☒ |
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
|
NORTH CAROLINA
|
81-2019652
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
901 EAST MAIN STREET
|
||
LINCOLNTON, NORTH CAROLINA
|
28092
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
Emerging growth company
|
☐
|
Page
|
||
Part
I
|
||
Item 1.
|
1 | |
Item 1A.
|
12 | |
Item 1B.
|
12 | |
Item 2.
|
12 | |
Item 3.
|
13 | |
Item 4.
|
13 | |
Part
II
|
||
Item 5.
|
13 | |
Item 6.
|
14 | |
Item 7.
|
14 | |
Item 7A.
|
14 | |
Item 8.
|
14 | |
Item 9.
|
14 | |
Item 9A.
|
14 | |
Item 9B.
|
15
|
|
Part
III
|
||
Item 10.
|
15 | |
Item 11.
|
15 | |
Item 12.
|
15 | |
Item 13.
|
16 | |
Item 14.
|
16 | |
Part
IV
|
||
Item 15.
|
16 |
NC County
|
No. of
Banks /
Institutions
|
No. of
Branches in
Market
|
Total
Deposits in
Market
($000s)
|
Our
Deposits
in Market
($000s)
|
Our
Deposit
Market
Share
|
|||||||||||||||
Lincoln
|
10
|
23
|
$
|
1,224,995
|
$
|
218,951
|
17.87
|
%
|
||||||||||||
Catawba
|
13
|
44
|
2,846,571
|
31,551
|
1.11
|
%
|
||||||||||||||
Gaston
|
14
|
45
|
2,500,546
|
83,299
|
3.33
|
%
|
||||||||||||||
Iredell
|
20
|
54
|
2,980,706
|
23,747
|
0.
80
|
%
|
||||||||||||||
Rutherford
|
11
|
17
|
706,935
|
44,991
|
6.36
|
%
|
|
• |
it may acquire direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly
own or control more than 5% of the voting shares of the bank;
|
|
• |
it or any of its subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank; or
|
|
• |
it may merge or consolidate with any other bank holding company.
|
•
|
the bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act; or
|
|
• |
no other person owns a greater percentage of that class of voting securities immediately after the transaction.
|
|
• |
“well capitalized” if it has a Total Risk-Based Capital ratio of 10% or greater, a Tier 1 Risk-Based Capital ratio of 8% or greater and a leverage ratio of 5% or greater
and is not subject to any order or written directive by the appropriate regulatory authority to meet and maintain a specific capital level for any capital measure;
|
|
• |
“adequately capitalized” if it has a Total Risk-Based Capital ratio of 8% or greater, a Tier 1 Risk-Based Capital ratio of 6% or greater and a leverage ratio of 4% or
greater (3% in certain circumstances) and is not “well capitalized;”
|
|
• |
“undercapitalized” if it has a Total Risk-Based Capital ratio of less than 8%, a Tier 1 Risk-Based Capital ratio of less than 6% or a leverage ratio of less than 4% (3%
in certain circumstances);
|
|
• |
“significantly undercapitalized” if it has a Total Risk-Based Capital ratio of less than 6%, a Tier 1 Risk-Based Capital ratio of less than 4% or a leverage ratio of less
than 3%; and
|
|
• |
“critically undercapitalized” if its tangible equity is equal to or less than 2% of average quarterly tangible assets.
|
|
• |
The rule implemented higher minimum capital requirements, includes a new common equity Tier 1 capital requirement, and established criteria that instruments must meet in
order to be considered Common Equity Tier 1 capital, additional Tier 1 capital, or Tier 2 capital. The minimum capital to risk-weighted assets (“RWA”) requirements under the rule are a common equity Tier 1 capital ratio of 4.5% and a
Tier 1 capital ratio of 6.0%, which is an increase from 4.0%, and a total capital ratio that remains at 8.0%. The minimum leverage ratio (Tier 1 capital to total assets) is 4.0%. The rule maintained the general structure of the
current prompt corrective action, or PCA, framework while incorporating these increased minimum requirements.
|
|
• |
The rule implemented changes to the definition of capital, including stricter eligibility criteria for regulatory capital instruments that disallows the inclusion of
instruments such as trust preferred securities in Tier 1 capital going forward (subject to certain exceptions), and new constraints on the inclusion of minority interests, mortgage-servicing assets (“MSAs”), deferred tax assets
(“DTAs”), and certain investments in the capital of unconsolidated financial institutions.
|
|
• |
The rule is intended to improve the quality of capital by implementing changes to the definition of capital. Among the most important changes that the rule implemented
were stricter eligibility criteria for regulatory capital instruments that would disallow the inclusion of instruments such as trust preferred securities in Tier 1 capital, and new constraints on the inclusion of minority interests,
mortgage-servicing assets (“MSAs”), deferred tax assets (“DTAs”), and certain investments in the capital of unconsolidated financial institutions. In addition, the rule requires that certain regulatory capital deductions be made from
common equity Tier 1 capital.
|
|
• |
Under the rule, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a
banking organization must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. This buffer is intended to help ensure that banking organizations conserve
capital when it is most needed, allowing them to better weather periods of economic stress. The buffer is measured relative to RWA. Phase-in of the capital conservation buffer requirements began on January 1, 2016 and will be fully
phased in beginning in 2019. A banking organization with a buffer greater than 2.5% would not be subject to limits on capital distributions or discretionary bonus payments; however, a banking organization with a buffer of less than
2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The rule also prohibits a banking organization from making distributions or discretionary bonus payments during any quarter if its eligible
retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% at the beginning of the quarter. When the rule is fully phased in, the minimum capital requirements plus the capital conservation
buffer will exceed the PCA well-capitalized thresholds.
|
|
• |
The rule also increased the risk weights for past-due loans, certain commercial real estate loans, and some equity exposures, and made selected other changes in risk
weights and credit conversion factors.
|
|
• |
total reported loans for construction, land development and other land (“C&D”) represent 100% or more of the institution’s total capital; or
|
|
• |
total CRE loans represent 300% or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio has increased by 50% or
more.
|
|
· |
Tax Rate
. The Tax Act replaces the graduated corporate tax rates applicable under prior law,
which imposed a maximum tax rate of 35%, with a reduced 21% flat tax rate. Although the reduced tax rate is generally favorable to the Company by resulting in increased earnings and capital, the immediate impact was a one-time
decrease in the value of our existing deferred tax assets, which resulted in a significant decrease in our net income for the fiscal year ending December 31, 2017.
|
|
· |
Employee Compensation
. A “publicly held corporation” is not permitted to deduct compensation
in excess of $1 million per year paid to certain employees. The Tax Act eliminates certain exceptions to the $1 million limit applicable under prior law related to performance-based compensation, such as equity grants and cash bonuses
that are paid only on the attainment of performance goals.
|
|
· |
Business Asset Expensing
. The Tax Act allows taxpayers immediately to expense the entire cost
(instead of only 50%, as under prior law) of certain depreciable tangible property and real property improvements acquired and placed in service after September 27, 2017 and before January 1, 2023 (with an additional year for certain
property). This 100% “bonus” depreciation is phased out proportionately for property placed in service on or after January 1, 2023 and before January 1, 2027 (with an additional year for certain property).
|
|
· |
Interest Expense
. The Tax Act limits a taxpayer’s annual deduction of business interest
expense to the sum of (i) business interest income and (ii) 30% of “adjusted taxable income,” defined as a business’s taxable income without taking into account business interest income or expense, net operating losses, and, for 2018
through 2021, depreciation, amortization and depletion.
|
Office
|
Address
|
Year First
Opened
|
Approximate
Square Footage
|
Owned or
Leased
|
|||||
Main Office/Headquarters
|
901 East Main Street
Lincolnton, NC 28092
|
2000
|
11,011
|
Leased
|
|||||
Lincolnton West branch
|
799 Highway 27 West
Lincolnton, NC 28092
|
2002
|
1,596
|
Leased
|
|||||
Vale branch
|
9584 N.C. Highway 10 West
Vale, NC 28168
|
2003
|
1,824
|
Leased
|
|||||
Denver branch
|
1293 Highway 16 North
Denver, NC 28037
|
2004
|
2,363
|
Owned
|
|||||
Gastonia branch
|
534 South New Hope Road
Gastonia, NC 28054
|
2009
|
11,650
|
Owned
|
|||||
Forest City branch
|
142 N. Watkins Drive
Forest City, NC 28043
|
2013
|
3,200
|
Leased
|
|||||
Hickory branch
|
11 13th Avenue NE
Hickory, NC 28601
|
2015
|
3,600
|
Owned
|
|||||
Lake Lure branch
|
103 Arcade Street
Lake Lure, NC 28746
|
2015
|
1,950
|
Leased
|
|||||
Mooresville branch
|
125-E Trade Court
Mooresville, NC 28117
|
2017
|
1,056
|
Leased
|
|||||
Salisbury loan production office
|
350 Jake Alexander Boulevard, Suite 102
Salisbury, NC 28147
|
2017
|
1,200
|
Leased
|
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
(excluding securities
reflected in column(a))
|
||||||||||
Plan Category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
135,566
|
$
|
3.83
|
-0-
|
||||||||
Equity compensation plans not approved by security holders
|
-0-
|
-0-
|
-0-
|
|||||||||
Total
|
135,566
|
$
|
3.83
|
-0-
|
|
1. |
Financial statements from the Company’s Annual Report to Security Holders for the fiscal year ended December 31, 2018, which are incorporated herein by reference:
|
|
2. |
Financial statement schedules required to be filed by Item 8 of this Form:
|
|
3. |
Exhibits: The exhibits listed below are filed as a part of this Annual Report on Form 10-K.
|
Incorporated by Reference
(Unless Otherwise Indicated)
|
||||||||||
Exhibit
No.
|
Description of Exhibit
|
Form
|
Exhibit
|
Filing Date
|
SEC
File No.
|
|||||
Agreement and Plan of Reorganization and Share Exchange dated March 30, 2016 between the Company and the Bank
|
8-K12G3
|
2.01
|
08/16/16
|
000-55683
|
||||||
Agreement and Plan of Merger and Reorganization by and between the Company
and Clover Community Bankshares, Inc., dated as of June 14, 2018
|
8-K
|
2.01
|
06/20/18
|
000-55683
|
||||||
Articles of Incorporation of the Company
|
8-K12G3
|
3.01
|
08/16/16
|
000-55683
|
||||||
Bylaws of the Company, as amended
|
8-K
|
3.01
|
02/02/18
|
000-55683
|
||||||
Form of Common Stock Certificate
|
10-K
|
4.01
|
03/27/18
|
000-55683
|
||||||
Form of Warrant to Purchase Common Stock of Carolina Trust Bank dated June 12, 2013
|
8-K12G3
|
4.01
|
08/16/16
|
000-55683
|
||||||
Employment Agreement dated January 2, 2014 with Jerry L. Ocheltree (management contract)
|
8-K12G3
|
10.01
|
08/16/16
|
000-55683
|
||||||
Amendment One to Employment Agreement with Jerry L. Ocheltree dated August 1, 2014 (management contract)
|
8-K12G3
|
10.02
|
08/16/16
|
000-55683
|
||||||
Amendment Two to Employment Agreement with Jerry L. Ocheltree dated August 1, 2014 (management contract)
|
8-K12G3
|
10.03
|
08/16/16
|
000-55683
|
||||||
Amended and Restated Employment Agreement dated May 31, 2018 with Edwin E. Laws (management contract)
|
8-K
|
10.01
|
06/06/18
|
000-55683
|
||||||
Amended and Restated Employment Agreement dated May 31, 2018 with Richard M. Rager (management contract)
|
8-K
|
10.02
|
06/06/18
|
000-55683
|
||||||
Supplemental Executive Retirement Plan Agreement for Jerry L. Ocheltree dated January 1, 2014. (management contract)
|
8-K12G3
|
10.09
|
08/16/16
|
000-55683
|
||||||
First Amendment to the 2014 Supplemental Executive Retirement Plan Agreement for Jerry L. Ocheltree dated August 31, 2018 (management contract)
|
8-K
|
10.04
|
09/04/18
|
000-55683
|
||||||
2018 Supplemental Executive Retirement Plan Agreement dated August 31, 2018, with Jerry L. Ocheltree (management contract)
|
8-K
|
10.02
|
09/04/18
|
000-55683
|
||||||
Supplemental Executive Retirement Plan adopted as of August 1, 2007 (compensatory plan)
|
8-K12G3
|
10.10
|
08/16/16
|
000-55683
|
Incorporated by Reference
(Unless Otherwise Indicated)
|
||||||||||
Exhibit
No.
|
Description of Exhibit
|
Form
|
Exhibit
|
Filing Date
|
SEC
File No.
|
2018 Supplemental Executive Retirement Plan Agreement dated August 31, 2018, with Edwin E. Laws (management contract)
|
8-K
|
10.01
|
09/04/18
|
000-55683
|
||||||
2018 Supplemental Executive Retirement Plan Agreement dated August 31,
2018, with Richard M. Rager (management contract)
|
8-K
|
10.03
|
09/04/18
|
000-55683
|
||||||
Carolina Trust Bank 2001 Incentive Stock Option Plan (compensatory plan)
|
8-K12G3
|
10.11
|
08/16/16
|
000-55683
|
||||||
Carolina Trust Bank 2005 Incentive Stock Option Plan (compensatory plan)
|
8-K12G3
|
10.12
|
08/16/16
|
000-55683
|
||||||
Carolina Trust Bank 2005 Nonstatutory Stock Option Plan (compensatory plan)
|
8-K12G3
|
10.13
|
08/16/16
|
000-55683
|
||||||
Carolina Commerce Bank Employee Stock Option Plan (compensatory plan)
|
8-K12G3
|
10.14
|
08/16/16
|
000-55683
|
||||||
Carolina Commerce Bank Director Stock Option Plan (compensatory plan)
|
8-K12G3
|
10.15
|
08/16/16
|
000-55683
|
||||||
Annual Report to Security Holders
|
Filed herewith
|
|||||||||
List of the Company’s Subsidiaries
|
Filed herewith
|
|||||||||
Consent of Dixon Hughes Goodman LLP
|
Filed herewith
|
|||||||||
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer
|
Filed herewith
|
|||||||||
Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer
|
Filed herewith
|
|||||||||
Section 1350 Certifications
|
Furnished herewith
|
|||||||||
101
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of December 31, 2018 and 2017; (ii) Consolidated
Statements of Operations for the years ended December 31, 2018 and 2017; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018 and 2017; (iv) Consolidated Statements of Changes in Stockholders’ Equity
for the years ended December 31, 2018 and 2017; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text.
|
Filed herewith
|
CAROLINA TRUST BANCSHARES, INC.
|
||||
Date:
|
March 27, 2019
|
By:
|
/s/ Jerry L. Ocheltree
|
|
Jerry L. Ocheltree
|
||||
President and Chief Executive Officer
(principal executive officer)
|
/s/ Jerry L. Ocheltree
|
March 27, 2019
|
|
Jerry L. Ocheltree, President, Chief Executive Officer, and Director
(principal executive officer)
|
||
/s/ Edwin E. Laws
|
March 27, 2019
|
|
Edwin E. Laws, EVP and Chief Financial Officer
(principal financial and accounting officer)
|
||
/s/ Bryan Elliot Beal
|
March 27, 2019
|
|
Bryan Elliot Beal, Director
|
||
/s/ Scott Craig Davis
|
March 27, 2019
|
|
Scott Craig Davis, Director
|
||
/s/Johnathan L. Rhyne, Jr.
|
March 27, 2019
|
|
Johnathan L. Rhyne, Jr. Director
|
||
/s/ Frederick P. Spach, Jr.
|
March 27, 2019
|
|
Frederick P. Spach, Jr., Director
|
||
/s/ Ralph N. Strayhorn, III
|
March 27, 2019
|
|
Ralph N. Strayhorn, III, Director
|
||
/s/ Jim R. Watson
|
March 27, 2019
|
|
Jim R. Watson, Director
|
Page No.
|
|
Forward-Looking and Cautionary Statements
|
1
|
Report of Management
|
2 |
Selected Financial and Other Data
|
4 |
Management’s Discussion and Analysis
|
5 |
Report of Independent Registered Public Accounting Firm
|
28
|
Consolidated Financial Statements
|
|
Consolidated Balance Sheets
|
29 |
|
|
Consolidated Statements of Operations
|
30 |
|
|
Consolidated Statements of Comprehensive Income
|
31 |
|
|
Consolidated Statements of Changes in Stockholders’ Equity
|
32 |
|
|
Consolidated Statements of Cash Flows
|
33 |
|
|
Notes to Consolidated Financial Statements
|
35 |
General Corporate Information
|
76 |
☐ |
deterioration in the financial condition of borrowers resulting in significant increases in the Company’s loan and lease losses and provisions for those losses and
other adverse impacts to results of operations and financial condition;
|
|
☐ |
changes in interest rates that affect the level and composition of deposits, loan demand and the values of loan collateral, securities, and interest-sensitive assets
and liabilities;
|
|
☐ |
the failure of assumptions underlying the establishment of reserves for possible loan and lease losses;
|
|
☐ |
the impact of liquidity needs on our results of operations and financial condition;
|
|
☐ |
risks related to the concentration in commercial real estate;
|
|
☐ |
declines in commercial and residential real estate;
|
|
☐ |
changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;
|
|
☐ |
a failure in or a breach of the Company’s operational or security systems or those of its third-party service providers;
|
|
☐ |
the effect of any mergers, acquisitions, or other transactions to which the Company may from time to time be a party, including Management’s ability to successfully
integrate any businesses acquired;
|
|
☐ |
the costs, effects, and outcomes of existing or future litigation, including any litigation related to our acquisition activities;
|
|
☐ |
changes in financial market conditions, either internationally, nationally or locally in areas in which the Company conducts operations, including demand for the
Company’s products and services and commercial and residential real estate development and prices;
|
|
☐ |
changes in accounting principles, policies, and guidelines applicable to bank holding companies and banking;
|
|
☐ |
the effects of competition from other commercial banks, non-bank lenders, consumer finance companies, credit unions, and other financial institutions operating in the
Company’s market area and elsewhere, together with such competitors offering banking products and services by mail, telephone and the Internet;
|
|
☐ |
the Company’s ability to attract and retain key personnel;
|
|
☐ |
changes in governmental monetary and fiscal policies as well as other legislative and regulatory changes;
|
|
☐ |
changes in political and economic conditions;
|
|
☐ |
the Company’s ability to comply with any requirements imposed on it by regulators, and the potential negative consequences that may result; and
|
|
☐ |
the success at managing the risks involved in the foregoing.
|
✓
|
Earnings
in 2018 totaled
$2,952,000, or $0.46 per diluted share, as fourth quarter earnings accelerated to $946,000, or $0.13 per diluted share.
|
✓
|
Adjusted 2018 earnings
to exclude merger expenses
(a non-GAAP financial measure
*
)
were $3,599,000, or $0.56 per diluted share after growing in the fourth quarter to $1,169,000, or $0.16 per diluted share.
|
✓
|
Return on assets
(“ROA”) for
2018 was 0.65% and for the fourth quarter was 0.80%. Fourth quarter adjusted ROA to exclude merger expenses was 0.99%.
|
✓
|
Loans
grew by $44.6 million
or 13% and deposits grew by $54.5 million or 16% in 2018.
|
✓
|
Average loans
and deposits
increased from 2017 to 2018 by 15% each, and
net interest income
grew by 18%.
|
✓
|
The
net interest margin
was
3.83%, and up 2 basis points over 2017, mostly due to the increase in the fourth quarter 2018 to 3.94%
.
|
✓
|
Noninterest income
grew by
22% in 2018 while
noninterest expense
grew by only 9%, of which 6% was attributed to 2018 merger expenses incurred in the acquisition
of Clover.
|
✓
|
The ratio of net noninterest
expenses
(i.e. noninterest expenses minus noninterest income)
to average assets
improved in 2018 to 2.66%, down from 2.88%
in 2017 as we leveraged our fixed costs.
|
✓
|
Stockholders’ equity
increased
by $21.1 million or 73% primarily from a
public stock offering in April
and from retained earnings.
|
✓
|
Book value per share
at
December 31, 2018 was $7.02, an increase of $0.77 from the prior year end.
|
✓
|
Announced plan to acquire Clover
and its subsidiary bank in June
.
Obtained regulatory and shareholder approvals
in the fourth quarter as we prepared for a
January 1, 2019 merger that would increase our assets to approximately $600 million
.
|
✓
|
Executed our 2017-2019 strategic
plan
that includes financial and operational goals
.
|
* Note: non-GAAP financial measures ($000)
2018
|
2017
|
Increase from
2017 to 2018
|
Fourth
Quarter 2018
|
|
Income before taxes
|
$3,915
|
$1,998
|
|
$1,250
|
Add: Merger expenses
|
744
|
-0-
|
|
264
|
Adjusted pre-tax income
|
4,659
|
1,998
|
|
1,514
|
Less: Income tax expense
|
963
|
1,594
|
|
304
|
Add: Income tax benefit for merger expenses
|
97
|
-0-
|
|
41
|
Add: Income tax charge for DTA revaluation due to tax reform
|
-0-
|
936
|
|
-0-
|
Adjusted net income
|
$3,599
|
$1,340
|
$2,259
|
$1,169
|
Diluted average common shares outstanding (thousands)
|
6,471
|
4,738
|
|
7,240
|
Adjusted diluted earnings per share
|
$0.56
|
$0.28
|
|
$0.16
|
|
As of or for the Years Ended December 31,
|
|||||||||||||||||||
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||||||||
Summary of Operations:
|
||||||||||||||||||||
Interest income
|
$
|
21,089
|
$
|
17,449
|
$
|
16,222
|
$
|
14,905
|
$
|
13,042
|
||||||||||
Interest expense
|
4,624
|
3,479
|
2,872
|
2,311
|
1,951
|
|||||||||||||||
Net interest income
|
16,465
|
13,970
|
13,350
|
12,594
|
11,091
|
|||||||||||||||
Provision (recovery) for loan losses
|
406
|
704
|
(27
|
)
|
(270
|
)
|
(80
|
)
|
||||||||||||
Net interest income after
provision for loan losses
|
16,059
|
13,266
|
13,377
|
12,864
|
11,171
|
|||||||||||||||
Non-interest income (1)
|
1,256
|
1,033
|
864
|
708
|
597
|
|||||||||||||||
Non-interest expense (1)
|
13,400
|
12,301
|
12,023
|
11,350
|
9,450
|
|||||||||||||||
Income before income taxes
|
3,915
|
1,998
|
2,218
|
2,222
|
2,318
|
|||||||||||||||
Provision (benefit) for income taxes
|
963
|
1,594
|
877
|
1,164
|
(4,539
|
)
|
||||||||||||||
Net income
|
$
|
2,952
|
$
|
404
|
$
|
1,341
|
$
|
1,058
|
$
|
6,857
|
||||||||||
Preferred stock dividend and accretion of
discount on warrants
|
-
|
-
|
222
|
234
|
227
|
|||||||||||||||
Net income available
to common stockholders
|
$
|
2,952
|
$
|
404
|
$
|
1,119
|
$
|
824
|
$
|
6,630
|
||||||||||
Per Share Data and Shares Outstanding Data:
|
||||||||||||||||||||
Basic net income per common share
|
$
|
0.46
|
$
|
0.09
|
$
|
0.24
|
$
|
0.18
|
$
|
1.43
|
||||||||||
Diluted net income per common share
|
0.46
|
0.09
|
0.24
|
0.18
|
1.43
|
|||||||||||||||
Book value per common share at period end
|
7.02
|
6.25
|
6.24
|
6.00
|
5.87
|
|||||||||||||||
Weighted average number of
common shares outstanding:
|
||||||||||||||||||||
Basic
|
6,380,227
|
4,655,369
|
4,649,405
|
4,645,408
|
4,635,096
|
|||||||||||||||
Diluted
|
6,470,939
|
4,737,874
|
4,697,765
|
4,685,814
|
4,678,108
|
|||||||||||||||
Shares outstanding at period end
|
7,156,987
|
4,657,880
|
4,650,808
|
4,646,225
|
4,635,422
|
|||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Total assets
|
$
|
475,104
|
$
|
406,618
|
$
|
374,917
|
$
|
334,049
|
$
|
293,041
|
||||||||||
Loans receivable
|
393,282
|
348,679
|
308,492
|
292,362
|
244,646
|
|||||||||||||||
Allowance for loan and lease losses
|
3,978
|
3,599
|
3,393
|
3,723
|
4,002
|
|||||||||||||||
Other interest-earning assets
|
56,147
|
37,598
|
47,589
|
25,341
|
29,677
|
|||||||||||||||
Deposits
|
395,149
|
340,653
|
318,665
|
284,794
|
237,176
|
|||||||||||||||
Borrowings
|
25,994
|
33,483
|
23,973
|
15,681
|
22,373
|
|||||||||||||||
Stockholders’ equity
|
50,261
|
29,119
|
29,033
|
30,464
|
29,807
|
|||||||||||||||
Selected Performance Ratios:
|
||||||||||||||||||||
Return on average assets
|
0.65
|
%
|
0.10
|
%
|
0.36
|
%
|
0.33
|
%
|
2.53
|
%
|
||||||||||
Return on average common equity
|
6.86
|
%
|
1.36
|
%
|
3.87
|
%
|
2.95
|
%
|
28.30
|
%
|
||||||||||
Net interest margin
|
3.83
|
%
|
3.81
|
%
|
3.80
|
%
|
4.20
|
%
|
4.33
|
%
|
||||||||||
Net interest spread
|
3.58
|
%
|
3.65
|
%
|
3.65
|
%
|
4.06
|
%
|
4.21
|
%
|
||||||||||
Noninterest income to average assets (1)
|
0.27
|
%
|
0.26
|
%
|
0.23
|
%
|
0.22
|
%
|
0.24
|
%
|
||||||||||
Noninterest expense to average assets (1)
|
2.93
|
%
|
3.15
|
%
|
3.26
|
%
|
3.54
|
%
|
3.51
|
%
|
||||||||||
Efficiency ratio (1) (2)
|
75.61
|
%
|
81.99
|
%
|
84.59
|
%
|
85.32
|
%
|
80.95
|
%
|
||||||||||
Asset Quality Ratios:
|
||||||||||||||||||||
Nonperforming loans to period-end loans
|
0.27
|
%
|
0.79
|
%
|
0.93
|
%
|
0.74
|
%
|
1.70
|
%
|
||||||||||
Allowance for loan and lease losses to
period-end loans
|
1.01
|
%
|
1.03
|
%
|
1.10
|
%
|
1.27
|
%
|
1.64
|
%
|
||||||||||
Allowance for loan and lease losses to
nonperforming loans
|
378.34
|
%
|
131.03
|
%
|
118.02
|
%
|
172.10
|
%
|
96.08
|
%
|
||||||||||
Nonperforming assets to total assets
|
0.46
|
%
|
0.87
|
%
|
1.04
|
%
|
1.24
|
%
|
2.12
|
%
|
||||||||||
Net loan charge-offs (recoveries) to average
loans outstanding
|
0.01
|
%
|
0.15
|
%
|
0.10
|
%
|
0.00
|
%
|
(0.01
|
%)
|
||||||||||
Capital Ratios: (*indicates subsidiary bank ratio)
|
||||||||||||||||||||
Common equity tier 1 capital ratio*
|
12.36
|
%
|
10.10
|
%
|
11.40
|
%
|
8.67
|
%
|
N/A
|
|||||||||||
Total risk-based capital ratio*
|
13.34
|
%
|
11.08
|
%
|
12.46
|
%
|
10.30
|
%
|
11.03
|
%
|
||||||||||
Tier 1 risk-based capital ratio*
|
12.36
|
%
|
10.10
|
%
|
11.40
|
%
|
9.10
|
%
|
9.77
|
%
|
||||||||||
Tier 1 leverage ratio*
|
10.85
|
%
|
9.22
|
%
|
9.64
|
%
|
8.48
|
%
|
9.02
|
%
|
||||||||||
Equity to assets ratio
|
10.58
|
%
|
7.16
|
%
|
7.74
|
%
|
9.12
|
%
|
10.17
|
%
|
||||||||||
Average equity (common and preferred)
to average assets
|
9.41
|
%
|
7.61
|
%
|
8.49
|
%
|
9.52
|
%
|
8.94
|
%
|
||||||||||
Average common equity to average assets
|
9.41
|
%
|
7.61
|
%
|
7.83
|
%
|
8.72
|
%
|
7.99
|
%
|
||||||||||
Other Data:
|
||||||||||||||||||||
Number of banking offices
|
9
|
9
|
9
|
9
|
7
|
|||||||||||||||
Number of full time equivalent employees
|
86
|
81
|
80
|
83
|
74
|
(1)
|
Adjusted for all historical periods for the reclassification of debit card expense to net with interchange fees that started in 2018.
|
(2)
|
Efficiency ratio is noninterest expense divided by the sum of net interest income and noninterest income.
|
|
· |
Increase in total loans outstanding of $44,603,000 or 12.8% over the prior year.
|
|
· |
Increase in total deposits outstanding of $54,496,000 or 16.0% over the prior year.
|
|
· |
Increase in net interest income of $2,495,000 or 17.9% as compared to the prior year.
|
|
· |
Total nonperforming assets (“NPAs”) decreased $1,327,000 from $3,535,000 at December 31, 2017 to $2,208,000 at December 31, 2018. This resulted in a 41 basis point
reduction in the Bank’s NPAs as a percentage of total assets, from 0.87% at December 31, 2017 to 0.46% at December 31, 2018.
|
|
· |
The ratio of Allowance for Loan and Lease Losses (“ALLL”) to total loans decreased from 1.03% at December 31, 2017 to 1.01% at December 31, 2018 due to continued
improvement in credit quality as demonstrated by the reduction in NPAs.
|
|
· |
Merger expenses of $744,000 in 2018 related to the acquisition of Clover Community Bankshares Inc. which was completed on January 1, 2019.
|
|
· |
Compensation expense increased $266,000 or 3.8% in comparison to 2017 as the result of staff additions over the past 12 months, merit increases and performance incentive
award increases.
|
|
· |
Foreclosed asset expenses increased $216,000 or 76.9% due to impairments totaling $355,000 in four different properties and increases in the maintenance expenses
associated with these assets.
|
|
· |
Data processing expense decreased $155,000 or 16.5% compared to 2017. These expenses were higher in 2017
due
to expenses for conversion of our core products that was completed in the second quarter of 2017
.
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||||
2018
|
2017
|
2016
|
||||||||||||||||||||||||||||||||||
Average
Balance |
Interest
Income/ Expense |
Average
Interest Rate(1) |
Average
Balance |
Interest
Income/ Expense |
Average
Interest Rate(1) |
Average
Balance |
Interest
Income/ Expense |
Average
Interest Rate(1) |
||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||||||||||||||
Loans(2)
|
$
|
373,547
|
$
|
19,736
|
5.28
|
%
|
$
|
326,103
|
$
|
16,534
|
5.07
|
%
|
$
|
298,600
|
$
|
15,213
|
5.09
|
%
|
||||||||||||||||||
Investment securities
|
30,679
|
869
|
2.83
|
%
|
28,419
|
783
|
2.76
|
%
|
27,447
|
815
|
2.97
|
%
|
||||||||||||||||||||||||
Other interest-earning assets
|
25,689
|
484
|
1.88
|
%
|
12,059
|
132
|
1.09
|
%
|
24,915
|
194
|
0.78
|
%
|
||||||||||||||||||||||||
Total interest-earning assets
|
429,915
|
21,089
|
4.91
|
%
|
366,581
|
17,449
|
4.76
|
%
|
350,962
|
16,222
|
4.62
|
%
|
||||||||||||||||||||||||
Other assets
|
27,237
|
24,266
|
18,324
|
|||||||||||||||||||||||||||||||||
Total Assets
|
$
|
457,152
|
$
|
390,847
|
$
|
369,286
|
||||||||||||||||||||||||||||||
Interest-bearing liabilities
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest-earning demand deposits and savings
|
$
|
145,815
|
$
|
724
|
0.50
|
%
|
$
|
131,072
|
$
|
442
|
0.34
|
%
|
$
|
110,981
|
$
|
278
|
0.25
|
%
|
||||||||||||||||||
Time deposits $250,000 or more
|
47,470
|
820
|
1.73
|
%
|
31,106
|
443
|
1.42
|
%
|
39,041
|
567
|
1.45
|
%
|
||||||||||||||||||||||||
Other time deposits
|
124,695
|
1,974
|
1.58
|
%
|
122,329
|
1,596
|
1.30
|
%
|
127,581
|
1,665
|
1.31
|
%
|
||||||||||||||||||||||||
Capital lease obligation
|
176
|
13
|
7.39
|
%
|
240
|
17
|
7.08
|
%
|
299
|
21
|
7.02
|
%
|
||||||||||||||||||||||||
Other interest-bearing liabilities
|
30,851
|
1,093
|
3.54
|
%
|
27,817
|
981
|
3.53
|
%
|
18,250
|
341
|
1.87
|
%
|
||||||||||||||||||||||||
Total interest-bearing liabilities
|
349,007
|
4,624
|
1.32
|
%
|
312,564
|
3,479
|
1.11
|
%
|
296,152
|
2,872
|
0.97
|
%
|
||||||||||||||||||||||||
Non-interest bearing deposits
|
61,520
|
45,362
|
38,662
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
3,621
|
3,183
|
3,102
|
|||||||||||||||||||||||||||||||||
Stockholders’ equity
|
43,004
|
29,738
|
31,370
|
|||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
457,152
|
$
|
390,847
|
$
|
369,286
|
||||||||||||||||||||||||||||||
Net interest income and interest rate spread (3)
|
$
|
16,465
|
3.58
|
%
|
$
|
13,970
|
3.65
|
%
|
$
|
13,350
|
3.65
|
%
|
||||||||||||||||||||||||
Net yield on average interest- earning assets (4)
|
3.83
|
%
|
3.81
|
%
|
3.80
|
%
|
||||||||||||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities
|
123.18
|
%
|
117.28
|
%
|
118.51
|
%
|
|
Years Ended
|
|||||||||||
|
December 31, 2018 vs. 2017
|
|||||||||||
|
Increase (Decrease) Due to
|
|||||||||||
In thousands
|
Volume
|
Rate
|
Net
|
|||||||||
Interest income:
|
||||||||||||
Loans
|
$
|
2,405
|
$
|
797
|
$
|
3,202
|
||||||
Investment securities
|
62
|
24
|
86
|
|||||||||
Other interest-earning assets
|
149
|
203
|
352
|
|||||||||
Total interest income
|
2,616
|
1,024
|
3,640
|
|||||||||
Interest expense:
|
||||||||||||
Deposits:
|
||||||||||||
Savings, NOW and money
market deposits
|
50
|
232
|
282
|
|||||||||
Time deposits $250,000 or more
|
233
|
144
|
377
|
|||||||||
Other time deposits
|
31
|
347
|
378
|
|||||||||
Capital lease obligation
|
(5
|
)
|
1
|
(4
|
)
|
|||||||
Other interest-bearing liabilities
|
107
|
5
|
112
|
|||||||||
Total interest expense
|
416
|
729
|
1,145
|
|||||||||
Net interest income increase (decrease)
|
$
|
2,200
|
$
|
295
|
$
|
2,495
|
|
Terms to repricing at December 31, 2018
|
|||||||||||||||||||
Dollars in thousands
|
Within 3
Months
|
4 to 12
Months
|
1 Year to 5
Years
|
Over 5
Years
|
Total
|
|||||||||||||||
INTEREST-EARNING ASSETS:
|
||||||||||||||||||||
Loans receivable:
|
||||||||||||||||||||
Adjustable rate
|
$
|
92,367
|
$
|
384
|
$
|
50,629
|
$
|
4,510
|
$
|
147,890
|
||||||||||
Fixed rate
|
2,804
|
15,566
|
202,934
|
24,088
|
245,392
|
|||||||||||||||
Investment securities available for sale
|
1,550
|
-
|
6,983
|
24,044
|
32,577
|
|||||||||||||||
Interest-earning deposits in other banks
|
21,022
|
-
|
-
|
-
|
21,022
|
|||||||||||||||
Certificate of deposit with banks
|
-
|
-
|
998
|
500
|
1,498
|
|||||||||||||||
Stock in FHLB of Atlanta
|
-
|
-
|
-
|
1,050
|
1,050
|
|||||||||||||||
Total interest-earning assets
|
$
|
117,743
|
$
|
15,950
|
$
|
261,544
|
$
|
54,192
|
$
|
449,429
|
||||||||||
INTEREST-BEARING LIABILITIES:
|
||||||||||||||||||||
Deposits:
|
||||||||||||||||||||
Interest-earning demand deposits
and
savings
|
$
|
165,592
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
165,592
|
||||||||||
Time deposits $250,000 or more
|
11,601
|
18,290
|
16,906
|
-
|
47,427
|
|||||||||||||||
Other time deposits
|
27,562
|
32,123
|
61,325
|
-
|
121,010
|
|||||||||||||||
Capital lease obligation
|
17
|
54
|
70
|
-
|
141
|
|||||||||||||||
Long Term – Subordinated Debt
|
-
|
-
|
9,753
|
-
|
9,753
|
|||||||||||||||
Advances from FHLB
|
10,000
|
4,100
|
0
|
2,000
|
16,100
|
|||||||||||||||
Total interest-bearing liabilities
|
$
|
214,772
|
$
|
55,197
|
$
|
88,054
|
$
|
2,000
|
$
|
360,023
|
||||||||||
Interest sensitivity gap per period
|
$
|
(97,029
|
)
|
$
|
(39,247
|
)
|
$
|
173,490
|
$
|
52,192
|
$
|
89,406
|
||||||||
Cumulative interest sensitivity gap
|
$
|
(97,029
|
)
|
$
|
(136,276
|
)
|
$
|
37,214
|
$
|
89,406
|
$
|
89,406
|
||||||||
Cumulative gap as a percentage of
total interest-earning
assets
|
(82.41
|
%)
|
(101.93
|
%)
|
9.42
|
%
|
19.89
|
%
|
19.89
|
%
|
||||||||||
Cumulative interest-earning assets
as a percentage of
interest-bearing
liabilities
|
54.82
|
%
|
49.52
|
%
|
110.39
|
%
|
124.83
|
%
|
124.83
|
%
|
|
At December 31, 2018
|
|||||||||||
|
Actual
Ratio
|
Minimum
Requirement
|
Well-Capitalized
Requirement
|
|||||||||
Common equity tier 1 capital ratio
|
12.36
|
%
|
4.50
|
%
|
6.50
|
%
|
||||||
Total risk-based capital ratio
|
13.34
|
%
|
8.00
|
%
|
10.00
|
%
|
||||||
Tier 1 risk-based capital ratio
|
12.36
|
%
|
6.00
|
%
|
8.00
|
%
|
||||||
Tier 1 leverage ratio
|
10.85
|
%
|
4.00
|
%
|
5.00
|
%
|
Dollars in thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||||||||||||
Balance at January 1
|
$
|
3,599
|
$
|
3,393
|
$
|
3,723
|
$
|
4,002
|
$
|
4,066
|
||||||||||
Recoveries:
|
||||||||||||||||||||
Commercial real estate
|
37
|
153
|
95
|
141
|
276
|
|||||||||||||||
Commercial
|
60
|
50
|
17
|
95
|
23
|
|||||||||||||||
Residential mortgage
|
45
|
18
|
-
|
-
|
1
|
|||||||||||||||
Consumer and home equity lines
|
10
|
16
|
25
|
12
|
6
|
|||||||||||||||
Total Recoveries
|
152
|
237
|
137
|
248
|
306
|
|||||||||||||||
Charged-off loans:
|
||||||||||||||||||||
Commercial real estate
|
(50
|
)
|
(208
|
)
|
(71
|
)
|
(108
|
)
|
(226
|
)
|
||||||||||
Commercial
|
(106
|
)
|
(369
|
)
|
(301
|
)
|
-
|
(18
|
)
|
|||||||||||
Residential mortgage
|
-
|
(66
|
)
|
-
|
(132
|
)
|
-
|
|||||||||||||
Consumer and home equity lines
|
(23
|
)
|
(92
|
)
|
(68
|
)
|
(17
|
)
|
(46
|
)
|
||||||||||
Total Charge-offs
|
(179
|
)
|
(735
|
)
|
(440
|
)
|
(257
|
)
|
(290
|
)
|
||||||||||
Net (charge-offs) recoveries
|
(27
|
)
|
(498
|
)
|
(303
|
)
|
(9
|
)
|
16
|
|||||||||||
Provision for (recovery of) loan losses
|
406
|
704
|
(27
|
)
|
(270
|
)
|
(80
|
)
|
||||||||||||
Balance at December 31
|
$
|
3,978
|
$
|
3,599
|
$
|
3,393
|
$
|
3,723
|
$
|
4,002
|
||||||||||
Ratio of allowance to total loans outstanding at end of year
|
1.01
|
%
|
1.03
|
%
|
1.10
|
%
|
1.27
|
%
|
1.64
|
%
|
||||||||||
Ratio of net charge-offs (recoveries) to average loans outstanding during the period
|
0.01
|
%
|
0.15
|
%
|
0.10
|
%
|
0.00
|
%
|
(0.01
|
%)
|
|
· |
Decrease in classified loans.
|
|
· |
Decrease in loans 30-89 days past due.
|
|
· |
Decrease in non-performing loans.
|
|
· |
Lower charge-offs in 2018.
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Category
Dollars in thousands
|
Number
|
Balance
|
Number
|
Balance
|
||||||||||||
Commercial real estate
|
10
|
$
|
1,569
|
12
|
$
|
2,663
|
||||||||||
Commercial
|
12
|
719
|
10
|
639
|
||||||||||||
Residential mortgage
|
7
|
656
|
7
|
472
|
||||||||||||
Consumer and home equity lines
|
8
|
930
|
14
|
1,727
|
||||||||||||
Total
|
37
|
$
|
3,874
|
43
|
$
|
5,501
|
Dollars in thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||||||||||||||||||||||||||||||||
$
|
|
%
|
$
|
|
%
|
$
|
|
%
|
$
|
|
%
|
$
|
|
%
|
||||||||||||||||||||||||||
Commercial real estate*
|
2,683
|
63.52
|
2,260
|
61.18
|
1,607
|
58.55
|
2,302
|
56.66
|
2,456
|
53.14
|
||||||||||||||||||||||||||||||
Commercial
|
596
|
13.05
|
634
|
14.01
|
1,171
|
14.19
|
570
|
14.78
|
705
|
15.21
|
||||||||||||||||||||||||||||||
Residential mortgage
|
520
|
13.79
|
505
|
14.07
|
427
|
14.49
|
505
|
16.21
|
464
|
18.48
|
||||||||||||||||||||||||||||||
Home equity lines
|
154
|
8.64
|
177
|
9.66
|
175
|
11.38
|
336
|
10.97
|
361
|
11.70
|
||||||||||||||||||||||||||||||
Consumer – other
|
25
|
1.00
|
23
|
1.08
|
13
|
1.39
|
10
|
1.38
|
16
|
1.46
|
||||||||||||||||||||||||||||||
Balance at December 31
|
3,978
|
100.00
|
3,599
|
100.00
|
3,393
|
100.00
|
3,723
|
100.00
|
4,002
|
100.00
|
Dollars in thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||||||||||||
Nonaccrual loans
|
$
|
1,046
|
$
|
2,664
|
$
|
2,628
|
$
|
2,047
|
$
|
3,991
|
||||||||||
Past due 90 days and accruing interest
|
5
|
82
|
247
|
117
|
175
|
|||||||||||||||
Total non-performing loans
|
$
|
1,051
|
$
|
2,746
|
$
|
2,875
|
$
|
2,164
|
$
|
4,166
|
||||||||||
Foreclosed assets
|
1,157
|
789
|
1,011
|
1,994
|
2,048
|
|||||||||||||||
Total non-performing assets
|
$
|
2,208
|
$
|
3,535
|
$
|
3,886
|
$
|
4,158
|
$
|
6,214
|
||||||||||
Non-performing assets to total assets
|
0.46
|
%
|
0.87
|
%
|
1.04
|
%
|
1.24
|
%
|
2.12
|
%
|
||||||||||
Interest income recognized on non- performing loans
|
$
|
1
|
$
|
22
|
$
|
22
|
$
|
64
|
$
|
42
|
||||||||||
Interest income foregone on non- performing loans
|
$
|
78
|
$
|
200
|
$
|
127
|
$
|
93
|
$
|
214
|
Dollars in thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||||||||||||
$
|
3,140
|
$
|
3,398
|
$
|
4,616
|
$
|
4,725
|
$
|
4,242
|
Dollars in thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||||||||||||
Commercial real estate
|
$
|
249,827
|
$
|
213,322
|
$
|
180,617
|
$
|
165,662
|
$
|
130,015
|
||||||||||
Commercial
|
51,334
|
48,867
|
43,780
|
43,207
|
37,202
|
|||||||||||||||
Residential mortgage
|
54,207
|
49,059
|
44,698
|
47,388
|
45,217
|
|||||||||||||||
Home equity lines of credit
|
33,968
|
33,672
|
35,119
|
32,083
|
28,632
|
|||||||||||||||
Consumer
|
3,946
|
3,759
|
4,278
|
4,022
|
3,580
|
|||||||||||||||
Total loans
|
$
|
393,282
|
$
|
348,679
|
$
|
308,492
|
$
|
292,362
|
$
|
244,646
|
Dollars in thousands
|
Due within
one year
|
Due one to
five years
|
Due after
five years
|
Total
|
||||||||||||
Commercial real estate
|
$
|
33,379
|
$
|
191,930
|
$
|
24,518
|
$
|
249,827
|
||||||||
Commercial
|
28,016
|
19,733
|
3,585
|
51,334
|
||||||||||||
Residential real estate
|
13,849
|
39,922
|
436
|
54,207
|
||||||||||||
Home equity lines of credit
|
33,968
|
-
|
-
|
33,968
|
||||||||||||
Consumer – other
|
1,909
|
1,979
|
58
|
3,946
|
||||||||||||
Total
|
$
|
111,121
|
$
|
253,564
|
$
|
28,597
|
$
|
393,282
|
Dollars in thousands
|
Due within
one year
|
Due one to
five years
|
Due after
five years
|
Total
|
||||||||||||
Fixed
|
$
|
18,370
|
$
|
202,934
|
$
|
24,088
|
$
|
245,392
|
||||||||
Variable
|
24,426
|
34,625
|
88,839
|
147,890
|
||||||||||||
Total
|
$
|
42,796
|
$
|
237,559
|
$
|
112,927
|
$
|
393,282
|
|
As of December 31, 2018
|
|||||||||||||||||||
|
Loans
Outstanding
|
Nonaccrual
Loans
|
Nonaccrual
Loans to
Loans
Outstanding
|
Allowance
for Loan
Losses
|
ALLL to
Loans
Outstanding
|
|||||||||||||||
Dollars in thousands
|
||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential ADC
|
$
|
4,650
|
$
|
-
|
0.00
|
%
|
$
|
35
|
0.75
|
%
|
||||||||||
Commercial ADC
|
20,791
|
42
|
0.20
|
%
|
156
|
0.75
|
%
|
|||||||||||||
Farmland
|
4,833
|
-
|
0.00
|
%
|
5
|
0.10
|
%
|
|||||||||||||
Multifamily
|
18,537
|
-
|
0.00
|
%
|
61
|
0.33
|
%
|
|||||||||||||
Owner occupied
|
103,983
|
932
|
0.90
|
%
|
1,248
|
1.20
|
%
|
|||||||||||||
Non-owner occupied
|
97,033
|
4
|
0.00
|
%
|
1,178
|
1.21
|
%
|
|||||||||||||
Total commercial real estate
|
249,827
|
978
|
0.39
|
%
|
2,683
|
1.07
|
%
|
|||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial and industrial
|
49,499
|
-
|
0.00
|
%
|
594
|
1.20
|
%
|
|||||||||||||
Agriculture
|
262
|
-
|
0.00
|
%
|
-
|
0.00
|
%
|
|||||||||||||
Other
|
1,573
|
-
|
0.00
|
%
|
2
|
0.13
|
%
|
|||||||||||||
Total commercial
|
51,334
|
-
|
0.00
|
%
|
596
|
1.16
|
%
|
|||||||||||||
Residential mortgage:
|
||||||||||||||||||||
First lien, closed-end
|
53,395
|
57
|
0.11
|
%
|
443
|
0.83
|
%
|
|||||||||||||
Junior lien, closed-end
|
312
|
4
|
0.49
|
%
|
77
|
9.48
|
%
|
|||||||||||||
Total residential mortgage
|
54,207
|
61
|
0.11
|
%
|
520
|
0.96
|
%
|
|||||||||||||
Home equity lines
|
33,968
|
-
|
0.00
|
%
|
154
|
0.45
|
%
|
|||||||||||||
Consumer – other
|
3,946
|
7
|
0.18
|
%
|
25
|
0.63
|
%
|
|||||||||||||
Total gross loans
|
$
|
393,282
|
$
|
1,046
|
0.27
|
%
|
$
|
3,978
|
1.01
|
%
|
In thousands
|
December 31, 2018
|
December 31, 2017
|
||||||
Balance, beginning of period
|
$
|
789
|
$
|
1,011
|
||||
Additions
|
1,618
|
520
|
||||||
Proceeds from sales
|
(916
|
)
|
(523
|
)
|
||||
Valuation adjustments
|
(355
|
)
|
(195
|
)
|
||||
Gains (losses) from sales
|
21
|
(24
|
)
|
|||||
Balance, end of period
|
$
|
1,157
|
$
|
789
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Undisbursed lines of credit
|
$
|
73,100
|
$
|
67,109
|
||||
Commercial letters of credit
|
603
|
609
|
||||||
Total
|
$
|
73,703
|
$
|
67,718
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair Value
|
|||||||||||||
Dollars in thousands
|
||||||||||||||||
December 31, 2018
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
11,036
|
$
|
6
|
$
|
(253
|
)
|
$
|
10,789
|
|||||||
Mortgage-backed securities *
|
21,010
|
36
|
(505
|
)
|
20,541
|
|||||||||||
Municipal securities
|
631
|
1
|
(2
|
)
|
630
|
|||||||||||
Total available-for-sale securities
|
32,677
|
43
|
(760
|
)
|
31,960
|
|||||||||||
Equity securities
|
1,204
|
-
|
(587
|
)
|
617
|
|||||||||||
Total
|
$
|
33,881
|
$
|
43
|
$
|
(1,347
|
)
|
$
|
32,577
|
|||||||
December 31, 2017
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
11,424
|
$
|
11
|
$
|
(159
|
)
|
$
|
11,276
|
|||||||
Mortgage-backed securities *
|
19,142
|
61
|
(288
|
)
|
18,915
|
|||||||||||
Municipal securities
|
297
|
-
|
(2
|
)
|
295
|
|||||||||||
Equity securities
|
1,204
|
-
|
(578
|
)
|
626
|
|||||||||||
Total
|
$
|
32,067
|
$
|
72
|
$
|
(1,027
|
)
|
$
|
31,112
|
|||||||
December 31, 2016
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
6,664
|
$
|
17
|
$
|
(138
|
)
|
$
|
6,543
|
|||||||
Mortgage-backed securities *
|
18,841
|
101
|
(284
|
)
|
18,658
|
|||||||||||
Corporate debt securities
|
750
|
-
|
-
|
750
|
||||||||||||
Equity securities
|
1,204
|
-
|
(92
|
)
|
1,112
|
|||||||||||
Total
|
$
|
27,459
|
$
|
118
|
$
|
(514
|
)
|
$
|
27,063
|
|
Amortized
Cost
|
Fair
Value
|
Book
Yield
|
|||||||||
Dollars in thousands
|
||||||||||||
U.S. Government Sponsored
|
||||||||||||
Mortgage-backed Securities
|
||||||||||||
Due within one year
|
$
|
-
|
$
|
-
|
-
|
|||||||
Due after one but within five years
|
129
|
129
|
3.18
|
%
|
||||||||
Due after five but within ten years
|
3,390
|
3,296
|
2.59
|
%
|
||||||||
Due after ten years
|
17,491
|
17,116
|
3.11
|
%
|
||||||||
|
21,010
|
20,541
|
3.02
|
%
|
||||||||
U.S. Government Sponsored
|
||||||||||||
Agency Securities
|
||||||||||||
Due within one year
|
-
|
-
|
-
|
|||||||||
Due after one but within five years
|
9,180
|
8,997
|
2.04 | % | ||||||||
Due after five but within ten years
|
1,856
|
1,792
|
2.45
|
%
|
||||||||
Due after ten years
|
-
|
-
|
-
|
|||||||||
|
11,036
|
10,789
|
2.11
|
%
|
||||||||
Municipal Securities
|
||||||||||||
Due within one year
|
-
|
-
|
-
|
|||||||||
Due after one but within five years
|
-
|
-
|
-
|
|||||||||
Due after five but within ten years
|
292
|
290
|
2.66
|
%
|
||||||||
Due after ten years
|
339
|
340
|
3.98
|
%
|
||||||||
|
631
|
630
|
3.37
|
%
|
||||||||
Total investment securities
|
||||||||||||
Due within one year
|
-
|
-
|
-
|
|||||||||
Due after one but within five years
|
9,308
|
9,126
|
2.05
|
%
|
||||||||
Due after five but within ten years
|
5,539
|
5,379
|
2.55
|
%
|
||||||||
Due after ten years
|
17,830
|
17,455
|
3.12
|
%
|
||||||||
|
$
|
32,677
|
$
|
31,960
|
2.72
|
%
|
For the Years Ended December 31,
|
||||||||||||||||||||||||
2018
|
2017
|
2016
|
||||||||||||||||||||||
Average
Balance
|
Average
Interest Rate
|
Average
Balance
|
Average
Interest Rate
|
Average
Balance
|
Average
Interest Rate
|
|||||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||||||
Savings, NOW and money market deposits
|
$
|
145,815
|
0.50
|
%
|
$
|
131,072
|
0.34
|
%
|
$
|
110,981
|
0.25
|
%
|
||||||||||||
Time deposits $250,000 or more
|
47,470
|
1.73
|
%
|
31,106
|
1.42
|
%
|
39,041
|
1.45
|
%
|
|||||||||||||||
Other time deposits
|
124,695
|
1.58
|
%
|
122,329
|
1.30
|
%
|
127,581
|
1.31
|
%
|
|||||||||||||||
Total interest bearing deposits
|
317,980
|
1.11
|
%
|
284,507
|
0.87
|
%
|
277,603
|
0.90
|
%
|
|||||||||||||||
Demand and other non-interest bearing deposits
|
61,520
|
-
|
45,362
|
-
|
38,662
|
-
|
||||||||||||||||||
Total average deposits
|
$
|
379,500
|
0.93
|
%
|
$
|
329,869
|
0.75
|
%
|
$
|
316,265
|
0.79
|
%
|
Three
months
or less
|
More than
three months
to six months
|
More than
six months
to one year
|
More than
one year
|
Total
|
||||||||||||||||||||||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Certificates of $100,000
or greater
|
$ | 31,149 |
1.83
|
%
|
$
|
10,867
|
1.68
|
%
|
$
|
27,097
|
1.69
|
%
|
$
|
53,623
|
1.92
|
%
|
$
|
122,736
|
1.83 | % | ||||||||||||||||||||
Certificates of less
than $100,000
|
8,014
|
1.60
|
%
|
3,683 |
1.10
|
%
|
9,396
|
1.20
|
%
|
24,608 |
1.75
|
%
|
45,701 |
1.56
|
%
|
|||||||||||||||||||||||||
Total
|
$
|
39,163
|
1.78
|
%
|
$
|
14,550
|
1.53
|
%
|
$ | 36,493 |
1.57
|
%
|
$ | 78,231 |
1.87
|
%
|
$
|
168,437
|
1.75
|
%
|
|
At or for the Year Ended
|
|||||||||||
|
December 31,
|
|||||||||||
|
2018
|
2017
|
2016
|
|||||||||
Dollars in thousands
|
||||||||||||
AMOUNTS OUTSTANDING AT
END OF PERIOD:
|
||||||||||||
Advances from the FHLB
|
||||||||||||
Amount
|
$
|
16,100
|
$
|
23,600
|
$
|
14,100
|
||||||
Weighted average rate
|
1.50
|
%
|
1.32
|
%
|
1.19
|
%
|
||||||
Federal Funds Purchased and Repurchase
Agreements
|
||||||||||||
Amount
|
-
|
-
|
-
|
|||||||||
Weighted average rate
|
-
|
-
|
-
|
|||||||||
Capital lease obligation
|
||||||||||||
Amount
|
141
|
207
|
268
|
|||||||||
Weighted average rate
|
7.09
|
%
|
7.09
|
%
|
7.09
|
%
|
||||||
Long Term Loan
|
||||||||||||
Amount
|
-
|
-
|
-
|
|||||||||
Weighted average rate
|
-
|
-
|
-
|
|||||||||
Long Term Subordinated Debt
|
||||||||||||
Amount
|
9,753
|
9,676
|
9,605
|
|||||||||
Weighted average rate
|
7.91
|
%
|
7.91
|
%
|
7.91
|
%
|
||||||
MAXIMUM AMOUNT OUTSTANDING AT
ANY MONTH-END:
|
||||||||||||
|
||||||||||||
Advances from the FHLB
|
31,600 |
23,600
|
26,000
|
|||||||||
Federal Funds Purchased and Repurchase
Agreements
|
-
|
-
|
240
|
|||||||||
Capitalized lease obligation
|
201
|
263
|
321
|
|||||||||
Long Term Loan
|
2,993
|
-
|
-
|
|||||||||
Long Term Subordinated Debt
|
9,753
|
9,676
|
9,605
|
|||||||||
AVERAGES DURING THE PERIOD:
|
||||||||||||
Advances from the FHLB
|
||||||||||||
Average balance
|
21,058
|
18,088
|
16,072
|
|||||||||
Weighted average rate
|
1.46
|
%
|
1.22
|
%
|
1.08
|
%
|
||||||
Federal Funds Purchased and Repurchase
Agreements
|
||||||||||||
Average balance
|
82
|
91
|
62
|
|||||||||
Weighted average rate
|
1.23
|
%
|
1.43
|
%
|
1.59
|
%
|
||||||
Capitalized lease obligation
|
||||||||||||
Average balance
|
176
|
240
|
299
|
|||||||||
Weighted average rate
|
7.13
|
%
|
7.12
|
%
|
7.10
|
%
|
||||||
Long Term Loan
|
||||||||||||
Average balance
|
234
|
-
|
-
|
|||||||||
Weighted average rate
|
7.46
|
%
|
-
|
-
|
||||||||
Long Term Subordinated Debt
|
||||||||||||
Average balance
|
9,711
|
9,638
|
2,115
|
|||||||||
Weighted average rate
|
7.89
|
%
|
7.88
|
%
|
7.87
|
%
|
|
Payments due by period
|
|||||||||||||||||||
In thousands
|
On demand
than 1 Year
or less
|
1 - 3 Years
|
4 - 5 Years
|
After
5 Years
|
Total
|
|||||||||||||||
Advances from FHLB
|
$
|
14,100
|
$
|
-
|
$
|
-
|
$
|
2,000
|
$
|
16,100
|
||||||||||
Long term – subordinated debt
|
-
|
10,000
|
-
|
-
|
10,000
|
|||||||||||||||
Capital lease obligation
|
71
|
70
|
-
|
-
|
141
|
|||||||||||||||
Operating leases
|
129
|
87
|
-
|
-
|
216
|
|||||||||||||||
Total contractual obligations,
excluding deposits
|
14,300
|
10,157
|
-
|
2,000
|
26,457
|
|||||||||||||||
Deposits
|
316,918
|
63,744
|
14,486
|
-
|
395,149
|
|||||||||||||||
Total contractual obligations,
including deposits
|
$
|
331,218
|
$
|
73,901
|
$
|
14,186
|
$
|
2,000
|
$
|
421,606
|
December 31,
2018
|
December 31,
2017
|
|||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
10,918
|
$
|
5,409
|
||||
Interest-earning deposits with banks
|
21,022
|
3,647
|
||||||
Cash and cash equivalents
|
31,940
|
9,056
|
||||||
Certificates of deposits with banks
|
1,498
|
1,498
|
||||||
Investment securities available for sale, at fair value (amortized cost $32,677 and $32,067)
|
31,960
|
31,112
|
||||||
Equity securities
|
617
|
-
|
||||||
Federal Home Loan Bank stock, at cost
|
1,050
|
1,341
|
||||||
Loans
|
393,282
|
348,679
|
||||||
Less: Allowance for loan and lease losses
|
(3,978
|
)
|
(3,599
|
)
|
||||
Net Loans
|
389,304
|
345,080
|
||||||
Bank owned life insurance
|
7,393
|
7,197
|
||||||
Accrued interest receivable
|
1,259
|
1,078
|
||||||
Bank premises, equipment and software
|
6,093
|
6,466
|
||||||
Foreclosed assets
|
1,157
|
789
|
||||||
Core deposit intangible, net of accumulated amortization of $744 and $711
|
40
|
73
|
||||||
Other assets
|
2,793
|
2,928
|
||||||
Total Assets
|
$
|
475,104
|
$
|
406,618
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Non-interest-earning demand deposits
|
$
|
61,120
|
$
|
49,199
|
||||
Interest-earning demand deposits
|
142,899
|
115,396
|
||||||
Savings
|
22,693
|
22,066
|
||||||
Time deposits
|
168,437
|
153,992
|
||||||
Total deposits
|
395,149
|
340,653
|
||||||
Capital lease obligation
|
141
|
207
|
||||||
Federal Home Loan Bank advances
|
16,100
|
23,600
|
||||||
Long term subordinated debt
|
9,753
|
9,676
|
||||||
Accrued interest payable
|
421
|
292
|
||||||
Other liabilities
|
3,279
|
3,071
|
||||||
Total liabilities
|
424,843
|
377,499
|
||||||
Common stock warrant
|
426
|
426
|
||||||
Common stock, $2.50 par value; 10,000,000 shares authorized; 7,156,987 and 4,657,880 shares issued and
outstanding
|
17,892
|
11,645
|
||||||
Additional paid-in capital
|
25,211
|
13,008
|
||||||
Retained earnings
|
7,281
|
4,772
|
||||||
Accumulated other comprehensive loss
|
(549
|
)
|
(732
|
)
|
||||
Total stockholders’ equity
|
50,261
|
29,119
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
475,104
|
$
|
406,618
|
2018
|
2017
|
|||||||
Interest Income
|
||||||||
Interest on investment securities and cash
|
$
|
1,353
|
$
|
915
|
||||
Interest and fees on loans
|
19,736
|
16,534
|
||||||
Total interest income
|
21,089
|
17,449
|
||||||
Interest Expense
|
||||||||
Interest expense non-maturity deposits
|
724
|
442
|
||||||
Interest expense time deposits
|
2,794
|
2,039
|
||||||
Interest expense borrowed funds
|
309
|
222
|
||||||
Interest expense capital lease
|
13
|
17
|
||||||
Interest expense debt
|
17
|
-
|
||||||
Interest expense on subordinated debt
|
767
|
759
|
||||||
Total interest expense
|
4,624
|
3,479
|
||||||
Net interest income
|
$
|
16,465
|
$
|
13,970
|
||||
Loan loss provision
|
406
|
704
|
||||||
Net interest income after loan loss provision
|
$
|
16,059
|
$
|
13,266
|
||||
Noninterest income
|
||||||||
Overdraft fees on deposits
|
$
|
538
|
$
|
431
|
||||
Interchange fee income, net
|
229
|
139
|
||||||
Service charges on deposits
|
65
|
56
|
||||||
Mortgage fee income
|
117
|
95
|
||||||
Customer service fees
|
58
|
54
|
||||||
ATM income
|
28
|
27
|
||||||
Bank-owned life insurance income
|
196
|
199
|
||||||
Unrealized loss on equity securities
|
(10
|
)
|
-
|
|||||
Other income
|
35
|
32
|
||||||
Total noninterest income
|
1,256
|
1,033
|
||||||
Noninterest expense
|
||||||||
Salaries & benefits expense
|
$
|
7,337
|
$
|
7,071
|
||||
Occupancy expense
|
773
|
859
|
||||||
Furniture, fixture & equipment expense
|
684
|
585
|
||||||
Data processing expense
|
792
|
948
|
||||||
Office supplies expense
|
87
|
81
|
||||||
Professional fees
|
477
|
473
|
||||||
Advertising and marketing
|
114
|
132
|
||||||
Insurance
|
301
|
306
|
||||||
Foreclosed asset expense, net
|
497
|
281
|
||||||
Loan expense
|
218
|
219
|
||||||
Stockholder expense
|
190
|
172
|
||||||
Directors fees and expenses
|
271
|
256
|
||||||
Telephone expense
|
293
|
288
|
||||||
Core deposit intangible amortization expense
|
33
|
44
|
||||||
Merger expenses
|
744
|
-
|
||||||
Other operating expense
|
589
|
586
|
||||||
Total noninterest expense
|
13,400
|
12,301
|
||||||
Pre-tax income
|
$
|
3,915
|
$
|
1,998
|
||||
Income tax expense
|
963
|
1,594
|
||||||
Net income
|
$
|
2,952
|
$
|
404
|
||||
Earnings per share
|
||||||||
Basic earnings per common share
|
$
|
0.46
|
$
|
0.09
|
||||
Diluted earnings per common share
|
$
|
0.46
|
$
|
0.09
|
||||
Weighted average common shares outstanding
|
6,380,227
|
4,655,369
|
||||||
Diluted average common shares outstanding
|
6,470,939
|
4,737,874
|
December 31,
2018
|
December 31,
2017
|
|||||||
Net income
|
$
|
2,952
|
$
|
404
|
||||
Other comprehensive loss:
|
||||||||
Unrealized loss on investment securities:
|
||||||||
Unrealized holding losses arising during period
|
(340
|
)
|
(559
|
)
|
||||
Deferred income tax benefit
|
80
|
203
|
||||||
Total other comprehensive loss
|
(260
|
)
|
(356
|
)
|
||||
Total comprehensive income
|
$
|
2,692
|
$
|
48
|
2018
Shares
outstanding
|
December 31,
2018
|
2017
Shares
outstanding
|
December 31,
2017
|
|||||||||||||
Common stock warrant
|
$
|
426
|
$
|
426
|
||||||||||||
Common stock, $2.50 par value
|
||||||||||||||||
Balance, beginning of year
|
4,657,880
|
$
|
11,645
|
4,650,808
|
$
|
11,627
|
||||||||||
Exercise of stock options
|
3,107
|
7
|
3,738
|
10
|
||||||||||||
Restricted stock vesting
|
-
|
-
|
3,334
|
8
|
||||||||||||
Issuance of common stock
|
2,496,000
|
6,240
|
-
|
-
|
||||||||||||
Balance, end of year
|
7,156,987
|
$
|
17,892
|
4,657,880
|
$
|
11,645
|
||||||||||
Additional paid-in capital
|
||||||||||||||||
Balance, beginning of year
|
$
|
13,008
|
$
|
12,988
|
||||||||||||
Stock-based compensation
|
1
|
24
|
||||||||||||||
Exercise of stock options
|
7
|
4
|
||||||||||||||
Restricted stock vesting
|
-
|
(8
|
)
|
|||||||||||||
Issuance of common stock
|
12,195
|
-
|
||||||||||||||
Balance, end of year
|
$
|
25,211
|
$
|
13,008
|
||||||||||||
Retained earnings
|
||||||||||||||||
Balance, beginning of year
|
$
|
4,772
|
$
|
4,241
|
||||||||||||
Reclassification of certain tax effects
|
(443
|
)
|
127
|
|||||||||||||
Net income
|
2,952
|
404
|
||||||||||||||
Balance, end of year
|
$
|
7,281
|
$
|
4,772
|
||||||||||||
Accumulated other comprehensive loss
|
||||||||||||||||
Balance, beginning of year
|
$
|
(732
|
)
|
$
|
(249
|
)
|
||||||||||
Other comprehensive loss
|
(260
|
)
|
(356
|
)
|
||||||||||||
Reclassification of certain tax effects
|
443
|
(127
|
)
|
|||||||||||||
Balance, end of year
|
$
|
(549
|
)
|
$
|
(732
|
)
|
||||||||||
Total stockholders’ equity
|
$
|
50,261
|
$
|
29,119
|
December 31,
2018
|
December 31,
2017
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
2,952
|
$
|
404
|
||||
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
|
||||||||
Provision for loan losses
|
406
|
704
|
||||||
Depreciation and amortization of bank premises, equipment and software
|
461
|
441
|
||||||
Accretion of loan fair value adjustments related to acquisition
|
(6
|
)
|
(7
|
)
|
||||
Net amortization of bond premiums/discounts
|
139
|
144
|
||||||
Accretion of long term subordinated debt issuance costs
|
77
|
71
|
||||||
Unrealized gain on equity securities
|
10
|
-
|
||||||
Amortization of core deposit intangible
|
33
|
44
|
||||||
Stock compensation expense
|
1
|
24
|
||||||
Increase in value of life insurance contracts
|
(196
|
)
|
(199
|
)
|
||||
Net losses and impairment write-downs on foreclosed assets
|
334
|
219
|
||||||
Deferred tax provision
|
577
|
1,373
|
||||||
(Decrease)/increase in other assets
|
(363
|
)
|
109
|
|||||
Increase in accrued interest receivable
|
(181
|
)
|
(133
|
)
|
||||
Increase in accrued interest payable
|
129
|
5
|
||||||
Increase in other liabilities
|
208
|
112
|
||||||
Net cash and cash equivalents provided by operating activities
|
$
|
4,581
|
$
|
3,311
|
||||
Cash flows from investing activities
|
||||||||
Net increase in loans
|
$
|
(46,242
|
)
|
$
|
(41,198
|
)
|
||
Proceeds from sale of foreclosed assets
|
916
|
523
|
||||||
Net purchases of bank premises, equipment and software
|
(88
|
)
|
(519
|
)
|
||||
Purchase of bank owned life insurance
|
-
|
(5,500
|
)
|
|||||
Purchase of available-for-sale securities
|
(5,450
|
)
|
(8,918
|
)
|
||||
Proceeds from maturities, calls and pay-downs of available for sale securities
|
3,497
|
4,166
|
||||||
(Decrease)/increase in Federal Home Loan Bank stock
|
291
|
(399
|
)
|
|||||
Net cash and cash equivalents used in investing activities
|
$
|
(47,076
|
)
|
$
|
(51,845
|
)
|
||
Cash flows from financing activities
|
||||||||
Increase in deposits
|
$
|
54,496
|
$
|
21,988
|
||||
(Decrease)/increase in Federal Home Loan Bank advances
|
(7,500
|
)
|
9,500
|
|||||
Payment of capital lease obligation
|
(66
|
)
|
(61
|
)
|
||||
Issuance of long term debt
|
3,000
|
-
|
||||||
Repayment of long term debt
|
(3,000
|
)
|
-
|
|||||
Net proceeds from stock option exercises
|
14
|
14
|
||||||
Net proceeds from issuance of common stock
|
18,435
|
-
|
||||||
Net cash and cash equivalents provided by financing activities
|
$
|
65,379
|
$
|
31,441
|
||||
Net (decrease) increase in cash and cash equivalents
|
$
|
22,884
|
$
|
(17,093
|
)
|
|||
Cash and cash equivalents, beginning
|
$
|
9,056
|
$
|
26,149
|
||||
Cash and cash equivalents, ending
|
$
|
31,940
|
$
|
9,056
|
Supplemental disclosure of cash flow information
|
||||||||
Cash paid during the period for taxes
|
$
|
876
|
$
|
15
|
||||
Cash paid during the period for interest
|
$
|
4,495
|
$
|
3,474
|
||||
Noncash financing and investing activities
|
||||||||
Unrealized loss on investment securities available-for-sale, net
|
$
|
(260
|
)
|
$
|
(356
|
)
|
||
Transfer of loans to foreclosed assets
|
$
|
1,618
|
$
|
520
|
|
· |
If unsecured, the loan must be charged off in full.
|
|
· |
If secured, the outstanding principal balance of the loan should be charged down to the net liquidation value of the collateral.
|
|
· |
No regularly scheduled payment has been made within four months, or
|
|
· |
The loan is unsecured, the borrower files for bankruptcy protection and there is no other (guarantor, etc.) support from an entity outside of the bankruptcy proceedings.
|
|
· |
identification of impaired loans;
|
|
· |
calculation of a specific reserve - where required - for each impaired loan based on collateral and other objective and quantifiable evidence;
|
|
· |
determination of an appropriate historical loss period for analysis;
|
|
· |
identification of homogenous loan groups, further segmented by risk grade, and reduced by the impaired loans;
|
|
· |
calculation of historical loss percentages based on the identified historical loss period;
|
|
· |
identification of internal and external factors which might affect the current application of the historical loss percentages, and assessment of any impact;
|
|
· |
adjustment of the historical loss percentages based on the factor assessment;
|
|
· |
application of historical loss percentages to loan groups to determine the allowance allocation; and
|
|
· |
determination of the need for any unallocated reserve.
|
1. |
Individual Reserves
. These are calculated against loans evaluated individually and identified
as impaired. Management determines which loans will be considered for potential impairment review. This does not mean that an individual reserve will necessarily be calculated for each loan considered for impairment, only for those
impaired loans identified during this process as having an estimated loss. Loans to be considered include:
|
|
· |
All commercial loans classified substandard or worse
|
|
· |
Any other loan in a non-accrual status
|
|
· |
Any loan, consumer or commercial, which has already been modified such that it meets the definition of Troubled Debt Restructure (“TDR”)
|
|
· |
When the amount of the actual loss becomes reasonably quantifiable, the loss is charged off against the ALLL, whether or not all liquidation and recovery efforts have been
completed.
|
|
· |
If the total amount of the individual reserve that will eventually be charged-off cannot yet be determined, but some portion of the individual reserve can be viewed as an
imminent loss, that smaller portion is charged off against the ALLL and the individual reserve is reduced by a corresponding amount.
|
2. |
Formula Reserves
. Formula reserves are held against performing loans evaluated collectively.
The total performing loan portfolio is divided into homogeneous loan groups. Loss estimates are based on historical loss rates for each respective loan group, adjusted for appropriate environmental factors established by the Company.
|
|
a) |
Volume of Loans – Accounts for historical growth characteristics of the loan group over the identified loss period.
|
|
b) |
Trends in Delinquency – Reflects increased risk derived from higher delinquency rates.
|
|
c) |
Trends in Nonaccrual and Classified loans – Compares the current portfolio to the levels and trends over the historical loss period.
|
|
d) |
Levels of Actual Losses – Evaluates the current losses and the trends and averages over the two year loss period.
|
|
e) |
Concentration of Credit – Measures increased risk derived from concentration of credit exposure in particular loan segments or classes.
|
|
f) |
Economic – Assesses the impact of general and local economic factors, including changes in collateral values,
primarily real estate.
|
|
g) |
Watch list growth – measures increased risk in particular loan segments or classes that meet certain requirements including negative trends and increased levels in the
watch or special mention rating.
|
3. |
Unallocated Reserves
. This
segment is utilized to provide for losses which are expected but cannot be tied to any specific loan or group of loans, based on the judgment of management.
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Carrying
Amount
|
Accumulated
Amortization
|
Carrying
Amount
|
Accumulated
Amortization
|
|||||||||||||
Amortized intangible assets | ||||||||||||||||
Core deposit intangible
|
$
|
40,497
|
$
|
744,109
|
$
|
72,998
|
$
|
711,607
|
2019
|
$
|
20,572
|
||
2020
|
9,833
|
|||
2021
|
5,264
|
|||
2022
|
3,356
|
|||
2023
|
1,472
|
|||
Thereafter
|
-
|
|||
Total
|
$
|
40,497
|
In thousands
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair Value
|
||||||||||||
December 31, 2018
|
||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||
U.S. Government and federal agency
|
$
|
11,036
|
$
|
6
|
$
|
(253
|
)
|
$
|
10,789
|
|||||||
Mortgage-backed securities *
|
21,010
|
36
|
(505
|
)
|
20,541
|
|||||||||||
Municipal securities
|
631
|
1
|
(2
|
)
|
630
|
|||||||||||
Total available-for-sale securities
|
32,677
|
43
|
(760
|
)
|
31,960
|
|||||||||||
Equity securities
|
1,204
|
-
|
(587
|
)
|
617
|
|||||||||||
Total
|
$
|
33,881
|
$
|
43
|
$
|
(1,347
|
)
|
$
|
32,577
|
|||||||
December 31, 2017
|
||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||
U.S. Government and federal agency
|
$
|
11,424
|
$
|
11
|
$
|
(159
|
)
|
$
|
11,276
|
|||||||
Mortgage-backed securities *
|
19,142
|
61
|
(288
|
)
|
18,915
|
|||||||||||
Municipal securities
|
297
|
-
|
(2
|
)
|
295
|
|||||||||||
Equity securities
|
1,204
|
-
|
(578
|
)
|
626
|
|||||||||||
Total
available-for-sale
securities
|
$
|
32,067
|
$
|
72
|
$
|
(1,027
|
)
|
$
|
31,112
|
Amortized
Cost
|
Fair Value
|
|||||||
Dollars in thousands
|
||||||||
Due within one year
|
$
|
-
|
$ | |||||
Due after one but within five years
|
9,308
|
9,126
|
||||||
Due after five but within ten years
|
5,539
|
5,379
|
||||||
Due after ten years
|
17,830
|
17,455
|
||||||
$
|
32,677
|
$
|
31,960
|
Temporarily Impaired Securities in Available-for-Sale Portfolio
|
||||||||||||||||||||||||
Less than 12 Months
|
Greater than 12 Months
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
U.S. Government and federal agency
|
$
|
-
|
$
|
-
|
$
|
10,657
|
$
|
(253
|
)
|
$
|
10,657
|
$
|
(253
|
)
|
||||||||||
Mortgage-backed securities *
|
2,885
|
(10
|
)
|
13,644
|
(495
|
)
|
16,529
|
(505
|
)
|
|||||||||||||||
Municipal Securities
|
-
|
-
|
290
|
(2
|
)
|
290
|
(2
|
)
|
||||||||||||||||
Total temporarily impaired securities
|
$
|
2,885
|
$
|
(10
|
)
|
$
|
24,591
|
$
|
(750
|
)
|
$
|
27,476
|
$
|
(760
|
)
|
|||||||||
December 31, 2017
|
||||||||||||||||||||||||
U.S. Government and federal agency
|
$
|
7,101
|
$
|
(88
|
)
|
$
|
2,008
|
$
|
(71
|
)
|
$
|
9,109
|
$
|
(159
|
)
|
|||||||||
Mortgage-backed securities *
|
5,472
|
(38
|
)
|
10,560
|
(250
|
)
|
16,032
|
(288
|
)
|
|||||||||||||||
Municipal securities
|
295
|
(2
|
)
|
-
|
-
|
295
|
(2
|
)
|
||||||||||||||||
Equity securities
|
626
|
(577
|
)
|
-
|
(1
|
)
|
626
|
(578
|
)
|
|||||||||||||||
Total temporarily impaired securities
|
$
|
13,494
|
$
|
(705
|
)
|
$
|
12,568
|
$
|
(322
|
)
|
$
|
26,062
|
$
|
(1,027
|
)
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Dollars in thousands
|
Amount
|
Percent of
Total
|
Amount
|
Percent of
Total
|
||||||||||||
Commercial real estate
|
||||||||||||||||
Residential ADC
|
$
|
4,650
|
1.18
|
%
|
$
|
7,242
|
2.08
|
%
|
||||||||
Commercial ADC
|
20,790
|
5.29
|
%
|
24,364
|
6.99
|
%
|
||||||||||
Farmland
|
4,833
|
1.23
|
%
|
5,392
|
1.55
|
%
|
||||||||||
Multifamily
|
18,537
|
4.71
|
%
|
11,967
|
3.43
|
%
|
||||||||||
Owner occupied
|
103,983
|
26.44
|
%
|
84,808
|
24.32
|
%
|
||||||||||
Non-owner occupied
|
97,034
|
24.67
|
%
|
79,549
|
22.81
|
%
|
||||||||||
Total commercial real estate
|
249,827
|
63.52
|
%
|
213,322
|
61.18
|
%
|
||||||||||
Commercial
|
||||||||||||||||
Commercial and industrial
|
49,499
|
12.59
|
%
|
47,032
|
13.49
|
%
|
||||||||||
Agriculture
|
262
|
0.06
|
%
|
415
|
0.12
|
%
|
||||||||||
Other
|
1573
|
0.40
|
%
|
1,420
|
0.40
|
%
|
||||||||||
Total commercial
|
51,334
|
13.05
|
%
|
48,867
|
14.01
|
%
|
||||||||||
Residential mortgage
|
||||||||||||||||
First lien, closed-end
|
53,395
|
13.58
|
%
|
47,936
|
13.75
|
%
|
||||||||||
Junior lien, closed-end
|
812
|
0.21
|
%
|
1,123
|
0.32
|
%
|
||||||||||
Total residential mortgage
|
54,207
|
13.79
|
%
|
49,059
|
14.07
|
%
|
||||||||||
Home equity lines
|
33,968
|
8.64
|
%
|
33,672
|
9.66
|
%
|
||||||||||
Consumer – other
|
3,946
|
1.00
|
%
|
3,759
|
1.08
|
%
|
||||||||||
Total loans
|
$
|
393,282
|
100.00
|
%
|
$
|
348,679
|
100.00
|
%
|
December 31,
2018
|
December 31,
2017
|
|||||||
In thousands
|
||||||||
Commercial real estate:
|
||||||||
Commercial ADC
|
$
|
42
|
$
|
5
|
||||
Owner occupied
|
932
|
2,031
|
||||||
Non-owner occupied
|
4
|
28
|
||||||
Total commercial real estate
|
978
|
2,064
|
||||||
Commercial:
|
||||||||
Commercial and industrial
|
-
|
25
|
||||||
Total commercial
|
-
|
25
|
||||||
Residential mortgage:
|
||||||||
First lien, closed-end
|
57
|
86
|
||||||
Junior lien, closed end
|
4
|
455
|
||||||
Total residential mortgage
|
61
|
541
|
||||||
Home equity lines
|
-
|
34
|
||||||
Consumer – other
|
7
|
-
|
||||||
Total non-accrual loans
|
$
|
1,046
|
$
|
2,664
|
Loans
30-89
Days
Past Due
|
Loans
90 or more
Days
Past Due
|
Total Past
Due Loans
|
Current
Loans
|
Total
Loans
|
Accruing
Loans 90
or More
Days
Past Due
|
|||||||||||||||||||
In thousands
|
||||||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Residential ADC
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4,650
|
$
|
4,650
|
$
|
-
|
||||||||||||
Commercial ADC
|
39
|
-
|
39
|
20,751
|
20,790
|
-
|
||||||||||||||||||
Farmland
|
-
|
-
|
-
|
4,833
|
4,833
|
-
|
||||||||||||||||||
Multifamily
|
-
|
-
|
-
|
18,537
|
18,537
|
-
|
||||||||||||||||||
Owner occupied
|
-
|
927
|
927
|
103,056
|
103,983
|
-
|
||||||||||||||||||
Non-owner occupied
|
-
|
4
|
4
|
97,030
|
97,034
|
-
|
||||||||||||||||||
Total commercial real estate
|
39
|
931
|
970
|
248,857
|
249,827
|
-
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial and industrial
|
126
|
-
|
126
|
49,373
|
49,499
|
-
|
||||||||||||||||||
Agriculture
|
-
|
-
|
-
|
262
|
262
|
-
|
||||||||||||||||||
Other
|
-
|
-
|
-
|
1,573
|
1,573
|
-
|
||||||||||||||||||
Total commercial
|
126
|
-
|
126
|
51,208
|
51,334
|
-
|
||||||||||||||||||
Residential mortgage:
|
||||||||||||||||||||||||
First lien, closed end
|
247
|
33
|
280
|
53,115
|
53,395
|
-
|
||||||||||||||||||
Junior lien, closed-end
|
-
|
-
|
-
|
812
|
812
|
-
|
||||||||||||||||||
Total residential mortgage
|
247
|
33
|
280
|
53,927
|
54,207
|
|||||||||||||||||||
Home equity lines
|
85
|
-
|
85
|
33,883
|
33,968
|
-
|
||||||||||||||||||
Consumer – other
|
-
|
13
|
13
|
3,933
|
3,946
|
5
|
||||||||||||||||||
Total loans
|
$
|
497
|
$
|
977
|
$
|
1,474
|
$
|
391,808
|
$
|
393,282,
|
$
|
5
|
Loans
30-89
Days
Past Due
|
Loans
90 or more
Days
Past Due
|
Total Past
Due Loans
|
Current
Loans
|
Total
Loans
|
Accruing
Loans 90
or More
Days
Past Due
|
|||||||||||||||||||
In thousands
|
||||||||||||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||
Residential ADC
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
7,242
|
$
|
7,242
|
$
|
-
|
||||||||||||
Commercial ADC
|
-
|
-
|
-
|
24,364
|
24,364
|
-
|
||||||||||||||||||
Farmland
|
-
|
-
|
-
|
5,392
|
5,392
|
-
|
||||||||||||||||||
Multifamily
|
-
|
-
|
-
|
11,967
|
11,967
|
-
|
||||||||||||||||||
Owner occupied
|
254
|
2,018
|
2,272
|
82,536
|
84,808
|
-
|
||||||||||||||||||
Non-owner occupied
|
144
|
-
|
144
|
79,405
|
79,549
|
-
|
||||||||||||||||||
Total commercial real estate
|
398
|
2,018
|
2,416
|
210,906
|
213,322
|
-
|
||||||||||||||||||
Commercial:
|
||||||||||||||||||||||||
Commercial and industrial
|
-
|
25
|
25
|
47,007
|
47,032
|
-
|
||||||||||||||||||
Agriculture
|
-
|
-
|
-
|
415
|
415
|
-
|
||||||||||||||||||
Other
|
-
|
-
|
-
|
1,420
|
1,420
|
-
|
||||||||||||||||||
Total commercial
|
-
|
25
|
25
|
48,842
|
48,867
|
-
|
||||||||||||||||||
Residential mortgage:
|
||||||||||||||||||||||||
First lien, closed end
|
50
|
135
|
185
|
47,751
|
47,936
|
79
|
||||||||||||||||||
Junior lien, closed-end
|
-
|
449
|
449
|
674
|
1,123
|
-
|
||||||||||||||||||
Total residential mortgage
|
50
|
584
|
634
|
48,425
|
49,059
|
79
|
||||||||||||||||||
Home equity lines
|
200
|
3
|
203
|
33,469
|
33,672
|
3
|
||||||||||||||||||
Consumer – other
|
10
|
-
|
10
|
3,749
|
3,759
|
-
|
||||||||||||||||||
Total loans
|
$
|
658
|
$
|
2,630
|
$
|
3,288
|
$
|
345,391
|
$
|
348,679
|
$
|
82
|
December 31, 2018
|
||||||||||||||||
In thousands
|
Unpaid
Contractual
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Related
Allowance
|
||||||||||||
Commercial real estate
|
||||||||||||||||
Commercial ADC
|
$
|
42
|
$
|
42
|
$
|
-
|
$
|
-
|
||||||||
Owner occupied
|
2,409
|
2,269
|
140
|
17
|
||||||||||||
Non-owner occupied
|
5
|
5
|
-
|
-
|
||||||||||||
Total commercial real estate
|
2,456
|
2,316
|
140
|
17
|
||||||||||||
Commercial
|
||||||||||||||||
Commercial and industrial
|
624
|
-
|
624
|
111
|
||||||||||||
Residential mortgage
|
||||||||||||||||
First lien, closed-end
|
876
|
56
|
760
|
42
|
||||||||||||
Junior lien, closed- end
|
478
|
270
|
208
|
75
|
||||||||||||
Total residential mortgage
|
1,354
|
326
|
968
|
117
|
||||||||||||
Home equity lines
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer – other
|
7
|
7
|
-
|
-
|
||||||||||||
Total loans
|
$
|
4,441
|
$
|
2,649
|
$
|
1,732
|
$
|
245
|
December 31, 2017
|
||||||||||||||||
In thousands
|
Unpaid
Contractual
Principal
Balance
|
Recorded
Investment
With No
Allowance
|
Recorded
Investment
With
Allowance
|
Related
Allowance
|
||||||||||||
Commercial real estate
|
||||||||||||||||
Commercial ADC
|
$
|
4
|
$
|
4
|
$
|
-
|
$
|
-
|
||||||||
Owner occupied
|
3,721
|
3,591
|
-
|
-
|
||||||||||||
Non-owner occupied
|
28
|
28
|
-
|
-
|
||||||||||||
Total commercial real estate
|
3,753
|
3,623
|
-
|
-
|
||||||||||||
Commercial
|
||||||||||||||||
Commercial and industrial
|
766
|
25
|
741
|
144
|
||||||||||||
Residential mortgage
|
||||||||||||||||
First lien, closed-end
|
1,040
|
165
|
811
|
24
|
||||||||||||
Junior lien, closed-end
|
884
|
670
|
215
|
79
|
||||||||||||
Total residential Mortgage
|
1,924
|
835
|
1,026
|
103
|
||||||||||||
Home equity lines
|
151
|
106
|
-
|
-
|
||||||||||||
Consumer - other
|
1
|
-
|
1
|
1
|
||||||||||||
Total loans
|
$
|
6,595
|
$
|
4,589
|
$
|
1,768
|
$
|
248
|
Year ended
December 31, 2018
|
Year ended
December 31, 2017
|
|||||||||||||||
In thousands
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||
Commercial real estate
|
||||||||||||||||
Commercial ADC
|
$
|
16
|
$
|
1
|
$
|
1,049
|
$
|
-
|
||||||||
Farmland
|
-
|
-
|
32
|
-
|
||||||||||||
Multifamily
|
59
|
-
|
163
|
-
|
||||||||||||
Owner occupied
|
2,508
|
82
|
3,614
|
102
|
||||||||||||
Non-owner occupied
|
9
|
-
|
133
|
-
|
||||||||||||
Total commercial real estate
|
2,592
|
83
|
4,991
|
102
|
||||||||||||
Commercial
|
||||||||||||||||
Commercial and industrial
|
692
|
45
|
1,580
|
57
|
||||||||||||
Residential mortgage
|
||||||||||||||||
First lien, closed-end
|
867
|
56
|
1,619
|
55
|
||||||||||||
Junior lien, closed- end
|
470
|
20
|
669
|
12
|
||||||||||||
Total residential mortgage
|
1,337
|
76
|
2,288
|
67
|
||||||||||||
Home equity lines
|
85
|
3
|
143
|
4
|
||||||||||||
Consumer – other
|
7
|
-
|
1
|
-
|
||||||||||||
Total loans
|
$
|
4,713
|
$
|
207
|
$
|
9,003
|
$
|
230
|
Year ended December 31, 2017
|
||||||||||||
Dollars in thousands
|
Number of
loans
|
Pre-Modification
Outstanding
Recorded
Investment
|
Post-Modification
Outstanding
Recorded
Investment
|
|||||||||
|
||||||||||||
Forgiveness of principal
Residential mortgage:
|
||||||||||||
Junior Lien, closed end
|
2
|
$
|
633
|
$
|
430
|
|||||||
Total residential mortgage
|
2
|
633
|
430
|
|||||||||
Total
|
2
|
$
|
633
|
$
|
430
|
|||||||
Grand Total
|
2
|
$
|
633
|
$
|
430
|
|
Paid in full
|
Paying as restructured
|
Converted to non-accrual
|
Foreclosure/Default
|
||||||||||||||||||||||||||||
|
Number of
loans
|
Recorded
Investment |
Number of
loans |
Recorded
Investment |
Number of
loans |
Recorded
Investment |
Number of
loans |
Recorded
Investment |
||||||||||||||||||||||||
December 31, 2017
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Forgiveness of principal
|
-
|
$
|
-
|
2
|
$
|
430
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||||||||||||
Total
|
-
|
$
|
-
|
2
|
$
|
430
|
-
|
$
|
-
|
-
|
$
|
-
|
|
· |
Loans with one or more major exceptions with no mitigating factors.
|
|
· |
Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the
Bank’s position at some future date. Potential weaknesses are the result of deviations from prudent lending practice.
|
|
· |
Loans where adverse economic conditions that develop subsequent to the loan origination that do not jeopardize liquidation of the debt but do substantially increase
the level of risk may also warrant this rating.
|
December 31, 2018 | ||||||||||||||||||||
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Loss
|
||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential ADC
|
$
|
4,650
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial ADC
|
20,509
|
239
|
42
|
-
|
-
|
|||||||||||||||
Farmland
|
4,833
|
-
|
-
|
-
|
-
|
|||||||||||||||
Multifamily
|
18,537
|
-
|
-
|
-
|
-
|
|||||||||||||||
Owner occupied
|
101,706
|
1,207
|
1,070
|
-
|
-
|
|||||||||||||||
Non-owner occupied
|
96,907
|
-
|
127
|
-
|
-
|
|||||||||||||||
Total commercial real estate
|
247,142
|
1,446
|
1,239
|
-
|
-
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial and industrial
|
48,157
|
981
|
361
|
-
|
-
|
|||||||||||||||
Agriculture
|
262
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other
|
1,573
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total commercial
|
49,992
|
981
|
361
|
-
|
-
|
|||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
First lien, closed-end
|
52,622
|
647
|
126
|
-
|
-
|
|||||||||||||||
Junior lien, closed-end
|
334
|
416
|
62
|
-
|
-
|
|||||||||||||||
Total residential mortgage
|
52,956
|
1,063
|
188
|
-
|
-
|
|||||||||||||||
Home equity lines
|
33,198
|
770
|
-
|
-
|
-
|
|||||||||||||||
Consumer – other
|
3,778
|
161
|
7
|
-
|
-
|
|||||||||||||||
Total
|
$
|
387,066
|
$
|
4,421
|
$
|
1,795
|
$
|
-
|
$
|
-
|
December 31, 2017 |
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Loss
|
||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||
Residential ADC
|
$
|
7,242
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Commercial ADC
|
23,883
|
477
|
4
|
-
|
-
|
|||||||||||||||
Farmland
|
5,392
|
-
|
-
|
-
|
-
|
|||||||||||||||
Multifamily
|
11,967
|
-
|
-
|
-
|
-
|
|||||||||||||||
Owner occupied
|
81,584
|
1,049
|
2,175
|
-
|
-
|
|||||||||||||||
Non-owner occupied
|
78,531
|
855
|
163
|
-
|
-
|
|||||||||||||||
Total commercial real estate
|
208,599
|
2,381
|
2,342
|
-
|
-
|
|||||||||||||||
Commercial:
|
||||||||||||||||||||
Commercial and industrial
|
45,480
|
1,130
|
422
|
-
|
-
|
|||||||||||||||
Agriculture
|
415
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other
|
1,420
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total commercial
|
47,315
|
1,130
|
422
|
-
|
-
|
|||||||||||||||
Residential mortgage:
|
||||||||||||||||||||
First lien, closed-end
|
47,257
|
513
|
166
|
-
|
-
|
|||||||||||||||
Junior lien, closed-end
|
239
|
-
|
884
|
-
|
-
|
|||||||||||||||
Total residential mortgage
|
47,496
|
513
|
1,050
|
-
|
-
|
|||||||||||||||
Home equity lines
|
32,005
|
1,543
|
124
|
-
|
-
|
|||||||||||||||
Consumer – other
|
3,596
|
162
|
1
|
-
|
-
|
|||||||||||||||
Total
|
339,011
|
$
|
5,729
|
$
|
3,939
|
$
|
-
|
$
|
-
|
Beginning
Balance
|
Provision
for
(Recovery)
of Loan
Losses
|
Charge-
offs
|
Recoveries
|
Ending
Balance
|
||||||||||||||||
Dollars in thousands
|
||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||
Commercial real estate
|
$
|
2,260
|
$
|
436
|
$
|
(50
|
)
|
$
|
37
|
$
|
2,683
|
|||||||||
Commercial
|
634
|
8
|
(106
|
)
|
60
|
596
|
||||||||||||||
Residential mortgage
|
505
|
(30
|
)
|
-
|
45
|
520
|
||||||||||||||
Consumer and home equity lines
|
200
|
(8
|
)
|
(23
|
)
|
10
|
179
|
|||||||||||||
Total
|
$
|
3,599
|
$
|
406
|
$
|
(179
|
)
|
$
|
152
|
$
|
3,978
|
|||||||||
December 31, 2017
|
||||||||||||||||||||
Commercial real estate
|
$
|
1,607
|
$
|
708
|
$
|
(208
|
)
|
$
|
153
|
$
|
2,260
|
|||||||||
Commercial
|
1,171
|
(218
|
)
|
(369
|
)
|
50
|
634
|
|||||||||||||
Residential mortgage
|
427
|
126
|
(66
|
)
|
18
|
505
|
||||||||||||||
Consumer and home equity lines
|
188
|
88
|
(92
|
)
|
16
|
200
|
||||||||||||||
Total
|
$
|
3,393
|
$
|
704
|
$
|
(735
|
)
|
$
|
237
|
$
|
3,599
|
|
Loans
Individually
Evaluated For
Impairment
|
Loans
Collectively
Evaluated for
Impairment
|
Total
|
|||||||||
Dollars in thousands
|
||||||||||||
December 31, 2018
|
||||||||||||
Commercial real estate
|
$
|
17
|
$
|
2,666
|
$
|
2,683
|
||||||
Commercial
|
111
|
485
|
596
|
|||||||||
Residential mortgage
|
117
|
403
|
520
|
|||||||||
Consumer and home equity lines
|
-
|
179
|
179
|
|||||||||
Total
|
$
|
245
|
$
|
3,733
|
$
|
3,978
|
||||||
December 31, 2017
|
||||||||||||
Commercial real estate
|
$
|
-
|
$
|
2,260
|
$
|
2,260
|
||||||
Commercial
|
144
|
490
|
634
|
|||||||||
Residential mortgage
|
103
|
402
|
505
|
|||||||||
Consumer and home equity lines
|
1
|
199
|
200
|
|||||||||
Total
|
$
|
248
|
$
|
3,351
|
$
|
3,599
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Loans
Individually
Evaluated for
Impairment
|
Loans
Collectively
Evaluated for
Impairment
|
Loans
Individually
Evaluated for
Impairment
|
Loans
Collectively
Evaluated for
Impairment
|
|||||||||||||
Dollars in thousands
|
||||||||||||||||
Commercial real estate
|
$
|
2,456
|
$
|
247,371
|
$
|
3,623
|
$
|
209,699
|
||||||||
Commercial
|
624
|
50,710
|
766
|
48,101
|
||||||||||||
Residential mortgage
|
1,294
|
52,912
|
1,861
|
47,198
|
||||||||||||
Consumer and home equity lines
|
7
|
37,907
|
107
|
37,324
|
||||||||||||
Total
|
$
|
4,381
|
$
|
388,900
|
$
|
6,357
|
$
|
342,322
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Balance, beginning of year
|
$
|
1,740
|
$
|
2,043
|
||||
Loan disbursements
|
254
|
102
|
||||||
Loan repayments
|
(1,601
|
)
|
(405
|
)
|
||||
Balance, end of year
|
$
|
393
|
$
|
1,740
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Balance, beginning of year
|
$
|
789
|
$
|
1,011
|
||||
Additions
|
1,618
|
520
|
||||||
Proceeds from sale
|
(916
|
)
|
(523
|
)
|
||||
Valuation adjustments
|
(355
|
)
|
(195
|
)
|
||||
Net gains (losses) on sales
|
21
|
(24
|
)
|
|||||
Balance, end of year
|
$
|
1,157
|
$
|
789
|
Net Income
Available to
Common
Shareholders
|
Weighted
Average
Common
Shares
|
Per Share
Amount
|
||||||||||
Dollars in thousands, except share and per share data
|
||||||||||||
December 31, 2018
|
||||||||||||
Basic earnings per common share
|
$
|
2,952
|
6,380,227
|
$
|
0.46
|
|||||||
Effect of dilutive options
|
-
|
74,418
|
||||||||||
Effect of dilutive stock warrants
|
-
|
16,294
|
||||||||||
Diluted earnings per common share
|
$
|
2,952
|
6,470,939
|
$
|
0.46
|
|||||||
December 31, 2017
|
||||||||||||
Basic earnings per common share
|
$
|
404
|
4,655,369
|
$
|
0.09
|
|||||||
Effect of dilutive options
|
-
|
71,225
|
||||||||||
Effect of dilutive stock warrants
|
-
|
11,280
|
||||||||||
Diluted earnings per common share
|
$
|
404
|
4,737,874
|
$
|
0.09
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Land, buildings and leasehold improvements
|
$
|
8,368
|
$
|
8,358
|
||||
Computer Equipment
|
1,148
|
1,151
|
||||||
Furniture and equipment
|
1,598
|
1,580
|
||||||
Work in progress
|
36
|
-
|
||||||
Total
|
11,150
|
11,089
|
||||||
Less accumulated depreciation
|
(5,057
|
)
|
(4,623
|
)
|
||||
Total
|
$
|
6,093
|
$
|
6,466
|
December 31, 2018
|
||||
Dollars in thousands
|
||||
2019
|
$
|
129
|
||
2020
|
53
|
|||
2021
|
34
|
|||
$
|
216
|
In thousands
|
Less than $250,000
|
$250,000 or
more
|
Total
|
|||||||||
2019
|
$
|
59,685
|
$
|
30,521
|
$
|
90,206
|
||||||
2020
|
34,333
|
12,681
|
47,014
|
|||||||||
2021
|
14,658
|
2,072
|
16,730
|
|||||||||
2022
|
7,969
|
1,834
|
9,803
|
|||||||||
2023
|
4,365
|
319
|
4,684
|
|||||||||
Total
|
$
|
121,010
|
$
|
47,427
|
$
|
168,437
|
Dollars in thousands
|
||||||||||||
Maturity Date
|
Interest Rates
|
December 31, 2018
|
December 31, 2017
|
|||||||||
1/29/2018
|
1.41
|
%
|
$
|
-
|
$
|
3,500
|
||||||
2/05/2018
|
1.27
|
%
|
-
|
4,000
|
||||||||
3/29/2018
|
1.88
|
%
|
-
|
2,000
|
||||||||
2/22/2019
|
1.17
|
%
|
10,000
|
10,000
|
||||||||
4/03/2019
|
2.34
|
%
|
2,000
|
-
|
||||||||
4/23/2019
|
1.75
|
%
|
2,100
|
2,100
|
||||||||
8/23/2028
|
2.02
|
%
|
2,000
|
2,000
|
||||||||
Total
|
$
|
16,100
|
$
|
23,600
|
December 31, 2018
|
December 31, 2017
|
|||||||
Dollars in thousands
|
||||||||
Current tax provision
|
$
|
386
|
$
|
221
|
||||
Deferred tax provision
|
577
|
1,373
|
||||||
Provision for income taxes
|
$
|
963
|
$
|
1,594
|
December 31, 2018
|
December 31, 2017
|
|||||||
Dollars in thousands
|
||||||||
Tax computed at the statutory rate
|
$
|
822
|
$
|
679
|
||||
Increase (decrease) resulting from:
|
||||||||
State income taxes, net of federal tax effect
|
146
|
57
|
||||||
Effect of rate revaluation
|
-
|
936
|
||||||
Other permanent differences
|
(5
|
)
|
(78
|
)
|
||||
Provision for income taxes
|
$
|
963
|
$
|
1,594
|
December 31, 2018
|
December 31, 2017
|
|||||||
Dollars in thousands
|
||||||||
Deferred tax assets relating to:
|
||||||||
Allowance for loan losses
|
$
|
640
|
$
|
556
|
||||
Stock options
|
15
|
15
|
||||||
Foreclosed asset basis differences
|
83
|
18
|
||||||
Unrealized loss on AFS securities
|
168
|
223
|
||||||
Unrealized loss on equity securities
|
135
|
|||||||
SERP liability
|
526
|
521
|
||||||
Nonaccrual loan interest
|
65
|
65
|
||||||
Net operating/economic loss carryforwards
|
460
|
811
|
||||||
Other
|
32
|
424
|
||||||
Total deferred tax assets
|
$
|
2,124
|
$
|
2, 633
|
||||
Deferred tax liabilities relating to:
|
||||||||
Prepaid expenses
|
$
|
(72
|
)
|
$
|
(55
|
)
|
||
Fixed assets
|
(299
|
)
|
(326
|
)
|
||||
Fair value acquisition adjustments, net
|
(113
|
)
|
(125
|
)
|
||||
Total deferred tax liabilities
|
(484
|
)
|
(506
|
)
|
||||
Net recorded deferred tax asset
|
$
|
1,640
|
$
|
2,127
|
Actual
|
Minimum required for
capital adequacy
purposes
|
Required in Order to Be
Well Capitalized Under
PCA
|
||||||||||||||||||||||
Dollars in thousands
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||||||
Common equity tier 1 capital to risk weighted assets
|
$
|
51,003
|
12.36
|
%
|
$
|
18,563
|
4.50
|
%
|
$
|
26,813
|
6.50
|
%
|
||||||||||||
Total capital to risk weighted assets
|
55,006
|
13.34
|
%
|
33,000
|
8.00
|
%
|
41,250
|
10.00
|
%
|
|||||||||||||||
Tier 1 capital to risk weighted assets
|
51,003
|
12.36
|
%
|
24,750
|
6.00
|
%
|
33,000
|
8.00
|
%
|
|||||||||||||||
Tier 1 capital to average assets
|
51,003
|
10.85
|
%
|
18,781
|
4.00
|
%
|
23,476
|
5.00
|
%
|
|||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||
Common equity tier 1 capital to risk weighted assets
|
$
|
37,321
|
10.10
|
%
|
$
|
16,627
|
4.50
|
%
|
$
|
24,017
|
6.50
|
%
|
||||||||||||
Total capital to risk weighted assets
|
40,948
|
11.08
|
%
|
29,560
|
8.00
|
%
|
39,950
|
10.00
|
%
|
|||||||||||||||
Tier 1 capital to risk weighted assets
|
37,321
|
10.10
|
%
|
22,170
|
6.00
|
%
|
29,560
|
8.00
|
%
|
|||||||||||||||
Tier 1 capital to average assets
|
37,321
|
9.22
|
%
|
16,196
|
4.00
|
%
|
20,245
|
5.00
|
%
|
Financial instruments whose contract represents credit risk
|
||||
December 31,
2018
|
||||
Dollars in thousands
|
||||
Undisbursed lines of credit
|
$
|
73,100
|
||
Letters of credit
|
603
|
|||
$
|
73,703
|
Fair Value Measurements at December 31, 2018 using
|
||||||||||||||||||||
Quoted Prices in
Active Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
Total Fair
Value
|
|||||||||||||||||
Dollars in thousands
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
|||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and due from banks
|
$
|
10,918
|
$
|
10,918
|
$
|
-
|
$
|
-
|
$
|
10,918
|
||||||||||
Interest earning deposits with banks
|
21,022
|
21,022
|
-
|
-
|
21,022
|
|||||||||||||||
Certificate of deposits with banks
|
1,498
|
-
|
1,484
|
-
|
1,484
|
|||||||||||||||
Federal Home Loan Bank Stock
|
1,050
|
-
|
1,050
|
-
|
1,050
|
|||||||||||||||
Securities available for sale
|
31,960
|
-
|
31,960
|
-
|
31,960
|
|||||||||||||||
Equity Securities
|
617
|
617
|
-
|
-
|
617
|
|||||||||||||||
Net loans
|
389,304
|
-
|
-
|
378,675
|
378,675
|
|||||||||||||||
Accrued interest receivable
|
1,259
|
-
|
1,259
|
-
|
1,259
|
|||||||||||||||
LIABILITIES
|
||||||||||||||||||||
Deposits
|
$
|
395,149
|
$
|
-
|
$
|
389,493
|
$
|
-
|
$
|
389,493
|
||||||||||
Capital lease obligation
|
141
|
-
|
141
|
-
|
141
|
|||||||||||||||
FHLB Advances
|
16,100
|
-
|
16,053
|
-
|
16,053
|
|||||||||||||||
Long term subordinated debt
|
9,753
|
-
|
9,946
|
-
|
9,946
|
|||||||||||||||
Accrued interest payable
|
421
|
-
|
421
|
-
|
421
|
Fair Value Measurements at December 31, 2017 using
|
||||||||||||||||||||
Quoted Prices in
Active Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
Total Fair
Value
|
|||||||||||||||||
Dollars in thousands
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Balance
|
|||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and due from banks
|
$
|
5,409
|
$
|
5,409
|
$
|
-
|
$
|
-
|
$
|
5,409
|
||||||||||
Interest earning deposits with banks
|
3,647
|
3,647
|
-
|
-
|
3,647
|
|||||||||||||||
Certificate of deposits with banks
|
1,498
|
-
|
1,519
|
-
|
1,519
|
|||||||||||||||
Federal Home Loan Bank Stock
|
1,341
|
-
|
1,341
|
-
|
1,341
|
|||||||||||||||
Securities available for sale
|
31,112
|
626
|
30,486
|
-
|
31,112
|
|||||||||||||||
Net loans
|
345,080
|
-
|
-
|
345,370
|
345,370
|
|||||||||||||||
Accrued interest receivable
|
1,078
|
-
|
1,078
|
-
|
1,078
|
|||||||||||||||
LIABILITIES
|
||||||||||||||||||||
Deposits
|
$
|
340,653
|
$
|
-
|
$
|
330,672
|
$
|
-
|
$
|
330,672
|
||||||||||
Capital lease obligation
|
207
|
-
|
207
|
-
|
207
|
|||||||||||||||
FHLB Advances
|
23,600
|
-
|
23,495
|
-
|
23,495
|
|||||||||||||||
Long term subordinated debt
|
9,676
|
-
|
9,619
|
-
|
9,619
|
|||||||||||||||
Accrued interest payable
|
292
|
-
|
292
|
-
|
292
|
|
Level 1 |
Valuation based upon quoted prices for identical instruments traded in active markets.
|
|
Level 2 |
Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active
and model-based valuation techniques for which all significant assumptions are observable in the market.
|
|
Level 3 |
Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions
reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Dollars in thousands
|
||||||||||||||||
December 31, 2018
|
||||||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
U.S. Government and federal agency
|
$
|
10,789
|
$
|
-
|
$
|
10,789
|
$
|
-
|
||||||||
Mortgage-backed securities*
|
20,541
|
-
|
20,541
|
-
|
||||||||||||
Municipal securities
|
630
|
-
|
630
|
-
|
||||||||||||
Total available-for-sale securities
|
31,960
|
-
|
31,960
|
-
|
||||||||||||
Equity securities
|
617
|
617
|
-
|
-
|
||||||||||||
Total
|
$
|
32,577
|
$
|
617
|
$
|
31,960
|
$
|
-
|
||||||||
December 31, 2017
|
||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||
U.S. Government and federal agency
|
$
|
11,276
|
$
|
-
|
$
|
11,276
|
$
|
-
|
||||||||
Mortgage-backed securities*
|
18,915
|
-
|
18,915
|
-
|
||||||||||||
Municipal securities
|
295
|
-
|
295
|
-
|
||||||||||||
Equity securities
|
626
|
626
|
-
|
-
|
||||||||||||
Total
available-for-sale
securities
|
$
|
31,112
|
$
|
626
|
$
|
30,486
|
$
|
-
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||
Dollars in thousands
|
Level 2
|
Level 3
|
Level 2
|
Level 3
|
||||||||||||
Carrying value of impaired loans before allocations
|
$
|
-
|
$
|
1,732
|
$
|
-
|
$
|
1,768
|
||||||||
Specific valuation allowance allocations
|
-
|
(245
|
)
|
-
|
(248
|
)
|
||||||||||
Carrying value of impaired loans after allocations
|
$
|
-
|
$
|
1,487
|
$
|
-
|
$
|
1,520
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Dollars in thousands
|
||||||||||||||||
December 31, 2018
|
||||||||||||||||
Foreclosed assets
|
$
|
942
|
$
|
-
|
$
|
-
|
$
|
942
|
||||||||
Impaired loans
|
1,487
|
-
|
-
|
1,487
|
||||||||||||
Total
|
$
|
2,429
|
$
|
-
|
$
|
-
|
$
|
2,429
|
||||||||
December 31, 2017
|
||||||||||||||||
Foreclosed assets
|
$
|
324
|
$
|
-
|
$
|
-
|
$
|
324
|
||||||||
Impaired loans
|
1,621
|
-
|
-
|
1,621
|
||||||||||||
Total
|
$
|
1,945
|
$
|
-
|
$
|
-
|
$
|
1,945
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted
Average
|
|||||||||||
Dollars in thousands
|
|||||||||||||||
December 31, 2018
|
|||||||||||||||
Impaired loans
|
$
|
122
|
Discounted appraisals
|
Appraisal adjustments
|
15.00
|
%
|
15.00
|
%
|
|||||||
1,365
|
Discounted cash flows
|
Discount rate
|
4.75 – 8.50
|
%
|
7.05
|
%
|
|||||||||
Foreclosed assets
|
942
|
Discounted appraisals
|
Appraisal adjustments
|
8.00-15.00
|
%
|
9.68
|
%
|
||||||||
December 31, 2017
|
|||||||||||||||
Impaired loans
|
$
|
101
|
Discounted appraisals
|
Appraisal adjustments
|
20.00-25.00
|
%
|
23.33
|
%
|
|||||||
1,520
|
Discounted cash flows
|
Discount rate
|
4.75-8.50
|
%
|
7.06
|
%
|
|||||||||
Foreclosed assets
|
324
|
Discounted appraisals
|
Appraisal adjustments
|
15.00
|
%
|
15.00
|
%
|
||||||||
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Option Grants
|
$
|
1
|
$
|
24
|
||||
Restricted Stock Grants
|
-
|
-
|
||||||
Total Compensation Expense
|
$
|
1
|
$
|
24
|
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding, December 31, 2017
|
151,173
|
$
|
4.54
|
5.27 years
|
|||||||||
Exercised
|
(3,107
|
)
|
4.84
|
||||||||||
Expired
|
(12,500
|
)
|
12.06
|
||||||||||
Forfeited
|
-
|
|
-
|
||||||||||
Granted
|
-
|
-
|
|||||||||||
Outstanding, December 31, 2018
|
135,566
|
$
|
3.83
|
4.71 years
|
$
|
507,779
|
|||||||
Exercisable, December 31, 2018
|
135,566
|
$
|
3.83
|
$
|
507,779
|
December 31, 2017
|
||||||||
Non-Vested
Restricted Stock
Outstanding
|
Weighted
Average
Grant Date
Fair Value
|
|||||||
Beginning balance outstanding
|
3,334
|
$
|
3.31
|
|||||
Granted
|
-
|
|||||||
Vested
|
(3,334
|
)
|
||||||
Ending balance outstanding
|
-
|
-
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Assets
|
||||||||
Cash and demand deposits
|
$
|
8,590
|
$
|
263
|
||||
Investment in bank subsidiary
|
50,838
|
38,018
|
||||||
Other assets
|
763
|
667
|
||||||
Total assets
|
60,191
|
38,948
|
||||||
Liabilities and stockholders’ equity
|
||||||||
Long term subordinated debt
|
9,753
|
9,676
|
||||||
Other liabilities
|
177
|
153
|
||||||
Total liabilities
|
9,930
|
9,829
|
||||||
Stockholders’ equity
|
50,261
|
29,119
|
||||||
Total liabilities and stockholders’ equity
|
$
|
60,191
|
$
|
38,948
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Income:
|
||||||||
Dividends from subsidiary
|
$
|
200
|
$
|
718
|
||||
Total income
|
200
|
718
|
||||||
Expense
|
||||||||
Interest expense
|
784
|
759
|
||||||
Merger expenses
|
444
|
-
|
||||||
Other operating expense
|
399
|
390
|
||||||
Total expense
|
1,627
|
1,149
|
||||||
Loss before income tax benefit and equity in undistributed earnings of subsidiary
|
(1,427
|
)
|
(431
|
)
|
||||
Income tax benefit
|
(299
|
)
|
(383
|
)
|
||||
Loss before equity in undistributed earnings of subsidiary
|
(1,128
|
)
|
(48
|
)
|
||||
Equity in undistributed earnings of subsidiaries
|
4,080
|
452
|
||||||
Net income
|
2,952
|
404
|
||||||
Net income available to common shareholders
|
$
|
2,952
|
$
|
404
|
December 31,
2018
|
December 31,
2017
|
|||||||
Dollars in thousands
|
||||||||
Cash flows from operating activities
|
||||||||
Net income
|
$
|
2,952
|
$
|
404
|
||||
Adjustments to reconcile net income to net cash used by operating activities:
|
||||||||
Equity in undistributed earnings of subsidiary
|
(4,080
|
)
|
(452
|
)
|
||||
Accretion of long term subordinated debt issuance costs
|
77
|
71
|
||||||
Increase in other assets
|
(95
|
)
|
(656
|
)
|
||||
Increase in other liabilities
|
24
|
103
|
||||||
Net cash used in operating activities
|
(1,122
|
)
|
(530
|
)
|
||||
Cash flows from investing activities
|
||||||||
Investment in subsidiary
|
(9,000
|
)
|
-
|
|||||
Net cash used in investing activities
|
(9,000
|
)
|
-
|
|||||
Cash flows from financing activities
|
||||||||
Net proceeds from the exercise of stock options
|
14
|
14
|
||||||
Net proceeds from issuance of common stock
|
18,435
|
-
|
||||||
Net cash provided by financing activities
|
18,449
|
14
|
||||||
Net increase (decrease) in cash and cash equivalents
|
8,327
|
(516
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
263
|
779
|
||||||
Cash and cash equivalents at end of year
|
$
|
8,590
|
$
|
263
|
Carolina Trust BancShares, Inc.
General Corporate Information
|
||
Office Locations
|
||
Vale Branch
|
Main
|
West Branch
|
9584 Hwy 10 West
|
901 East Main Street
|
799 Hwy 27 West
|
Vale, North Carolina 28168
|
Lincolnton, North Carolina 28092
|
Lincolnton, North Carolina 28092
|
Triangle Branch
|
Forest City Branch
|
New Hope Branch
|
1293 Hwy 16 North
|
142 North Watkins Drive
|
534 South New Hope Road
|
Denver, North Carolina 28037
|
Forest City, North Carolina 28043
|
Gastonia, North Carolina 28054
|
Hickory Branch
|
Mooresville Branch
|
Lake Lure Branch
|
11 13
th
Avenue NE
|
125 East Trade Court
|
103 Arcade Street
|
Hickory, North Carolina, 28601
|
Mooresville, North Carolina, 28117
|
Lake Lure, North Carolina 28746
|
Salisbury Office
|
Clover Branch
|
Lake Wylie Branch
|
350 Jake Alexander Blvd. West, Ste 102
|
124 North Main Street
|
5196 Charlotte Highway
|
Salisbury, North Carolina 28147
|
Clover, SC 29710
|
Lake Wylie, SC 29710
|
Directors
|
Name
|
Principal Occupation
|
|
Bryan Elliott Beal
|
President and Chief Executive Officer, Carolina Mills, Inc., Maiden, NC (textile manufacturer).
|
|
Scott C. Davis
|
President, Gaston Electronics; President, Gaston County Dyeing Machine Company (manufacturing); both of Stanley, NC.
|
|
Jerry L. Ocheltree
|
President and Chief Executive Officer, Carolina Trust Bancshares, Inc. and Carolina Trust Bank, both of Lincolnton, NC.
|
|
Johnathan L. Rhyne, Jr.
|
Partner/Member, The Jonas Law Firm, P.L.L.C., Lincolnton, NC.
|
|
Frederick P. Spach, Jr.
|
President and Chief Executive Officer, Carolina Brush Company (manufacturer of brushes for commercial and industrial use), Gastonia, NC.
|
|
Ralph N. Strayhorn III
|
Managing Partner, Cape Point Advisory Partners, LLC (bank consulting firm), Charlotte, NC.
|
|
Jim R. Watson
|
Associate Professor, College of Education, University of North Carolina at Charlotte, Charlotte, NC; President, WSRR Consulting Group, LLC and
Managing Partner, Silo Investors, LLC; both of Lincolnton, NC.
|
Name
|
Principal Occupation
|
|
Jerry L. Ocheltree
|
President and Chief Executive Officer of the Company and the Bank.
|
|
Edwin E. Laws
|
Executive Vice President and Chief Financial Officer of the Company and the Bank.
|
|
Richard M. Rager
|
Executive
Vice President and Chief Credit Officer of
the Bank.
|
Subsidiary of Registrant
|
State of Incorporation
|
Name Under Which
Subsidiary Does Business
|
Carolina Trust Bank
|
North Carolina
|
Carolina Trust Bank
|
(1) |
I have reviewed this annual report on Form 10-K of Carolina Trust BancShares, Inc., a North Carolina company (the “registrant”);
|
(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 controls 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, 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 quarter in 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:
|
(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 27, 2019
|
By:
|
/s/ Jerry L. Ocheltree
|
Jerry L. Ocheltree
|
||
President and Chief Executive Officer
|
(1) |
I have reviewed this annual report on Form 10-K of Carolina Trust BancShares, Inc., a North Carolina company (the “registrant”);
|
(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 controls 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, 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 quarter in 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:
|
(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 27, 2019
|
By:
|
/s/ Edwin E. Laws
|
Edwin E. Laws
|
||
Principal Financial Officer
|
CAROLINA TRUST BANK
|
||
Date: March 27, 2019
|
By:
|
/s/ Jerry L. Ocheltree
|
Jerry L. Ocheltree
|
||
President and Chief Executive Officer
|
Date: March 27, 2019
|
By:
|
/s/ Edwin E. Laws
|
Edwin E. Laws
|
||
Executive Vice President and Chief Financial Officer
|