Bancorp’s activities are with customers located in Anne Arundel County, Maryland and nearby areas. Note 2, of the Notes to Consolidated Financial Statements discusses the types of securities that Bancorp currently invests in. Note 3 discusses the types of lending that Bancorp engages in. Although Bancorp intends to have a diversified loan portfolio, its debtors’ ability to honor their contracts will be influenced by the region’s economy. Bancorp does not have any significant concentrations to any one customer. |
T. | Off-Balance Sheet Financial Instruments – In the ordinary course of business, Bancorp has entered into off-balance sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the consolidated balance sheet when they are funded. |
U. | Recent Accounting Pronouncements – Under ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, a creditor will be considered to have physical possession of residential real estate property that is collateral for a residential mortgage loan and therefore should reclassify the loan to other real estate owned when either (a) the creditor obtains legal title to the property upon completion of a foreclosure, or (b) the borrower conveys all interest in the real estate property to the lender to satisfy that loan even though legal title may not have passed. The amendments are effective for public business entities for annual periods and interim periods within those annual periods, beginning after December 15, 2014. Bancorp adopted this guidance on January 1, 2015 using a prospective transition method; it did not have material impact on the consolidated financial statements. The guidance requires disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. Bancorp has included these disclosures in Note 16 Fair Values of Financial Instruments. |
V. | Subsequent Events – Bancorp has evaluated events and transactions occurring subsequent to December 31, 2015, the date of the consolidated statements of financial condition, for items that should potentially be recognized or disclosed in the consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued. |
W. | Concentration of Credit Risk – From time to time, the Bank will maintain balances with its correspondent bank that exceed the $250,000 federally insured deposit limit. Management routinely evaluates the credit worthiness of the correspondent bank and does not feel they pose a significant risk to Bancorp. |
X. | Reclassifications – Amounts in the prior year’s consolidated financial statements have been reclassified whenever necessary to conform to the current year’s presentation. Such reclassifications had no impact on net income. |
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
December 31, 2015:
|
||||||||||||||||
US Treasury securities
|
$
|
21,057
|
$
|
276
|
$
|
8
|
$
|
21,325
|
||||||||
US Agency securities
|
20,011
|
139
|
76
|
20,074
|
||||||||||||
US Government sponsored mortgage-backed securities
|
35,065
|
41
|
195
|
34,911
|
||||||||||||
Total
|
$
|
76,133
|
$
|
456
|
$
|
279
|
$
|
76,310
|
||||||||
December 31, 2014:
|
||||||||||||||||
US Treasury securities
|
$
|
27,140
|
$
|
465
|
$
|
29
|
$
|
27,576
|
||||||||
US Agency securities
|
17,044
|
130
|
57
|
17,117
|
||||||||||||
US Government sponsored mortgage-backed securities
|
15,432
|
48
|
50
|
15,430
|
||||||||||||
Total
|
$
|
59,616
|
$
|
643
|
$
|
136
|
$
|
60,123
|
Less than 12 months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
Fair Value
|
Unrealized
Losses
|
|||||||||||||||||||
December 31, 2015:
|
(dollars in thousands)
|
|||||||||||||||||||||||
US Treasury securities
|
$
|
3,992
|
$
|
8
|
$
|
-
|
$
|
-
|
$
|
3,992
|
$
|
8
|
||||||||||||
US Agency securities
|
12,958
|
76
|
-
|
-
|
12,958
|
76
|
||||||||||||||||||
US Government sponsored mortgage-backed securities
|
31,091
|
195
|
-
|
-
|
31,091
|
195
|
||||||||||||||||||
Total
|
$
|
48,041
|
$
|
279
|
$
|
-
|
$
|
-
|
$
|
48,041
|
$
|
279
|
||||||||||||
December 31, 2014:
|
||||||||||||||||||||||||
US Treasury securities
|
$
|
6,953
|
$
|
29
|
$
|
-
|
$
|
-
|
$
|
6,953
|
$
|
29
|
||||||||||||
US Agency securities
|
10,024
|
57
|
-
|
-
|
10,024
|
57
|
||||||||||||||||||
US Government sponsored mortgage-backed securities
|
13,405
|
50
|
-
|
-
|
13,405
|
50
|
||||||||||||||||||
Total
|
$
|
30,382
|
$
|
136
|
$
|
-
|
$
|
-
|
$
|
30,382
|
$
|
136
|
Held to Maturity
(dollars in thousands)
|
||||||||
Amortized
Cost
|
Estimated
Fair Value
|
|||||||
Due in one year or less
|
$
|
11,060
|
$
|
11,125
|
||||
Due from one year to five years
|
28,053
|
28,211
|
||||||
Due from five years to ten years
|
1,955
|
2,063
|
||||||
US Government sponsored mortgage-backed securities
|
35,065
|
34,911
|
||||||
$
|
76,133
|
$
|
76,310
|
December 31 | ||||||||
2015 |
2014
|
|||||||
(dollars in thousands) | ||||||||
Residential mortgage, total
|
$
|
285,930
|
$
|
309,461
|
||||
Individually evaluated for impairment
|
26,087
|
28,535
|
||||||
Collectively evaluated for impairment
|
259,843
|
280,926
|
||||||
Construction, land acquisition and development, total
|
77,478
|
84,325
|
||||||
Individually evaluated for impairment
|
309
|
917
|
||||||
Collectively evaluated for impairment
|
77,169
|
83,408
|
||||||
Land, total
|
28,677
|
30,426
|
||||||
Individually evaluated for impairment
|
1,608
|
2,039
|
||||||
Collectively evaluated for impairment
|
27,069
|
28,387
|
||||||
Lines of credit, total
|
20,188
|
19,251
|
||||||
Individually evaluated for impairment
|
299
|
454
|
||||||
Collectively evaluated for impairment
|
19,889
|
18,797
|
||||||
Commercial real estate, total
|
174,912
|
198,539
|
||||||
Individually evaluated for impairment
|
6,321
|
6,309
|
||||||
Collectively evaluated for impairment
|
168,591
|
192,230
|
||||||
Commercial non-real estate, total
|
9,296
|
10,167
|
||||||
Individually evaluated for impairment
|
122
|
274
|
||||||
Collectively evaluated for impairment
|
9,174
|
9,893
|
||||||
Home equity, total
|
24,529
|
28,750
|
||||||
Individually evaluated for impairment
|
2,285
|
3,551
|
||||||
Collectively evaluated for impairment
|
22,244
|
25,199
|
||||||
Consumer, total
|
1,224
|
1,040
|
||||||
Individually evaluated for impairment
|
10
|
12
|
||||||
Collectively evaluated for impairment
|
1,214
|
1,028
|
||||||
Total Loans
|
622,234
|
681,959
|
||||||
Less
|
||||||||
Unfunded commitments included above
|
(21,101
|
)
|
(36,162
|
)
|
||||
601,133
|
645,797
|
|||||||
Individually evaluated for impairment
|
37,041
|
42,091
|
||||||
Collectively evaluated for impairment
|
564,092
|
603,706
|
||||||
601,133
|
645,797
|
|||||||
Allowance for loan losses
|
(8,758
|
)
|
(9,435
|
)
|
||||
Deferred loan origination fees and costs, net
|
(2,719
|
)
|
(2,480
|
)
|
||||
Net Loans
|
$
|
589,656
|
$
|
633,882
|
· | The loan has been foreclosed on. Once the loan has been transferred from the Loans Receivable to Foreclosed Real Estate, a charge off is recorded for the difference between the recorded amount of the loan and the net value of the underlying collateral. |
· | An agreement to accept less than the recorded balance of the loan has been made with the borrower. Once an agreement has been finalized, and any proceeds from the borrower are received, a charge off is recorded for the difference between the recorded amount of the loan and the net value of the underlying collateral. |
· | The loan is considered to be impaired collateral dependent and its collateral valuation is less than the recorded balance. The loan is written down for accounting purposes by the amount of the difference between the recorded balance and collateral value. |
2015
|
Total
|
Residential
Mortgage
|
Acquisition
and
Development
|
Land
|
Lines of
Credit
|
Commercial
Real Estate
|
Commercial
Non-Real
Estate
|
Home
Equity
|
Consumer
|
|||||||||||||||||||||||||||
Beginning Balance
|
$
|
9,435
|
$
|
4,664
|
$
|
362
|
$
|
646
|
$
|
12
|
$
|
2,504
|
$
|
280
|
$
|
963
|
$
|
4
|
||||||||||||||||||
Provision
|
(280
|
)
|
(651
|
)
|
84
|
(185
|
)
|
(190
|
)
|
368
|
59
|
236
|
(1
|
)
|
||||||||||||||||||||||
Charge-offs
|
(1,522
|
)
|
(454
|
)
|
-
|
-
|
-
|
(80
|
)
|
(154
|
)
|
(834
|
)
|
-
|
||||||||||||||||||||||
Recoveries
|
1,125
|
629
|
-
|
49
|
235
|
-
|
49
|
163
|
-
|
|||||||||||||||||||||||||||
Ending Balance
|
$
|
8,758
|
$
|
4,188
|
$
|
446
|
$
|
510
|
$
|
57
|
$
|
2,792
|
$
|
234
|
$
|
528
|
$
|
3
|
||||||||||||||||||
Allowance on loans individually evaluated for impairment
|
$
|
2,282
|
$
|
1,838
|
$
|
-
|
$
|
78
|
$
|
30
|
$
|
328
|
$
|
5
|
$
|
2
|
$
|
1
|
||||||||||||||||||
Allowance on loans collectively evaluated for impairment
|
$
|
6,476
|
$
|
2,350
|
$
|
446
|
$
|
432
|
$
|
27
|
$
|
2,464
|
$
|
229
|
$
|
526
|
$
|
2
|
2014
|
Total
|
Residential
Mortgage
|
Acquisition
and
Development
|
Land
|
Lines of
Credit
|
Commercial
Real Estate
|
Commercial
Non-Real
Estate
|
Home
Equity
|
Consumer
|
|||||||||||||||||||||||||||
Beginning Balance
|
$
|
11,739
|
$
|
6,291
|
$
|
414
|
$
|
1,346
|
$
|
36
|
$
|
2,512
|
$
|
135
|
$
|
1,003
|
$
|
2
|
||||||||||||||||||
Provision
|
831
|
(1,089
|
)
|
11
|
(1,049
|
)
|
1,285
|
59
|
1,396
|
221
|
(3
|
)
|
||||||||||||||||||||||||
Charge-offs
|
(3,994
|
)
|
(844
|
)
|
(63
|
)
|
-
|
(1,324
|
)
|
(92
|
)
|
(1,410
|
)
|
(261
|
)
|
-
|
||||||||||||||||||||
Recoveries
|
859
|
306
|
-
|
349
|
15
|
25
|
159
|
-
|
5
|
|||||||||||||||||||||||||||
Ending Balance
|
$
|
9,435
|
$
|
4,664
|
$
|
362
|
$
|
646
|
$
|
12
|
$
|
2,504
|
$
|
280
|
$
|
963
|
$
|
4
|
||||||||||||||||||
Allowance on loans individually evaluated for impairment
|
$
|
2,777
|
$
|
2,113
|
$
|
-
|
$
|
53
|
$
|
-
|
$
|
224
|
$
|
15
|
$
|
370
|
$
|
2
|
||||||||||||||||||
Allowance on loans collectively evaluated for impairment
|
$
|
6,658
|
$
|
2,551
|
$
|
362
|
$
|
593
|
$
|
12
|
$
|
2,280
|
$
|
265
|
$
|
593
|
$
|
2
|
Impaired Loans with
Specific Allowance
|
Impaired
Loans with
No Specific
Allowance
|
Total Impaired Loans
|
||||||||||||||||||
Recorded
Investment
|
Related
Allowance
|
Recorded
Investment
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
||||||||||||||||
December 31, 2015
|
||||||||||||||||||||
Residential mortgage
|
$
|
11,885
|
$
|
1,838
|
$
|
14,202
|
$
|
26,087
|
$
|
26,656
|
||||||||||
Construction, acquisition and development
|
-
|
-
|
309
|
309
|
309
|
|||||||||||||||
Land
|
639
|
78
|
969
|
1,608
|
1,723
|
|||||||||||||||
Lines of credit
|
299
|
30
|
-
|
299
|
299
|
|||||||||||||||
Commercial real estate
|
3,214
|
328
|
3,107
|
6,321
|
6,469
|
|||||||||||||||
Commercial non-real estate
|
103
|
5
|
19
|
122
|
123
|
|||||||||||||||
Home equity
|
16
|
2
|
2,269
|
2,285
|
3,251
|
|||||||||||||||
Consumer
|
10
|
1
|
-
|
10
|
10
|
|||||||||||||||
Total Impaired loans
|
$
|
16,166
|
$
|
2,282
|
$
|
20,875
|
$
|
37,041
|
$
|
38,840
|
Impaired Loans with
Specific Allowance
|
Impaired
Loans with
No Specific
Allowance
|
Total Impaired Loans
|
||||||||||||||||||
Recorded
Investment
|
Related
Allowance
|
Recorded
Investment
|
Recorded
Investment
|
Unpaid
Principal
Balance
|
||||||||||||||||
December 31, 2014
|
||||||||||||||||||||
Residential mortgage
|
$
|
14,094
|
$
|
2,113
|
$
|
14,441
|
$
|
28,535
|
$
|
29,487
|
||||||||||
Construction, acquisition and development
|
-
|
-
|
917
|
917
|
917
|
|||||||||||||||
Land
|
355
|
53
|
1,684
|
2,039
|
2,157
|
|||||||||||||||
Lines of credit
|
-
|
-
|
454
|
454
|
545
|
|||||||||||||||
Commercial real estate
|
2,529
|
224
|
3,780
|
6,309
|
6,533
|
|||||||||||||||
Commercial non-real estate
|
274
|
15
|
-
|
274
|
274
|
|||||||||||||||
Home equity
|
1,472
|
370
|
2,079
|
3,551
|
4,274
|
|||||||||||||||
Consumer
|
12
|
2
|
-
|
12
|
12
|
|||||||||||||||
Total Impaired loans
|
$
|
18,736
|
$
|
2,777
|
$
|
23,355
|
$
|
42,091
|
$
|
44,199
|
Impaired Loans with
Specific Allowance
|
Impaired Loans with No
Specific Allowance
|
Total Impaired Loans
|
||||||||||||||||||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||
Residential mortgage
|
$
|
12,645
|
$
|
540
|
$
|
13,886
|
$
|
564
|
$
|
26,531
|
$
|
1,104
|
||||||||||||
Construction, acquisition and development
|
114
|
1
|
573
|
29
|
687
|
30
|
||||||||||||||||||
Land
|
822
|
21
|
1,035
|
72
|
1,857
|
93
|
||||||||||||||||||
Lines of credit
|
25
|
1
|
321
|
18
|
346
|
19
|
||||||||||||||||||
Commercial real estate
|
2,933
|
134
|
2,179
|
166
|
5,112
|
300
|
||||||||||||||||||
Commercial non-real estate
|
213
|
5
|
10
|
13
|
223
|
18
|
||||||||||||||||||
Home equity
|
337
|
8
|
2,520
|
115
|
2,857
|
123
|
||||||||||||||||||
Consumer
|
11
|
-
|
414
|
3
|
425
|
3
|
||||||||||||||||||
Total Impaired loans
|
$
|
17,100
|
$
|
710
|
$
|
20,938
|
$
|
980
|
$
|
38,038
|
1,690
|
Impaired Loans with
Specific Allowance
|
Impaired Loans with No
Specific Allowance
|
Total Impaired Loans
|
||||||||||||||||||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||
Residential mortgage
|
$
|
14,222
|
$
|
592
|
$
|
17,342
|
$
|
648
|
$
|
31,564
|
$
|
1,240
|
||||||||||||
Construction, acquisition and development
|
-
|
-
|
1,831
|
54
|
1,831
|
54
|
||||||||||||||||||
Land
|
359
|
13
|
1,774
|
89
|
2,133
|
102
|
||||||||||||||||||
Lines of credit
|
599
|
15
|
616
|
41
|
1,215
|
56
|
||||||||||||||||||
Commercial real estate
|
2,556
|
120
|
4,515
|
230
|
7,071
|
350
|
||||||||||||||||||
Commercial non-real estate
|
258
|
5
|
406
|
23
|
664
|
28
|
||||||||||||||||||
Home equity
|
1,460
|
-
|
2,174
|
65
|
3,634
|
65
|
||||||||||||||||||
Consumer
|
13
|
-
|
-
|
-
|
13
|
-
|
||||||||||||||||||
Total Impaired loans
|
$
|
19,467
|
$
|
745
|
$
|
28,658
|
$
|
1,150
|
$
|
48,125
|
1,895
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
December 31, 2015
|
||||||||||||||||||||
Residential mortgage
|
$
|
268,583
|
$
|
12,457
|
$
|
4,890
|
$
|
-
|
$
|
285,930
|
||||||||||
Construction acquisition and development
|
77,168
|
71
|
239
|
-
|
77,478
|
|||||||||||||||
Land
|
26,845
|
1,268
|
564
|
-
|
28,677
|
|||||||||||||||
Lines of credit
|
19,521
|
368
|
299
|
-
|
20,188
|
|||||||||||||||
Commercial real estate
|
155,766
|
13,208
|
5,938
|
-
|
174,912
|
|||||||||||||||
Commercial non-real estate
|
9,151
|
125
|
20
|
-
|
9,296
|
|||||||||||||||
Home equity
|
22,018
|
588
|
1,923
|
-
|
24,529
|
|||||||||||||||
Consumer
|
1,224
|
-
|
-
|
-
|
1,224
|
|||||||||||||||
Total loans
|
$
|
580,276
|
$
|
28,085
|
$
|
13,873
|
$
|
-
|
$
|
622,234
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Total
|
||||||||||||||||
December 31, 2014
|
||||||||||||||||||||
Residential mortgage
|
$
|
295,589
|
$
|
1,331
|
$
|
12,541
|
$
|
-
|
$
|
309,461
|
||||||||||
Construction acquisition and development
|
82,778
|
-
|
1,547
|
-
|
84,325
|
|||||||||||||||
Land
|
30,285
|
-
|
141
|
-
|
30,426
|
|||||||||||||||
Lines of credit
|
16,112
|
2,479
|
660
|
-
|
19,251
|
|||||||||||||||
Commercial real estate
|
181,686
|
7,172
|
9,681
|
-
|
198,539
|
|||||||||||||||
Commercial non-real estate
|
9,275
|
637
|
255
|
-
|
10,167
|
|||||||||||||||
Home equity
|
25,769
|
-
|
2,981
|
-
|
28,750
|
|||||||||||||||
Consumer
|
985
|
-
|
55
|
-
|
1,040
|
|||||||||||||||
Total loans
|
$
|
642,479
|
$
|
11,619
|
$
|
27,861
|
$
|
-
|
$
|
681,959
|
30-59
Days
Past Due
|
60-89 Days
Past Due
|
90+
Days
Past
Due
|
Total
Past
Due
|
Current
|
Total
Loans
|
Non-Accrual
|
||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||||||
Residential mortgage
|
$
|
1,593
|
$
|
65
|
$
|
2,461
|
$
|
4,119
|
$
|
281,811
|
$
|
285,930
|
$
|
3,191
|
||||||||||||||
Construction acquisition and development
|
-
|
-
|
-
|
-
|
77,478
|
77,478
|
244
|
|||||||||||||||||||||
Land
|
137
|
-
|
156
|
293
|
28,384
|
28,677
|
277
|
|||||||||||||||||||||
Lines of credit
|
149
|
-
|
-
|
149
|
20,039
|
20,188
|
483
|
|||||||||||||||||||||
Commercial real estate
|
253
|
-
|
292
|
545
|
174,367
|
174,912
|
2,681
|
|||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
9,296
|
9,296
|
-
|
|||||||||||||||||||||
Home equity
|
-
|
-
|
625
|
625
|
23,904
|
24,529
|
2,098
|
|||||||||||||||||||||
Consumer
|
3
|
-
|
-
|
3
|
1,221
|
1,224
|
-
|
|||||||||||||||||||||
Total loans
|
$
|
2,135
|
$
|
65
|
$
|
3,534
|
$
|
5,734
|
$
|
616,500
|
$
|
622,234
|
$
|
8,974
|
30-59
Days Past
Due
|
60-89 Days
Past Due
|
90+
Days
Past
Due
|
Total
Past
Due
|
Current
|
Total
Loans
|
Non-Accrual
|
||||||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||||||
Residential mortgage
|
$
|
2,549
|
$
|
2,333
|
$
|
3,095
|
$
|
7,977
|
$
|
301,484
|
$
|
309,461
|
$
|
6,052
|
||||||||||||||
Construction acquisition and development
|
-
|
-
|
-
|
-
|
84,325
|
84,325
|
115
|
|||||||||||||||||||||
Land
|
-
|
-
|
6
|
6
|
30,420
|
30,426
|
847
|
|||||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
19,251
|
19,251
|
388
|
|||||||||||||||||||||
Commercial real estate
|
447
|
45
|
375
|
867
|
197,672
|
198,539
|
652
|
|||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
10,167
|
10,167
|
1,775
|
|||||||||||||||||||||
Home equity
|
174
|
242
|
2,417
|
2,833
|
25,917
|
28,750
|
3,016
|
|||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
1,040
|
1,040
|
-
|
|||||||||||||||||||||
Total loans
|
$
|
3,170
|
$
|
2,620
|
$
|
5,893
|
$
|
11,683
|
$
|
670,276
|
$
|
681,959
|
$
|
12,845
|
Financial Instruments Whose Contract
Amounts Represent Credit Risk
|
Contract Amount
At December 31,
|
|||||||
2015
|
2014
|
|||||||
(dollars in thousands)
|
||||||||
Standby letters of credit
|
$
|
5,937
|
$
|
7,357
|
||||
Home equity lines of credit
|
7,467
|
8,571
|
||||||
Unadvanced construction commitments
|
21,101
|
36,162
|
||||||
Mortgage loan commitments
|
3,233
|
2,120
|
||||||
Lines of credit
|
27,189
|
23,844
|
||||||
Loans sold with limited repurchase provisions
|
65,107
|
38,247
|
· | Rate Modification – A modification in which the interest rate is changed. |
· | Term Modification – A modification in which the maturity date, timing of payments or frequency of payments is changed. |
· | Interest Only Modification – A modification in which the loan is converted to interest only payments for a period of time. |
· | Payment Modification – A modification in which the dollar amount of the payment is changed, other than an interest only modification above. |
· | Loan Balance Modification – A modification in which a portion of the outstanding loan balance is forgiven. |
· | Combination Modification – Any other type of modification, including the use of multiple categories above. |
Year ended December 31, 2015
|
||||||||||||||||||||||||||||||||
Rate
Modification
|
Contracts
|
Term
Modifications
|
Contracts
|
Combination Modifications
|
Contracts
|
Total
|
Total
Contracts
|
|||||||||||||||||||||||||
Pre-Modification Outstanding Recorded Investment:
|
||||||||||||||||||||||||||||||||
Residential mortgage
|
$
|
-
|
-
|
$
|
91
|
1
|
$
|
-
|
1
|
$
|
91
|
2
|
||||||||||||||||||||
Construction, acquisition and development
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
61
|
1
|
61
|
1
|
||||||||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Total loans
|
$
|
-
|
-
|
$
|
91
|
1
|
$
|
61
|
2
|
$
|
152
|
3
|
||||||||||||||||||||
Post-Modification Outstanding Recorded Investment:
|
||||||||||||||||||||||||||||||||
Residential mortgage
|
$
|
-
|
-
|
$
|
91
|
1
|
$
|
109
|
1
|
$
|
200
|
2
|
||||||||||||||||||||
Construction, acquisition and development
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
31
|
1
|
31
|
1
|
||||||||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Total loans
|
$
|
-
|
-
|
$
|
91
|
1
|
$
|
140
|
2
|
$
|
231
|
3
|
Year ended December 31, 2014 | ||||||||||||||||||||||||||||||||
Rate
Modification
|
Contracts
|
Term
Modifications
|
Contracts
|
Combination Modifications
|
Contracts
|
Total
|
Total
Contracts
|
|||||||||||||||||||||||||
Pre-Modification Outstanding Recorded Investment:
|
||||||||||||||||||||||||||||||||
Residential mortgage
|
-
|
-
|
-
|
-
|
$
|
447
|
2
|
$
|
447
|
2
|
||||||||||||||||||||||
Construction, acquisition and development
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
541
|
3
|
541
|
3
|
||||||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Total loans
|
-
|
-
|
-
|
-
|
$
|
988
|
5
|
$
|
988
|
5
|
||||||||||||||||||||||
Post-Modification Outstanding Recorded Investment:
|
||||||||||||||||||||||||||||||||
Residential mortgage
|
-
|
-
|
-
|
-
|
$
|
447
|
2
|
$
|
447
|
2
|
||||||||||||||||||||||
Construction, acquisition and development
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Land
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
541
|
3
|
541
|
3
|
||||||||||||||||||||||||
Commercial non-real estate
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Total loans
|
-
|
-
|
-
|
-
|
$
|
988
|
5
|
$
|
988
|
5
|
Number of
Contracts
|
Accrual
Status
|
Number of
Contracts
|
Non-
Accrual
Status
|
Total
Number of
Contracts
|
Total
Modifications
|
|||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||
Residential mortgage
|
55
|
$
|
20,831
|
3
|
$
|
1,071
|
58
|
$
|
21,902
|
|||||||||||||||
Construction, acquisition and development
|
1
|
71
|
-
|
-
|
1
|
71
|
||||||||||||||||||
Land
|
6
|
907
|
1
|
6
|
7
|
913
|
||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Commercial real estate
|
4
|
2,464
|
2
|
252
|
6
|
2,716
|
||||||||||||||||||
Commercial non-real estate
|
4
|
103
|
-
|
-
|
4
|
103
|
||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Consumer
|
1
|
10
|
-
|
-
|
1
|
10
|
||||||||||||||||||
Total loans
|
71
|
$
|
24,386
|
6
|
$
|
1,329
|
77
|
$
|
25,715
|
|||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||
Residential mortgage
|
57
|
$
|
22,154
|
5
|
$
|
2,402
|
62
|
$
|
24,556
|
|||||||||||||||
Construction, acquisition and development
|
2
|
803
|
-
|
-
|
2
|
803
|
||||||||||||||||||
Land
|
5
|
982
|
1
|
6
|
6
|
988
|
||||||||||||||||||
Lines of credit
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Commercial real estate
|
6
|
3,623
|
1
|
109
|
7
|
3,732
|
||||||||||||||||||
Commercial non-real estate
|
5
|
150
|
2
|
124
|
7
|
274
|
||||||||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Consumer
|
1
|
12
|
-
|
-
|
1
|
12
|
||||||||||||||||||
Total loans
|
76
|
$
|
27,724
|
9
|
$
|
2,641
|
85
|
$
|
30,365
|
· | The loan has been foreclosed on. Once the loan has been transferred from the loans receivable to foreclosed real estate, a charge off is recorded for the difference between the recorded amount of the loan and the net value of the underlying collateral. |
· | An agreement to accept less than the face value of the loan has been made with the borrower. Once an agreement has been finalized, and any proceeds from the borrower are received, a charge off is recorded for the difference between the recorded amount of the loan and the net value of the underlying collateral. |
December 31,
|
Estimated
|
|||||||||||
2015
|
2014
|
Useful Lives
|
||||||||||
(dollars in thousands)
|
||||||||||||
Land
|
$
|
1,537
|
$
|
1,537
|
-
|
|||||||
Building
|
29,464
|
29,423
|
39 Years
|
|||||||||
Leasehold improvements
|
1,676
|
1,675
|
15-27.5 Years
|
|||||||||
Furniture, fixtures and equipment
|
2,385
|
2,985
|
3-10 Years
|
|||||||||
Construction in process
|
37
|
-
|
||||||||||
Total at cost
|
35,099
|
35,620
|
||||||||||
Accumulated depreciation
|
(10,809
|
)
|
(10,461
|
)
|
||||||||
$
|
24,290
|
$
|
25,159
|
Years Ended December 31, (in thousands)
|
||||
2016
|
$
|
152
|
||
2017
|
152
|
|||
2018
|
134
|
|||
2019
|
134
|
|||
2020
|
94
|
Years Ended December 31, (in thousands)
|
||||
2016
|
$
|
974
|
||
2017
|
674
|
|||
2018
|
455
|
|||
2019
|
217
|
Foreclosed real estate at December 31, 2013
|
$
|
8,972
|
||
Transferred from impaired loans, net of specific reserves of $3,303
|
847
|
|||
Property improvements
|
-
|
|||
Additional write downs
|
-
|
|||
Property sold, including loss on sale
|
(7,872
|
)
|
||
Foreclosed real estate at December 31, 2014
|
$
|
1,947
|
||
Transferred from impaired loans, net of specific reserves of $2,282
|
2,234
|
|||
Property improvements
|
-
|
|||
Additional write downs
|
(58
|
)
|
||
Property sold, including loss on sale
|
(2,379
|
)
|
||
Foreclosed real estate at December 31, 2015
|
$
|
1,744
|
December 31, 2015
|
December 31, 2014
|
|||||||||||||||
Category
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||||
(dollars in thousands)
|
||||||||||||||||
NOW accounts
|
$
|
56,096
|
10.71
|
%
|
$
|
54,827
|
10.08
|
%
|
||||||||
Money market accounts
|
47,690
|
9.11
|
%
|
39,579
|
7.28
|
%
|
||||||||||
Passbooks
|
111,992
|
21.38
|
%
|
126,062
|
23.18
|
%
|
||||||||||
Certificates of deposit
|
277,778
|
53.03
|
%
|
298,489
|
54.89
|
%
|
||||||||||
Non-interest bearing accounts
|
30,215
|
5.77
|
%
|
24,857
|
4.57
|
%
|
||||||||||
Total deposits
|
$
|
523,771
|
100.00
|
%
|
$
|
543,814
|
100.00
|
%
|
Amount
|
||||
(dollars in thousands)
|
||||
One year or less
|
$
|
169,298
|
||
More than 1 year to 2 years
|
56,335
|
|||
More than 2 years to 3 years
|
21,899
|
|||
More than 3 years to 4 years
|
5,936
|
|||
More than 4 years to 5 years
|
24,310
|
|||
$
|
277,778
|
Rate
|
Amount
|
Maturity
|
|||||||
1.81% to 1.83%
|
$
|
15,000
|
2016
|
||||||
2.43% to 4.05%
|
70,000
|
2017
|
|||||||
2.58% to 3.43%
|
15,000
|
2018
|
|||||||
4.00% |
|
15,000
|
2019
|
||||||
$
|
115,000
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
|
Aggregate
Intrinsic
Value
|
|||||||||||
Options outstanding, December 31, 2013
|
319,000
|
$
|
4.23
|
|||||||||||
Options granted
|
50,000
|
4.67
|
||||||||||||
Options exercised
|
(700
|
)
|
3.37
|
|||||||||||
Options forfeited
|
(40,100
|
)
|
3.93
|
|||||||||||
Options outstanding, December 31, 2014
|
328,200
|
4.33
|
||||||||||||
Options granted
|
111,500
|
5.85
|
||||||||||||
Options exercised
|
(21,500
|
)
|
4.48
|
|||||||||||
Options forfeited
|
(78,400
|
)
|
4.29
|
|||||||||||
Options outstanding, December 31, 2015
|
339,800
|
4.83
|
3.48
|
$322,714
|
||||||||||
Options exercisable, December 31, 2015
|
104,230
|
4.17
|
2.53
|
$164,859
|
||||||||||
Option price range at December 31, 2015
|
|
|
$3.37 to $6.33
|
2015
|
2014
|
|||||||
Expected life of options
|
5.5 years
|
5.5 years
|
||||||
Risk-free interest rate
|
1.71
|
%
|
1.76
|
%
|
||||
Expected volatility
|
61.84
|
%
|
66.61
|
%
|
||||
Expected dividend yield
|
0.00
|
%
|
0.00
|
%
|
||||
Weighted average fair value of options granted
|
$
|
3.16
|
$
|
2.63
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||
Nonvested options outstanding, December 31, 2014
|
198,505
|
$
|
4.44
|
|||||
Nonvested options granted
|
111,500
|
5.85
|
||||||
Nonvested options vested
|
(45,435
|
)
|
4.31
|
|||||
Nonvested options forfeited
|
(29,000
|
)
|
4.55
|
|||||
Nonvested options outstanding, December 31, 2015
|
235,570
|
$
|
5.13
|
Actual
|
For Capital
Adequacy Purposes
|
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
|
||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
December 31, 2015
|
||||||||||||||||||||||||
Tangible (1)
|
$
|
112,959
|
14.8
|
%
|
$
|
11,423
|
1.50
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Tier 1 capital (2)
|
112,959
|
19.6
|
%
|
34,626
|
6.00
|
%
|
$
|
46,168
|
8.00
|
%
|
||||||||||||||
Common Equity Tier 1 (2)
|
112,959
|
19.6
|
%
|
25,970
|
4.50
|
%
|
$
|
37,512
|
6.50
|
%
|
||||||||||||||
Leverage (1)
|
112,959
|
14.8
|
%
|
30,461
|
4.00
|
%
|
38,076
|
5.00
|
%
|
|||||||||||||||
Total (2)
|
120,193
|
20.8
|
%
|
46,168
|
8.00
|
%
|
57,710
|
10.00
|
%
|
|||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||
Tangible (1)
|
$
|
106,916
|
13.8
|
%
|
$
|
11,590
|
1.50
|
%
|
N/
|
A
|
N/
|
A
|
||||||||||||
Tier 1 capital (2)
|
106,916
|
19.4
|
%
|
N/
|
A
|
N/
|
A
|
$
|
33,081
|
6.00
|
%
|
|||||||||||||
Leverage (1)
|
106,916
|
13.8
|
%
|
30,906
|
4.00
|
%
|
38,633
|
5.00
|
%
|
|||||||||||||||
Total (2)
|
113,848
|
20.6
|
%
|
44,108
|
8.00
|
%
|
55,135
|
10.00
|
%
|
2015
|
2014
|
|||||||
Current
|
||||||||
Federal
|
$
|
83
|
$
|
12
|
||||
State
|
7
|
19
|
||||||
90
|
31
|
|||||||
Deferred
|
||||||||
Federal
|
1,486
|
1,029
|
||||||
State
|
321
|
251
|
||||||
1,807
|
1,280
|
|||||||
Valuation allowance
|
(1,807
|
)
|
(1,280
|
)
|
||||
Total income tax provision
|
$
|
90
|
$
|
31
|
2015
|
2014
|
|||||||||||||||
Amount
|
Percent of
Pretax
Income
|
Amount
|
Percent of
Pretax
Income
|
|||||||||||||
Statutory Federal income tax rate
|
$
|
1,572
|
34.0
|
%
|
$
|
1,000
|
34.0
|
%
|
||||||||
State tax net of Federal income tax benefit
|
216
|
4.7
|
%
|
178
|
6.1
|
%
|
||||||||||
Valuation allowance change
|
(1,807
|
)
|
(39.1
|
)%
|
(1,280
|
)
|
(43.5
|
)%
|
||||||||
Other adjustments
|
109
|
2.4
|
%
|
133
|
4.5
|
%
|
||||||||||
$
|
90
|
2.0
|
%
|
$
|
31
|
1.1
|
%
|
2015
|
2014
|
|||||||
(dollars in thousands)
|
||||||||
Deferred Tax Assets:
|
||||||||
Allowance for loan losses
|
$
|
5,456
|
$
|
5,648
|
||||
Loan charge-offs
|
-
|
-
|
||||||
Reserve on foreclosed real estate
|
552
|
565
|
||||||
Reserve for uncollected interest
|
143
|
263
|
||||||
Reserve for contingent liability
|
57
|
128
|
||||||
Federal net operating loss carryforwards
|
7,306
|
8,593
|
||||||
State net operating loss carryforwards
|
1,457
|
1,606
|
||||||
Charitable contribution carryforwards
|
319
|
319
|
||||||
Other
|
88
|
12
|
||||||
Total deferred tax assets
|
15,378
|
17,134
|
||||||
Valuation allowance
|
(12,485
|
)
|
(14,292
|
)
|
||||
Total deferred tax assets, net of valuation allowance
|
2,893
|
2,842
|
||||||
Deferred Tax Liabilities:
|
||||||||
Federal Home Loan Bank stock dividends
|
(84
|
)
|
(84
|
)
|
||||
Loan origination costs
|
(733
|
)
|
(627
|
)
|
||||
Accelerated depreciation
|
(1,544
|
)
|
(1,599
|
)
|
||||
Prepaid expenses
|
(278
|
)
|
(265
|
)
|
||||
Mortgage servicing rights
|
(252
|
)
|
(265
|
)
|
||||
Other
|
(2
|
)
|
(2
|
)
|
||||
Total deferred tax liabilities
|
(2,893
|
)
|
(2,842
|
)
|
||||
Net deferred tax assets
|
$
|
-
|
$
|
-
|
2015
|
||||
Beginning balance as of December 31, 2014
|
$
|
3,340,000
|
||
Loan funding
|
-
|
|||
Loan pay off/payment
|
154,000
|
|||
Ending balance as of December 31, 2015
|
$
|
3,186,000
|
December 31, 2015
Fair Value Measurement Using:
|
||||||||||||||||
December 31, 2015
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Nonrecurring fair value measurements
|
||||||||||||||||
Impaired loans
|
$
|
17,103
|
$
|
-
|
$
|
-
|
$
|
17,103
|
||||||||
Foreclosed real estate
|
543
|
-
|
-
|
543
|
||||||||||||
Total nonrecurring fair value measurements
|
$
|
17,646
|
$
|
-
|
$
|
-
|
$
|
17,646
|
||||||||
Recurring fair value measurements
|
||||||||||||||||
Mortgage servicing rights
|
$
|
623
|
$
|
-
|
$
|
-
|
$
|
623
|
||||||||
Rate lock commitments
|
141
|
-
|
141
|
-
|
||||||||||||
Mandatory forward contracts
|
111
|
-
|
111
|
-
|
||||||||||||
Total recurring fair value measurements
|
$
|
875
|
$
|
-
|
$
|
252
|
$
|
623
|
December 31, 2014
Fair Value Measurement Using:
|
||||||||||||||||
December 31, 2014
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
(dollars in thousands)
|
||||||||||||||||
Nonrecurring fair value measurements
|
||||||||||||||||
Impaired loans
|
$
|
15,959
|
$
|
-
|
$
|
-
|
$
|
15,959
|
||||||||
Foreclosed real estate
|
1,947
|
-
|
-
|
1,947
|
||||||||||||
Total nonrecurring fair value measurements
|
$
|
17,906
|
$
|
-
|
$
|
-
|
$
|
17,906
|
||||||||
Recurring fair value measurements
|
||||||||||||||||
Mortgage servicing rights
|
$
|
658
|
$
|
-
|
$
|
-
|
$
|
658
|
||||||||
Rate lock commitments
|
139
|
-
|
139
|
-
|
||||||||||||
Mandatory forward contracts
|
(59
|
)
|
-
|
(59
|
)
|
-
|
||||||||||
Total recurring fair value measurements
|
$
|
738
|
$
|
-
|
$
|
80
|
$
|
658
|
Quantitative Information about Level 3 Fair Value Measurements
|
||||||||||
Fair Value
Estimate
|
Valuation
Techniques
|
Unobservable Input
|
Range (Weighted
Average)
|
|||||||
December 31, 2015
|
||||||||||
Impaired loans
|
$
|
13,884
|
PV of future cash flows (1)
|
Discount Rate
|
-6.00
|
%
|
||||
$
|
3,219
|
Appraisal of collateral (2)
|
Liquidation expenses (3)
|
-6.00
|
%
|
|||||
Foreclosed real estate
|
$
|
543
|
Appraisal of collateral (2),(4)
|
Appraisal adjustments (3)
|
-6.12% to -7.31% (-6.24%)
|
|||||
December 31, 2014
|
||||||||||
Impaired loans
|
$
|
15,589
|
PV of future cash flows (1)
|
Discount Rate
|
-6.00
|
%
|
||||
$
|
370
|
Appraisal of collateral (2)
|
Liquidation expenses (3)
|
-6.00
|
%
|
|||||
Foreclosed real estate
|
$
|
1,947
|
Appraisal of collateral (2),(4)
|
Appraisal adjustments (3)
|
-6.51% to -100% (-13.94%)
|
|||||
(1) | Cash flow which generally include various level 3 inputs which are not identifiable. |
(2) | Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable. |
(3) | Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal. |
(4) | Includes qualitative adjustments by management and estimated liquidation expenses. |
Fair Value Measurement at
December 31, 2015
|
||||||||||||||||||||
Carrying
Amount
|
Fair
Value
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
Financial Assets
|
(dollars in thousands)
|
|||||||||||||||||||
Cash and cash equivalents
|
$
|
43,591
|
$
|
43,591
|
$
|
43,591
|
$
|
-
|
$
|
-
|
||||||||||
Investment securities (HTM)
|
76,133
|
76,310
|
-
|
76,310
|
-
|
|||||||||||||||
Loans held for sale
|
13,203
|
13,295
|
-
|
13,295
|
-
|
|||||||||||||||
Loans receivable, net
|
589,656
|
593,742
|
-
|
-
|
593,742
|
|||||||||||||||
FHLB stock
|
5,626
|
5,626
|
-
|
5,626
|
-
|
|||||||||||||||
Accrued interest receivable
|
2,218
|
2,218
|
-
|
2,218
|
-
|
|||||||||||||||
Mortgage servicing rights
|
623
|
623
|
-
|
-
|
623
|
|||||||||||||||
Rate lock commitments
|
141
|
141
|
-
|
141
|
-
|
|||||||||||||||
Mandatory forward contracts
|
111
|
111
|
-
|
111
|
-
|
|||||||||||||||
Financial Liabilities
|
||||||||||||||||||||
Deposits
|
$
|
523,771
|
$
|
524,458
|
-
|
524,458
|
-
|
|||||||||||||
FHLB advances
|
115,000
|
110,759
|
-
|
110,759
|
-
|
|||||||||||||||
Subordinated debentures
|
24,119
|
24,119
|
-
|
-
|
24,119
|
|||||||||||||||
Accrued interest payable
|
3,137
|
3,137
|
-
|
3,137
|
-
|
|||||||||||||||
Off Balance Sheet Commitments
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Fair Value Measurement at
December 31, 2014
|
|||||||||||||||||||
Carrying
Amount
|
Fair
Value
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||||
Financial Assets
|
(dollars in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
33,335
|
$
|
33,335
|
33,335
|
$
|
-
|
$
|
-
|
||||||||||
Investment securities (HTM)
|
59,616
|
60,123
|
-
|
60,123
|
-
|
||||||||||||||
Loans held for sale
|
7,165
|
7,211
|
-
|
7,211
|
-
|
||||||||||||||
Loans receivable, net
|
633,882
|
636,696
|
-
|
-
|
636,696
|
||||||||||||||
FHLB stock
|
5,936
|
5,936
|
-
|
5,936
|
-
|
||||||||||||||
Accrued interest receivable
|
2,297
|
2,297
|
-
|
2,297
|
-
|
||||||||||||||
Mortgage servicing rights
|
658
|
658
|
-
|
-
|
658
|
||||||||||||||
Rate lock commitments
|
139
|
139
|
-
|
139
|
-
|
||||||||||||||
Financial Liabilities
|
|||||||||||||||||||
Deposits
|
$
|
543,814
|
$
|
544,751
|
-
|
544,751
|
-
|
||||||||||||
FHLB advances
|
115,000
|
108,859
|
-
|
108,859
|
-
|
||||||||||||||
Subordinated debentures
|
24,119
|
24,119
|
-
|
-
|
24,119
|
||||||||||||||
Accrued interest payable
|
2,136
|
2,136
|
-
|
2,136
|
-
|
||||||||||||||
Mandatory forward contracts
|
59
|
59
|
-
|
59
|
-
|
||||||||||||||
Off Balance Sheet Commitments
|
$
|
-
|
$
|
-
|
-
|
$
|
-
|
$
|
-
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
(dollars in thousands)
|
||||||||
Statements of Financial Condition
|
||||||||
Cash
|
$
|
993
|
$
|
1,316
|
||||
Equity in net assets of subsidiaries:
|
||||||||
Bank
|
113,294
|
107,316
|
||||||
Non-Bank
|
3,881
|
3,758
|
||||||
Loans, net of allowance for loan losses
|
-
|
-
|
||||||
Other assets
|
912
|
920
|
||||||
Total assets
|
$
|
119,080
|
$
|
113,310
|
||||
Subordinated debentures
|
$
|
24,119
|
$
|
24,119
|
||||
Other liabilities
|
8,505
|
5,381
|
||||||
Total liabilities
|
32,624
|
29,500
|
||||||
Stockholders’ equity
|
86,456
|
83,810
|
||||||
Total liabilities and stockholders’ equity
|
$
|
119,080
|
$
|
113,310
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Statements of Operations
|
||||||||
Interest income
|
$
|
-
|
$
|
34
|
||||
Interest expense on subordinated debentures
|
1,322
|
1,086
|
||||||
Net interest expense
|
(1,322
|
)
|
(1,052
|
)
|
||||
General and administrative expenses
|
243
|
242
|
||||||
Provision for loan losses
|
-
|
(19
|
)
|
|||||
Loss before income taxes and equity in undistributed net income of subsidiaries
|
(1,565
|
)
|
(1,275
|
)
|
||||
Income tax expense
|
-
|
(20
|
)
|
|||||
Equity in undistributed net income of subsidiaries
|
6,100
|
4,204
|
||||||
Net income
|
$
|
4,535
|
$
|
2,909
|
For the Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
(dollars in thousands)
|
||||||||
Statements of Cash Flows
|
||||||||
Cash Flows from Operating Activities:
|
||||||||
Net income
|
$
|
4,535
|
$
|
2,909
|
||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Equity in undistributed earnings of subsidiaries
|
(6,100
|
)
|
(4,204
|
)
|
||||
Provision for loan losses
|
-
|
(19
|
)
|
|||||
Decrease in other assets
|
8
|
559
|
||||||
Stock-based compensation expense
|
120
|
201
|
||||||
Increase in other liabilities
|
1,018
|
298
|
||||||
Cash used in operating activities
|
(419
|
)
|
(256
|
)
|
||||
Cash Flows from Investing Activities:
|
||||||||
Net decrease in loans
|
-
|
350
|
||||||
Cash provided by investing activities
|
-
|
350
|
||||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from sale of foreclosed real estate
|
-
|
250
|
||||||
Proceeds from exercise of options
|
96
|
3
|
||||||
Cash provided by financing activities
|
96
|
253
|
||||||
(Decrease) increase in cash and cash equivalents
|
(323
|
)
|
347
|
|||||
Cash and cash equivalents at beginning of year
|
1,316
|
969
|
||||||
Cash and cash equivalents at end of year
|
$
|
993
|
$
|
1,316
|
Entity
|
Jurisdiction of Formation
|
Severn Savings Bank, FSB.
|
United States of America (federally chartered savings association)
|
Louis Hyatt, Inc. (d/b/a Hyatt Commercial)
|
Maryland
|
HS West, LLC
|
Maryland
|
Severn Financial Services Corporation
|
Maryland
|
SSB Realty Holdings, LLC
|
Maryland
|
SSB Realty Holdings II, LLC
|
Maryland
|
Homeowners Title and Escrow Corporation
|
Maryland
|
SBI Mortgage Company
|
Maryland
|
Crownsville Development Corporation (d/b/a Annapolis Equity Group)
|
Maryland
|
Crownsville Holdings I, LLC
|
Maryland
|
/s/BDO USA, LLP
|
|
Harrisburg, Pennsylvania
|
|
March 17, 2016
|
1) | I have reviewed this annual report on Form 10-K of Severn Bancorp, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 17, 2016
|
|
/s/ Alan J. Hyatt
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1) | I have reviewed this annual report on Form 10-K of Severn Bancorp, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 17, 2016
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/s/ Thomas G. Bevivino
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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Bancorp.
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SEVERN BANCORP, INC.
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Date: March 17, 2016
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/s/ Alan J. Hyatt
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Alan J. Hyatt, President, Chief Executive Officer
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and Chairman of the Board
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(Principal Executive Officer)
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Date: March 17, 2016
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/s/ Thomas G, Bevivino
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Thomas G. Bevivino, Executive Vice President,
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and Chief Financial Officer
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(Principal Financial Officer)
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Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2015 |
Mar. 01, 2016 |
Jun. 30, 2015 |
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Document and Entity Information [Abstract] | |||
Entity Registrant Name | SEVERN BANCORP INC | ||
Entity Central Index Key | 0000868271 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 30,849,450 | ||
Entity Common Stock, Shares Outstanding | 10,088,879 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands |
Preferred Stock [Member] |
Common Stock [Member] |
Additional Paid-In Capital [Member] |
Retained Earnings [Member] |
Total |
Series B Preferred Stock [Member]
Preferred Stock [Member]
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Series B Preferred Stock [Member]
Common Stock [Member]
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Series B Preferred Stock [Member]
Additional Paid-In Capital [Member]
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Series B Preferred Stock [Member]
Retained Earnings [Member]
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Series B Preferred Stock [Member] |
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Balance at Dec. 31, 2013 | $ 4 | $ 101 | $ 75,374 | $ 7,290 | $ 82,769 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net Income | 0 | 0 | 0 | 2,909 | 2,909 | |||||
Stock-based compensation | 0 | 0 | 201 | 0 | 201 | |||||
Dividend declared on Series B preferred stock | $ 0 | $ 0 | $ 0 | $ (2,072) | $ (2,072) | |||||
Amortization of discount on Series B preferred stock | 0 | 0 | 270 | (270) | 0 | |||||
Exercised Options | 0 | 0 | 3 | 0 | 3 | |||||
Balance at Dec. 31, 2014 | 4 | 101 | 75,848 | 7,857 | 83,810 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net Income | 0 | 0 | 0 | 4,535 | 4,535 | |||||
Stock-based compensation | 0 | 0 | 120 | 0 | 120 | |||||
Dividend declared on Series B preferred stock | $ 0 | $ 0 | 0 | (2,105) | (2,105) | |||||
Amortization of discount on Series B preferred stock | $ 271 | $ (271) | $ 0 | |||||||
Exercised Options | 0 | 0 | 96 | 0 | 96 | |||||
Balance at Dec. 31, 2015 | $ 4 | $ 101 | $ 76,335 | $ 10,016 | $ 86,456 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - shares |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Number of options exercised (in shares) | (21,500) | (700) |
Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting Policies
Bancorp has no reportable segments. Management does not separately allocate expenses, including the cost of funding loan demand, between the retail and real estate operations of Bancorp. As such, discrete financial information is not available and segment reporting would not be meaningful.
The Bank evaluated the FHLB stock for impairment in accordance with generally accepted accounting principles. The Bank’s determination of whether this investment is impaired is based on an assessment of the ultimate recoverability of its cost rather than by recognizing temporary declines in value. The determination of whether a decline in value affects the ultimate recoverability of its cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and accordingly on the customer base of the FHLB, and (4) the liquidity position of the FHLB. Management has evaluated the FHLB stock for impairment and believes that no impairment charge is necessary as of December 31, 2015.
Loans serviced for others not included in the accompanying consolidated statements of financial condition totaled $76,460,000 and $93,332,000 at December 31, 2015 and 2014, respectively. As of December 31, 2015, the Bank was servicing $20,454,000 in loans for Federal Home Loan Mortgage Corporation (“FHLMC”), $44,366,000 in loans for Federal National Mortgage Association (“FNMA”) and $11,640,000 in loans for other investors.
Residential lending is generally considered to involve less risk than other forms of lending, although payment experience on these loans is dependent to some extent on economic and market conditions in the Bank's lending area. Multifamily residential, commercial, construction and other loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy. A substantial portion of the Bank's loans receivable is mortgage loans secured by residential and commercial real estate properties located in the State of Maryland. Loans are extended only after evaluation by management of customers' creditworthiness and other relevant factors on a case-by-case basis. The Bank generally does not lend more than 80% of the appraised value of a property and requires private mortgage insurance on residential mortgages with loan-to-value ratios in excess of 80%. In addition, the Bank generally obtains personal guarantees of repayment from borrowers and/or others for construction, commercial and multifamily residential loans and disburses the proceeds of construction and similar loans only as work progresses on the related projects. The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued in the current year, but not collected for loans that are placed on non-accrual or charged-off, is reversed against interest income. Any interest accrued in prior years for loans that are placed on non-accrual or charged-off is charged against the allowance for loan losses. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. When a real estate secured loan becomes impaired, a decision is made as to whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. For loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For such loans that are classified as impaired, an allowance is established when the current market value of the underlying collateral less its estimated disposal costs has not been finalized, but management determines that it is likely that the value is lower than the carrying value of that loan. Once the net collateral value has been determined, a charge-off is taken for the difference between the net collateral value and the carrying value of the loan. For loans that are not solely collateral dependent, an allowance is established when the present value of the expected future cash flows of the impaired loan is lower than the carrying value of that loan. The general component relates to loans that are classified as doubtful, substandard or special mention that are not considered impaired, as well as non-classified loans. The general reserve is based on historical loss experience adjusted for qualitative factors. These qualitative factors include:
A loan is generally considered impaired if it meets either of the following two criteria:
Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established. Bancorp recognizes a tax position as a benefit only if it “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The judgment about the level of future taxable income is inherently subjective and is reviewed on a continual basis as regulatory and business factors change. Bancorp recognizes interest and penalties on income taxes as a component of income tax expense.
Not included in the diluted earnings per share calculation for the years ended December 31, 2015 and 2014, because they were anti-dilutive, were shares of common stock issuable upon exercise of outstanding stock options totaling 151,500 and 172,000, respectively, 556,976 shares of common stock issuable upon the exercise of a warrant and 437,500 shares of common stock issuable upon conversion of Bancorp’s Series A preferred stock.
Bancorp’s investment portfolio consists principally of obligations of the United States and its agencies. In the opinion of management, there is no concentration of credit risk in its investment portfolio. Bancorp places deposits in correspondent accounts and, on occasion, sells Federal funds to qualified financial institutions. Management believes credit risk associated with correspondent accounts and with Federal funds sold is not significant. Therefore, management believes that these particular practices do not subject Bancorp to unusual credit risk.
Under ASU 2014-09, Revenue from Contracts with Customers, establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance. The revenue standard’s core principal is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. The new standard applies to all public entities for annual periods beginning after December 15, 2017. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that year. Bancorp has evaluated the effect of ASU 2014-09 and believes adoption will not have a material effect on the Consolidated Financial Statements. Financial Statements. Under ASU 2016-01, Amendment to the Recognition and Measurement Guidance for Financial Instruments, an entity is required to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in Other Comprehensive Income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of Available For Sale debt securities in combination with other deferred tax assets. The Amendment provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Amendment also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The new standard takes effect in 2018 for public companies. Early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities. Bancorp has evaluated the effect of ASU 2016-01 and believes adoption will not have a material effect on the Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, “Leases.” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact this update will have on its consolidated financial position and results of operations.
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Investment Securities |
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Investment Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Note 2 - Investment Securities The amortized cost and fair value of investment securities held to maturity are as follows:
As of December 31, 2015 and 2014, there were $0 and $4,244,000, respectively, of US Treasury securities or mortgage-backed securities pledged by Bancorp as collateral for borrowers’ letters of credit with Anne Arundel County. Bancorp is no longer required to pledge collateral due to its improved financial condition. The following table shows fair value and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2015. Included in the table are four US Treasury securities, thirteen Agency securities and twelve Mortgage-backed securities in a gross unrealized loss position at December 31, 2015. There were seven US Treasury securities, ten Agency securities and five Mortgage-backed securities in a gross unrealized loss position at December 31, 2014. Management believes that the unrealized losses in 2015 and 2014 were the result of interest rate levels differing from those existing at the time of purchase of the securities and actual and estimated prepayment speeds. The Bank does not consider any of these securities to be other than temporarily impaired at December 31, 2015 or December 31, 2014, because the unrealized losses were related primarily to changes in market interest rates and widening of sector spreads and were not necessarily related to the credit quality of the issuers of the securities.
The amortized cost and estimated fair value of debt securities as of December 31, 2015, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Loans Receivable |
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Loans Receivable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable | Note 3 - Loans Receivable Loans receivable, including unfunded commitments consist of the following:
The inherent credit risks within the portfolio vary depending upon the loan class as follows: Residential mortgage loans are secured by one to four family dwelling units. The loans have limited risk as they are secured by first mortgages on the unit, which are generally the primary residence of the borrower, at a loan to value ratio of 80% or less. Construction, land acquisition and development loans are underwritten based upon a financial analysis of the developers and property owners and construction cost estimates, in addition to independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project rather than the ability of the borrower or guarantor to repay principal and interest. If the Bank is forced to foreclose on a project prior to or at completion, due to a default, there can be no assurance that the Bank will be able to recover all of the unpaid balance of the loan as well as related foreclosure and holding costs. In addition, the Bank may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time. Sources of repayment of these loans typically are permanent financing expected to be obtained upon completion or sales of developed property. These loans are closely monitored by onsite inspections and are considered to be of a higher risk than other real estate loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term financing, interest rate sensitivity, and governmental regulation of real property. Land loans are underwritten based upon the independent appraisal valuations as well as the estimated value associated with the land upon completion of development. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other real estate loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term financing, interest rate sensitivity, and governmental regulation of real property. Line of credit loans are subject to the underwriting standards and processes similar to commercial non-real estate loans, in addition to those underwriting standards for real estate loans. These loans are viewed primarily as cash flow dependent and secondarily as loans secured by real-estate and/or other assets. Repayment of these loans is generally dependent upon the successful operation of the property securing the loan or the principal business conducted on the property securing the loan. Line of credit loans may be adversely affected by conditions in the real estate markets or the economy in general. Management monitors and evaluates line of credit loans based on collateral and risk-rating criteria. Commercial real estate loans are subject to the underwriting standards and processes similar to commercial and industrial loans, in addition to those underwriting standards for real-estate loans. These loans are viewed primarily as cash flow dependent and secondarily as loans secured by real estate. Repayment of these loans is generally dependent upon the successful operation of the property securing the loan or the principal business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or the economy in general. Management monitors and evaluates commercial real estate loans based on collateral and risk-rating criteria. The Bank also utilizes third-party experts to provide environmental and market valuations. The nature of commercial real estate loans makes them more difficult to monitor and evaluate. Commercial non-real estate loans are underwritten after evaluating historical and projected profitability and cash flow to determine the borrower's ability to repay their obligation as agreed. Commercial and industrial loans are made primarily based on the identified cash flow of the borrower and secondarily on the underlying collateral supporting the loan facility. Accordingly, the repayment of a commercial and industrial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. Home equity loans are subject to the underwriting standards and processes similar to residential mortgages and are secured by one to four family dwelling units. Home equity loans have greater risk than residential mortgages as a result of the Bank being in a second lien position in the event collateral is liquidated. Consumer loans consist of loans to individuals through the Bank's retail network and are typically unsecured or secured by personal property. Consumer loans have a greater credit risk than residential loans because of the difference in the underlying collateral, if any. The application of various federal and state bankruptcy and insolvency laws may limit the amount that can be recovered on such loans. The loan portfolio segments and loan classes disclosed above are the same because this is the level of detail management uses when the original loan is recorded and is the level of detail used by management to assess and monitor the risk and performance of the portfolio. Management has determined that this level of detail is adequate to understand and manage the inherent risks within each portfolio segment and loan class. A loan is considered a troubled debt restructuring when for economic or legal reasons relating to the borrowers financial difficulties Bancorp grants a concession to the borrower that it would not otherwise consider. Loan modifications made with terms consistent with current market conditions that the borrower could obtain in the open market are not considered troubled debt restructurings. With respect to all loan segments, management does not charge off a loan, or a portion of a loan, until one of the following conditions have been met:
Prior to the above conditions, a loan is assessed for impairment when: (i) a loan becomes 90 days or more in arrears or (ii) based on current information and events, it is probable that the borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. If a loan is considered to be impaired, it is then determined to be either cash flow or collateral dependent. For a cash flow dependent loan, if based on management’s calculation of discounted cash flows, a reserve is needed, a specific reserve is recorded. That reserve is included in the Allowance for Loan Losses in the Consolidated Statement of Financial Condition. Bancorp has experienced extension requests for commercial real estate and construction loans, some of which have related repayment guarantees. An extension may be granted to allow for the completion of the project, marketing or sales of completed units, or to provide for permanent financing, and is based on a re-underwriting of the loan and management's assessment of the borrower's ability to perform according to the agreed-upon terms. Typically, at the time of an extension, borrowers are performing in accordance with contractual loan terms. Extension terms generally do not exceed 12 to 18 months and typically require that the borrower provide additional economic support in the form of partial repayment, additional collateral or guarantees. In cases where the fair value of the collateral or the financial resources of the borrower are deemed insufficient to repay the loan, reliance may be placed on the support of a guarantee, if applicable. However, such guarantees are not relied on when evaluating a loan for impairment and never considered the sole source of repayment. Bancorp evaluates the financial condition of guarantors based on the most current financial information available. Most often, such information takes the form of (i) personal financial statements of net worth, cash flow statements and tax returns (for individual guarantors) and (ii) financial and operating statements, tax returns and financial projections (for legal entity guarantors). Bancorp’s evaluation is primarily focused on various key financial metrics, including net worth, leverage ratios, and liquidity. It is Bancorp's policy to update such information annually, or more frequently as warranted, over the life of the loan. While Bancorp does not specifically track the frequency with which it has pursued guarantor performance under a guarantee, its underwriting process, both at origination and upon extension, as applicable, includes an assessment of the guarantor's reputation, creditworthiness and willingness to perform. Historically, when Bancorp has found it necessary to seek performance under a guarantee, it has been able to effectively mitigate its losses. As stated above, Bancorp’s ability to seek performance under a guarantee is directly related to the guarantor's reputation, creditworthiness and willingness to perform. When a loan becomes impaired, repayment is sought from both the underlying collateral and the guarantor (as applicable). In the event that the guarantor is unwilling or unable to perform, a legal remedy is pursued. Construction loans are funded, at the request of the borrower, typically not more than once per month, based on the extent of work completed, and are monitored, throughout the life of the project, by independent professional construction inspectors and Bancorp's commercial real estate lending department. Interest is advanced to the borrower, upon request, based upon the progress of the project toward completion. The amount of interest advanced is added to the total outstanding principal under the loan commitment. Should the project not progress as scheduled, the adequacy of the interest reserve necessary to carry the project through to completion is subject to close monitoring by management. Should the interest reserve be deemed to be inadequate, the borrower is required to fund the deficiency. Similarly, once a loan is fully funded, the borrower is required to fund all interest payments. Construction loans are reviewed for extensions upon expiration of the loan term. Provided the loan is performing in accordance with contractual terms, extensions may be granted to allow for the completion of the project, marketing or sales of completed units, or to provide for permanent financing. Extension terms generally do not exceed 12 to 18 months. In general, Bancorp's construction loans are used to finance improvements to commercial, industrial or residential property. Repayment is typically derived from the sale of the property as a whole, the sale of smaller individual units, or by a take-out from a permanent mortgage. The term of the construction period generally does not exceed two years. Loan commitments are based on established construction budgets which represent an estimate of total costs to complete the proposed project including both hard (direct) costs (building materials, labor, etc.) and soft (indirect) costs (legal and architectural fees, etc.). In addition, project costs may include an appropriate level of interest reserve to carry the project through to completion. If established, such interest reserves are determined based on (i) a percentage of the committed loan amount, (ii) the loan term, and (iii) the applicable interest rate. Regardless of whether a loan contains an interest reserve, the total project cost statement serves as the basis for underwriting and determining which items will be funded by the loan and which items will be funded through borrower equity. Bancorp has not advanced additional interest reserves to keep a loan from becoming nonperforming. The following is a summary of the allowance for loan losses for the years ended December 31, 2015 and December 31, 2014 (dollars in thousands):
The allowance for loan losses is based on management’s judgment and evaluation of the loan portfolio. Management assesses the adequacy of the allowance for loan losses and the need for any addition thereto, by considering the nature and size of the loan portfolio, overall portfolio quality, review of specific problem loans, economic conditions that may affect the borrowers’ ability to pay or the value of property securing loans, and other relevant factors. While management believes the allowance was adequate at December 31, 2015, changing economic and market conditions may require future adjustments to the allowance for loan losses. For such loans that are classified as impaired, an allowance is established when the current market value of the underlying collateral less its estimated disposal costs is lower than the carrying value of that loan. For loans that are not solely collateral dependent, an allowance is established when the present value of the expected future cash flows of the impaired loan is lower than the carrying value of that loan. During the year ended December 31, 2015, the provision for loan losses was ($280,000) compared to $831,000 for the year ended December 31, 2014. This decrease of $1,111,000 was primarily due to lower total loans and improved asset quality at December 31, 2015 compared to December 31, 2014 and lower net charge-offs taken in 2015 compared to 2014. The following tables summarize impaired loans at December 31, 2015 and 2014 (dollars in thousands):
The following tables summarize average impaired loans for the years ended December 31, 2015 and 2014 (dollars in thousands):
Included in the above impaired loans amount at December 31, 2015 is $28,067,000 of loans that are not in non-accrual status. In addition, there was a total of $26,087,000 of residential real estate loans included in impaired loans at December 31, 2015, of which $20,378,000 were to consumers and $5,709,000 to builders. The collateral supporting impaired loans is individually reviewed by management to determine its estimated fair market value, less estimated disposal cost and a charge-off to the loan is made, if necessary, for the difference between the carrying amount of any loan and the estimated fair value of the collateral less estimated disposal cost. A specific allowance is established if the net collateral value has not been finalized, but management determines that it is likely that the net collateral value of the loan is lower than the carrying value of the loan. The following tables present the classes of the loan portfolio, including unfunded commitments summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of December 31, 2015 and 2014 (dollars in thousands):
Included in the Pass column were $21,101,000 and $36,162,000 in unfunded commitments at December 31, 2015 and 2014, respectively. Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. There were no loans past due greater than 90 days and still accruing as of December 31, 2015 and 2014. Included in the Current column were $21,101,000 and $36,162,000 in unfunded commitments at December 31, 2015 and 2014, respectively. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of December 31, 2015 and 2014 (dollars in thousands):
The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statements of financial condition. The contract amounts of these instruments express the extent of involvement the Bank has in each class of financial instruments. The Bank's exposure to credit loss from non-performance by the other party to the above mentioned financial instruments is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Unless otherwise noted, the Bank requires collateral or other security to support financial instruments with off-balance-sheet credit risk.
Standby letters of credit are conditional commitments issued by the Bank guaranteeing performance by a customer to various municipalities. These guarantees are issued primarily to support performance arrangements, limited to real estate transactions. The majority of these standby letters of credit expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Bank requires collateral supporting these letters of credit as deemed necessary. Management believes, except for certain standby letters of credit, that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of December 31, 2015 and 2014 for guarantees under standby letters of credit issued was $115,000 and $314,000, respectively. Home equity lines of credit are loan commitments to individuals as long as there is no violation of any condition established in the contract. Commitments under home equity lines expire ten years after the date the loan closes and are secured by real estate. The Bank evaluates each customer's credit worthiness on a case-by-case basis. Unadvanced construction commitments are loan commitments made to borrowers for both residential and commercial projects that are either in process or are expected to begin construction shortly. Mortgage loan commitments not reflected in the accompanying statements of financial condition at December 31, 2015 include seven loans at a fixed interest rate range of 3.75% to 8.00% totaling $3,233,000 and two at floating interest rates totaling $0, and at December 31, 2014 included $2,120,000 at a fixed rate range of 3.75% to 4.50% and none at floating interest rates. Lines of credit are loan commitments to individuals and companies as long as there is no violation of any condition established in the contract. Lines of credit have a fixed expiration date. The Bank evaluates each customer's credit worthiness on a case-by-case basis. The Bank has entered into several agreements to sell mortgage loans to third parties. The loans sold under these agreements for the years ended December 31, 2015 and 2014 were $163,150,000 and $90,560,000, respectively. These agreements contain limited provisions that require the Bank to repurchase a loan if the loan becomes delinquent within a period ranging generally from 120 to 180 days after the sale date depending on the investor’s agreement. The credit risk involved in these financial instruments is essentially the same as that involved in extending loan facilities to customers. No amount has been recognized in the consolidated statement of financial condition at December 31, 2015 and 2014 as a liability for credit loss related to these loans. The Bank repurchased no loans under these agreements in 2015 or 2014. Only loans originated specifically for sale are recorded as held for sale at the period ended December 31, 2015 and December 31, 2014. Except for the liability recorded for standby letters of credit of $115,000 and $314,000 at December 31, 2015 and 2014, respectively, liabilities for credit losses associated with these commitments were not material at December 31, 2015 and 2014. Bancorp offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:
Bancorp considers a modification of a loan term a TDR if Bancorp for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Prior to entering into a loan modification, Bancorp assesses the borrower’s financial condition to determine if the borrower has the means to meet the terms of the modification. This includes obtaining a credit report on the borrower as well as the borrower’s tax returns and financial statements. The following tables present newly restructured loans that occurred during the years ended December 31, 2015 and 2014 by the type of concession (dollars in thousands):
In addition, the TDR is considered an impaired loan. A determination is made as to whether an impaired TDR is cash flows or collateral dependent. If the TDR is cash flows dependent, an allowance for loan losses specific reserve is calculated based on the difference in net present value of future cash flows between the original and modified loan terms. If the TDR is collateral dependent, the collateral securing the TDR, which is always real estate, is evaluated for impairment based on an appraisal. If a TDR’s collateral valuation is less than its current loan balance, the TDR is written down for accounting purposes by the amount of the difference between the current loan balance and the collateral. If the borrower performs under the terms of the modification, generally six consecutive months, and the ultimate collectability of all amounts contractually due under the modified terms is not in doubt, the loan is returned to accrual status but continues to be an impaired loan. There are no loans that have been modified due to the financial difficulties of the borrower that are not considered a TDR. Interest on TDRs was accounted for under the following methods as of December 31, 2015 and December 31, 2014 (dollars in thousands):
Management does not charge off a TDR, or a portion of a TDR, until one of the following conditions has been met:
Prior to either of the above conditions, a loan is assessed for impairment when a loan becomes a TDR. If, based on management’s assessment of the underlying collateral of the loan, it is determined that the TDR’s collateral valuation is less than its current loan balance, the TDR is written down for accounting purposes by the amount of the difference between the current loan balance and the collateral. |
Premises and Equipment |
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Premises and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment | Note 4 - Premises and Equipment Premises and equipment are summarized by major classification as follows:
Depreciation expense was $1,137,000 and $1,110,000 for the years ended December 31, 2015 and 2014, respectively. Bancorp has four retail branch locations in Anne Arundel County, Maryland, of which it owns three and leases the fourth from a third party. The lease term expires July 2020. There is an option remaining to renew the lease for one additional five year term. In addition, the Bank leases office space in Annapolis, Maryland from a third party. The lease expires in January 2020. The minimum future annual rental payments on leases are as follows:
Total rent expense was $131,000 and $121,000 for the years ended December 31, 2015 and 2014, respectively. The minimum future annual rental income on leases is as follows:
H.S. West, LLC, a subsidiary of the Bank, leases space to three unrelated companies and to a law firm of which the President of Bancorp and the Bank is a partner. Total gross rental income included in occupancy expense on the Consolidated Statements of Operations was $970,000 and $956,000 for the years ended December 31, 2015 and 2014, respectively. |
Foreclosed Real Estate |
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Foreclosed Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreclosed Real Estate | Note 5 – Foreclosed Real Estate As of December 31, 2015, Bancorp had foreclosed real estate consisting of seven residential properties with a carrying value of $1,419,000 and three land parcels with a carrying value of $325,000. During the year ended December 31, 2015, Bancorp sold a total of twelve properties previously included in foreclosed real estate. The properties sold during 2015 had a combined net book value of $2,379,000 after total write-downs taken subsequent to their transfer from loans to foreclosed real estate of $1,023,000, and were sold at a combined net gain of $49,000. In addition, Bancorp incurred $1,526,000 in costs related to the sale of the properties. The following table summarizes the changes in foreclosed real estate for the years ended December 31, 2015 and 2014 (dollars in thousands):
Total foreclosed real estate expense for 2015 was $230,000. Net gain on the property sales was $49,000, property write downs totaled $58,000 and operating expense was $221,000. Total foreclosed real estate expense for 2014 was $10,000. Net gain on the property sales was $302,000, property write downs totaled $0 and operating expense was $312,000. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction totaled $1,487,000 as of December 31, 2015. |
Investment in Federal Home Loan Bank of Atlanta Stock |
12 Months Ended |
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Dec. 31, 2015 | |
Investment in Federal Home Loan Bank of Atlanta Stock [Abstract] | |
Investment in Federal Home Loan Bank of Atlanta Stock | Note 6 - Investment in Federal Home Loan Bank of Atlanta Stock The Bank is required to maintain an investment in the stock of the FHLB in an amount equal to at least 1% of the unpaid principal balances of the Bank's residential mortgage loans or 1/20 of its outstanding advances from the FHLB, whichever is greater. Purchases and sales of stock are made directly with the FHLB at par value. |
Deposits |
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Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Note 7 – Deposits Deposits in the Bank as of December 31, 2015 and 2014 consisted of the following:
At December 31, 2015 scheduled maturities of certificates of deposit are as follows:
The aggregate amount of jumbo certificates of deposit with a minimum denomination of $250,000 was $25,713,000 and $30,702,000 at December 31, 2015 and 2014, respectively. |
Long Term Borrowings |
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Long Term Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Borrowings | Note 8 – Long Term Borrowings The Bank's total credit availability under the FHLB’s credit availability program was $192,672,000 and $153,070,000 at December 31, 2015 and 2014, respectively. The Bank’s credit availability is based on the level of collateral pledged up to 25% of total assets. There were no short-term borrowings with the FHLB at December 31, 2015 and 2014. Long-term advances outstanding were $115,000,000 at December 31, 2015 and 2014. The maturities of these long-term advances at December 31, 2015 are as follows (dollars in thousands):
The Bank's stock in the FHLB is pledged as security for the advances and under a blanket floating lien security agreement with the FHLB. The Bank is required to maintain as collateral for its advances, qualified loans in varying amounts depending on the loan type. Loans with an approximate fair value of $274,783,000 are pledged as collateral at December 31, 2015. |
Subordinated Debentures |
12 Months Ended |
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Dec. 31, 2015 | |
Subordinated Debentures [Abstract] | |
Subordinated Debentures | Note 9 - Subordinated Debentures As of December 31, 2015, Bancorp had outstanding approximately $20,619,000 principal amount of Junior Subordinated Debt Securities Due 2035 (the “2035 Debentures”). The 2035 Debentures were issued pursuant to an Indenture dated as of December 17, 2004 (the “2035 Indenture”) between Bancorp and Wells Fargo Bank, National Association as Trustee. The 2035 Debentures pay interest quarterly at a floating rate of interest of 3-month LIBOR (0.32% December 31, 2015) plus 200 basis points, and mature on January 7, 2035. Payments of principal, interest, premium and other amounts under the 2035 Debentures are subordinated and junior in right of payment to the prior payment in full of all senior indebtedness of Bancorp, as defined in the 2035 Indenture. The 2035 Debentures became redeemable, in whole or in part, by Bancorp on January 7, 2010. The 2035 Debentures were issued and sold to Severn Capital Trust I (the “Trust”), of which 100% of the common equity is owned by Bancorp. The Trust was formed for the purpose of issuing corporation-obligated mandatorily redeemable Capital Securities (“Capital Securities”) to third-party investors and using the proceeds from the sale of such Capital Securities to purchase the 2035 Debentures. The 2035 Debentures held by the Trust are the sole assets of the Trust. Distributions on the Capital Securities issued by the Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Trust on the 2035 Debentures. The Capital Securities are subject to mandatory redemption, in whole or in part, upon repayment of the 2035 Debentures. Bancorp has entered into an agreement which, taken collectively, fully and unconditionally guarantees the Capital Securities subject to the terms of the guarantee. $17,000,000 of the proceeds from Bancorp’s issuance of the debentures was contributed to the Bank, and qualifies as Tier 1 capital for the Bank under Federal Reserve Board guidelines. Under the terms of the 2035 Indenture, Bancorp is permitted to defer the payment of interest on the 2035 Debentures for up to 20 consecutive quarterly periods provided that no event of default has occurred and is continuing. As of December 31, 2015, Bancorp has deferred the payment of fifteen quarters of interest and the cumulative amount of interest in arrears not paid, including interest on unpaid interest, was $1,863,000. This amount is included in the accrued interest payable and other liabilities total on the balance sheet. Under the terms of Bancorp’s 2035 Indenture, if Bancorp has deferred payments of interest on the 2035 Debentures, Bancorp may not, among other things, declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock, including common stock until all such deferred interest has been paid. Accordingly, Bancorp will not be able to pay dividends on its common stock until the deferred interest on the 2035 Debentures has been paid in full. On November 15, 2008, Bancorp completed a private placement offering consisting of a total of 70 units, at an offering price of $100,000 per unit, for gross proceeds of $7.0 million. Each unit consisted of 6,250 shares of Bancorp's Series A preferred stock and Bancorp's Subordinated Note in the original principal amount of $50,000. The Subordinated Notes pay interest at an annual rate of 8.0%, payable quarterly in arrears on the last day of March, June, September and December commencing December 31, 2008. The Subordinated Notes are redeemable in whole or in part at the option of Bancorp at any time beginning on December 31, 2009 until maturity, which is December 31, 2018. Debt issuance costs totaled $245,000 and are being amortized over 10 years. Interest payments on the Subordinated Notes are current as of December 31, 2015. |
Employee Benefit Plans |
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Dec. 31, 2015 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Note 10 – Employee Benefit Plans The Bank has a 401(k) Retirement Savings Plan. Employees may contribute a percentage of their salary up to the maximum amount allowed by law. The Bank is obligated to contribute 50% of the employee's contribution, not to exceed 6% of the employee's annual salary. All employees who have completed one year of service with the Bank are eligible to participate. The Bank's contributions to this plan were $217,000, and $198,000 for the years ended December 31, 2015 and 2014, respectively. The Bank has an Employee Stock Ownership Plan ("ESOP") for the exclusive benefit of participating employees. The Bank recognized ESOP expense of $140,000 for each of the years ended December 31, 2015 and 2014, and had unallocated shares to participants in the plan totaling 10,000 shares and 25,000 shares as of December 31, 2015 and 2014, respectively. The fair value of the unallocated shares at December 31, 2015 was approximately $58,000. |
Stockholders' Equity |
12 Months Ended |
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Dec. 31, 2015 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 11 - Stockholders’ Equity As part of the private placement offering discussed in Note 9, Bancorp issued a total of 437,500 shares of its Series A 8.0% Non-Cumulative Convertible preferred stock (“Series A preferred stock”). The liquidation preference is $8.00 per share. Holders of Series A preferred stock will not be entitled to any further liquidation distribution on the Series A preferred stock. Each share of Series A preferred stock is convertible at the option of the holder into one share of Bancorp common stock, subject to adjustment upon certain corporate events. The initial conversion rate is equivalent to an initial conversion price of $8.00 per share of Bancorp common stock. At the option of Bancorp, on and after December 31, 2015, at any time and from time to time, some or all of the Series A preferred stock may be converted into shares of Bancorp common stock at the then-applicable conversion rate. Costs related to the issuance of the preferred stock totaled $247,000 and were netted against the proceeds. If declared by Bancorp's board of directors, cash dividends at an annual rate of 8.0% will be paid quarterly in arrears on the last day of March, June, September and December commencing December 31, 2008. Dividends will not be paid on Bancorp common stock in any quarter until the dividend on the Series A preferred stock has been paid for such quarter; however, there is no requirement that Bancorp's board of directors declare any dividends on the Series A preferred stock and any unpaid dividends shall not be cumulative. Dividends on the Series A preferred stock have not been declared since the first quarter of 2012. On November 21, 2008, Bancorp entered into an agreement with the United States Department of the Treasury (“Treasury”), pursuant to which Bancorp issued and sold (i) 23,393 shares of its Series B Fixed Rate Cumulative Perpetual preferred stock, par value $0.01 per share and liquidation preference $1,000 per share, (the “Series B preferred stock”) and (ii) a warrant (the “Warrant”) to purchase 556,976 shares of Bancorp’s common stock, par value $0.01 per share, for an aggregate purchase price of $23,393,000. Costs related to the issuance of the preferred stock and warrants totaled $45,000 and were netted against the proceeds. On September 25, 2013, the Treasury sold all of its 23,393 shares of Series B preferred stock to outside investors as part of their ongoing efforts to wind down and recover its remaining investments under the Troubled Asset Relief Program (“TARP’). The terms of the Series B preferred stock remain the same. The Treasury continues to hold the Warrant. The Series B preferred stock qualifies as Tier 1 capital and pays cumulative compounding dividends at a rate of 9% per annum. The Series B preferred stock may be redeemed by Bancorp. The Series B preferred stock has no maturity date and ranks pari passu with Bancorp’s existing Series A preferred stock, in terms of dividend payments and distributions upon liquidation, dissolution and winding up of Bancorp. The Series B preferred stock is non-voting, other than class voting rights on certain matters that could adversely affect the Series B preferred stock. If dividends on the Series B preferred stock have not been paid for an aggregate of six quarterly dividend periods or more, whether consecutive or not, Bancorp’s authorized number of directors will be automatically increased by two and the holders of the Series B preferred stock, voting together with holders of any then outstanding voting parity stock, will have the right to elect those directors at Bancorp’s next annual meeting of stockholders or at a special meeting of stockholders called for that purpose. These preferred share directors will be elected annually and serve until all accrued and unpaid dividends on the Series B preferred stock have been paid. In connection with the sale by the Treasury of the Series B preferred stock, the Federal Reserve obtained waivers from the outside investors who purchased the Series B preferred stock in which such investors agreed not to exercise their right to elect directors, and certain other voting or control rights, without the prior approval of the Federal Reserve. The Warrant has a 10-year term and is immediately exercisable at an exercise price of $6.30 per share of Common Stock. The exercise price and number of shares subject to the Warrant are both subject to anti-dilution adjustments. Pursuant to the Purchase Agreement, Treasury has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant. Bancorp’s ability to declare dividends on its common stock are limited by the terms of Bancorp’s Series A preferred stock and Series B preferred stock. Bancorp may not declare or pay any dividend on, make any distributions relating to, or redeem, purchase, acquire or make a liquidation payment relating to, or make any guarantee payment with respect to its common stock in any quarter until the dividend on the Series A preferred stock has been declared and paid for such quarter, subject to certain minor exceptions. Additionally, Bancorp may not declare or pay dividend or distribution on its common stock, and Bancorp may not purchase, redeem or otherwise acquire for consideration any of its common stock, unless all accrued and unpaid dividends for all past dividend periods, including the latest completed dividend period, on all outstanding shares of Series B preferred stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside), subject to certain minor exceptions. As of December 31, 2015, the cumulative amount of dividends of the Series B preferred stock in arrears not declared, including interest on unpaid dividends was $7,033,000. Accordingly, Bancorp will not be able to pay dividends on its common stock until the dividend arrearages on its Series B preferred stock have been paid in full and until Bancorp declares and pays a dividend on its Series A preferred stock. Additionally, under the terms of Bancorp's 2035 Debentures, if (i) there has occurred and is continuing an event of default, (ii) Bancorp is in default with respect to payment of any obligations under the related guarantee or (iii) Bancorp has given notice of its election to defer payments of interest on the 2035 Debentures by extending the interest distribution period as provided in the indenture governing the 2035 Debentures and such period, or any extension thereof, has commenced and is continuing, then Bancorp may not, among other things, declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock, including common stock. As permitted under the terms of the 2035 Debentures, as of December 31, 2015, Bancorp has deferred the payment of fifteen quarters of interest and the cumulative amount of interest in arrears not paid, including interest on unpaid interest, was $1,863,000. Accordingly, Bancorp will not be able to pay dividends on its common stock until the interest deferrals on the 2035 Debentures have been paid in full. |
Stock-Based Compensation |
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Stock-Based Compensation | Note 12- Stock-Based Compensation Bancorp has a stock-based compensation plan for directors, officers, and other key employees of Bancorp. The aggregate number of shares of common stock that may be issued with respect to the awards granted under the plan is 500,000 plus any shares forfeited under Bancorp’s old stock-based compensation plan. Under the terms of the plan, Bancorp has the ability to grant various stock compensation incentives, including stock options, stock appreciation rights, and restricted stock. The number of shares available to grant under the plan was 260,501 at December 31, 2015. The stock-based compensation is granted under terms and conditions determined by the Compensation Committee of the Board of Directors. Under the stock based compensation plan, stock options generally have a maximum term of ten years, and are granted with an exercise price at least equal to the fair market value of the common stock on the date the options are granted. Generally, options granted to directors of Bancorp vest immediately, and options granted to officers and employees vest over a five-year period, although the Compensation Committee has the authority to provide for different vesting schedules. Bancorp follows FASB ASC 718, Compensation – Stock Compensation (FASB ASC 718) to account for stock-based compensation. FASB ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the statement of operations at fair value. FASB ASC 718 requires an entity to recognize the expense of employee services received in share-based payment transactions and measure the expense based on the grant date fair value of the award. The expense is recognized over the period during which an employee is required to provide service in exchange for the award. Stock-based compensation expense included in the consolidated statements of operations for the years ended December 31, 2015 and 2014 totaled $120,000 and $201,000, respectively. There was no income tax benefit recognized in the consolidated statements of operations for stock-based compensation for the years ended December 31, 2015 and 2014. There were 111,500 options granted in 2015 and 50,000 options granted in 2014. Information regarding Bancorp’s stock option plan as of and for the years ended December 31, 2015 and 2014 is as follows:
The stock-based compensation expense amounts were derived using the Black-Scholes option-pricing model. The following weighted average assumptions were used to value options granted in current and prior periods presented.
The expected life of options amount is based on the vesting period and the expiration date of the options granted. The Risk-free interest rate is based on the US Treasury’s five year Treasury note rate at the time of the option grant. The expected volatility is based on the closing common stock price of Bancorp over a five year period. The expected dividend yield is based on Bancorp’s current policy of not paying a common stock dividend. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. The following table summarizes the nonvested options in Bancorp’s stock option plan as of December 31, 2015.
As of December 31, 2015, there was approximately $690,000 of total unrecognized stock-based compensation cost related to non-vested stock options, which is expected to be recognized over a period of fifty-eight months. |
Regulatory Matters |
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Regulatory Matters | Note 13- Regulatory Matters As of December 31, 2015, Bancorp’s reservable liability was below the threshold established by the Federal Reserve Bank and therefore, Bancorp was not required to maintain reserves (in the form of deposits with the Federal Reserve Bank or a correspondent bank on behalf of the Federal Reserve Bank.) Federal banking agencies have adopted proposals that have substantially amended the regulatory capital rules applicable to Bancorp and the Bank. The amendments implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The amended rules establish new higher capital ratio requirements, narrow the definitions of capital, impose new operating restrictions on banking organizations with insufficient capital buffers and increase the risk weighting of certain assets. The amended rules were effective with respect to Bancorp and the Bank in January 2015, with certain requirements to be phased in beginning in 2016. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). As of December 31, 2015, the most recent notification from the regulators categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios are also presented in the table. The following table presents the Bank's actual capital amounts and ratios at December 31, 2015 and 2014:
(1) To adjusted total assets. (2) To risk-weighted assets. On November 23, 2009, Bancorp and the Bank each entered into a supervisory agreement with the Office of Thrift Supervision (“OTS”). As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), effective as of July 21, 2011, the OTS was abolished, and the regulatory oversight functions and authority of the OTS related to the Bank were transferred to the Office of the Comptroller of the Currency (“OCC”) and the regulatory oversight functions and authority of the OTS related to Bancorp were transferred to the Board of Governors of the Federal Reserve System (“Federal Reserve” or “FRB”). The Bank’s supervisory agreement was replaced by a formal agreement dated April 23, 2013 with the OCC. On October 15, 2015, the Bank was notified by the OCC that its agreement was terminated. Bancorp’s supervisory agreement was enforced by the FRB. On January 21, 2016, Bancorp was notified by FRB that its agreement was terminated. On April 23, 2013, the Bank was notified by the OCC that the OCC established minimum capital ratios for the Bank requiring it to immediately maintain a Tier 1 Leverage Capital Ratio to Adjusted Total Assets of at least 10% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 15%. On October 15, 2015 the Bank was notified by the OCC that these additional minimum capital ratios were no longer required. |
Income Taxes |
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 14 - Income Taxes The income tax provision consists of the following for the years ended December 31:
The amount computed by applying the statutory federal income tax rate to income before taxes is less than the tax provision for the following reasons for the years ended December 31:
Bancorp does not have a liability related to tax positions at December 31, 2015 or 2014. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014 are presented below:
At December 31, 2015, federal net operating losses totaled $20,875,000 and expire in 2033 and 2034. The state net operating losses totaled $27,173,000 and expire at various times from 2023 through 2033. In assessing the realizability of federal or state deferred tax assets at December 31, 2015, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. Based on its review of all available evidence, and after consideration of the losses recorded on the loan sales in 2013, management determined it was more likely than not that the deferred tax assets will not be realized and accordingly determined that a valuation allowance should be recorded as of December 31, 2015 and 2014. The deferred tax asset valuation may, in accordance with the requirements of generally accepted accounting principles, be reversed in future periods, depending upon Bancorp’s financial position and results of operations in the future, among other factors, and, in such event, may be available to increase future earnings. Bancorp will continue to have the benefit of the net operating loss carryforward relating to the deferred tax asset, and will have the ability to utilize the carryforward against future federal and state income taxes. The statute of limitations for Internal Revenue Service examination of Bancorp’s federal consolidated tax returns remains open for tax years 2012 through 2015. |
Related Party Transactions |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||
Related Party Transactions | Note 15 - Related Party Transactions During the years ended December 31, 2015 and 2014, the Bank engaged in the transactions described below with parties that are deemed affiliated. During January 2007, a law firm, in which the President of Bancorp and the Bank is a partner, entered into a five year lease agreement with a subsidiary of Bancorp. The term of the lease is five years with the option to renew the lease for three additional five year terms. The first option to renew was exercised in January 2012. The total payments received by the subsidiary, which includes rent, common area maintenance and utilities were $404,000 and $385,000 for the years ended December 31, 2015 and 2014, respectively. In addition, the law firm represents Bancorp and the Bank in certain legal matters. The fees for services rendered by that firm were $206,000, and $324,000 for the years ended December 31, 2015 and 2014 respectively. Members of the Board of Directors of Bancorp had loans outstanding totaling $3,186,000 and $3,340,000 at December 31, 2015 and 2014, respectively. The following table shows loan activity for the year ended December 31, 2015:
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Fair Value of Financial Instruments |
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Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Note 16 - Fair Value of Financial Instruments A fair value hierarchy that prioritizes the inputs to valuation methods is used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair market hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Significant other observable inputs other than level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumption that market participants would use in pricing an asset or liability. An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following information should not be interpreted as an estimate of the fair value of Bancorp since a fair value calculation is only provided for a limited portion of Bancorp’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Bancorp’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of Bancorp’s financial instruments at December 31, 2015 and December 31, 2014. Impaired Loans: Impaired loans are carried at the lower of cost or the present value of expected future cash flows of the loan. If it is determined that the repayment of the loan will be provided solely by the underlying collateral, and there are no other available and reliable sources of repayment, the loan is considered collateral dependent. Impaired loans that are considered collateral dependent are carried at the lower of cost or the fair value of the underlying collateral. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The use of independent appraisals and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and impaired loans are therefore classified within level 3 of the fair value hierarchy. For such loans that are classified as impaired, an allowance is established when the present value of the expected future cash flows of the impaired loan is lower than the carrying value of that loan. For such loans that are classified as collateral dependent impaired loans, an allowance is established when the current market value of the underlying collateral less its estimated disposal costs has not been finalized, but management determines that it is likely that the value is lower than the carrying value of that loan. Once the net collateral value has been determined, a charge-off is taken for the difference between the net collateral value and the carrying value of the loan. Impaired loans are those for which Bancorp has measured impairment based on the present value of expected future cash flows or on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consisted of the loan balances of $16,166,000 and $18,736,000 at December 31, 2015 and December 31, 2014, respectively, less their valuation allowances of $2,282,000 and $2,777,000 at December 31, 2015 and December 31, 2014, respectively. The fair value of seven impaired collateral-dependent loans that were partially charged off during the year ended December 31, 2015 totaled $3,219,000 net of charge-offs of $622,000. The fair value of nine impaired collateral-dependent loans that were partially charged off during the year ended December 31, 2014 totaled $3,834,000 net of charge-offs of $477,000. Foreclosed Real Estate: Real estate acquired through foreclosure is included in the following disclosure at the lower of carrying value or fair value less estimated disposal costs. Management periodically evaluates the recoverability of the carrying value of the real estate acquired through foreclosure using current estimates of fair value. In the event of a subsequent decline, management provides a specific allowance to reduce real estate acquired through foreclosure to fair value less estimated disposal cost. Expenses incurred on foreclosed real estate prior to disposition are charged to expense. Gains or losses on the sale of foreclosed real estate are recognized upon disposition of the property. The following table sets forth financial assets that were accounted for at fair value on a nonrecurring and recurring basis by level within the fair value hierarchy as of December 31, 2015:
The following table sets forth financial assets that were accounted for at fair value on a nonrecurring and recurring basis by level within the fair value hierarchy as of December, 31, 2014:
There were no liabilities that were required to be re-measured on a nonrecurring basis at December 31, 2015 or December 31, 2014. All appraisals are reviewed by the credit department; however, no modifications or adjustments are made to the appraisals received. The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Bancorp has utilized Level 3 inputs to determine fair value:
The estimated fair values of Bancorp's financial instruments as of December 31, 2015 and December 31, 2014 were as follows:
The foregoing information should not be interpreted as an estimate of the fair value of Bancorp since a fair value calculation is only provided for a limited portion of Bancorp’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between Bancorp’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of Bancorp’s financial instruments at December 31, 2015 and 2014. Cash and cash equivalents: The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents approximate those assets’ fair values. Investment Securities: Bancorp utilizes a third party source to determine the fair value of its securities. The methodology consists of pricing models based on asset class and includes available trade, bid, other market information, broker quotes, proprietary models, various databases and trading desk quotes. All Bancorp’s investments are considered Level 2. FHLB stock: The carrying amount of FHLB stock approximates fair value based on the redemption provisions of the FHLB. There have been no identified events or changes in circumstances that may have a significant adverse effect on the FHLB stock. Based on our evaluation, we have concluded that our FHLB stock was not impaired at December 31, 2015 and 2014. Loans held for sale: The fair value of loans held for sale is based primarily on mandatory contracts. Loans receivable: The fair values of loans receivable was estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. These rates were used for each aggregated category of loans as reported on the OCC Quarterly Report. Accrued interest receivable and payable: The carrying amounts of accrued interest receivable and accrued interest payable approximates its fair value. Derivative Instruments: Mortgage banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts (“forward contract”) and rate lock commitments. The fair value of Bancorp’s derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants. The pricing is derived from observable market inputs that can generally be verified and do not typically involve significant judgment by Bancorp. Forward contracts and rate lock loan commitments are classified as Level 2 in the fair value hierarchy. Mortgage servicing rights: The fair value of mortgage servicing rights is determined using a valuation model administered by a third party that calculates the present value of estimated future net servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service (including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary income such as late fees. Management reviews all significant assumptions on a monthly basis. Mortgage loan prepayment speed, a key assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The discount rate used to determine the present value of estimated future net servicing income, another key assumption in the model, is an estimate of the required rate of return investors in the market would require for an asset with similar risk. Both assumptions can, and generally will, change as market conditions and interest rates change. Deposit liabilities: The fair values disclosed for demand deposit accounts, savings accounts and money market deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. FHLB advances: Fair values of long-term debt are estimated using discounted cash flow analysis, based on rates currently available for advances from the FHLB with similar terms and remaining maturities. Subordinated debentures: Current economic conditions have rendered the market for this liability inactive. As such, Bancorp is unable to determine a good estimate of fair value. Since the rate paid on the debentures held is lower than what would be required to secure an interest in the same debt at year end and we are unable to obtain a current fair value, Bancorp has disclosed that the carrying value approximates the fair value. Off-balance sheet financial instruments: Fair values for Bancorp’s off-balance sheet financial instruments (lending commitments and letters of credit) are not significant and are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. |
Condensed Financial Information (Parent Company Only) |
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Condensed Financial Information (Parent Company Only) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information (Parent Company Only) | Note 17 - Condensed Financial Information (Parent Company Only) Information as to the financial position of Severn Bancorp, Inc. as of December 31, 2015 and 2014 and results of operations and cash flows for each of the years ended December 31, 2015 and 2014 is summarized below.
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Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation |
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Business |
Bancorp has no reportable segments. Management does not separately allocate expenses, including the cost of funding loan demand, between the retail and real estate operations of Bancorp. As such, discrete financial information is not available and segment reporting would not be meaningful. |
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Estimates |
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Investment Securities Held to Maturity |
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Federal Home Loan Bank Stock |
The Bank evaluated the FHLB stock for impairment in accordance with generally accepted accounting principles. The Bank’s determination of whether this investment is impaired is based on an assessment of the ultimate recoverability of its cost rather than by recognizing temporary declines in value. The determination of whether a decline in value affects the ultimate recoverability of its cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and accordingly on the customer base of the FHLB, and (4) the liquidity position of the FHLB. Management has evaluated the FHLB stock for impairment and believes that no impairment charge is necessary as of December 31, 2015. |
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Loans Held for Sale |
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Derivative Financial Instruments |
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Loan Servicing |
Loans serviced for others not included in the accompanying consolidated statements of financial condition totaled $76,460,000 and $93,332,000 at December 31, 2015 and 2014, respectively. As of December 31, 2015, the Bank was servicing $20,454,000 in loans for Federal Home Loan Mortgage Corporation (“FHLMC”), $44,366,000 in loans for Federal National Mortgage Association (“FNMA”) and $11,640,000 in loans for other investors. |
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Loans |
Residential lending is generally considered to involve less risk than other forms of lending, although payment experience on these loans is dependent to some extent on economic and market conditions in the Bank's lending area. Multifamily residential, commercial, construction and other loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy. A substantial portion of the Bank's loans receivable is mortgage loans secured by residential and commercial real estate properties located in the State of Maryland. Loans are extended only after evaluation by management of customers' creditworthiness and other relevant factors on a case-by-case basis. The Bank generally does not lend more than 80% of the appraised value of a property and requires private mortgage insurance on residential mortgages with loan-to-value ratios in excess of 80%. In addition, the Bank generally obtains personal guarantees of repayment from borrowers and/or others for construction, commercial and multifamily residential loans and disburses the proceeds of construction and similar loans only as work progresses on the related projects. The accrual of interest on loans is discontinued at the time the loan is 90 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued in the current year, but not collected for loans that are placed on non-accrual or charged-off, is reversed against interest income. Any interest accrued in prior years for loans that are placed on non-accrual or charged-off is charged against the allowance for loan losses. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
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Allowance for Loan Losses |
The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. When a real estate secured loan becomes impaired, a decision is made as to whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. For loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For such loans that are classified as impaired, an allowance is established when the current market value of the underlying collateral less its estimated disposal costs has not been finalized, but management determines that it is likely that the value is lower than the carrying value of that loan. Once the net collateral value has been determined, a charge-off is taken for the difference between the net collateral value and the carrying value of the loan. For loans that are not solely collateral dependent, an allowance is established when the present value of the expected future cash flows of the impaired loan is lower than the carrying value of that loan. The general component relates to loans that are classified as doubtful, substandard or special mention that are not considered impaired, as well as non-classified loans. The general reserve is based on historical loss experience adjusted for qualitative factors. These qualitative factors include:
A loan is generally considered impaired if it meets either of the following two criteria:
Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. |
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Foreclosed Real Estate |
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Transfers of Financial Assets |
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Premises and Equipment |
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Statement of Cash Flows |
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Income Taxes |
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established. Bancorp recognizes a tax position as a benefit only if it “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The judgment about the level of future taxable income is inherently subjective and is reviewed on a continual basis as regulatory and business factors change. Bancorp recognizes interest and penalties on income taxes as a component of income tax expense. |
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Earnings Per Common Share |
Not included in the diluted earnings per share calculation for the years ended December 31, 2015 and 2014, because they were anti-dilutive, were shares of common stock issuable upon exercise of outstanding stock options totaling 151,500 and 172,000, respectively, 556,976 shares of common stock issuable upon the exercise of a warrant and 437,500 shares of common stock issuable upon conversion of Bancorp’s Series A preferred stock.
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Advertising Cost |
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Troubled Debt Restructuring |
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Significant Group Concentrations of Credit Risk |
Bancorp’s investment portfolio consists principally of obligations of the United States and its agencies. In the opinion of management, there is no concentration of credit risk in its investment portfolio. Bancorp places deposits in correspondent accounts and, on occasion, sells Federal funds to qualified financial institutions. Management believes credit risk associated with correspondent accounts and with Federal funds sold is not significant. Therefore, management believes that these particular practices do not subject Bancorp to unusual credit risk. |
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Off-Balance Sheet Financial Instruments |
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Recent Accounting Pronouncements |
Under ASU 2014-09, Revenue from Contracts with Customers, establishes a comprehensive revenue recognition standard for virtually all industries under U.S. GAAP, including those that previously followed industry-specific guidance. The revenue standard’s core principal is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. The new standard applies to all public entities for annual periods beginning after December 15, 2017. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim periods within that year. Bancorp has evaluated the effect of ASU 2014-09 and believes adoption will not have a material effect on the Consolidated Financial Statements. Financial Statements. Under ASU 2016-01, Amendment to the Recognition and Measurement Guidance for Financial Instruments, an entity is required to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in Other Comprehensive Income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of Available For Sale debt securities in combination with other deferred tax assets. The Amendment provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Amendment also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The new standard takes effect in 2018 for public companies. Early adoption is only permitted for the provision related to instrument-specific credit risk and the fair value disclosure exemption provided to nonpublic entities. Bancorp has evaluated the effect of ASU 2016-01 and believes adoption will not have a material effect on the Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, “Leases.” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact this update will have on its consolidated financial position and results of operations. |
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Subsequent Events |
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Concentration of Credit Risk |
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Reclassifications |
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Summary of Significant Accounting Policies (Tables) |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share reconciliation |
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Investment Securities (Tables) |
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Investment Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost and fair value of investment securities held to maturity | The amortized cost and fair value of investment securities held to maturity are as follows:
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Schedule of temporary impairment losses | The following table shows fair value and unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2015. Included in the table are four US Treasury securities, thirteen Agency securities and twelve Mortgage-backed securities in a gross unrealized loss position at December 31, 2015. There were seven US Treasury securities, ten Agency securities and five Mortgage-backed securities in a gross unrealized loss position at December 31, 2014. Management believes that the unrealized losses in 2015 and 2014 were the result of interest rate levels differing from those existing at the time of purchase of the securities and actual and estimated prepayment speeds. The Bank does not consider any of these securities to be other than temporarily impaired at December 31, 2015 or December 31, 2014, because the unrealized losses were related primarily to changes in market interest rates and widening of sector spreads and were not necessarily related to the credit quality of the issuers of the securities.
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Amortized cost and estimated fair value of debt securities | The amortized cost and estimated fair value of debt securities as of December 31, 2015, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Loans Receivable (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable | Loans receivable, including unfunded commitments consist of the following:
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Allowance for loan losses | The following is a summary of the allowance for loan losses for the years ended December 31, 2015 and December 31, 2014 (dollars in thousands):
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Impaired loans | The following tables summarize impaired loans at December 31, 2015 and 2014 (dollars in thousands):
The following tables summarize average impaired loans for the years ended December 31, 2015 and 2014 (dollars in thousands):
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Classes of the loan portfolio | The following tables present the classes of the loan portfolio, including unfunded commitments summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of December 31, 2015 and 2014 (dollars in thousands):
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Classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans | The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of December 31, 2015 and 2014 (dollars in thousands):
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Financial instruments whose contract amounts represents credit risk | Unless otherwise noted, the Bank requires collateral or other security to support financial instruments with off-balance-sheet credit risk.
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Newly restructured loans during the period | The following tables present newly restructured loans that occurred during the years ended December 31, 2015 and 2014 by the type of concession (dollars in thousands):
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Methods used to account for interest on TDRs | Interest on TDRs was accounted for under the following methods as of December 31, 2015 and December 31, 2014 (dollars in thousands):
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Premises and Equipment (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premises and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of premises and equipment by major classification | Premises and equipment are summarized by major classification as follows:
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Minimum future annual rental payments on leases | The minimum future annual rental payments on leases are as follows:
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Minimum future annual rental income from leases | The minimum future annual rental income on leases is as follows:
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Foreclosed Real Estate (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreclosed Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in foreclosed real estate | The following table summarizes the changes in foreclosed real estate for the years ended December 31, 2015 and 2014 (dollars in thousands):
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Deposits (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deposits in the bank | Deposits in the Bank as of December 31, 2015 and 2014 consisted of the following:
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Scheduled of maturities of certificates of deposit | At December 31, 2015 scheduled maturities of certificates of deposit are as follows:
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Long Term Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of maturities of long-term advances | The maturities of these long-term advances at December 31, 2015 are as follows (dollars in thousands):
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information regarding stock option plan | Information regarding Bancorp’s stock option plan as of and for the years ended December 31, 2015 and 2014 is as follows:
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Stock options valuation assumptions | The following weighted average assumptions were used to value options granted in current and prior periods presented.
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Summary of nonvested options in stock option plan | The following table summarizes the nonvested options in Bancorp’s stock option plan as of December 31, 2015.
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Regulatory Matters (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank's actual capital amounts and ratios | The following table presents the Bank's actual capital amounts and ratios at December 31, 2015 and 2014:
(1) To adjusted total assets. (2) To risk-weighted assets. |
Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of income tax provision (benefit) | The income tax provision consists of the following for the years ended December 31:
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Summary of statutory federal income tax rate to income (loss) | The amount computed by applying the statutory federal income tax rate to income before taxes is less than the tax provision for the following reasons for the years ended December 31:
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Summary of deferred tax assets and deferred tax liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014 are presented below:
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Related Party Transactions (Tables) |
12 Months Ended | |||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||
Related party loan activity | Members of the Board of Directors of Bancorp had loans outstanding totaling $3,186,000 and $3,340,000 at December 31, 2015 and 2014, respectively. The following table shows loan activity for the year ended December 31, 2015:
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Fair Value of Financial Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial assets accounted for at fair value on a nonrecurring basis | The following table sets forth financial assets that were accounted for at fair value on a nonrecurring and recurring basis by level within the fair value hierarchy as of December 31, 2015:
The following table sets forth financial assets that were accounted for at fair value on a nonrecurring and recurring basis by level within the fair value hierarchy as of December, 31, 2014:
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Assets measured at fair value on a nonrecurring basis utilizing level 3 input | The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Bancorp has utilized Level 3 inputs to determine fair value:
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Estimated fair values of financial instruments | The estimated fair values of Bancorp's financial instruments as of December 31, 2015 and December 31, 2014 were as follows:
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Condensed Financial Information (Parent Company Only) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information (Parent Company Only) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of financial position, result of operation and cash flows | Information as to the financial position of Severn Bancorp, Inc. as of December 31, 2015 and 2014 and results of operations and cash flows for each of the years ended December 31, 2015 and 2014 is summarized below.
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Investment in Federal Home Loan Bank of Atlanta Stock (Details) |
Dec. 31, 2015 |
---|---|
Investment in Federal Home Loan Bank of Atlanta Stock [Abstract] | |
Minimum percentage of the unpaid principal balances | 1.00% |
Ratio of outstanding advances from FHLB | 5.00% |
Deposits (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deposits by category [Abstract] | ||
NOW accounts | $ 56,096,000 | $ 54,827,000 |
Money market accounts | 47,690,000 | 39,579,000 |
Passbooks | 111,992,000 | 126,062,000 |
Certificates of deposit | 277,778,000 | 298,489,000 |
Non-interest bearing accounts | 30,215,000 | 24,857,000 |
Total deposits | $ 523,771,000 | $ 543,814,000 |
NOW accounts | 10.71% | 10.08% |
Money market accounts | 9.11% | 7.28% |
Passbooks | 21.38% | 23.18% |
Certificates of deposit | 53.03% | 54.89% |
Non-interest bearing accounts | 5.77% | 4.57% |
Total deposits | 100.00% | 100.00% |
Scheduled maturities of certificates of deposit [Abstract] | ||
One year or less | $ 169,298,000 | |
More than 1 year to 2 years | 56,335,000 | |
More than 2 years to 3 years | 21,899,000 | |
More than 3 years to 4 years | 5,936,000 | |
More than 4 years to 5 years | 24,310,000 | |
Time Deposits | 277,778,000 | $ 298,489,000 |
Jumbo certificates of deposit with a minimum denomination of $250,000 | $ 25,713,000 | $ 30,702,000 |
Employee Benefit Plans (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
401 (k) Retirement Savings Plan [Abstract] | ||
Employee's contribution | 50.00% | |
Maximum percentage of the employee's annual salary | 6.00% | |
Bank's contribution to employee benefit plans | $ 217,000 | $ 198,000 |
Employee Stock Ownership Plan ("ESOP") [Abstract] | ||
Recognized ESOP expense | $ 140,000 | $ 140,000 |
Unallocated shares (in shares) | 10,000 | 25,000 |
Fair value of the unallocated shares | $ 58,000 |
Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current [Abstract] | ||
Federal | $ 83,000 | $ 12,000 |
State | 7,000 | 19,000 |
Current, Total income tax provision (benefit) | 90,000 | 31,000 |
Deferred [Abstract] | ||
Federal | 1,486,000 | 1,029,000 |
State | 321,000 | 251,000 |
Deferred, Total income tax provision (benefit) | 1,807,000 | 1,280,000 |
Valuation allowance | (1,807,000) | (1,280,000) |
Total income tax provision (benefit) | 90,000 | 31,000 |
Income Tax Expense (Benefit), Amount [Abstract] | ||
Statutory Federal income tax rate | 1,572,000 | 1,000,000 |
State tax net of Federal income tax benefit | 216,000 | 178,000 |
Valuation allowance change | (1,807,000) | (1,280,000) |
Other adjustments | 109,000 | 133,000 |
Total income tax provision (benefit) | $ 90,000 | $ 31,000 |
Percent of Pretax Income [Abstract] | ||
Statutory Federal income tax rate | 34.00% | 34.00% |
State tax net of Federal income tax benefit | 4.70% | 6.10% |
Valuation allowance change | (39.10%) | (43.50%) |
Other adjustments | 2.40% | 4.50% |
Total income tax provision (benefit), Total | 2.00% | 1.10% |
Deferred Tax Assets [Abstract] | ||
Allowance for loan losses | $ 5,456,000 | $ 5,648,000 |
Loan charge-offs | 0 | 0 |
Reserve on foreclosed real estate | 552,000 | 565,000 |
Reserve for uncollected interest | 143,000 | 263,000 |
Reserve for contingent liability | 57,000 | 128,000 |
Federal net operating loss carryforwards | 7,306,000 | 8,593,000 |
State net operating loss carryforwards | 1,457,000 | 1,606,000 |
Charitable contribution carryforwards | 319,000 | 319,000 |
Other | 88,000 | 12,000 |
Total deferred tax assets | 15,378,000 | 17,134,000 |
Valuation allowance | (12,485,000) | (14,292,000) |
Total deferred tax assets, net of valuation allowance | 2,893,000 | 2,842,000 |
Deferred Tax Liabilities [Abstract] | ||
Federal Home Loan Bank stock dividends | (84,000) | (84,000) |
Loan origination costs | (733,000) | (627,000) |
Accelerated depreciation | (1,544,000) | (1,599,000) |
Prepaid expenses | (278,000) | (265,000) |
Mortgage servicing rights | (252,000) | (265,000) |
Other | (2,000) | (2,000) |
Total deferred tax liabilities | (2,893,000) | (2,842,000) |
Net deferred tax assets | 0 | $ 0 |
Federal [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 20,875,000 | |
Expiration date | Dec. 31, 2033 | |
Expiration date description | expire in 2033 and 2034 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 27,173,000 | |
Expiration date | Dec. 31, 2033 | |
Expiration date description | expire at various times from 2023 through 2033 |
Related Party Transactions (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
Term
|
Dec. 31, 2014
USD ($)
|
|
Board of Directors of Bancorp [Member] | ||
Related party loan activity [Roll forward] | ||
Beginning balance | $ 3,340,000 | |
Loan funding | 0 | |
Loan pay off/payment | 154,000 | |
Ending balance | $ 3,186,000 | $ 3,340,000 |
President of Bancorp, Law Firm Partner [Member] | Law Firm, Bank Partner [Member] | ||
Related Party Transaction [Line Items] | ||
Period for lease agreement with subsidiary | 5 years | |
Number of additional term for which period of lease agreement increase | Term | 3 | |
Total lease payments received by the subsidiary | $ 404,000 | 385,000 |
Related party transaction fees for services | $ 206,000 | $ 324,000 |
Fair Value of Financial Instruments (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
Loan
|
Dec. 31, 2014
USD ($)
Loan
|
|
Fair Value of Financial Instruments [Abstract] | ||
Impaired loan balance | $ 16,166,000 | $ 18,736,000 |
Valuation allowances | $ 2,282,000 | $ 2,777,000 |
Number of impaired collateral-dependent loans | Loan | 7 | 9 |
Fair value of impaired collateral-dependent loans partially charged off | $ 3,219,000 | $ 3,834,000 |
Charge-off impaired collateral-dependent loans | 622,000 | 477,000 |
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Rate lock commitments | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Rate lock commitments | 141,000 | 139,000 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Rate lock commitments | 0 | 0 |
Nonrecurring [Member] | ||
Nonrecurring fair value measurements [Abstract] | ||
Impaired loans | 17,103,000 | 15,959,000 |
Foreclosed real estate | 543,000 | 1,947,000 |
Total nonrecurring fair value measurements | 17,646,000 | 17,906,000 |
Liabilities required to be re-measured on a nonrecurring basis | 0 | 0 |
Nonrecurring [Member] | Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Nonrecurring fair value measurements [Abstract] | ||
Impaired loans | 0 | 0 |
Foreclosed real estate | 0 | 0 |
Total nonrecurring fair value measurements | 0 | 0 |
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Nonrecurring fair value measurements [Abstract] | ||
Impaired loans | 0 | 0 |
Foreclosed real estate | 0 | 0 |
Total nonrecurring fair value measurements | 0 | 0 |
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Nonrecurring fair value measurements [Abstract] | ||
Impaired loans | 17,103,000 | 15,959,000 |
Foreclosed real estate | 543,000 | 1,947,000 |
Total nonrecurring fair value measurements | 17,646,000 | 17,906,000 |
Recurring [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Mortgage servicing rights | 623,000 | 658,000 |
Rate lock commitments | 141,000 | 139,000 |
Mandatory forward contracts | 111,000 | (59,000) |
Total recurring fair value measurements | 875,000 | 738,000 |
Recurring [Member] | Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Mortgage servicing rights | 0 | 0 |
Rate lock commitments | 0 | 0 |
Mandatory forward contracts | 0 | 0 |
Total recurring fair value measurements | 0 | 0 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Mortgage servicing rights | 0 | 0 |
Rate lock commitments | 141,000 | 139,000 |
Mandatory forward contracts | 111,000 | (59,000) |
Total recurring fair value measurements | 252,000 | 80,000 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Recurring Fair Value Measurements [Abstract] | ||
Mortgage servicing rights | 623,000 | 658,000 |
Rate lock commitments | 0 | 0 |
Mandatory forward contracts | 0 | 0 |
Total recurring fair value measurements | $ 623,000 | $ 658,000 |
Fair Value of Financial Instruments, Roll Forward of Level 3 Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
||||||||||
Impaired Loans [Member] | PV of Future Cash Flows [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Fair Value Estimate | $ 13,884 | $ 15,589 | |||||||||
Valuation Techniques | [1] | PV of future cash flows | PV of future cash flows | ||||||||
Unobservable Input | Discount Rate | Discount Rate | |||||||||
Range and weighted average of liquidation expenses | (6.00%) | (6.00%) | |||||||||
Impaired Loans [Member] | Appraisal of Collateral [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Fair Value Estimate | $ 3,219 | $ 370 | |||||||||
Valuation Techniques | [2] | Appraisal of collateral | Appraisal of collateral | ||||||||
Unobservable Input | [3] | Liquidation expenses | Liquidation expenses | ||||||||
Range and weighted average of liquidation expenses | (6.00%) | (6.00%) | |||||||||
Foreclosed Real Estate [Member] | Appraisal of Collateral [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Fair Value Estimate | $ 543 | $ 1,947 | |||||||||
Valuation Techniques | [2],[4] | Appraisal of collateral | Appraisal of collateral | ||||||||
Unobservable Input | [3] | Appraisal adjustments | Appraisal adjustments | ||||||||
Minimum [Member] | Foreclosed Real Estate [Member] | Appraisal of Collateral [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Range and weighted average of appraisal adjustments | (6.12%) | (6.51%) | |||||||||
Maximum [Member] | Foreclosed Real Estate [Member] | Appraisal of Collateral [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Range and weighted average of appraisal adjustments | (7.31%) | (100.00%) | |||||||||
Weighted Average [Member] | Foreclosed Real Estate [Member] | Appraisal of Collateral [Member] | |||||||||||
Quantitative Information about Level 3 Fair Value Measurements [Abstract] | |||||||||||
Range and weighted average of appraisal adjustments | (6.24%) | (13.94%) | |||||||||
|
Fair Value of Financial Instruments, Assets, Quantitative Information (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Financial Assets [Abstract] | ||
Investment securities (HTM) | $ 76,310,000 | $ 60,123,000 |
Mortgage servicing rights | 623,000 | 658,000 |
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 43,591,000 | 33,335,000 |
Investment securities (HTM) | 0 | 0 |
Loans held for sale | 0 | 0 |
Loans receivable, net | 0 | 0 |
FHLB stock | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Mortgage servicing rights | 0 | 0 |
Rate lock commitments | 0 | 0 |
Mandatory forward contracts | 0 | |
Financial Liabilities [Abstract] | ||
Deposits | 0 | 0 |
FHLB advances | 0 | 0 |
Subordinated debentures | 0 | 0 |
Accrued interest payable | 0 | 0 |
Mandatory forward contracts | 0 | |
Off Balance Sheet Commitments | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Investment securities (HTM) | 76,310,000 | 60,123,000 |
Loans held for sale | 13,295,000 | 7,211,000 |
Loans receivable, net | 0 | 0 |
FHLB stock | 5,626,000 | 5,936,000 |
Accrued interest receivable | 2,218,000 | 2,297,000 |
Mortgage servicing rights | 0 | 0 |
Rate lock commitments | 141,000 | 139,000 |
Mandatory forward contracts | 111,000 | |
Financial Liabilities [Abstract] | ||
Deposits | 524,458,000 | 544,751,000 |
FHLB advances | 110,759,000 | 108,859,000 |
Subordinated debentures | 0 | 0 |
Accrued interest payable | 3,137,000 | 2,136,000 |
Mandatory forward contracts | 59,000 | |
Off Balance Sheet Commitments | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 0 | 0 |
Investment securities (HTM) | 0 | 0 |
Loans held for sale | 0 | 0 |
Loans receivable, net | 593,742,000 | 636,696,000 |
FHLB stock | 0 | 0 |
Accrued interest receivable | 0 | 0 |
Mortgage servicing rights | 623,000 | 658,000 |
Rate lock commitments | 0 | 0 |
Mandatory forward contracts | 0 | |
Financial Liabilities [Abstract] | ||
Deposits | 0 | 0 |
FHLB advances | 0 | 0 |
Subordinated debentures | 24,119,000 | 24,119,000 |
Accrued interest payable | 0 | 0 |
Mandatory forward contracts | 0 | |
Off Balance Sheet Commitments | 0 | 0 |
Fair Value [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 43,591,000 | 33,335,000 |
Investment securities (HTM) | 76,310,000 | 60,123,000 |
Loans held for sale | 13,295,000 | 7,211,000 |
Loans receivable, net | 593,742,000 | 636,696,000 |
FHLB stock | 5,626,000 | 5,936,000 |
Accrued interest receivable | 2,218,000 | 2,297,000 |
Mortgage servicing rights | 623,000 | 658,000 |
Rate lock commitments | 141,000 | 139,000 |
Mandatory forward contracts | 111,000 | |
Financial Liabilities [Abstract] | ||
Deposits | 524,458,000 | 544,751,000 |
FHLB advances | 110,759,000 | 108,859,000 |
Subordinated debentures | 24,119,000 | 24,119,000 |
Accrued interest payable | 3,137,000 | 2,136,000 |
Mandatory forward contracts | 59,000 | |
Off Balance Sheet Commitments | 0 | 0 |
Carrying Amount [Member] | ||
Financial Assets [Abstract] | ||
Cash and cash equivalents | 43,591,000 | 33,335,000 |
Investment securities (HTM) | 76,133,000 | 59,616,000 |
Loans held for sale | 13,203,000 | 7,165,000 |
Loans receivable, net | 589,656,000 | 633,882,000 |
FHLB stock | 5,626,000 | 5,936,000 |
Accrued interest receivable | 2,218,000 | 2,297,000 |
Mortgage servicing rights | 623,000 | 658,000 |
Rate lock commitments | 141,000 | 139,000 |
Mandatory forward contracts | 111,000 | |
Financial Liabilities [Abstract] | ||
Deposits | 523,771,000 | 543,814,000 |
FHLB advances | 115,000,000 | 115,000,000 |
Subordinated debentures | 24,119,000 | 24,119,000 |
Accrued interest payable | 3,137,000 | 2,136,000 |
Mandatory forward contracts | 59,000 | |
Off Balance Sheet Commitments | $ 0 | $ 0 |
Condensed Financial Information (Parent Company Only) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Equity in net assets of subsidiaries [Abstract] | |||
Loans, net of allowance for loan losses | $ 589,656 | $ 633,882 | |
Total assets | 762,079 | 776,328 | |
Subordinated debentures | 24,119 | 24,119 | |
Total Liabilities | 675,623 | 692,518 | |
Stockholders' equity | 86,456 | 83,810 | $ 82,769 |
Total liabilities and stockholders' equity | 762,079 | 776,328 | |
Statements of Operations [Abstract] | |||
Interest income | 31,153 | 31,816 | |
Net interest income | 22,161 | 23,182 | |
Provision for loan losses | (280) | 831 | |
Income before income tax provision | 4,625 | 2,940 | |
Income tax expense | (90) | (31) | |
Net income | 4,535 | 2,909 | |
Cash Flows from Operating Activities [Abstract] | |||
Net income | 4,535 | 2,909 | |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Provision for loan losses | (280) | 831 | |
Stock-based compensation expense | 120 | 201 | |
Net cash provided by operating activities | 1,153 | 1,340 | |
Cash Flows from Investing Activities [Abstract] | |||
Net decrease in loans | 43,555 | (31,752) | |
Net cash provided by (used in) investing activities | 29,050 | (38,949) | |
Cash Flows from Financing Activities [Abstract] | |||
Proceeds from sale of foreclosed real estate | 2,428 | 8,174 | |
Proceeds from exercise of options | 96 | 3 | |
Net cash used in financing activities | (19,947) | (27,432) | |
Increase (decrease) in cash and cash equivalents | 10,256 | (65,041) | |
Cash and cash equivalents at beginning of year | 33,335 | 98,376 | |
Cash and cash equivalents at end of year | 43,591 | 33,335 | |
Severn Bancorp, Inc [Member] | |||
Statements of Financial Condition [Abstract] | |||
Cash | 993 | 1,316 | |
Equity in net assets of subsidiaries [Abstract] | |||
Bank | 113,294 | 107,316 | |
Non-Bank | 3,881 | 3,758 | |
Loans, net of allowance for loan losses | 0 | 0 | |
Other assets | 912 | 920 | |
Total assets | 119,080 | 113,310 | |
Subordinated debentures | 24,119 | 24,119 | |
Other liabilities | 8,505 | 5,381 | |
Total Liabilities | 32,624 | 29,500 | |
Stockholders' equity | 86,456 | 83,810 | |
Total liabilities and stockholders' equity | 119,080 | 113,310 | |
Statements of Operations [Abstract] | |||
Interest income | 0 | 34 | |
Interest expense on subordinated debentures | 1,322 | 1,086 | |
Net interest income | (1,322) | (1,052) | |
General and administrative expenses | 243 | 242 | |
Provision for loan losses | 0 | (19) | |
Income before income tax provision | (1,565) | (1,275) | |
Income tax expense | 0 | (20) | |
Equity in undistributed net income of subsidiaries | 6,100 | 4,204 | |
Net income | 4,535 | 2,909 | |
Cash Flows from Operating Activities [Abstract] | |||
Net income | 4,535 | 2,909 | |
Adjustments to reconcile net income to net cash used in operating activities: | |||
Equity in undistributed earnings of subsidiaries | (6,100) | (4,204) | |
Provision for loan losses | 0 | (19) | |
Decrease in other assets | 8 | 559 | |
Stock-based compensation expense | 120 | 201 | |
Increase in other liabilities | 1,018 | 298 | |
Net cash provided by operating activities | (419) | (256) | |
Cash Flows from Investing Activities [Abstract] | |||
Net decrease in loans | 0 | 350 | |
Net cash provided by (used in) investing activities | 0 | 350 | |
Cash Flows from Financing Activities [Abstract] | |||
Proceeds from sale of foreclosed real estate | 0 | 250 | |
Proceeds from exercise of options | 96 | 3 | |
Net cash used in financing activities | 96 | 253 | |
Increase (decrease) in cash and cash equivalents | (323) | 347 | |
Cash and cash equivalents at beginning of year | 1,316 | 969 | |
Cash and cash equivalents at end of year | $ 993 | $ 1,316 |
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