VERMONT | 03-0283552 |
Common Stock, $2.00 par value | Nasdaq Stock Market | |||
(Title of class) | (Exchanges registered on) |
Large accelerated filer [ ] | Accelerated filer [ X ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Common Stock, $2 par value | 4,459,535 | shares |
PART II OTHER INFORMATION | |
Item 1A. Risk Factors. | |
June 30, 2016 | December 31, 2015 | |||||
(Unaudited) | ||||||
Assets | (Dollars in thousands) | |||||
Cash and due from banks | $ | 4,220 | $ | 4,217 | ||
Federal funds sold and overnight deposits | 19,979 | 13,744 | ||||
Cash and cash equivalents | 24,199 | 17,961 | ||||
Interest bearing deposits in banks | 10,213 | 12,753 | ||||
Investment securities available-for-sale | 58,141 | 54,110 | ||||
Investment securities held-to-maturity (fair value $2.0 million and $5.1 million at June 30, 2016 and December 31, 2015, respectively) | 1,998 | 5,217 | ||||
Loans held for sale | 6,749 | 5,635 | ||||
Loans | 502,458 | 500,506 | ||||
Allowance for loan losses | (5,226 | ) | (5,201 | ) | ||
Net deferred loan costs | 602 | 515 | ||||
Net loans | 497,834 | 495,820 | ||||
Accrued interest receivable | 2,003 | 1,832 | ||||
Premises and equipment, net | 13,090 | 13,055 | ||||
Core deposit intangible | 840 | 925 | ||||
Goodwill | 2,223 | 2,223 | ||||
Investment in real estate limited partnerships | 2,137 | 2,373 | ||||
Company-owned life insurance | 8,492 | 8,800 | ||||
Other assets | 8,550 | 8,175 | ||||
Total assets | $ | 636,469 | $ | 628,879 | ||
Liabilities and Stockholders’ Equity | ||||||
Liabilities | ||||||
Deposits | ||||||
Noninterest bearing | $ | 103,918 | $ | 99,826 | ||
Interest bearing | 333,402 | 310,203 | ||||
Time | 110,644 | 150,379 | ||||
Total deposits | 547,964 | 560,408 | ||||
Borrowed funds | 27,808 | 9,564 | ||||
Accrued interest and other liabilities | 4,714 | 5,339 | ||||
Total liabilities | 580,486 | 575,311 | ||||
Commitments and Contingencies | ||||||
Stockholders’ Equity | ||||||
Common stock, $2.00 par value; 7,500,000 shares authorized; 4,934,296 shares issued at June 30, 2016 and 4,931,796 shares issued at December 31, 2015 | 9,869 | 9,864 | ||||
Additional paid-in capital | 586 | 501 | ||||
Retained earnings | 50,970 | 49,524 | ||||
Treasury stock at cost; 474,761 shares at June 30, 2016 and 474,619 shares at December 31, 2015 | (4,024 | ) | (4,019 | ) | ||
Accumulated other comprehensive loss | (1,418 | ) | (2,302 | ) | ||
Total stockholders' equity | 55,983 | 53,568 | ||||
Total liabilities and stockholders' equity | $ | 636,469 | $ | 628,879 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(Dollars in thousands, except per share data) | ||||||||||||
Interest and dividend income | ||||||||||||
Interest and fees on loans | $ | 6,254 | $ | 5,859 | $ | 12,249 | $ | 11,591 | ||||
Interest on debt securities: | ||||||||||||
Taxable | 223 | 257 | 472 | 472 | ||||||||
Tax exempt | 146 | 106 | 283 | 213 | ||||||||
Dividends | 18 | 9 | 35 | 24 | ||||||||
Interest on federal funds sold and overnight deposits | 6 | 4 | 11 | 12 | ||||||||
Interest on interest bearing deposits in banks | 41 | 41 | 86 | 81 | ||||||||
Total interest and dividend income | 6,688 | 6,276 | 13,136 | 12,393 | ||||||||
Interest expense | ||||||||||||
Interest on deposits | 412 | 434 | 837 | 910 | ||||||||
Interest on borrowed funds | 107 | 87 | 195 | 176 | ||||||||
Total interest expense | 519 | 521 | 1,032 | 1,086 | ||||||||
Net interest income | 6,169 | 5,755 | 12,104 | 11,307 | ||||||||
Provision for loan losses | 75 | 150 | 150 | 250 | ||||||||
Net interest income after provision for loan losses | 6,094 | 5,605 | 11,954 | 11,057 | ||||||||
Noninterest income | ||||||||||||
Trust income | 180 | 190 | 352 | 367 | ||||||||
Service fees | 1,427 | 1,348 | 2,839 | 2,694 | ||||||||
Net gains on sales of investment securities available-for-sale | 18 | — | 18 | — | ||||||||
Net gains on sales of loans held for sale | 775 | 785 | 1,275 | 1,514 | ||||||||
Other income | 197 | 203 | 299 | 286 | ||||||||
Total noninterest income | 2,597 | 2,526 | 4,783 | 4,861 | ||||||||
Noninterest expenses | ||||||||||||
Salaries and wages | 2,442 | 2,331 | 4,900 | 4,654 | ||||||||
Pension and employee benefits | 851 | 769 | 1,794 | 1,503 | ||||||||
Occupancy expense, net | 309 | 312 | 626 | 693 | ||||||||
Equipment expense | 541 | 460 | 1,050 | 867 | ||||||||
Other expenses | 1,783 | 1,684 | 3,377 | 3,229 | ||||||||
Total noninterest expenses | 5,926 | 5,556 | 11,747 | 10,946 | ||||||||
Income before provision for income taxes | 2,765 | 2,575 | 4,990 | 4,972 | ||||||||
Provision for income taxes | 626 | 558 | 1,092 | 1,071 | ||||||||
Net income | $ | 2,139 | $ | 2,017 | $ | 3,898 | $ | 3,901 | ||||
Earnings per common share | $ | 0.48 | $ | 0.46 | $ | 0.87 | $ | 0.88 | ||||
Weighted average number of common shares outstanding | 4,458,488 | 4,458,749 | 4,458,326 | 4,458,312 | ||||||||
Dividends per common share | $ | 0.28 | $ | 0.27 | $ | 0.55 | $ | 0.54 | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(Dollars in thousands) | ||||||||||||
Net income | $ | 2,139 | $ | 2,017 | $ | 3,898 | $ | 3,901 | ||||
Other comprehensive income (loss), net of tax: | ||||||||||||
Investment securities available-for-sale: | ||||||||||||
Net unrealized holding gains (losses) arising during the period on investment securities available-for-sale | 384 | (492 | ) | 896 | (218 | ) | ||||||
Reclassification adjustment for net gains on sales of investment securities available-for-sale realized in net income | (12 | ) | — | (12 | ) | — | ||||||
Total other comprehensive income (loss) | 372 | (492 | ) | 884 | (218 | ) | ||||||
Total comprehensive income | $ | 2,511 | $ | 1,525 | $ | 4,782 | $ | 3,683 |
Common Stock | ||||||||||||||||||||
Shares, net of treasury | Amount | Additional paid-in capital | Retained earnings | Treasury stock | Accumulated other comprehensive loss | Total stockholders’ equity | ||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Balances, December 31, 2015 | 4,457,177 | $ | 9,864 | $ | 501 | $ | 49,524 | $ | (4,019 | ) | $ | (2,302 | ) | $ | 53,568 | |||||
Net income | — | — | — | 3,898 | — | — | 3,898 | |||||||||||||
Other comprehensive income | — | — | — | — | — | 884 | 884 | |||||||||||||
Issuance of common stock | 71 | — | 1 | — | 1 | — | 2 | |||||||||||||
Cash dividends declared ($0.55 per share) | — | — | — | (2,452 | ) | — | — | (2,452 | ) | |||||||||||
Stock based compensation expense | — | — | 33 | — | — | — | 33 | |||||||||||||
Exercise of stock options | 2,500 | 5 | 51 | — | — | — | 56 | |||||||||||||
Purchase of treasury stock | (213 | ) | — | — | — | (6 | ) | — | (6 | ) | ||||||||||
Balances, June 30, 2016 | 4,459,535 | $ | 9,869 | $ | 586 | $ | 50,970 | $ | (4,024 | ) | $ | (1,418 | ) | $ | 55,983 | |||||
Balances, December 31, 2014 | 4,458,430 | $ | 9,859 | $ | 418 | $ | 46,462 | $ | (3,925 | ) | $ | (1,380 | ) | $ | 51,434 | |||||
Net income | — | — | — | 3,901 | — | — | 3,901 | |||||||||||||
Other comprehensive loss | — | — | — | — | — | (218 | ) | (218 | ) | |||||||||||
Cash dividends declared ($0.54 per share) | — | — | — | (2,408 | ) | — | — | (2,408 | ) | |||||||||||
Stock based compensation expense | — | — | 20 | — | — | — | 20 | |||||||||||||
Exercise of stock options | 2,500 | 5 | 48 | — | — | — | 53 | |||||||||||||
Purchase of treasury stock | (1,077 | ) | — | — | — | (26 | ) | — | (26 | ) | ||||||||||
Balances, June 30, 2015 | 4,459,853 | $ | 9,864 | $ | 486 | $ | 47,955 | $ | (3,951 | ) | $ | (1,598 | ) | $ | 52,756 |
Six Months Ended June 30, | ||||||
2016 | 2015 | |||||
(Dollars in thousands) | ||||||
Cash Flows From Operating Activities | ||||||
Net income | $ | 3,898 | $ | 3,901 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation | 638 | 502 | ||||
Provision for loan losses | 150 | 250 | ||||
Deferred income tax provision (credit) | 311 | (11 | ) | |||
Net amortization of investment securities | 188 | 97 | ||||
Equity in losses of limited partnerships | 236 | 248 | ||||
Stock based compensation expense | 33 | 20 | ||||
Net increase in unamortized loan costs | (87 | ) | (96 | ) | ||
Proceeds from sales of loans held for sale | 59,619 | 69,356 | ||||
Origination of loans held for sale | (59,458 | ) | (62,603 | ) | ||
Net gains on sales of loans held for sale | (1,275 | ) | (1,514 | ) | ||
Net loss on disposals of premises and equipment | — | 6 | ||||
Net gains on sales of investment securities available-for-sale | (18 | ) | — | |||
Write-downs of impaired assets | — | 29 | ||||
Net gains on sales of other real estate owned | — | (3 | ) | |||
(Increase) decrease in accrued interest receivable | (171 | ) | 32 | |||
Amortization of core deposit intangible | 86 | 86 | ||||
Increase in other assets | (635 | ) | (800 | ) | ||
Contribution to defined benefit pension plan | (750 | ) | — | |||
Increase (decrease) in other liabilities | 125 | (802 | ) | |||
Net cash provided by operating activities | 2,890 | 8,698 | ||||
Cash Flows From Investing Activities | ||||||
Interest bearing deposits in banks | ||||||
Proceeds from maturities and redemptions | 3,286 | 2,138 | ||||
Purchases | (747 | ) | (2,587 | ) | ||
Investment securities held-to-maturity | ||||||
Proceeds from maturities, calls and paydowns | 3,220 | 2,000 | ||||
Investment securities available-for-sale | ||||||
Proceeds from sales | 2,673 | — | ||||
Proceeds from maturities, calls and paydowns | 6,617 | 4,878 | ||||
Purchases | (12,151 | ) | (16,947 | ) | ||
Purchase of nonmarketable stock, net | (200 | ) | — | |||
Net (increase) decrease in loans | (2,108 | ) | 7,193 | |||
Recoveries of loans charged off | 31 | 25 | ||||
Purchases of premises and equipment | (673 | ) | (1,590 | ) | ||
Purchase of company-owned life insurance | — | (5,000 | ) | |||
Investments in limited partnerships | — | (15 | ) | |||
Proceeds from sales of other real estate owned | — | 100 | ||||
Net cash used in investing activities | (52 | ) | (9,805 | ) | ||
Cash Flows From Financing Activities | ||||||
Advances on long-term borrowings | 5,070 | — | ||||
Repayment of long-term debt | (152 | ) | (146 | ) | ||
Net increase in short-term borrowings outstanding | 13,326 | 15,629 | ||||
Net increase in noninterest bearing deposits | 4,092 | 4,045 | ||||
Net increase in interest bearing deposits | 23,199 | 312 | ||||
Net decrease in time deposits | (39,735 | ) | (43,442 | ) | ||
Issuance of common stock | 58 | 53 | ||||
Purchase of treasury stock | (6 | ) | (26 | ) | ||
Dividends paid | (2,452 | ) | (2,408 | ) | ||
Net cash provided by (used in) financing activities | 3,400 | (25,983 | ) | |||
Net increase (decrease) in cash and cash equivalents | 6,238 | (27,090 | ) | |||
Cash and cash equivalents | ||||||
Beginning of period | 17,961 | 41,744 | ||||
End of period | $ | 24,199 | $ | 14,654 | ||
Supplemental Disclosures of Cash Flow Information | ||||||
Interest paid | $ | 1,210 | $ | 1,306 | ||
Income taxes paid | $ | 800 | $ | 1,010 | ||
Note 1. | Basis of Presentation |
AFS: | Available-for-sale | IRS: | Internal Revenue Service |
ALCO: | Asset Liability Committee | MBS: | Mortgage-backed security |
ALL: | Allowance for loan losses | MSRs: | Mortgage servicing rights |
ASC: | Accounting Standards Codification | OAO: | Other assets owned |
ASU: | Accounting Standards Update | OCI: | Other comprehensive income (loss) |
Board: | Board of Directors | OFAC: | U.S. Office of Foreign Assets Control |
bp or bps: | Basis point(s) | OREO: | Other real estate owned |
Branch Acquisition: | The acquisition of three New Hampshire branches in May 2011 | OTTI: | Other-than-temporary impairment |
CDARS: | Certificate of Deposit Accounts Registry Service of the Promontory Interfinancial Network | OTT: | Other-than-temporary |
Company: | Union Bankshares, Inc. and Subsidiary | Plan: | The Union Bank Pension Plan |
DRIP: | Dividend Reinvestment Plan | RD: | USDA Rural Development |
FASB: | Financial Accounting Standards Board | RSU: | Restricted Stock Unit |
FDIC: | Federal Deposit Insurance Corporation | SBA: | U.S. Small Business Administration |
FHA: | U.S. Federal Housing Administration | SEC: | U.S. Securities and Exchange Commission |
FHLB: | Federal Home Loan Bank of Boston | TDR: | Troubled-debt restructuring |
FRB: | Federal Reserve Board | Union: | Union Bank, the sole subsidiary of Union Bankshares, Inc |
FHLMC/Freddie Mac: | Federal Home Loan Mortgage Corporation | USDA: | U.S. Department of Agriculture |
GAAP: | Generally Accepted Accounting Principles in the United States | VA: | U.S. Veterans Administration |
HTM: | Held-to-maturity | 2008 ISO Plan: | 2008 Incentive Stock Option Plan of the Company |
HUD: | U.S. Department of Housing and Urban Development | 2014 Equity Plan: | 2014 Equity Incentive Plan |
ICS: | Insured Cash Sweeps of the Promontory Interfinancial Network |
(Dollars in thousands) | |||
2016 | $ | 86 | |
2017 | 171 | ||
2018 | 171 | ||
2019 | 171 | ||
2020 | 171 | ||
Thereafter | 70 | ||
Total | $ | 840 |
June 30, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||
(Dollars in thousands) | ||||||||||||
Available-for-sale | ||||||||||||
Debt securities: | ||||||||||||
U.S. Government-sponsored enterprises | $ | 7,414 | $ | 87 | $ | (22 | ) | $ | 7,479 | |||
Agency mortgage-backed | 14,150 | 279 | (2 | ) | 14,427 | |||||||
State and political subdivisions | 23,179 | 729 | (8 | ) | 23,900 | |||||||
Corporate | 11,759 | 395 | (160 | ) | 11,994 | |||||||
Total debt securities | 56,502 | 1,490 | (192 | ) | 57,800 | |||||||
Mutual funds | 341 | — | — | 341 | ||||||||
Total | $ | 56,843 | $ | 1,490 | $ | (192 | ) | $ | 58,141 | |||
Held-to-maturity | ||||||||||||
U.S. Government-sponsored enterprises | $ | 1,998 | $ | 8 | $ | — | $ | 2,006 |
December 31, 2015 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||
(Dollars in thousands) | ||||||||||||
Available-for-sale | ||||||||||||
Debt securities: | ||||||||||||
U.S. Government-sponsored enterprises | $ | 10,805 | $ | 30 | $ | (143 | ) | $ | 10,692 | |||
Agency mortgage-backed | 11,083 | 39 | (64 | ) | 11,058 | |||||||
State and political subdivisions | 19,653 | 404 | (25 | ) | 20,032 | |||||||
Corporate | 12,266 | 76 | (359 | ) | 11,983 | |||||||
Total debt securities | 53,807 | 549 | (591 | ) | 53,765 | |||||||
Mutual funds | 345 | — | — | 345 | ||||||||
Total | $ | 54,152 | $ | 549 | $ | (591 | ) | $ | 54,110 | |||
Held-to-maturity | ||||||||||||
U.S. Government-sponsored enterprises | $ | 5,217 | $ | — | $ | (101 | ) | $ | 5,116 |
Amortized Cost | Fair Value | |||||
(Dollars in thousands) | ||||||
Available-for-sale | ||||||
Due from one to five years | $ | 4,488 | $ | 4,603 | ||
Due from five to ten years | 23,109 | 23,740 | ||||
Due after ten years | 14,755 | 15,030 | ||||
42,352 | 43,373 | |||||
Agency mortgage-backed | 14,150 | 14,427 | ||||
Total debt securities available-for-sale | $ | 56,502 | $ | 57,800 | ||
Held-to-maturity | ||||||
Due from one to five years | $ | 999 | $ | 1,003 | ||
Due after ten years | 999 | 1,003 | ||||
Total debt securities held-to-maturity | $ | 1,998 | $ | 2,006 |
June 30, 2016 | Less Than 12 Months | 12 Months and over | Total | |||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
U.S. Government-sponsored enterprises | 4 | $ | 1,847 | $ | (9 | ) | 1 | $ | 426 | $ | (13 | ) | 5 | $ | 2,273 | $ | (22 | ) | ||||||
Agency mortgage-backed | — | — | — | 1 | 426 | (2 | ) | 1 | 426 | (2 | ) | |||||||||||||
State and political subdivisions | 1 | 469 | (8 | ) | — | — | — | 1 | 469 | (8 | ) | |||||||||||||
Corporate | 3 | 1,451 | (48 | ) | 5 | 2,098 | (112 | ) | 8 | 3,549 | (160 | ) | ||||||||||||
Total | 8 | $ | 3,767 | $ | (65 | ) | 7 | $ | 2,950 | $ | (127 | ) | 15 | $ | 6,717 | $ | (192 | ) |
December 31, 2015 | Less Than 12 Months | 12 Months and over | Total | |||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
U.S. Government-sponsored enterprises | 12 | $ | 9,081 | $ | (157 | ) | 5 | $ | 3,607 | $ | (87 | ) | 17 | $ | 12,688 | $ | (244 | ) | ||||||
Agency mortgage-backed | 12 | 7,459 | (58 | ) | 1 | 259 | (6 | ) | 13 | 7,718 | (64 | ) | ||||||||||||
State and political subdivisions | 4 | 1,512 | (14 | ) | 2 | 785 | (11 | ) | 6 | 2,297 | (25 | ) | ||||||||||||
Corporate | 12 | 5,750 | (277 | ) | 4 | 1,632 | (82 | ) | 16 | 7,382 | (359 | ) | ||||||||||||
Total | 40 | $ | 23,802 | $ | (506 | ) | 12 | $ | 6,283 | $ | (186 | ) | 52 | $ | 30,085 | $ | (692 | ) |
• | The length of time, and extent to which, the fair value has been less than the amortized cost; |
• | Adverse conditions specifically related to the security, industry, or geographic area; |
• | The historical and implied volatility of the fair value of the security; |
• | The payment structure of the debt security and the likelihood of the issuer being able to make payments that may increase in the future; |
• | Failure of the issuer of the security to make scheduled interest or principal payments; |
• | Any changes to the rating of the security by a rating agency; |
• | Recoveries or additional declines in fair value subsequent to the balance sheet date; and |
• | The nature of the issuer, including whether it is a private company, public entity or government-sponsored enterprise, and the existence or likelihood of any government or third party guaranty. |
For The Three Months Ended June 30, | For The Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(Dollars in thousands) | ||||||||||||
Balance at beginning of period | $ | — | $ | 274 | $ | — | $ | 292 | ||||
Loan premium amortization | — | (18 | ) | — | (36 | ) | ||||||
Balance at end of period | $ | — | $ | 256 | $ | — | $ | 256 |
June 30, 2016 | December 31, 2015 | |||||
(Dollars in thousands) | ||||||
Residential real estate | $ | 167,658 | $ | 165,396 | ||
Construction real estate | 33,163 | 42,889 | ||||
Commercial real estate | 247,799 | 230,442 | ||||
Commercial | 31,413 | 21,397 | ||||
Consumer | 3,845 | 3,963 | ||||
Municipal | 18,580 | 36,419 | ||||
Gross loans | 502,458 | 500,506 | ||||
Allowance for loan losses | (5,226 | ) | (5,201 | ) | ||
Net deferred loan costs | 602 | 515 | ||||
Net loans | $ | 497,834 | $ | 495,820 |
June 30, 2016 | Current | 30-59 Days | 60-89 Days | 90 Days and Over and Accruing | Nonaccrual | Total | ||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Residential real estate | $ | 164,734 | $ | 90 | $ | 692 | $ | 256 | $ | 1,886 | $ | 167,658 | ||||||
Construction real estate | 32,998 | 139 | — | — | 26 | 33,163 | ||||||||||||
Commercial real estate | 245,833 | — | 731 | 539 | 696 | 247,799 | ||||||||||||
Commercial | 31,378 | 16 | — | — | 19 | 31,413 | ||||||||||||
Consumer | 3,825 | 14 | 6 | — | — | 3,845 | ||||||||||||
Municipal | 18,580 | — | — | — | — | 18,580 | ||||||||||||
Total | $ | 497,348 | $ | 259 | $ | 1,429 | $ | 795 | $ | 2,627 | $ | 502,458 |
December 31, 2015 | Current | 30-59 Days | 60-89 Days | 90 Days and Over and Accruing | Nonaccrual | Total | ||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Residential real estate | $ | 159,895 | $ | 2,034 | $ | 1,195 | $ | 368 | $ | 1,904 | $ | 165,396 | ||||||
Construction real estate | 42,616 | 7 | 204 | 34 | 28 | 42,889 | ||||||||||||
Commercial real estate | 228,513 | 667 | 641 | 111 | 510 | 230,442 | ||||||||||||
Commercial | 20,977 | — | 20 | 321 | 79 | 21,397 | ||||||||||||
Consumer | 3,950 | 10 | 1 | 2 | — | 3,963 | ||||||||||||
Municipal | 36,419 | — | — | — | — | 36,419 | ||||||||||||
Total | $ | 492,370 | $ | 2,718 | $ | 2,061 | $ | 836 | $ | 2,521 | $ | 500,506 |
• | Residential real estate - Loans in this segment are collateralized by owner-occupied 1-4 family residential real estate, second and vacation homes, 1-4 family investment properties, home equity and second mortgage loans. Repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, could have an effect on the credit quality of this segment. |
• | Construction real estate - Loans in this segment include residential and commercial construction properties, commercial real estate development loans (while in the construction phase of the projects), land and land development loans. Repayment is dependent on the credit quality of the individual borrower and/or the underlying cash flows generated by the properties being constructed. The overall health of the economy, including unemployment rates, housing prices, vacancy rates and material costs, could have an effect on the credit quality of this segment. |
• | Commercial real estate - Loans in this segment are primarily properties occupied by businesses or income-producing properties. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by a general slowdown in business or increased vacancy rates which, in turn, could have an effect on the credit quality of this segment. Management requests business financial statements at least annually and monitors the cash flows of these loans. |
• | Commercial - Loans in this segment are made to businesses and are generally secured by non-real estate assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer or business spending, could have an effect on the credit quality of this segment. |
• | Consumer - Loans in this segment are made to individuals for personal expenditures, such as an automobile purchase, and include unsecured loans. Repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment, could have an effect on the credit quality of this segment. |
• | Municipal - Loans in this segment are made to municipalities located within the Company's service area. Repayment is primarily dependent on taxes or other funds collected by the municipalities. Management considers there to be minimal risk surrounding the credit quality of this segment. |
For The Three Months Ended June 30, 2016 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance, March 31, 2016 | $ | 1,386 | $ | 466 | $ | 2,729 | $ | 218 | $ | 25 | $ | 47 | $ | 254 | $ | 5,125 | ||||||||
Provision (credit) for loan losses | (19 | ) | (96 | ) | 108 | 16 | — | (21 | ) | 87 | 75 | |||||||||||||
Recoveries of amounts charged off | 15 | 3 | — | 6 | 2 | — | — | 26 | ||||||||||||||||
1,382 | 373 | 2,837 | 240 | 27 | 26 | 341 | 5,226 | |||||||||||||||||
Amounts charged off | — | — | — | — | — | — | — | — | ||||||||||||||||
Balance, June 30, 2016 | $ | 1,382 | $ | 373 | $ | 2,837 | $ | 240 | $ | 27 | $ | 26 | $ | 341 | $ | 5,226 |
For The Three Months Ended June 30, 2015 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance, March 31, 2015 | $ | 1,339 | $ | 379 | $ | 2,668 | $ | 183 | $ | 26 | $ | 54 | $ | 124 | $ | 4,773 | ||||||||
Provision (credit) for loan losses | 6 | (1 | ) | 151 | 9 | — | (29 | ) | 14 | 150 | ||||||||||||||
Recoveries of amounts charged off | — | 19 | — | — | 2 | — | — | 21 | ||||||||||||||||
1,345 | 397 | 2,819 | 192 | 28 | 25 | 138 | 4,944 | |||||||||||||||||
Amounts charged off | (23 | ) | — | — | — | (2 | ) | — | — | (25 | ) | |||||||||||||
Balance, June 30, 2015 | $ | 1,322 | $ | 397 | $ | 2,819 | $ | 192 | $ | 26 | $ | 25 | $ | 138 | $ | 4,919 |
For The Six Months Ended June 30, 2016 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance, December 31, 2015 | $ | 1,419 | $ | 514 | $ | 2,792 | $ | 209 | $ | 28 | $ | 38 | $ | 201 | $ | 5,201 | ||||||||
Provision (credit) for loan losses | 68 | (147 | ) | 45 | 57 | (1 | ) | (12 | ) | 140 | 150 | |||||||||||||
Recoveries of amounts charged off | 15 | 6 | — | 7 | 3 | — | — | 31 | ||||||||||||||||
1,502 | 373 | 2,837 | 273 | 30 | 26 | 341 | 5,382 | |||||||||||||||||
Amounts charged off | (120 | ) | — | — | (33 | ) | (3 | ) | — | — | (156 | ) | ||||||||||||
Balance, June 30, 2016 | $ | 1,382 | $ | 373 | $ | 2,837 | $ | 240 | $ | 27 | $ | 26 | $ | 341 | $ | 5,226 |
For The Six Months Ended June 30, 2015 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Balance, December 31, 2014 | $ | 1,330 | $ | 439 | $ | 2,417 | $ | 176 | $ | 27 | $ | 42 | $ | 263 | $ | 4,694 | ||||||||
Provision (credit) for loan losses | 15 | (64 | ) | 402 | 29 | 10 | (17 | ) | (125 | ) | 250 | |||||||||||||
Recoveries of amounts charged off | — | 22 | — | — | 3 | — | — | 25 | ||||||||||||||||
1,345 | 397 | 2,819 | 205 | 40 | 25 | 138 | 4,969 | |||||||||||||||||
Amounts charged off | (23 | ) | — | — | (13 | ) | (14 | ) | — | — | (50 | ) | ||||||||||||
Balance, June 30, 2015 | $ | 1,322 | $ | 397 | $ | 2,819 | $ | 192 | $ | 26 | $ | 25 | $ | 138 | $ | 4,919 |
June 30, 2016 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Individually evaluated for impairment | $ | 58 | $ | — | $ | 84 | $ | — | $ | — | $ | — | $ | — | $ | 142 | ||||||||
Collectively evaluated for impairment | 1,324 | 373 | 2,753 | 240 | 27 | 26 | 341 | 5,084 | ||||||||||||||||
Total allocated | $ | 1,382 | $ | 373 | $ | 2,837 | $ | 240 | $ | 27 | $ | 26 | $ | 341 | $ | 5,226 |
December 31, 2015 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Unallocated | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Individually evaluated for impairment | $ | 109 | $ | — | $ | 227 | $ | 21 | $ | — | $ | — | $ | — | $ | 357 | ||||||||
Collectively evaluated for impairment | 1,310 | 514 | 2,565 | 188 | 28 | 38 | 201 | 4,844 | ||||||||||||||||
Total allocated | $ | 1,419 | $ | 514 | $ | 2,792 | $ | 209 | $ | 28 | $ | 38 | $ | 201 | $ | 5,201 |
June 30, 2016 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Individually evaluated for impairment | $ | 1,304 | $ | 90 | $ | 3,153 | $ | 460 | $ | — | $ | — | $ | 5,007 | |||||||
Collectively evaluated for impairment | 166,354 | 33,073 | 244,646 | 30,953 | 3,845 | 18,580 | 497,451 | ||||||||||||||
Total | $ | 167,658 | $ | 33,163 | $ | 247,799 | $ | 31,413 | $ | 3,845 | $ | 18,580 | $ | 502,458 |
December 31, 2015 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Individually evaluated for impairment | $ | 1,197 | $ | 92 | $ | 3,094 | $ | 493 | $ | — | $ | — | $ | 4,876 | |||||||
Collectively evaluated for impairment | 164,199 | 42,797 | 227,348 | 20,904 | 3,963 | 36,419 | 495,630 | ||||||||||||||
Total | $ | 165,396 | $ | 42,889 | $ | 230,442 | $ | 21,397 | $ | 3,963 | $ | 36,419 | $ | 500,506 |
June 30, 2016 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Pass | $ | 153,346 | $ | 29,489 | $ | 179,088 | $ | 28,075 | $ | 3,821 | $ | 18,580 | $ | 412,399 | |||||||
Satisfactory/Monitor | 10,684 | 3,558 | 63,451 | 2,183 | 24 | — | 79,900 | ||||||||||||||
Substandard | 3,628 | 116 | 5,260 | 1,155 | — | — | 10,159 | ||||||||||||||
Total | $ | 167,658 | $ | 33,163 | $ | 247,799 | $ | 31,413 | $ | 3,845 | $ | 18,580 | $ | 502,458 |
December 31, 2015 | Residential Real Estate | Construction Real Estate | Commercial Real Estate | Commercial | Consumer | Municipal | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Pass | $ | 150,535 | $ | 37,750 | $ | 175,438 | $ | 18,347 | $ | 3,902 | $ | 36,419 | $ | 422,391 | |||||||
Satisfactory/Monitor | 11,329 | 4,968 | 49,745 | 2,384 | 61 | — | 68,487 | ||||||||||||||
Substandard | 3,532 | 171 | 5,259 | 666 | — | — | 9,628 | ||||||||||||||
Total | $ | 165,396 | $ | 42,889 | $ | 230,442 | $ | 21,397 | $ | 3,963 | $ | 36,419 | $ | 500,506 |
As of June 30, 2016 | For The Three Months Ended June 30, 2016 | For The Six Months Ended June 30, 2016 | |||||||||||||||||||
Recorded Investment (1) | Principal Balance (1) | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Residential real estate | $ | 259 | $ | 268 | $ | 58 | |||||||||||||||
Commercial real estate | 507 | 533 | 84 | ||||||||||||||||||
With an allowance recorded | 766 | 801 | 142 | ||||||||||||||||||
Residential real estate | 1,045 | 1,395 | — | ||||||||||||||||||
Construction real estate | 90 | 90 | — | ||||||||||||||||||
Commercial real estate | 2,646 | 2,714 | — | ||||||||||||||||||
Commercial | 460 | 461 | — | ||||||||||||||||||
With no allowance recorded | 4,241 | 4,660 | — | ||||||||||||||||||
Residential real estate | 1,304 | 1,663 | 58 | $ | 1,240 | $ | 8 | $ | 1,226 | $ | 16 | ||||||||||
Construction real estate | 90 | 90 | — | 90 | 1 | 91 | 2 | ||||||||||||||
Commercial real estate | 3,153 | 3,247 | 84 | 3,130 | 17 | 3,118 | 31 | ||||||||||||||
Commercial | 460 | 461 | — | 468 | — | 476 | — | ||||||||||||||
Total | $ | 5,007 | $ | 5,461 | $ | 142 | $ | 4,928 | $ | 26 | $ | 4,911 | $ | 49 |
(1) | Does not reflect government guaranties on impaired loans as of June 30, 2016 totaling $578 thousand. |
As of June 30, 2015 | For The Three Months Ended June 30, 2015 | For The Six Months Ended June 30, 2015 | |||||||||||||||||||
Recorded Investment (1) | Principal Balance (1) | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Residential real estate | $ | 685 | $ | 805 | $ | 36 | $ | 689 | $ | 2 | $ | 776 | $ | 14 | |||||||
Construction real estate | 95 | 95 | — | 174 | 14 | 208 | 17 | ||||||||||||||
Commercial real estate | 4,079 | 4,150 | 331 | 3,687 | 71 | 3,568 | 105 | ||||||||||||||
Commercial | — | — | — | — | — | 41 | — | ||||||||||||||
Total | $ | 4,859 | $ | 5,050 | $ | 367 | $ | 4,550 | $ | 87 | $ | 4,593 | $ | 136 |
(1) | Does not reflect government guaranties on impaired loans as of June 30, 2015 totaling $240 thousand. |
December 31, 2015 | |||||||||||
Recorded Investment (1) | Principal Balance (1) | Related Allowance | |||||||||
(Dollars in thousands) | |||||||||||
Residential real estate | $ | 659 | $ | 668 | $ | 109 | |||||
Commercial real estate | 2,142 | 2,161 | 227 | ||||||||
Commercial | 493 | 493 | 21 | ||||||||
With an allowance recorded | 3,294 | 3,322 | 357 | ||||||||
Residential real estate | 538 | 697 | — | ||||||||
Construction real estate | 92 | 92 | — | ||||||||
Commercial real estate | 952 | 1,015 | — | ||||||||
With no allowance recorded | 1,582 | 1,804 | — | ||||||||
Residential real estate | 1,197 | 1,365 | 109 | ||||||||
Construction real estate | 92 | 92 | — | ||||||||
Commercial real estate | 3,094 | 3,176 | 227 | ||||||||
Commercial | 493 | 493 | 21 | ||||||||
Total | $ | 4,876 | $ | 5,126 | $ | 357 |
(1) | Does not reflect government guaranties on impaired loans as of December 31, 2015 totaling $606 thousand. |
June 30, 2016 | December 31, 2015 | |||||||||
Number of Loans | Principal Balance | Number of Loans | Principal Balance | |||||||
(Dollars in thousands) | ||||||||||
Residential real estate | 14 | $ | 1,304 | 11 | $ | 1,197 | ||||
Construction real estate | 1 | 90 | 1 | 92 | ||||||
Commercial real estate | 7 | 1,111 | 5 | 950 | ||||||
Commercial | 2 | 461 | 2 | 493 | ||||||
Total | 24 | $ | 2,966 | 19 | $ | 2,732 |
New TDRs During the | New TDRs During the | |||||||||||||||
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||
Number of Loans | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number of Loans | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||||
(Dollars in thousands) | ||||||||||||||||
Residential real estate | 2 | $ | 132 | $ | 139 | 3 | $ | 189 | $ | 196 | ||||||
Commercial real estate | 2 | 160 | 160 | 2 | 160 | 160 |
New TDRs During the | New TDRs During the | |||||||||||||||
Three Months Ended June 30, 2015 | Six Months Ended June 30, 2015 | |||||||||||||||
Number of Loans | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | Number of Loans | Pre-Modification Outstanding Recorded Investment | Post-Modification Outstanding Recorded Investment | |||||||||||
(Dollars in thousands) | ||||||||||||||||
Commercial real estate | 2 | $ | 281 | $ | 281 | 2 | $ | 281 | $ | 281 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(Dollars in thousands) | ||||||||||||
Interest cost on projected benefit obligation | $ | 175 | $ | 170 | $ | 350 | $ | 340 | ||||
Expected return on plan assets | (259 | ) | (286 | ) | (518 | ) | (572 | ) | ||||
Amortization of net loss | 41 | 14 | 82 | 28 | ||||||||
Net periodic benefit | $ | (43 | ) | $ | (102 | ) | $ | (86 | ) | $ | (204 | ) |
• | A total of 5,444 RSUs were granted at a fair value of $27.91 per share, based on the closing market price of the Company's common stock on the December 31, 2015 earned date of the award. 50% of the RSUs awarded were in the form of Time-Based RSUs, which will vest over three years, approximately one-third per year on the anniversary of the earned date; and 50% of the RSUs awarded were in the form of Performance-Based RSUs, which are subject to both performance and time based vesting conditions. The Performance-Based conditions were satisfied during 2015 and vesting of the Performance-Based RSUs will occur over two years, with approximately one-half vesting on each of the next two anniversaries of the earned date. Prior to vesting, the RSUs do not earn dividends or dividend equivalents, nor do they bear any voting rights. The general terms of the awards were described in a 2015 Award Summary, with the final awards and related 2015 performance results and December 31, 2015 stock price, certified by the Board of Directors during the first quarter of 2016. Unrecognized compensation expense related to the unvested RSUs as of June 30, 2016 was $121 thousand. |
• | A total of 4,456 contingent RSUs were provisionally granted at a fair value of $29.10 per share, based on the closing market price of the Company's stock on the March 16, 2016 grant date. The estimated number of contingent RSUs provisionally granted was based on target payout amounts as detailed in the 2016 Award Plan Summary adopted by the Board of Directors. As with the 2015 grants, one half is in the form of Time-Based RSUs and one-half is in the form of Performance-Based RSUs. The actual number of RSUs granted (if any) will be determined as of the earned date of December 31, 2016. The contingent RSUs were granted on substantially the same terms and conditions as the RSUs granted under the 2015 Award Plan Summary. As of June 30, 2016 the estimated unrecognized compensation expense related to the contingent unvested RSUs, based on the closing market price of the Company's stock on the grant date of March 16, 2016 was $130 thousand. |
June 30, 2016 | December 31, 2015 | |||||
(Dollars in thousands) | ||||||
Net unrealized gain (loss) on investment securities available-for-sale | $ | 857 | $ | (27 | ) | |
Defined benefit pension plan net unrealized actuarial loss | (2,275 | ) | (2,275 | ) | ||
Total | $ | (1,418 | ) | $ | (2,302 | ) |
Three Months Ended | ||||||||||||||||||
June 30, 2016 | June 30, 2015 | |||||||||||||||||
Before-Tax Amount | Tax (Expense) Benefit | Net-of-Tax Amount | Before-Tax Amount | Tax Benefit | Net-of-Tax Amount | |||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Investment securities available-for-sale: | ||||||||||||||||||
Net unrealized holding gains (losses) arising during the period on investment securities available-for-sale | $ | 582 | $ | (198 | ) | $ | 384 | $ | (746 | ) | $ | 254 | $ | (492 | ) | |||
Reclassification adjustment for net gains on investment securities available-for-sale realized in net income | (18 | ) | 6 | (12 | ) | — | — | — | ||||||||||
Total other comprehensive income (loss) | $ | 564 | $ | (192 | ) | $ | 372 | $ | (746 | ) | $ | 254 | $ | (492 | ) |
Six Months Ended | ||||||||||||||||||
June 30, 2016 | June 30, 2015 | |||||||||||||||||
Before-Tax Amount | Tax (Expense) Benefit | Net-of-Tax Amount | Before-Tax Amount | Tax Benefit | Net-of-Tax Amount | |||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Investment securities available-for-sale: | ||||||||||||||||||
Net unrealized holding gains (losses) arising during the period on investment securities available-for-sale | $ | 1,358 | $ | (462 | ) | $ | 896 | $ | (331 | ) | $ | 113 | $ | (218 | ) | |||
Reclassification adjustment for net gains on investment securities available-for-sale realized in net income | (18 | ) | 6 | (12 | ) | — | — | — | ||||||||||
Total other comprehensive income (loss) | $ | 1,340 | $ | (456 | ) | $ | 884 | $ | (331 | ) | $ | 113 | $ | (218 | ) |
Three Months Ended | Six Months Ended | ||||||||||||
Reclassification Adjustment Description | June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | Affected Line Item in Consolidated Statement of Income | ||||||||
(Dollars in thousands) | |||||||||||||
Investment securities available-for-sale: | |||||||||||||
Net gains on investment securities available-for-sale | $ | (18 | ) | $ | — | $ | (18 | ) | $ | — | Net gains on sales of investment securities available-for-sale | ||
Tax benefit | 6 | — | 6 | — | Provision for income taxes | ||||||||
Total reclassifications | $ | (12 | ) | $ | — | $ | (12 | ) | $ | — | Net income |
• | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
• | Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; |
• | Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |