|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
California
|
|
68-0450397
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
195 N. First Street, Dixon, California
|
|
95620
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Yes
|
No
|
Yes
|
No
|
Large accelerated filer
|
Accelerated filer ☒
|
Non-accelerated filer (Do not check if a smaller reporting company)
|
Smaller reporting company ☐
|
Yes
|
No
|
|
Page
|
PART I – Financial Information
|
|
ITEM I. – Financial Statements (Unaudited)
|
3
|
Condensed Consolidated Balance Sheets (Unaudited)
|
3
|
Condensed Consolidated Statements of Income (Unaudited)
|
4
|
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
|
5
|
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
|
6
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
7
|
Notes to Condensed Consolidated Financial Statements
|
8
|
ITEM 2. – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
32
|
ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
47
|
ITEM 4. – CONTROLS AND PROCEDURES
|
47
|
PART II – OTHER INFORMATION
|
47
|
ITEM 1. – LEGAL PROCEEDINGS
|
47
|
ITEM 1A. – RISK FACTORS
|
47
|
ITEM 2. – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
49
|
ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
|
49
|
ITEM 4. – MINE SAFETY DISCLOSURES
|
49
|
ITEM 5. – OTHER INFORMATION
|
49
|
ITEM 6. – EXHIBITS
|
49
|
SIGNATURES
|
50
|
(in thousands, except shares amounts)
|
March 31, 2017
|
December 31, 2016
|
||||||
|
||||||||
Assets
|
||||||||
|
||||||||
Cash and cash equivalents
|
$
|
163,247
|
$
|
159,643
|
||||
Certificates of deposit
|
15,717
|
16,213
|
||||||
Investment securities – available-for-sale
|
293,443
|
277,079
|
||||||
Loans, net of allowance for loan losses of $11,499 at March 31, 2017 and $10,899 at December 31, 2016
|
653,453
|
669,770
|
||||||
Loans held-for-sale
|
1,243
|
3,326
|
||||||
Stock in Federal Home Loan Bank and other equity securities, at cost
|
4,409
|
4,409
|
||||||
Premises and equipment, net
|
6,020
|
7,304
|
||||||
Interest receivable and other assets
|
29,181
|
29,019
|
||||||
|
||||||||
Total Assets
|
$
|
1,166,713
|
$
|
1,166,763
|
||||
|
||||||||
Liabilities and Stockholders' Equity
|
||||||||
|
||||||||
Liabilities:
|
||||||||
|
||||||||
Demand deposits
|
$
|
358,203
|
$
|
362,688
|
||||
Interest-bearing transaction deposits
|
293,609
|
293,343
|
||||||
Savings and MMDA's
|
328,802
|
331,730
|
||||||
Time, $250,000 or less
|
59,865
|
60,677
|
||||||
Time, over $250,000
|
20,255
|
15,258
|
||||||
Total deposits
|
1,060,734
|
1,063,696
|
||||||
|
||||||||
Interest payable and other liabilities
|
11,127
|
10,769
|
||||||
|
||||||||
Total Liabilities
|
1,071,861
|
1,074,465
|
||||||
|
||||||||
Stockholders' Equity:
|
||||||||
Common stock, no par value; 16,000,000 shares authorized; 11,172,279 shares issued and outstanding at March 31, 2017 and 11,148,446 shares issued and outstanding at December 31, 2016
|
79,398
|
79,114
|
||||||
Additional paid-in capital
|
977
|
977
|
||||||
Retained earnings
|
16,853
|
14,557
|
||||||
Accumulated other comprehensive loss, net
|
(2,376
|
)
|
(2,350
|
)
|
||||
Total Stockholders' Equity
|
94,852
|
92,298
|
||||||
|
||||||||
Total Liabilities and Stockholders' Equity
|
$
|
1,166,713
|
$
|
1,166,763
|
(in thousands, except per share amounts)
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||
Interest and dividend income:
|
||||||||
Loans
|
$
|
7,961
|
$
|
7,382
|
||||
Due from banks interest bearing accounts
|
332
|
269
|
||||||
Investment securities
|
||||||||
Taxable
|
1,102
|
782
|
||||||
Non-taxable
|
75
|
70
|
||||||
Other earning assets
|
108
|
84
|
||||||
Total interest and dividend income
|
9,578
|
8,587
|
||||||
Interest expense:
|
||||||||
Deposits
|
265
|
286
|
||||||
Total interest expense
|
265
|
286
|
||||||
Net interest income
|
9,313
|
8,301
|
||||||
Provision for loan losses
|
600
|
450
|
||||||
Net interest income after provision for loan losses
|
8,713
|
7,851
|
||||||
Non-interest income:
|
||||||||
Service charges on deposit accounts
|
418
|
520
|
||||||
Gains on sales of other real estate owned
|
—
|
4
|
||||||
Gains on sales of loans held-for-sale
|
147
|
110
|
||||||
Investment and brokerage services income
|
143
|
125
|
||||||
Mortgage brokerage income
|
13
|
—
|
||||||
Loan servicing income
|
150
|
116
|
||||||
Fiduciary activities income
|
125
|
113
|
||||||
Debit card income
|
467
|
465
|
||||||
(Losses) gains on sales/calls of available-for-sale securities
|
(16
|
)
|
14
|
|||||
Gain on sale-leaseback of real estate
|
1,187
|
—
|
||||||
Other income
|
211
|
218
|
||||||
Total non-interest income
|
2,845
|
1,685
|
||||||
Non-interest expenses:
|
||||||||
Salaries and employee benefits
|
4,751
|
4,185
|
||||||
Occupancy and equipment
|
696
|
723
|
||||||
Data processing
|
402
|
386
|
||||||
Stationery and supplies
|
70
|
93
|
||||||
Advertising
|
66
|
85
|
||||||
Directors' fees
|
59
|
59
|
||||||
Other real estate owned (recovery) expense
|
(1
|
)
|
1
|
|||||
Other expense
|
1,460
|
1,287
|
||||||
Total non-interest expenses
|
7,503
|
6,819
|
||||||
Income before provision for income taxes
|
4,055
|
2,717
|
||||||
Provision for income taxes
|
1,542
|
986
|
||||||
|
||||||||
Net income
|
$
|
2,513
|
$
|
1,731
|
||||
|
||||||||
Basic earnings per common share
|
$
|
0.23
|
$
|
0.16
|
||||
Diluted earnings per common share
|
$
|
0.22
|
$
|
0.16
|
(in thousands)
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||
Net income
|
$
|
2,513
|
$
|
1,731
|
||||
Other comprehensive (loss) income, net of tax:
|
||||||||
Unrealized holding gains on securities:
|
||||||||
Unrealized holding gains arising during the period, net of tax effect of $6 and $441 for the three-month periods ended March 31, 2017 and March 31, 2016, respectively
|
10
|
660
|
||||||
Less: reclassification adjustment due to losses (gains) realized on sales of securities, net of tax effect of $6 and ($6) for the three-month periods ended March 31, 2017 and March 31, 2016, respectively
|
10
|
(8
|
)
|
|||||
Directors' and officer's retirement plan equity adjustments, net of tax effect of $(31) and $0 for the three-month periods ended March 31, 2017 and March 31, 2016, respectively
|
(46
|
)
|
—
|
|||||
Other comprehensive (loss) income
|
$
|
(26
|
)
|
$
|
652
|
|||
Comprehensive income
|
$
|
2,487
|
$
|
2,383
|
|
Common Stock
|
|||||||||||||||||||||||
|
Shares
|
Amounts
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
(Loss) Income
|
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance at December 31, 2015
|
10,676,557
|
$
|
73,764
|
$
|
977
|
$
|
11,603
|
$
|
(495
|
)
|
$
|
85,849
|
||||||||||||
Net income
|
8,051
|
8,051
|
||||||||||||||||||||||
Other comprehensive loss
|
(1,855
|
)
|
(1,855
|
)
|
||||||||||||||||||||
Stock dividend adjustment
|
505
|
4
|
(4
|
)
|
—
|
|||||||||||||||||||
4% stock dividend declared in 2017
|
428,786
|
5,088
|
(5,088
|
)
|
—
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(101
|
)
|
(5
|
)
|
(5
|
)
|
||||||||||||||||||
Stock-based compensation
|
286
|
286
|
||||||||||||||||||||||
Tax deficiency related to expired, vested non-qualified stock options
|
(114
|
)
|
(114
|
)
|
||||||||||||||||||||
Common shares issued related to restricted stock grants
|
34,976
|
61
|
61
|
|||||||||||||||||||||
Stock options exercised
|
7,723
|
25
|
25
|
|||||||||||||||||||||
Balance at December 31, 2016
|
11,148,446
|
$
|
79,114
|
$
|
977
|
$
|
14,557
|
$
|
(2,350
|
)
|
$
|
92,298
|
||||||||||||
Net income
|
2,513
|
2,513
|
||||||||||||||||||||||
Other comprehensive loss
|
(26
|
)
|
(26
|
)
|
||||||||||||||||||||
Stock dividend adjustment
|
289
|
207
|
(207
|
)
|
—
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(129
|
)
|
(10
|
)
|
(10
|
)
|
||||||||||||||||||
Stock-based compensation
|
77
|
77
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
23,673
|
—
|
—
|
|||||||||||||||||||||
Balance at March 31, 2017
|
11,172,279
|
$
|
79,398
|
$
|
977
|
$
|
16,853
|
$
|
(2,376
|
)
|
$
|
94,852
|
|
(in thousands)
|
|||||||
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$
|
2,513
|
$
|
1,731
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
152
|
145
|
||||||
Accretion and amortization of investment securities premiums and discounts, net
|
918
|
601
|
||||||
Valuation adjustment on mortgage servicing rights
|
(21
|
)
|
—
|
|||||
Increase (decrease) in deferred loan origination fees and costs, net
|
77
|
(25
|
)
|
|||||
Provision for loan losses
|
600
|
450
|
||||||
Stock-based compensation
|
77
|
63
|
||||||
Loss (gain) on calls of available-for-sale securities
|
16
|
(14
|
)
|
|||||
Gain on sale-leaseback of real estate
|
(1,187
|
)
|
—
|
|||||
Gain on sales of other real estate owned
|
—
|
(4
|
)
|
|||||
Gain on sales of loans held-for-sale
|
(147
|
)
|
(110
|
)
|
||||
Proceeds from sales of loans held-for-sale
|
10,045
|
4,985
|
||||||
Originations of loans held-for-sale
|
(7,815
|
)
|
(7,235
|
)
|
||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in interest receivable and other assets
|
(122
|
)
|
326
|
|||||
Net increase (decrease) in interest payable and other liabilities
|
281
|
(1,821
|
)
|
|||||
Net cash provided by (used in) operating activities
|
5,387
|
(908
|
)
|
|||||
|
||||||||
Cash Flows From Investing Activities
|
||||||||
Proceeds from calls or maturities of available-for-sale securities
|
2,275
|
3,978
|
||||||
Proceeds from sales of available-for-sale securities
|
462
|
—
|
||||||
Principal repayments on available-for-sale securities
|
11,153
|
6,781
|
||||||
Purchase of available-for-sale securities
|
(31,156
|
)
|
(52,620
|
)
|
||||
Net decrease in certificates of deposit
|
496
|
—
|
||||||
Net decrease (increase) in loans
|
15,640
|
(12,323
|
)
|
|||||
Proceeds from sale of other real estate owned
|
—
|
221
|
||||||
Sales (purchases) of premises and equipment, net
|
2,319
|
(466
|
)
|
|||||
Net cash provided by (used in) investing activities
|
1,189
|
(54,429
|
)
|
|||||
|
||||||||
Cash Flows From Financing Activities
|
||||||||
Net (decrease) increase in deposits
|
(2,962
|
)
|
10,822
|
|||||
Cash dividends paid in lieu of fractional shares
|
(10
|
)
|
(5
|
)
|
||||
Net cash (used in) provided by financing activities
|
(2,972
|
)
|
10,817
|
|||||
|
||||||||
Net increase (decrease) in Cash and Cash Equivalents
|
3,604
|
(44,520
|
)
|
|||||
Cash and Cash Equivalents, beginning of period
|
159,643
|
200,797
|
||||||
Cash and Cash Equivalents, end of period
|
$
|
163,247
|
$
|
156,277
|
||||
|
||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
263
|
$
|
273
|
||||
Income taxes
|
$
|
—
|
$
|
200
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Stock dividend distributed
|
$
|
5,295
|
$
|
3,351
|
||||
Transfer of loans held-for-investment to other real estate owned
|
$
|
—
|
$
|
217
|
||||
Decrease in directors' & officer's retirement plan equity adjustment, net of tax
|
$
|
(46
|
)
|
$
|
—
|
|||
Unrealized holding gains on available for sale securities, net of taxes
|
$
|
20
|
$
|
652
|
1. |
BASIS OF PRESENTATION
|
2. |
ACCOUNTING POLICIES
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated
fair value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury Securities
|
$
|
28,699
|
$
|
—
|
$
|
(91
|
)
|
$
|
28,608
|
|||||||
Securities of U.S. government agencies and corporations
|
22,376
|
5
|
(155
|
)
|
22,226
|
|||||||||||
Obligations of states and political subdivisions
|
30,471
|
268
|
(152
|
)
|
30,587
|
|||||||||||
Collateralized mortgage obligations
|
53,695
|
—
|
(1,013
|
)
|
52,682
|
|||||||||||
Mortgage-backed securities
|
160,966
|
281
|
(1,907
|
)
|
159,340
|
|||||||||||
Total debt securities
|
$
|
296,207
|
$
|
554
|
$
|
(3,318
|
)
|
$
|
293,443
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated
fair value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury Securities
|
$
|
28,738
|
$
|
2
|
$
|
(88
|
)
|
$
|
28,652
|
|||||||
Securities of U.S. government agencies and corporations
|
24,382
|
2
|
(187
|
)
|
24,197
|
|||||||||||
Obligations of states and political subdivisions
|
30,870
|
271
|
(253
|
)
|
30,888
|
|||||||||||
Collateralized mortgage obligations
|
51,002
|
1
|
(1,065
|
)
|
49,938
|
|||||||||||
Mortgage-backed securities
|
144,883
|
280
|
(1,759
|
)
|
143,404
|
|||||||||||
Total debt securities
|
$
|
279,875
|
$
|
556
|
$
|
(3,352
|
)
|
$
|
277,079
|
(in thousands)
|
Amortized
cost
|
Estimated
fair value
|
||||||
|
||||||||
Maturity in years:
|
||||||||
Due in one year or less
|
$
|
28,548
|
$
|
28,535
|
||||
Due after one year through five years
|
45,642
|
45,378
|
||||||
Due after five years through ten years
|
7,356
|
7,508
|
||||||
Due after ten years
|
—
|
—
|
||||||
Subtotal
|
81,546
|
81,421
|
||||||
MBS & CMO
|
214,661
|
212,022
|
||||||
Total
|
296,207
|
293,443
|
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
(in thousands)
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$
|
28,608
|
$
|
(91
|
)
|
$
|
—
|
$
|
—
|
$
|
28,608
|
$
|
(91
|
)
|
||||||||||
Securities of U.S. government agencies and corporations
|
19,221
|
(155
|
)
|
—
|
—
|
19,221
|
(155
|
)
|
||||||||||||||||
Obligations of states and political subdivisions
|
15,971
|
(147
|
)
|
996
|
(5
|
)
|
16,967
|
(152
|
)
|
|||||||||||||||
Collateralized Mortgage obligations
|
47,541
|
(1,013
|
)
|
—
|
—
|
47,541
|
(1,013
|
)
|
||||||||||||||||
Mortgage-backed securities
|
126,384
|
(1,829
|
)
|
6,304
|
(78
|
)
|
132,688
|
(1,907
|
)
|
|||||||||||||||
Total
|
$
|
237,725
|
$
|
(3,235
|
)
|
$
|
7,300
|
$
|
(83
|
)
|
$
|
245,025
|
$
|
(3,318
|
)
|
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
(in thousands)
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury Securities
|
$
|
23,564
|
$
|
(88
|
)
|
$
|
—
|
$
|
—
|
$
|
23,564
|
$
|
(88
|
)
|
||||||||||
Securities of U.S. government agencies and corporations
|
22,195
|
(187
|
)
|
—
|
—
|
22,195
|
(187
|
)
|
||||||||||||||||
Obligations of states and political subdivisions
|
16,168
|
(245
|
)
|
996
|
(8
|
)
|
17,164
|
(253
|
)
|
|||||||||||||||
Collateralized Mortgage obligations
|
49,805
|
(1,065
|
)
|
—
|
—
|
49,805
|
(1,065
|
)
|
||||||||||||||||
Mortgage-backed securities
|
109,092
|
(1,678
|
)
|
4,829
|
(81
|
)
|
113,921
|
(1,759
|
)
|
|||||||||||||||
Total
|
$
|
220,824
|
$
|
(3,263
|
)
|
$
|
5,825
|
$
|
(89
|
)
|
$
|
226,649
|
$
|
(3,352
|
)
|
($ in thousands)
|
March 31, 2017
|
December 31, 2016
|
||||||
|
||||||||
Commercial
|
$
|
121,053
|
$
|
126,311
|
||||
Commercial Real Estate
|
342,180
|
344,210
|
||||||
Agriculture
|
94,652
|
101,905
|
||||||
Residential Mortgage
|
43,176
|
40,237
|
||||||
Residential Construction
|
22,738
|
23,650
|
||||||
Consumer
|
40,124
|
43,250
|
||||||
|
663,923
|
679,563
|
||||||
Allowance for loan losses
|
(11,499
|
)
|
(10,899
|
)
|
||||
Net deferred origination fees and costs
|
1,029
|
1,106
|
||||||
Loans, net
|
$
|
653,453
|
$
|
669,770
|
($ in thousands)
|
Current & Accruing
|
30-59 Days Past Due & Accruing
|
60-89 Days Past Due & Accruing
|
90 Days or
more Past Due & Accruing
|
Nonaccrual
|
Total Loans
|
||||||||||||||||||
March 31, 2017
|
||||||||||||||||||||||||
Commercial
|
$
|
115,988
|
$
|
65
|
$
|
—
|
$
|
—
|
$
|
5,000
|
$
|
121,053
|
||||||||||||
Commercial Real Estate
|
341,188
|
478
|
—
|
—
|
514
|
342,180
|
||||||||||||||||||
Agriculture
|
94,652
|
—
|
—
|
—
|
—
|
94,652
|
||||||||||||||||||
Residential Mortgage
|
42,508
|
—
|
—
|
—
|
668
|
43,176
|
||||||||||||||||||
Residential Construction
|
22,738
|
—
|
—
|
—
|
—
|
22,738
|
||||||||||||||||||
Consumer
|
40,061
|
63
|
—
|
—
|
—
|
40,124
|
||||||||||||||||||
Total
|
$
|
657,135
|
$
|
606
|
$
|
—
|
$
|
—
|
$
|
6,182
|
$
|
663,923
|
||||||||||||
|
||||||||||||||||||||||||
December 31, 2016
|
||||||||||||||||||||||||
Commercial
|
$
|
121,311
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
5,000
|
$
|
126,311
|
||||||||||||
Commercial Real Estate
|
343,186
|
484
|
—
|
—
|
540
|
344,210
|
||||||||||||||||||
Agriculture
|
101,905
|
—
|
—
|
—
|
—
|
101,905
|
||||||||||||||||||
Residential Mortgage
|
39,463
|
—
|
120
|
—
|
654
|
40,237
|
||||||||||||||||||
Residential Construction
|
23,650
|
—
|
—
|
—
|
—
|
23,650
|
||||||||||||||||||
Consumer
|
43,106
|
—
|
41
|
—
|
103
|
43,250
|
||||||||||||||||||
Total
|
$
|
672,621
|
$
|
484
|
$
|
161
|
$
|
—
|
$
|
6,297
|
$
|
679,563
|
($ in thousands)
|
Unpaid Contractual
Principal Balance
|
Recorded
Investment with no
Allowance
|
Recorded
Investment with
Allowance
|
Total Recorded
Investment
|
Related Allowance
|
|||||||||||||||
March 31, 2017
|
||||||||||||||||||||
Commercial
|
$
|
5,544
|
$
|
—
|
$
|
5,544
|
$
|
5,544
|
$
|
1,341
|
||||||||||
Commercial Real Estate
|
870
|
514
|
281
|
795
|
38
|
|||||||||||||||
Agriculture
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Residential Mortgage
|
3,380
|
668
|
2,354
|
3,022
|
578
|
|||||||||||||||
Residential Construction
|
812
|
—
|
812
|
812
|
98
|
|||||||||||||||
Consumer
|
593
|
—
|
593
|
593
|
24
|
|||||||||||||||
Total
|
$
|
11,199
|
$
|
1,182
|
$
|
9,584
|
$
|
10,766
|
$
|
2,079
|
||||||||||
|
||||||||||||||||||||
December 31, 2016
|
||||||||||||||||||||
Commercial
|
$
|
5,578
|
$
|
—
|
$
|
5,578
|
$
|
5,578
|
$
|
898
|
||||||||||
Commercial Real Estate
|
885
|
540
|
283
|
823
|
39
|
|||||||||||||||
Agriculture
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Residential Mortgage
|
3,392
|
654
|
2,380
|
3,034
|
584
|
|||||||||||||||
Residential Construction
|
820
|
—
|
820
|
820
|
98
|
|||||||||||||||
Consumer
|
708
|
103
|
601
|
704
|
25
|
|||||||||||||||
Total
|
$
|
11,383
|
$
|
1,297
|
$
|
9,662
|
$
|
10,959
|
$
|
1,644
|
($ in thousands)
|
Three Months Ended
March 31, 2017
|
Three Months Ended
March 31, 2016
|
||||||||||||||
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||
Commercial
|
$
|
5,561
|
$
|
9
|
$
|
990
|
$
|
12
|
||||||||
Commercial Real Estate
|
809
|
15
|
1,075
|
4
|
||||||||||||
Agriculture
|
—
|
—
|
—
|
—
|
||||||||||||
Residential Mortgage
|
3,028
|
31
|
3,560
|
24
|
||||||||||||
Residential Construction
|
816
|
9
|
1,001
|
11
|
||||||||||||
Consumer
|
649
|
9
|
1,013
|
45
|
||||||||||||
Total
|
$
|
10,863
|
$
|
73
|
$
|
7,639
|
$
|
96
|
($ in thousands)
|
Three Months Ended March 31, 2016
|
|||||||||||
|
Number of
Contracts
|
Pre-modification
outstanding
recorded
investment
|
Post-modification
outstanding
recorded
investment
|
|||||||||
Commercial
|
1
|
180
|
180
|
|||||||||
Total
|
1
|
$
|
180
|
$
|
180
|
($ in thousands)
|
Pass
|
Special
Mention
|
Substandard
|
Doubtful
|
Loss
|
Total
|
||||||||||||||||||
March 31, 2017
|
||||||||||||||||||||||||
Commercial
|
$
|
107,626
|
$
|
7,359
|
$
|
6,068
|
$
|
—
|
$
|
—
|
$
|
121,053
|
||||||||||||
Commercial Real Estate
|
330,711
|
10,200
|
1,269
|
—
|
—
|
342,180
|
||||||||||||||||||
Agriculture
|
94,522
|
—
|
130
|
—
|
—
|
94,652
|
||||||||||||||||||
Residential Mortgage
|
40,782
|
1,725
|
669
|
—
|
—
|
43,176
|
||||||||||||||||||
Residential Construction
|
22,738
|
—
|
—
|
—
|
—
|
22,738
|
||||||||||||||||||
Consumer
|
39,059
|
546
|
519
|
—
|
—
|
40,124
|
||||||||||||||||||
Total
|
$
|
635,438
|
$
|
19,830
|
$
|
8,655
|
$
|
—
|
$
|
—
|
$
|
663,923
|
||||||||||||
|
||||||||||||||||||||||||
December 31, 2016
|
||||||||||||||||||||||||
Commercial
|
$
|
112,656
|
$
|
7,294
|
$
|
6,361
|
$
|
—
|
$
|
—
|
$
|
126,311
|
||||||||||||
Commercial Real Estate
|
331,653
|
11,058
|
1,499
|
—
|
—
|
344,210
|
||||||||||||||||||
Agriculture
|
101,820
|
—
|
85
|
—
|
—
|
101,905
|
||||||||||||||||||
Residential Mortgage
|
37,831
|
1,751
|
655
|
—
|
—
|
40,237
|
||||||||||||||||||
Residential Construction
|
23,070
|
436
|
144
|
—
|
—
|
23,650
|
||||||||||||||||||
Consumer
|
41,826
|
547
|
877
|
—
|
—
|
43,250
|
||||||||||||||||||
Total
|
$
|
648,856
|
$
|
21,086
|
$
|
9,621
|
$
|
—
|
$
|
—
|
$
|
679,563
|
Three months ended March 31, 2017
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2016
|
$
|
3,571
|
$
|
3,910
|
$
|
1,262
|
$
|
660
|
$
|
440
|
$
|
498
|
$
|
558
|
$
|
10,899
|
||||||||||||||||
Provision for (reversal of) loan losses
|
235
|
813
|
25
|
41
|
13
|
(114
|
)
|
(413
|
)
|
600
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Charge-offs
|
—
|
—
|
—
|
—
|
—
|
(11
|
)
|
—
|
(11
|
)
|
||||||||||||||||||||||
Recoveries
|
2
|
—
|
—
|
—
|
1
|
8
|
—
|
11
|
||||||||||||||||||||||||
Net charge-offs
|
2
|
—
|
—
|
—
|
1
|
(3
|
)
|
—
|
—
|
|||||||||||||||||||||||
Balance as of March 31, 2017
|
$
|
3,808
|
$
|
4,723
|
$
|
1,287
|
$
|
701
|
$
|
454
|
$
|
381
|
$
|
145
|
$
|
11,499
|
||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
1,341
|
38
|
—
|
578
|
98
|
24
|
—
|
2,079
|
||||||||||||||||||||||||
Loans collectively evaluated for impairment
|
2,467
|
4,685
|
1,287
|
123
|
356
|
357
|
145
|
9,420
|
||||||||||||||||||||||||
Balance as of March 31, 2017
|
$
|
3,808
|
$
|
4,723
|
$
|
1,287
|
$
|
701
|
$
|
454
|
$
|
381
|
$
|
145
|
$
|
11,499
|
Three months ended March 31, 2016
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2015
|
$
|
3,097
|
$
|
3,343
|
$
|
1,060
|
$
|
739
|
$
|
334
|
$
|
641
|
$
|
37
|
$
|
9,251
|
||||||||||||||||
Provision for (reversal of) loan losses
|
(35
|
)
|
308
|
(95
|
)
|
(38
|
)
|
66
|
(53
|
)
|
297
|
450
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Charge-offs
|
(100
|
)
|
(15
|
)
|
—
|
—
|
—
|
(20
|
)
|
—
|
(135
|
)
|
||||||||||||||||||||
Recoveries
|
18
|
—
|
—
|
1
|
1
|
21
|
—
|
41
|
||||||||||||||||||||||||
Net charge-offs
|
(82
|
)
|
(15
|
)
|
—
|
1
|
1
|
1
|
—
|
(94
|
)
|
|||||||||||||||||||||
Balance as of March 31, 2016
|
$
|
2,980
|
$
|
3,636
|
$
|
965
|
$
|
702
|
$
|
401
|
$
|
589
|
$
|
334
|
$
|
9,607
|
||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
188
|
41
|
—
|
607
|
114
|
33
|
—
|
983
|
||||||||||||||||||||||||
Loans collectively evaluated for impairment
|
2,792
|
3,595
|
965
|
95
|
287
|
556
|
334
|
8,624
|
||||||||||||||||||||||||
Balance as of March 31, 2016
|
$
|
2,980
|
$
|
3,636
|
$
|
965
|
$
|
702
|
$
|
401
|
$
|
589
|
$
|
334
|
$
|
9,607
|
Year ended December 31, 2016
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2015
|
$
|
3,097
|
$
|
3,343
|
$
|
1,060
|
$
|
739
|
$
|
334
|
$
|
641
|
$
|
37
|
$
|
9,251
|
||||||||||||||||
Provision for (reversal of) loan losses
|
883
|
582
|
121
|
(67
|
)
|
101
|
(341
|
)
|
521
|
1,800
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Charge-offs
|
(446
|
)
|
(15
|
)
|
—
|
(13
|
)
|
—
|
(65
|
)
|
—
|
(539
|
)
|
|||||||||||||||||||
Recoveries
|
37
|
—
|
81
|
1
|
5
|
263
|
—
|
387
|
||||||||||||||||||||||||
Net charge-offs
|
(409
|
)
|
(15
|
)
|
81
|
(12
|
)
|
5
|
198
|
—
|
(152
|
)
|
||||||||||||||||||||
Ending Balance
|
3,571
|
3,910
|
1,262
|
660
|
440
|
498
|
558
|
10,899
|
||||||||||||||||||||||||
Period-end amount allocated to:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
898
|
39
|
—
|
584
|
98
|
25
|
—
|
1,644
|
||||||||||||||||||||||||
Loans collectively evaluated for impairment
|
2,673
|
3,871
|
1,262
|
76
|
342
|
473
|
558
|
9,255
|
||||||||||||||||||||||||
Balance as of December 31, 2016
|
$
|
3,571
|
$
|
3,910
|
$
|
1,262
|
$
|
660
|
$
|
440
|
$
|
498
|
$
|
558
|
$
|
10,899
|
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Total
|
|||||||||||||||||||||
March 31, 2017
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,544
|
$
|
795
|
$
|
—
|
$
|
3,022
|
$
|
812
|
$
|
593
|
$
|
10,766
|
||||||||||||||
Loans collectively evaluated for impairment
|
115,509
|
341,385
|
94,652
|
40,154
|
21,926
|
39,531
|
653,157
|
|||||||||||||||||||||
Ending Balance
|
$
|
121,053
|
$
|
342,180
|
$
|
94,652
|
$
|
43,176
|
$
|
22,738
|
$
|
40,124
|
$
|
663,923
|
||||||||||||||
|
||||||||||||||||||||||||||||
March 31, 2016
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
1,062
|
$
|
891
|
$
|
—
|
$
|
3,544
|
$
|
997
|
$
|
704
|
$
|
7,198
|
||||||||||||||
Loans collectively evaluated for impairment
|
129,352
|
316,059
|
77,185
|
37,868
|
15,763
|
42,682
|
618,909
|
|||||||||||||||||||||
Ending Balance
|
$
|
130,414
|
$
|
316,950
|
$
|
77,185
|
$
|
41,412
|
$
|
16,760
|
$
|
43,386
|
$
|
626,107
|
||||||||||||||
|
||||||||||||||||||||||||||||
December 31, 2016
|
||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
5,578
|
$
|
823
|
$
|
—
|
$
|
3,034
|
$
|
820
|
$
|
704
|
$
|
10,959
|
||||||||||||||
Loans collectively evaluated for impairment
|
120,733
|
343,387
|
101,905
|
37,203
|
22,830
|
42,546
|
668,604
|
|||||||||||||||||||||
Ending Balance
|
$
|
126,311
|
$
|
344,210
|
$
|
101,905
|
$
|
40,237
|
$
|
23,650
|
$
|
43,250
|
$
|
679,563
|
|
March 31, 2017
|
|
December 31, 2016
|
||
|
|
|
|
||
Constant prepayment rate
|
|
11.00%
|
|
|
12.67%
|
Discount rate
|
|
10.02%
|
|
|
10.02%
|
Weighted average life (years)
|
|
6.01
|
|
|
5.51
|
|
(in thousands)
|
|||||||||||||||
|
December 31, 2016
|
Additions
|
Reductions
|
March 31, 2017
|
||||||||||||
|
||||||||||||||||
Mortgage servicing rights
|
$
|
1,815
|
$
|
68
|
$
|
(85
|
)
|
$
|
1,798
|
|||||||
Valuation allowance
|
(21
|
)
|
—
|
21
|
—
|
|||||||||||
Mortgage servicing rights, net of valuation allowance
|
$
|
1,794
|
$
|
68
|
$
|
(64
|
)
|
$
|
1,798
|
|
(in thousands)
|
|||||||||||||||
March 31, 2017
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
28,608
|
$
|
28,608
|
$
|
—
|
$
|
—
|
||||||||
Securities of U.S. government agencies and corporations
|
22,226
|
—
|
22,226
|
—
|
||||||||||||
Obligations of states and political subdivisions
|
30,587
|
—
|
30,587
|
—
|
||||||||||||
Collateralized mortgage obligations
|
52,682
|
—
|
52,682
|
—
|
||||||||||||
Mortgage-backed securities
|
159,340
|
—
|
159,340
|
—
|
||||||||||||
Total investments at fair value
|
$
|
293,443
|
$
|
28,608
|
$
|
264,835
|
$
|
—
|
|
(in thousands)
|
|||||||||||||||
December 31, 2016
|
Fair Value
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
28,652
|
$
|
28,652
|
$
|
—
|
$
|
—
|
||||||||
Securities of U.S. government agencies and corporations
|
24,197
|
—
|
24,197
|
—
|
||||||||||||
Obligations of states and political subdivisions
|
30,888
|
—
|
30,888
|
—
|
||||||||||||
Collateralized mortgage obligations
|
49,938
|
—
|
49,938
|
—
|
||||||||||||
Mortgage-backed securities
|
143,404
|
—
|
143,404
|
—
|
||||||||||||
Total investments at fair value
|
$
|
277,079
|
$
|
28,652
|
$
|
248,427
|
$
|
—
|
|
(in thousands)
|
|||||||||||||||
March 31, 2017
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Impaired loans
|
$
|
3,674
|
$
|
—
|
$
|
—
|
$
|
3,674
|
||||||||
Total assets at fair value
|
$
|
3,674
|
$
|
—
|
$
|
—
|
$
|
3,674
|
|
(in thousands)
|
|||||||||||||||
December 31, 2016
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Impaired loans
|
$
|
4,128
|
$
|
—
|
$
|
—
|
$
|
4,128
|
||||||||
Loan servicing rights
|
1,794
|
—
|
—
|
1,794
|
||||||||||||
Total assets at fair value
|
$
|
5,922
|
$
|
—
|
$
|
—
|
$
|
5,922
|
|
Method
|
Assumption Inputs
|
|
|
|
|
|
Impaired loans
|
Collateral, market, income, enterprise, liquidation and discounted Cash Flows
|
External appraised values, management assumptions regarding market trends or other relevant factors; selling costs ranging 6% to 7%.
|
|
Loan servicing rights
|
Discounted cash flows
|
Present value of expected future cash flows was estimated using a discount rate factor of 10.02% as of December 31, 2016. A constant prepayment rate of 12.67% as of December 31, 2016 was utilized.
|
|
|
|
|
|
March 31, 2017
|
December 31, 2016
|
||||||||||||||||||
|
Level
|
Carrying amount
|
Fair value
|
Carrying amount
|
Fair value
|
|||||||||||||||
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
1
|
$
|
163,247
|
$
|
163,247
|
$
|
159,643
|
$
|
159,643
|
|||||||||||
Certificates of deposit
|
2
|
15,717
|
15,726
|
16,213
|
16,230
|
|||||||||||||||
Stock in Federal Home Loan Bank and other equity securities
|
3
|
4,409
|
4,409
|
4,409
|
4,409
|
|||||||||||||||
Loans receivable:
|
||||||||||||||||||||
Net loans
|
3
|
653,453
|
652,973
|
669,770
|
669,437
|
|||||||||||||||
Loans held-for-sale
|
2
|
1,243
|
1,280
|
3,326
|
3,363
|
|||||||||||||||
Interest receivable
|
2
|
3,686
|
3,686
|
3,996
|
3,996
|
|||||||||||||||
Mortgage servicing rights
|
3
|
1,798
|
1,918
|
1,794
|
1,794
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
3
|
1,060,734
|
990,737
|
1,063,696
|
1,001,460
|
|||||||||||||||
Interest payable
|
2
|
80
|
80
|
78
|
78
|
(in thousands)
|
March 31, 2017
|
December 31, 2016
|
||||||
|
||||||||
Undisbursed loan commitments
|
$
|
227,127
|
$
|
207,207
|
||||
Standby letters of credit
|
3,066
|
3,518
|
||||||
Commitments to sell loans
|
2,010
|
1,848
|
||||||
|
$
|
232,203
|
$
|
212,573
|
|
Number of Shares
|
Weighted Average
Exercise Price
|
Aggregate
Intrinsic Value
|
Weighted Average
Remaining
Contractual
Term (in years)
|
||||||||||||
Options outstanding at Beginning of Period
|
227,549
|
$
|
8.12
|
|||||||||||||
Granted
|
60,520
|
$
|
11.54
|
|||||||||||||
Expired
|
(37,475
|
)
|
$
|
16.31
|
||||||||||||
Cancelled / Forfeited
|
—
|
$
|
—
|
|||||||||||||
Exercised
|
—
|
$
|
—
|
|||||||||||||
Options outstanding at End of Period
|
250,594
|
$
|
7.72
|
$
|
978,246
|
7.49
|
||||||||||
Exercisable (vested) at End of Period
|
118,731
|
$
|
6.03
|
$
|
667,012
|
5.71
|
|
Three Months Ended
March 31, 2017
|
|
Risk Free Interest Rate
|
|
1.89 %
|
|
|
|
Expected Dividend Yield
|
|
0.00 %
|
|
|
|
Expected Life in Years
|
|
5
|
|
|
|
Expected Price Volatility
|
|
22.88 %
|
|
Number of Shares
|
Weighted Average
Grant-Date Fair
Value
|
Aggregate Intrinsic
Value
|
Weighted Average
Remaining
Contractual
Term (in years)
|
|||||||||
Non-vested Restricted stock outstanding at Beginning of Period
|
99,184
|
$
|
6.70
|
|
|||||||||
Granted
|
24,617
|
$
|
11.46
|
||||||||||
Cancelled/Forfeited
|
—
|
$
|
—
|
||||||||||
Exercised/Released/Vested
|
(15,340
|
)
|
$
|
5.08
|
$ | ||||||||
Non-vested restricted stock outstanding at End of Period
|
108,461
|
$
|
8.01
|
$1,258,148
|
3.06
|
|
Three Months Ended
March 31, 2017
|
|
Risk Free Interest Rate
|
|
0.85%
|
|
|
|
Expected Dividend Yield
|
|
0.00%
|
|
|
|
Expected Life in Years
|
|
1.00
|
|
|
|
Expected Price Volatility
|
|
8.18%
|
($ in thousands)
|
Unrealized
Gains (losses)
on Securities
|
Officers'
retirement plan
|
Directors'
retirement plan
|
Accumulated Other
Comprehensive
Income/(loss)
|
||||||||||||
Balance as of December 31, 2016
|
$
|
(1,678
|
)
|
$
|
(686
|
)
|
$
|
14
|
$
|
(2,350
|
)
|
|||||
Current period other comprehensive income/(loss)
|
20
|
(46
|
)
|
-
|
(26
|
)
|
||||||||||
Balance as of March 31, 2017
|
$
|
(1,658
|
)
|
$
|
(732
|
)
|
$
|
14
|
$
|
(2,376
|
)
|
($ in thousands)
|
Unrealized
Gains (losses)
on Securities
|
Officers'
retirement plan
|
Directors'
retirement plan
|
Accumulated Other
Comprehensive
Income/(loss)
|
||||||||||||
Balance as of December 31, 2015
|
$
|
150
|
$
|
(662
|
)
|
$
|
17
|
$
|
(495
|
)
|
||||||
Current period other comprehensive income/(loss)
|
652
|
—
|
—
|
652
|
||||||||||||
Balance as of March 31, 2016
|
$
|
802
|
$
|
(662
|
)
|
$
|
17
|
$
|
157
|
|
Three months ended
March 31,
|
|||||||
|
2017
|
2016
|
||||||
Basic earnings per share:
|
||||||||
Net income
|
$
|
2,513
|
$
|
1,731
|
||||
|
||||||||
Weighted average common shares outstanding
|
11,052,475
|
11,014,129
|
||||||
Basic EPS
|
$
|
0.23
|
$
|
0.16
|
||||
|
||||||||
Diluted earnings per share:
|
||||||||
Net income
|
$
|
2,513
|
$
|
1,731
|
||||
|
||||||||
Weighted average common shares outstanding
|
11,052,475
|
11,014,129
|
||||||
Effect of dilutive shares
|
137,753
|
69,819
|
||||||
Adjusted weighted average common shares outstanding
|
11,190,228
|
11,083,948
|
||||||
Diluted EPS
|
$
|
0.22
|
$
|
0.16
|
|
Our business objectives, strategies and initiatives, our organizational structure, the growth of our business and our competitive position and prospects, and the effect of competition on our business and strategies
|
|
Our assessment of significant factors and developments that have affected or may affect our results
|
|
Pending and recent legal and regulatory actions, and future legislative and regulatory developments, including the effects of the Dodd-Frank Wall Street Reform and Protection Act (the "Dodd-Frank Act") and other legislation and governmental measures introduced in response to the financial crises affecting the banking system, financial markets and the U.S. economy
|
|
Regulatory and compliance controls, processes and requirements and their impact on our business
|
|
The costs and effects of legal or regulatory actions
|
|
Expectations regarding draws on performance letters of credit
|
|
Our regulatory capital requirements, including the capital rules adopted in the past several years by the U.S. federal banking agencies
|
|
Expectations regarding our non-payment of a cash dividend on our common stock in the foreseeable future
|
|
Credit quality and provision for credit losses and management of asset quality and credit risk and expectations regarding collections
|
|
Our allowances for credit losses, including the conditions we consider in determining the unallocated allowance and our portfolio credit quality, underwriting standards, and risk grading
|
|
Our assessment of economic conditions and trends and credit cycles and their impact on our business
|
|
The seasonal nature of our business
|
|
The impact of changes in interest rates and our strategy to manage our interest rate risk profile and the possible effect of increases in residential mortgage interest rates on new originations and refinancing of existing residential mortgage loans
|
|
Loan portfolio composition and risk grade trends, expected charge-offs, portfolio credit quality, our strategy regarding troubled debt restructurings ("TDRs"), delinquency rates and our underwriting standards
|
|
Our deposit base including renewal of time deposits
|
|
The impact on our net interest income and net interest margin from the current low-interest rate environment
|
|
Expectations regarding an increase or decrease in unrecognized tax benefits
|
|
Our pension and retirement plan costs
|
|
Our liquidity position
|
|
Critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements or changes in accounting principles
|
|
Expected rates of return, maturities, loss exposure, growth rates, yields and projected results
|
|
The possible impact of weather-related conditions, including drought or flooding, and related governmental responses on economic conditions, especially in the agricultural sector
|
|
Maintenance of insurance coverages appropriate for our operations
|
|
Threats to the banking sector and our business due to cybersecurity issues and attacks and regulatory expectations related to cybersecurity
|
|
Descriptions of assumptions underlying or relating to any of the of the foregoing
|
|
Net income of $2.5 million for the three months ended March 31, 2017, up 47.1% from $1.7 million earned for the same period last year.
|
|
Diluted earnings per share of $0.22 for the three months ended March 31, 2017, up 37.5% from diluted income per share of $0.16 in the same period last year.
|
|
Net interest income of $9.3 million for the three months ended March 31, 2017, up 12.1% from $8.3 million in the same period last year. The increase in net interest income was primarily attributable to an increase in interest income on loans and investment securities and a decrease in interest expense on deposits. The increase in interest income on loans was due to an increase in average loans and an increase in interest yield. The increase in interest income on investment securities was primarily due to an increase in average balance, which was partially offset by a decrease in interest yield. The decrease in interest expense on deposits was primarily due to a decrease in interest yield, which was partially offset by an increase in average balance.
|
●
|
Net interest margin of 3.42% for the three months ended March 31, 2017, up 0.08% from 3.34% for the same period last year.
|
●
|
Gain on sale-leaseback of $1.2 million for the three months ended March 31, 2017, up 100.0% from $0 for the same period last year.
|
|
Provision for loan losses of $0.6 million for the three months ended March 31, 2017, up 20.0% from $0.5 million for the same period last year.
|
|
Total assets of $1.167 billion as of March 31, 2017 and December 31, 2016.
|
|
Total net loans (including loans held-for-sale) of $654.7 million as of March 31, 2017, down 2.7% from $673.1 million as of December 31, 2016.
|
|
Total investment securities of $293.4 million as of March 31, 2017, up 5.9% from $277.1 million as of December 31, 2016.
|
|
Total deposits of $1.061 billion as of March 31, 2017, down 0.3% from $1.064 billion as of December 31, 2016.
|
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||
|
||||||||
(in thousands except for per share amounts)
|
||||||||
For the Period:
|
||||||||
Net Income
|
$
|
2,513
|
$
|
1,731
|
||||
Basic Earnings Per Common Share
|
$
|
0.23
|
$
|
0.16
|
||||
Diluted Earnings Per Common Share
|
$
|
0.22
|
$
|
0.16
|
||||
Net Income to Average Total Assets (annualized)
|
0.87
|
%
|
0.66
|
%
|
||||
Net Income to Average Common Shareholders' Equity (annualized)
|
10.64
|
%
|
7.91
|
%
|
||||
|
||||||||
|
|
March 31, 2017
|
December 31, 2016
|
||||||
|
||||||||
(in thousands except for ratios)
|
||||||||
At Period End:
|
||||||||
Total Assets
|
$
|
1,166,713
|
$
|
1,166,763
|
||||
Total Loans, Net (including loans held-for-sale)
|
$
|
654,696
|
$
|
673,096
|
||||
Total Investment Securities
|
$
|
293,443
|
$
|
277,079
|
||||
Total Deposits
|
$
|
1,060,734
|
$
|
1,063,696
|
||||
Loan-To-Deposit Ratio
|
61.7
|
%
|
63.3
|
%
|
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||||||||||||||||||
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
660,028
|
$
|
7,961
|
4.89
|
%
|
$
|
607,784
|
$
|
7,382
|
4.87
|
%
|
||||||||||||
Certificates of deposit
|
16,161
|
36
|
0.90
|
%
|
16,649
|
33
|
0.80
|
%
|
||||||||||||||||
Interest bearing due from banks
|
139,768
|
296
|
0.86
|
%
|
171,976
|
236
|
0.55
|
%
|
||||||||||||||||
Investment securities, taxable
|
263,729
|
1,102
|
1.69
|
%
|
185,044
|
782
|
1.70
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
19,108
|
75
|
1.59
|
%
|
12,447
|
70
|
2.26
|
%
|
||||||||||||||||
Other interest earning assets
|
4,409
|
108
|
9.93
|
%
|
3,934
|
84
|
8.56
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,103,203
|
9,578
|
3.52
|
%
|
997,834
|
8,587
|
3.45
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
24,451
|
24,334
|
||||||||||||||||||||||
Premises and equipment, net
|
6,095
|
7,145
|
||||||||||||||||||||||
Other real estate owned
|
-
|
26
|
||||||||||||||||||||||
Interest receivable and other assets
|
27,773
|
25,930
|
||||||||||||||||||||||
Total average assets
|
1,161,522
|
1,055,269
|
||||||||||||||||||||||
|
||||||||||||||||||||||||
Liabilities and Stockholders' Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
288,923
|
60
|
0.08
|
%
|
264,896
|
75
|
0.11
|
%
|
||||||||||||||||
Savings and MMDA's
|
334,643
|
127
|
0.15
|
%
|
290,716
|
124
|
0.17
|
%
|
||||||||||||||||
Time, $250,000 and under
|
58,717
|
59
|
0.41
|
%
|
67,251
|
65
|
0.39
|
%
|
||||||||||||||||
Time, over $250,000
|
19,866
|
19
|
0.39
|
%
|
20,422
|
22
|
0.43
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
702,149
|
265
|
0.15
|
%
|
643,285
|
286
|
0.18
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
354,759
|
315,387
|
||||||||||||||||||||||
Interest payable and other liabilities
|
10,128
|
9,031
|
||||||||||||||||||||||
Total liabilities
|
1,067,036
|
967,703
|
||||||||||||||||||||||
Total average stockholders' equity
|
94,486
|
87,566
|
||||||||||||||||||||||
Total average liabilities and stockholders' equity
|
$
|
1,161,522
|
$
|
1,055,269
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
9,313
|
3.42
|
%
|
$
|
8,301
|
3.34
|
%
|
|
Three months ended
March 31, 2017
|
Three months ended
December 31, 2016
|
||||||||||||||||||||||
|
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
660,028
|
$
|
7,961
|
4.89
|
%
|
$
|
648,387
|
$
|
7,895
|
4.83
|
%
|
||||||||||||
Certificates of deposit
|
16,161
|
36
|
0.90
|
%
|
16,394
|
37
|
0.90
|
%
|
||||||||||||||||
Interest bearing due from banks
|
139,768
|
296
|
0.86
|
%
|
145,255
|
178
|
0.49
|
%
|
||||||||||||||||
Investment securities, taxable
|
263,729
|
1,102
|
1.69
|
%
|
255,599
|
1,005
|
1.56
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
19,108
|
75
|
1.59
|
%
|
18,677
|
74
|
1.57
|
%
|
||||||||||||||||
Other interest earning assets
|
4,409
|
108
|
9.93
|
%
|
4,409
|
247
|
22.23
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,103,203
|
9,578
|
3.52
|
%
|
1,088,721
|
9,436
|
3.44
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
24,451
|
26,104
|
||||||||||||||||||||||
Premises and equipment, net
|
6,095
|
7,393
|
||||||||||||||||||||||
Interest receivable and other assets
|
27,773
|
27,176
|
||||||||||||||||||||||
Total average assets
|
1,161,522
|
1,149,394
|
||||||||||||||||||||||
|
||||||||||||||||||||||||
Liabilities and Stockholders' Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
288,923
|
60
|
0.08
|
%
|
277,010
|
83
|
0.12
|
%
|
||||||||||||||||
Savings and MMDA's
|
334,643
|
127
|
0.15
|
%
|
333,447
|
144
|
0.17
|
%
|
||||||||||||||||
Time, $250,000 and under
|
58,717
|
59
|
0.41
|
%
|
65,013
|
77
|
0.47
|
%
|
||||||||||||||||
Time, over $250,000
|
19,866
|
19
|
0.39
|
%
|
16,348
|
5
|
0.12
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
702,149
|
265
|
0.15
|
%
|
691,818
|
309
|
0.18
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
354,759
|
354,060
|
||||||||||||||||||||||
Interest payable and other liabilities
|
10,128
|
10,168
|
||||||||||||||||||||||
Total liabilities
|
1,067,036
|
1,056,046
|
||||||||||||||||||||||
Total average stockholders' equity
|
94,486
|
93,348
|
||||||||||||||||||||||
Total average liabilities and stockholders' equity
|
$
|
1,161,522
|
$
|
1,149,394
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
9,313
|
3.42
|
%
|
$
|
9,127
|
3.33
|
%
|
|
Three Months Ended March 31, 2017
Over
Three Months Ended March 31, 2016
|
Three Months Ended March 31, 2017
Over
Three Months Ended December 31, 2016
|
||||||||||||||||||||||
|
Volume
|
Interest
Rate
|
Change
|
Volume
|
Interest
Rate
|
Change
|
||||||||||||||||||
|
||||||||||||||||||||||||
Increase (Decrease) in Interest Income:
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Loans
|
$
|
557
|
$
|
(86
|
)
|
$
|
471
|
$
|
18
|
$
|
6
|
$
|
24
|
|||||||||||
|
||||||||||||||||||||||||
Loan Fees
|
108
|
—
|
108
|
42
|
—
|
42
|
||||||||||||||||||
|
||||||||||||||||||||||||
Due From Banks
|
(51
|
)
|
111
|
60
|
(7
|
)
|
125
|
118
|
||||||||||||||||
Certificates of Deposit
|
(1
|
)
|
4
|
3
|
(1
|
)
|
—
|
(1
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||
Investment Securities
|
713
|
(388
|
)
|
325
|
38
|
60
|
98
|
|||||||||||||||||
|
||||||||||||||||||||||||
Other Assets
|
11
|
14
|
24
|
1
|
(140
|
)
|
(139
|
)
|
||||||||||||||||
|
||||||||||||||||||||||||
|
$
|
1,336
|
$
|
(345
|
)
|
$
|
991
|
$
|
91
|
$
|
51
|
$
|
142
|
|||||||||||
|
||||||||||||||||||||||||
Increase (Decrease) in Interest Expense:
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Interest-Bearing Transaction Deposits
|
$
|
6
|
$
|
(21
|
)
|
$
|
(15
|
)
|
$
|
4
|
$
|
(27
|
)
|
$
|
(23
|
)
|
||||||||
|
||||||||||||||||||||||||
Savings & MMDAs
|
19
|
(16
|
)
|
3
|
1
|
(18
|
)
|
(17
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||
Time Certificates
|
(8
|
)
|
(2
|
)
|
(9
|
)
|
(8
|
)
|
4
|
(4
|
)
|
|||||||||||||
|
||||||||||||||||||||||||
Borrowed Funds
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
||||||||||||||||||||||||
|
$
|
17
|
$
|
(38
|
)
|
$
|
(21
|
)
|
$
|
(3
|
)
|
$
|
(41
|
)
|
$
|
(44
|
)
|
|||||||
|
||||||||||||||||||||||||
Increase in Net Interest Income:
|
$
|
1,319
|
$
|
(307
|
)
|
$
|
1,012
|
$
|
94
|
$
|
92
|
$
|
186
|
|
(in thousands)
|
|||||||
|
Three months ended
March 31, 2017
|
Three months ended
March 31, 2016
|
||||||
Other non-interest expenses
|
||||||||
FDIC assessments
|
$
|
135
|
$
|
155
|
||||
Contributions
|
45
|
25
|
||||||
Legal fees
|
46
|
83
|
||||||
Accounting and audit fees
|
93
|
88
|
||||||
Consulting fees
|
250
|
151
|
||||||
Postage expense
|
69
|
78
|
||||||
Telephone expense
|
32
|
37
|
||||||
Public relations
|
51
|
65
|
||||||
Training expense
|
48
|
37
|
||||||
Loan origination expense
|
35
|
38
|
||||||
Computer software depreciation
|
38
|
25
|
||||||
Operational losses
|
98
|
31
|
||||||
Loan collection expense
|
26
|
20
|
||||||
Other non-interest expense
|
494
|
454
|
||||||
Total other non-interest expenses
|
$
|
1,460
|
$
|
1,287
|
|
(in thousands)
|
|||||||
|
March 31, 2017
|
December 31, 2016
|
||||||
|
||||||||
Undisbursed loan commitments
|
$
|
227,127
|
$
|
207,207
|
||||
Standby letters of credit
|
3,066
|
3,518
|
||||||
Commitments to sell loans
|
2,010
|
1,848
|
||||||
|
$
|
232,203
|
$
|
212,573
|
● |
Substandard Assets – A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
|
● |
Doubtful Assets – An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable or improbable.
|
|
At March 31, 2017
|
At December 31, 2016
|
||||||||||||||||||||||
|
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Commercial
|
$
|
5,000
|
$
|
2,000
|
$
|
3,000
|
$
|
5,000
|
$
|
2,000
|
$
|
3,000
|
||||||||||||
Commercial real estate
|
514
|
78
|
436
|
540
|
81
|
459
|
||||||||||||||||||
Agriculture
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Residential mortgage
|
668
|
—
|
668
|
654
|
—
|
654
|
||||||||||||||||||
Residential construction
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Consumer
|
—
|
—
|
—
|
103
|
—
|
103
|
||||||||||||||||||
Total non-accrual loans
|
$
|
6,182
|
$
|
2,078
|
$
|
4,104
|
$
|
6,297
|
$
|
2,081
|
$
|
4,216
|
|
At March 31, 2017
|
At December 31, 2016
|
||||||||||||||||||||||
|
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Non-accrual loans
|
$
|
6,182
|
$
|
2,078
|
$
|
4,104
|
$
|
6,297
|
$
|
2,081
|
$
|
4,216
|
||||||||||||
Loans 90 days past due and still accruing
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
||||||||||||||||||||||||
Total non-performing loans
|
6,182
|
2,078
|
4,104
|
6,297
|
2,081
|
4,216
|
||||||||||||||||||
Other real estate owned
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total non-performing assets
|
6,182
|
2,078
|
4,104
|
6,297
|
2,081
|
4,216
|
||||||||||||||||||
|
||||||||||||||||||||||||
Non-performing loans to total loans
|
0.6
|
%
|
0.6
|
%
|
||||||||||||||||||||
Non-performing assets to total assets
|
0.4
|
%
|
0.4
|
%
|
||||||||||||||||||||
Allowance for loan and lease losses to non-performing loans (net of guarantees)
|
280.2
|
%
|
258.5
|
%
|
|
Three months ended
March 31,
|
Year ended
December 31,
|
||||||||||
|
2017
|
2016
|
2016
|
|||||||||
|
||||||||||||
Balance at beginning of period
|
$
|
10,899
|
$
|
9,251
|
$
|
9,251
|
||||||
Provision for loan losses
|
600
|
450
|
1,800
|
|||||||||
Loans charged-off:
|
||||||||||||
Commercial
|
—
|
(100
|
)
|
(446
|
)
|
|||||||
Commercial Real Estate
|
—
|
(15
|
)
|
(15
|
)
|
|||||||
Agriculture
|
—
|
—
|
—
|
|||||||||
Residential Mortgage
|
—
|
—
|
(13
|
)
|
||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
(11
|
)
|
(20
|
)
|
(65
|
)
|
||||||
Total charged-off
|
(11
|
)
|
(135
|
)
|
(539
|
)
|
||||||
|
||||||||||||
Recoveries:
|
||||||||||||
Commercial
|
2
|
18
|
37
|
|||||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
—
|
—
|
81
|
|||||||||
Residential Mortgage
|
—
|
1
|
1
|
|||||||||
Residential Construction
|
1
|
1
|
5
|
|||||||||
Consumer
|
8
|
21
|
263
|
|||||||||
Total recoveries
|
11
|
41
|
387
|
|||||||||
|
||||||||||||
Net charge-offs
|
—
|
(94
|
)
|
(152
|
)
|
|||||||
|
||||||||||||
Balance at end of period
|
$
|
11,499
|
$
|
9,607
|
$
|
10,899
|
||||||
|
||||||||||||
Ratio of net charge-offs to average loans outstanding during the period (annualized)
|
0.00
|
%
|
(0.06
|
%)
|
(0.02
|
%)
|
||||||
Allowance for loan losses
|
||||||||||||
To total loans at the end of the period
|
1.73
|
%
|
1.53
|
%
|
1.60
|
%
|
||||||
To non-performing loans, net of guarantees at the end of the period
|
280.2
|
%
|
511.3
|
%
|
258.5
|
%
|
|
(in thousands)
|
|||||||
|
March 31, 2017
|
December 31, 2016
|
||||||
Three months or less
|
$
|
4,766
|
$
|
2,676
|
||||
Over three to twelve months
|
8,182
|
10,058
|
||||||
Over twelve months
|
7,307
|
2,524
|
||||||
Total
|
$
|
20,255
|
$
|
15,258
|
|
(amounts in thousands except percentage amounts)
|
|||||||||||
|
Actual
|
Well Capitalized
Ratio Requirement
|
||||||||||
|
Capital
|
Ratio
|
||||||||||
Leverage
|
$
|
94,696
|
8.15
|
%
|
5.0
|
%
|
||||||
Common Equity Tier 1
|
$
|
94,696
|
12.15
|
%
|
6.5
|
%
|
||||||
Tier 1 Risk-Based
|
$
|
94,696
|
12.15
|
%
|
8.0
|
%
|
||||||
Total Risk-Based
|
$
|
104,473
|
13.40
|
%
|
10.0
|
%
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
31.1
|
|
Rule 13a — 14(a) Certification of Chief Executive Officer
|
|
|
|
31.2
|
|
Rule 13a — 14(a) Certification of Chief Financial Officer
|
|
|
|
32.1*
|
|
Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
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32.2*
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Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
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101
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Pursuant to Rule 405 of Regulation S-T, the following financial information from the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, is formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income (iv) Condensed Consolidated Statement of Stockholders' Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.
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FIRST NORTHERN COMMUNITY BANCORP
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Date:
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May 3, 2017
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By:
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/s/ Jeremiah Z. Smith
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Jeremiah Z. Smith, Senior Executive Vice President / Chief Operating Officer and Chief Financial Officer
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(Principal Financial Officer and Duly Authorized Officer)
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Date: May 3, 2017
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/s/ Louise A. Walker
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Louise A. Walker, President and Chief Executive Officer
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Date: May 3, 2017
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/s/ Jeremiah Z. Smith
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Jeremiah Z. Smith, Senior Executive Vice President / Chief Operating Officer and Chief Financial Officer
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Date:
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May 3, 2017
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/s/ Louise A. Walker
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Louise A. Walker, President and Chief Executive
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Date:
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May 3, 2017
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/s/ Jeremiah Z. Smith
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Jeremiah Z. Smith, Senior Executive Vice President / Chief Operating Officer and Chief Financial Officer
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Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2017 |
May 01, 2017 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIRST NORTHERN COMMUNITY BANCORP | |
Entity Central Index Key | 0001114927 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,172,279 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets | ||
Loans, allowance for loan losses | $ 11,499 | $ 10,899 |
Stockholder's Equity: | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 16,000,000 | 16,000,000 |
Common stock, shares issued (in shares) | 11,172,279 | 11,148,446 |
Common stock, shares outstanding (in shares) | 11,172,279 | 11,148,446 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | ||
Net income | $ 2,513 | $ 1,731 |
Unrealized holding gains on securities: | ||
Unrealized holding gains arising during the period, net of tax effect of $6 and $441 for the three-month periods ended March 31, 2017 and March 31, 2016, respectively | 10 | 660 |
Less: reclassification adjustment due to losses (gains) realized on sales of securities, net of tax effect of $6 and ($6) for the three-month periods ended March 31, 2017 and March 31, 2016, respectively | 10 | (8) |
Directors' and officer's retirement plan equity adjustments, net of tax effect of $(31) and $0 for the three-month periods ended March 31, 2017 and March 31, 2016, respectively | (46) | 0 |
Other comprehensive (loss) income | (26) | 652 |
Comprehensive income | $ 2,487 | $ 2,383 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Unrealized holding gains on securities: | ||
Unrealized holding gains arising during the period, tax | $ 6 | $ 441 |
Less: reclassification adjustment due to losses (gains) realized on sales of securities, tax | 6 | (6) |
Directors' and officer's retirement plan equity adjustments, tax | $ (31) | $ 0 |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) |
3 Months Ended |
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Mar. 31, 2017 | |
Common Stock [Member] | |
Stock dividend declared | 4.00% |
BASIS OF PRESENTATION |
3 Months Ended | ||
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Mar. 31, 2017 | |||
BASIS OF PRESENTATION [Abstract] | |||
BASIS OF PRESENTATION |
The accompanying unaudited condensed consolidated financial statements of First Northern Community Bancorp (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Articles 9 and 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. All material intercompany balances and transactions have been eliminated in consolidation. |
ACCOUNTING POLICIES |
3 Months Ended | ||
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Mar. 31, 2017 | |||
ACCOUNTING POLICIES [Abstract] | |||
ACCOUNTING POLICIES |
The most significant accounting policies followed by the Company are presented in Note 1 to the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, Management has identified the allowance for loan losses accounting to be the accounting area requiring the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available. A discussion of the factors affecting accounting for the allowance for loan losses is included in the "Asset Quality" and "Allowance for Loan Loss" discussions below. Certain amounts in prior periods have been reclassified to conform to the current presentation. Application of these principles requires the Company to make certain estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment writedown or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available. Recently Issued Accounting Pronouncements: In January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business. The amendments in ASU 2017-01 clarify the definition and provide a more robust framework to use in determining when a set of assets and activities constitutes a business. ASU 2017-01 is intended to provide guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. In January 2017, FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. These amendments apply to ASU 2014-9 (Revenue from Contracts with Customers), ASU 2016-02 (Leases), and ASU 2016-13 (Financial Instruments - Credit Losses). The Company does not expect these amendments to have a significant impact on its consolidated financial statements. In March 2017, FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments also allow only the service cost component to be eligible for capitalization when applicable. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. In March 2017, FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments are effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. |
INVESTMENT SECURITIES |
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INVESTMENT SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | 3. INVESTMENT SECURITIES The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at March 31, 2017 are summarized as follows:
The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at December 31, 2016 are summarized as follows:
The Company had $2,737,000 and $3,978,000 proceeds from sales/calls of available-for-sale securities for the three months ended March 31, 2017 and March 31, 2016, respectively. There were $0 and $14,000 gross realized gains from sales/calls of available-for-sale securities for the three months ended March 31, 2017 and March 31, 2016, respectively. There were $(16,000) and $0 gross realized losses from sales/calls of available-for-sale securities for the three months ended March 31, 2017 and March 31, 2016, respectively. The amortized cost and estimated market value of debt and other securities at March 31, 2017, by contractual and expected maturity, are shown in the following table:
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, factors such as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities. An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of March 31, 2017, follows:
No decline in value was considered "other-than-temporary" during the first three months of 2017. One hundred sixty four securities, all considered investment grade, which had a fair value of $237,725,000 and a total unrealized loss of $3,235,000 have been in an unrealized loss position for less than twelve months as of March 31, 2017. Thirteen securities, all considered investment grade, which had a fair value of $7,300,000 and a total unrealized loss of $83,000 have been in an unrealized loss position for more than twelve months as of March 31, 2017. The declines in fair value were attributable to changes in interest rates. We have evaluated the credit ratings of our investment securities and their issuer and/or insurers, and based on this evaluation have determined that no investment security in our investment portfolio was other-than-temporarily impaired as of March 31, 2017. As the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities prior to their anticipated recovery, these investments are not considered other-than-temporarily impaired. An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2016, follows:
Investment securities carried at $36,473,000 and $38,152,000 at March 31, 2017 and December 31, 2016, respectively, were pledged to secure public deposits or for other purposes as required or permitted by law. |
LOANS |
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LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS | 4. LOANS The composition of the Company's loan portfolio, by loan class, as of March 31, 2017 and December 31, 2016 was as follows:
The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies, with particular attention to portfolio dynamics and loan mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of collectability and current collateral values and to maintain an adequate allowance for loan losses at all times. Asset quality reviews of loans and other non-performing assets are administered using credit risk rating standards and criteria similar to those employed by state and federal banking regulatory agencies. Commercial loans, whether secured or unsecured, generally are made to support the short-term operations and other needs of small businesses. These loans are generally secured by the receivables, equipment, and other real property of the business and are susceptible to the related risks described above. Problem commercial loans are generally identified by periodic review of financial information that may include financial statements, tax returns, and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner-occupied real estate are primarily susceptible to changes in the market conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in business cycles. These same risks apply to Commercial loans whether secured by equipment, receivables or other personal property or unsecured. Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default. Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often, these shifts are a result of changes in general economic or market conditions or overbuilding and resulting over-supply of space. Losses are dependent on the value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, sales invoices, or other appropriate means. Agricultural loans, whether secured or unsecured, generally are made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Agricultural loans are generally secured by inventory, receivables, equipment, and other real property. Agricultural loans primarily are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in business cycles, as well as adverse weather conditions such as drought or floods. Problem agricultural loans are generally identified by periodic review of financial information that may include financial statements, tax returns, crop budgets, payment history, and crop inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Residential mortgage loans, which are secured by real estate, are primarily susceptible to four risks; non-payment due to diminished or lost income, over-extension of credit, a lack of borrower's cash flow to sustain payments, and shortfalls in collateral value. In general, non-payment is usually due to loss of employment and follows general economic trends in the economy, particularly the upward movement in the unemployment rate, loss of collateral value, and demand shifts. Construction loans, whether owner-occupied or non-owner occupied residential development loans, are not only susceptible to the related risks described above but the added risks of construction, including cost over-runs, mismanagement of the project, or lack of demand and market changes experienced at time of completion. Losses are primarily related to underlying collateral value and changes therein as described above. Problem construction loans are generally identified by periodic review of financial information that may include financial statements, tax returns and payment history of the borrower. Based on this information the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors, or repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Consumer loans, whether unsecured or secured, are primarily susceptible to four risks: non-payment due to diminished or lost income, over-extension of credit, a lack of borrower's cash flow to sustain payments, and shortfall in collateral value. In general, non-payment is usually due to loss of employment and will follow general economic trends in the economy, particularly the upward movements in the unemployment rate, loss of collateral value, and demand shifts. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation. Collateral valuations are obtained at origination of the credit and periodically thereafter (generally annually but may be more frequent depending on the collateral type), once repayment is questionable, and the loan has been deemed classified. As of March 31, 2017, approximately 52% in principal amount of the Company's loans were secured by commercial real estate, consisting primarily of loans secured by commercial properties and construction and land development loans. Approximately 7% in principal amount of the Company's loans were residential mortgage loans. Approximately 3% in principal amount of the Company's loans were residential construction loans. Approximately 14% in principal amount of the Company's loans were for agriculture and 18% in principal amount of the Company's loans were for general commercial uses including professional, retail and small businesses. Approximately 6% in principal amount of the Company's loans were consumer loans. Once a loan becomes delinquent and repayment becomes questionable, a Company collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral or a principal payment. If this is not forthcoming and payment of principal and interest in accordance with the contractual terms of the loan agreement becomes unlikely, the Company will consider the loan to be impaired and will estimate its probable loss, using the present value of future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. For collateral dependent loans, the Company will obtain an updated valuation of the underlying collateral less estimated costs of sale, and charge-off the loan down to the estimated net realizable amount. Depending on the length of time until final collection, the Company may periodically revalue the estimated loss and take additional charge-offs or specific reserves as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when the collateral is liquidated and the actual loss is confirmed. Unpaid balances on loans after or during collection and liquidation may also be pursued through legal action and attachment of wages or judgment liens on the borrower's other assets. At March 31, 2017 and December 31, 2016, all loans were pledged under a blanket collateral lien to secure actual and potential borrowings from the Federal Home Loan Bank ("FHLB") and the Federal Reserve Bank. Non-accrual and Past Due Loans The Company's loans by delinquency and non-accrual status, as of March 31, 2017 and December 31, 2016, were as follows:
Non-accrual loans amounted to $6,182,000 at March 31, 2017 and were comprised of one commercial loan totaling $5,000,000, two commercial real estate loans totaling $514,000 and three residential mortgage loans totaling $668,000. Non-accrual loans amounted to $6,297,000 at December 31, 2016 and were comprised of one commercial loan totaling $5,000,000, two commercial real estate loans totaling $540,000, three residential mortgage loans totaling $654,000, and one consumer loan totaling $103,000. All non-accrual loans are measured for impairment based upon the present value of future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of collateral, if the loan is collateral dependent. If the measurement of the non-accrual loan is less than the recorded investment in the loan, an impairment is recognized through the establishment of a specific reserve sufficient to cover expected losses and/or a charge-off against the allowance for loan losses. If the loan is considered to be collateral dependent, it is generally the Company's policy to charge-off the portion of any non-accrual loan that the Company does not expect to collect by writing the loan down to the estimated net realizable value of the underlying collateral. There were no commitments to lend additional funds to borrowers whose loans were on non-accrual status at March 31, 2017. Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. Loans to be considered for impairment include non-accrual loans, troubled debt restructurings and loans with a risk rating of 6 (substandard) or worse. Once identified, impaired loans are measured individually for impairment using one of three methods: present value of expected cash flows discounted at the loan's effective interest rate; the loan's observable market price; or fair value of collateral if the loan is collateral dependent. In general, any portion of the recorded investment in a collateral dependent loan in excess of the fair value of the collateral that can be identified as uncollectible, and is, therefore, deemed a confirmed loss, and is promptly charged-off against the allowance for loan losses. Impaired loans, segregated by loan class, as of March 31, 2017 and December 31, 2016 were as follows:
The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the three months ended March 31, 2017 and March 31, 2016 was as follows:
Troubled Debt Restructurings The Company's loan portfolio includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), which are loans on which concessions in terms have been granted because of the borrowers' financial difficulties and, as a result, the Company receives less than the current market-based compensation for the loan. These concessions may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are placed on non-accrual status at the time of restructure and may only be returned to accruing status after considering the borrower's sustained repayment performance for a reasonable period, generally six months. When a loan is modified, it is measured based upon the present value of future cash flows discounted at the contractual interest rate of the original loan agreement, or the fair value of collateral less selling costs if the loan is collateral dependent. If the value of the modified loan is less than the recorded investment in the loan, impairment is recognized through a specific allowance or a charge-off of the loan. The Company had $9,584,000 and $9,663,000 in TDR loans as of March 31, 2017 and December 31, 2016, respectively. Specific reserves for TDR loans totaled $2,079,000 and $1,644,000 as of March 31, 2017 and December 31, 2016, respectively. TDR loans performing in compliance with modified terms totaled $4,584,000 and $4,662,000 as of March 31, 2017 and December 31, 2016, respectively. There were no commitments to advance additional funds on existing TDR loans as of March 31, 2017. There were no loans modified as TDRs during the three months ended March 31, 2017. Loans modified as TDRs during the three months ended March 31, 2016, were as follows:
Loan modifications generally involve reductions in the interest rate, payment extensions, forgiveness of principal, or forbearance. There were no loans modified as a TDR within the previous 12 months and for which there was a payment default during the three-month periods ended March 31, 2017 and March 31, 2016. Credit Quality Indicators All loans are rated using the credit risk ratings and criteria adopted by the Company. Risk ratings are adjusted as future circumstances warrant. All credits risk rated 1, 2, 3 or 4 equate to a Pass as indicated by Federal and State bank regulatory agencies; a 5 equates to a Special Mention; a 6 equates to Substandard; a 7 equates to Doubtful; and an 8 equates to a Loss. For the definitions of each risk rating, see Note 4 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The following table presents the risk ratings by loan class as of March 31, 2017 and December 31, 2016:
Allowance for Loan Losses The following tables detail activity in the allowance for loan losses by loan class for the three months ended March 31, 2017 and March 31, 2016:
The following table details activity in the allowance for loan losses and the amount allocated to loans individually and collectively evaluated for impairment as of and for the period ended December 31, 2016.
The Company's investment in loans as of March 31, 2017, March 31, 2016, and December 31, 2016 related to each balance in the allowance for loan losses by loan class and disaggregated on the basis of the Company's impairment methodology was as follows:
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MORTGAGE OPERATIONS |
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MORTGAGE OPERATIONS | 5. MORTGAGE OPERATIONS Transfers and servicing of financial assets and extinguishments of liabilities are accounted for and reported based on consistent application of a financial-components approach that focuses on control. Transfers of financial assets that are sales are distinguished from transfers that are secured borrowings. Retained interests (mortgage servicing rights) in loans sold are measured by allocating the previous carrying amount of the transferred assets between the loans sold and retained interests, if any, based on their relative fair value at the date of transfer. Fair values are estimated using discounted cash flows based on a current market interest rate. The Company recognizes a gain and a related asset for the fair value of the rights to service loans for others when loans are sold. The Company sold substantially its entire portfolio of conforming long-term residential mortgage loans originated during the three months ended March 31, 2017 for cash proceeds equal to the fair value of the loans. The recorded value of mortgage servicing rights is included in other assets on the condensed consolidated balance sheets, and is amortized in proportion to, and over the period of, estimated net servicing revenues. The Company assesses capitalized mortgage servicing rights for impairment based upon the fair value of those rights at each reporting date. For purposes of measuring impairment, the rights are stratified based upon the product type, term and interest rates. Fair value is determined by discounting estimated net future cash flows from mortgage servicing activities using discount rates that approximate current market rates and estimated prepayment rates, among other assumptions. The amount of impairment recognized, if any, is the amount by which the capitalized mortgage servicing rights for a stratum exceeds their fair value. Impairment, if any, is recognized through a valuation allowance for each individual stratum. Changes in the carrying amount of mortgage servicing rights are reported in earnings under other operating income on the condensed consolidated statements of income. Key assumptions used in measuring the fair value of mortgage servicing rights as of March 31, 2017 and December 31, 2016 were as follows:
At March 31, 2017 and December 31, 2016, the Company's mortgage loans held-for-sale totaled $1,243,000 and $3,326,000, respectively. At March 31, 2017, and December 31, 2016, the Company serviced real estate mortgage loans for others totaling $231,811,000 and $231,310,000, respectively. The following table summarizes the Company's mortgage servicing rights assets as of March 31, 2017 and December 31, 2016. Mortgage servicing rights are included in Interest Receivable and Other Assets on the condensed consolidated balance sheets:
At March 31, 2017 and December 31, 2016, the estimated fair market value of the Company's mortgage servicing rights asset was $1,918,000 and $1,794,000, respectively. The Company received contractually specified servicing fees of $146,000 and $149,000 for the three months ended March 31, 2017 and March 31, 2016, respectively. Contractually specified servicing fees are included in non-interest income on the condensed consolidated statements of income, net of the amortization of the mortgage servicing rights asset. |
FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 6. FAIR VALUE MEASUREMENTS The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale and trading securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a non-recurring basis, such as loans held-for-sale, loans held-for-investment and certain other assets. These non-recurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally corresponds with the Company's quarterly valuation process. Assets Recorded at Fair Value on a Recurring Basis The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:
There were no transfers of assets measured at fair value on a recurring basis between level 1 and level 2 of the fair value hierarchy. The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
Assets Recorded at Fair Value on a Non-Recurring Basis Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of March 31, 2017:
Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of December 31, 2016:
There were no liabilities measured at fair value on a recurring or non-recurring basis at March 31, 2017 and December 31, 2016. Key methods and assumptions used in measuring the fair value of impaired loans and loan servicing rights as of March 31, 2017 and December 31, 2016 were as follows:
The following section describes the valuation methodologies used for assets and liabilities recorded at fair value. Investment Securities Available-for-Sale Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security's credit rating, prepayment assumptions, and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets where valuations include significant unobservable assumptions. Loans Held-for-Sale Loans held-for-sale are carried at the lower of cost or fair value. The fair value of loans held-for-sale is based on what secondary markets are currently offering for portfolios with similar characteristics. As such, the Company classifies loans subjected to non-recurring fair value adjustments as Level 2. At March 31, 2017 and December 31, 2016, there were no loans held-for-sale that required a write-down. Impaired Loans The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, the Company measures impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Inputs include external appraised values, management assumptions regarding market trends or other relevant factors, selling and commission costs generally ranging from 6% to 7%, and amount and timing of cash flows based upon current discount rates. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At March 31, 2017, certain impaired loans were considered collateral dependent and were evaluated based on the fair value of the underlying collateral securing the loan. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When a loan is evaluated based on the fair value of the underlying collateral securing the loan, the Company records the impaired loan as non-recurring Level 3. Other Real Estate Owned Other real estate assets ("OREO") acquired through, or in lieu of, foreclosure are held-for-sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for loan losses. Appraisals or evaluations are then done periodically thereafter charging any additional write-downs or valuation allowances to the appropriate expense accounts. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. OREO is classified within Level 3 of the hierarchy. At March 31, 2017 and December 31, 2016, there were no OREO that required a write-down. Loan Servicing Rights Loan servicing rights are subject to impairment testing. The Company utilizes a third party service provider to calculate the fair value of the Company's loan servicing rights. Loan servicing rights are measured at fair value as of the date of sale. The Company uses quoted market prices when available. Subsequent fair value measurements are determined using a discounted cash flow model. In order to determine the fair value of the loan servicing rights, the present value of expected future cash flows is estimated. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. The model used to calculate the fair value of the Company's loan servicing rights is periodically validated by an independent external model validation group. The model assumptions and the loan servicing rights fair value estimates are also compared to observable trades of similar portfolios as well as to loan servicing rights broker valuations and industry surveys, as available. If the valuation model reflects a value less than the carrying value, loan servicing rights are adjusted to fair value through a valuation allowance as determined by the model. As such, the Company classifies loan servicing rights subjected to non-recurring fair value adjustments as Level 3. Disclosures about Fair Value of Financial Instruments The estimated fair values of the Company's financial instruments for the periods ended March 31, 2017 and December 31, 2016 were approximately as follows:
The following section describes the valuation methodologies used by the Company for estimating fair value of financial instruments not recorded at fair value on the Balance Sheet. Cash and Cash Equivalents The carrying amounts reported in the condensed consolidated balance sheets for cash and short-term instruments are a reasonable estimate of fair value. The carrying amount is a reasonable estimate of fair value because of the relatively short term between the origination of the instrument and its expected realization. Therefore, the Company believes the measurement of fair value of cash and cash equivalents is derived from Level 1 inputs. Certificates of Deposit The Company measures the fair value of Certificates of deposit using Level 2 inputs. The fair values of Certificates of deposit were derived by discounting their future expected cash flows back to their present values based upon a constant maturity curve. The constant maturity curve is based on similar instruments, taking into account factors such as instrument type, coupon type, currency, issuer, sector, country of issuer, credit rating, and prevailing market conditions. The Company believes these inputs fall under Level 2 of the fair value hierarchy. Other Equity Securities The carrying amounts reported in the condensed consolidated balance sheets approximate fair value as the shares can only be redeemed by the issuing institution. The Company believes the measurement of the fair value of other equity securities is derived from Level 3 inputs. Loans Receivable For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans (e.g., commercial real estate and rental property mortgage loans, commercial and industrial loans, and agricultural loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The allowance for loan losses is considered to be a reasonable estimate of loan discount due to credit risks. Given the estimation of expected credit losses involves management estimates for assumptions that are not directly observable in a market, the Company believes the fair value of loans receivable is derived from Level 3 inputs. Interest Receivable and Payable The carrying amount of interest receivable and payable approximates its fair value. The Company believes the measurement of the fair value of interest receivable and payable is derived from Level 2 inputs. Deposit Liabilities The Company measures fair value of deposits using both observable and unobservable inputs. The fair value of deposits were derived by discounting their expected future cash flows back to their present values based on the FHLB yield curve, and their expected decay rates for non-maturing deposits. The Company is able to obtain FHLB yield curve rates as of the measurement date, and believes these inputs fall under Level 2 of the fair value hierarchy. Decay rates were developed through internal analysis, and are supported by recent years of the Bank's transaction history. The inputs used by the Company to derive the decay rate assumptions are unobservable inputs, and therefore fall under Level 3 of the fair value hierarchy. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include deferred tax liabilities and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in many of the estimates. |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Bank's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Financial instruments, whose contract amounts represent credit risk at the indicated periods, were as follows:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank issues both financial and performance standby letters of credit. The financial standby letters of credit are primarily to guarantee payment to third parties. At March 31, 2017 and December 31, 2016, there were no financial standby letters of credit outstanding. The performance standby letters of credit are typically issued to municipalities as specific performance bonds. Performance standby letters of credit totaled $3,066,000 and $3,518,000 at March 31, 2017 and December 31, 2016, respectively. The Bank has experienced no draws on these letters of credit, resulting in no related liability included on their balance sheet; however, should a triggering event occur, the Bank either has collateral in excess of the letter of credit or imbedded agreements of recourse from the customer. The Bank has set aside a reserve for unfunded commitments in the amount of $793,000 at March 31, 2017 and December 31, 2016, which is recorded in "interest payable and other liabilities" on the Condensed Consolidated Balance Sheets. Commitments to extend credit and standby letters of credit bear similar credit risk characteristics as outstanding loans. As of March 31, 2017 and December 31, 2016, the Company had no off-balance sheet derivatives requiring additional disclosure. Mortgage loans sold to investors may be sold with servicing rights retained, for which the Company makes only standard legal representations and warranties as to meeting certain underwriting and collateral documentation standards. In the past two years, the number of loans the Company has had to repurchase due to deficiencies in underwriting or loan documentation is not significant. Management believes that any liabilities that may result from such recourse provisions are not significant. |
STOCK PLANS |
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STOCK PLANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PLANS | 8. STOCK PLANS On January 26, 2017, the Board of Directors of the Company declared a 4% stock dividend payable as of March 31, 2017 to shareholders of record as of February 28, 2017. All stock options and restricted stock outstanding have been adjusted to give retroactive effect to stock dividends. The following table presents the activity related to stock options for the three months ended March 31, 2017:
The weighted average grant date fair value per share of options granted during the three months ended March 31, 2017 was $2.78 per share. As of March 31, 2017, there was $313,000 of total unrecognized compensation cost related to non-vested stock options. This cost is expected to be recognized over a weighted average period of approximately 3.15 years. There was $24,000 of recognized compensation cost related to stock options granted for the three months ended March 31, 2017. A summary of the weighted average assumptions used in valuing stock options during the three months ended March 31, 2017 is presented below:
The following table presents the activity related to non-vested restricted stock for the three months ended March 31, 2017:
The weighted average fair value of restricted stock granted during the three months ended March 31, 2017 was $11.46 per share. As of March 31, 2017, there was $560,000 of total unrecognized compensation cost related to non-vested restricted stock. This cost is expected to be recognized over a weighted average period of approximately 3.06 years. There was $48,000 of recognized compensation cost related to restricted stock awards for the three months ended March 31, 2017. The Company has an Employee Stock Purchase Plan ("ESPP"). There are 270,400 shares authorized under the ESPP. The total number of shares authorized has been adjusted to give retroactive effect to stock dividends and stock splits, including the 4% stock dividend declared on January 26, 2017, payable March 31, 2017 to shareholders of record as of February 28, 2017. The ESPP will expire on March 16, 2026. The ESPP is implemented by participation periods of not more than twenty-seven months each. The Board of Directors determines the commencement date and duration of each participation period. The Board of Directors approved the current participation period of December 10, 2016 to November 23, 2017. An eligible employee is one who has been continually employed for at least 90 days prior to commencement of a participation period. Under the terms of the ESPP, employees can choose to have up to 10 percent of their compensation withheld to purchase the Company's common stock each participation period. The purchase price of the stock is 85 percent of the lower of the fair value on the last trading day before the date of participation or the fair value on the last trading day during the participation period. As of March 31, 2017, there was $14,000 of unrecognized compensation cost related to ESPP issuances. This cost is expected to be recognized over a weighted average period of approximately 0.75 years. There was $5,000 of recognized compensation cost related to ESPP issuances for the three months ended March 31, 2017. The weighted average fair value at issuance date during the three months ended March 31, 2017 was $1.74. A summary of the weighted average assumptions used in valuing ESPP issuances during the three months ended March 31, 2017 is presented below:
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ACCUMULATED OTHER COMPREHENSIVE INCOME |
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ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9. ACCUMULATED OTHER COMPREHENSIVE INCOME The following table details activity in accumulated other comprehensive income (loss) for the three months ended March 31, 2017:
The following table details activity in accumulated other comprehensive income (loss) for the three months ended March 31, 2016:
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OUTSTANDING SHARES AND EARNINGS PER SHARE |
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OUTSTANDING SHARES AND EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OUTSTANDING SHARES AND EARNINGS PER SHARE | 10. OUTSTANDING SHARES AND EARNINGS PER SHARE On January 26, 2017, the Board of Directors of the Company declared a 4% stock dividend payable as of March 31, 2017 to shareholders of record as of February 28, 2017. All income per share amounts have been adjusted to give retroactive effect to stock dividends. Earnings Per Share (EPS) Basic EPS includes no dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the respective period. Diluted EPS is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding plus dilutive shares for the quarter. Diluted shares include all common stock equivalents ("in-the-money" stock options, unvested restricted stock, stock units, warrants and rights, convertible bonds and preferred stock), which reflects the potential dilution of securities that could share in the earnings of the Company. The following table presents a reconciliation of basic and diluted EPS for the three months ended March 31, 2017 and 2016 (dollars in thousands except per share amounts):
Stock options which were not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect amounted to 68,398 shares and 169,530 shares for the three months ended March 31, 2017 and March 31, 2016, respectively. |
GAIN ON SALE-LEASEBACK OF REAL ESTATE |
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GAIN ON SALE-LEASEBACK OF REAL ESTATE [Abstract] | |
GAIN ON SALE-LEASEBACK OF REAL ESTATE | 11. GAIN ON SALE-LEASEBACK OF REAL ESTATE On January 6, 2017, the Company executed a sale-leaseback transaction related to land and building which is partially occupied by our Auburn Branch. The lease carries an initial lease term of six years and is classified as an operating lease. The sale resulted in a total gain of $1,682, of which $495 has been deferred as a component of Other Liabilities and will be accounted for as a reduction of Occupancy and equipment expense over the initial lease term. The Company recognized $14 as a reduction of Occupancy and equipment expense for the three month period ended March 31, 2017. |
BASIS OF PRESENTATION (Policies) |
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BASIS OF PRESENTATION [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of First Northern Community Bancorp (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Articles 9 and 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. All material intercompany balances and transactions have been eliminated in consolidation. |
ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2017 | |
ACCOUNTING POLICIES [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements: In January 2017, FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business. The amendments in ASU 2017-01 clarify the definition and provide a more robust framework to use in determining when a set of assets and activities constitutes a business. ASU 2017-01 is intended to provide guidance when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. In January 2017, FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. These amendments apply to ASU 2014-9 (Revenue from Contracts with Customers), ASU 2016-02 (Leases), and ASU 2016-13 (Financial Instruments - Credit Losses). The Company does not expect these amendments to have a significant impact on its consolidated financial statements. In March 2017, FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The amendments also allow only the service cost component to be eligible for capitalization when applicable. The amendments are effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. In March 2017, FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities. The amendments shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments are effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those periods. The Company does not expect the adoption of this update to have a significant impact on its consolidated financial statements. |
INVESTMENT SECURITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost, Unrealized Gains and Losses and Estimated Fair Values of Investments in Debt and Other Securities | The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at March 31, 2017 are summarized as follows:
The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at December 31, 2016 are summarized as follows:
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Amortized Cost and Estimated Fair Value of Debt and Other Securities by Contractual Maturity | The amortized cost and estimated market value of debt and other securities at March 31, 2017, by contractual and expected maturity, are shown in the following table:
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Analysis of Gross Unrealized Losses of the Available-for-sale Investment Securities Portfolio | An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of March 31, 2017, follows:
An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2016, follows:
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LOANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Loan Portfolio, by Loan Class | The composition of the Company's loan portfolio, by loan class, as of March 31, 2017 and December 31, 2016 was as follows:
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Non-accrual Loans by Loan Class | The Company's loans by delinquency and non-accrual status, as of March 31, 2017 and December 31, 2016, were as follows:
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Impaired Loans, Segregated by Loan Class | Impaired loans, segregated by loan class, as of March 31, 2017 and December 31, 2016 were as follows:
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Average Recorded Investment and Interest Income in Impaired Loans Recognized Using Accrual Basis Method of Accounting | The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the three months ended March 31, 2017 and March 31, 2016 was as follows:
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Loans Modified as TDR's | Loans modified as TDRs during the three months ended March 31, 2016, were as follows:
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Risk Ratings by Loan Class | The following table presents the risk ratings by loan class as of March 31, 2017 and December 31, 2016:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan Losses | The following tables detail activity in the allowance for loan losses by loan class for the three months ended March 31, 2017 and March 31, 2016:
The following table details activity in the allowance for loan losses and the amount allocated to loans individually and collectively evaluated for impairment as of and for the period ended December 31, 2016.
The Company's investment in loans as of March 31, 2017, March 31, 2016, and December 31, 2016 related to each balance in the allowance for loan losses by loan class and disaggregated on the basis of the Company's impairment methodology was as follows:
|
MORTGAGE OPERATIONS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE OPERATIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Assumptions Used in Measuring the Fair Value of Mortgage Servicing Rights | Key assumptions used in measuring the fair value of mortgage servicing rights as of March 31, 2017 and December 31, 2016 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Servicing Rights Assets | The following table summarizes the Company's mortgage servicing rights assets as of March 31, 2017 and December 31, 2016. Mortgage servicing rights are included in Interest Receivable and Other Assets on the condensed consolidated balance sheets:
|
FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of March 31, 2017:
There were no transfers of assets measured at fair value on a recurring basis between level 1 and level 2 of the fair value hierarchy. The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2016:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Non-recurring Basis | Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of March 31, 2017:
Assets measured at fair value on a non-recurring basis are included in the table below by level within the fair value hierarchy as of December 31, 2016:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Methods and Assumptions Used in Measuring Fair Value of Impaired Loans and Other Real Estate Owned | Key methods and assumptions used in measuring the fair value of impaired loans and loan servicing rights as of March 31, 2017 and December 31, 2016 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | The estimated fair values of the Company's financial instruments for the periods ended March 31, 2017 and December 31, 2016 were approximately as follows:
|
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments Whose Contract Amount Represent Credit Risk | Financial instruments, whose contract amounts represent credit risk at the indicated periods, were as follows:
|
STOCK PLANS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PLANS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity | The following table presents the activity related to stock options for the three months ended March 31, 2017:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions Used in Valuing Stock Options Granted | A summary of the weighted average assumptions used in valuing stock options during the three months ended March 31, 2017 is presented below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity Related to Restricted Stock | The following table presents the activity related to non-vested restricted stock for the three months ended March 31, 2017:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Weighted Average Assumptions Used in Valuing ESPP | A summary of the weighted average assumptions used in valuing ESPP issuances during the three months ended March 31, 2017 is presented below:
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table details activity in accumulated other comprehensive income (loss) for the three months ended March 31, 2017:
The following table details activity in accumulated other comprehensive income (loss) for the three months ended March 31, 2016:
|
OUTSTANDING SHARES AND EARNINGS PER SHARE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OUTSTANDING SHARES AND EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted EPS | The following table presents a reconciliation of basic and diluted EPS for the three months ended March 31, 2017 and 2016 (dollars in thousands except per share amounts):
|
INVESTMENT SECURITIES, Contractual and Expected Maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Maturity in years [Abstract] | ||
Due in one year or less | $ 28,548 | |
Due after one year through five years | 45,642 | |
Due after five years through ten years | 7,356 | |
Due after ten years | 0 | |
Subtotal | 81,546 | |
MBS & CMO | 214,661 | |
Amortized cost | 296,207 | $ 279,875 |
Maturity in years [Abstract] | ||
Due in one year or less | 28,535 | |
Due after one year through five years | 45,378 | |
Due after five years through ten years | 7,508 | |
Due after ten years | 0 | |
Subtotal | 81,421 | |
MBS & CMO | 212,022 | |
Estimated fair value | $ 293,443 | $ 277,079 |
MORTGAGE OPERATIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Key assumptions used in measuring the fair value of mortgage servicing rights [Abstract] | |||
Constant prepayment rate | 11.00% | 12.67% | |
Discount rate | 10.02% | 10.02% | |
Weighted average life | 6 years 4 days | 5 years 6 months 4 days | |
Mortgages held-for-sale | $ 1,243 | $ 3,326 | |
Real estate mortgage loans serviced | 231,811 | 231,310 | |
Mortgage servicing rights assets [Roll Forward] | |||
Beginning balance | 1,815 | ||
Additions | 68 | ||
Reductions | (85) | ||
Ending balance | 1,798 | 1,815 | |
Valuation allowance [Roll Forward] | |||
Beginning balance | (21) | ||
Additions | 0 | ||
Reductions | 21 | ||
Ending balance | 0 | (21) | |
Mortgage servicing rights, net of valuation allowance [Roll Forward] | |||
Beginning balance | 1,794 | ||
Additions | 68 | ||
Reductions | (64) | ||
Ending balance | 1,798 | ||
Fair value of mortgage servicing rights asset | 1,918 | $ 1,794 | |
Contractually specified servicing fee | $ 146 | $ 149 |
STOCK PLANS (Details) |
3 Months Ended | |
---|---|---|
Jan. 26, 2017 |
Mar. 31, 2017 |
|
STOCK PLANS [Abstract] | ||
Stock dividend | 4.00% | |
Dividends date declared | Jan. 26, 2017 | |
Dividend date to be paid | Mar. 31, 2017 | |
Dividends payable, date of record | Feb. 28, 2017 |
GAIN ON SALE-LEASEBACK OF REAL ESTATE (Details) - Land and Building Partially Occupied by Auburn Branch [Member] - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Jan. 06, 2017 |
|
Sale Leaseback Transaction [Line Items] | ||
Total gain from sale-leaseback transaction | $ 1,682 | |
Initial lease term | 6 years | |
Amount of gain deferred as component of Other Liabilities | $ 495 | |
Gain recognized as reduction of Occupancy and equipment expense | $ 14 |
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