x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018.
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
.
|
CALIFORNIA
|
|
91-2112732
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
2126 Inyo Street, Fresno, California
|
|
93721
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Small reporting company
x
|
|
Emerging growth company
o
|
PART I:
|
|
|
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||
|
Item 1A - Risk Factors
|
|
|
||
|
||
|
||
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||
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PART II:
|
|
|
|
||
|
Item 6 - Selected Consolidated Financial Data
|
|
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||
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||
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||
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||
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||
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PART III:
|
|
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||
|
||
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||
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||
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||
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|
PART IV:
|
|
|
|
•
|
our ability to compete effectively against other financial service providers in our markets;
|
•
|
the effect of the current low interest rate environment or impact of changes in interest rates or levels of market activity, especially on the fair value of our loan and investment portfolios;
|
•
|
economic deterioration or a recession that may affect the ability of borrowers to make contractual payments on loans and may affect the value of real property or other property held as collateral for such loans;
|
•
|
changes in credit quality and the effect of credit quality on our allowance for loan and lease losses;
|
•
|
our ability to attract and retain deposits and other sources of funding or liquidity;
|
•
|
the need to retain capital for strategic or regulatory reasons;
|
•
|
the impact of the Dodd-Frank Act on our business, business strategies and cost of operations;
|
•
|
compression of the net interest margin due to changes in the interest rate environment, forward yield curves, loan products offered, spreads on newly originated loans and leases and/or asset mix;
|
•
|
reduced demand for our services due to strategic or regulatory reasons;
|
•
|
our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications;
|
•
|
legislative or regulatory requirements or changes, including an increase to capital requirements, and increased political and regulatory uncertainty;
|
•
|
the impact on our reputation and business from our interactions with business partners, counterparties, service providers and other third parties;
|
•
|
higher than anticipated increases in operating expenses;
|
•
|
inability for the bank to pay dividends to the holding company;
|
•
|
a deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge;
|
•
|
the effectiveness of our risk management framework and quantitative models;
|
•
|
the costs and effects of legal, compliance, and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews;
|
•
|
the impact of the Tax Cuts and Jobs Act on our business and business strategies, or if other changes are made to tax laws or regulations affecting our business, including the disallowance of tax benefits by tax authorities and/or changes in tax filing jurisdictions or entity classifications; and
|
•
|
our success at managing risks involved in the foregoing items and all other risk factors described in our audited consolidated financial statements, and other risk factors described in this Form 10-K and other documents filed or furnished by the Company with the SEC.
|
•
|
the customer must obtain or provide some additional credit, property or services from or to the Bank other than a loan, discount, deposit or trust services;
|
•
|
the customer must obtain or provide some additional credit, property or service from or to the Holding Company or any subsidiaries; or
|
•
|
the customer must not obtain some other credit, property or services from competitors, except reasonable requirements to assure soundness of credit extended.
|
•
|
The amount of retained earnings of the Holding Company immediately prior to the distribution equals or exceeds the sum of (A) the amount of the proposed distribution plus (B) the preferential dividends arrears amount; or
|
•
|
Immediately after the distribution, the value of the Holding Company's assets would equal or exceed the sum of its total liabilities plus the preferential rights amount.
|
•
|
An increase in the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets;
|
•
|
A new category and a required 4.50% of risk-weighted assets ratio is established for “common equity Tier 1” as a subset of Tier 1 capital limited to common equity;
|
•
|
A minimum non-risk-based leverage ratio is set at 4.00% eliminating a 3.00% exception for higher rated banks;
|
•
|
Changes in the permitted composition of Tier 1 capital to exclude trust preferred securities, mortgage servicing rights and certain deferred tax assets and include unrealized gains and losses on available for sale debt and equity securities;
|
•
|
An additional capital conservation buffer of 2.5% of risk-weighted assets over each of the required capital ratios will be phased in beginning January 2016 at 0.625% of risk-weighted assets until fully implemented in January 2019. This conservation buffer level must be met to avoid limitations on the ability to pay dividends, repurchase shares or pay discretionary bonuses;
|
•
|
The risk weights of certain assets for purposes of calculating the risk-based capital ratios are changed for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures; and
|
•
|
An additional “countercyclical capital buffer” is required for larger and more complex institutions.
|
•
|
“well capitalized” if it has a total risk-based capital ratio of 10% or more, has a Tier 1 risk-based capital ratio of 6% or more, has a leverage capital ratio of 5% or more and is not subject to specified requirements 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 more, a Tier 1 risk-based capital ratio of 4% or more and a leverage capital ratio of 4% or more (3% under certain circumstances) and does not meet the definition of “well capitalized”;
|
•
|
“undercapitalized” if it has a total risk-based capital ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than 4%, or a leverage capital ratio that is less than 4% (3% under certain circumstances)
|
•
|
“significantly undercapitalized” if it has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3% or a leverage capital ratio that is less than 3%; and
|
•
|
“critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2%.
|
•
|
a membership stock requirement with an initial cap of $25 million (100% of “membership asset value” as defined), or
|
•
|
an activity based stock requirement (based on percentage of outstanding advances).
|
•
|
Loan delinquencies and defaults may increase;
|
•
|
Problem assets and foreclosures may increase;
|
•
|
Demand for loans or other products and services offered by us may decline;
|
•
|
Low cost or noninterest bearing deposits may decrease;
|
•
|
Decline in the value of our loans or other assets secured by real estate could occur;
|
•
|
Foreclosed assets may not be able to be sold;
|
•
|
Decrease in our stock price;
|
•
|
An impairment of goodwill or certain intangible assets; or
|
•
|
An increase in operating expenses associated with attending to the effects of the above-listed circumstances.
|
|
Closing Prices
|
Volume
|
||||||
Quarter
|
High
|
Low
|
|
|||||
4th Quarter 2018
|
$
|
11.18
|
|
$
|
9.41
|
|
877,712
|
|
3rd Quarter 2018
|
$
|
11.50
|
|
$
|
10.65
|
|
753,907
|
|
2nd Quarter 2018
|
$
|
11.45
|
|
$
|
10.70
|
|
745,092
|
|
1st Quarter 2018
|
$
|
10.75
|
|
$
|
10.15
|
|
1,134,156
|
|
4th Quarter 2017
|
$
|
11.10
|
|
$
|
9.20
|
|
1,339,681
|
|
3rd Quarter 2017
|
$
|
9.85
|
|
$
|
8.75
|
|
1,134,983
|
|
2nd Quarter 2017
|
$
|
9.85
|
|
$
|
7.05
|
|
2,668,596
|
|
1st Quarter 2017
|
$
|
8.12
|
|
$
|
7.13
|
|
541,529
|
|
Plan Category
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(column a)
|
|
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))
|
|||||
Equity compensation plans approved by security holders
|
94,601
|
|
(1
|
)
|
$
|
7.87
|
|
532,265
|
|
Equity compensation plans not approved by security holders
|
N/A
|
|
|
N/A
|
|
N/A
|
|
||
Total
|
94,601
|
|
|
$
|
7.87
|
|
532,265
|
|
|
For the Year Ended December 31,
|
||||||||||||||
(in thousands except per share data and ratios)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Summary of Year-to-Date Earnings:
|
|
|
|
|
|
||||||||||
Interest income and loan fees
|
$
|
36,615
|
|
$
|
32,930
|
|
$
|
29,473
|
|
$
|
27,410
|
|
$
|
24,962
|
|
Interest expense
|
2,703
|
|
1,730
|
|
1,409
|
|
1,281
|
|
1,345
|
|
|||||
Net interest income
|
33,912
|
|
31,200
|
|
28,064
|
|
26,129
|
|
23,617
|
|
|||||
(Recovery of provision) provision for credit losses
|
(1,764
|
)
|
24
|
|
(21
|
)
|
(41
|
)
|
(845
|
)
|
|||||
Net interest income after (recovery of provision) provision for credit losses
|
35,676
|
|
31,176
|
|
28,085
|
|
26,170
|
|
24,462
|
|
|||||
Noninterest income
|
4,605
|
|
4,306
|
|
4,514
|
|
4,735
|
|
5,161
|
|
|||||
Noninterest expense
|
20,932
|
|
19,803
|
|
20,345
|
|
19,598
|
|
19,215
|
|
|||||
Income before taxes on income
|
19,349
|
|
15.679
|
|
12,254
|
|
11,307
|
|
10,408
|
|
|||||
Taxes on income
|
5,332
|
|
7,039
|
|
4,869
|
|
4,497
|
|
4,192
|
|
|||||
Net income
|
$
|
14,017
|
|
$
|
8,640
|
|
$
|
7,385
|
|
$
|
6,810
|
|
$
|
6,216
|
|
|
|
|
|
|
|
||||||||||
Per Share Data:
|
|
|
|
|
|
||||||||||
Net income- Basic
|
$
|
0.83
|
|
$
|
0.51
|
|
$
|
0.44
|
|
$
|
0.40
|
|
$
|
0.37
|
|
Net income - Diluted
|
$
|
0.83
|
|
$
|
0.51
|
|
$
|
0.44
|
|
$
|
0.40
|
|
$
|
0.37
|
|
Average shares outstanding - Basic
|
16,899,960
|
|
16,885,587
|
|
16,881,379
|
|
16,880,563
|
|
16,686,896
|
|
|||||
Average shares outstanding - Diluted
|
16,938,772
|
|
16,904,915
|
|
16,889,027
|
|
16,882,787
|
|
16,692,646
|
|
|||||
Book value per share
|
$
|
6.45
|
|
$
|
6.00
|
|
$
|
5.79
|
|
$
|
5.58
|
|
$
|
5.37
|
|
|
|
|
|
|
|
||||||||||
Financial Position at Period-end:
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
933,058
|
|
$
|
805,836
|
|
$
|
787,972
|
|
$
|
725,644
|
|
$
|
663,169
|
|
Total net loans and leases
|
579,419
|
|
593,123
|
|
561,931
|
|
505,663
|
|
446,824
|
|
|||||
Total deposits
|
805,643
|
|
687,693
|
|
676,629
|
|
621,805
|
|
565,373
|
|
|||||
Total shareholders' equity
|
109,240
|
|
101,353
|
|
96,654
|
|
89,635
|
|
82,826
|
|
|||||
|
|
|
|
|
|
||||||||||
Selected Financial Ratios:
|
|
|
|
|
|
||||||||||
Return on average assets
|
1.61
|
%
|
1.07
|
%
|
0.98
|
%
|
0.98
|
%
|
0.93
|
%
|
|||||
Return on average equity
|
13.23
|
%
|
8.63
|
%
|
7.86
|
%
|
7.88
|
%
|
7.8
|
%
|
|||||
Average equity to average assets
|
12.14
|
%
|
12.46
|
%
|
12.43
|
%
|
12.41
|
%
|
11.88
|
%
|
|||||
Net interest margin (1)
|
4.28
|
%
|
4.27
|
%
|
4.11
|
%
|
4.22
|
%
|
4.01
|
%
|
|||||
Allowance for credit losses as a percentage of total nonperforming assets
|
38.81
|
%
|
52.62
|
%
|
47.15
|
%
|
30.26
|
%
|
36.41
|
%
|
|||||
Net (recoveries) charge-offs to average loans
|
(0.20
|
)%
|
(0.06
|
)%
|
0.14
|
%
|
0.2
|
%
|
(0.14
|
)%
|
|||||
Allowance of credit losses as a percentage of period-end loans
|
1.43
|
%
|
1.54
|
%
|
1.56
|
%
|
1.88
|
%
|
2.35
|
%
|
|||||
Dividend payout ratio
|
33.76
|
%
|
33.22
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
1.
|
Fully taxable equivalent
|
(In thousands except per share data and ratios)
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||
Selected Financial Ratios:
|
|
|
|
|
|
|||||
Return on average assets
|
1.61
|
%
|
1.07
|
%
|
0.98
|
%
|
0.98
|
%
|
0.93
|
%
|
Return on average shareholders' equity
|
13.23
|
%
|
8.63
|
%
|
7.86
|
%
|
7.88
|
%
|
7.80
|
%
|
Average shareholders' equity to average assets
|
12.14
|
%
|
12.46
|
%
|
12.43
|
%
|
12.41
|
%
|
11.88
|
%
|
Dividend payout ratio
|
33.76
|
%
|
33.21
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
|
|
|
2018
|
|
|
|
|
|
2017
|
|
|
|
|
|
2016
|
|
|
|||||||||||||||
|
Average Balance
|
|
Interest
|
|
Yield/Rate
|
|
Average Balance
|
|
Interest
|
|
Yield/Rate
|
|
Average Balance
|
|
Interest
|
|
Yield/Rate
|
|||||||||||||||
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and leases (1)
|
$
|
581,221
|
|
|
$
|
32,383
|
|
|
5.57
|
%
|
|
$
|
569,079
|
|
|
$
|
30,817
|
|
|
5.42
|
%
|
|
$540,777
|
|
28,182
|
|
|
5.21
|
%
|
|||
Investment Securities – taxable
|
54,838
|
|
|
1,146
|
|
|
2.09
|
%
|
|
52,513
|
|
|
901
|
|
|
1.72
|
%
|
|
49,612
|
|
|
825
|
|
|
1.66
|
%
|
||||||
Interest-bearing deposits in other banks
|
—
|
|
|
—
|
|
|
—
|
%
|
|
644
|
|
|
5
|
|
|
0.78
|
%
|
|
1,517
|
|
|
8
|
|
|
0.53
|
%
|
||||||
Interest-bearing deposits in FRB
|
157,222
|
|
|
3,086
|
|
|
1.96
|
%
|
|
108,218
|
|
|
1,207
|
|
|
1.12
|
%
|
|
90,393
|
|
|
458
|
|
|
0.51
|
%
|
||||||
Total interest-earning assets
|
793,281
|
|
|
$
|
36,615
|
|
|
4.62
|
%
|
|
730,454
|
|
|
$
|
32,930
|
|
|
4.51
|
%
|
|
682,299
|
|
|
29,473
|
|
|
4.32
|
%
|
||||
Allowance for credit losses
|
(9,118
|
)
|
|
|
|
|
|
|
|
(9,067
|
)
|
|
|
|
|
|
|
|
(9,311
|
)
|
|
|
|
|
||||||||
Noninterest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash and due from banks
|
27,605
|
|
|
|
|
|
|
|
|
22,225
|
|
|
|
|
|
|
|
|
21,886
|
|
|
|
|
|
||||||||
Premises and equipment, net
|
10,040
|
|
|
|
|
|
|
|
|
10,613
|
|
|
|
|
|
|
|
|
10,497
|
|
|
|
|
|
||||||||
Accrued interest receivable
|
7,577
|
|
|
|
|
|
|
|
|
4,594
|
|
|
|
|
|
|
|
|
2,568
|
|
|
|
|
|
||||||||
Other real estate owned
|
5,745
|
|
|
|
|
|
|
|
|
5,998
|
|
|
|
|
|
|
|
|
9,100
|
|
|
|
|
|
||||||||
Other assets
|
37,704
|
|
|
|
|
|
|
|
|
39,313
|
|
|
|
|
|
|
|
|
36,658
|
|
|
|
|
|
||||||||
Total average assets
|
$
|
872,834
|
|
|
|
|
|
|
|
|
$
|
804,130
|
|
|
|
|
|
|
|
|
$
|
753,697
|
|
|
|
|
|
|||||
Liabilities and Shareholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NOW accounts
|
$
|
102,130
|
|
|
$
|
145
|
|
|
0.14
|
%
|
|
$
|
87,867
|
|
|
$
|
117
|
|
|
0.13
|
%
|
|
$
|
85,357
|
|
|
111
|
|
|
0.13
|
%
|
|
Money market accounts
|
192,344
|
|
|
1,299
|
|
|
0.68
|
%
|
|
154,629
|
|
|
703
|
|
|
0.45
|
%
|
|
148,911
|
|
|
567
|
|
|
0.38
|
%
|
||||||
Savings accounts
|
86,086
|
|
|
236
|
|
|
0.27
|
%
|
|
79,202
|
|
|
183
|
|
|
0.23
|
%
|
|
67,590
|
|
|
145
|
|
|
0.21
|
%
|
||||||
Time deposits
|
69,452
|
|
|
598
|
|
|
0.86
|
%
|
|
76,856
|
|
|
423
|
|
|
0.55
|
%
|
|
73,680
|
|
|
344
|
|
|
0.47
|
%
|
||||||
Junior subordinated debentures
|
9,922
|
|
|
425
|
|
|
4.28
|
%
|
|
9,211
|
|
|
304
|
|
|
3.30
|
%
|
|
8,058
|
|
|
242
|
|
|
3.00
|
%
|
||||||
Total interest-bearing liabilities
|
459,934
|
|
|
$
|
2,703
|
|
|
0.59
|
%
|
|
407,765
|
|
|
$
|
1,730
|
|
|
0.42
|
%
|
|
383,596
|
|
|
$
|
1,409
|
|
|
0.37
|
%
|
|||
Noninterest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Noninterest-bearing checking
|
300,698
|
|
|
|
|
|
|
|
|
289,334
|
|
|
|
|
|
|
|
|
268,712
|
|
|
|
|
|
||||||||
Accrued interest payable
|
130
|
|
|
|
|
|
|
|
|
102
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
||||||||
Other liabilities
|
6,123
|
|
|
|
|
|
|
|
|
6,769
|
|
|
|
|
|
|
|
|
7,592
|
|
|
|
|
|
||||||||
Total average liabilities
|
766,885
|
|
|
|
|
|
|
|
|
703,970
|
|
|
|
|
|
|
|
|
659,981
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total average shareholders' equity
|
105,949
|
|
|
|
|
|
|
|
|
100,160
|
|
|
|
|
|
|
|
|
93,716
|
|
|
|
|
|
||||||||
Total average liabilities and shareholders' equity
|
$
|
872,834
|
|
|
|
|
|
|
|
|
$
|
804,130
|
|
|
|
|
|
|
|
|
$
|
753,697
|
|
|
|
|
|
|||||
Interest income as a percentage of average earning assets
|
|
|
|
|
|
|
4.62
|
%
|
|
|
|
|
|
|
|
4.51
|
%
|
|
|
|
|
|
4.32
|
%
|
||||||||
Interest expense as a percentage of average earning assets
|
|
|
|
|
|
|
0.34
|
%
|
|
|
|
|
|
|
|
0.24
|
%
|
|
|
|
|
|
0.21
|
%
|
||||||||
Net interest margin
|
|
|
|
|
|
|
4.28
|
%
|
|
|
|
|
|
|
|
4.27
|
%
|
|
|
|
|
|
4.11
|
%
|
|
2018 compared to 2017
|
|
2017 compared to 2016
|
||||||||||||||||||
(In thousands)
|
Total
|
|
Rate
|
|
Volume
|
|
Total
|
|
Rate
|
|
Volume
|
||||||||||
Increase (decrease) in interest income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans
|
$
|
1,566
|
|
|
$
|
936
|
|
|
630
|
|
|
$
|
2,635
|
|
|
$
|
1,216
|
|
|
1,419
|
|
Investment securities
|
245
|
|
|
204
|
|
|
41
|
|
|
76
|
|
|
30
|
|
|
46
|
|
||||
Interest-bearing deposits in other banks
|
(5
|
)
|
|
(8
|
)
|
|
3
|
|
|
(3
|
)
|
|
5
|
|
|
(8
|
)
|
||||
Interest-bearing deposits in FRB
|
1,879
|
|
|
762
|
|
|
1,117
|
|
|
749
|
|
|
535
|
|
|
214
|
|
||||
Total interest income
|
3,685
|
|
|
1,894
|
|
|
1,791
|
|
|
3,457
|
|
|
1,786
|
|
|
1,671
|
|
||||
Increase (decrease) in interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest-bearing demand accounts
|
624
|
|
|
424
|
|
|
200
|
|
|
142
|
|
|
118
|
|
|
24
|
|
||||
Savings accounts
|
53
|
|
|
36
|
|
|
17
|
|
|
38
|
|
|
12
|
|
|
26
|
|
||||
Time deposits
|
175
|
|
|
219
|
|
|
(44
|
)
|
|
79
|
|
|
64
|
|
|
15
|
|
||||
Subordinated debentures
|
121
|
|
|
96
|
|
|
25
|
|
|
62
|
|
|
26
|
|
|
36
|
|
||||
Total interest expense
|
973
|
|
|
775
|
|
|
198
|
|
|
321
|
|
|
220
|
|
|
101
|
|
||||
Increase (decrease) in net interest income
|
$
|
2,712
|
|
|
$
|
1,119
|
|
|
1,593
|
|
|
$
|
3,136
|
|
|
$
|
1,566
|
|
|
1,570
|
|
|
YTD Average
12/31/18
|
|
YTD Average
12/31/17
|
|
YTD Average
12/31/16
|
|||
Loans
|
73.27
|
%
|
|
77.91
|
%
|
|
79.26
|
%
|
Investment securities available for sale
|
6.91
|
%
|
|
7.18
|
%
|
|
7.27
|
%
|
Interest-bearing deposits in other banks
|
—
|
%
|
|
0.09
|
%
|
|
0.22
|
%
|
Interest-bearing deposits in FRB
|
19.82
|
%
|
|
14.82
|
%
|
|
13.25
|
%
|
Total earning assets
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
|
|
|
|
|
|
|||
NOW accounts
|
22.21
|
%
|
|
21.55
|
%
|
|
22.25
|
%
|
Money market accounts
|
41.82
|
%
|
|
37.92
|
%
|
|
38.82
|
%
|
Savings accounts
|
18.72
|
%
|
|
19.42
|
%
|
|
17.62
|
%
|
Time deposits
|
15.10
|
%
|
|
18.85
|
%
|
|
19.21
|
%
|
Subordinated debentures
|
2.15
|
%
|
|
2.26
|
%
|
|
2.10
|
%
|
Total interest-bearing liabilities
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
(In thousands)
|
2018
|
|
% of Total
|
|
2017
|
|
% of Total
|
|
2016
|
|
% of Total
|
|||||||||
Customer service fees
|
$
|
3,544
|
|
|
76.96
|
%
|
|
$
|
3,851
|
|
|
89.43
|
%
|
|
$
|
3,792
|
|
|
84.01
|
%
|
Increase in cash surrender value of bank-owned life insurance
|
520
|
|
|
11.29
|
%
|
|
534
|
|
|
12.40
|
%
|
|
$
|
530
|
|
|
11.74
|
%
|
||
Loss on fair value of marketable equity securities
|
(78
|
)
|
|
(1.69
|
)%
|
|
—
|
|
|
0.00
|
%
|
|
$
|
—
|
|
|
—
|
%
|
||
Gain on proceeds from bank-owned life insurance
|
171
|
|
|
3.71
|
%
|
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
||
Loss on fair value of junior subordinated debentures
|
(424
|
)
|
|
(9.21
|
)%
|
|
(882
|
)
|
|
(20.48
|
)%
|
|
$
|
(518
|
)
|
|
(11.48
|
)%
|
||
Other
|
872
|
|
|
18.94
|
%
|
|
803
|
|
|
18.65
|
%
|
|
$
|
710
|
|
|
15.73
|
%
|
||
Total
|
$
|
4,605
|
|
|
100.00
|
%
|
|
$
|
4,306
|
|
|
100.00
|
%
|
|
$
|
4,514
|
|
|
100.00
|
%
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
(Dollars in thousands)
|
Amount
|
% of
Average
Earning Assets
|
|
Amount
|
% of
Average
Earning Assets
|
|
Amount
|
% of
Average
Earning Assets
|
|||||||||
Salaries and employee benefits
|
$
|
11,721
|
|
1.48
|
%
|
|
$
|
10,821
|
|
1.48
|
%
|
|
$
|
10,628
|
|
1.56
|
%
|
Occupancy expense
|
4,372
|
|
0.55
|
%
|
|
4,254
|
|
0.58
|
%
|
|
4,222
|
|
0.62
|
%
|
|||
Data processing
|
171
|
|
0.02
|
%
|
|
119
|
|
0.02
|
%
|
|
148
|
|
0.02
|
%
|
|||
Professional fees
|
1,617
|
|
0.20
|
%
|
|
1,433
|
|
0.20
|
%
|
|
1,493
|
|
0.22
|
%
|
|||
Regulatory assessments
|
330
|
|
0.04
|
%
|
|
391
|
|
0.05
|
%
|
|
767
|
|
0.11
|
%
|
|||
Director fees
|
321
|
|
0.04
|
%
|
|
289
|
|
0.04
|
%
|
|
284
|
|
0.04
|
%
|
|||
Correspondent bank service charges
|
63
|
|
0.01
|
%
|
|
71
|
|
0.01
|
%
|
|
—
|
|
—
|
%
|
|||
Loss on California tax credit partnership
|
25
|
|
—
|
%
|
|
109
|
|
0.01
|
%
|
|
158
|
|
0.02
|
%
|
|||
Net cost (gain) on operation and sale of OREO
|
145
|
|
0.02
|
%
|
|
(150
|
)
|
(0.02
|
)%
|
|
263
|
|
0.04
|
%
|
|||
Other
|
2,167
|
|
0.27
|
%
|
|
2,466
|
|
0.34
|
%
|
|
2,382
|
|
0.35
|
%
|
|||
Total
|
$
|
20,932
|
|
2.64
|
%
|
|
$
|
19,803
|
|
2.71
|
%
|
|
$
|
20,345
|
|
2.98
|
%
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||
(In thousands)
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|
Dollar Amount
|
% of Loans
|
|||||||||||||||
Commercial and industrial
|
$
|
56,978
|
|
9.7
|
%
|
|
$
|
47,026
|
|
7.8
|
%
|
|
$
|
49,005
|
|
8.6
|
%
|
|
$
|
55,826
|
|
10.8
|
%
|
|
$
|
62,369
|
|
13.6
|
%
|
Real estate mortgage
|
289,200
|
|
49.2
|
%
|
|
306,293
|
|
50.9
|
%
|
|
288,200
|
|
50.6
|
%
|
|
252,232
|
|
48.9
|
%
|
|
214,877
|
|
46.9
|
%
|
|||||
RE construction & development
|
108,795
|
|
18.5
|
%
|
|
122,970
|
|
20.4
|
%
|
|
130,687
|
|
22.9
|
%
|
|
130,596
|
|
25.3
|
%
|
|
137,158
|
|
30.0
|
%
|
|||||
Agricultural
|
61,149
|
|
10.4
|
%
|
|
59,481
|
|
9.9
|
%
|
|
56,918
|
|
10.0
|
%
|
|
52,137
|
|
10.1
|
%
|
|
31,713
|
|
6.9
|
%
|
|||||
Installment and student loans
|
71,811
|
|
12.2
|
%
|
|
65,581
|
|
11.0
|
%
|
|
44,949
|
|
7.9
|
%
|
|
24,527
|
|
4.9
|
%
|
|
11,802
|
|
2.6
|
%
|
|||||
Total loans
|
$
|
587,933
|
|
100.0
|
%
|
|
$
|
601,351
|
|
100.0
|
%
|
|
$
|
569,759
|
|
100.0
|
%
|
|
$
|
515,318
|
|
100.0
|
%
|
|
$
|
457,919
|
|
100.0
|
%
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
Number of Loans
|
|
Amount
|
|
Accrued Interest
|
|
Number of Loans
|
|
Amount
|
|
Accrued Interest
|
||||||||||
School
|
1,056
|
|
|
$
|
42,852
|
|
|
$
|
5,494
|
|
|
1,216
|
|
|
$
|
48,825
|
|
|
$
|
3,973
|
|
Grace
|
23
|
|
|
562
|
|
|
81
|
|
|
55
|
|
|
1,446
|
|
|
166
|
|
||||
Repayment
|
366
|
|
|
15,526
|
|
|
118
|
|
|
201
|
|
|
6,473
|
|
|
40
|
|
||||
Deferment
|
48
|
|
|
1,945
|
|
|
79
|
|
|
32
|
|
|
1,128
|
|
|
45
|
|
||||
Forbearance
|
181
|
|
|
7,336
|
|
|
212
|
|
|
50
|
|
|
1,981
|
|
|
37
|
|
||||
Claim
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
1,674
|
|
|
$
|
68,221
|
|
|
$
|
5,984
|
|
|
1,554
|
|
|
$
|
59,853
|
|
|
$
|
4,261
|
|
(In thousands)
|
Due in one year or less
|
|
Due after one year through five years
|
|
Due after five years
|
|
Total
|
||||||||
Commercial and agricultural
|
$
|
49,269
|
|
|
$
|
37,290
|
|
|
$
|
31,568
|
|
|
$
|
118,127
|
|
Real estate construction & development
|
76,439
|
|
|
30,202
|
|
|
2,154
|
|
|
108,795
|
|
||||
Real estate – mortgage
|
28,679
|
|
|
132,891
|
|
|
127,630
|
|
|
289,200
|
|
||||
All other loans
|
1,659
|
|
|
1,546
|
|
|
68,606
|
|
|
71,811
|
|
||||
Total loans
|
$
|
156,046
|
|
|
$
|
201,929
|
|
|
$
|
229,958
|
|
|
$
|
587,933
|
|
|
Due in one
|
|
Due after one
Year through
|
|
Due after
|
|
|
||||||||
(In thousands)
|
year or less
|
|
Five years
|
|
Five years
|
|
Total
|
||||||||
Accruing loans:
|
|
|
|
|
|
|
|
||||||||
Fixed rate loans
|
$
|
56,949
|
|
|
$
|
156,722
|
|
|
$
|
32,220
|
|
|
$
|
245,891
|
|
Floating rate loans
|
91,018
|
|
|
41,234
|
|
|
197,738
|
|
|
329,990
|
|
||||
Total accruing loans
|
147,967
|
|
|
197,956
|
|
|
229,958
|
|
|
575,881
|
|
||||
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed rate loans
|
8,079
|
|
|
3,973
|
|
|
—
|
|
|
12,052
|
|
||||
Floating rate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total nonaccrual loans
|
8,079
|
|
|
3,973
|
|
|
—
|
|
|
12,052
|
|
||||
Total Loans
|
$
|
156,046
|
|
|
$
|
201,929
|
|
|
$
|
229,958
|
|
|
$
|
587,933
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
(In thousands)
|
Amortized Cost
|
Fair Value (Carrying Amount)
|
|
Amortized Cost
|
Fair Value (Carrying Amount)
|
||||||||
Available-for-sale:
|
|
|
|
|
|
||||||||
U.S. Government agencies
|
$
|
36,665
|
|
$
|
36,527
|
|
|
$
|
19,683
|
|
$
|
19,954
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
30,289
|
|
29,899
|
|
|
22,391
|
|
22,031
|
|
||||
Total available-for-sale
|
$
|
66,954
|
|
$
|
66,426
|
|
|
$
|
42,074
|
|
$
|
41,985
|
|
|
December 31,
|
||||||||||||||
(In thousands)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Noninterest-bearing deposits
|
$
|
292,720
|
|
$
|
307,299
|
|
$
|
262,697
|
|
$
|
262,168
|
|
$
|
215,439
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|||||
NOW and money market accounts
|
340,445
|
|
234,154
|
|
235,873
|
|
226,886
|
|
211,290
|
|
|||||
Savings accounts
|
90,046
|
|
81,408
|
|
75,068
|
|
63,592
|
|
60,499
|
|
|||||
Time deposits:
|
|
|
|
|
|
|
|
|
|
|
|||||
Under $250,000
|
60,875
|
|
51,687
|
|
87,419
|
|
58,122
|
|
65,844
|
|
|||||
$250,000 and over
|
21,557
|
|
13,145
|
|
15,572
|
|
11,037
|
|
12,301
|
|
|||||
Total interest-bearing deposits
|
512,923
|
|
380,394
|
|
413,932
|
|
359,637
|
|
349,934
|
|
|||||
Total deposits
|
$
|
805,643
|
|
$
|
687,693
|
|
$
|
676,629
|
|
$
|
621,805
|
|
$
|
565,373
|
|
|
December 31,
|
|||||||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||
Noninterest-bearing deposits
|
36.33
|
%
|
44.69
|
%
|
38.82
|
%
|
42.16
|
%
|
38.11
|
%
|
Interest-bearing deposits:
|
|
|
|
|
|
|||||
NOW and money market accounts
|
42.26
|
%
|
34.05
|
%
|
34.86
|
%
|
36.49
|
%
|
37.37
|
%
|
Savings accounts
|
11.18
|
%
|
11.84
|
%
|
11.09
|
%
|
10.23
|
%
|
10.70
|
%
|
Time deposits:
|
|
|
|
|
|
|||||
Under $250,000
|
7.56
|
%
|
7.52
|
%
|
12.92
|
%
|
9.35
|
%
|
11.65
|
%
|
$250,000 and over
|
2.68
|
%
|
1.91
|
%
|
2.30
|
%
|
1.77
|
%
|
2.18
|
%
|
Total interest-bearing deposits
|
63.67
|
%
|
55.31
|
%
|
61.18
|
%
|
57.84
|
%
|
61.89
|
%
|
Total deposits
|
100.00
|
%
|
100.00
|
%
|
100.00
|
%
|
100.00
|
%
|
100.00
|
%
|
|
2018
|
2017
|
||||||||
(Dollars in thousands)
|
Average Balance
|
Rate %
|
Average Balance
|
Rate %
|
||||||
Interest-bearing deposits:
|
|
|
|
|
||||||
Checking accounts
|
$
|
294,474
|
|
0.49
|
%
|
$
|
242,496
|
|
0.34
|
%
|
Savings
|
86,086
|
|
0.27
|
%
|
79,202
|
|
0.23
|
%
|
||
Time deposits (1)
|
69,452
|
|
0.86
|
%
|
76,856
|
|
0.55
|
%
|
||
Noninterest-bearing deposits
|
300,698
|
|
|
|
289,334
|
|
|
|
Loan Segments for Loan Loss Reserve Analysis
|
Loan Balances at December 31,
|
||||||||||||||
(Dollars in thousands)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Commercial and business loans
|
$
|
55,929
|
|
$
|
46,065
|
|
$
|
47,464
|
|
$
|
54,503
|
|
$
|
60,422
|
|
Government program loans
|
1,049
|
|
961
|
|
1,541
|
|
1,323
|
|
1,947
|
|
|||||
Total commercial and industrial
|
56,978
|
|
47,026
|
|
49,005
|
|
55,826
|
|
62,369
|
|
|||||
Real estate – mortgage:
|
|
|
|
|
|
||||||||||
Commercial real estate
|
229,448
|
|
221,032
|
|
200,213
|
|
182,554
|
|
154,672
|
|
|||||
Residential mortgages
|
59,431
|
|
84,804
|
|
87,388
|
|
68,811
|
|
59,095
|
|
|||||
Home improvement and home equity loans
|
321
|
|
457
|
|
599
|
|
867
|
|
1,110
|
|
|||||
Total real estate mortgage
|
289,200
|
|
306,293
|
|
288,200
|
|
252,232
|
|
214,877
|
|
|||||
Real estate construction and development
|
108,795
|
|
122,970
|
|
130,687
|
|
130,596
|
|
137,158
|
|
|||||
Agricultural
|
61,149
|
|
59,481
|
|
56,918
|
|
52,137
|
|
31,713
|
|
|||||
Installment and student loans
|
71,811
|
|
65,581
|
|
44,949
|
|
24,527
|
|
11,802
|
|
|||||
Total loans
|
$
|
587,933
|
|
$
|
601,351
|
|
$
|
569,759
|
|
$
|
515,318
|
|
$
|
457,919
|
|
•
|
Levels of, and trends in delinquencies and nonaccrual loans;
|
•
|
Trends in volumes and term of loans;
|
•
|
Effects of any changes in lending policies and procedures including those for underwriting, collection, charge-off, and recovery;
|
•
|
Experience, ability, and depth of lending management and staff;
|
•
|
National and local economic trends and conditions; and
|
•
|
Concentrations of credit that might affect loss experience across one or more components of the portfolio, including high-balance loan concentrations and participations.
|
(In thousands)
|
December 31, 2018
|
December 31, 2017
|
||||
Specific allowance – impaired loans
|
$
|
1,776
|
|
$
|
1,888
|
|
Formula allowance – classified loans not impaired
|
4
|
|
1,136
|
|
||
Formula allowance – special mention loans
|
17
|
|
181
|
|
||
Total allowance for special mention and classified loans
|
1,797
|
|
3,205
|
|
||
Formula allowance for pass loans
|
6,005
|
|
4,806
|
|
||
Unallocated allowance
|
593
|
|
1,256
|
|
||
Total allowance
|
8,395
|
|
9,267
|
|
||
Impaired loans
|
18,683
|
|
14,790
|
|
||
Classified loans not considered impaired
|
34
|
|
12,521
|
|
||
Total classified and impaired loans
|
18,717
|
|
27,311
|
|
||
Special mention loans not considered impaired
|
2,228
|
|
10,201
|
|
(Dollars in thousands)
|
December 31, 2018
|
December 31, 2017
|
||||
Allowance for loan losses - beginning of period
|
$
|
9,267
|
|
$
|
8,902
|
|
Net loans recovered during period
|
(892
|
)
|
(341
|
)
|
||
(Recovery of provision) provision for credit loss
|
(1,764
|
)
|
24
|
|
||
Allowance for loan losses - end of period
|
8,395
|
|
9,267
|
|
||
Loans outstanding at period-end
|
587,933
|
|
601,351
|
|
||
ALLL as % of loans at period-end
|
1.43
|
%
|
1.54
|
%
|
||
Nonaccrual loans
|
12,052
|
|
5,296
|
|
||
Accruing restructured loans
|
3,832
|
|
6,084
|
|
||
Loans, past due 90 days or more, still accruing
|
—
|
|
485
|
|
||
Total non-performing loans
|
15,884
|
|
11,865
|
|
||
ALLL as % of nonperforming loans
|
52.85
|
%
|
78.10
|
%
|
||
Impaired loans
|
18,683
|
|
14,790
|
|
||
Classified loans not considered impaired
|
34
|
|
12,521
|
|
||
Total classified and impaired loans
|
$
|
18,717
|
|
$
|
27,311
|
|
ALLL as % of classified loans
|
44.85
|
%
|
33.93
|
%
|
|
Balance
|
|
Allowance
|
|
Balance
|
|
Allowance
|
||||||||
(In thousands)
|
December 31, 2018
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2017
|
||||||||
Commercial and industrial
|
$
|
2,816
|
|
|
$
|
787
|
|
|
$
|
3,318
|
|
|
$
|
534
|
|
Real estate – mortgage
|
3,345
|
|
|
469
|
|
|
4,296
|
|
|
488
|
|
||||
Real estate construction and development
|
11,663
|
|
|
—
|
|
|
5,972
|
|
|
—
|
|
||||
Agricultural
|
818
|
|
|
520
|
|
|
1,204
|
|
|
866
|
|
||||
Installment and student loans
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total impaired loans
|
$
|
18,683
|
|
|
$
|
1,776
|
|
|
$
|
14,790
|
|
|
$
|
1,888
|
|
|
Total TDRs
|
Nonaccrual TDRs
|
Accruing TDRs
|
||||||
(In thousands
)
|
December 31, 2018
|
December 31, 2018
|
December 31, 2018
|
||||||
Commercial and industrial
|
$
|
75
|
|
$
|
—
|
|
$
|
75
|
|
Real estate - mortgage:
|
|
|
|
|
|
|
|||
Commercial real estate
|
1,305
|
|
389
|
|
916
|
|
|||
Residential mortgages
|
2,028
|
|
—
|
|
2,028
|
|
|||
Total real estate mortgage
|
3,333
|
|
389
|
|
2,944
|
|
|||
Real estate construction and development
|
2,838
|
|
2,838
|
|
—
|
|
|||
Agricultural
|
813
|
|
—
|
|
813
|
|
|||
Installment and student loans
|
—
|
|
—
|
|
—
|
|
|||
Total Troubled Debt Restructurings
|
$
|
7,059
|
|
$
|
3,227
|
|
$
|
3,832
|
|
|
Total TDRs
|
Nonaccrual TDRs
|
Accruing TDRs
|
||||||
(In thousands
)
|
December 31, 2017
|
December 31, 2017
|
December 31, 2017
|
||||||
Commercial and industrial
|
$
|
436
|
|
$
|
194
|
|
$
|
242
|
|
Real estate - mortgage:
|
|
|
|
|
|
|
|||
Commercial real estate
|
1,233
|
|
454
|
|
779
|
|
|||
Residential mortgages
|
2,542
|
|
288
|
|
2,254
|
|
|||
Total real estate mortgage
|
3,775
|
|
742
|
|
3,033
|
|
|||
Real estate construction and development
|
5,951
|
|
4,342
|
|
1,609
|
|
|||
Agricultural
|
1,200
|
|
—
|
|
1,200
|
|
|||
Installment and student loans
|
—
|
|
—
|
|
—
|
|
|||
Total Troubled Debt Restructurings
|
$
|
11,362
|
|
$
|
5,278
|
|
$
|
6,084
|
|
(In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Commercial and industrial
|
$
|
48
|
|
|
$
|
—
|
|
Real estate - mortgage:
|
|
|
|
|
|
||
Commercial real estate
|
2,180
|
|
|
8,487
|
|
||
Residential mortgages
|
470
|
|
|
643
|
|
||
Home equity loans
|
—
|
|
|
—
|
|
||
Total real estate mortgage
|
2,650
|
|
|
9,130
|
|
||
RE construction & development
|
—
|
|
|
720
|
|
||
Agricultural
|
—
|
|
|
994
|
|
||
Installment and student loans
|
—
|
|
|
—
|
|
||
Total Special Mention Loans
|
$
|
2,698
|
|
|
$
|
10,844
|
|
Description
|
Loss
|
Recoveries
|
Provision
|
Balance
|
||||||||
Balance Forward
|
|
|
|
$
|
9,267
|
|
||||||
1st quarter - 2018
|
$
|
95
|
|
$
|
133
|
|
$
|
(189
|
)
|
9,116
|
|
|
2nd quarter- 2018
|
5
|
|
450
|
|
(1,136
|
)
|
8,425
|
|
||||
3rd quarter - 2018
|
52
|
|
798
|
|
(373
|
)
|
8,798
|
|
||||
4th quarter - 2018
|
402
|
|
65
|
|
(66
|
)
|
8,395
|
|
||||
Total YTD - 2018
|
$
|
554
|
|
$
|
1,446
|
|
$
|
(1,764
|
)
|
$
|
8,395
|
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||
(Dollars in thousands)
|
Allowance
for Credit Losses
|
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|
Allowance
for Credit Losses |
% of Loans
|
|||||||||||||||
Commercial and industrial
|
$
|
1,673
|
|
0.28
|
%
|
|
$
|
1,408
|
|
0.23
|
%
|
|
$
|
1,843
|
|
0.32
|
%
|
|
$
|
1,652
|
|
0.32
|
%
|
|
$
|
1,218
|
|
0.27
|
%
|
Real estate – mortgage
|
1,015
|
|
0.17
|
%
|
|
1,182
|
|
0.20
|
%
|
|
1,430
|
|
0.25
|
%
|
|
1,449
|
|
0.28
|
%
|
|
1,653
|
|
0.36
|
%
|
|||||
RE construction and development
|
2,424
|
|
0.41
|
%
|
|
2,903
|
|
0.48
|
%
|
|
3,378
|
|
0.59
|
%
|
|
4,629
|
|
0.90
|
%
|
|
6,278
|
|
1.37
|
%
|
|||||
Agricultural
|
1,131
|
|
0.19
|
%
|
|
1,631
|
|
0.27
|
%
|
|
666
|
|
0.12
|
%
|
|
655
|
|
0.13
|
%
|
|
482
|
|
0.11
|
%
|
|||||
Installment and student loans
|
1,559
|
|
0.27
|
%
|
|
887
|
|
0.15
|
%
|
|
888
|
|
0.16
|
%
|
|
1,258
|
|
0.24
|
%
|
|
293
|
|
0.06
|
%
|
|||||
Not allocated
|
593
|
|
0.11
|
%
|
|
1,256
|
|
0.21
|
%
|
|
697
|
|
0.12
|
%
|
|
70
|
|
0.01
|
%
|
|
847
|
|
0.18
|
%
|
|||||
|
$
|
8,395
|
|
1.43
|
%
|
|
$
|
9,267
|
|
1.54
|
%
|
|
$
|
8,902
|
|
1.56
|
%
|
|
$
|
9,713
|
|
1.88
|
%
|
|
$
|
10,771
|
|
2.35
|
%
|
|
December 31,
|
||||||||||||||
(In thousands)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Formula allowance
|
$
|
6,026
|
|
$
|
6,123
|
|
$
|
6,845
|
|
$
|
6,546
|
|
$
|
9,209
|
|
Specific allowance
|
1,776
|
|
1,888
|
|
1,360
|
|
3,097
|
|
715
|
|
|||||
Unallocated allowance
|
593
|
|
1,256
|
|
697
|
|
70
|
|
847
|
|
|||||
Total allowance
|
$
|
8,395
|
|
$
|
9,267
|
|
$
|
8,902
|
|
$
|
9,713
|
|
$
|
10,771
|
|
|
December 31,
|
||||||||||||||
(Dollars in thousands)
|
2018
|
2017
|
2016
|
2015
|
2014
|
||||||||||
Nonaccrual loans (1)
|
$
|
12,052
|
|
$
|
5,296
|
|
$
|
7,264
|
|
$
|
8,193
|
|
$
|
9,935
|
|
Accruing restructured loans
|
3,832
|
|
6,084
|
|
5,146
|
|
11,028
|
|
5,641
|
|
|||||
Loans, past due 90 days or more, still accruing
|
—
|
|
485
|
|
1,250
|
|
—
|
|
—
|
|
|||||
Total non-performing loans
|
15,884
|
|
11,865
|
|
13,660
|
|
19,221
|
|
15,576
|
|
|||||
Other real estate owned
|
5,745
|
|
5,745
|
|
6,471
|
|
12,873
|
|
14,010
|
|
|||||
Total non-performing assets
|
$
|
21,629
|
|
$
|
17,610
|
|
$
|
20,131
|
|
$
|
32,094
|
|
$
|
29,586
|
|
|
|
|
|
|
|
||||||||||
Non-performing loans to total gross loans
|
2.70
|
%
|
1.97
|
%
|
2.40
|
%
|
3.73
|
%
|
3.40
|
%
|
|||||
Non-performing assets to total gross loans
|
3.68
|
%
|
2.92
|
%
|
3.53
|
%
|
6.23
|
%
|
6.47
|
%
|
|||||
Allowance for loan losses to nonperforming loans
|
52.85
|
%
|
78.10
|
%
|
65.17
|
%
|
50.53
|
%
|
69.15
|
%
|
(In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
(Recovery of provision) provision for credit losses during period
|
$
|
(1,764
|
)
|
|
$
|
24
|
|
Allowance as % of nonperforming loans
|
52.85
|
%
|
|
78.10
|
%
|
||
Nonperforming loans as % total loans
|
2.70
|
%
|
|
1.97
|
%
|
||
Restructured loans as % total loans
|
1.20
|
%
|
|
1.89
|
%
|
|
|
Balance
|
|
Change
|
||||||||
(In thousands)
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2017
|
||||||
Commercial and industrial
|
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
(212
|
)
|
Real estate - mortgage
|
|
389
|
|
|
742
|
|
|
(353
|
)
|
|||
Real estate - construction
|
|
11,663
|
|
|
4,342
|
|
|
7,321
|
|
|||
Agricultural
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Installment and student loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Nonaccrual Loans
|
|
$
|
12,052
|
|
|
$
|
5,296
|
|
|
$
|
6,756
|
|
|
Balance
|
||
December 31, 2018
|
$
|
220,337
|
|
December 31, 2017
|
$
|
107,934
|
|
December 31, 2016
|
$
|
113,032
|
|
1)
|
Local core deposits are the Company’s primary funding source. The Company works to attract these deposits through service-related and competitive pricing tactics. Other liquidity funding sources are considered if local core deposits are not attractive because of maturity or pricing.
|
2)
|
Unsecured Federal Funds lines with correspondent banks may be used to fund short-term peaks in loan demand or deposit run-off. Currently, unsecured borrowing lines with correspondents are limited and may not be reliable for long periods of time or in times of economic stress.
|
3)
|
Other funding sources such as secured credit lines with the Federal Home Loan Bank or the Federal Reserve may be used for longer periods. The Company collateralized these available lines with a combination of investment securities and pledged loans. The Company has utilized specific loan pledging with both the FHLB and the Federal Reserve to better ensure the continued availability of those lines of credit.
|
4)
|
The Company presently has a Discount Window facility available from the Federal Reserve Bank of San Francisco collateralized with loans as discussed above. At
December 31, 2018
, the Company had available credit of
$287,446,000
from the Federal Reserve based upon the loans pledged at that date. The Federal Reserve will monitor use of the Discount Window closely given the current status of the Company and the economy as a whole. This credit facility may not be competitively priced under certain economic conditions. As such, the Company does not expect to use this facility except for short periods, but does consider this to be a key contingency funding source.
|
5)
|
As long as the Bank remains “Well Capitalized,” the Company may rely on brokered deposits when core deposit rates are higher in the marketplace or maturity structures are not desirable. The Company’s current policy limit for brokered deposits is 25% of total deposits. The Company may also utilize other wholesale deposit sources such as memberships that advertise the Bank’s time deposit rates to other subscribers, typically banks and credit unions. The Company’s current policy limit on other wholesale deposits is 10% of total deposits.
|
6)
|
The Bank may sell whole loans or participations in loans to provide additional liquidity. During economic downturns or other crises events, these funding sources may be difficult to achieve in a short period of time or at a reasonable price. As such, this strategy is better used as a long-term asset/liability management tool to effectively balance assets and liabilities to reduce liquidity risk.
|
7)
|
The Company currently has Bank-Owned Life Insurance (BOLI) and Corporate-Owned Life Insurance (COLI) policies issued by highly rated insurance companies which may be sold to increase liquidity.
|
8)
|
The Company owns certain real estate including its administration building and several of its branches. These may be sold and vacated or leased back from the purchaser after sale to provide additional liquidity if needed. The sales process may require substantial time to complete, and may have an adverse impact on earnings depending on market rates and other factors at the time of sale.
|
9)
|
Investments near maturity may be sold to meet temporary funding needs but may need to be replaced to maintain liquidity ratios within acceptable limits. At the current time approximately half of the investment portfolio is pledged to secure public deposits and borrowing lines. The Company seeks to maintain an investment-grade securities portfolio to ensure quality collateral for pledging against borrowing lines of credit as well as to provide liquidity in times of needs.
|
|
Ratio at December 31, 2018
|
|
Ratio at December 31, 2017
|
|
Minimum for Capital Adequacy
|
|
Minimum requirement to be "Well Capitalized"
|
Total capital to risk weighted assets
|
|
|
|
|
|
|
|
Company
|
17.80%
|
|
17.54%
|
|
8.00%
|
|
N/A
|
Bank
|
17.70%
|
|
17.31%
|
|
8.00%
|
|
10.00%
|
Tier 1 capital to risk-weighted assets
|
|
|
|
|
|
|
|
Company
|
16.55%
|
|
16.29%
|
|
6.00%
|
|
N/A
|
Bank
|
16.45%
|
|
16.06%
|
|
6.00%
|
|
8.00%
|
Common equity tier 1 capital to risk-weighted assets
|
|
|
|
|
|
|
|
Company
|
15.15%
|
|
14.81%
|
|
4.50%
|
|
N/A
|
Bank
|
16.45%
|
|
16.06%
|
|
4.50%
|
|
6.50%
|
Tier 1 capital to adjusted average assets (leverage)
|
|
|
|
|
|
|
|
Company
|
12.15%
|
|
13.01%
|
|
4.00%
|
|
N/A
|
Bank
|
12.16%
|
|
12.90%
|
|
4.00%
|
|
5.00%
|
(In thousands except shares)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Cash and noninterest-bearing deposits in other banks
|
$
|
28,949
|
|
|
$
|
35,237
|
|
Due from Federal Reserve Bank ("FRB")
|
191,388
|
|
|
72,697
|
|
||
Cash and cash equivalents
|
220,337
|
|
|
107,934
|
|
||
Investment securities (at fair value)
|
|
|
|
||||
Available for sale ("AFS") securities
|
66,426
|
|
|
41,985
|
|
||
Marketable equity securities
|
3,659
|
|
|
3,737
|
|
||
Total investment securities
|
70,085
|
|
|
45,722
|
|
||
Loans
|
587,933
|
|
|
601,351
|
|
||
Unearned fees and unamortized loan origination (fees) costs, net
|
(119
|
)
|
|
1,039
|
|
||
Allowance for credit losses
|
(8,395
|
)
|
|
(9,267
|
)
|
||
Net loans
|
579,419
|
|
|
593,123
|
|
||
Premises and equipment – net
|
9,837
|
|
|
10,165
|
|
||
Accrued interest receivable
|
8,341
|
|
|
6,526
|
|
||
Other real estate owned (OREO)
|
5,745
|
|
|
5,745
|
|
||
Goodwill
|
4,488
|
|
|
4,488
|
|
||
Deferred tax assets - net
|
3,174
|
|
|
2,389
|
|
||
Cash surrender value of life insurance
|
20,244
|
|
|
19,752
|
|
||
Investment in limited partnerships
|
1,911
|
|
|
1,601
|
|
||
Other assets
|
9,477
|
|
|
8,391
|
|
||
Total assets
|
$
|
933,058
|
|
|
$
|
805,836
|
|
Liabilities & Shareholders' Equity
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
|
||
Deposits
|
|
|
|
|
|
||
Noninterest-bearing
|
$
|
292,720
|
|
|
$
|
307,299
|
|
Interest bearing
|
512,923
|
|
|
380,394
|
|
||
Total deposits
|
805,643
|
|
|
687,693
|
|
||
Accrued interest payable
|
57
|
|
|
44
|
|
||
Other liabilities
|
7,963
|
|
|
7,017
|
|
||
Junior subordinated debentures (at fair value)
|
10,155
|
|
|
9,730
|
|
||
Total liabilities
|
823,818
|
|
|
704,484
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Shareholders' Equity
|
|
|
|
|
|
||
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 16,946,622 at December 31, 2018 and 16,885,615 at December 31, 2017
|
58,624
|
|
|
57,880
|
|
||
Retained earnings
|
49,942
|
|
|
44,182
|
|
||
Accumulated other comprehensive income (loss)
|
674
|
|
|
(710
|
)
|
||
Total shareholders' equity
|
109,240
|
|
|
101,352
|
|
||
Total liabilities and shareholders' equity
|
$
|
933,058
|
|
|
$
|
805,836
|
|
(In thousands except shares and EPS)
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Interest Income:
|
|
|
|
|
|
||||||
Interest and fees on loans
|
$
|
32,383
|
|
|
$
|
30,817
|
|
|
$
|
28,182
|
|
Interest on investment securities
|
1,146
|
|
|
901
|
|
|
825
|
|
|||
Interest on deposits in FRB
|
3,086
|
|
|
1,207
|
|
|
458
|
|
|||
Interest on deposits in other banks
|
—
|
|
|
5
|
|
|
8
|
|
|||
Total interest income
|
36,615
|
|
|
32,930
|
|
|
29,473
|
|
|||
Interest Expense:
|
|
|
|
|
|
|
|
||||
Interest on deposits
|
2,278
|
|
|
1,426
|
|
|
1,167
|
|
|||
Interest on other borrowed funds
|
425
|
|
|
304
|
|
|
242
|
|
|||
Total interest expense
|
2,703
|
|
|
1,730
|
|
|
1,409
|
|
|||
Net Interest Income
|
33,912
|
|
|
31,200
|
|
|
28,064
|
|
|||
(Recovery of Provision) Provision for Credit Losses
|
(1,764
|
)
|
|
24
|
|
|
(21
|
)
|
|||
Net Interest Income after (Recovery of Provision) Provision for Credit Losses
|
35,676
|
|
|
31,176
|
|
|
28,085
|
|
|||
Noninterest Income:
|
|
|
|
|
|
|
|
||||
Customer service fees
|
3,544
|
|
|
3,851
|
|
|
3,792
|
|
|||
Increase in cash surrender value of bank-owned life insurance
|
520
|
|
|
534
|
|
|
530
|
|
|||
Loss on fair value of marketable equity securities
|
(78
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on proceeds from bank-owned life insurance
|
171
|
|
|
—
|
|
|
—
|
|
|||
Loss on fair value of junior subordinated debentures
|
(424
|
)
|
|
(882
|
)
|
|
(518
|
)
|
|||
Other
|
872
|
|
|
803
|
|
|
710
|
|
|||
Total noninterest income
|
4,605
|
|
|
4,306
|
|
|
4,514
|
|
|||
Noninterest Expense:
|
|
|
|
|
|
|
|
||||
Salaries and employee benefits
|
11,721
|
|
|
10,821
|
|
|
10,628
|
|
|||
Occupancy expense
|
4,372
|
|
|
4,254
|
|
|
4,222
|
|
|||
Data processing
|
171
|
|
|
119
|
|
|
148
|
|
|||
Professional fees
|
1,617
|
|
|
1,433
|
|
|
1,493
|
|
|||
Regulatory assessments
|
330
|
|
|
391
|
|
|
767
|
|
|||
Director fees
|
321
|
|
|
289
|
|
|
284
|
|
|||
Correspondent bank service charges
|
63
|
|
|
71
|
|
|
—
|
|
|||
Loss on California tax credit partnership
|
25
|
|
|
109
|
|
|
158
|
|
|||
Net cost (gain) on operation and sale of OREO
|
145
|
|
|
(150
|
)
|
|
263
|
|
|||
Other
|
2,167
|
|
|
2,466
|
|
|
2,382
|
|
|||
Total noninterest expense
|
20,932
|
|
|
19,803
|
|
|
20,345
|
|
|||
Income Before Provision for Taxes
|
19,349
|
|
|
15,679
|
|
|
12,254
|
|
|||
Provision for Taxes on Income
|
5,332
|
|
|
7,039
|
|
|
4,869
|
|
|||
Net Income
|
$
|
14,017
|
|
|
$
|
8,640
|
|
|
$
|
7,385
|
|
Net Income per common share
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.83
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Diluted
|
$
|
0.83
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Shares on which net income per common share were based
|
|
|
|
|
|
|
|
|
|||
Basic
|
16,899,960
|
|
|
16,885,587
|
|
|
16,881,379
|
|
|||
Diluted
|
16,938,772
|
|
|
16,904,915
|
|
|
16,889,027
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
$
|
14,017
|
|
|
$
|
8,640
|
|
|
$
|
7,385
|
|
|
|
|
|
|
|
||||||
Unrealized holdings (losses) gains on securities
|
(362
|
)
|
|
16
|
|
|
(648
|
)
|
|||
Unrealized gains (losses) on unrecognized post retirement costs
|
5
|
|
|
(6
|
)
|
|
(22
|
)
|
|||
Unrealized gain on junior subordinated debentures
|
32
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive (loss) income, before tax
|
(325
|
)
|
|
10
|
|
|
(670
|
)
|
|||
Tax benefit (expense) related to securities
|
54
|
|
|
(6
|
)
|
|
259
|
|
|||
Tax (expense) benefit related to unrecognized post-retirement costs
|
(2
|
)
|
|
3
|
|
|
9
|
|
|||
Tax expense related to junior subordinated debentures
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||
Total other comprehensive (loss) income
|
(282
|
)
|
|
7
|
|
|
(402
|
)
|
|||
Comprehensive Income
|
$
|
13,735
|
|
|
$
|
8,647
|
|
|
$
|
6,983
|
|
|
Common Stock
|
|
|
|
|
|
|
|||||||||||
(In thousands except shares)
|
Number of Shares
|
|
Amount
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Total
|
|||||||||
Balance January 1, 2016 (1)
|
16,051,406
|
|
|
$
|
52,572
|
|
|
$
|
37,265
|
|
|
$
|
(202
|
)
|
|
$
|
89,635
|
|
(1) Excludes 15,019 unvested restricted shares
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
(402
|
)
|
|
(402
|
)
|
|||||||
Common stock dividends
|
651,725
|
|
|
3,949
|
|
|
(3,949
|
)
|
|
|
|
—
|
|
|||||
Stock options exercised
|
2,463
|
|
|
6
|
|
|
|
|
|
|
6
|
|
||||||
Stock-based compensation expense
|
|
|
30
|
|
|
|
|
|
|
30
|
|
|||||||
Net Income
|
|
|
|
|
7,385
|
|
|
|
|
7,385
|
|
|||||||
Balance December 31, 2016 (2)
|
16,705,594
|
|
|
$
|
56,557
|
|
|
$
|
40,701
|
|
|
$
|
(604
|
)
|
|
$
|
96,654
|
|
(2) Excludes 12,015 unvested restricted shares
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
7
|
|
|
7
|
|
||||
Reclassification of income tax effects from accumulated other comprehensive income
|
|
|
|
|
113
|
|
|
(113
|
)
|
|
—
|
|
||||||
Common stock dividends
|
167,082
|
|
|
1,220
|
|
|
(1,220
|
)
|
|
|
|
|
—
|
|
||||
Stock options exercised
|
2,514
|
|
|
6
|
|
|
|
|
|
|
|
6
|
|
|||||
Dividends on common stock ($0.17 per share)
|
|
|
|
|
(2,870
|
)
|
|
|
|
(2,870
|
)
|
|||||||
Dividends payable
($0.07 per share)
|
|
|
|
|
(1,182
|
)
|
|
|
|
(1,182
|
)
|
|||||||
Restricted stock units released
|
10,425
|
|
|
|
|
|
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
|
|
97
|
|
|
|
|
|
|
|
|
97
|
|
||||
Net Income
|
|
|
|
|
|
|
8,640
|
|
|
|
|
|
8,640
|
|
||||
Balance December 31, 2017 (3)
|
16,885,615
|
|
|
$
|
57,880
|
|
|
$
|
44,182
|
|
|
$
|
(710
|
)
|
|
$
|
101,352
|
|
(3) Excludes 46,511 unvested restricted shares
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Adoption of ASU 2016-01: reclassification of TRUPS to accumulated other comprehensive income
|
|
|
|
|
(1,482
|
)
|
|
1,482
|
|
|
—
|
|
||||||
Adoption of ASU 2016-01: recognition of previously unrealized losses within marketable equity securities
|
|
|
|
|
(184
|
)
|
|
184
|
|
|
—
|
|
||||||
Adjusted balance at January 1, 2018
|
16,885,615
|
|
|
$
|
57,880
|
|
|
$
|
42,516
|
|
|
$
|
956
|
|
|
$
|
101,352
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
(282
|
)
|
|
(282
|
)
|
||||
Dividends on common stock ($0.28 per share)
|
|
|
|
|
(4,732
|
)
|
|
|
|
(4,732
|
)
|
|||||||
Dividends payable ($0.11 per share)
|
|
|
|
|
(1,859
|
)
|
|
|
|
(1,859
|
)
|
|||||||
Restricted stock units released
|
61,007
|
|
|
|
|
|
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
|
|
|
744
|
|
|
|
|
|
|
|
|
744
|
|
||||
Net Income
|
|
|
|
|
|
|
14,017
|
|
|
|
|
|
14,017
|
|
||||
Balance December 31, 2018 (4)
|
16,946,622
|
|
|
$
|
58,624
|
|
|
$
|
49,942
|
|
|
$
|
674
|
|
|
$
|
109,240
|
|
(4) Excludes 59,217 unvested restricted shares
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net Income
|
$
|
14,017
|
|
|
$
|
8,640
|
|
|
$
|
7,385
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
||||
(Recovery of provision) provision for credit losses
|
(1,764
|
)
|
|
24
|
|
|
(21
|
)
|
|||
Depreciation and amortization
|
1,352
|
|
|
1,335
|
|
|
1,428
|
|
|||
Amortization of investment securities
|
631
|
|
|
534
|
|
|
481
|
|
|||
Accretion of investment securities
|
(5
|
)
|
|
(8
|
)
|
|
(28
|
)
|
|||
Increase in accrued interest receivable
|
(1,815
|
)
|
|
(2,631
|
)
|
|
(1,676
|
)
|
|||
Increase (decrease) in accrued interest payable
|
13
|
|
|
(32
|
)
|
|
47
|
|
|||
Decrease (increase) in unearned fees
|
1,159
|
|
|
36
|
|
|
(1,017
|
)
|
|||
(Increase) decrease in income taxes receivable
|
(316
|
)
|
|
(734
|
)
|
|
957
|
|
|||
Stock-based compensation expense
|
744
|
|
|
97
|
|
|
30
|
|
|||
(Recovery of provision) provision for deferred income taxes
|
(785
|
)
|
|
906
|
|
|
2,199
|
|
|||
Decrease in accounts payable and accrued liabilities
|
(940
|
)
|
|
(39
|
)
|
|
(146
|
)
|
|||
Gain on sale of investment in limited partnership
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||
Gain on sale of other real estate owned
|
—
|
|
|
(336
|
)
|
|
(37
|
)
|
|||
Unrealized loss on marketable equity securities
|
78
|
|
|
—
|
|
|
—
|
|
|||
Loss on fair value option of junior subordinated debentures
|
424
|
|
|
882
|
|
|
518
|
|
|||
Gain on bank owned life insurance
|
(171
|
)
|
|
—
|
|
|
—
|
|
|||
Increase in surrender value of life insurance
|
(520
|
)
|
|
(534
|
)
|
|
(530
|
)
|
|||
Loss on tax credit limited partnership interest
|
25
|
|
|
109
|
|
|
158
|
|
|||
Gain on disposal of premises and equipment
|
(29
|
)
|
|
(73
|
)
|
|
—
|
|
|||
Net increase in other assets
|
(974
|
)
|
|
(618
|
)
|
|
(290
|
)
|
|||
Net cash provided by operating activities
|
11,124
|
|
|
7,555
|
|
|
9,458
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
||||
Net decrease in interest-bearing deposits with banks
|
—
|
|
|
650
|
|
|
878
|
|
|||
Purchase of correspondent bank stock
|
(23
|
)
|
|
(495
|
)
|
|
(101
|
)
|
|||
Maturities and calls on available-for-sale securities
|
—
|
|
|
—
|
|
|
2,600
|
|
|||
Principal payments on available-for-sale securities
|
9,678
|
|
|
11,260
|
|
|
4,687
|
|
|||
Purchases of available-for-sale securities
|
(34,921
|
)
|
|
—
|
|
|
(34,987
|
)
|
|||
Purchase of bank-owned life insurance/company-owned life insurance
|
—
|
|
|
—
|
|
|
(220
|
)
|
|||
Net decrease (increase) in loans
|
14,310
|
|
|
(31,251
|
)
|
|
(51,465
|
)
|
|||
Cash proceeds from sales of other real estate owned
|
—
|
|
|
1,062
|
|
|
3,378
|
|
|||
Payoff of senior liens on other real estate owned
|
—
|
|
|
—
|
|
|
(705
|
)
|
|||
Proceeds from Bank Owned Life Insurance
|
376
|
|
|
—
|
|
|
—
|
|
|||
Capital expenditures for premises and equipment
|
(1,024
|
)
|
|
(1,128
|
)
|
|
(1,073
|
)
|
|||
(Investment in) distributions from limited partnership
|
(335
|
)
|
|
(954
|
)
|
|
1
|
|
|||
Net cash used in investing activities
|
(11,939
|
)
|
|
(20,856
|
)
|
|
(77,007
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
||||
Net increase in demand deposit and savings accounts
|
100,349
|
|
|
49,226
|
|
|
20,993
|
|
|||
Net increase (decrease) in time deposits
|
17,601
|
|
|
(38,159
|
)
|
|
33,831
|
|
|||
Proceeds from exercise of stock options
|
—
|
|
|
6
|
|
|
6
|
|
|||
Dividends on common stock
|
(4,732
|
)
|
|
(2,870
|
)
|
|
—
|
|
|||
Net cash provided by financing activities
|
113,218
|
|
|
8,203
|
|
|
54,830
|
|
|||
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents
|
112,403
|
|
|
(5,098
|
)
|
|
(12,719
|
)
|
|||
Cash and cash equivalents at beginning of year
|
107,934
|
|
|
113,032
|
|
|
125,751
|
|
|||
Cash and cash equivalents at end of year
|
$
|
220,337
|
|
|
$
|
107,934
|
|
|
$
|
113,032
|
|
1.
|
Organization and Summary of Significant Accounting and Reporting Policies
|
a.
|
Cash and cash equivalents
– Cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold and repurchase agreements. At times throughout the year, balances can exceed FDIC insurance limits. Generally, federal funds sold and repurchase agreements are sold for one-day periods. The Bank did not have any repurchase agreements during
2018
or
2017
, or at
December 31, 2018 and 2017
. All cash and cash equivalents have maturities when purchased of three months or less.
|
b.
|
Securities
- Debt and equity securities classified as available for sale are reported at fair value, with unrealized gains and losses excluded from net income and reported, net of tax, as a separate component of comprehensive income and shareholders’ equity. Debt securities classified as held to maturity are carried at amortized cost. Gains and losses on disposition are reported using the specific identification method for the adjusted basis of the securities sold. Premiums and discounts are recognized in interest income using the interest method over the period to maturity.
|
c.
|
Loans
- Interest income on loans is credited to income as earned and is calculated by using the simple interest method on the daily balance of the principal amounts outstanding. Loans are placed on non-accrual status when principal or interest is past due for
90
days and/or when management believes the collection of amounts due is doubtful. For loans placed on nonaccrual status, the accrued and unpaid interest receivable may be reversed at management's discretion based upon management's assessment of collectability, and interest is thereafter credited to principal to the extent necessary to eliminate doubt as to the collectability of the net carrying amount of the loan.
|
d.
|
Allowance for Credit Losses and
Reserve for Unfunded Loan Commitments
- The allowance for credit losses is maintained to provide for losses that can reasonably be anticipated. The allowance is based on ongoing quarterly assessments of the probable losses inherent in the loan portfolio, and to a lesser extent, unfunded loan commitments. The reserve for unfunded loan commitments is a liability on the Company’s consolidated financial statements and is included in other liabilities. The liability is computed using a methodology similar to that used to determine the allowance for credit losses, modified to take into account the probability of a drawdown on the commitment.
|
e.
|
Premises and Equipment
- Premises and equipment are carried at cost less accumulated depreciation. Depreciation expense is computed principally on the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:
|
Buildings
|
31 years
|
Furniture and equipment
|
3-7 Years
|
f.
|
Other Real Estate Owned
- Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at fair value of the property, less estimated costs to sell. The excess, if any, of the loan amount over the fair value is charged to the allowance for credit losses. Subsequent declines in the fair value of other real estate owned, along with related revenue and expenses from operations, are charged to noninterest expense.
|
g.
|
Intangible Assets and Goodwill
- Intangible assets are comprised of core deposit intangibles, other specific identifiable intangibles, and goodwill acquired in branch acquisitions where the consideration given exceeded the fair value of the net assets acquired.
|
h.
|
Income Taxes
- Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities using the liability method, and are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. For the use in estimates the enacted tax rate of the period is utilized.
|
i.
|
Net Income per Share
- Basic income per common share is computed based on the weighted average number of common shares outstanding. Diluted income per share includes the effect of stock options and other potentially dilutive securities using the treasury stock method to the extent they have a dilutive impact. Net income per share has been retroactively adjusted for all stock dividends declared. The number of potentially dilutive common shares included in quarterly diluted income per share is computed using the average market prices during the three months included in the reporting period under the treasury stock method. The number of potentially dilutive common shares included in year-to-date diluted income per share is a year-to-date weighted average of potentially dilutive common shares included in each quarterly diluted net income per share computation.
|
j.
|
Cash Flow Reporting
- For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreements to resell. Federal funds and securities purchased under agreements to resell are generally sold for one-day periods. Net cash flows are reported for interest-bearing deposits with other banks, loans to customers, and deposits held for customers.
|
k.
|
Transfers of Financial Assets
- Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
|
l.
|
Advertising Costs
- The Company expenses marketing costs as they are incurred. Advertising expense was
$85,000
,
$154,000
, and
$126,000
for the years ended
December 31, 2018, 2017, and 2016
, respectively.
|
m.
|
Stock Based Compensation -
The Company has a stock-based employee compensation plan, which is described more fully in Note 11. The Company accounts for all share-based payments to employees, including grants of employee stock options and restricted stock units and awards, to be recognized in the financial statements based on the grant date fair value of the award. The fair value is amortized over the requisite service period (generally the vesting period). Included in salaries and employee benefits for the years ended
December 31, 2018, 2017, and 2016
are
$744,000
,
$97,000
, an
$30,000
, respectively, of share-based compensation. The related tax benefit, recorded in the provision for income taxes, was not significant. All share data contained within the financial statements has been retroactively restated for stock based transactions (i.e. stock splits and stock dividends.)
|
n.
|
Federal Home Loan Bank stock and Federal Reserve Stock
-
As a member of the Federal Home Loan Bank (FHLB), the Company is required to maintain an investment in capital stock of the FHLB. In addition, as a member of the Federal Reserve Bank (FRB), the Company is required to maintain an investment in capital stock of the FRB. The investments in both the FHLB and the FRB are carried at cost, which approximates their fair value, in the accompanying consolidated balance sheets under other assets and are subject to certain redemption requirements by the FHLB and FRB. Stock redemptions are at the discretion of the FHLB and FRB.
|
o.
|
Comprehensive Income
- Comprehensive income is comprised of net income and other comprehensive income. Other comprehensive income includes items recorded directly to equity, such as unrealized gains and losses on securities available-for-sale, unrecognized costs of salary continuation defined benefit plans, and unrealized gains and losses on trust preferred securities. Comprehensive income is presented in the Consolidated Statements of Other Comprehensive Income.
|
p.
|
Segment Reporting
- The Company's operations are solely in the financial services industry and include providing to its customers traditional banking and other financial services. The Company operates primarily in the San Joaquin Valley region of California. Management makes operating decisions and assesses performance based on an ongoing review of the Company's consolidated financial results. Therefore, the Company has a single operating segment for financial reporting purposes.
|
q.
|
Revenue from Contacts with Customers
- The Company records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation.
|
r.
|
New Accounting Standards:
|
2.
|
Investment Securities
|
(In thousands)
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
||||||||
December 31, 2018
|
|
|
|
||||||||||||
Securities available for sale:
|
|
|
|
||||||||||||
U.S. Government agencies
|
$
|
36,665
|
|
|
$
|
117
|
|
|
(255
|
)
|
|
$
|
36,527
|
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
30,289
|
|
|
51
|
|
|
(441
|
)
|
|
29,899
|
|
||||
Total securities available for sale
|
$
|
66,954
|
|
|
$
|
168
|
|
|
$
|
(696
|
)
|
|
$
|
66,426
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government agencies
|
$
|
19,683
|
|
|
$
|
312
|
|
|
$
|
(41
|
)
|
|
$
|
19,954
|
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
22,391
|
|
|
56
|
|
|
(416
|
)
|
|
22,031
|
|
||||
Total securities available for sale
|
$
|
42,074
|
|
|
$
|
368
|
|
|
$
|
(457
|
)
|
|
$
|
41,985
|
|
|
December 31, 2018
|
||||||
|
Amortized Cost
|
|
Fair Value (Carrying Amount)
|
||||
(In thousands)
|
|||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
—
|
|
|
—
|
|
||
Due after five years through ten years
|
4,721
|
|
|
4,710
|
|
||
Due after ten years
|
31,944
|
|
|
31,816
|
|
||
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
30,289
|
|
|
29,900
|
|
||
|
$
|
66,954
|
|
|
$
|
66,426
|
|
|
Less than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
(In thousands)
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
|
Fair Value (Carrying Amount)
|
|
Unrealized Losses
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
||||||||||||||||||
Securities available for sale:
|
|
|
|
|
|
||||||||||||||||||
U.S. Government agencies
|
$
|
19,085
|
|
|
$
|
(148
|
)
|
|
$
|
6,874
|
|
|
$
|
(107
|
)
|
|
$
|
25,959
|
|
|
$
|
(255
|
)
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
—
|
|
|
—
|
|
|
16,681
|
|
|
(441
|
)
|
|
16,681
|
|
|
(441
|
)
|
||||||
Total impaired securities
|
$
|
19,085
|
|
|
$
|
(148
|
)
|
|
$
|
23,555
|
|
|
$
|
(548
|
)
|
|
$
|
42,640
|
|
|
$
|
(696
|
)
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Government agencies
|
$
|
1,728
|
|
|
$
|
(3
|
)
|
|
$
|
6,625
|
|
|
$
|
(38
|
)
|
|
$
|
8,353
|
|
|
$
|
(41
|
)
|
U.S. Government sponsored entities & agencies collateralized by mortgage obligations
|
7,483
|
|
|
(154
|
)
|
|
13,583
|
|
|
(262
|
)
|
|
21,066
|
|
|
(416
|
)
|
||||||
Total impaired securities
|
$
|
9,211
|
|
|
$
|
(157
|
)
|
|
$
|
20,208
|
|
|
$
|
(300
|
)
|
|
$
|
29,419
|
|
|
$
|
(457
|
)
|
In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
|||||
Commercial and business loans
|
$
|
55,929
|
|
|
$
|
46,065
|
|
|
Government program loans
|
1,049
|
|
|
961
|
|
|||
Total commercial and industrial
|
56,978
|
|
|
47,026
|
|
|||
Real estate – mortgage:
|
|
|
|
|
|
|||
Commercial real estate
|
229,448
|
|
|
221,032
|
|
|||
Residential mortgages
|
59,431
|
|
|
84,804
|
|
|||
Home improvement and home equity loans
|
321
|
|
|
457
|
|
|||
Total real estate mortgage
|
289,200
|
|
|
306,293
|
|
|||
Real estate construction and development
|
108,795
|
|
|
122,970
|
|
|||
Agricultural
|
61,149
|
|
|
59,481
|
|
|||
Installment and student loans
|
71,811
|
|
|
65,581
|
|
|||
Total loans
|
$
|
587,933
|
|
|
$
|
601,351
|
|
•
|
Commercial real estate mortgage loans comprise the largest segment of this loan category and are available on all types of income producing and commercial properties, including: office buildings, shopping centers; apartments and motels; owner occupied buildings; manufacturing facilities and more. Commercial real estate mortgage loans can also be used to refinance existing debt. Although real estate associated with the business is the primary collateral for commercial real estate mortgage loans, the underlying real estate is not the source of repayment. Commercial real estate loans are made under the premise that the loan will be repaid from the borrower's business operations, rental income associated with the real property, or personal assets.
|
•
|
Residential mortgage loans are provided to individuals to finance or refinance single-family residences. Residential mortgages are not a primary business line offered by the Company, and a majority are conventional mortgages that were purchased as a pool. Most residential mortgages originated by the Company are of a shorter term than conventional mortgages, with maturities ranging from
three
to
fifteen
years on average.
|
•
|
Home Improvement and Home Equity loans comprise a relatively small portion of total real estate mortgage loans, and are offered to borrowers for the purpose of home improvements, although the proceeds may be used for other purposes. Home equity loans are generally secured by junior trust deeds, but may be secured by 1
st
trust deeds.
|
|
December 31,
|
|||||
(In thousands)
|
2018
|
2017
|
||||
Aggregate amount outstanding, beginning of year
|
$
|
3,729
|
|
$
|
5,838
|
|
New loans or advances during year
|
4,380
|
|
440
|
|
||
Repayments during year
|
(701
|
)
|
(2,549
|
)
|
||
Aggregate amount outstanding, end of year
|
$
|
7,408
|
|
$
|
3,729
|
|
Undisbursed commitments, end of year
|
$
|
4,740
|
|
$
|
7,470
|
|
December 31, 2018
|
Loans
30-60 Days Past Due
|
|
Loans
61-89 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
|
||||||||||||||
Commercial and business loans
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55,929
|
|
|
$
|
55,929
|
|
|
$
|
—
|
|
Government program loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,049
|
|
|
1,049
|
|
|
—
|
|
|||||||
Total commercial and industrial
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,978
|
|
|
56,978
|
|
|
—
|
|
|||||||
Commercial real estate loans
|
—
|
|
|
—
|
|
|
389
|
|
|
389
|
|
|
229,059
|
|
|
229,448
|
|
|
—
|
|
|||||||
Residential mortgages
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
59,399
|
|
|
59,431
|
|
|
—
|
|
|||||||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
321
|
|
|
321
|
|
|
—
|
|
|||||||
Total real estate mortgage
|
32
|
|
|
—
|
|
|
389
|
|
|
421
|
|
|
288,779
|
|
|
289,200
|
|
|
—
|
|
|||||||
Real estate construction and development loans
|
—
|
|
|
—
|
|
|
8,825
|
|
|
8,825
|
|
|
99,970
|
|
|
108,795
|
|
|
—
|
|
|||||||
Agricultural loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61,149
|
|
|
61,149
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Installment and student loans
|
130
|
|
|
139
|
|
|
—
|
|
|
269
|
|
|
71,362
|
|
|
71,631
|
|
|
—
|
|
|||||||
Overdraft protection lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
41
|
|
|
—
|
|
|||||||
Overdrafts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|
139
|
|
|
—
|
|
|||||||
Total installment and student loans
|
130
|
|
|
139
|
|
|
—
|
|
|
269
|
|
|
71,542
|
|
|
71,811
|
|
|
—
|
|
|||||||
Total loans
|
$
|
162
|
|
|
$
|
139
|
|
|
$
|
9,214
|
|
|
$
|
9,515
|
|
|
$
|
578,418
|
|
|
$
|
587,933
|
|
|
$
|
—
|
|
December 31, 2017
|
Loans
30-60 Days Past Due
|
|
Loans
61-89 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
|
||||||||||||||
Commercial and business loans
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
212
|
|
|
$
|
45,853
|
|
|
$
|
46,065
|
|
|
$
|
—
|
|
Government program loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
961
|
|
|
961
|
|
|
—
|
|
|||||||
Total commercial and industrial
|
—
|
|
|
—
|
|
|
212
|
|
|
212
|
|
|
46,814
|
|
|
47,026
|
|
|
—
|
|
|||||||
Commercial real estate loans
|
779
|
|
|
—
|
|
|
—
|
|
|
779
|
|
|
220,253
|
|
|
221,032
|
|
|
—
|
|
|||||||
Residential mortgages
|
—
|
|
|
—
|
|
|
94
|
|
|
94
|
|
|
84,710
|
|
|
84,804
|
|
|
—
|
|
|||||||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
457
|
|
|
457
|
|
|
—
|
|
|||||||
Total real estate mortgage
|
779
|
|
|
—
|
|
|
94
|
|
|
873
|
|
|
305,420
|
|
|
306,293
|
|
|
—
|
|
|||||||
Real estate construction and development loans
|
—
|
|
|
—
|
|
|
360
|
|
|
360
|
|
|
122,610
|
|
|
122,970
|
|
|
360
|
|
|||||||
Agricultural loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,481
|
|
|
59,481
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,446
|
|
|
65,446
|
|
|
125
|
|
|||||||
Overdraft protection lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
|
—
|
|
|||||||
Overdrafts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
97
|
|
|
—
|
|
|||||||
Total installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,581
|
|
|
65,581
|
|
|
125
|
|
|||||||
Total loans
|
$
|
779
|
|
|
$
|
—
|
|
|
$
|
666
|
|
|
$
|
1,445
|
|
|
$
|
599,906
|
|
|
$
|
601,351
|
|
|
$
|
485
|
|
-
|
When there is doubt regarding the full repayment of interest and principal.
|
-
|
When principal and/or interest on the loan has been in default for a period of
90
-days or more, unless the asset is both well secured and in the process of collection that will result in repayment in the near future.
|
-
|
When the loan is identified as having loss elements and/or is risk rated "8" Doubtful.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Commercial and business loans
|
$
|
—
|
|
|
$
|
212
|
|
Government program loans
|
—
|
|
|
—
|
|
||
Total commercial and industrial
|
—
|
|
|
212
|
|
||
|
|
|
|
||||
Commercial real estate loans
|
389
|
|
|
454
|
|
||
Residential mortgages
|
—
|
|
|
288
|
|
||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
||
Total real estate mortgage
|
389
|
|
|
742
|
|
||
|
|
|
|
||||
Real estate construction and development loans
|
11,663
|
|
|
4,342
|
|
||
Agricultural loans
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Installment and student loans
|
—
|
|
|
—
|
|
||
Total installment and student loans
|
—
|
|
|
—
|
|
||
Total loans
|
$
|
12,052
|
|
|
$
|
5,296
|
|
-
|
For loans secured by collateral including real estate and equipment, the fair value of the collateral less selling costs will determine the carrying value of the loan. The difference between the recorded investment in the loan and the fair value, less selling costs, determines the amount of impairment. The Company uses the measurement method based on fair value of collateral when the loan is collateral dependent and foreclosure is probable. For loans that are not considered collateral dependent, a discounted cash flow methodology is used.
|
-
|
The discounted cash flow method of measuring the impairment of a loan is used for impaired loans that are not considered to be collateral dependent. Under this method, the Company assesses both the amount and timing of cash flows expected from impaired loans. The estimated cash flows are discounted using the loan's effective interest rate. The difference between the amount of the loan on the Bank's books and the discounted cash flow amounts determines the amount of impairment to be provided. This method is used for most of the Company’s troubled debt restructurings or other impaired loans where some payment stream is being collected.
|
-
|
The observable market price method of measuring the impairment of a loan is only used by the Company when the sale of loans or a loan is in process.
|
December 31, 2018
|
Unpaid
Contractual
Principal Balance
|
|
Recorded
Investment
With No Allowance (1)
|
|
Recorded
Investment
With Allowance (1)
|
|
Total
Recorded Investment
|
|
Related Allowance
|
|
Average
Recorded Investment (2)
|
|
Interest Recognized (2)
|
||||||||||||||
Commercial and business loans
|
$
|
2,513
|
|
|
$
|
470
|
|
|
$
|
2,054
|
|
|
$
|
2,524
|
|
|
$
|
787
|
|
|
$
|
2,955
|
|
|
$
|
179
|
|
Government program loans
|
291
|
|
|
292
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|
254
|
|
|
20
|
|
|||||||
Total commercial and industrial
|
2,804
|
|
|
762
|
|
|
2,054
|
|
|
2,816
|
|
|
787
|
|
|
3,209
|
|
|
199
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial real estate loans
|
1,305
|
|
|
389
|
|
|
919
|
|
|
1,308
|
|
|
394
|
|
|
1,370
|
|
|
60
|
|
|||||||
Residential mortgages
|
2,028
|
|
|
391
|
|
|
1,646
|
|
|
2,037
|
|
|
75
|
|
|
2,412
|
|
|
117
|
|
|||||||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total real estate mortgage
|
3,333
|
|
|
780
|
|
|
2,565
|
|
|
3,345
|
|
|
469
|
|
|
3,782
|
|
|
177
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Real estate construction and development loans
|
11,663
|
|
|
11,663
|
|
|
—
|
|
|
11,663
|
|
|
—
|
|
|
9,144
|
|
|
331
|
|
|||||||
Agricultural loans
|
543
|
|
|
—
|
|
|
818
|
|
|
818
|
|
|
520
|
|
|
1,014
|
|
|
81
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Installment and student loans
|
41
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
48
|
|
|
5
|
|
|||||||
Total installment and student loans
|
41
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
48
|
|
|
5
|
|
|||||||
Total impaired loans
|
$
|
18,384
|
|
|
$
|
13,246
|
|
|
$
|
5,437
|
|
|
$
|
18,683
|
|
|
$
|
1,776
|
|
|
$
|
17,197
|
|
|
$
|
793
|
|
December 31, 2017
|
Unpaid
Contractual
Principal Balance
|
|
Recorded
Investment With No Allowance (1) |
|
Recorded
Investment With Allowance (1) |
|
Total
Recorded Investment |
|
Related Allowance
|
|
Average
Recorded Investment (2) |
|
Interest Recognized (2)
|
||||||||||||||
Commercial and business loans
|
$
|
3,255
|
|
|
$
|
381
|
|
|
$
|
2,887
|
|
|
$
|
3,268
|
|
|
$
|
534
|
|
|
$
|
3,791
|
|
|
$
|
229
|
|
Government program loans
|
49
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
219
|
|
|
5
|
|
|||||||
Total commercial and industrial
|
3,304
|
|
|
431
|
|
|
2,887
|
|
|
3,318
|
|
|
534
|
|
|
4,010
|
|
|
234
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Commercial real estate loans
|
1,233
|
|
|
—
|
|
|
1,245
|
|
|
1,245
|
|
|
385
|
|
|
1,138
|
|
|
79
|
|
|||||||
Residential mortgages
|
3,040
|
|
|
1,199
|
|
|
1,852
|
|
|
3,051
|
|
|
103
|
|
|
2,745
|
|
|
142
|
|
|||||||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total real estate mortgage
|
4,273
|
|
|
1,199
|
|
|
3,097
|
|
|
4,296
|
|
|
488
|
|
|
3,883
|
|
|
221
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Real estate construction and development loans
|
5,951
|
|
|
5,972
|
|
|
—
|
|
|
5,972
|
|
|
—
|
|
|
6,660
|
|
|
418
|
|
|||||||
Agricultural loans
|
1,200
|
|
|
1
|
|
|
1,203
|
|
|
1,204
|
|
|
866
|
|
|
1,179
|
|
|
48
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|||||||
Total installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|||||||
Total impaired loans
|
$
|
14,728
|
|
|
$
|
7,603
|
|
|
$
|
7,187
|
|
|
$
|
14,790
|
|
|
$
|
1,888
|
|
|
$
|
15,973
|
|
|
$
|
921
|
|
◦
|
The reduction (absolute or contingent) of the stated interest rate.
|
◦
|
The extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk.
|
◦
|
The reduction (absolute or contingent) of the face amount or maturity amount of debt as stated in the instrument or agreement.
|
◦
|
The reduction (absolute or contingent) of accrued interest.
|
|
Year ended December 31, 2018
|
||||||||||||||||
|
Number of
Contracts
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
Number of Contracts in Default
|
|
Recorded Investment on Defaulted TDRs
|
||||||||
Troubled Debt Restructurings
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and business loans
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Government program loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Commercial real estate term loans
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
393
|
|
|||
Single family residential loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Real estate construction and development loans
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
310
|
|
|||
Agricultural loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Overdraft protection lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total loans
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
703
|
|
|
Year ended December 31, 2017
|
||||||||||||||||
|
Number of
Contracts
|
|
Pre-
Modification
Outstanding
Recorded
Investment
|
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
Number of Contracts in Default
|
|
Recorded Investment on Defaulted TDRs
|
||||||||
Troubled Debt Restructurings
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial and business loans
|
1
|
|
|
$
|
69
|
|
|
$
|
69
|
|
|
—
|
|
|
$
|
—
|
|
Government program loans
|
1
|
|
|
178
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|||
Commercial real estate term loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Single family residential loans
|
2
|
|
|
404
|
|
|
404
|
|
|
—
|
|
|
—
|
|
|||
Home improvement and home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Real estate construction and development loans
|
1
|
|
|
790
|
|
|
790
|
|
|
1
|
|
|
288
|
|
|||
Agricultural loans
|
3
|
|
|
2,112
|
|
|
2,112
|
|
|
—
|
|
|
—
|
|
|||
Installment and student loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Overdraft protection lines
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total loans
|
8
|
|
|
$
|
3,553
|
|
|
$
|
3,553
|
|
|
1
|
|
|
$
|
288
|
|
Twelve Months Ended December 31, 2018
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Residential Mortgages
|
|
Home Improvement and Home Equity
|
|
Real Estate Construction Development
|
|
Agricultural
|
|
Installment
& Student Loans |
|
Total
|
||||||||||||||||
Beginning balance
|
$
|
436
|
|
|
$
|
1,233
|
|
|
$
|
2,542
|
|
|
$
|
—
|
|
|
$
|
5,951
|
|
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
11,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Defaults
|
—
|
|
|
(393
|
)
|
|
—
|
|
|
—
|
|
|
(310
|
)
|
|
—
|
|
|
—
|
|
|
(703
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal (reductions) additions
|
(249
|
)
|
|
511
|
|
|
(513
|
)
|
|
—
|
|
|
(2,803
|
)
|
|
(388
|
)
|
|
—
|
|
|
(3,442
|
)
|
||||||||
Charge-offs
|
(112
|
)
|
|
(46
|
)
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(158
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ending balance
|
$
|
75
|
|
|
$
|
1,305
|
|
|
$
|
2,029
|
|
|
$
|
—
|
|
|
$
|
2,838
|
|
|
$
|
812
|
|
|
$
|
—
|
|
|
$
|
7,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allowance for loan loss
|
$
|
—
|
|
|
$
|
394
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
520
|
|
|
$
|
—
|
|
|
$
|
989
|
|
Twelve Months Ended December 31, 2017
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Residential Mortgages
|
|
Home Improvement and Home Equity
|
|
Real Estate Construction Development
|
|
Agricultural
|
|
Installment
& Student Loans |
|
Total
|
||||||||||||||||
Beginning balance
|
$
|
1,356
|
|
|
$
|
1,454
|
|
|
$
|
2,368
|
|
|
$
|
—
|
|
|
$
|
6,267
|
|
|
$
|
—
|
|
|
$
|
965
|
|
|
$
|
12,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Defaults
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(288
|
)
|
|
—
|
|
|
—
|
|
|
(288
|
)
|
||||||||
Additions
|
247
|
|
|
—
|
|
|
404
|
|
|
—
|
|
|
790
|
|
|
2,112
|
|
|
—
|
|
|
3,553
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Principal (reductions) additions
|
(1,139
|
)
|
|
(221
|
)
|
|
(221
|
)
|
|
—
|
|
|
(818
|
)
|
|
(912
|
)
|
|
(965
|
)
|
|
(4,276
|
)
|
||||||||
Charge-offs
|
(28
|
)
|
|
—
|
|
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(37
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ending balance
|
$
|
436
|
|
|
$
|
1,233
|
|
|
$
|
2,542
|
|
|
$
|
—
|
|
|
$
|
5,951
|
|
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
11,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Allowance for loan loss
|
$
|
9
|
|
|
$
|
385
|
|
|
$
|
109
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
866
|
|
|
$
|
—
|
|
|
$
|
1,369
|
|
-
|
Grades 1 and 2
– These grades include loans which are given to high quality borrowers with high credit quality and sound financial strength. Key financial ratios are generally above industry averages and the borrower’s strong earnings history or net worth. These may be secured by deposit accounts or high-grade investment securities.
|
-
|
Grade 3
– This grade includes loans to borrowers with solid credit quality with minimal risk. The borrower’s balance sheet and financial ratios are generally in line with industry averages, and the borrower has historically demonstrated the ability to manage economic adversity. Real estate and asset-based loans assigned this risk rating must have characteristics, which place them well above the minimum underwriting requirements for those departments. Asset-based borrowers assigned this rating must exhibit extremely favorable leverage and cash flow characteristics, and consistently demonstrate a high level of unused borrowing capacity.
|
-
|
Grades 4 and 5 – These include “pass” grade loans to borrowers of acceptable credit quality and risk. The borrower’s balance sheet and financial ratios may be below industry averages, but above the lowest industry quartile. Leverage is above and liquidity is below industry averages. Inadequacies evident in financial performance and/or management sufficiency are offset by readily available features of support, such as adequate collateral, or good guarantors having the liquid assets and/or cash flow capacity to repay the debt. The borrower may have recognized a loss over
three
or
four
years, however recent earnings trends, while perhaps somewhat cyclical, are improving and cash flows are adequate to cover debt service and fixed obligations. Real estate and asset-borrowers fully comply with all underwriting standards and are performing according to projections would be assigned this rating. These also include grade 5 loans which are “leveraged” or on management’s “watch list.” While still considered pass loans (loans given a grade 5), the borrower’s financial condition, cash flow or operations evidence more than average risk and short term weaknesses, these loans warrant a higher than average level of monitoring, supervision and attention from the Company, but do not reflect credit weakness trends that weaken or inadequately protect the Company’s credit position. Loans with a grade rating of 5 are not normally acceptable as new credits unless they are adequately secured or carry substantial endorser/guarantors.
|
-
|
Grade 6
– This grade includes “special mention” loans which are loans that are currently protected but are potentially weak. This generally is an interim grade classification and should usually be upgraded to an Acceptable rating or downgraded to Substandard within a reasonable time period. Weaknesses in special mention loans may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. Special mention loans are often loans with weaknesses inherent from the loan origination, loan servicing, and perhaps some technical deficiencies. The main theme in special mention credits is the distinct probability that the classification will deteriorate to a more adverse class if the noted deficiencies are not addressed by the loan officer or loan management.
|
-
|
Grade 7
– This grade includes “substandard” loans which are inadequately supported by the current sound net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that may impair the regular liquidation of the debt. Substandard loans exhibit a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Substandard loans also include impaired loans.
|
-
|
Grade 8
- This grade includes “doubtful” loans which exhibit the same characteristics as the Substandard loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing
|
-
|
Grade 9
- This grade includes loans classified “loss” which are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off the asset even though partial recovery may be achieved in the future.
|
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Real Estate Construction and Development
|
|
Agricultural
|
|
Total
|
||||||||||
December 31, 2018
|
|
|
|
|
|||||||||||||||
(In thousands)
|
|
|
|
|
|||||||||||||||
Grades 1 and 2
|
$
|
324
|
|
|
$
|
2,881
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
3,285
|
|
Grade 3
|
—
|
|
|
1,028
|
|
|
—
|
|
|
—
|
|
|
1,028
|
|
|||||
Grades 4 and 5 – pass
|
53,843
|
|
|
222,970
|
|
|
97,132
|
|
|
60,256
|
|
|
434,201
|
|
|||||
Grade 6 – special mention
|
48
|
|
|
2,180
|
|
|
—
|
|
|
—
|
|
|
2,228
|
|
|||||
Grade 7 – substandard
|
2,763
|
|
|
389
|
|
|
11,663
|
|
|
813
|
|
|
15,628
|
|
|||||
Grade 8 – doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
56,978
|
|
|
$
|
229,448
|
|
|
$
|
108,795
|
|
|
$
|
61,149
|
|
|
$
|
456,370
|
|
|
Commercial and Industrial
|
|
Commercial Real Estate
|
|
Real Estate Construction and Development
|
|
Agricultural
|
|
Total
|
||||||||||
December 31, 2017
|
|
|
|
|
|||||||||||||||
(In thousands)
|
|
|
|
|
|||||||||||||||
Grades 1 and 2
|
$
|
342
|
|
|
$
|
2,954
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
3,366
|
|
Grade 3
|
251
|
|
|
1,569
|
|
|
—
|
|
|
—
|
|
|
1,820
|
|
|||||
Grades 4 and 5 – pass
|
43,264
|
|
|
207,568
|
|
|
104,549
|
|
|
56,817
|
|
|
412,198
|
|
|||||
Grade 6 – special mention
|
—
|
|
|
8,487
|
|
|
720
|
|
|
994
|
|
|
10,201
|
|
|||||
Grade 7 – substandard
|
3,169
|
|
|
454
|
|
|
17,701
|
|
|
1,600
|
|
|
22,924
|
|
|||||
Grade 8 – doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
47,026
|
|
|
$
|
221,032
|
|
|
$
|
122,970
|
|
|
$
|
59,481
|
|
|
$
|
450,509
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
Residential Mortgages
|
|
Home
Improvement and Home Equity |
|
Installment and Student Loans
|
|
Total
|
|
Residential Mortgages
|
|
Home
Improvement and Home Equity |
|
Installment and Student Loans
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Not graded
|
$
|
49,563
|
|
|
$
|
300
|
|
|
$
|
70,990
|
|
|
$
|
120,853
|
|
|
$
|
69,249
|
|
|
$
|
433
|
|
|
$
|
63,565
|
|
|
$
|
133,247
|
|
Pass
|
9,186
|
|
|
21
|
|
|
780
|
|
|
9,987
|
|
|
13,899
|
|
|
24
|
|
|
2,011
|
|
|
15,934
|
|
||||||||
Special Mention
|
470
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|
643
|
|
|
—
|
|
|
—
|
|
|
643
|
|
||||||||
Substandard
|
212
|
|
|
—
|
|
|
41
|
|
|
253
|
|
|
1,013
|
|
|
—
|
|
|
5
|
|
|
1,018
|
|
||||||||
Doubtful
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
$
|
59,431
|
|
|
$
|
321
|
|
|
$
|
71,811
|
|
|
$
|
131,563
|
|
|
$
|
84,804
|
|
|
$
|
457
|
|
|
$
|
65,581
|
|
|
$
|
150,842
|
|
December 31, 2018
|
Commercial and Industrial
|
|
Real Estate Mortgage
|
|
Real Estate Construction Development
|
|
Agricultural
|
|
Installment & Student Loans
|
|
Unallocated
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||
Beginning balance
|
$
|
1,408
|
|
|
$
|
1,182
|
|
|
$
|
2,903
|
|
|
$
|
1,631
|
|
|
$
|
887
|
|
|
$
|
1,256
|
|
|
$
|
9,267
|
|
Provision (recovery of provision) for credit losses
|
(739
|
)
|
|
(149
|
)
|
|
(479
|
)
|
|
(500
|
)
|
|
766
|
|
|
(663
|
)
|
|
(1,764
|
)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Charge-offs
|
(98
|
)
|
|
(47
|
)
|
|
—
|
|
|
—
|
|
|
(409
|
)
|
|
—
|
|
|
(554
|
)
|
|||||||
Recoveries
|
1,102
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
315
|
|
|
—
|
|
|
1,446
|
|
|||||||
Net recoveries (charge-offs)
|
1,004
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
892
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ending balance
|
$
|
1,673
|
|
|
$
|
1,015
|
|
|
$
|
2,424
|
|
|
$
|
1,131
|
|
|
$
|
1,559
|
|
|
$
|
593
|
|
|
$
|
8,395
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans individually evaluated for impairment
|
787
|
|
|
469
|
|
|
—
|
|
|
520
|
|
|
—
|
|
|
—
|
|
|
1,776
|
|
|||||||
Loans collectively evaluated for impairment
|
886
|
|
|
546
|
|
|
2,424
|
|
|
611
|
|
|
1,559
|
|
|
593
|
|
|
6,619
|
|
|||||||
Ending balance
|
$
|
1,673
|
|
|
$
|
1,015
|
|
|
$
|
2,424
|
|
|
$
|
1,131
|
|
|
$
|
1,559
|
|
|
$
|
593
|
|
|
$
|
8,395
|
|
December 31, 2017
|
Commercial and Industrial
|
|
Real Estate Mortgage
|
|
Real Estate Construction and Development
|
|
Agricultural
|
|
Installment
|
|
Unallocated
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||
Beginning balance
|
$
|
1,843
|
|
|
$
|
1,430
|
|
|
$
|
3,378
|
|
|
$
|
666
|
|
|
$
|
888
|
|
|
$
|
697
|
|
|
$
|
8,902
|
|
Provision (recovery of provision) for credit losses
|
(493
|
)
|
|
(320
|
)
|
|
(475
|
)
|
|
944
|
|
|
(191
|
)
|
|
559
|
|
|
24
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Charge-offs
|
(122
|
)
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(163
|
)
|
|||||||
Recoveries
|
180
|
|
|
95
|
|
|
—
|
|
|
21
|
|
|
208
|
|
|
—
|
|
|
504
|
|
|||||||
Net recoveries (charge-offs)
|
58
|
|
|
72
|
|
|
—
|
|
|
21
|
|
|
190
|
|
|
—
|
|
|
341
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Ending balance
|
$
|
1,408
|
|
|
$
|
1,182
|
|
|
$
|
2,903
|
|
|
$
|
1,631
|
|
|
$
|
887
|
|
|
$
|
1,256
|
|
|
$
|
9,267
|
|
Period-end amount allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans individually evaluated for impairment
|
534
|
|
|
488
|
|
|
—
|
|
|
866
|
|
|
—
|
|
|
—
|
|
|
1,888
|
|
|||||||
Loans collectively evaluated for impairment
|
874
|
|
|
694
|
|
|
2,903
|
|
|
765
|
|
|
887
|
|
|
1,256
|
|
|
7,379
|
|
|||||||
Ending balance
|
$
|
1,408
|
|
|
$
|
1,182
|
|
|
$
|
2,903
|
|
|
$
|
1,631
|
|
|
$
|
887
|
|
|
$
|
1,256
|
|
|
$
|
9,267
|
|
|
December 31, 2018
|
||||||||||
|
Loans
Individually Evaluated for Impairment |
|
Loans
Collectively Evaluated for Impairment |
|
Total Loans
|
||||||
(In thousands)
|
|
|
|||||||||
Commercial and business loans
|
$
|
2,524
|
|
|
$
|
53,405
|
|
|
$
|
55,929
|
|
Government program loans
|
292
|
|
|
757
|
|
|
1,049
|
|
|||
Total commercial and industrial
|
2,816
|
|
|
54,162
|
|
|
56,978
|
|
|||
|
|
|
|
|
|
||||||
Commercial real estate loans
|
1,308
|
|
|
228,140
|
|
|
229,448
|
|
|||
Residential mortgage loans
|
2,037
|
|
|
57,394
|
|
|
59,431
|
|
|||
Home improvement and home equity loans
|
—
|
|
|
321
|
|
|
321
|
|
|||
Total real estate mortgage
|
3,345
|
|
|
285,855
|
|
|
289,200
|
|
|||
|
|
|
|
|
|
||||||
Real estate construction and development loans
|
11,663
|
|
|
97,132
|
|
|
108,795
|
|
|||
|
|
|
|
|
|
||||||
Agricultural loans
|
818
|
|
|
60,331
|
|
|
61,149
|
|
|||
|
|
|
|
|
|
||||||
Installment and student loans
|
41
|
|
|
71,770
|
|
|
71,811
|
|
|||
Total loans
|
$
|
18,683
|
|
|
$
|
569,250
|
|
|
$
|
587,933
|
|
|
December 31, 2017
|
||||||||||
|
Loans
Individually Evaluated for Impairment |
|
Loans
Collectively Evaluated for Impairment |
|
Total Loans
|
||||||
(In thousands)
|
|
|
|||||||||
Commercial and business loans
|
$
|
3,268
|
|
|
$
|
42,797
|
|
|
$
|
46,065
|
|
Government program loans
|
50
|
|
|
911
|
|
|
961
|
|
|||
Total commercial and industrial
|
3,318
|
|
|
43,708
|
|
|
47,026
|
|
|||
|
|
|
|
|
|
||||||
Commercial real estate loans
|
1,245
|
|
|
219,787
|
|
|
221,032
|
|
|||
Residential mortgage loans
|
3,051
|
|
|
81,753
|
|
|
84,804
|
|
|||
Home improvement and home equity loans
|
—
|
|
|
457
|
|
|
457
|
|
|||
Total real estate mortgage
|
4,296
|
|
|
301,997
|
|
|
306,293
|
|
|||
|
|
|
|
|
|
||||||
Real estate construction and development loans
|
5,972
|
|
|
116,998
|
|
|
122,970
|
|
|||
|
|
|
|
|
|
|
|||||
Agricultural loans
|
1,204
|
|
|
58,277
|
|
|
59,481
|
|
|||
|
|
|
|
|
|
|
|||||
Installment and student loans
|
—
|
|
|
65,581
|
|
|
65,581
|
|
|||
Total loans
|
$
|
14,790
|
|
|
$
|
586,561
|
|
|
$
|
601,351
|
|
4.
|
Student Loans
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
Number of Loans
|
|
Amount
|
|
Accrued Interest
|
|
Number of Loans
|
|
Amount
|
|
Accrued Interest
|
||||||||||
School
|
1,056
|
|
|
$
|
42,852
|
|
|
$
|
5,494
|
|
|
1,216
|
|
|
$
|
48,825
|
|
|
$
|
3,973
|
|
Grace
|
23
|
|
|
562
|
|
|
81
|
|
|
55
|
|
|
1,446
|
|
|
166
|
|
||||
Repayment
|
366
|
|
|
15,526
|
|
|
118
|
|
|
201
|
|
|
6,473
|
|
|
40
|
|
||||
Deferment
|
48
|
|
|
1,945
|
|
|
79
|
|
|
32
|
|
|
1,128
|
|
|
45
|
|
||||
Forbearance
|
181
|
|
|
7,336
|
|
|
212
|
|
|
50
|
|
|
1,981
|
|
|
37
|
|
||||
Claim
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
1,674
|
|
|
$
|
68,221
|
|
|
$
|
5,984
|
|
|
1,554
|
|
|
$
|
59,853
|
|
|
$
|
4,261
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Number of Borrowers
|
|
Amount
|
|
Number of Borrowers
|
|
Amount
|
||||||
Current or less than 31 days
|
248
|
|
|
$
|
22,534
|
|
|
148
|
|
|
$
|
8,237
|
|
31 - 60 days
|
2
|
|
|
130
|
|
|
2
|
|
|
92
|
|
||
61 - 90 days
|
4
|
|
|
140
|
|
|
—
|
|
|
—
|
|
||
91 - 120 days
|
1
|
|
|
58
|
|
|
3
|
|
|
125
|
|
||
Total
|
255
|
|
|
$
|
22,862
|
|
|
153
|
|
|
$
|
8,454
|
|
5.
|
Premises and Equipment
|
(In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
968
|
|
|
$
|
968
|
|
Buildings and improvements
|
15,756
|
|
|
15,648
|
|
||
Furniture and equipment
|
10,492
|
|
|
9,642
|
|
||
|
27,216
|
|
|
26,258
|
|
||
Less accumulated depreciation and amortization
|
(17,379
|
)
|
|
(16,093
|
)
|
||
Total premises and equipment
|
$
|
9,837
|
|
|
$
|
10,165
|
|
6.
|
Investment in Limited Partnership
|
7.
|
Deposits
|
(In thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Noninterest-bearing deposits
|
$
|
292,720
|
|
|
$
|
307,299
|
|
Interest-bearing deposits:
|
|
|
|
|
|
||
NOW and money market accounts
|
340,445
|
|
|
234,154
|
|
||
Savings accounts
|
90,046
|
|
|
81,408
|
|
||
Time deposits:
|
|
|
|
|
|
||
Under $250,000
|
60,875
|
|
|
51,687
|
|
||
$250,000 and over
|
21,557
|
|
|
13,145
|
|
||
Total interest-bearing deposits
|
512,923
|
|
|
380,394
|
|
||
Total deposits
|
$
|
805,643
|
|
|
$
|
687,693
|
|
(In thousands)
|
December 31, 2018
|
December 31, 2017
|
||||
One year or less
|
$
|
66,407
|
|
$
|
48,704
|
|
More than one year, but less than or equal to two years
|
12,834
|
|
13,460
|
|
||
More than two years, but less than or equal to three years
|
993
|
|
738
|
|
||
More than three years, but less than or equal to four years
|
1,279
|
|
508
|
|
||
More than four years, but less than or equal to five years
|
819
|
|
1,422
|
|
||
Greater than five years
|
100
|
|
—
|
|
||
|
$
|
82,432
|
|
$
|
64,832
|
|
8.
|
Short-term Borrowings/Other Borrowings
|
9.
|
Junior Subordinated Debt/Trust Preferred Securities
|
10.
|
Taxes on Income
|
|
December 31,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Credit losses not currently deductible
|
$
|
2,925
|
|
|
$
|
3,055
|
|
Deferred compensation
|
1,319
|
|
|
1,300
|
|
||
Depreciation
|
178
|
|
|
324
|
|
||
Accrued reserves
|
95
|
|
|
90
|
|
||
Write-down on other real estate owned
|
89
|
|
|
35
|
|
||
Unrealized gain on AFS
|
195
|
|
|
196
|
|
||
Unrealized gain on retirement obligation
|
155
|
|
|
104
|
|
||
Interest on nonaccrual loans
|
187
|
|
|
29
|
|
||
Other
|
830
|
|
|
361
|
|
||
Total deferred tax assets
|
5,973
|
|
|
5,494
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
State Tax
|
(251
|
)
|
|
(152
|
)
|
||
FHLB dividend
|
(46
|
)
|
|
(46
|
)
|
||
Loss on limited partnership investment
|
(870
|
)
|
|
(873
|
)
|
||
Deferred gain ASC 825 – fair value option
|
(91
|
)
|
|
(896
|
)
|
||
Fair value adjustments for purchase accounting
|
(98
|
)
|
|
(99
|
)
|
||
Unrealized loss on TRUPs
|
(631
|
)
|
|
—
|
|
||
Deferred loan costs
|
(695
|
)
|
|
(835
|
)
|
||
Specific reserve charge-offs
|
(54
|
)
|
|
(43
|
)
|
||
Prepaid expenses
|
(63
|
)
|
|
(161
|
)
|
||
Total deferred tax liabilities
|
(2,799
|
)
|
|
(3,105
|
)
|
||
Net deferred tax assets
|
$
|
3,174
|
|
|
$
|
2,389
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Statutory federal income tax rate
|
21.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State franchise tax, net of federal income tax benefit
|
7.2
|
|
|
6.2
|
|
|
6.9
|
|
Tax Cuts and Jobs Act impact on deferred re-measurement
|
0.0
|
|
|
6.3
|
|
|
0.0
|
|
Other
|
(0.7
|
)
|
|
(1.6
|
)
|
|
(1.2
|
)
|
|
27.5
|
%
|
|
44.9
|
%
|
|
39.7
|
%
|
11.
|
Stock Based Compensation
|
|
Shares
(a)
|
|
Weighted
Average
Grant-Date Fair Value
|
|||
Non-vested units at December 31, 2017
|
46,511
|
|
|
$
|
9.57
|
|
Granted during the year
|
108,799
|
|
|
10.51
|
|
|
Vested during the year
|
61,007
|
|
|
10.39
|
|
|
Forfeited during the year
|
35,086
|
|
|
10.71
|
|
|
Non-vested units at December 31, 2018
|
59,217
|
|
|
$
|
9.77
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Weighted average grant-date fair value per share of stock options granted
|
$
|
—
|
|
|
$
|
7.18
|
|
Total fair value of stock options vested
|
$
|
12,788
|
|
|
$
|
17,845
|
|
Total intrinsic value of stock options exercised
|
$
|
—
|
|
|
$
|
12,383
|
|
|
Year Ended
|
|
Year Ended
|
|
December 31, 2017
|
|
December 31, 2016
|
Risk Free Interest Rate
|
1.94%
|
|
—%
|
Expected Dividend Yield
|
—%
|
|
—%
|
Expected Life in Years
|
10 years
|
|
0 years
|
Expected Price Volatility
|
62.60%
|
|
—%
|
12.
|
Employee Benefit Plans
|
13.
|
Commitments and Contingent Liabilities
|
|
Contractual amount – December 31,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Commitments to extend credit
|
$
|
144,643
|
|
|
$
|
99,958
|
|
Standby letters of credit
|
1,183
|
|
|
2,058
|
|
14.
|
Fair Value Measurements and Disclosure
|
December 31, 2018
|
|||||||||||||||||||
(In thousands)
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Quoted Prices In Active Markets for Identical Assets Level 1
|
|
Significant Other Observable Inputs Level 2
|
|
Significant Unobservable Inputs Level 3
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
220,337
|
|
|
$
|
220,337
|
|
|
$
|
220,337
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities
|
70,085
|
|
|
70,085
|
|
|
3,659
|
|
|
66,426
|
|
|
—
|
|
|||||
Loans
|
579,419
|
|
|
566,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
566,195
|
|
||
Accrued interest receivable
|
8,341
|
|
|
8,341
|
|
|
—
|
|
|
8,341
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Noninterest-bearing
|
292,720
|
|
|
292,720
|
|
|
292,720
|
|
|
—
|
|
|
—
|
|
|||||
NOW and money market
|
340,445
|
|
|
340,445
|
|
|
340,445
|
|
|
—
|
|
|
—
|
|
|||||
Savings
|
90,046
|
|
|
90,046
|
|
|
90,046
|
|
|
—
|
|
|
—
|
|
|||||
Time deposits
|
82,432
|
|
|
81,745
|
|
|
—
|
|
|
—
|
|
|
81,745
|
|
|||||
Total deposits
|
805,643
|
|
|
804,956
|
|
|
723,211
|
|
|
—
|
|
|
81,745
|
|
|||||
Junior subordinated debt
|
10,155
|
|
|
10,155
|
|
|
—
|
|
|
—
|
|
|
10,155
|
|
|||||
Accrued interest payable
|
57
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|
—
|
|
December 31, 2017
|
|||||||||||||||||||
(In thousands)
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Quoted Prices In Active Markets for Identical Assets Level 1
|
|
Significant Other Observable Inputs Level 2
|
|
Significant Unobservable Inputs Level 3
|
||||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
107,934
|
|
|
$
|
107,934
|
|
|
$
|
107,934
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities
|
45,722
|
|
|
45,722
|
|
|
3,737
|
|
|
41,985
|
|
|
—
|
|
|||||
Loans
|
593,123
|
|
|
588,938
|
|
|
—
|
|
|
—
|
|
|
588,938
|
|
|||||
Accrued interest receivable
|
6,526
|
|
|
6,526
|
|
|
—
|
|
|
6,526
|
|
|
—
|
|
|||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Noninterest-bearing
|
307,299
|
|
|
307,299
|
|
|
307,299
|
|
|
—
|
|
|
—
|
|
|||||
NOW and money market
|
234,154
|
|
|
234,154
|
|
|
234,154
|
|
|
—
|
|
|
—
|
|
|||||
Savings
|
81,408
|
|
|
81,408
|
|
|
81,408
|
|
|
—
|
|
|
—
|
|
|||||
Time deposits
|
64,832
|
|
|
64,387
|
|
|
—
|
|
|
—
|
|
|
64,387
|
|
|||||
Total deposits
|
687,693
|
|
|
687,248
|
|
|
622,861
|
|
|
—
|
|
|
64,387
|
|
|||||
Junior subordinated debt
|
9,730
|
|
|
9,730
|
|
|
—
|
|
|
—
|
|
|
9,730
|
|
|||||
Accrued interest payable
|
44
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|
—
|
|
Description of Assets
|
December 31, 2018
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
AFS Securities (2):
|
|
|
|
|
|
|
|
||||||||
U.S. Government agencies
|
$
|
36,527
|
|
|
$
|
—
|
|
|
$
|
36,527
|
|
|
$
|
—
|
|
U.S Govt collateralized mortgage obligations
|
29,899
|
|
|
—
|
|
|
29,899
|
|
|
—
|
|
||||
Total AFS securities
|
66,426
|
|
|
—
|
|
|
66,426
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Marketable equity securities - mutual funds (2)
|
3,659
|
|
|
3,659
|
|
|
—
|
|
|
—
|
|
||||
Impaired Loans (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate mortgage
|
389
|
|
|
—
|
|
|
—
|
|
|
389
|
|
||||
Total impaired loans
|
389
|
|
|
—
|
|
|
—
|
|
|
389
|
|
||||
Total
|
$
|
70,474
|
|
|
$
|
3,659
|
|
|
$
|
66,426
|
|
|
$
|
389
|
|
Description of Liabilities
|
December 31, 2018
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Junior subordinated debt (2)
|
$
|
10,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,155
|
|
Total
|
$
|
10,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,155
|
|
Description of Assets
|
December 31, 2017
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
AFS Securities (2):
|
|
|
|
|
|
|
|
||||||||
U.S. Government agencies
|
$
|
19,954
|
|
|
$
|
—
|
|
|
$
|
19,954
|
|
|
$
|
—
|
|
U.S Govt collateralized mortgage obligations
|
22,031
|
|
|
—
|
|
|
22,031
|
|
|
—
|
|
||||
Total AFS securities
|
41,985
|
|
|
—
|
|
|
41,985
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Marketable equity securities - mutual funds (2)
|
3,737
|
|
|
3,737
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
45,722
|
|
|
$
|
3,737
|
|
|
$
|
41,985
|
|
|
$
|
—
|
|
Description of Liabilities
|
December 31, 2017
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Junior subordinated debt (2)
|
$
|
9,730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,730
|
|
Total
|
$
|
9,730
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,730
|
|
December 31, 2018
|
||||
Financial Instrument
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Adjustment Percentage
|
Impaired Loans:
|
|
|
|
|
Real estate mortgage
|
$389
|
Fair Value of Collateral Method for Collateral Dependent Loans
|
Adjustment for difference between appraised value and net realizable value
|
9.43%
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||
Reconciliation of Liabilities:
|
Junior
Subordinated
Debt
|
|
Junior
Subordinated
Debt
|
|
Junior
Subordinated
Debt
|
||||||
Beginning balance
|
$
|
9,730
|
|
|
$
|
8,832
|
|
|
$
|
8,300
|
|
Total losses included in earnings
|
424
|
|
|
882
|
|
|
518
|
|
|||
Total gains included in OCI
|
(32
|
)
|
|
—
|
|
|
—
|
|
|||
Capitalized interest
|
33
|
|
|
16
|
|
|
1,050
|
|
|||
Ending balance
|
$
|
10,155
|
|
|
$
|
9,730
|
|
|
$
|
8,832
|
|
The amount of total losses for the period included in earnings attributable to the change in unrealized gains or losses relating to liabilities still held at the reporting date
|
$
|
424
|
|
|
$
|
882
|
|
|
$
|
518
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
Financial Instrument
|
Valuation Technique
|
Unobservable Input
|
Weighted Average
|
|
Financial Instrument
|
Valuation Technique
|
Unobservable Input
|
Weighted Average
|
Subordinated Debt
|
Discounted cash flow
|
Discount Rate
|
5.86%
|
|
Subordinated Debt
|
Discounted cash flow
|
Discount Rate
|
5.81%
|
15.
|
Regulatory Matters
|
|
|
|
|
|
To Be Well Capitalized Under
|
||||||||||
|
Actual
|
For Capital
Adequacy Purposes
|
Prompt Corrective
Action Provisions
|
||||||||||||
(In thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||
As of December 31, 2018 (Company):
|
|
|
|
|
|
|
|||||||||
Total Capital (to Risk Weighted Assets)
|
$
|
123,525
|
|
17.80
|
%
|
$
|
55,519
|
|
8.00
|
%
|
N/A
|
|
N/A
|
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
114,848
|
|
16.55
|
%
|
41,639
|
|
6.00
|
%
|
N/A
|
|
N/A
|
|
|||
Common Equity Tier 1 (to Risk Weighted Assets)
|
105,157
|
|
15.15
|
%
|
31,230
|
|
4.50
|
%
|
N/A
|
|
N/A
|
|
|||
Tier 1 Leverage (to Average Assets)
|
114,848
|
|
12.15
|
%
|
37,570
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
As of December 31, 2018 (Bank):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Capital (to Risk Weighted Assets)
|
$
|
122,850
|
|
17.70
|
%
|
$
|
55,519
|
|
8.00
|
%
|
$
|
69,399
|
|
10.00
|
%
|
Tier 1 Capital (to Risk Weighted Assets)
|
114,173
|
|
16.45
|
%
|
41,639
|
|
6.00
|
%
|
55,519
|
|
8.00
|
%
|
|||
Common Equity Tier 1 (to Risk Weighted Assets)
|
114,173
|
|
16.45
|
%
|
31,230
|
|
4.50
|
%
|
45,109
|
|
6.50
|
%
|
|||
Tier 1 Leverage (to Average Assets)
|
114,173
|
|
12.16
|
%
|
37,570
|
|
4.00
|
%
|
46,963
|
|
5.00
|
%
|
|||
As of December 31, 2017 (Company):
|
|
|
|
|
|
|
|||||||||
Total Capital (to Risk Weighted Assets)
|
$
|
115,265
|
|
17.54
|
%
|
$
|
52,511
|
|
8.00
|
%
|
N/A
|
|
N/A
|
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
107,043
|
|
16.29
|
%
|
39,383
|
|
6.00
|
%
|
N/A
|
|
N/A
|
|
|||
Common Equity Tier 1 (to Risk Weighted Assets)
|
97,313
|
|
14.81
|
%
|
29,537
|
|
4.50
|
%
|
N/A
|
|
N/A
|
|
|||
Tier 1 Leverage (to Average Assets)
|
107,043
|
|
13.01
|
%
|
32,732
|
|
4.00
|
%
|
N/A
|
|
N/A
|
|
|||
As of December 31, 2017 (Bank):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Capital (to Risk Weighted Assets)
|
$
|
113,653
|
|
17.31
|
%
|
$
|
52,511
|
|
8.00
|
%
|
$
|
65,638
|
|
10.00
|
%
|
Tier 1 Capital (to Risk Weighted Assets)
|
105,431
|
|
16.06
|
%
|
39,383
|
|
6.00
|
%
|
52,511
|
|
8.00
|
%
|
|||
Common Equity Tier 1 (to Risk Weighted Assets)
|
105,431
|
|
16.06
|
%
|
29,537
|
|
4.50
|
%
|
42,665
|
|
6.50
|
%
|
|||
Tier 1 Leverage (to Average Assets)
|
105,431
|
|
12.90
|
%
|
32,732
|
|
4.00
|
%
|
40,865
|
|
5.00
|
%
|
16.
|
Supplemental Cash Flow Disclosures
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
||||||
Interest
|
$
|
2,690
|
|
|
$
|
1,792
|
|
|
$
|
1,362
|
|
Income Taxes
|
7,060
|
|
|
6,863
|
|
|
1,710
|
|
|||
Noncash activities:
|
|
|
|
|
|
|
|
||||
OREO financed
|
—
|
|
|
—
|
|
|
3,766
|
|
|||
Unrealized gains on TRUPs
|
32
|
|
|
—
|
|
|
—
|
|
|||
Unrealized gains (losses) on available for sale securities
|
(362
|
)
|
|
16
|
|
|
(648
|
)
|
|||
Unrealized (losses) gains on unrecognized post retirement costs
|
5
|
|
|
(6
|
)
|
|
(22
|
)
|
|||
Stock dividends issued
|
—
|
|
|
1,220
|
|
|
3,949
|
|
|||
Cash dividend declared
|
1,859
|
|
|
1,182
|
|
|
—
|
|
|||
Adoption of ASU 2016-01: reclassification of TRUPS to accumulated other comprehensive income
|
1,482
|
|
|
—
|
|
|
—
|
|
|||
Adoption of ASU 2016-01: recognition of previously unrealized losses within CRA Fund
|
184
|
|
|
—
|
|
|
—
|
|
17.
|
Dividends on Common Stock
|
18.
|
Net Income Per Share
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except earnings per share data)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income available to common shareholders
|
$
|
14,017
|
|
|
$
|
8,640
|
|
|
$
|
7,385
|
|
Weighted average shares outstanding
|
16,899,960
|
|
|
16,885,587
|
|
|
16,881,379
|
|
|||
Add: dilutive effect of stock options
|
38,812
|
|
|
19,328
|
|
|
7,648
|
|
|||
Weighted average shares outstanding adjusted for potential dilution
|
16,938,772
|
|
|
16,904,915
|
|
|
16,889,027
|
|
|||
Basic earnings per share
|
$
|
0.83
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Diluted earnings per share
|
$
|
0.83
|
|
|
$
|
0.51
|
|
|
$
|
0.44
|
|
Anti-dilutive shares excluded from earnings per share calculation
|
84,000
|
|
|
98,000
|
|
|
21,000
|
|
20.
|
Accumulated Other Comprehensive Income
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(in 000's)
|
Net unrealized loss on available for sale securities
|
|
Unfunded status of the supplemental retirement plans
|
|
Net unrealized gain on junior subordinated debentures
|
|
Net unrealized loss on available for sale securities
|
|
Unfunded status of the supplemental retirement plans
|
|
Net unrealized gain on junior subordinated debentures
|
||||||||||||
December 31, 2017
|
$
|
(248
|
)
|
|
$
|
(462
|
)
|
|
$
|
—
|
|
|
$
|
(221
|
)
|
|
$
|
(383
|
)
|
|
$
|
—
|
|
Reclassifications upon adoption of ASU 2016-01
|
184
|
|
|
—
|
|
|
1,482
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
January 1, 2018
|
(64
|
)
|
|
(462
|
)
|
|
1,482
|
|
|
(221
|
)
|
|
(383
|
)
|
|
—
|
|
||||||
Current period comprehensive (loss) income
|
(308
|
)
|
|
3
|
|
|
23
|
|
|
(27
|
)
|
|
(79
|
)
|
|
—
|
|
||||||
December 31, 2018
|
$
|
(372
|
)
|
|
$
|
(459
|
)
|
|
$
|
1,505
|
|
|
$
|
(248
|
)
|
|
$
|
(462
|
)
|
|
$
|
—
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
|
$
|
674
|
|
|
|
|
|
|
$
|
(710
|
)
|
United Security Bancshares – (parent only)
|
|
|
|
||||
Balance Sheets - December 31, 2018 and 2017
|
|
|
|
||||
(In thousands)
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Cash and equivalents
|
$
|
2,297
|
|
|
$
|
1,656
|
|
Investment in bank subsidiary
|
117,831
|
|
|
109,472
|
|
||
Other assets
|
1,153
|
|
|
1,136
|
|
||
Total assets
|
121,281
|
|
|
112,264
|
|
||
Liabilities & Shareholders' Equity
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
|
||
Junior subordinated debt securities (at fair value)
|
10,155
|
|
|
9,730
|
|
||
Dividends declared
|
1,859
|
|
|
1,182
|
|
||
Other liabilities
|
27
|
|
|
—
|
|
||
Total liabilities
|
12,041
|
|
|
10,912
|
|
||
Shareholders' Equity:
|
|
|
|
|
|
||
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding: 16,946,622 at December 31, 2018 and 16,885,615 at December 31, 2017
|
58,624
|
|
|
57,880
|
|
||
Retained earnings
|
49,942
|
|
|
44,182
|
|
||
Accumulated other comprehensive income (loss)
|
674
|
|
|
(710
|
)
|
||
Total shareholders' equity
|
109,240
|
|
|
101,352
|
|
||
Total liabilities and shareholders' equity
|
$
|
121,281
|
|
|
$
|
112,264
|
|
United Security Bancshares – (parent only)
|
Year ended December 31,
|
||||||||||
Statement of Cash Flows
|
|||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows From Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
14,017
|
|
|
$
|
8,640
|
|
|
$
|
7,385
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Equity in undistributed income of subsidiary
|
(9,145
|
)
|
|
(4,813
|
)
|
|
(7,549
|
)
|
|||
Provision for deferred income taxes
|
(111
|
)
|
|
(751
|
)
|
|
(169
|
)
|
|||
Loss on fair value option of financial liability
|
424
|
|
|
882
|
|
|
518
|
|
|||
Decrease (increase) in income tax receivable
|
144
|
|
|
391
|
|
|
(198
|
)
|
|||
Net change in other assets/liabilities
|
44
|
|
|
23
|
|
|
15
|
|
|||
Net cash provided by operating activities
|
5,373
|
|
|
4,372
|
|
|
2
|
|
|||
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
||||
Proceeds from exercise of stock options
|
—
|
|
|
6
|
|
|
6
|
|
|||
Dividends paid
|
(4,732
|
)
|
|
(2,870
|
)
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(4,732
|
)
|
|
(2,864
|
)
|
|
6
|
|
|||
Net increase (decrease) increase in cash and cash equivalents
|
641
|
|
|
1,508
|
|
|
8
|
|
|||
Cash and cash equivalents at beginning of year
|
1,656
|
|
|
148
|
|
|
140
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,297
|
|
|
$
|
1,656
|
|
|
$
|
148
|
|
|
2018 Quarters Ended
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
Interest Income:
|
|
|
|
|
|
|
|
||||||||
Loans, including fees
|
$
|
8,269
|
|
|
$
|
8,397
|
|
|
$
|
7,491
|
|
|
$
|
8,226
|
|
Investment securities, interest bearing cash at Banks
|
1,552
|
|
|
1,157
|
|
|
946
|
|
|
577
|
|
||||
Total interest income
|
9,821
|
|
|
9,554
|
|
|
8,437
|
|
|
8,803
|
|
||||
Interest Expense
|
876
|
|
|
691
|
|
|
659
|
|
|
477
|
|
||||
Net Interest Income
|
8,945
|
|
|
8,863
|
|
|
7,778
|
|
|
8,326
|
|
||||
Provision (recovery of provision) for Credit Losses
|
(65
|
)
|
|
(373
|
)
|
|
(1,136
|
)
|
|
(189
|
)
|
||||
Net Interest Income after Provision for Credit Losses
|
9,010
|
|
|
9,236
|
|
|
8,914
|
|
|
8,515
|
|
||||
Noninterest Income
|
1,665
|
|
|
849
|
|
|
1,170
|
|
|
923
|
|
||||
Noninterest Expense
|
5,473
|
|
|
5,143
|
|
|
5,318
|
|
|
5,000
|
|
||||
Income Before Provision for Taxes
|
5,202
|
|
|
4,942
|
|
|
4,766
|
|
|
4,438
|
|
||||
Provision for Taxes on Income
|
1,254
|
|
|
1,424
|
|
|
1,373
|
|
|
1,280
|
|
||||
Net Income
|
$
|
3,948
|
|
|
$
|
3,518
|
|
|
$
|
3,393
|
|
|
$
|
3,158
|
|
Net Income per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.23
|
|
|
$
|
0.21
|
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
Diluted
|
$
|
0.23
|
|
|
$
|
0.21
|
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
2017 Quarters Ended
|
||||||||||||||
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
Interest Income:
|
|
|
|
|
|
|
|
||||||||
Loans, including fees
|
$
|
8,035
|
|
|
$
|
7,978
|
|
|
$
|
7,579
|
|
|
$
|
7,225
|
|
Investment securities, interest bearing cash at Banks
|
560
|
|
|
614
|
|
|
531
|
|
|
408
|
|
||||
Total interest income
|
8,595
|
|
|
8,592
|
|
|
8,110
|
|
|
7,633
|
|
||||
Interest Expense
|
451
|
|
|
435
|
|
|
438
|
|
|
405
|
|
||||
Net Interest Income
|
8,144
|
|
|
8,157
|
|
|
7,672
|
|
|
7,228
|
|
||||
Provision (recovery of provision) for Credit Losses
|
48
|
|
|
7
|
|
|
(52
|
)
|
|
21
|
|
||||
Net Interest Income after Provision for Credit Losses
|
8,096
|
|
|
8,150
|
|
|
7,724
|
|
|
7,207
|
|
||||
Noninterest Income
|
1,155
|
|
|
1,176
|
|
|
1,066
|
|
|
909
|
|
||||
Noninterest Expense
|
5,260
|
|
|
4,746
|
|
|
4,607
|
|
|
5,190
|
|
||||
Income Before Provision for Taxes
|
3,991
|
|
|
4,580
|
|
|
4,183
|
|
|
2,926
|
|
||||
Provision for Taxes on Income
|
2,354
|
|
|
1,840
|
|
|
1,691
|
|
|
1,155
|
|
||||
Net Income
|
$
|
1,637
|
|
|
$
|
2,740
|
|
|
$
|
2,492
|
|
|
$
|
1,771
|
|
Net Income per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.10
|
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
$
|
0.10
|
|
Diluted
|
$
|
0.10
|
|
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
$
|
0.10
|
|
Articles of Incorporation of Registrant (1)
|
|
|
|
Bylaws of Registrant (1)
|
|
|
|
Specimen common stock certificate of United Security Bancshares (1)
|
|
|
|
Amended and Restated Executive Salary Continuation Agreement for Dennis Woods (2)
|
|
|
|
Amended and Restated Employment Agreement for Dennis R. Woods (5)
|
|
|
|
Amended and Restated Executive Salary Continuation Agreement for David Eytcheson (2)
|
|
|
|
Amended and Restated Change in Control Agreement for David Eytcheson (5)
|
|
|
|
USB 2005 Stock Option Plan (3)
|
|
|
|
United Security Bancshares 2015 Equity Incentive Award Plan (4)
|
|
|
|
Executive Salary Continuation Agreement for Bhavneet Gill (5)
|
|
|
|
Change in Control Agreement for Bhavneet Gill (5)
|
|
|
|
Executive Salary Continuation Agreement for William Yarbenet (5)
|
|
|
|
Change in Control Agreement for William Yarbenet (5)
|
|
|
|
Employment Agreement for William Yarbenet (5)
|
|
|
|
Change in Control Agreement for Robert Oberg (filed herewith)
|
|
|
|
Computation of earnings per share.
|
|
See Note 18 to Consolidated Financial Statements and related documents set forth in “Item 8. Financial Statements and Supplementary Data” of this report are filed as part of this report.
|
|
|
Subsidiaries of the Company (filed herewith)
|
|
|
|
Consent of Moss Adams LLP, Independent Registered Public Accounting Firm (filed herewith)
|
|
|
|
Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
Certification of the Chief Executive Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
Certification of the Chief Financial Officer of United Security Bancshares pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
|
|
|
|
101
|
Interactive data files pursuant to Rule 405 of Regulation S‑T: (i) the Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) the Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016, (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016, (iv) the Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2018, 2017 and 2016, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016, and (vi) the Notes to Consolidated Financial Statements. (Pursuant to Rule 406T of Regulation S‑T, this information is deemed furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.) (Filed herewith).
|
March 1, 2019
|
|
/S/ Dennis R. Woods
|
|
|
Dennis R. Woods
|
|
|
President and Chief Executive Officer
|
March 1, 2019
|
|
/S/ Bhavneet Gill
|
|
|
Bhavneet Gill
|
|
|
Senior Vice President and Chief Financial Officer
|
|
Date:
|
March 1, 2019
|
|
/s/ Stanley J. Cavalla
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Tom Ellithorpe
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Benjamin Mackovak
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Robert M. Mochizuki
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Kenneth D. Newby
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Sue Quigley
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Mike Woolf
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Nabeel Mahmood
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
Date:
|
March 1, 2019
|
|
/s/ Brian Tkacz
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
1)
|
United Security Bank – incorporated in the State of California
|
|
2)
|
USB Capital Trust II – incorporated in the State of Delaware
|
Date: March 1, 2019
|
|
/S/ Dennis R. Woods
|
Dennis R. Woods
|
President and Chief Executive Officer
|
Date: March 1, 2019
|
|
/S/ Bhavneet Gill
|
Bhavneet Gill
|
Senior Vice President and Chief Financial Officer
|
/s/ Dennis R. Woods
|
Dennis R. Woods
|
President and Chief Executive Officer
|
/s/ Bhavneet Gill
|
Bhavneet Gill
|
Senior Vice President and Chief Financial Officer
|