Vermont
|
03-0284070
|
(State
of Incorporation)
|
(IRS
Employer Identification Number)
|
Address
of Principal Executive Offices: 4811 US Route 5, Derby,
Vermont 05829
|
Title
of Each Class
|
Name of
each exchange on which registered
|
NONE
|
NONE
|
Large
accelerated filer ( )
|
|
Accelerated
filer (X)
|
Non-accelerated
filer ( )
|
|
Smaller
reporting company (X)
|
Emerging
growth company ( )
|
|
|
FORM
10-K ANNUAL REPORT
|
||
Table
of Contents
|
||
|
|
|
PART
I
|
|
Page
|
|
|
|
|
Definitions,
Acronyms and Abbreviations
|
4
|
Item
1
|
4
|
|
Item
1A
|
15
|
|
Item
1B
|
20
|
|
Item
2
|
21
|
|
Item
3
|
21
|
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Item
4
|
22
|
|
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PART
II
|
|
|
|
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Item
5
|
22
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Item
6
|
22
|
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Item
7
|
22
|
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Item
7A
|
22
|
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Item
8
|
22
|
|
Item
9
|
23
|
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Item
9A
|
23
|
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Item
9B
|
23
|
|
|
|
|
PART
III
|
|
|
|
|
|
Item
10
|
23
|
|
Item
11
|
24
|
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Item
12
|
24
|
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Item
13
|
24
|
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Item
14
|
24
|
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|
|
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PART
IV
|
|
|
|
|
|
Item
15
|
25
|
|
|
26
|
|
|
27
|
●
|
a new
common equity Tier 1 risk-based capital ratio of 4.5%;
|
●
|
a Tier
1 risk-based capital ratio of 6% (increased from the former 4%
requirement);
|
●
|
a total
risk-based capital ratio of 8% (unchanged from the former
requirement); and
|
●
|
a
leverage ratio of 4% (also unchanged from the former
requirement).
|
Office Location1
|
Owned
|
Leased
|
CFSG Office2
|
|
|
|
|
Caledonia County
|
|
|
|
St.
Johnsbury (Railroad Street)3
|
|
X
|
|
St.
Johnsbury (Route 5)
|
|
X
|
|
Lyndon
(Memorial Drive)
|
|
X
|
X
|
|
|
|
|
Chittenden County
|
|
|
|
Burlington
(Shelburne Road)4
|
|
X
|
|
|
|
|
|
Franklin County
|
|
|
|
Enosburg
Falls (Sampsonville Road)
|
X
|
|
|
|
|
|
|
Lamoille County
|
|
|
|
Morrisville
(Route 15 West)
|
|
X
|
|
|
|
|
|
Orleans County
|
|
|
|
Barton
(Church Street)
|
X
|
|
|
Derby
Line (Main Street)
|
X
|
|
|
Island
Pond (Route 105)
|
|
X
|
|
Newport
(Main Street)
|
X
|
|
|
Troy
(Route 101)
|
X
|
|
|
|
|
|
|
Washington County
|
|
|
|
Barre
(North Main Street)
|
X
|
|
X
|
Montpelier
(State Street)
|
|
X
|
|
|
Total
Number
|
Average
|
|
of
Shares
|
Price
Paid
|
For the
period:
|
Purchased(1)(2)
|
Per
Share
|
|
|
|
October 1 - October
31
|
0
|
$0.00
|
November 1 -
November 30
|
3,291
|
16.90
|
December 1 -
December 31
|
0
|
0.00
|
Total
|
3,291
|
$16.90
|
COMMUNITY
BANCORP.
|
|||
/s/Kathryn M.
Austin
|
|
Date:
March 15, 2019
|
|
Kathryn
M. Austin, President and Chief
|
|
|
|
Executive
Officer (Principal Executive Officer)
|
|
|
|
/s/Kathryn M.
Austin
|
|
Date:
March 15, 2019
|
Kathryn
M. Austin, President and Chief
|
|
|
Executive
Officer (Principal Executive Officer)
|
|
|
|
|
|
/s/Louise M.
Bonvechio
|
|
Date:
March 15, 2019
|
Louise
M. Bonvechio, Corporate Secretary and
|
|
|
Treasurer
(Principal Financial Officer)
|
|
|
|
|
|
/s/Candace A.
Patenaude
|
|
Date:
March 15, 2019
|
Candace
A. Patenaude
|
|
|
(Principal
Accounting Officer)
|
|
|
COMMUNITY
BANCORP. DIRECTORS
|
||
/s/Thomas E.
Adams
|
|
Date:
March 15, 2019
|
Thomas
E. Adams
|
|
|
|
|
|
/s/Kathryn M.
Austin
|
|
Date:
March 15, 2019
|
Kathryn
M. Austin
|
|
|
|
|
|
/s/David M.
Bouffard
|
|
Date:
March 15, 2019
|
David
M. Bouffard
|
|
|
|
|
|
/s/Charles W.
Bucknam, Jr.
|
|
Date:
March 15, 2019
|
Charles
W. Bucknam, Jr.
|
|
|
|
|
|
/s/Aminta K.
Conant
|
|
Date:
March 15, 2019
|
Aminta
K. Conant
|
|
|
|
|
|
/s/Jacques R.
Couture
|
|
Date:
March 15, 2019
|
Jacques
R. Couture
|
|
|
|
|
|
|
|
Date:
March 15, 2019
|
David
P. Laforce
|
|
|
|
|
|
/s/Rosemary
M. Lalime
|
|
Date:
March 15, 2019
|
Rosemary
M. Lalime
|
|
|
|
|
|
/s/Stephen P.
Marsh
|
|
Date:
March 15, 2019
|
Stephen
P. Marsh, Board Chair
|
|
|
|
|
|
/s/Jeffrey L.
Moore
|
|
Date:
March 15, 2019
|
Jeffrey
L. Moore
|
|
|
|
|
|
/s/Dorothy R.
Mitchell
|
|
Date:
March 15, 2019
|
Dorothy
R. Mitchell
|
|
|
|
|
|
/s/Fredric
Oeschger
|
|
Date:
March 15, 2019
|
Fredric
Oeschger
|
|
|
|
|
|
/s/James G.
Wheeler, Jr.
|
|
Date:
March 15, 2019
|
James
G. Wheeler, Jr.
|
|
|
Portions
of the 2018 Annual Report, specifically incorporated by reference
into this report.
|
|
|
|
Subsidiaries
of Community Bancorp.
|
|
|
|
Consent
of Berry Dunn McNeil & Parker, LLC
|
|
|
|
Certification
from the Chief Executive Officer (Principal Executive Officer) of
the Company pursuant to section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
|
Certification
from the Treasurer (Principal Financial Officer) of the Company
pursuant to section 302 of the Sarbanes-Oxley Act of
2002
|
|
|
|
Certification
from the Chief Executive Officer (Principal Executive Officer) of
the Company pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002**
|
|
|
|
Certification
from the Treasurer (Principal Financial Officer) of the Company
pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section
906 of the Sarbanes-Oxley Act of 2002**
|
|
|
|
|
|
Exhibit
101
|
The
following materials from the Company’s Annual Report on Form
10-K for the year ended December 31, 2018 formatted in eXtensible
Business Reporting Language (XBRL): (i) the audited consolidated
balance sheets, (ii) the audited consolidated statements of income,
(iii) the audited consolidated statements of comprehensive income;
(iv) the audited consolidated statements of changes in
shareholders’ equity, (v) the audited consolidated statements
of cash flows and (vi) related notes, for the years ended December
31, 2018 and 2017.
|
|
|
|
|
Ms.
Kathryn M. Austin, President & Chief Executive
Officer
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
Ms.
Louise M. Bonvechio, Corporate Secretary &
Treasurer
|
|
(Principal
Financial Officer)
|
|
Community
Bancorp. and Subsidiary
|
December
31,
|
December
31,
|
Consolidated
Balance Sheets
|
2018
|
2017
|
|
|
|
Assets
|
|
|
Cash
and due from banks
|
$14,906,529
|
$10,690,396
|
Federal
funds sold and overnight deposits
|
53,028,286
|
31,963,105
|
Total
cash and cash equivalents
|
67,934,815
|
42,653,501
|
Securities
held-to-maturity (fair value $47,228,000 at December
|
|
|
31,
2018 and $48,796,000 at December 31, 2017)
|
47,067,023
|
48,824,965
|
Securities
available-for-sale
|
39,366,831
|
38,450,653
|
Restricted
equity securities, at cost
|
1,749,450
|
1,703,650
|
Loans
held-for-sale
|
0
|
1,037,287
|
Loans
|
531,383,494
|
502,864,651
|
Allowance
for loan losses
|
(5,602,541)
|
(5,438,099)
|
Deferred
net loan costs
|
363,614
|
318,651
|
Net
loans
|
526,144,567
|
497,745,203
|
Bank
premises and equipment, net
|
9,713,455
|
10,344,177
|
Accrued
interest receivable
|
2,300,841
|
2,051,918
|
Bank
owned life insurance
|
4,814,099
|
4,721,782
|
Goodwill
|
11,574,269
|
11,574,269
|
Other
real estate owned
|
201,386
|
284,235
|
Other
assets
|
9,480,762
|
7,653,955
|
Total
assets
|
$720,347,498
|
$667,045,595
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
Liabilities
|
|
|
Deposits:
|
|
|
Demand,
non-interest bearing
|
$122,430,805
|
$117,245,565
|
Interest-bearing
transaction accounts
|
177,815,417
|
132,633,533
|
Money
market funds
|
85,261,685
|
93,392,005
|
Savings
|
93,129,875
|
97,516,284
|
Time
deposits, $250,000 and over
|
14,395,291
|
18,909,898
|
Other
time deposits
|
115,783,492
|
100,937,695
|
Total
deposits
|
608,816,565
|
560,634,980
|
Borrowed
funds
|
1,550,000
|
3,550,000
|
Repurchase
agreements
|
30,521,565
|
28,647,848
|
Capital
lease obligations
|
266,747
|
381,807
|
Junior
subordinated debentures
|
12,887,000
|
12,887,000
|
Accrued
interest and other liabilities
|
3,701,910
|
3,008,106
|
Total
liabilities
|
657,743,787
|
609,109,741
|
|
|
|
Shareholders'
Equity
|
|
|
Preferred
stock, 1,000,000 shares authorized, 20 and 25 shares issued
and
|
|
|
outstanding
in 2018 and 2017, respectively ($100,000 liquidation
value)
|
2,000,000
|
2,500,000
|
Common
stock - $2.50 par value; 15,000,000 shares authorized,
|
|
|
5,382,103
and 5,322,320 shares issued at December 31, 2018
|
|
|
and
2017, respectively (including 17,442 and 13,039 shares
|
|
|
issued
February 1, 2019 and 2018, respectively)
|
13,455,258
|
13,305,800
|
Additional
paid-in capital
|
32,536,532
|
31,639,189
|
Retained
earnings
|
17,882,282
|
13,387,739
|
Accumulated
other comprehensive loss
|
(647,584)
|
(274,097)
|
Less:
treasury stock, at cost; 210,101 shares at December 31, 2018 and
2017
|
(2,622,777)
|
(2,622,777)
|
Total
shareholders' equity
|
62,603,711
|
57,935,854
|
Total
liabilities and shareholders' equity
|
$720,347,498
|
$667,045,595
|
|
|
|
Book value per
common share outstanding
|
$11.72
|
$10.84
|
Community
Bancorp. and Subsidiary
|
Years
Ended December 31,
|
|
Consolidated
Statements of Income
|
2018
|
2017
|
|
|
|
Interest
income
|
|
|
Interest
and fees on loans
|
$26,313,489
|
$24,103,281
|
Interest
on debt securities
|
|
|
Taxable
|
895,165
|
676,352
|
Tax-exempt
|
1,296,016
|
1,328,488
|
Dividends
|
125,973
|
172,473
|
Interest
on federal funds sold and overnight deposits
|
483,960
|
160,355
|
Total
interest income
|
29,114,603
|
26,440,949
|
|
|
|
Interest
expense
|
|
|
Interest
on deposits
|
3,547,798
|
2,355,847
|
Interest
on borrowed funds
|
95,936
|
100,532
|
Interest
on repurchase agreements
|
190,993
|
87,315
|
Interest
on junior subordinated debentures
|
650,361
|
524,696
|
Total
interest expense
|
4,485,088
|
3,068,390
|
|
|
|
Net
interest income
|
24,629,515
|
23,372,559
|
Provision for
loan losses
|
780,000
|
650,000
|
Net
interest income after provision for loan losses
|
23,849,515
|
22,722,559
|
|
|
|
Non-interest
income
|
|
|
Service
fees
|
3,238,954
|
3,076,567
|
Income
from sold loans
|
780,622
|
730,019
|
Other
income from loans
|
879,887
|
846,392
|
Net
realized (loss) gain on sale of securities AFS
|
(32,718)
|
3,384
|
Other
income
|
1,314,563
|
928,030
|
Total
non-interest income
|
6,181,308
|
5,584,392
|
|
|
|
Non-interest
expense
|
|
|
Salaries
and wages
|
7,203,001
|
6,772,373
|
Employee
benefits
|
2,880,048
|
2,648,060
|
Occupancy
expenses, net
|
2,545,959
|
2,549,455
|
Other
expenses
|
7,266,018
|
7,196,435
|
Total
non-interest expense
|
19,895,026
|
19,166,323
|
|
|
|
Income
before income taxes
|
10,135,797
|
9,140,628
|
Income tax
expense
|
1,738,265
|
2,909,330
|
Net
income
|
$8,397,532
|
$6,231,298
|
|
|
|
Earnings per
common share
|
$1.61
|
$1.21
|
Weighted
average number of common shares
|
|
|
used in
computing earnings per share
|
5,139,297
|
5,084,102
|
Dividends
declared per common share
|
$0.74
|
$0.68
|
Community
Bancorp. and Subsidiary
|
|
|
Consolidated
Statements of Comprehensive Income
|
|
|
|
Years
Ended December 31,
|
|
|
2018
|
2017
|
|
|
|
Net
income
|
$8,397,532
|
$6,231,298
|
|
|
|
Other comprehensive
loss, net of tax:
|
|
|
Unrealized
holding loss on securities AFS
|
|
|
arising
during the period
|
(505,487)
|
(206,027)
|
Reclassification
adjustment for loss (gain) realized in income
|
32,718
|
(3,384)
|
Unrealized
loss during the period
|
(472,769)
|
(209,411)
|
Tax
effect
|
99,282
|
71,199
|
Other
comprehensive loss, net of tax
|
(373,487)
|
(138,212)
|
Total
comprehensive income
|
$8,024,045
|
$6,093,086
|
Community Bancorp. and Subsidiary
|
Consolidated Statements of Changes in Shareholders'
Equity
|
Years Ended December 31, 2018 and 2017
|
|
Common
stock
|
Preferred
stock
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
|
Balances, December
31, 2016
|
5,269,053
|
$13,172,633
|
25
|
$2,500,000
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
Net
income
|
0
|
0
|
0
|
0
|
Other comprehensive
loss
|
0
|
0
|
0
|
0
|
|
|
|
|
|
Total comprehensive
income
|
|
|
|
|
|
|
|
|
|
Reclassification
adjustment for effect of enacted
|
|
|
|
|
tax law
changes
|
0
|
0
|
0
|
0
|
|
|
|
|
|
Cash dividends
declared - common stock
|
0
|
0
|
0
|
0
|
Cash dividends
declared - preferred stock
|
0
|
0
|
0
|
0
|
Issuance of common
stock
|
53,267
|
133,167
|
0
|
0
|
|
|
|
|
|
Balances, December
31, 2017
|
5,322,320
|
13,305,800
|
25
|
2,500,000
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
Net
income
|
0
|
0
|
0
|
0
|
Other comprehensive
loss
|
0
|
0
|
0
|
0
|
|
|
|
|
|
Total comprehensive
income
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared - common stock
|
0
|
0
|
0
|
0
|
Cash dividends
declared - preferred stock
|
0
|
0
|
0
|
0
|
Issuance of common
stock
|
59,783
|
149,458
|
0
|
0
|
|
|
|
|
|
Redemption of
preferred stock
|
0
|
0
|
(5)
|
(500,000)
|
|
|
|
|
|
Balances, December
31, 2018
|
5,382,103
|
$13,455,258
|
20
|
$2,000,000
|
|
|
Accumulated
|
|
|
Additional
|
|
other
|
|
Total
|
paid-in
|
Retained
|
comprehensive
|
Treasury
|
shareholders'
|
capital
|
earnings
|
loss
|
stock
|
equity
|
|
|
|
|
|
$30,825,658
|
$10,666,782
|
$(90,779)
|
$(2,622,777)
|
$54,451,517
|
|
|
|
|
|
|
|
|
|
|
0
|
6,231,298
|
0
|
0
|
6,231,298
|
0
|
0
|
(138,212)
|
0
|
(138,212)
|
|
|
|
|
|
|
|
|
|
6,093,086
|
|
|
|
|
|
|
|
|
|
|
0
|
45,106
|
(45,106)
|
0
|
0
|
|
|
|
|
|
0
|
(3,453,884)
|
0
|
0
|
(3,453,884)
|
0
|
(101,563)
|
0
|
0
|
(101,563)
|
813,531
|
0
|
0
|
0
|
946,698
|
|
|
|
|
|
31,639,189
|
13,387,739
|
(274,097)
|
(2,622,777)
|
57,935,854
|
|
|
|
|
|
|
|
|
|
|
0
|
8,397,532
|
0
|
0
|
8,397,532
|
0
|
0
|
(373,487)
|
0
|
(373,487)
|
|
|
|
|
|
|
|
|
|
8,024,045
|
|
|
|
|
|
0
|
(3,799,864)
|
0
|
0
|
(3,799,864)
|
0
|
(103,125)
|
0
|
0
|
(103,125)
|
897,343
|
0
|
0
|
0
|
1,046,801
|
|
|
|
|
|
0
|
0
|
0
|
0
|
(500,000)
|
|
|
|
|
|
$32,536,532
|
$17,882,282
|
$(647,584)
|
$(2,622,777)
|
$62,603,711
|
Community
Bancorp. and Subsidiary
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
Years
Ended December 31,
|
|
|
2018
|
2017
|
|
|
|
Cash
Flows from Operating Activities:
|
|
|
Net
income
|
$8,397,532
|
$6,231,298
|
Adjustments
to reconcile net income to net cash provided by
|
|
|
operating
activities:
|
|
|
Depreciation
and amortization, bank premises and equipment
|
981,691
|
1,032,418
|
Provision
for loan losses
|
780,000
|
650,000
|
Deferred
income tax
|
(11,359)
|
784,331
|
Net
realized loss (gain) on sale of securities AFS
|
32,718
|
(3,384)
|
Gain
on sale of loans
|
(345,780)
|
(317,432)
|
(Gain)
loss on sale of bank premises and equipment
|
(260,013)
|
29,029
|
Loss
(gain) on sale of OREO
|
2,397
|
(143)
|
Income
from CFS Partners
|
(514,485)
|
(415,561)
|
Amortization
of bond premium, net
|
128,469
|
126,863
|
Write
down of OREO
|
78,447
|
40,000
|
Proceeds
from sales of loans held for sale
|
12,507,561
|
14,152,736
|
Originations
of loans held for sale
|
(11,124,494)
|
(14,872,591)
|
(Decrease)
increase in taxes payable
|
(23,758)
|
475,048
|
Increase
in interest receivable
|
(248,923)
|
(233,408)
|
Decrease
in mortgage servicing rights
|
78,338
|
127,409
|
(Increase)
decrease in other assets
|
(790,320)
|
98,223
|
Increase
in cash surrender value of BOLI
|
(92,317)
|
(96,376)
|
Amortization
of core deposit intangible
|
0
|
272,691
|
Amortization
of limited partnerships
|
411,061
|
617,233
|
Increase
in unamortized loan costs
|
(44,963)
|
(8,521)
|
Increase
in interest payable
|
12,524
|
28,021
|
Increase
in accrued expenses
|
149,648
|
86,309
|
Increase
(decrease) in other liabilities
|
62,805
|
(738,549)
|
Net
cash provided by operating activities
|
10,166,779
|
8,065,644
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
Investments
- HTM
|
|
|
Maturities
and pay downs
|
33,578,091
|
37,344,426
|
Purchases
|
(31,820,149)
|
(36,282,760)
|
Investments
- AFS
|
|
|
Maturities,
calls, pay downs and sales
|
8,543,078
|
11,497,241
|
Purchases
|
(10,093,214)
|
(16,565,733)
|
Proceeds
from redemption of restricted equity securities
|
1,147,500
|
1,055,800
|
Purchases
of restricted equity securities
|
(1,193,300)
|
(3,600)
|
Increase
in limited partnership contributions payable
|
388,750
|
459,250
|
Investments
in limited liability entities
|
(877,000)
|
(486,750)
|
Proceeds
from other investments - SERP
|
0
|
1,102,815
|
Increase
in loans, net
|
(29,593,914)
|
(16,589,721)
|
Capital
expenditures net of proceeds from sales of bank
|
|
|
premises
and equipment
|
(90,957)
|
(575,068)
|
Proceeds
from sales of OREO
|
335,056
|
462,063
|
Recoveries
of loans charged off
|
126,462
|
91,795
|
Net
cash used in investing activities
|
(29,549,597)
|
(18,490,242)
|
|
2018
|
2017
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
Net
increase in demand and interest-bearing transaction
accounts
|
50,367,124
|
27,353,470
|
Net
(decrease) increase in money market and savings
accounts
|
(12,516,729)
|
25,088,814
|
Net
increase in time deposits
|
10,331,190
|
3,457,664
|
Net
increase (decrease) in repurchase agreements
|
1,873,717
|
(1,775,347)
|
Net
decrease in short-term borrowings
|
0
|
(30,000,000)
|
Proceeds
from long-term borrowings
|
0
|
2,000,000
|
Repayments
on long-term borrowings
|
(2,000,000)
|
0
|
Decrease
in capital lease obligations
|
(115,060)
|
(101,354)
|
Redemption
of preferred stock
|
(500,000)
|
0
|
Dividends
paid on preferred stock
|
(103,125)
|
(101,563)
|
Dividends
paid on common stock
|
(2,672,985)
|
(2,457,871)
|
Net
cash provided by financing activities
|
44,664,132
|
23,463,813
|
|
|
|
Net
increase in cash and cash equivalents
|
25,281,314
|
13,039,215
|
Cash
and cash equivalents:
|
|
|
Beginning
|
42,653,501
|
29,614,286
|
Ending
|
$67,934,815
|
$42,653,501
|
|
|
|
Supplemental
Schedule of Cash Paid During the Period:
|
|
|
Interest
|
$4,472,564
|
$3,040,369
|
|
|
|
Income
taxes, net of refunds
|
$1,365,000
|
$1,032,720
|
|
|
|
Supplemental
Schedule of Noncash Investing and Financing
Activities:
|
|
|
Change
in unrealized loss on securities AFS
|
$(472,769)
|
$(209,411)
|
|
|
|
Loans
transferred to OREO
|
$333,051
|
$392,155
|
|
|
|
Common
Shares Dividends Paid:
|
|
|
Dividends
declared
|
$3,799,864
|
$3,453,884
|
Increase
in dividends payable attributable to dividends
declared
|
(80,078)
|
(49,315)
|
Dividends
reinvested
|
(1,046,801)
|
(946,698)
|
|
$2,672,985
|
$2,457,871
|
ABS and OAS:
|
Asset backed or other amortizing security
|
FHA:
|
Federal Housing Administration
|
ACBB:
|
Atlantic Community Bankers Bank
|
FHLBB:
|
Federal Home Loan Bank of Boston
|
ACBI:
|
Atlantic Community Bancshares, Inc.
|
FHLMC :
|
Federal Home Loan Mortgage Corporation
|
ACH:
|
Automated Clearing House
|
FICO:
|
Financing Corporation
|
AFS:
|
Available-for-sale
|
FLA:
|
First Loss Account
|
Agency MBS:
|
MBS issued by a US government agency
|
FOMC:
|
Federal Open Market Committee
|
|
or GSE
|
FRB:
|
Federal Reserve Board
|
ALCO:
|
Asset Liability Committee
|
FRBB:
|
Federal Reserve Bank of Boston
|
ALL:
|
Allowance for loan losses
|
GAAP:
|
Generally Accepted Accounting Principles
|
AML:
|
Anti-money laundering laws
|
|
in the United States
|
AOCI
|
Accumulated other comprehensive income
|
GSE:
|
Government sponsored enterprise
|
ASC:
|
Accounting Standards Codification
|
HMDA:
|
Home Mortgage Disclosure Act
|
ASU:
|
Accounting Standards Update
|
HTM:
|
Held-to-maturity
|
ATMs:
|
Automatic teller machines
|
ICS:
|
Insured Cash Sweeps of the Promontory
|
Bancorp:
|
Community Bancorp.
|
|
Interfinancial Network
|
Bank:
|
Community National Bank
|
IRS:
|
Internal Revenue Service
|
BIC:
|
Borrower-in-Custody
|
JNE:
|
Jobs for New England
|
Board:
|
Board of Directors
|
Jr:
|
Junior
|
BOLI:
|
Bank owned life insurance
|
LIBOR:
|
London Interbank Offered Rate
|
bp or bps:
|
Basis point(s)
|
LLC:
|
Limited liability corporation
|
BSA:
|
Bank Secrecy Act
|
MBS:
|
Mortgage-backed security
|
CBLR:
|
Community Bank Leverage Ratio
|
MPF:
|
Mortgage Partnership Finance
|
CDARS:
|
Certificate of Deposit Accounts Registry
|
MSAs
|
Metropolitan Statistical Areas
|
|
Service of the Promontory Interfinancial
|
MSRs:
|
Mortgage servicing rights
|
|
Network
|
NII:
|
Net interest income
|
CDs:
|
Certificates of deposit
|
NMTC:
|
New Market Tax Credits
|
CDI:
|
Core deposit intangible
|
OCI:
|
Other comprehensive income (loss)
|
CECL:
|
Current Expected Credit Loss
|
OFAC:
|
Office of Foreign Asset Control
|
CEO:
|
Credit Enhancement Obligation
|
OREO:
|
Other real estate owned
|
CFPB:
|
Consumer Financial Protection Bureau
|
OTTI:
|
Other-than-temporary impairment
|
CFSG:
|
Community Financial Services Group, LLC
|
PMI:
|
Private mortgage insurance
|
CFS Partners:
|
Community Financial Services Partners,
|
RD:
|
USDA Rural Development
|
|
LLC
|
RESPA:
|
Real Estate Settlement Procedures Act
|
Company:
|
Community Bancorp. and Subsidiary
|
SBA:
|
U.S. Small Business Administration
|
CRA:
|
Community Reinvestment Act
|
SEC:
|
U.S. Securities and Exchange Commission
|
CRE:
|
Commercial Real Estate
|
SERP:
|
Supplemental Employee Retirement Plan
|
DDA or DDAs:
|
Demand Deposit Account(s)
|
SOX:
|
Sarbanes-Oxley Act of 2002
|
DIF:
|
Deposit Insurance Fund
|
TDR:
|
Troubled-debt restructuring
|
DTC:
|
Depository Trust Company
|
TILA:
|
Truth in Lending Act
|
DRIP:
|
Dividend Reinvestment Plan
|
USDA:
|
U.S. Department of Agriculture
|
Exchange Act:
|
Securities Exchange Act of 1934
|
VA:
|
U.S. Veterans Administration
|
FASB:
|
Financial Accounting Standards Board
|
VIE:
|
Variable interest entities
|
FDIA:
|
Federal Deposit Insurance Act
|
2017 Tax Act:
|
Tax Cut and Jobs Act of 2017
|
FDIC:
|
Federal Deposit Insurance Corporation
|
2018
|
Economic Growth, Regulatory Relief and
|
FDICIA:
|
Federal Deposit Insurance Company
|
Regulatory
|
Consumer Protection Act of 2018
|
|
Improvement Act of 1991
|
Relief Act:
|
|
Years
Ended December 31,
|
2018
|
2017
|
|
|
|
Net income, as
reported
|
$8,397,532
|
$6,231,298
|
Less: dividends to
preferred shareholders
|
103,125
|
101,563
|
Net income
available to common shareholders
|
$8,294,407
|
$6,129,735
|
Weighted average
number of common shares
|
|
|
used
in calculating earnings per share
|
5,139,297
|
5,084,102
|
Earnings per common
share
|
$1.61
|
$1.21
|
|
|
Gross
|
Gross
|
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
Securities
AFS
|
Cost
|
Gains
|
Losses
|
Value
|
|
|
|
|
|
December
31, 2018
|
|
|
|
|
U.S. GSE debt
securities
|
$14,010,100
|
$394
|
$259,391
|
$13,751,103
|
Agency
MBS
|
16,020,892
|
2,701
|
449,068
|
15,574,525
|
ABS and
OAS
|
1,988,565
|
3,806
|
6,242
|
1,986,129
|
Other
investments
|
8,167,000
|
8,472
|
120,398
|
8,055,074
|
|
$40,186,557
|
$15,373
|
$835,099
|
$39,366,831
|
|
|
|
|
|
December
31, 2017
|
|
|
|
|
U.S. GSE debt
securities
|
$17,308,229
|
$0
|
$149,487
|
$17,158,742
|
Agency
MBS
|
16,782,380
|
11,144
|
180,187
|
16,613,337
|
Other
investments
|
4,707,000
|
165
|
28,591
|
4,678,574
|
|
$38,797,609
|
$11,309
|
$358,265
|
$38,450,653
|
|
|
Gross
|
Gross
|
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
Securities
HTM
|
Cost
|
Gains
|
Losses
|
Value*
|
|
|
|
|
|
December
31, 2018
|
|
|
|
|
States and
political subdivisions
|
$47,067,023
|
$332,415
|
$171,438
|
$47,228,000
|
|
|
|
|
|
December
31, 2017
|
|
|
|
|
States and
political subdivisions
|
$48,824,965
|
$0
|
$28,965
|
$48,796,000
|
|
Amortized
|
Fair
|
|
Cost
|
Value
|
|
|
|
December 31,
2018
|
$40,186,557
|
$39,366,831
|
December 31,
2017
|
38,797,609
|
38,450,653
|
|
Amortized
|
Fair
|
|
Cost
|
Value
|
|
|
|
Due from one to
five years
|
$12,714,642
|
$12,519,008
|
Due from five to
ten years
|
11,451,023
|
11,273,298
|
Mortgage-backed
securities
|
16,020,892
|
15,574,525
|
|
$40,186,557
|
$39,366,831
|
|
Amortized
|
Fair
|
|
Cost
|
Value*
|
|
|
|
Due in one year or
less
|
$23,052,312
|
$23,052,000
|
Due from one to
five years
|
5,907,713
|
5,948,000
|
Due from five to
ten years
|
6,481,941
|
6,522,000
|
Due after ten
years
|
11,625,057
|
11,706,000
|
|
$47,067,023
|
$47,228,000
|
|
Less
than 12 months
|
12
months or more
|
|
Totals
|
|||
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Number
of
|
Fair
|
Unrealized
|
|
Value
|
Loss
|
Value
|
Loss
|
Securities
|
Value
|
Loss
|
December
31, 2018
|
|
|
|
|
|
|
|
U.S. GSE debt
securities
|
$1,465,947
|
$6,752
|
$11,284,761
|
$252,639
|
11
|
$12,750,708
|
$259,391
|
Agency
MBS
|
2,317,838
|
22,029
|
12,223,386
|
427,039
|
24
|
14,541,224
|
449,068
|
ABS and
OAS
|
976,226
|
6,242
|
0
|
0
|
1
|
976,226
|
6,242
|
Other
investments
|
1,956,914
|
20,086
|
4,113,688
|
100,312
|
25
|
6,070,602
|
120,398
|
State and political
subdivisions
|
5,417,189
|
17,957
|
15,582,323
|
153,481
|
78
|
20,999,512
|
171,438
|
|
$12,134,114
|
$73,066
|
$43,204,158
|
$933,471
|
139
|
$55,338,272
|
$1,006,537
|
|
|
|
|
|
|
|
|
December
31, 2017
|
|
|
|
|
|
|
|
U.S. GSE debt
securities
|
$13,223,739
|
$84,490
|
$3,935,003
|
$64,997
|
15
|
$17,158,742
|
$149,487
|
Agency
MBS
|
9,251,323
|
105,063
|
4,542,446
|
75,124
|
21
|
13,793,769
|
180,187
|
Other
investments
|
3,692,571
|
25,429
|
244,838
|
3,162
|
16
|
3,937,409
|
28,591
|
State and political
subdivisions
|
22,530,141
|
28,965
|
0
|
0
|
79
|
22,530,141
|
28,965
|
|
$48,697,774
|
$243,947
|
$8,722,287
|
$143,283
|
131
|
$57,420,061
|
$387,230
|
December
31,
|
2018
|
2017
|
|
|
|
Commercial &
industrial
|
$80,766,693
|
$77,110,747
|
Commercial real
estate
|
235,318,148
|
207,044,227
|
Residential real
estate - 1st lien
|
165,665,175
|
168,184,135
|
Residential real
estate - Jr lien
|
44,544,987
|
45,256,862
|
Consumer
|
5,088,491
|
5,268,680
|
Gross
Loans
|
531,383,494
|
502,864,651
|
Deduct
(add):
|
|
|
Allowance for loan
losses
|
5,602,541
|
5,438,099
|
Deferred net loan
costs
|
(363,614)
|
(318,651)
|
Net
Loans
|
$526,144,567
|
$497,745,203
|
|
|
|
|
|
|
|
90
Days or
|
|
|
90
Days
|
Total
|
|
|
Non-Accrual
|
More
and
|
December
31, 2018
|
30-89
Days
|
or
More
|
Past
Due
|
Current
|
Total
Loans
|
Loans
|
Accruing
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$217,385
|
$0
|
$217,385
|
$80,549,308
|
$80,766,693
|
$84,814
|
$0
|
Commercial real
estate
|
1,509,839
|
190,789
|
1,700,628
|
233,617,520
|
235,318,148
|
1,742,993
|
0
|
Residential real
estate
|
|
|
|
|
|
|
|
- 1st
lien
|
4,108,319
|
1,371,061
|
5,479,380
|
160,185,795
|
165,665,175
|
2,026,939
|
622,486
|
- Jr
lien
|
484,855
|
353,914
|
838,769
|
43,706,218
|
44,544,987
|
408,540
|
104,959
|
Consumer
|
43,277
|
1,661
|
44,938
|
5,043,553
|
5,088,491
|
0
|
1,661
|
|
$6,363,675
|
$1,917,425
|
$8,281,100
|
$523,102,394
|
$531,383,494
|
$4,263,286
|
$729,106
|
|
|
|
|
|
|
|
90
Days or
|
|
|
90
Days
|
Total
|
|
|
Non-Accrual
|
More
and
|
December
31, 2017
|
30-89
Days
|
or
More
|
Past
Due
|
Current
|
Total
Loans
|
Loans
|
Accruing
|
|
|
|
|
|
|
|
|
Commercial &
industrial
|
$308,712
|
$0
|
$308,712
|
$76,802,035
|
$77,110,747
|
$98,806
|
$0
|
Commercial real
estate
|
1,482,982
|
418,255
|
1,901,237
|
205,142,990
|
207,044,227
|
1,065,385
|
0
|
Residential real
estate
|
|
|
|
|
|
|
|
- 1st
lien
|
4,238,933
|
2,011,419
|
6,250,352
|
161,933,783
|
168,184,135
|
1,585,473
|
1,249,241
|
- Jr
lien
|
156,101
|
168,517
|
324,618
|
44,932,244
|
45,256,862
|
346,912
|
0
|
Consumer
|
80,384
|
1,484
|
81,868
|
5,186,812
|
5,268,680
|
0
|
1,484
|
|
$6,267,112
|
$2,599,675
|
$8,866,787
|
$493,997,864
|
$502,864,651
|
$3,096,576
|
$1,250,725
|
|
Number of
loans
|
Current
Balance
|
December 31,
2018
|
12
|
$961,709
|
December 31,
2017
|
10
|
791,944
|
|
|
|
Residential
|
Residential
|
|
|
|
|
Commercial
|
Commercial
|
Real
Estate
|
Real
Estate
|
|
|
|
|
&
Industrial
|
Real
Estate
|
1st
Lien
|
Jr
Lien
|
Consumer
|
Unallocated
|
Total
|
|
|
|
|
|
|
|
|
ALL beginning
balance
|
$675,687
|
$2,674,029
|
$1,460,547
|
$316,982
|
$43,303
|
$267,551
|
$5,438,099
|
Charge-offs
|
(152,860)
|
(124,645)
|
(251,654)
|
(69,173)
|
(143,688)
|
0
|
(742,020)
|
Recoveries
|
60,192
|
0
|
26,832
|
1,420
|
38,018
|
0
|
126,462
|
Provision
(credit)
|
114,450
|
470,484
|
185,769
|
24,216
|
119,154
|
(134,073)
|
780,000
|
ALL ending
balance
|
$697,469
|
$3,019,868
|
$1,421,494
|
$273,445
|
$56,787
|
$133,478
|
$5,602,541
|
|
|
|
|
|
|
|
|
ALL evaluated for
impairment
|
|
|
|
|
|
|
|
Individually
|
$0
|
$0
|
$112,969
|
$1,757
|
$0
|
$0
|
$114,726
|
Collectively
|
697,469
|
3,019,868
|
1,308,525
|
271,688
|
56,787
|
133,478
|
5,487,815
|
|
$697,469
|
$3,019,868
|
$1,421,494
|
$273,445
|
$56,787
|
$133,478
|
$5,602,541
|
|
|||||||
Loans evaluated for
impairment
|
|
|
|
|
|
|
|
Individually
|
$60,846
|
$1,746,894
|
$4,392,060
|
$319,321
|
$0
|
|
$6,519,121
|
Collectively
|
80,705,847
|
233,571,254
|
161,273,115
|
44,225,666
|
5,088,491
|
|
524,864,373
|
|
$80,766,693
|
$235,318,148
|
$165,665,175
|
$44,544,987
|
$5,088,491
|
|
$531,383,494
|
|
|
|
Residential
|
Residential
|
|
|
|
|
Commercial
|
Commercial
|
Real
Estate
|
Real
Estate
|
|
|
|
|
&
Industrial
|
Real
Estate
|
1st
Lien
|
Jr
Lien
|
Consumer
|
Unallocated
|
Total
|
|
|
|
|
|
|
|
|
ALL beginning
balance
|
$726,848
|
$2,496,085
|
$1,369,757
|
$371,176
|
$83,973
|
$230,606
|
$5,278,445
|
Charge-offs
|
(20,000)
|
(160,207)
|
(159,533)
|
(118,359)
|
(124,042)
|
0
|
(582,141)
|
Recoveries
|
27,051
|
230
|
26,826
|
465
|
37,223
|
0
|
91,795
|
Provision
(credit)
|
(58,212)
|
337,921
|
223,497
|
63,700
|
46,149
|
36,945
|
650,000
|
ALL ending
balance
|
$675,687
|
$2,674,029
|
$1,460,547
|
$316,982
|
$43,303
|
$267,551
|
$5,438,099
|
|
|
|
|
|
|
|
|
ALL Evaluated for
impairment
|
|
|
|
|
|
|
|
Individually
|
$0
|
$69,015
|
$125,305
|
$26,353
|
$0
|
$0
|
$220,673
|
Collectively
|
675,687
|
2,605,014
|
1,335,242
|
290,629
|
43,303
|
267,551
|
5,217,426
|
|
$675,687
|
$2,674,029
|
$1,460,547
|
$316,982
|
$43,303
|
$267,551
|
$5,438,099
|
|
|||||||
Loans evaluated for
impairment
|
|
|
|
|
|
|
|
Individually
|
$98,806
|
$1,306,057
|
$4,075,666
|
$300,759
|
$0
|
|
$5,781,288
|
Collectively
|
77,011,941
|
205,738,170
|
164,108,469
|
44,956,103
|
5,268,680
|
|
497,083,363
|
|
$77,110,747
|
$207,044,227
|
$168,184,135
|
$45,256,862
|
$5,268,680
|
|
$502,864,651
|
|
As
of December 31, 2018
|
2018
|
|||
|
|
Unpaid
|
|
Average
|
Interest
|
|
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
|
Investment
|
Balance
|
Allowance
|
Investment
|
Recognized
|
|
|
|
|
|
|
Related allowance
recorded
|
|
|
|
|
|
Commercial
real estate
|
$0
|
$0
|
$0
|
$57,658
|
$0
|
Residential
real estate
|
|
|
|
|
|
-
1st lien
|
942,365
|
963,367
|
112,969
|
836,326
|
45,139
|
-
Jr lien
|
7,271
|
7,248
|
1,757
|
77,555
|
351
|
|
949,636
|
970,615
|
114,726
|
971,539
|
45,490
|
|
|
|
|
|
|
No related
allowance recorded
|
|
|
|
|
|
Commercial
& industrial
|
60,846
|
80,894
|
|
120,924
|
0
|
Commercial
real estate
|
1,748,323
|
1,975,831
|
|
1,663,794
|
13,131
|
Residential
real estate
|
|
|
|
|
|
-
1st lien
|
3,465,117
|
4,082,637
|
|
3,497,772
|
94,313
|
-
Jr lien
|
312,072
|
351,139
|
|
235,970
|
0
|
|
5,586,358
|
6,490,501
|
|
5,518,460
|
107,444
|
|
|
|
|
|
|
|
$6,535,994
|
$7,461,116
|
$114,726
|
$6,489,999
|
$152,934
|
|
As
of December 31, 2017
|
2017
|
|||
|
|
Unpaid
|
|
Average
|
Interest
|
|
Recorded
|
Principal
|
Related
|
Recorded
|
Income
|
|
Investment
|
Balance
|
Allowance
|
Investment
|
Recognized
|
|
|
|
|
|
|
Related allowance
recorded
|
|
|
|
|
|
Commercial
real estate
|
$204,645
|
$225,681
|
$69,015
|
$210,890
|
$0
|
Residential
real estate
|
|
|
|
|
|
-
1st lien
|
798,226
|
837,766
|
125,305
|
646,799
|
29,262
|
-
Jr lien
|
146,654
|
293,351
|
26,353
|
220,274
|
400
|
|
1,149,525
|
1,356,798
|
220,673
|
1,077,963
|
29,662
|
|
|
|
|
|
|
No related
allowance recorded
|
|
|
|
|
|
Commercial
& industrial
|
98,806
|
136,590
|
|
75,868
|
72,426
|
Commercial
real estate
|
1,102,859
|
1,226,040
|
|
1,105,030
|
237,792
|
Residential
real estate
|
|
|
|
|
|
-
1st lien
|
3,300,175
|
3,641,627
|
|
1,930,108
|
133,732
|
-
Jr lien
|
154,116
|
154,423
|
|
116,519
|
16,574
|
|
4,655,956
|
5,158,680
|
|
3,227,525
|
460,524
|
|
|
|
|
|
|
|
$5,805,481
|
$6,515,478
|
$220,673
|
$4,305,488
|
$490,186
|
|
|
|
Residential
|
Residential
|
|
|
|
Commercial
|
Commercial
|
Real
Estate
|
Real
Estate
|
|
|
|
&
Industrial
|
Real
Estate
|
1st
Lien
|
Jr
Lien
|
Consumer
|
Total
|
|
|
|
|
|
|
|
Group
A
|
$78,585,348
|
$226,785,919
|
$161,293,233
|
$43,817,872
|
$5,086,830
|
$515,569,202
|
Group
B
|
90,763
|
246,357
|
224,992
|
0
|
0
|
562,112
|
Group
C
|
2,090,582
|
8,285,872
|
4,146,950
|
727,115
|
1,661
|
15,252,180
|
|
$80,766,693
|
$235,318,148
|
$165,665,175
|
$44,544,987
|
$5,088,491
|
$531,383,494
|
|
|
|
Residential
|
Residential
|
|
|
|
Commercial
|
Commercial
|
Real
Estate
|
Real
Estate
|
|
|
|
&
Industrial
|
Real
Estate
|
1st
Lien
|
Jr
Lien
|
Consumer
|
Total
|
|
|
|
|
|
|
|
Group
A
|
$73,352,768
|
$194,066,034
|
$165,089,999
|
$44,687,951
|
$5,267,196
|
$482,463,948
|
Group
B
|
617,526
|
4,609,847
|
282,671
|
37,598
|
0
|
5,547,642
|
Group
C
|
3,140,453
|
8,368,346
|
2,811,465
|
531,313
|
1,484
|
14,853,061
|
|
$77,110,747
|
$207,044,227
|
$168,184,135
|
$45,256,862
|
$5,268,680
|
$502,864,651
|
|
|
Pre-
|
Post-
|
|
|
Modification
|
Modification
|
|
|
Outstanding
|
Outstanding
|
|
Number
of
|
Recorded
|
Recorded
|
|
Contracts
|
Investment
|
Investment
|
|
|
|
|
Commercial real
estate
|
1
|
$406,920
|
$406,920
|
Residential real
estate - 1st lien
|
10
|
1,031,330
|
1,142,089
|
|
11
|
$1,438,250
|
$1,549,009
|
|
Number
of
Contracts
|
Pre-
Modification
Outstanding
Recorded
Investment
|
Post-
Modification
Outstanding
Recorded
Investment
|
|
|
|
|
Residential real estate - 1st
lien
|
4
|
$256,353
|
$287,385
|
|
Number
of
|
Recorded
|
|
Contracts
|
Investment
|
|
|
|
Commercial real
estate
|
1
|
$400,646
|
Residential real
estate - 1st lien
|
3
|
518,212
|
|
4
|
$918,858
|
|
Number
of
|
Recorded
|
|
Contracts
|
Investment
|
|
|
|
Residential real
estate - 1st lien
|
1
|
$87,696
|
|
2018
|
2017
|
Specific
Allowance
|
$114,726
|
$197,605
|
|
2018
|
2017
|
|
|
|
Balance at
beginning of year
|
$1,083,286
|
$1,210,695
|
MSRs
capitalized
|
110,209
|
109,297
|
MSRs
amortized
|
(188,547)
|
(236,706)
|
Change
in valuation allowance
|
0
|
0
|
Balance at end of
year
|
$1,004,948
|
$1,083,286
|
|
2018
|
2017
|
|
|
|
Buildings and
improvements
|
$10,555,868
|
$11,148,715
|
Land and land
improvements
|
2,586,373
|
2,433,971
|
Furniture and
equipment
|
6,460,625
|
6,127,897
|
Leasehold
improvements
|
1,155,284
|
1,155,284
|
Capital
lease
|
991,014
|
991,014
|
Other prepaid
assets
|
55,406
|
0
|
|
21,804,570
|
21,856,881
|
Less accumulated
depreciation and amortization
|
(12,091,115)
|
(11,512,704)
|
|
$9,713,455
|
$10,344,177
|
2019
|
$238,687
|
2020
|
219,044
|
2021
|
131,517
|
2022
|
100,582
|
2023
|
103,097
|
Subsequent to
2023
|
198,275
|
|
$991,202
|
2019
|
$141,460
|
2020
|
110,460
|
2021
|
39,117
|
Total minimum lease
payments
|
291,037
|
Less amount
representing interest
|
(24,290)
|
Present value of
net minimum lease payments
|
$266,747
|
2019
|
$86,679,711
|
2020
|
16,061,613
|
2021
|
10,685,904
|
2022
|
8,780,290
|
2023
|
7,971,265
|
Total time
certificates of deposit
|
$130,178,783
|
|
2018
|
2017
|
Long-Term
Advances(1)
|
|
|
FHLBB term advance,
0.00%, due February 26, 2021
|
$350,000
|
$350,000
|
FHLBB term advance,
0.00%, due November 22, 2021
|
1,000,000
|
1,000,000
|
FHLBB term advance,
0.00%, due June 9, 2022
|
0
|
2,000,000
|
FHLBB term advance,
0.00%, due September 22, 2023
|
200,000
|
200,000
|
|
$1,550,000
|
$3,550,000
|
December
31,
|
2018
|
2017
|
|
|
|
Current
balance
|
$30,521,565
|
$28,647,848
|
Average
balance
|
30,554,953
|
28,949,820
|
Highest month-end
balance
|
32,938,807
|
31,745,206
|
|
|
|
Book Value –
Pledged investments (1)
|
40,186,557
|
38,797,609
|
Fair Value –
Pledged investments (1)
|
39,366,831
|
38,450,653
|
|
2018
|
2017
|
|
|
|
Currently
paid or payable
|
$1,749,624
|
$2,124,999
|
Deferred
(benefit) expense
|
(11,359)
|
784,331
|
Total income
tax expense
|
$1,738,265
|
$2,909,330
|
|
2018
|
2017
|
|
|
|
Computed expense at
statutory rates
|
$2,128,517
|
$3,107,813
|
Tax exempt interest
and BOLI
|
(291,550)
|
(484,454)
|
Disallowed
interest
|
11,631
|
13,867
|
Partnership
rehabilitation and tax credits
|
(437,229)
|
(549,897)
|
Low income housing
investment amortization expense
|
323,948
|
278,296
|
NMTC amortization
expense
|
0
|
129,078
|
Deferred tax asset
revaluation to enacted tax rates
|
0
|
410,304
|
Other
|
2,948
|
4,323
|
|
$1,738,265
|
$2,909,330
|
|
2018
|
2017
|
|
|
|
Depreciation
|
$25,782
|
$12,377
|
Mortgage servicing
rights
|
(16,451)
|
(184,146)
|
Deferred
compensation
|
3,681
|
281,886
|
Bad
debts
|
(34,533)
|
652,671
|
Limited partnership
amortization
|
(20,129)
|
(15,573)
|
Investment in CFS
Partners
|
(1,014)
|
(39,644)
|
Core deposit
intangible
|
0
|
(92,715)
|
Loan fair
value
|
(2,228)
|
(13,531)
|
OREO write
down
|
13,860
|
80
|
Revaluation effect
of unrealized loss on debt securities AFS
|
0
|
45,106
|
Prepaid
expenses
|
(846)
|
80,325
|
Other
|
20,519
|
57,495
|
Deferred
tax (benefit) expense
|
$(11,359)
|
$784,331
|
|
2018
|
2017
|
|
|
|
Components of the
deferred tax asset:
|
|
|
Bad
debts
|
$1,176,534
|
$1,142,001
|
Deferred
compensation
|
16,599
|
20,280
|
Contingent
liability - MPF program
|
17,838
|
17,793
|
OREO
write down
|
0
|
13,860
|
Capital
lease
|
23,287
|
32,609
|
Unrealized
loss on debt securities AFS
|
172,143
|
72,859
|
Other
|
11,968
|
23,210
|
Total
deferred tax asset
|
$1,418,369
|
$1,322,612
|
|
|
|
Components of the
deferred tax liability:
|
|
|
Depreciation
|
257,463
|
231,681
|
Limited
partnerships
|
16,407
|
36,536
|
Mortgage
servicing rights
|
211,039
|
227,490
|
Investment
in CFS Partners
|
74,377
|
75,391
|
Prepaid
expenses
|
79,479
|
80,325
|
Fair
value adjustment on acquired loans
|
6,171
|
8,399
|
Total
deferred tax liability
|
644,936
|
659,822
|
Net
deferred tax asset
|
$773,433
|
$662,790
|
|
Contract
or Notional Amount
|
|
|
2018
|
2017
|
|
|
|
Unused portions of
home equity lines of credit
|
$31,328,881
|
$29,529,411
|
Residential and
commercial construction lines of credit
|
7,251,560
|
19,068,034
|
Commercial real
estate commitments
|
26,588,950
|
12,014,332
|
Commercial and
industrial commitments
|
45,135,452
|
38,369,010
|
Other commitments
to extend credit
|
53,586,720
|
48,233,850
|
Standby letters of
credit and commercial letters of credit
|
2,408,581
|
1,939,759
|
Recourse on sale of
credit card portfolio
|
284,680
|
302,775
|
MPF credit
enhancement obligation, net (See Note 16)
|
552,158
|
634,340
|
|
2018
|
2017
|
|
|
|
Balance, beginning
of year
|
$7,356,906
|
$14,121,486
|
Loans - New
Directors
|
936,445
|
0
|
New loans to
existing Principal Officers/Directors
|
5,582,052
|
6,181,507
|
Retirement/Resignation
of Director
|
0
|
(6,876,144)
|
Repayment
|
(7,144,561)
|
(6,069,943)
|
Balance, end of
year
|
$6,730,842
|
$7,356,906
|
|
|
|
|
|
Minimum
|
|
|
|
|
Minimum
|
To
Be Well
|
||
|
|
|
For
Capital
|
Capitalized
Under
|
||
|
|
|
Adequacy
|
Prompt
Corrective
|
||
|
Actual
|
Purposes:
|
Action
Provisions(1):
|
|||
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|
(Dollars
in Thousands)
|
|||||
December
31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier
1 capital
|
|
|
|
|
|
|
(to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$64,564
|
12.94%
|
$22,446
|
4.50%
|
N/A
|
N/A
|
Bank
|
$63,960
|
12.84%
|
$22,419
|
4.50%
|
$32,384
|
6.50%
|
|
|
|
|
|
|
|
Tier 1 capital (to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$64,564
|
12.94%
|
$29,928
|
6.00%
|
N/A
|
N/A
|
Bank
|
$63,960
|
12.84%
|
$29,893
|
6.00%
|
$39,857
|
8.00%
|
|
|
|
|
|
|
|
Total capital (to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$70,210
|
14.08%
|
$39,904
|
8.00%
|
N/A
|
N/A
|
Bank
|
$69,606
|
13.97%
|
$39,857
|
8.00%
|
$49,821
|
10.00%
|
|
|
|
|
|
|
|
Tier 1 capital (to
average assets)
|
|
|
|
|
|
|
Company
|
$64,564
|
9.26%
|
$27,890
|
4.00%
|
N/A
|
N/A
|
Bank
|
$63,960
|
9.18%
|
$27,867
|
4.00%
|
$34,834
|
5.00%
|
|
|
|
|
|
|
|
December
31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier
1 capital
|
|
|
|
|
|
|
(to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$59,523
|
12.75%
|
$21,003
|
4.50%
|
N/A
|
N/A
|
Bank
|
$58,920
|
12.64%
|
$20,972
|
4.50%
|
$30,293
|
6.50%
|
|
|
|
|
|
|
|
Tier 1 capital (to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$59,523
|
12.75%
|
$28,004
|
6.00%
|
N/A
|
N/A
|
Bank
|
$58,920
|
12.64%
|
$27,963
|
6.00%
|
$37,284
|
8.00%
|
|
|
|
|
|
|
|
Total capital (to
risk-weighted assets)
|
|
|
|
|
|
|
Company
|
$65,005
|
13.93%
|
$37,338
|
8.00%
|
N/A
|
N/A
|
Bank
|
$64,401
|
13.82%
|
$37,284
|
8.00%
|
$46,605
|
10.00%
|
|
|
|
|
|
|
|
Tier 1 capital (to
average assets)
|
|
|
|
|
|
|
Company
|
$59,523
|
9.05%
|
$26,304
|
4.00%
|
N/A
|
N/A
|
Bank
|
$58,920
|
8.97%
|
$26,279
|
4.00%
|
$32,849
|
5.00%
|
Level
2
|
2018
|
2017
|
Assets: (market
approach)
|
|
|
U.S. GSE debt
securities
|
$13,751,103
|
$17,158,742
|
Agency
MBS
|
15,574,525
|
16,613,337
|
ABS and
OAS
|
1,986,129
|
0
|
Other
investments
|
8,055,074
|
4,678,574
|
|
$39,366,831
|
$38,450,653
|
Level
2
|
2018
|
2017
|
Assets: (market
approach)
|
|
|
MSRs
(1)
|
$1,004,948
|
$1,083,286
|
Impaired loans, net
of related allowance
|
0
|
135,630
|
OREO
|
201,386
|
284,235
|
December
31, 2018
|
|
Fair
|
Fair
|
Fair
|
Fair
|
|
Carrying
|
Value
|
Value
|
Value
|
Value
|
|
Amount
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
(Dollars
in Thousands)
|
||||
Financial
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$67,935
|
$67,935
|
$0
|
$0
|
$67,935
|
Debt securities
HTM
|
47,067
|
0
|
47,228
|
0
|
47,228
|
Debt securities
AFS
|
39,367
|
0
|
39,367
|
0
|
39,367
|
Restricted equity
securities
|
1,749
|
0
|
1,749
|
0
|
1,749
|
Loans and loans
held-for-sale, net of ALL
|
|
|
|
|
|
Commercial
& industrial
|
80,049
|
0
|
0
|
79,773
|
79,773
|
Commercial
real estate
|
232,239
|
0
|
0
|
230,532
|
230,532
|
Residential
real estate - 1st lien
|
164,202
|
0
|
0
|
161,068
|
161,068
|
Residential
real estate - Jr lien
|
44,260
|
0
|
0
|
44,127
|
44,127
|
Consumer
|
5,031
|
0
|
0
|
5,063
|
5,063
|
MSRs
(1)
|
1,005
|
0
|
1,481
|
0
|
1,481
|
Accrued interest
receivable
|
2,301
|
0
|
2,301
|
0
|
2,301
|
|
|
|
|
|
|
Financial
liabilities:
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
Other
deposits
|
573,525
|
0
|
571,952
|
0
|
571,952
|
Brokered
deposits
|
35,292
|
0
|
35,247
|
0
|
35,247
|
Long-term
borrowings
|
1,550
|
0
|
1,425
|
0
|
1,425
|
Repurchase
agreements
|
30,522
|
0
|
30,522
|
0
|
30,522
|
Capital lease
obligations
|
267
|
0
|
267
|
0
|
267
|
Subordinated
debentures
|
12,887
|
0
|
12,807
|
0
|
12,807
|
Accrued interest
payable
|
113
|
0
|
113
|
0
|
113
|
December
31, 2017
|
|
Fair
|
Fair
|
Fair
|
Fair
|
|
Carrying
|
Value
|
Value
|
Value
|
Value
|
|
Amount
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
(Dollars
in Thousands)
|
||||
Financial
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$42,654
|
$42,654
|
$0
|
$0
|
$42,654
|
Debt securities
HTM
|
48,825
|
0
|
48,796
|
0
|
48,796
|
Debt securities
AFS
|
38,451
|
0
|
38,451
|
0
|
38,451
|
Restricted equity
securities
|
1,704
|
0
|
1,704
|
0
|
1,704
|
Loans and loans
held-for-sale, net of ALL
|
|
|
|
|
|
Commercial
& industrial
|
76,394
|
0
|
0
|
76,799
|
76,799
|
Commercial
real estate
|
204,260
|
0
|
136
|
204,697
|
204,833
|
Residential
real estate - 1st lien
|
167,671
|
0
|
0
|
169,205
|
169,205
|
Residential
real estate - Jr lien
|
44,916
|
0
|
0
|
45,207
|
45,207
|
Consumer
|
5,223
|
0
|
0
|
5,425
|
5,425
|
MSRs
(1)
|
1,083
|
0
|
1,337
|
0
|
1,337
|
Accrued interest
receivable
|
2,052
|
0
|
2,052
|
0
|
2,052
|
|
|
|
|
|
|
Financial
liabilities:
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
Other
deposits
|
509,686
|
0
|
508,407
|
0
|
508,407
|
Brokered
deposits
|
50,949
|
0
|
50,926
|
0
|
50,926
|
Long-term
borrowings
|
3,550
|
0
|
3,191
|
0
|
3,191
|
Repurchase
agreements
|
28,648
|
0
|
28,648
|
0
|
28,648
|
Capital lease
obligations
|
382
|
0
|
382
|
0
|
382
|
Subordinated
debentures
|
12,887
|
0
|
12,832
|
0
|
12,832
|
Accrued interest
payable
|
101
|
0
|
101
|
0
|
101
|
Community
Bancorp. (Parent Company Only)
|
December
31,
|
December
31,
|
Balance
Sheets
|
2018
|
2017
|
|
|
|
Assets
|
|
|
|
|
|
Cash
|
$720,620
|
$556,392
|
Investment
in subsidiary - Community National Bank
|
74,886,386
|
70,219,699
|
Investment
in Capital Trust
|
387,000
|
387,000
|
Income
taxes receivable
|
207,244
|
290,224
|
Total
assets
|
$76,201,250
|
$71,453,315
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Junior
subordinated debentures
|
$12,887,000
|
$12,887,000
|
Dividends
payable
|
710,539
|
630,461
|
Total
liabilities
|
13,597,539
|
13,517,461
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Preferred
stock, 1,000,000 shares authorized, 20 and 25 shares
|
|
|
issued
and outstanding in 2018 and 2017, respectively
|
|
|
($100,000
liquidation value)
|
2,000,000
|
2,500,000
|
Common
stock - $2.50 par value; 15,000,000 shares authorized,
|
|
|
5,382,103
and 5,322,320 shares issued at December 31, 2018
|
|
|
and
2017, respectively (including 17,442 and 13,039 shares
|
|
|
issued
February 1, 2019 and 2018, respectively)
|
13,455,258
|
13,305,800
|
Additional
paid-in capital
|
32,536,532
|
31,639,189
|
Retained
earnings
|
17,882,282
|
13,387,739
|
Accumulated
other comprehensive loss
|
(647,584)
|
(274,097)
|
Less:
treasury stock, at cost; 210,101 shares at December
31,
|
|
|
2018
and 2017
|
(2,622,777)
|
(2,622,777)
|
Total
shareholders' equity
|
62,603,711
|
57,935,854
|
|
|
|
Total
liabilities and shareholders' equity
|
$76,201,250
|
$71,453,315
|
Community
Bancorp. (Parent Company Only)
|
Years
Ended December 31,
|
|
Condensed
Statements of Income
|
2018
|
2017
|
|
|
|
Income
|
|
|
Bank
subsidiary distributions
|
$4,137,000
|
$3,206,000
|
Dividends
on Capital Trust
|
19,530
|
15,757
|
Total
income
|
4,156,530
|
3,221,757
|
|
|
|
Expense
|
|
|
Interest
on junior subordinated debentures
|
650,361
|
524,696
|
Administrative
and other
|
356,055
|
344,657
|
Total
expense
|
1,006,416
|
869,353
|
|
|
|
Income before
applicable income tax benefit and equity in
|
|
|
undistributed
net income of subsidiary
|
3,150,114
|
2,352,404
|
Income tax
benefit
|
207,244
|
290,224
|
|
|
|
Income before
equity in undistributed net income of subsidiary
|
3,357,358
|
2,642,628
|
Equity in
undistributed net income of subsidiary
|
5,040,174
|
3,588,670
|
Net
income
|
$8,397,532
|
$6,231,298
|
Community
Bancorp. (Parent Company Only)
|
Years
Ended December 31,
|
|
Condensed
Statements of Cash Flows
|
2018
|
2017
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
Net
income
|
$8,397,532
|
$6,231,298
|
Adjustments
to reconcile net income to net cash provided by
|
|
|
operating
activities
|
|
|
Equity
in undistributed net income of subsidiary
|
(5,040,174)
|
(3,588,670)
|
Decrease
(increase) in income taxes receivable
|
82,980
|
(20,888)
|
Net
cash provided by operating activities
|
3,440,338
|
2,621,740
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
Redemption
of preferred stock
|
(500,000)
|
0
|
Dividends
paid on preferred stock
|
(103,125)
|
(101,563)
|
Dividends
paid on common stock
|
(2,672,985)
|
(2,457,871)
|
Net
cash used in financing activities
|
(3,276,110)
|
(2,559,434)
|
Net
increase in cash
|
164,228
|
62,306
|
|
|
|
Cash
|
|
|
Beginning
|
556,392
|
494,086
|
Ending
|
$720,620
|
$556,392
|
|
|
|
Cash
Received for Income Taxes
|
$290,224
|
$269,335
|
|
|
|
Cash
Paid for Interest
|
$650,361
|
$524,696
|
|
|
|
Dividends
paid:
|
|
|
Dividends
declared
|
$3,799,864
|
$3,453,884
|
Increase
in dividends payable attributable to dividends
declared
|
(80,078)
|
(49,315)
|
Dividends
reinvested
|
(1,046,801)
|
(946,698)
|
|
$2,672,985
|
$2,457,871
|
2018
|
March
31,
|
June
30,
|
September
30,
|
December
31,
|
|
|
|
|
|
Interest
income
|
$6,776,838
|
$7,028,859
|
$7,517,022
|
$7,791,884
|
Interest
expense
|
868,749
|
938,499
|
1,220,145
|
1,457,695
|
Provision for loan
losses
|
180,000
|
180,000
|
210,000
|
210,000
|
Non-interest
income
|
1,395,670
|
1,690,161
|
1,542,793
|
1,552,684
|
Non-interest
expense
|
4,731,116
|
5,103,975
|
4,874,332
|
5,185,603
|
Net
income
|
1,982,543
|
2,002,654
|
2,269,732
|
2,142,603
|
Earnings per common
share
|
0.38
|
0.39
|
0.44
|
0.40
|
2017
|
March
31,
|
June
30,
|
September
30,
|
December
31,
|
|
|
|
|
|
Interest
income
|
$6,156,393
|
$6,444,837
|
$6,820,165
|
$7,019,554
|
Interest
expense
|
734,411
|
749,504
|
796,192
|
788,283
|
Provision for loan
losses
|
150,000
|
150,000
|
150,000
|
200,000
|
Non-interest
income
|
1,370,218
|
1,381,731
|
1,449,247
|
1,383,196
|
Non-interest
expense
|
4,731,119
|
4,892,568
|
4,842,116
|
4,700,520
|
Net
income
|
1,414,216
|
1,499,513
|
1,792,949
|
1,524,620
|
Earnings per common
share
|
0.27
|
0.29
|
0.35
|
0.30
|
|
2018
|
2017
|
Income
|
|
|
Income
from investment in CFS Partners
|
$514,485
|
$415,561
|
|
|
|
Expenses
|
|
|
Outsourcing
expense
|
$480,563
|
$538,359
|
Service
contracts - administration
|
512,902
|
447,374
|
Marketing
|
552,617
|
484,330
|
State
deposit tax
|
633,185
|
590,728
|
ATM
fees
|
412,813
|
417,067
|
SELECTED
FINANCIAL DATA
|
|||||
|
|||||
As
of December 31,
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
Balance
Sheet Data
|
|
|
|
|
|
Net
loans
|
$526,144,567
|
$497,745,203
|
$482,280,911
|
$453,424,042
|
$443,202,475
|
Total
assets
|
720,347,498
|
667,045,595
|
637,653,665
|
596,134,709
|
586,711,044
|
Total
deposits
|
608,816,565
|
560,634,980
|
504,735,032
|
495,485,562
|
493,019,463
|
Borrowed
funds
|
1,550,000
|
3,550,000
|
31,550,000
|
10,000,000
|
0
|
Junior subordinated
debentures
|
12,887,000
|
12,887,000
|
12,887,000
|
12,887,000
|
12,887,000
|
Total
liabilities
|
657,743,787
|
609,109,741
|
583,202,148
|
544,720,053
|
537,715,842
|
Total shareholders'
equity
|
62,603,711
|
57,935,854
|
54,451,517
|
51,414,656
|
48,995,202
|
|
|
|
|
|
|
Years
Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
|
Total interest
income
|
$29,114,603
|
$26,440,949
|
$24,248,114
|
$23,406,689
|
$22,950,277
|
Total interest
expense
|
4,485,088
|
3,068,390
|
2,699,299
|
2,645,650
|
3,055,744
|
Net
interest income
|
24,629,515
|
23,372,559
|
21,548,815
|
20,761,039
|
19,894,533
|
|
|
|
|
|
|
Provision for loan
losses
|
780,000
|
650,000
|
500,000
|
510,000
|
540,000
|
Net
interest income after
|
|
|
|
|
|
provision
for loan losses
|
23,849,515
|
22,722,559
|
21,048,815
|
20,251,039
|
19,354,533
|
|
|
|
|
|
|
Non-interest
income
|
6,181,308
|
5,584,392
|
5,501,899
|
5,150,155
|
5,141,751
|
Non-interest
expense
|
19,895,026
|
19,166,323
|
19,142,524
|
18,810,973
|
17,585,980
|
Income
before income taxes
|
10,135,797
|
9,140,628
|
7,408,190
|
6,590,221
|
6,910,304
|
|
|
|
|
|
|
Applicable income
tax expense (1)
|
1,738,265
|
2,909,330
|
1,923,912
|
1,764,630
|
1,785,396
|
|
|
|
|
|
|
Net
income
|
$8,397,532
|
$6,231,298
|
$5,484,278
|
$4,825,591
|
$5,124,908
|
|
|
|
|
|
|
Per
Share Data
|
|
|
|
|
|
Earnings per common
share (2)
|
$1.61
|
$1.21
|
$1.07
|
$0.96
|
$1.03
|
Dividends declared
per common
|
|
|
|
|
|
share
|
$0.74
|
$0.68
|
$0.64
|
$0.64
|
$0.64
|
Book value per
common share
|
|
|
|
|
|
outstanding
|
$11.72
|
$10.84
|
$10.27
|
$9.79
|
$9.43
|
Weighted average
number of
|
|
|
|
|
|
common
shares outstanding
|
5,139,297
|
5,084,102
|
5,024,270
|
4,961,972
|
4,897,281
|
Number of common
shares
|
|
|
|
|
|
outstanding,
period end
|
5,172,002
|
5,112,219
|
5,058,952
|
4,994,416
|
4,932,374
|
(1)
Applicable income tax expense assumes a 21% tax rate for 2018 and a
34% tax rate for all years prior to 2018.
|
(2)
Computed based on the weighted average number of common shares
outstanding during the periods presented.
|
|
December
31,
|
||
|
2018
|
2017
|
2016
|
|
|
|
|
Return on average
assets
|
1.24%
|
0.96%
|
0.91%
|
Return on average
equity
|
14.08%
|
11.16%
|
10.36%
|
Dividend payout
ratio (1)
|
45.96%
|
56.20%
|
59.81%
|
Average equity to
average assets ratio
|
8.83%
|
8.58%
|
8.77%
|
Years
Ended December 31,
|
2018
|
2017
|
2016
|
|
(Dollars
in Thousands)
|
||
|
|
|
|
Net interest income
as presented
|
$24,630
|
$23,373
|
$21,549
|
Effect of
tax-exempt income
|
344
|
684
|
660
|
Net
interest income, tax equivalent
|
$24,974
|
$24,057
|
$22,209
|
|
Years
Ended December 31,
|
||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Average
|
|
Average
|
Income/
|
Rate/
|
Average
|
Income/
|
Rate/
|
Average
|
Income/
|
Rate/
|
|
Balance
|
Expense
|
Yield
|
Balance
|
Expense
|
Yield
|
Balance
|
Expense
|
Yield
|
|
(Dollars
in Thousands)
|
||||||||
Interest-Earning
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
(1)
|
$519,734
|
$26,313
|
5.06%
|
$497,847
|
$24,103
|
4.84%
|
$470,229
|
$22,294
|
4.74%
|
Taxable
investment securities
|
38,372
|
895
|
2.33%
|
35,758
|
676
|
1.89%
|
29,383
|
511
|
1.74%
|
Tax-exempt
investment securities
|
48,777
|
1,641
|
3.36%
|
52,127
|
2,013
|
3.86%
|
51,744
|
1,944
|
3.76%
|
Sweep and
interest-earning accounts
|
23,256
|
484
|
2.08%
|
12,331
|
160
|
1.30%
|
4,481
|
22
|
0.49%
|
Other
investments (2)
|
2,249
|
126
|
5.60%
|
2,430
|
173
|
7.12%
|
2,690
|
138
|
5.13%
|
|
$632,288
|
$29,459
|
4.66%
|
$600,493
|
$27,125
|
4.52%
|
$558,527
|
$24,909
|
4.46%
|
Interest-Bearing
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
transaction accounts
|
$137,547
|
$865
|
0.63%
|
$122,521
|
$324
|
0.26%
|
$116,081
|
$223
|
0.19%
|
Money market
accounts
|
91,641
|
1,057
|
1.15%
|
86,142
|
782
|
0.91%
|
82,254
|
803
|
0.98%
|
Savings
deposits
|
98,154
|
136
|
0.14%
|
96,551
|
124
|
0.13%
|
85,896
|
106
|
0.12%
|
Time
deposits
|
122,499
|
1,489
|
1.22%
|
124,134
|
1,126
|
0.91%
|
109,347
|
894
|
0.82%
|
Borrowed
funds
|
5,462
|
70
|
1.28%
|
9,975
|
65
|
0.65%
|
17,426
|
95
|
0.55%
|
Repurchase
agreements
|
30,555
|
191
|
0.63%
|
28,950
|
87
|
0.30%
|
25,888
|
77
|
0.30%
|
Capital lease
obligations
|
320
|
27
|
8.44%
|
430
|
35
|
8.14%
|
511
|
42
|
8.22%
|
Junior
subordinated debentures
|
12,887
|
650
|
5.04%
|
12,887
|
525
|
4.07%
|
12,887
|
460
|
3.57%
|
|
$499,065
|
$4,485
|
0.90%
|
$481,590
|
$3,068
|
0.64%
|
$450,290
|
$2,700
|
0.60%
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$24,974
|
|
|
$24,057
|
|
|
$22,209
|
|
Net interest spread
(3)
|
|
|
3.76%
|
|
|
3.88%
|
|
|
3.86%
|
Net interest margin
(4)
|
|
|
3.95%
|
|
|
4.01%
|
|
|
3.98%
|
(1)
Included in gross loans are non-accrual loans with an average
balance of $4.0 million, $2.6 million and $3.2 million
|
for
the years ended December 31, 2018, 2017 and 2016, respectively.
Loans are stated before deduction of
|
unearned
discount and allowance for loan losses, less loans
held-for-sale.
|
(2)
Included in other investments is the Company’s FHLBB Stock
with an average balance of $1.2 million, $1.5 million
|
and
$1.7 million, respectively, for 2018, 2017 and 2016 and a dividend
rate of approximately 5.92%, 4.24% and
|
4.67%,
respectively.
|
(3) Net
interest spread is the difference between the average yield on
average earning assets and the average rate
|
paid
on average interest-bearing liabilities.
|
(4) Net
interest margin is net interest income divided by average earning
assets.
|
|
2018
versus 2017
|
2017
versus 2016
|
||||
|
Variance
|
Variance
|
|
Variance
|
Variance
|
|
|
Due
to
|
Due
to
|
Total
|
Due
to
|
Due
to
|
Total
|
|
Rate
(1)
|
Volume
(1)
|
Variance
|
Rate
(1)
|
Volume
(1)
|
Variance
|
|
(Dollars
in Thousands)
|
|||||
Average
Interest-Earning Assets
|
|
|
|
|
|
|
Loans
|
$1,151
|
$1,059
|
$2,210
|
$500
|
$1,309
|
$1,809
|
Taxable
investment securities
|
170
|
49
|
219
|
54
|
111
|
165
|
Tax-exempt
investment securities
|
(259)
|
(113)
|
(372)
|
55
|
14
|
69
|
Sweep and
interest-earning accounts
|
182
|
142
|
324
|
100
|
38
|
138
|
Other
investments
|
(37)
|
(10)
|
(47)
|
54
|
(19)
|
35
|
|
$1,207
|
$1,127
|
$2,334
|
$763
|
$1,453
|
$2,216
|
|
|
|
|
|
|
|
Average
Interest-Bearing Liabilities
|
|
|
|
|
|
|
Interest-bearing
transaction accounts
|
$502
|
$39
|
$541
|
$89
|
$12
|
$101
|
Money market
accounts
|
225
|
50
|
275
|
(59)
|
38
|
(21)
|
Savings
deposits
|
10
|
2
|
12
|
5
|
13
|
18
|
Time
deposits
|
383
|
(20)
|
363
|
111
|
121
|
232
|
Borrowed
funds
|
63
|
(58)
|
5
|
18
|
(48)
|
(30)
|
Repurchase
agreements
|
99
|
5
|
104
|
1
|
9
|
10
|
Capital lease
obligations
|
1
|
(9)
|
(8)
|
0
|
(7)
|
(7)
|
Junior
subordinated debentures
|
125
|
0
|
125
|
65
|
0
|
65
|
|
$1,408
|
$9
|
$1,417
|
$230
|
$138
|
$368
|
|
|
|
|
|
|
|
Changes
in net interest income
|
$(201)
|
$1,118
|
$917
|
$533
|
$1,315
|
$1,848
|
(1)
Items which have shown a year-to-year increase in volume have
variances allocated as follows:
|
Variance
due to rate = Change in rate x new volume
|
Variance
due to volume = Change in volume x old rate
|
Items
which have shown a year-to-year decrease in volume have variances
allocated as follows:
|
Variance
due to rate = Change in rate x old volume
|
Variances
due to volume = Change in volume x new rate
|
|
Years
Ended
|
|
|
|
|
December
31,
|
Change
|
||
|
2018
|
2017
|
Income
|
Percent
|
|
|
|
|
|
Service
fees
|
$3,238,954
|
$3,076,567
|
$162,387
|
5.28%
|
Income from sold
loans
|
780,622
|
730,019
|
50,603
|
6.93%
|
Other income from
loans
|
879,887
|
846,392
|
33,495
|
3.96%
|
Net realized (loss)
gain on sale of securities AFS
|
(32,718)
|
3,384
|
(36,102)
|
-1066.84%
|
Other
income
|
|
|
|
|
Income
from CFS Partners
|
514,486
|
415,561
|
98,925
|
23.81%
|
SERP
fair value adjustment
|
0
|
45,312
|
(45,312)
|
-100.00%
|
Rental
income
|
30,365
|
62,092
|
(31,727)
|
-51.10%
|
Gain on
sale of property
|
263,118
|
0
|
263,118
|
100.00%
|
VISA
card commission
|
93,377
|
1,638
|
91,739
|
5600.67%
|
Service
fee NMTC
|
43,602
|
0
|
43,602
|
100.00%
|
Other
miscellaneous income
|
369,615
|
403,427
|
(33,812)
|
-8.38%
|
Total
non-interest income
|
$6,181,308
|
$5,584,392
|
$596,916
|
10.69%
|
|
Years
Ended
|
|
|
|
|
December
31,
|
Change
|
||
|
2018
|
2017
|
Expense
|
Percent
|
|
|
|
|
|
Salaries and
wages
|
$7,203,001
|
$6,772,373
|
$430,628
|
6.36%
|
Employee
benefits
|
2,880,048
|
2,648,060
|
231,988
|
8.76%
|
Occupancy expenses,
net
|
2,545,959
|
2,549,455
|
(3,496)
|
-0.14%
|
Other
expenses
|
|
|
|
|
Service
contracts - administrative
|
512,902
|
447,374
|
65,528
|
14.65%
|
Marketing
expense
|
552,617
|
484,330
|
68,287
|
14.10%
|
Audit
Fees
|
448,439
|
379,773
|
68,666
|
18.08%
|
Consultant
services
|
276,972
|
235,811
|
41,161
|
17.46%
|
Collection
& non-accruing loan expense
|
145,009
|
87,520
|
57,489
|
65.69%
|
Subsequent
write downs on OREO
|
78,447
|
40,000
|
38,447
|
96.12%
|
Amortization
of CDI
|
0
|
272,691
|
(272,691)
|
-100.00%
|
Other
miscellaneous expenses
|
5,251,632
|
5,248,936
|
2,696
|
0.05%
|
Total
non-interest expense
|
$19,895,026
|
$19,166,323
|
$728,703
|
3.80%
|
Years
Ended December 31,
|
2018
|
2017
|
2016
|
|||
|
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
|
(Dollars
in Thousands)
|
|||||
Average
Assets
|
|
|
|
|
|
|
Cash and due from
banks
|
|
|
|
|
|
|
Non-interest
bearing
|
$10,838
|
1.61%
|
$16,427
|
2.53%
|
$9,514
|
1.58%
|
Federal funds
sold and overnight deposits
|
23,256
|
3.44%
|
12,331
|
1.90%
|
4,481
|
0.74%
|
Taxable investment
securities
|
38,372
|
5.69%
|
35,758
|
5.50%
|
29,383
|
4.87%
|
Tax-exempt
investment securities
|
48,777
|
7.23%
|
52,127
|
8.01%
|
51,744
|
8.58%
|
Other
securities
|
1,862
|
0.28%
|
2,043
|
0.31%
|
2,303
|
0.38%
|
Total
investment securities
|
89,011
|
13.20%
|
89,928
|
13.82%
|
83,430
|
13.83%
|
Gross
loans
|
520,083
|
77.07%
|
498,363
|
76.63%
|
470,856
|
78.06%
|
ALL and deferred
net loan costs
|
(5,176)
|
-0.77%
|
(5,073)
|
-0.78%
|
(4,831)
|
-0.80%
|
Premises and
equipment
|
9,958
|
1.47%
|
10,619
|
1.63%
|
11,082
|
1.84%
|
OREO
|
278
|
0.04%
|
377
|
0.06%
|
417
|
0.07%
|
Investment in
Capital Trust
|
387
|
0.06%
|
387
|
0.06%
|
387
|
0.06%
|
BOLI
|
4,765
|
0.71%
|
4,670
|
0.72%
|
4,569
|
0.76%
|
CDI
|
0
|
0.00%
|
129
|
0.02%
|
401
|
0.06%
|
Goodwill
|
11,574
|
1.71%
|
11,574
|
1.78%
|
11,574
|
1.92%
|
Other
assets
|
9,835
|
1.46%
|
10,574
|
1.63%
|
11,343
|
1.88%
|
Total
average assets
|
$674,809
|
100%
|
$650,306
|
100%
|
$603,223
|
100%
|
|
|
|
|
|
|
|
Average
Liabilities
|
|
|
|
|
|
|
Demand
deposits
|
$113,412
|
16.81%
|
$109,920
|
16.90%
|
$96,618
|
16.02%
|
Interest-bearing
transaction accounts
|
137,547
|
20.38%
|
122,521
|
18.84%
|
116,081
|
19.24%
|
Money market
funds
|
91,642
|
13.58%
|
86,141
|
13.25%
|
82,254
|
13.64%
|
Savings
accounts
|
98,154
|
14.55%
|
96,551
|
14.85%
|
85,896
|
14.24%
|
Time
deposits
|
122,499
|
18.15%
|
124,134
|
19.09%
|
109,347
|
18.13%
|
Total
average deposits
|
563,254
|
83.47%
|
539,267
|
82.93%
|
490,196
|
81.27%
|
|
|
|
|
|
|
|
Borrowed
funds
|
5,462
|
0.81%
|
9,975
|
1.53%
|
17,426
|
2.89%
|
Repurchase
agreements
|
30,555
|
4.53%
|
28,950
|
4.45%
|
25,888
|
4.29%
|
Junior subordinated
debentures
|
12,887
|
1.91%
|
12,887
|
1.98%
|
12,887
|
2.14%
|
Other
liabilities
|
3,019
|
0.45%
|
3,408
|
0.53%
|
3,878
|
0.64%
|
Total
average liabilities
|
615,177
|
91.17%
|
594,487
|
91.42%
|
550,275
|
91.23%
|
|
||||||
Average
Shareholders' Equity
|
|
|
|
|
|
|
Preferred
stock
|
2,119
|
0.31%
|
2,500
|
0.38%
|
2,500
|
0.41%
|
Common
stock
|
13,367
|
1.98%
|
13,230
|
2.03%
|
13,074
|
2.17%
|
Additional paid-in
capital
|
32,000
|
4.74%
|
31,159
|
4.79%
|
30,361
|
5.03%
|
Retained
earnings
|
15,563
|
2.31%
|
11,623
|
1.79%
|
9,502
|
1.57%
|
Less: Treasury
stock
|
(2,623)
|
-0.39%
|
(2,623)
|
-0.40%
|
(2,623)
|
-0.43%
|
Accumulated other
comprehensive (loss) income
|
(794)
|
-0.12%
|
(70)
|
-0.01%
|
134
|
0.02%
|
Total
average shareholders' equity
|
59,632
|
8.83%
|
55,819
|
8.58%
|
52,948
|
8.77%
|
Total
average liabilities and shareholders' equity
|
$674,809
|
100%
|
$650,306
|
100%
|
$603,223
|
100%
|
Change
in Volume of Assets, Liabilities and Shareholders'
Equity
|
|||||||
|
|
|
|
|
|
|
|
Years
Ended December 31,
|
2018
|
2017
|
2016
|
2018
vs 2017
|
2017
vs 2016
|
||
|
Average
|
Average
|
Average
|
Volume
|
%
of
|
Volume
|
%
of
|
Average
Assets
|
Balance
|
Balance
|
Balance
|
Change
|
Change
|
Change
|
Change
|
|
(Dollars
in Thousands)
|
||||||
Cash and due from
banks
|
|
|
|
|
|
|
|
Non-interest
bearing
|
$10,838
|
$16,427
|
$9,514
|
$(5,589)
|
-34.02%
|
$6,913
|
72.66%
|
Federal funds
sold and overnight deposits
|
23,256
|
12,331
|
4,481
|
10,925
|
88.60%
|
7,850
|
175.18%
|
Taxable investment
securities
|
38,372
|
35,758
|
29,383
|
2,614
|
7.31%
|
6,375
|
21.70%
|
Tax-exempt
investment securities
|
48,777
|
52,127
|
51,744
|
(3,350)
|
-6.43%
|
383
|
0.74%
|
Other
securities
|
1,862
|
2,043
|
2,303
|
(181)
|
-8.86%
|
(260)
|
-11.29%
|
Total
investment securities
|
89,011
|
89,928
|
83,430
|
(917)
|
-1.02%
|
6,498
|
7.79%
|
Gross
loans
|
520,083
|
498,363
|
470,856
|
21,720
|
4.36%
|
27,507
|
5.84%
|
ALL and deferred
net loan costs
|
(5,176)
|
(5,073)
|
(4,831)
|
(103)
|
2.03%
|
(242)
|
5.01%
|
Premises and
equipment
|
9,958
|
10,619
|
11,082
|
(661)
|
-6.22%
|
(463)
|
-4.18%
|
OREO
|
278
|
377
|
417
|
(99)
|
-26.26%
|
(40)
|
-9.59%
|
Investment in
Capital Trust
|
387
|
387
|
387
|
0
|
0.00%
|
0
|
0.00%
|
BOLI
|
4,765
|
4,670
|
4,569
|
95
|
2.03%
|
101
|
2.21%
|
CDI
|
0
|
129
|
401
|
(129)
|
-100.00%
|
(272)
|
-67.83%
|
Goodwill
|
11,574
|
11,574
|
11,574
|
0
|
0.00%
|
0
|
0.00%
|
Other
assets
|
9,835
|
10,574
|
11,343
|
(739)
|
-6.99%
|
(769)
|
-6.78%
|
Total
average assets
|
$674,809
|
$650,306
|
$603,223
|
$24,503
|
3.77%
|
$47,083
|
7.81%
|
|
|
|
|
|
|
|
|
Average
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
deposits
|
$113,412
|
$109,920
|
$96,618
|
$3,492
|
3.18%
|
$13,302
|
13.77%
|
Interest-bearing
transaction accounts
|
137,547
|
122,521
|
116,081
|
15,026
|
12.26%
|
6,440
|
5.55%
|
Money market
funds
|
91,642
|
86,141
|
82,254
|
5,501
|
6.39%
|
3,887
|
4.73%
|
Savings
accounts
|
98,154
|
96,551
|
85,896
|
1,603
|
1.66%
|
10,655
|
12.40%
|
Time
deposits
|
122,499
|
124,134
|
109,347
|
(1,635)
|
-1.32%
|
14,787
|
13.52%
|
Total
average deposits
|
563,254
|
539,267
|
490,196
|
23,987
|
4.45%
|
49,071
|
10.01%
|
|
|
|
|
|
|
|
|
Borrowed
funds
|
5,462
|
9,975
|
17,426
|
(4,513)
|
-45.24%
|
(7,451)
|
-42.76%
|
Repurchase
agreements
|
30,555
|
28,950
|
25,888
|
1,605
|
5.54%
|
3,062
|
11.83%
|
Junior subordinated
debentures
|
12,887
|
12,887
|
12,887
|
0
|
0.00%
|
0
|
0.00%
|
Other
liabilities
|
3,019
|
3,408
|
3,878
|
(389)
|
-11.41%
|
(470)
|
-12.12%
|
Total
average liabilities
|
615,177
|
594,487
|
550,275
|
20,690
|
3.48%
|
44,212
|
8.03%
|
|
|
|
|
|
|
|
|
Average
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock
|
2,119
|
2,500
|
2,500
|
(381)
|
-15.24%
|
0
|
0.00%
|
Common
stock
|
13,367
|
13,230
|
13,074
|
137
|
1.04%
|
156
|
1.19%
|
Additional paid-in
capital
|
32,000
|
31,159
|
30,361
|
841
|
2.70%
|
798
|
2.63%
|
Retained
earnings
|
15,563
|
11,623
|
9,502
|
3,940
|
33.90%
|
2,121
|
22.32%
|
Less: Treasury
stock
|
(2,623)
|
(2,623)
|
(2,623)
|
0
|
0.00%
|
0
|
0.00%
|
Accumulated other
comprehensive (loss) income
|
(794)
|
(70)
|
134
|
(724)
|
1034.29%
|
(204)
|
-152.24%
|
Total
average shareholders' equity
|
59,632
|
55,819
|
52,948
|
3,813
|
6.83%
|
2,871
|
5.42%
|
Total
average liabilities and shareholders' equity
|
$674,809
|
$650,306
|
$603,223
|
$24,503
|
3.77%
|
$47,083
|
7.81%
|
3 months or
less
|
$31,443,117
|
Over 3 through 6
months
|
5,950,399
|
Over 6 through 12
months
|
20,969,846
|
Over 12
months
|
20,534,805
|
Total
|
$78,898,167
|
One Year Horizon
|
Two Year Horizon
|
||
Rate Change
|
Percent Change in NII
|
Rate Change
|
Percent Change in NII
|
|
|
|
|
Down
100 basis points
|
-1.40%
|
Down
100 basis points
|
-4.90%
|
Up 200
basis points
|
1.70%
|
Up 200
basis points
|
8.30%
|
|
2018
|
2017
|
2016
|
2015
|
2014
|
|||||
|
(Dollars
in Thousands)
|
|||||||||
Real estate
loans
|
|
|
|
|
|
|
|
|
|
|
Construction
& land
|
|
|
|
|
|
|
|
|
|
|
development
|
$26,826
|
5.05%
|
$21,968
|
4.37%
|
$14,991
|
3.08%
|
$21,445
|
4.68%
|
$12,574
|
2.81%
|
Farm
land
|
10,209
|
1.92%
|
10,477
|
2.08%
|
13,011
|
2.67%
|
12,570
|
2.74%
|
13,105
|
2.93%
|
1-4 Family
residential -
|
|
|
|
|
|
|
|
|
|
|
1st
lien
|
165,665
|
31.18%
|
168,184
|
33.44%
|
166,692
|
34.21%
|
162,760
|
35.53%
|
163,966
|
36.62%
|
Jr
lien
|
44,545
|
8.38%
|
45,257
|
9.00%
|
42,927
|
8.81%
|
44,720
|
9.76%
|
44,801
|
10.00%
|
Commercial
real estate
|
198,283
|
37.31%
|
174,599
|
34.72%
|
173,727
|
35.66%
|
144,192
|
31.48%
|
140,934
|
31.47%
|
Loans to
finance
|
|
|
|
|
|
|
|
|
|
|
agricultural
production
|
2,797
|
0.53%
|
887
|
0.18%
|
996
|
0.20%
|
2,508
|
0.55%
|
2,017
|
0.45%
|
Commercial &
industrial
|
77,970
|
14.67%
|
76,224
|
15.16%
|
67,734
|
13.90%
|
62,683
|
13.68%
|
62,373
|
13.93%
|
Consumer
|
5,088
|
0.96%
|
5,269
|
1.05%
|
7,171
|
1.47%
|
7,241
|
1.58%
|
8,035
|
1.79%
|
Gross
loans
|
531,383
|
100%
|
502,865
|
100%
|
487,249
|
100%
|
458,119
|
100%
|
447,805
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Allowance for
loan losses
|
|
|
|
|
|
|
|
|
|
|
and
deferred net loan costs
|
(5,238)
|
|
(5,120)
|
|
(4,968)
|
|
(4,695)
|
|
(4,602)
|
|
Net
loans
|
$526,145
|
|
$497,745
|
|
$482,281
|
|
$453,424
|
|
$443,203
|
|
|
Fixed
Rate Loans
|
Variable
Rate Loans
|
||||||
|
Within
|
2-5
|
After
|
|
Within
|
2-5
|
After
|
|
|
1
Year
|
Years
|
5 Years
|
Total
|
1 Year
|
Years
|
5 Years
|
Total
|
|
(Dollars
in Thousands)
|
|||||||
Real
estate
|
|
|
|
|
|
|
|
|
Construction
& land development
|
$1,158
|
$255
|
$2,866
|
$4,279
|
$3,279
|
$636
|
$18,632
|
$22,547
|
Secured
by farm land
|
0
|
411
|
504
|
915
|
0
|
103
|
9,191
|
9,294
|
Commercial
real estate
|
1,827
|
4,554
|
10,628
|
17,009
|
2,593
|
7,250
|
171,431
|
181,274
|
Loans to finance
agricultural production
|
59
|
238
|
0
|
297
|
204
|
1,033
|
1,263
|
2,500
|
Commercial &
industrial
|
1,177
|
16,950
|
10,888
|
29,015
|
15,629
|
21,815
|
11,511
|
48,955
|
|
$4,221
|
$22,408
|
$24,886
|
$51,515
|
$21,705
|
$30,837
|
$212,028
|
$264,570
|
December
31,
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
(Dollars
in Thousands)
|
||||
Accruing loans past
due 90 days or more:
|
|
|
|
|
|
Commercial
& industrial
|
$0
|
$0
|
$26
|
$14
|
$24
|
Commercial
real estate
|
0
|
0
|
0
|
45
|
5
|
Residential
real estate - 1st lien
|
622
|
1,249
|
1,068
|
801
|
980
|
Residential
real estate - Jr lien
|
105
|
0
|
28
|
63
|
116
|
Consumer
|
2
|
1
|
2
|
0
|
0
|
Total
past due 90 days or more
|
729
|
1,250
|
1,124
|
923
|
1,125
|
|
|
|
|
|
|
Non-accrual
loans:
|
|
|
|
|
|
Commercial
& industrial
|
85
|
99
|
143
|
441
|
553
|
Commercial
real estate
|
1,743
|
1,065
|
766
|
2,401
|
1,934
|
Residential
real estate - 1st lien
|
2,027
|
1,585
|
1,227
|
2,009
|
1,263
|
Residential
real estate - Jr lien
|
408
|
347
|
339
|
386
|
404
|
Total
non-accrual loans
|
4,263
|
3,096
|
2,475
|
5,237
|
4,154
|
|
|
|
|
|
|
Total non-accrual
and past due loans
|
4,992
|
4,346
|
3,599
|
6,160
|
5,279
|
Other real estate
owned
|
201
|
284
|
394
|
262
|
1,238
|
Total
non-performing assets
|
$5,193
|
$4,630
|
$3,993
|
$6,422
|
$6,517
|
|
|
|
|
|
|
Percentage by
segment of non-performing loans:
|
|
|
|
|
|
Commercial
& industrial
|
1.70%
|
2.28%
|
4.70%
|
7.39%
|
10.93%
|
Commercial
real estate
|
34.92%
|
24.51%
|
21.28%
|
39.71%
|
36.73%
|
Residential
real estate - 1st lien
|
53.06%
|
65.21%
|
63.77%
|
45.62%
|
42.49%
|
Residential
real estate - Jr lien
|
10.28%
|
7.98%
|
10.20%
|
7.29%
|
9.85%
|
Consumer
|
0.04%
|
0.02%
|
0.06%
|
0.00%
|
0.00%
|
|
100.00%
|
100.00%
|
100.00%
|
100.00%
|
100.00%
|
|
|
|
|
|
|
Percent of gross
loans
|
0.98%
|
0.92%
|
0.82%
|
1.40%
|
1.46%
|
Reserve coverage of
non-performing assets
|
107.87%
|
117.45%
|
132.18%
|
78.04%
|
75.28%
|
|
|
|
|
|
|
Yearly increase
(decrease) in non-performing assets
|
$563
|
$637
|
$(2,429)
|
$(95)
|
|
Percent of change
in non-performing assets
|
12.16%
|
15.96%
|
-37.82%
|
-1.46%
|
|
|
December
31, 2018
|
December
31, 2017
|
||
|
Number
of
|
Principal
|
Number
of
|
Principal
|
|
Loans
|
Balance
|
Loans
|
Balance
|
|
|
|
|
|
Commercial &
industrial
|
1
|
$24,685
|
1
|
$24,685
|
Commercial real
estate
|
4
|
862,713
|
3
|
531,117
|
Residential real
estate - 1st lien
|
12
|
1,082,187
|
7
|
412,134
|
|
18
|
$1,969,585
|
11
|
$967,937
|
|
December
31, 2018
|
December
31, 2017
|
||
|
Number
of
|
Principal
|
Number
of
|
Principal
|
|
Loans
|
Balance
|
Loans
|
Balance
|
|
|
|
|
|
Commercial real
estate
|
1
|
$102,292
|
2
|
$308,460
|
Residential real
estate - 1st lien
|
31
|
2,544,728
|
54
|
2,837,572
|
Residential real
estate - Jr lien
|
1
|
7,248
|
1
|
8,358
|
|
33
|
$2,654,268
|
57
|
$3,154,389
|
As
of or Years Ended December 31,
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
(Dollars
in Thousands)
|
||||
|
|
|
|
|
|
Loans outstanding,
end of year
|
$531,383
|
$502,865
|
$487,249
|
$458,119
|
$447,805
|
Average loans
outstanding during year
|
$519,734
|
$497,847
|
$470,229
|
$454,793
|
$447,133
|
Non-accruing loans,
end of year
|
$4,263
|
$3,096
|
$2,475
|
$5,237
|
$4,154
|
Non-accruing loans,
net of government guarantees
|
$3,887
|
$3,037
|
$2,328
|
$4,551
|
$3,378
|
|
|
|
|
|
|
Allowance,
beginning of year
|
$5,438
|
$5,278
|
$5,012
|
$4,906
|
$4,855
|
Loans charged
off:
|
|
|
|
|
|
Commercial
& industrial
|
(153)
|
(20)
|
(49)
|
(201)
|
(153)
|
Commercial
real estate
|
(124)
|
(160)
|
0
|
(15)
|
(168)
|
Residential
real estate - 1st lien
|
(252)
|
(160)
|
(244)
|
(151)
|
(59)
|
Residential
real estate - Jr lien
|
(69)
|
(118)
|
0
|
(66)
|
(52)
|
Consumer
|
(144)
|
(124)
|
(16)
|
(69)
|
(112)
|
|
(742)
|
(582)
|
(309)
|
(502)
|
(544)
|
Recoveries:
|
|
|
|
|
|
Commercial
& industrial
|
60
|
27
|
25
|
59
|
6
|
Commercial
real estate
|
0
|
0
|
0
|
0
|
0
|
Residential
real estate - 1st lien
|
27
|
27
|
24
|
6
|
15
|
Residential
real estate - Jr lien
|
1
|
1
|
0
|
0
|
0
|
Consumer
|
38
|
37
|
26
|
33
|
34
|
|
126
|
92
|
75
|
98
|
55
|
|
|
|
|
|
|
Net loans charged
off
|
(616)
|
(490)
|
(234)
|
(404)
|
(489)
|
Provision charged
to income
|
780
|
650
|
500
|
510
|
540
|
Allowance, end of
year
|
$5,602
|
$5,438
|
$5,278
|
$5,012
|
$4,906
|
|
|
|
|
|
|
Net charge offs to
average loans outstanding
|
0.12%
|
0.10%
|
0.05%
|
0.09%
|
0.11%
|
Provision charged
to income as a percent
|
|
|
|
|
|
of
average loans
|
0.15%
|
0.13%
|
0.11%
|
0.11%
|
0.12%
|
Allowance to
average loans outstanding
|
1.08%
|
1.09%
|
1.12%
|
1.10%
|
1.10%
|
Allowance to
non-accruing loans
|
131.41%
|
175.65%
|
213.25%
|
95.70%
|
118.10%
|
Allowance to
non-accruing loans net of
|
|
|
|
|
|
government
guarantees
|
144.12%
|
179.06%
|
226.72%
|
110.13%
|
145.23%
|
December
31,
|
2018
|
%
|
2017
|
%
|
2016
|
%
|
2015
|
%
|
2014
|
%
|
|
(Dollars
in Thousands)
|
|||||||||
Domestic
|
|
|
|
|
|
|
|
|
|
|
Commercial
& industrial
|
$697
|
15%
|
$676
|
15%
|
$726
|
14%
|
$713
|
14%
|
$647
|
14%
|
Commercial
real estate
|
3,020
|
44%
|
2,674
|
41%
|
2,496
|
41%
|
2,152
|
39%
|
2,312
|
37%
|
Residential
real estate
|
|
|
|
|
|
|
|
|
|
|
1st
lien
|
1,422
|
32%
|
1,461
|
34%
|
1,370
|
35%
|
1,368
|
35%
|
1,271
|
37%
|
Jr
lien
|
273
|
8%
|
317
|
9%
|
371
|
9%
|
423
|
10%
|
321
|
10%
|
Consumer
|
57
|
1%
|
43
|
1%
|
84
|
1%
|
76
|
2%
|
119
|
2%
|
Unallocated
|
133
|
0%
|
267
|
0%
|
231
|
0%
|
280
|
0%
|
236
|
0%
|
|
$5,602
|
100%
|
$5,438
|
100%
|
$5,278
|
100%
|
$5,012
|
100%
|
$4,906
|
100%
|
|
|
Gross
|
Gross
|
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|
Cost
|
Gains
|
Losses
|
Value
|
|
(Dollars
in Thousands)
|
|||
December
31, 2018
|
|
|
|
|
|
|
|
|
|
Investments
AFS
|
|
|
|
|
U.S.
GSE debt securities
|
$14,010
|
$0
|
$259
|
$13,751
|
Agency
MBS
|
16,021
|
3
|
449
|
15,575
|
ABS
and OAS
|
1,988
|
4
|
6
|
1,986
|
Other
investments
|
8,167
|
8
|
120
|
8,055
|
|
$40,186
|
$15
|
$834
|
$39,367
|
|
|
|
|
|
Investments
HTM
|
|
|
|
|
States
and political subdivisions
|
$47,067
|
$332
|
$171
|
$47,228
|
|
|
|
|
|
Restricted Equity
Securities (1)
|
$1,749
|
$0
|
$0
|
$1,659
|
|
|
|
|
|
Total
|
$89,002
|
$347
|
$1,005
|
$88,254
|
|
|
Gross
|
Gross
|
|
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|
Cost
|
Gains
|
Losses
|
Value
|
|
(Dollars
in Thousands)
|
|||
December
31, 2017
|
|
|
|
|
|
|
|
|
|
Investments
AFS
|
|
|
|
|
U.S.
GSE debt securities
|
$17,308
|
$0
|
$149
|
$17,159
|
Agency
MBS
|
16,782
|
11
|
180
|
16,613
|
Other
investments
|
4,707
|
0
|
29
|
4,678
|
|
$38,797
|
$11
|
$358
|
$38,450
|
|
|
|
|
|
Investments
HTM
|
|
|
|
|
States
and political subdivisions
|
$48,825
|
$0
|
$29
|
$48,796
|
|
|
|
|
|
Restricted Equity
Securities (1)
|
$1,704
|
$0
|
$0
|
$1,704
|
|
|
|
|
|
|
$89,326
|
$11
|
$387
|
$88,950
|
December
31, 2016
|
|
|
|
|
|
|
|
|
|
Investments
AFS
|
|
|
|
|
U.S.
GSE debt securities
|
$17,366
|
$24
|
$73
|
$17,317
|
Agency
MBS
|
13,266
|
4
|
116
|
13,154
|
Other
investments
|
3,221
|
25
|
2
|
3,244
|
|
$33,853
|
$53
|
$191
|
$33,715
|
|
|
|
|
|
Investments
HTM
|
|
|
|
|
States
and political subdivisions
|
$49,887
|
$1,148
|
$0
|
$51,035
|
|
|
|
|
|
Restricted Equity
Securities (1)
|
$2,756
|
$0
|
$0
|
$2,756
|
|
|
|
|
|
|
$86,496
|
$1,201
|
$191
|
$87,506
|
|
2018
|
2017
|
Realized
gains
|
|
|
U.S.
GSE debt securities
|
$0
|
$2,021
|
Other
investments
|
0
|
6,366
|
|
$0
|
$8,387
|
Realized
losses
|
|
|
U.S.
GSE debt securities
|
$32,718
|
$1,804
|
Other
investments
|
0
|
3,199
|
|
$32,718
|
$5,003
|
|
|
|
|
$(32,718)
|
$3,384
|
December
31,
|
2018
|
2017
|
2016
|
|||
|
|
Weighted
|
|
Weighted
|
|
Weighted
|
|
Fair
|
Average
|
Fair
|
Average
|
Fair
|
Average
|
|
Value(1)
|
Yield(2)
|
Value(1)
|
Yield(2)
|
Value(1)
|
Yield(2)
|
|
(Dollars
in Thousands)
|
|||||
Available-for-Sale
|
|
|
|
|
|
|
U.S. GSE debt
securities
|
|
|
|
|
|
|
Due
in one year or less
|
$0
|
0.00%
|
$3,740
|
1.30%
|
$2,010
|
1.17%
|
Due
from one to five years
|
4,944
|
1.69%
|
6,978
|
1.64%
|
14,331
|
1.44%
|
Due
from five to ten years
|
8,807
|
2.84%
|
6,441
|
2.62%
|
976
|
2.60%
|
Total
|
$13,751
|
2.42%
|
$17,159
|
1.93%
|
$17,317
|
1.47%
|
|
|
|
|
|
|
|
ABS/AOS
|
|
|
|
|
|
|
Due from
five to ten years |
$1,986
|
3.33%
|
$0
|
0.00%
|
$0
|
0.00%
|
|
|
|
|
|
|
|
Other
Investments
|
|
|
|
|
|
|
Due
from one to five years
|
$7,575
|
2.63%
|
$4,190
|
2.25%
|
$2,998
|
2.12%
|
Due
from five to ten years
|
480
|
2.50%
|
488
|
2.50%
|
245
|
2.50%
|
Total
|
$8,055
|
2.62%
|
$4,678
|
2.28%
|
$3,243
|
2.15%
|
|
|
|
|
|
|
|
Agency MBS
(3)
|
$15,575
|
2.33%
|
$16,613
|
2.08%
|
$13,154
|
2.01%
|
|
|
|
|
|
|
|
FRBB Stock
(4)
|
$588
|
6.00%
|
$588
|
6.00%
|
$588
|
6.00%
|
|
|
|
|
|
|
|
FHLBB Stock
(4)
|
$1,071
|
5.92%
|
$1,454
|
4.24%
|
$2,168
|
3.70%
|
|
|
|
|
|
|
|
ACBI Stock
(4)(5)
|
$90
|
0.00%
|
0
|
0.00%
|
0
|
0.00%
|
|
|
|
|
|
|
|
Held-to-Maturity
|
|
|
|
|
|
|
Obligations of
State & Political Subdivisions
|
|
|
|
|
|
|
Due
in one year or less
|
$23,052
|
3.97%
|
$24,818
|
3.83%
|
$25,369
|
3.67%
|
Due
from one to five years
|
5,908
|
3.68%
|
4,494
|
3.59%
|
4,031
|
2.97%
|
Due
from five to ten years
|
6,482
|
4.05%
|
4,338
|
4.14%
|
4,013
|
4.36%
|
Due
after ten years
|
11,625
|
3.86%
|
15,175
|
3.80%
|
16,474
|
3.79%
|
Total
|
$47,067
|
3.92%
|
$48,825
|
3.82%
|
$49,887
|
3.72%
|
(1) AFS
Investments are presented at fair value, and HTM investments are
presented at book value.
|
(2) The
yield on obligations of state and political subdivisions is
calculated on a tax equivalent basis assuming a tax
rate
|
of
21% for 2018 and 34% for 2017 and 2016.
|
(3)
Because the actual maturities of Agency MBS usually differ from
their contractual maturities due to the right of
|
borrowers
to prepay the underlying mortgage loans, usually without penalty,
those securities are not presented
|
by
contractual maturity date.
|
(4)
Required equity purchases for membership in the FRB System and FHLB
System and for access to correspondent
|
banking
services from ACBB.
|
(5) The
Company’s holdings of ACBI stock were purchased during the
fourth quarter of 2018 and the first declared
|
dividend
was paid during the first quarter of 2019, accounting for the
absence in yield for 2018.
|
Balance at December
31, 2017 (book value $10.84 per common share)
|
$57,935,854
|
Net
income
|
8,397,532
|
Issuance
of stock through the DRIP
|
1,046,801
|
Redemption
of preferred stock
|
(500,000)
|
Dividends
declared on common stock
|
(3,799,864)
|
Dividends
declared on preferred stock
|
(103,125)
|
Unrealized
loss on AFS securities during the period, net of tax
|
(373,487)
|
Balance at December
31, 2018 (book value $11.72 per common share)
|
$62,603,711
|
|
2018
|
2017
|
||||||
Trade
Price
|
First
|
Second
|
Third
|
Fourth
|
First
|
Second
|
Third
|
Fourth
|
High
|
$18.50
|
$18.25
|
$18.90
|
$19.39
|
$18.00
|
$17.85
|
$20.45
|
$19.20
|
Low
|
$16.55
|
$16.50
|
$16.91
|
$16.00
|
$15.00
|
$16.50
|
$17.50
|
$17.51
|
|
2018
|
2017
|
||||||
Bid
Price
|
First
|
Second
|
Third
|
Fourth
|
First
|
Second
|
Third
|
Fourth
|
High
|
$18.10
|
$17.55
|
$18.80
|
$18.25
|
$17.50
|
$17.50
|
$20.00
|
$18.80
|
Low
|
$16.55
|
$16.60
|
$16.95
|
$16.00
|
$15.00
|
$16.01
|
$17.25
|
$17.76
|
|
|
|
|
|
|
|
|
|
Cash Dividends
Declared
|
$0.17
|
$0.19
|
$0.19
|
$0.19
|
$0.17
|
$0.17
|
$0.17
|
$0.17
|
|
Community Bancorp.
|
|
|
|
|
March
15, 2019
|
By: /s/
Kathryn M. Austin
|
|
|
Name:
Kathryn M. Austin,
|
|
|
Title:
President & Chief Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
Community Bancorp.
|
|
|
|
|
March
15, 2019
|
By: /s/
Louise M. Bonvechio
|
|
|
Name:
Louise M. Bonvechio
|
|
|
Title:
Corporate Secretary and Treasurer
|
|
|
(Principal
Financial Officer)
|
|
|
Community Bancorp.
|
|
|
|
|
March
15, 2019
|
By: /s/
Kathryn M. Austin
|
|
|
Name:
Kathryn M. Austin,
|
|
|
Title:
President & Chief Executive Officer
|
|
|
(Principal
Executive Officer)
|
|
|
Community Bancorp.
|
|
|
|
|
March
15, 2019
|
By: /s/
Louise M. Bonvechio
|
|
|
Name:
Louise M. Bonvechio
|
|
|
Title:
Corporate Secretary and Treasurer
|
|
|
(Principal
Financial Officer)
|
|
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 07, 2019 |
Jun. 30, 2018 |
|
Document And Entity Information | |||
Entity Registrant Name | Community Bancorp /VT | ||
Entity Central Index Key | 0000718413 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 82,097,082 | ||
Entity Common Stock, Shares Outstanding | 5,174,326 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Securities held-to-maturity, fair value | $ 47,228,000 | $ 48,796,000 |
Shareholder's Equity | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 20 | 25 |
Preferred stock, shares outstanding (in shares) | 20 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,382,103 | 5,322,320 |
Treasury stock (in shares) | 210,101 | 210,101 |
Consolidated Statements of Comprehensive Income - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 8,397,532 | $ 6,231,298 |
Other comprehensive loss, net of tax: | ||
Unrealized holding loss on securities AFS arising during the period | (505,487) | (206,027) |
Reclassification adjustment for loss (gain) realized in income | 32,718 | (3,384) |
Unrealized loss during the year | (472,769) | (209,411) |
Tax effect | 99,282 | 71,199 |
Other comprehensive loss, net of tax | (373,487) | (138,212) |
Total comprehensive income | $ 8,024,045 | $ 6,093,086 |
Consolidated Statements of Changes in Shareholders' Equity - USD ($) |
Common Stock |
Preferred Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total |
---|---|---|---|---|---|---|---|
Beginning Balance, Shares at Dec. 31, 2016 | 5,269,053 | 25 | |||||
Beginning Balance, Amount at Dec. 31, 2016 | $ 13,172,633 | $ 2,500,000 | $ 30,825,658 | $ 10,666,782 | $ (90,779) | $ (2,622,777) | $ 54,451,517 |
Comprehensive income | |||||||
Net income | 0 | 0 | 0 | 6,231,298 | 0 | 0 | 6,231,298 |
Other comprehensive loss | 0 | 0 | 0 | 0 | (138,212) | 0 | (138,212) |
Total comprehensive income | 6,093,086 | ||||||
Reclassification adjustment for effect of enacted tax law changes | 0 | 0 | 0 | 45,106 | (45,106) | 0 | 0 |
Cash dividends declared - common stock | 0 | 0 | 0 | (3,453,884) | 0 | 0 | (3,453,884) |
Cash dividends declared - preferred stock | $ 0 | $ 0 | 0 | (101,563) | 0 | 0 | (101,563) |
Issuance of common stock, shares | 53,267 | 0 | |||||
Issuance of common stock, amount | $ 133,167 | $ 0 | 813,531 | 0 | 0 | 0 | 946,698 |
Ending Balance, Shares at Dec. 31, 2017 | 5,322,320 | 25 | |||||
Ending Balance, Amount at Dec. 31, 2017 | $ 13,305,800 | $ 2,500,000 | 31,639,189 | 13,387,739 | (274,097) | (2,622,777) | 57,935,854 |
Comprehensive income | |||||||
Net income | 0 | 0 | 0 | 8,397,532 | 0 | 0 | 8,397,532 |
Other comprehensive loss | 0 | 0 | 0 | 0 | (373,487) | 0 | (373,487) |
Total comprehensive income | 8,024,045 | ||||||
Cash dividends declared - common stock | 0 | 0 | 0 | (3,799,864) | 0 | 0 | (3,799,864) |
Cash dividends declared - preferred stock | $ 0 | $ 0 | 0 | (103,125) | 0 | 0 | (103,125) |
Issuance of common stock, shares | 59,783 | 0 | |||||
Issuance of common stock, amount | $ 149,458 | $ 0 | 897,343 | 0 | 0 | 0 | 1,046,801 |
Redemption of preferred stock, shares | 0 | (5) | |||||
Redemption of preferred stock, amount | $ 0 | $ (500,000) | 0 | 0 | 0 | 0 | (500,000) |
Ending Balance, Shares at Dec. 31, 2018 | 5,382,103 | 20 | |||||
Ending Balance, Amount at Dec. 31, 2018 | $ 13,455,258 | $ 2,000,000 | $ 32,536,532 | $ 17,882,282 | $ (647,584) | $ (2,622,777) | $ 62,603,711 |
1. Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1. Significant Accounting Policies | The accounting policies of Community Bancorp. and Subsidiary (the Company) are in conformity, in all material respects, with U.S. generally accepted accounting principles (US GAAP) and general practices within the banking industry. The following is a description of the Company’s significant accounting policies.
Basis of presentation and consolidation
In addition to the definitions provided elsewhere in this annual report, the definitions, acronyms and abbreviations identified below are used throughout this Annual Report, including these “Notes to Consolidated Financial Statements” and the section labeled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” immediately following. These definitions are intended to aid the reader and provide a reference page when reviewing this Annual Report.
The consolidated financial statements include the accounts of the Bancorp. and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated. The Company is considered a “smaller reporting company” under the disclosure rules of the SEC, as amended in 2018. Accordingly, the Company has elected to provide its audited consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two year, rather than a three year, period, and intends to provide smaller reporting company scaled disclosures where management deems it appropriate. Beginning with its periodic reports filed in 2018, the Company is considered an accelerated filer under the financial reporting rules of the SEC.
FASB ASC Topic 810, “Consolidation”, in part, addresses limited purpose trusts formed to issue trust preferred securities. It also establishes the criteria used to identify VIE, and to determine whether or not to consolidate a VIE. In general, ASC Topic 810 provides that the enterprise with the controlling financial interest, known as the primary beneficiary, consolidates the VIE. In 2007, the Company formed CMTV Statutory Trust I for the purposes of issuing trust preferred securities to unaffiliated parties and investing the proceeds from the issuance thereof and the common securities of the trust in junior subordinated debentures issued by the Company. The Company is not the primary beneficiary of CMTV Statutory Trust I; accordingly, the trust is not consolidated with the Company for financial reporting purposes. CMTV Statutory Trust I is considered an affiliate of the Company (see Note 10).
During the years 2011 through 2018, the Company was the sole owner of a LLC formed to facilitate the Company’s purchase of federal NMTC under an investment structure designed by a local community development entity. The NMTC financing matured in the fourth quarter of 2018 and the Company exited the investment and terminated its interest in the LLC. Management evaluated the Company’s interest in the LLC under the ASC guidance relating to VIEs in light of the overall structure and purpose of the NMTC financing transaction and concluded that the LLC should not be consolidated in the Company’s financial statements for financial reporting purposes, as the Company was not the primary beneficiary of the NMTC structure, did not exercise control within the overall structure and was not obligated to absorb a majority of any losses of the NMTC structure (see Note 7).
Nature of operations
The Company provides a variety of deposit and lending services to individuals, municipalities, and business customers through its branches, ATMs and telephone, mobile and internet banking capabilities in northern and central Vermont, which is primarily a small business and agricultural area. The Company's primary deposit products are checking and savings accounts and certificates of deposit. Its primary lending products are commercial, real estate, municipal and consumer loans.
Concentration of risk
The Company's operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic concentration of its deposit taking and lending activities. Management attempts to manage interest rate risk through various asset/liability management techniques designed to match maturities and repricing of assets and liabilities. Loan policies and administration are designed to provide assurance that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors inherent in management’s estimate of credit risk and factors beyond the control of the Company. While the Company has a diversified loan portfolio by loan type, most of its lending activities are conducted within the geographic area where its banking offices are located. As a result, the Company and its borrowers may be especially vulnerable to the consequences of changes in the local economy in northern and central Vermont. In addition, a substantial portion of the Company's loans are secured by real estate, which is susceptible to a decline in value, especially during times of adverse economic conditions.
Use of estimates
The preparation of consolidated financial statements in conformity with US 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 and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions involve inherent uncertainties. Accordingly, actual results could differ from those estimates and those differences could be material.
Material estimates that are particularly susceptible to significant change relate to the determination of the ALL and the valuation of OREO. In connection with evaluating loans for impairment or assigning the carrying value of OREO, management generally obtains independent evaluations or appraisals for significant properties. While the ALL and the carrying value of OREO are determined using management's best estimate of probable loan and OREO losses, respectively, as of the balance sheet date, the ultimate collection of a substantial portion of the Company's loan portfolio and the recovery of a substantial portion of the fair value of OREO are susceptible to uncertainties and changes in a number of factors, especially local real estate market conditions. The amount of the change that is reasonably possible cannot be estimated.
While management uses available information to recognize losses on loans and OREO, future additions to the allowance or write-downs of OREO may be necessary based on changes in local economic conditions or other relevant factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for losses on loans and the carrying value of OREO. Such agencies may require the Company to recognize additions to the allowance or write-downs of OREO based on their judgment about information available to them at the time of their examination.
MSRs associated with loans originated and sold in the secondary market, where servicing is retained, are capitalized and included in other assets in the consolidated balance sheets. MSRs are amortized against non-interest income in proportion to, and over the period of, estimated future net servicing income of the underlying loans. The value of capitalized servicing rights represents the present estimated value of the future servicing fees arising from the right to service loans for third parties. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of estimated fair value as compared to amortized cost, and impairment, if any, is recognized through a valuation allowance and is recorded as a write down. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to determine the valuation of MSRs requires the development and use of estimates, including anticipated principal amortization and prepayments. Events that may significantly affect the estimates used are changes in interest rates and the payment performance of the underlying loans. Management uses a third party consultant to assist in analyzing the fair value of the Company’s MSRs.
Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to various factors, including the length of time and the extent to which the fair value has been less than cost; the nature of the issuer and its financial condition and near-term prospects; and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The evaluation of these factors is a subjective process and involves estimates and assumptions about matters that are inherently uncertain. Should actual factors and conditions differ materially from those used by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements.
Accounting for a business combination that was completed prior to 2009 requires the application of the purchase method of accounting. Under the purchase method, the Company was required to record the assets and liabilities acquired through the LyndonBank merger in 2007 at fair market value, with the excess of the purchase price over the fair value of the net assets recorded as goodwill and evaluated annually for impairment. Management uses various assumptions in evaluating goodwill for impairment.
Management utilizes numerous techniques to estimate the carrying value of various other assets held by the Company, including, but not limited to, bank premises and equipment and deferred taxes. The assumptions considered in making these estimates are based on historical experience and on various other factors that are believed by management to be reasonable under the circumstances. Management acknowledges that the use of different estimates or assumptions could produce different estimates of carrying values.
Presentation of cash flows
For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents includes cash on hand, amounts due from banks (including cash items in process of clearing), federal funds sold (generally purchased and sold for one day periods) and overnight deposits.
Investment securities
Debt securities the Company has the positive intent and ability to hold to maturity are classified as HTM and reported at amortized cost. Debt securities not classified as HTM are classified as AFS, and are carried at fair value, with unrealized gains and losses, net of tax and reclassification adjustments, reflected as a net amount in the shareholders’ equity section of the consolidated balance sheets and in the statements of changes in shareholders’ equity. Investment securities transactions are accounted for on a trade date basis. The specific identification method is used to determine realized gains and losses on sales of debt securities AFS and equity securities. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or call date. The Company does not hold any securities purchased for the purpose of selling in the near term and classified as trading.
For individual debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in the fair value of the debt security related to (1) credit loss is recognized in earnings and (2) other factors is recognized in other comprehensive income or loss. Credit loss is deemed to exist if the present value of expected future cash flows using the interest rates at acquisition is less than the amortized cost basis of the debt security. For individual debt securities where the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security’s cost basis and its fair value at the balance sheet date.
Other investments
In December 2011, the Company made an equity investment in a NMTC financing structure, which was fully amortized in 2017 (see Note 7). The Company’s investment in the NMTC financing structure was amortized using the effective yield method.
From time to time, the Company acquires partnership interests in limited partnerships for low income housing projects. New investments in limited partnerships are amortized using the proportional amortization method. All investments made before January 1, 2015 are amortized using the effective yield method.
The Company has a one-third ownership interest in CFSG, a non-depository trust company (see Note 7). The Company's investment in CFSG is accounted for under the equity method of accounting.
Restricted equity securities
The Company holds certain restricted equity securities acquired for non-investment purposes, and required as a matter of law or as a condition to the receipt of certain financial products and services. These securities are carried at cost. As a member of the FRBB, the Company is required to invest in FRBB stock in an amount equal to 6% of the Bank's capital stock and surplus.
As a member of the FHLBB, the Company is required to invest in $100 par value stock of the FHLBB in an amount that approximates 1% of unpaid principal balances on qualifying loans, plus an additional amount to satisfy an activity based requirement. The stock is nonmarketable and redeemable at par value, subject to the FHLBB’s right to temporarily suspend such redemptions. Members are subject to capital calls in some circumstances to ensure compliance with the FHLBB’s capital plan.
In order to access correspondent banking services from the ACBB, the Company is required to invest in a minimum of 20 shares of the common stock of ACBB’s parent company, ACBI.
Loans held-for-sale
Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.
Loans
Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, adjusted for any charge-offs, the ALL, loan premiums or discounts for acquired loans and any unearned fees or costs on originated loans.
Loan interest income is accrued daily on the outstanding balances. For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is considered by management to be remote. Interest payments received on non-accrual loans are generally applied as a reduction of the loan principal balance. Loans are returned to accrual status when principal and interest payments are brought current and the customer has demonstrated the intent and ability to make future payments on a timely basis. Loans are written down or charged off when collection of principal is considered doubtful.
Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount is amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life of the loans.
Loan premiums and discounts on loans acquired in the merger with LyndonBank are amortized as an adjustment to yield over the life of the loans.
Allowance for loan losses
The ALL is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes that future payments of a loan balance are unlikely. Subsequent recoveries, if any, are credited to the allowance.
Unsecured loans, primarily consumer loans, are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on impaired loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. Value of the collateral is determined in accordance with the Company’s appraisal policy. The unsecured portion of an impaired real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due.
As described below, the allowance consists of general, specific and unallocated components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of specific, general and unallocated components considered in determining the amount of the allowance.
General component
The general component of the ALL is based on historical loss experience and various qualitative factors and is stratified by the following loan segments: commercial and industrial, CRE, residential real estate 1st lien, residential real estate Jr lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes.
Loss ratios are calculated by loan segment for one year, two year, three year, four year and five year look back periods. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment in the current economic climate. During periods of economic stability, a relatively longer period (e.g., five years) may be appropriate. During periods of significant expansion or contraction, the Company may appropriately shorten the historical time period. The Company is currently using an extended look back period of five years.
Qualitative factors include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of CRE loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available.
The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows:
Commercial & Industrial – Loans in this segment include commercial and industrial loans and to a lesser extent loans to finance agricultural production. Commercial loans are made to businesses and are generally secured by assets of the business, including trade assets and equipment. While not the primary collateral, in many cases these loans may also be secured by the real estate of the business. Repayment is expected from the cash flows of the business. A weakened economy, soft consumer spending, unfavorable foreign trade conditions and the rising cost of labor or raw materials are examples of issues that can impact the credit quality in this segment.
Commercial Real Estate – Loans in this segment are principally made to businesses and are generally secured by either owner-occupied, or non-owner occupied CRE. A relatively small portion of this segment includes farm loans secured by farm land and buildings. As with commercial and industrial loans, repayment of owner-occupied CRE loans is expected from the cash flows of the business and the segment would be impacted by the same risk factors as commercial and industrial loans. The non-owner occupied CRE portion includes both residential and commercial construction loans, vacant land and real estate development loans, multi-family dwelling loans and commercial rental property loans. Repayment of construction loans is expected from permanent financing takeout; the Company generally requires a commitment or eligibility for the take-out financing prior to construction loan origination. Real estate development loans are generally repaid from the sale of the subject real property as the project progresses. Construction and development lending entail additional risks, including the project exceeding budget, not being constructed according to plans, not receiving permits, or the pre-leasing or occupancy rate not meeting expectations. Repayment of multi-family loans and commercial rental property loans is expected from the cash flow generated by rental payments received from the individuals or businesses occupying the real estate. CRE loans are impacted by factors such as competitive market forces, vacancy rates, cap rates, net operating incomes, lease renewals and overall economic demand. In addition, loans in the recreational and tourism sector can be affected by weather conditions, such as unseasonably low winter snowfalls. CRE lending also carries a higher degree of environmental risk than other real estate lending.
Residential Real Estate - 1st Lien – All loans in this segment are collateralized by first mortgages on 1 – 4 family owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment.
Residential Real Estate – Jr Lien – All loans in this segment are collateralized by junior lien mortgages on 1 – 4 family residential real estate and repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment.
Consumer – Loans in this segment are made to individuals for consumer and household purposes. This segment includes both loans secured by automobiles and other consumer goods, as well as loans that are unsecured. This segment also includes overdrafts, which are extensions of credit made to both individuals and businesses to cover temporary shortages in their deposit accounts and are generally unsecured. The Company maintains policies restricting the size and term of these extensions of credit. The overall health of the economy, including unemployment rates, has an impact on the credit quality of this segment.
Specific component
The specific component of the ALL relates to loans that are impaired. Impaired loans are loan(s) to a borrower that in the aggregate are greater than $100,000 and that are in non-accrual status or are TDRs regardless of amount. A specific allowance is established for an impaired loan when its estimated impaired basis is less than the carrying value of the loan. For all loan segments, except consumer loans, a loan is considered impaired when, based on current information and events, in management’s estimation it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant or temporary payment delays and payment shortfalls generally are not classified as impaired. Management evaluates the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and frequency of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.
Impaired loans also include troubled loans that are restructured. A TDR occurs when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would otherwise not be granted. TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loan’s terms, or a combination of the two.
Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, unless such loans are subject to a restructuring agreement.
Unallocated component
An unallocated component of the ALL is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component reflects management’s estimate of the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
Bank premises and equipment
Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The cost of assets sold or otherwise disposed of, and the related accumulated depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the consolidated statements of income. Maintenance and repairs are charged to current expense as incurred and the cost of major renewals and betterments is capitalized.
Other real estate owned
Real estate properties acquired through or in lieu of loan foreclosure or properties no longer used for bank operations are initially recorded at fair value less estimated selling cost at the date of acquisition, foreclosure or transfer. Fair value is determined, as appropriate, either by obtaining a current appraisal or evaluation prepared by an independent, qualified appraiser, by obtaining a broker’s market value analysis, and finally, if the Company has limited exposure and limited risk of loss, by the opinion of management as supported by an inspection of the property and its most recent tax valuation. During periods of declining market values, the Company will generally obtain a new appraisal or evaluation. Any write-down based on the asset's fair value at the date of acquisition or institution of foreclosure is charged to the ALL. After acquisition through or in lieu of foreclosure, these assets are carried at the lower of their new cost basis or fair value. Costs of significant property improvements are capitalized, whereas costs relating to holding the property are expensed as incurred. Appraisals by an independent, qualified appraiser are performed periodically on properties that management deems significant, or evaluations may be performed by management or a qualified third party on OREO properties in the portfolio that are deemed less significant or less vulnerable to market conditions. Subsequent write-downs are recorded as a charge to other expense. Gains or losses on the sale of such properties are included in income when the properties are sold.
Intangible assets
Intangible assets include the excess of the purchase price over the fair value of net assets acquired (goodwill) in the Company’s 2007 acquisition of LyndonBank, and in 2017 and prior years also included a core deposit intangible related to the deposits acquired from LyndonBank (see Note 6). The core deposit intangible was amortized on an accelerated basis over 10 years to approximate the pattern of economic benefit to the Company and was fully amortized as of December 31, 2017. Goodwill is not amortizable and is reviewed for impairment annually, or more frequently as events or circumstances warrant.
Income taxes
The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled. Adjustments to the Company's deferred tax assets are recognized as deferred income tax expense or benefit based on management's judgments relating to the outcome of such asset.
Mortgage servicing
Servicing assets are recognized as separate assets when rights are acquired through purchase or retained upon the sale of loans. Capitalized servicing rights are reported in other assets and initially recorded at fair value, and are amortized against non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are periodically evaluated for impairment, based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying the rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and is recorded as amortization of other assets, to the extent that estimated fair value is less than the capitalized amount at the valuation date. Subsequent improvement, if any, in the estimated fair value of impaired MSRs is reflected in a positive valuation adjustment and is recognized in other income up to (but not in excess of) the amount of the prior impairment.
Pension costs
Pension costs are charged to salaries and employee benefits expense and accrued over the active service period.
Advertising costs
The Company expenses advertising costs as incurred.
Comprehensive income
US GAAP generally requires recognized revenue, expenses, gains and losses to be included in net income. Certain changes in assets and liabilities, such as the after-tax effect of unrealized gains and losses on available-for-sale securities, are not reflected in the consolidated statement of income, but the cumulative effect of such items from period-to-period is reflected as a separate component of the shareholders’ equity section of the consolidated balance sheet (accumulated other comprehensive income or loss). Other comprehensive income or loss, along with net income, comprises the Company's total comprehensive income.
Preferred stock
The Company had outstanding 20 shares and 25 shares, as of December 31, 2018 and 2017, respectively, of fixed-to-floating rate non-cumulative perpetual preferred stock, without par value and with a liquidation preference of $100,000 per share, issued in December 2007. Under the terms of the preferred stock, the Company pays non-cumulative cash dividends quarterly, when, as and if declared by the Board. Dividends are payable at a variable dividend rate equal to the Wall Street Journal Prime Rate in effect on the first business day of each quarterly dividend period. A variable rate of 3.75% was in effect for the first quarter of 2017, with increases during 2017 on an almost quarterly basis, to a rate of 4.25% for the fourth quarter of 2017. The variable rate then increased in the fourth quarter of 2017 to 4.50%, and was in effect for the dividend payment due in the first quarter of 2018, followed by quarterly increases each quarter to a rate of 5.25% for the fourth quarter of 2018. The variable rate then increased in the fourth quarter of 2018 to 5.50%, which will be in effect for the first quarter of 2019. A partial redemption of five shares of preferred stock at a redemption price per share of $101,125 (including accrued dividend) occurred on March 31, 2018, accounting for the decrease to 20 outstanding shares at December 31, 2018.
Earnings per common share
Earnings per common share amounts are computed based on net income, net of dividends to preferred shareholders, and on the weighted average number of shares of common stock issued during the period, including DRIP shares issuable upon reinvestment of dividends (retroactively adjusted for stock splits and stock dividends, if any) and reduced for shares held in treasury.
The following table illustrates the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock:
Off-balance-sheet financial instruments
In the ordinary course of business, the Company is a party to off-balance-sheet financial instruments consisting of commitments to extend credit, commercial and municipal letters of credit, standby letters of credit, and risk-sharing commitments on residential mortgage loans sold through the FHLBB’s MPF program. Such financial instruments are recorded in the consolidated financial statements when they are funded.
Transfers of financial assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Impact of recently issued accounting standards
The FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, in 2014 to replace a plethora of industry-specific rules with a broad, principles-based framework for recognizing and measuring revenue. Due to the complexity of the new pronouncement and the anticipated effort required by entities in many industries to implement ASU No. 2014-09, FASB delayed the effective date. Adoption of ASU 2014-09, which became effective for the Company on January 1, 2018 and which is being applied prospectively, did not have a material impact on the Company’s consolidated financial statements.
FASB formed a Transition Resource Group to assist it in identifying implementation issues that may require further clarification or amendment to ASU No. 2014-09. As a result of that group’s deliberations, FASB has issued several amendments, which became effective concurrently with ASU No. 2014-09, including ASU No. 2016-08, Principal versus Agent Considerations, which clarifies whether an entity should record the gross amount of revenue or only its ultimate share when a third party is also involved in providing goods or services to a customer. Since the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, the new guidance did not have a material impact on revenue most closely associated with financial instruments, including interest income and expense. Adoption of this ASU and its amendments did not have a material impact on the Company’s consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. This guidance also changes certain disclosure requirements and other aspects of current accounting principles. Public businesses must use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. This guidance became effective for the Company on January 1, 2018. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in the ASU is permitted for all entities. Management expects that adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Under the new guidance, which will replace the existing incurred loss model for recognizing credit losses, banks and other lending institutions will be required to recognize the full amount of expected credit losses. The new guidance, which is referred to as the CECL model, requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses. A modified version of these requirements also applies to debt securities classified as available for sale, which will require that credit losses on those securities be recorded through an allowance for credit losses rather than a write-down. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within such years. The Company is evaluating the impact of the adoption of the ASU on its consolidated financial statements. The ASU may have a material impact on the Company's consolidated financial statements upon adoption as it will require a change in the Company's methodology for calculating its ALL and allowance on unused commitments. The Company will transition from an incurred loss model to an expected loss model, which will likely result in an increase in the ALL upon adoption and may negatively impact the Company’s and the Bank's regulatory capital ratios. The Company has formed a committee to assess the implications of this new pronouncement and transitioned to a software solution for preparing the ALL calculation and related reports that provides the Company with stronger data integrity, ease and efficiency in ALL preparation. The new software solution also provides numerous training opportunities for the appropriate personnel within the Company. The Company has gathered and will analyze pertinent historical data to serve as a basis for estimating the ALL under CECL.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU was issued to reduce the cost and complexity of the goodwill impairment test. To simplify the subsequent measurement of goodwill, step two of the goodwill impairment test was eliminated. Instead, a company will recognize an impairment of goodwill should the carrying value of a reporting unit exceed its fair value (i.e., step one). The ASU will be effective for the Company on January 1, 2020 and will be applied prospectively.
The Company has goodwill from its acquisition of LyndonBank in 2007 and performs an impairment test annually or more frequently if circumstances warrant (see Note 6). The Company is evaluating the impact of adoption of the ASU on its consolidated financial statements, but does not anticipate any material impact at this time.
In February 2018, FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU was issued to allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the 2017 Tax Act to improve the usefulness of information reported to financial statement users. The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for financial statements which have not yet been issued. The Company adopted the ASU for its December 31, 2017 consolidated financial statements. See Note 12 to the audited consolidated financial statements contained in the Company’s December 31, 2017 Annual Report on Form 10-K for more information on the impact of adoption of the ASU on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adoption of this ASU on its consolidated financial statements, but does not anticipate any material impact at this time.
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2. Investment Securities |
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Note 2. Investment Securities | Debt securities AFS and HTM consist of the following:
*Method used to determine fair value rounds values to nearest thousand.
The entire balance under “Securities HTM - States and political subdivisions" consists of securities of local municipalities which are attributable to municipal financing transactions directly with the Company. The reported fair value of these securities is an estimate based on an analysis that takes into account future maturities and scheduled future repricing. The Company anticipates no losses on these securities and expects to hold them until their maturity.
Investments pledged as collateral for larger dollar repurchase agreement accounts and for other purposes as required or permitted by law consisted of U.S. GSE debt securities, Agency MBS, ABS and OAS, and CDs. These repurchase agreements mature daily. These investments as of the balance sheet dates were as follows:
Proceeds from sales of debt securities AFS were $5,715,525 in 2018 and $9,015,961 in 2017 with gains of $0 and $8,387, respectively, and losses of $32,718 and $5,003, respectively.
The carrying amount and estimated fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties, pursuant to contractual terms. Because the actual maturities of Agency MBS usually differ from their contractual maturities due to the right of borrowers to prepay the underlying mortgage loans, usually without penalty, those securities are not presented in the table by contractual maturity date.
The scheduled maturities of debt securities AFS at December 31, 2018 were as follows:
The scheduled maturities of debt securities HTM at December 31, 2018 were as follows:
*Method used to determine fair value rounds values to nearest thousand.
Debt securities with unrealized losses as of the balance sheet dates are presented in the tables below.
Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions, or adverse developments relating to the issuer, warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition.
As the Company has the ability to hold its debt securities until maturity, or for the foreseeable future if classified as AFS, and it is more likely than not that the Company will not have to sell such securities before recovery of their cost basis, no declines in such securities were deemed to be other-than-temporary as of the balance sheet dates presented.
The Bank is a member of the FHLBB. The FHLBB is a cooperatively owned wholesale bank for housing and finance in the six New England States. Its mission is to support the residential mortgage and community-development lending activities of its members, which include over 450 financial institutions across New England. The Company obtains much of its wholesale funding from the FHLBB. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on the Bank’s level of borrowings from the FHLBB. As a result of the Bank’s level of borrowings during 2018 and 2017, the Bank was required to purchase additional FHLBB stock in aggregate totaling $1,103,300 and $3,600, respectively. As a member of the FHLBB, the Company is also subject to future capital calls by the FHLBB in order to maintain compliance with its capital plan. During 2018 and 2017, FHLBB exercised capital call options with redemptions totaling $1,147,500 and $1,055,800, respectively, on the Company’s portfolio of FHLBB stock. As of December 31, 2018 and 2017, the Company’s investment in FHLBB stock was $1,071,300 and $1,115,500, respectively.
The Company periodically evaluates its investment in FHLBB stock for impairment based on, among other factors, the capital adequacy of the FHLBB and its overall financial condition. No impairment losses have been recorded through December 31, 2018.
The Company’s investment in FRBB Stock was $588,150 at December 31, 2018 and 2017.
In 2018, the Company purchased 20 shares of common stock in ACBI at a purchase price of $90,000, for the purpose of obtaining access to correspondent banking services from ABCI’s subsidiary, ACBB. These shares are subject to contractual resale restrictions and considered by management to be restricted and are recorded in the balance sheet at cost.
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3. Loans, Allowance for Loan Losses and Credit Quality |
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 3. Loans, Allowance for Loan Losses and Credit Quality | The composition of net loans as of the balance sheet dates was as follows:
The following is an age analysis of loans (including non-accrual), by portfolio segment:
For all loan segments, loans over 30 days past due are considered delinquent.
As of the balance sheet dates presented, residential mortgage loans in process of foreclosure consisted of the following:
The following summarizes changes in the ALL and select loan information, by portfolio segment:
As of or for the year ended December 31, 2018
As of or for the year ended December 31, 2017
Impaired loans by portfolio segment were as follows:
In the table above, recorded investment in impaired loans as of December 31, 2018 includes accrued interest receivable and deferred net loan costs of $16,873.
In the table above, recorded investment in impaired loans as of December 31, 2017 includes accrued interest receivable and deferred net loan costs of $24,193.
Credit Quality Grouping
In developing the ALL, management uses credit quality grouping to help evaluate trends in credit quality. The Company groups credit risk into Groups A, B and C. The manner the Company utilizes to assign risk grouping is driven by loan purpose. Commercial purpose loans are individually risk graded while the retail portion of the portfolio is generally grouped by delinquency pool.
Group A loans - Acceptable Risk – are loans that are expected to perform as agreed under their respective terms. Such loans carry a normal level of risk that does not require management attention beyond that warranted by the loan or loan relationship characteristics, such as loan size or relationship size. Group A loans include commercial purpose loans that are individually risk rated and retail loans that are rated by pool. Group A retail loans include performing consumer and residential real estate loans. Residential real estate loans are loans to individuals secured by 1-4 family homes, including first mortgages, home equity and home improvement loans. Loan balances fully secured by deposit accounts or that are fully guaranteed by the federal government are considered acceptable risk.
Group B loans – Management Involved - are loans that require greater attention than the acceptable risk loans in Group A. Characteristics of such loans may include, but are not limited to, borrowers that are experiencing negative operating trends such as reduced sales or margins, borrowers that have exposure to adverse market conditions such as increased competition or regulatory burden, or borrowers that have had unexpected or adverse changes in management. These loans have a greater likelihood of migrating to an unacceptable risk level if these characteristics are left unchecked. Group B is limited to commercial purpose loans that are individually risk rated.
Group C loans – Unacceptable Risk – are loans that have distinct shortcomings that require a greater degree of management attention. Examples of these shortcomings include a borrower's inadequate capacity to service debt, poor operating performance, or insolvency. These loans are more likely to result in repayment through collateral liquidation. Group C loans range from those that are likely to sustain some loss if the shortcomings are not corrected, to those for which loss is imminent and non-accrual treatment is warranted. Group C loans include individually rated commercial purpose loans and retail loans adversely rated in accordance with the Federal Financial Institutions Examination Council’s Uniform Retail Credit Classification Policy. Group C retail loans include 1-4 family residential real estate loans and home equity loans past due 90 days or more with loan-to-value ratios greater than 60%, home equity loans 90 days or more past due where the Bank does not hold first mortgage, irrespective of loan-to-value, loans in bankruptcy where repayment is likely but not yet established, and lastly consumer loans that are 90 days or more past due.
Commercial purpose loan ratings are assigned by the commercial account officer; for larger and more complex commercial loans, the credit rating is a collaborative assignment by the lender and the credit analyst. The credit risk rating is based on the borrower's expected performance, i.e., the likelihood that the borrower will be able to service its obligations in accordance with the loan terms. Credit risk ratings are meant to measure risk versus simply record history. Assessment of expected future payment performance requires consideration of numerous factors. While past performance is part of the overall evaluation, expected performance is based on an analysis of the borrower's financial strength, and historical and projected factors such as size and financing alternatives, capacity and cash flow, balance sheet and income statement trends, the quality and timeliness of financial reporting, and the quality of the borrower’s management. Other factors influencing the credit risk rating to a lesser degree include collateral coverage and control, guarantor strength and commitment, documentation, structure and covenants and industry conditions. There are uncertainties inherent in this process.
Credit risk ratings are dynamic and require updating whenever relevant information is received. Risk ratings are assessed on an ongoing basis and at various points, including at delinquency or at the time of other adverse events. For larger, more complex or adversely rated loans, risk ratings are also assessed at the time of annual or periodic review. Lenders are required to make immediate disclosure to the Chief Credit Officer of any known increase in loan risk, even if considered temporary in nature.
The risk ratings within the loan portfolio, by segment, as of the balance sheet dates were as follows:
As of December 31, 2018
As of December 31, 2017
Modifications of Loans and TDRs
A loan is classified as a TDR if, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider.
The Company is deemed to have granted such a concession if it has modified a troubled loan in any of the following ways:
An insignificant delay or insignificant shortfall in the amount of payments typically would not require the loan to be accounted for as a TDR. However, pursuant to regulatory guidance, any payment delay longer than three months is generally not considered insignificant. Management’s assessment of whether a concession has been granted also takes into account payments expected to be received from third parties, including third-party guarantors, provided that the third party has the ability to perform on the guarantee.
The Company’s TDRs are principally a result of extending loan repayment terms to relieve cash flow difficulties. The Company has only, on a limited basis, reduced interest rates for borrowers below the current market rate for the borrower. The Company has not forgiven principal or reduced accrued interest within the terms of original restructurings, nor has it converted variable rate terms to fixed rate terms. However, the Company evaluates each TDR situation on its own merits and does not foreclose the granting of any particular type of concession.
New TDRs, by portfolio segment, for the periods presented were as follows:
Year ended December 31, 2018
Year ended December 31, 2017
The TDRs for which there was a payment default during the twelve month periods presented were as follows:
Year ended December 31, 2018
Year ended December 31, 2017
TDRs are treated as other impaired loans and carry individual specific reserves with respect to the calculation of the ALL. These loans are categorized as non-performing, may be past due, and are generally adversely risk rated. The TDRs that have defaulted under their restructured terms are generally in collection status and their reserve is typically calculated using the fair value of collateral method.
The specific allowances related to TDRs as of the balance sheet dates presented were as follows:
As of the balance sheet dates, the Company evaluates whether it is contractually committed to lend additional funds to debtors with impaired, non-accrual or modified loans. The Company is contractually committed to lend under one SBA guaranteed line of credit to a borrower whose lending relationship was previously restructured.
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4. Loan Servicing |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing of Financial Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 4. Loan Servicing | Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others were $176,083,984 and $185,757,658 at December 31, 2018 and 2017, respectively. Net gain realized on the sale of loans was $345,780 and $317,432 for the years ended December 31, 2018 and 2017, respectively.
The following table summarizes changes in MSRs for the years ended December 31,
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5. Bank Premises and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 5. Bank Premises and Equipment | The major classes of bank premises and equipment and accumulated depreciation and amortization at December 31 were as follows:
The Company is obligated under non-cancelable operating leases for bank premises expiring in various years through 2026, with options to renew. Minimum future rental payments for these leases with original terms in excess of one year as of December 31, 2018 for each of the next five years and in aggregate are:
Total rental expense amounted to $247,812 and $242,726 for the years ended December 31, 2018 and 2017, respectively.
Capital lease obligations
The following is a schedule by years of future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of December 31, 2018:
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6. Goodwill and Other Intangible Assets |
12 Months Ended |
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Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Note 6. Goodwill and Other Intangible Assets | As a result of the acquisition of LyndonBank on December 31, 2007, the Company recorded goodwill amounting to $11,574,269. The goodwill is not amortizable and is not deductible for tax purposes. Management evaluated goodwill for impairment at December 31, 2018 and 2017 and concluded that no impairment existed as of such dates.
In connection with the acquisition, the Company also recorded $4,161,000 of acquired identified intangible assets as of December 31, 2007, representing the core deposit intangible, which was subject to amortization as a non-interest expense over a ten year period. This core deposit intangible was fully amortized as of December 31, 2017.
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7. Other Investments |
12 Months Ended |
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Dec. 31, 2018 | |
Other Investments [Abstract] | |
Note 7. Other Investments | In 2011, the Company established a single-member LLC to facilitate the purchase of federal NMTC through an investment structure designed by a local community development entity. The equity investment was fully amortized at December 31, 2017, and the Company exited the equity investment, including termination of its interest in the LLC, during the last quarter of 2018.The LLC did not conduct any business apart from its role in the NMTC financing structure. The NMTC equity investment generated federal income tax credits of $204,900 for the year ended December 31, 2017, with amortization expense of $195,572. The carrying value of the NMTC equity investment in the LLC was $1,000 at December 31, 2017, and is included in other assets in the consolidated balance sheets.
The Company purchases from time to time interests in various limited partnerships established to acquire, own and rent residential housing for low and moderate income residents of northeastern and central Vermont. The tax credits from these investments were $437,229 and $414,663 for the years ended December 31, 2018 and 2017, respectively. Expenses related to amortization of the investments in the limited partnerships are recognized as a component of income tax expense, and were $410,061 and $421,661 for 2018 and 2017, respectively. The carrying values of the limited partnership investments were $2,263,512 and $1,796,573 at December 31, 2018 and 2017, respectively, and are included in other assets.
The Bank has a one-third ownership interest in a non-depository trust company, CFSG, based in Newport, Vermont, which is held indirectly through CFS Partners, a Vermont LLC that owns 100% of the LLC equity interests of CFSG. The Bank accounts for its investment in CFS Partners under the equity method of accounting. The Company's investment in CFS Partners, included in other assets, amounted to $2,946,831 and $2,432,346 as of December 31, 2018 and 2017, respectively. The Company recognized income of $514,485 and $415,561 for 2018 and 2017, respectively, through CFS Partners from the operations of CFSG. |
8. Deposits |
12 Months Ended | ||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||
Maturities of Time Deposits [Abstract] | |||||||||||||||||||||||||||||||
Note 8. Deposits | The following is a maturity distribution of time deposits at December 31, 2018:
Total deposits in excess of the FDIC insurance level amounted to $159,075,993 as of December 31, 2018.
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9. Borrowed Funds |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 9. Borrowed Funds | Outstanding advances for the Company as of the balance sheet dates presented were as follows:
Borrowings from the FHLBB are secured by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by 1-4 family residential properties. Qualified collateral for these borrowings totaled $148,323,822 and $154,324,420 as of December 31, 2018 and 2017, respectively, and the Company's gross potential borrowing capacity under this arrangement was $108,736,234 and $109,726,508, respectively, before reduction for outstanding advances and collateral pledges.
Under a separate agreement with the FHLBB, the Company has the authority to collateralize public unit deposits, up to its available borrowing capacity, with letters of credit issued by the FHLBB. At December 31, 2018, $2,625,000 in FHLBB letters of credit was utilized as collateral for these deposits compared to $59,850,000 at December 31, 2017. Total fees paid by the Company in connection with issuance of these letters of credit were $46,620 for 2018 and $34,601 for 2017.
The Company also maintained a $500,000 IDEAL Way Line of Credit with the FHLBB at December 31, 2018 and 2017, with no outstanding advances under this line at either year-end date. Interest on these borrowings is at a rate determined daily by the FHLBB and payable monthly.
The Company also has a line of credit with the FRBB, which is intended to be used as a contingency funding source. For this BIC arrangement, the Company pledged eligible commercial and industrial loans, commercial real estate loans and home equity loans, resulting in an available line of $50,913,351 and $45,305,894 as of December 31, 2018 and 2017, respectively. Credit advances in the FRBB lending program are overnight advances with interest chargeable at the primary credit rate (generally referred to as the discount rate), which was 300 basis points as of December 31, 2018. As of December 31, 2018 and 2017, the Company had no outstanding advances against this line.
The Company has unsecured lines of credit with three correspondent banks, with aggregate available borrowing capacity totaling $12,500,000 at December 31, 2018 and 2017. The Company had no outstanding advances against these lines for the periods presented.
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10. Junior Subordinated Debentures |
12 Months Ended |
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Dec. 31, 2018 | |
Junior Subordinated Notes [Abstract] | |
Note 10. Junior Subordinated Debentures | As of December 31, 2018 and 2017, the Company had outstanding $12,887,000 principal amount of Junior Subordinated Debentures due in 2037 (the Debentures). The Debentures bear a floating rate equal to the 3-month London Interbank Offered Rate plus 2.85%. During 2018, the floating rate averaged 4.95% per quarter compared to 4.02% for 2017. The Debentures mature on December 15, 2037 and are subordinated and junior in right of payment to all senior indebtedness of the Company, as defined in the Indenture dated as of October 31, 2007 between the Company and Wilmington Trust Company, as Trustee. The Debentures first became redeemable, in whole or in part, by the Company on December 15, 2012. Interest paid on the Debentures for 2018 and 2017 was $650,361 and $524,696, respectively, and is deductible for tax purposes.
The Debentures were issued and sold to CMTV Statutory Trust I (the Trust). The Trust is a special purpose trust funded by a capital contribution of $387,000 from the Company, in exchange for 100% of the Trust’s common equity. The Trust was formed for the purpose of issuing corporation-obligated mandatorily redeemable Capital Securities (Capital Securities) in the principal amount of $12.5 million to third-party investors and using the proceeds from the sale of such Capital Securities and the Company’s initial capital contribution to purchase the Debentures. The Debentures are the sole asset of the Trust. Distributions on the Capital Securities issued by the Trust are payable quarterly at a rate per annum equal to the interest rate being earned by the Trust on the Debentures. The Capital Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Debentures. The Company has entered into an agreement which, taken collectively, fully and unconditionally guarantees the payments on the Capital Securities, subject to the terms of the guarantee.
The Debentures are currently includable in the Company’s Tier 1 capital up to 25% of core capital elements (see Note 20).
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11. Repurchase Agreements |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Sold under Agreements to Repurchase [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 11. Repurchase Agreements | Securities sold under agreements to repurchase mature daily, carried a weighted average interest rate of 0.63% and 0.30%, respectively, during 2018 and 2017, and consisted of the following:
(1) U.S. GSE securities, Agency MBS, ABS and OAS, and CDs were pledged as collateral for the periods presented.
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12. Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 12. Income Taxes | The Company prepares its federal income tax return on a consolidated basis. Federal income taxes are allocated to members of the consolidated group based on taxable income. As a result of the 2017 Tax Act, the federal corporate income tax rate decreased from 35% to 21% effective January 1, 2018. The 2017 deferred tax expense and total income tax expense were impacted by a one-time charge of $410,304 in 2017 for the revaluation of the Company’s net deferred tax asset to reflect the 21% enacted tax rate in future periods.
Federal income tax expense for the years ended December 31 was as follows:
Total income tax expense differed from the amounts computed at the statutory federal income tax rate of 21 percent in 2018 and 34 percent in 2017 primarily due to the following for the years ended December 31:
The deferred income tax (benefit) expense consisted of the following items for the years ended December 31:
Listed below are the significant components of the net deferred tax asset at December 31:
US GAAP provides for the recognition and measurement of deductible temporary differences (including general valuation allowances) to the extent that it is more likely than not that the deferred tax asset will be realized.
The net deferred tax asset is included in other assets in the consolidated balance sheets.
ASC Topic 740, Income Taxes, defines the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company's financial statements. Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the consolidated financial statements. The Company has adopted these provisions and there was no material effect on the consolidated financial statements. The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 31, 2015 through 2018.
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13. 401(k) and Profit-Sharing Plan |
12 Months Ended |
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Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Note 13. 401(k) and Profit-Sharing Plan | The Company has a defined contribution plan covering all employees who meet certain age and service requirements. The pension expense was $617,800 and $572,310 for 2018 and 2017, respectively. These amounts represent discretionary matching contributions of a portion of the voluntary employee salary deferrals under the 401(k) plan and discretionary profit-sharing contributions under the plan.
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14. Deferred Compensation and Supplemental Employee Retirement Plans |
12 Months Ended |
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Dec. 31, 2018 | |
Compensation Related Costs [Abstract] | |
Note 14. Deferred Compensation and Supplemental Employee Retirement Plans | The Company maintains a directors’ deferred compensation plan and, prior to 2005, maintained a retirement plan for its directors. Participants are general unsecured creditors of the Company with respect to these benefits. The benefits accrued under these plans were $79,045 and $96,572 at December 31, 2018 and 2017, respectively. Expenses associated with these plans were $474 and $558 for the years ended December 31, 2018 and 2017, respectively.
During 2017 and prior years, the Company maintained a SERP for certain key employees of the Company. The final payment of SERP benefits to the last participant was made on July 1, 2017 and the SERP was then terminated.
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15. Financial Instruments with Off-Balance-Sheet Risk |
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Financial Instruments With Off-balance-sheet Risk | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 15. 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 and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees, commitments to sell loans and risk-sharing commitments on certain sold loans. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amounts of those instruments reflect the maximum extent of involvement the Company has in particular classes of financial instruments.
The Company's maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit and financial guarantees written is represented by the contractual notional amount of those instruments. The Company applies the same credit policies and underwriting criteria in making commitments and conditional obligations as it does for on-balance-sheet instruments.
The Company generally requires collateral or other security to support financial instruments with credit risk. At December 31, the following off-balance-sheet financial instruments representing credit risk were outstanding:
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 funding requirements. At December 31, 2018 and 2017, the Company had binding loan commitments to sell residential mortgages at fixed rates totaling $391,840 and $1,789,453, respectively (see Note 16). The recourse provision under the terms of the sale of the Company’s credit card portfolio in 2007 is based on total lines, not balances outstanding. Based on historical losses, the Company does not expect any significant losses from this commitment.
The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit, or a commitment to extend credit, is based on management's credit evaluation of the counter-party. Collateral or other security held varies but may include real estate, accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.
Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support private borrowing arrangements. The credit risk involved in issuing letters of credit or providing reimbursement guarantees for the benefit of the Company’s commercial customers is essentially the same as that involved in extending loans to customers. The fair value of standby letters of credit and reimbursement guarantees on letters of credit has not been included in the balance sheets as the fair value is immaterial.
In connection with its 2007 trust preferred securities financing, the Company guaranteed the payment obligations under the $12,500,000 of capital securities of its subsidiary, the Trust. The source of funds for payments by the Trust on its capital trust securities is payments made by the Company on its debentures issued to the Trust. The Company's obligation under those debentures is fully reflected in the Company's consolidated balance sheet, in the gross amount of $12,887,000 as of the dates presented, of which $12,500,000 represents external financing through the issuance to investors of capital securities by the Trust (see Note 10).
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16. Contingent Liability |
12 Months Ended |
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Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 16. Contingent Liability | The Company sells first lien 1-4 family residential mortgage loans under the MPF program with the FHLBB. Under this program the Company shares in the credit risk of each mortgage loan, while receiving fee income in return. The Company is responsible for a CEO based on the credit quality of these loans. FHLBB funds a FLA based on the Company's outstanding MPF mortgage balances. This creates a laddered approach to sharing in any losses. In the event of default, homeowner's equity and private mortgage insurance, if any, are the first sources of repayment; the FHLBB's FLA funds are then utilized, followed by the participant’s CEO, with the balance of losses absorbed by FHLBB. These loans must meet specific underwriting standards of the FHLBB. As of December 31, 2018 and 2017, the Company had $38,935,411 and $43,006,299, respectively, in loans sold through the MPF program and on which the Company had a CEO. As of December 31, 2018, the notional amount of the maximum CEO related to this program was $637,102 compared to $719,067 as of December 31, 2017. The Company had accrued a contingent liability for this CEO in the amount of $84,944 and $84,727 as of December 31, 2018 and 2017, respectively, which is calculated by management based on the methodology used in calculating the ALL, adjusted to reflect the risk sharing arrangements with the FHLBB.
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17. Legal Proceedings |
12 Months Ended |
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Dec. 31, 2018 | |
Legal Proceedings | |
Note 17. Legal Proceedings | In the normal course of business, the Company is involved in various claims and legal proceedings. In the opinion of the Company's management, any liabilities resulting from such proceedings are not expected to be material to the Company's consolidated financial condition or results of operations.
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18. Transactions with Related Parties |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 18. Transactions with Related Parties | Aggregate loan transactions of the Company with directors, principal officers, their immediate families and affiliated companies in which they are principal owners (commonly referred to as related parties) as of December 31 were as follows:
Total funds of related parties on deposit with the Company were $6,179,453 and $5,679,969 at December 31, 2018 and 2017, respectively.
Prior to May 2018, the Company leased 2,253 square feet of condominium space in the state office building on Main Street in Newport, Vermont to its trust company affiliate, CFSG, for its principal offices. In May 2018, CFSG purchased the condominium space from the Company. CFSG also leases offices in the Company’s Barre and Lyndonville branches. The amount of rental income received from CFSG for the years ended December 31, 2018 and 2017 was $30,365 and $62,092, respectively.
The Company utilizes the services of CFSG as an investment advisor for the Company’s 401(k) plan. The Human Resources committee of the Board of Directors is the Trustee of the plan, and CFSG provides investment advice for the plan. CFSG also acts as custodian of the retirement funds and makes investments on behalf of the plan and its participants. In addition, prior to liquidation of the SERP assets, CFSG served as investment advisor and custodian of funds under the Company’s SERP. The Company pays monthly management fees to CFSG for its services to the 401(k) plan in 2018 and 2017, and the SERP based on the market value of the total assets under management in 2017. The amount paid to CFSG for the years ended December 31, 2018 and 2017 was $47,676 and $48,943, respectively, for services related to the 401(k) plan and $1,412 in 2017 for services related to the SERP.
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19. Restrictions on Cash and Due From Banks |
12 Months Ended |
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Dec. 31, 2018 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Note 19. Restrictions on Cash and Due From Banks | In the ordinary course of business, the Company may, from time to time, maintain amounts due from correspondent banks that exceed federally insured limits. However, no losses have occurred in these accounts and the Company believes it is not exposed to any significant risk with respect to such accounts. The Company was required to maintain contracted balances with a correspondent bank of $30,000 and $462,500 at December 31, 2018 and 2017, respectively. Of the $462,500 balance at December 31, 2017, $262,500 was a separate agreed upon “impressed” balance to avoid monthly charges on the Company’s current federal funds liquidity line. Due to a merger of the correspondent bank in 2018, the impressed balance was eliminated and a clearing balance of $30,000 was agreed upon by the Company and ACBB as the successor correspondent bank.
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20. Regulatory Capital Requirements |
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Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 20. Regulatory Capital Requirements | The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Additional prompt corrective action capital requirements are applicable to banks, but not to bank holding companies.
Under current banking rules governing required regulatory capital, the Company and the Bank are required to maintain minimum amounts and ratios (set forth in the table on the following page) of Common equity tier 1, Tier 1 and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). The Company’s non-cumulative Series A preferred stock ($2.0 million liquidation preference in 2018 and $2.5 million in 2017) is includable without limitation in its Common equity tier 1 and Tier 1 capital. The Company is allowed to include in Common equity tier 1 and Tier 1 capital an amount of trust preferred securities equal to no more than 25% of the sum of all core capital elements, which is generally defined as shareholders’ equity, less certain intangibles, including goodwill and the core deposit intangible, net of any related deferred income tax liability, with the balance includable in Tier 2 capital. Management believes that, as of December 31, 2018, the Company and the Bank met all capital adequacy requirements to which they are currently subject.
Beginning in 2016, an additional capital conservation buffer was added to the minimum requirements for capital adequacy purposes, subject to a three year phase-in period. The capital conservation buffer was fully phased-in on January 1, 2019 at 2.5% of risk-weighted assets. A banking organization with a conservation buffer of less than 2.5% (or the required phase-in amount in years prior to 2019) is subject to limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The Company’s and the Bank’s capital conservation buffer was 6.08% and 5.97%, respectively, at December 31, 2018 compared to 5.93% and 5.82%, respectively, at December 31, 2017. As of December 31, 2018, both the Company and the Bank exceeded the required capital conservation buffer of 1.875% of risk-weighted assets as well as the fully phased-in capital conservation buffer of 2.50% that became effective on January 1, 2019.
As of December 31, 2018, the Bank was considered well capitalized under the regulatory capital framework for Prompt Corrective Action and the Company exceeded applicable consolidated regulatory guidelines for capital adequacy.
The following table shows the regulatory capital ratios for the Company and the Bank as of December 31:
(1) Applicable to banks, but not bank holding companies.
The Company's ability to pay dividends to its shareholders is largely dependent on the Bank's ability to pay dividends to the Company. The Bank is restricted by law as to the amount of dividends that can be paid. Dividends declared by national banks that exceed net income for the current and preceding two years must be approved by the Bank’s primary banking regulator, the Office of the Comptroller of the Currency. Regardless of formal regulatory restrictions, the Bank may not pay dividends that would result in its capital levels being reduced below the minimum requirements shown above.
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21. Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 21. Fair Value | Certain assets and liabilities are recorded at fair value to provide additional insight into the Company’s quality of earnings. The fair values of some of these assets and liabilities are measured on a recurring basis while others are measured on a non-recurring basis, with the determination based upon applicable existing accounting pronouncements. For example, securities available-for-sale are recorded at fair value on a recurring basis. Other assets, such as MSRs, loans held-for-sale, impaired loans, and OREO are recorded at fair value on a non-recurring basis using the lower of cost or market methodology to determine impairment of individual assets. The Company groups assets and liabilities which are recorded at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement (with Level 1 considered highest and Level 3 considered lowest). A brief description of each level follows.
The following methods and assumptions were used by the Company in estimating its fair value measurements:
Debt Securities AFS: Fair value measurement is based upon quoted prices for similar assets, if available. If quoted prices are not available, fair values are measured using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curves, prepayment speeds and default rates. Level 1 securities would include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. Level 2 securities include federal agency securities and securities of local municipalities.
Impaired loans: Impaired loans are reported based on one of three measures: the present value of expected 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. If the fair value is less than an impaired loan’s recorded investment, an impairment loss is recognized as part of the ALL. Accordingly, certain impaired loans may be subject to measurement at fair value on a non-recurring basis. Management has estimated the fair values of collateral-dependent loans using Level 2 inputs, such as the fair value of collateral based on independent third-party appraisals.
Loans held-for-sale: The fair value of loans held-for-sale is based upon an actual purchase and sale agreement between the Company and an independent market participant. The sale is executed within a reasonable period following quarter end at the stated fair value.
MSRs: MSRs represent the value associated with servicing residential mortgage loans. Servicing assets and servicing liabilities are reported using the amortization method and compared to fair value for impairment. In evaluating the carrying values of MSRs, the Company obtains third party valuations based on loan level data including note rate, and the type and term of the underlying loans. The Company classifies MSRs as non-recurring Level 2.
OREO: Real estate acquired through or in lieu of foreclosure and bank properties no longer used as bank premises are initially recorded at fair value. The fair value of OREO is based on property appraisals and an analysis of similar properties currently available. The Company records OREO as non-recurring Level 2.
FASB ASC Topic 825, “Financial Instruments”, requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet, if the fair values can be reasonably determined. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques using observable inputs when available. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
Assets Recorded at Fair Value on a Recurring Basis
Assets measured at fair value on a recurring basis and reflected in the consolidated balance sheets at December 31, segregated by fair value hierarchy, are summarized below:
There were no Level 1 or Level 3 assets or liabilities measured on a recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between Levels during either 2018 or 2017.
Assets Recorded at Fair Value on a Non-Recurring Basis
The following table includes assets measured at fair value on a non-recurring basis that have had a fair value adjustment since their initial recognition. Impaired loans measured at fair value only include impaired loans with a related specific ALL and are presented net of specific allowances as disclosed in Note 3.
Assets measured at fair value on a non-recurring basis and reflected in the consolidated balance sheets at December 31, segregated by fair value hierarchy, are summarized below:
(1) Represents MSRs at lower of cost or fair value, including MSRs deemed to be impaired and for which a valuation allowance was established to carry at fair value at December 31, 2018 and 2017.
There were no Level 1 or Level 3 assets or liabilities measured on a non-recurring basis as of the balance sheet dates presented, nor were there any transfers of assets between Levels during either 2018 or 2017.
The carrying amounts and estimated fair values of the Company's financial instruments were as follows:
(1) Reported fair value represents all MSRs serviced by the Company at December 31, 2018, regardless of carrying amount.
(1) Reported fair value represents all MSRs serviced by the Company at December 31, 2017, regardless of carrying amount.
The estimated fair values of commitments to extend credit, letters of credit and financial guarantees for the benefit of customers were immaterial at December 31, 2018 and 2017.
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22. Condensed Financial Information (Parent Company Only) |
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Condensed Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 22. Condensed Financial Information (Parent Company Only) | The following condensed financial statements are for Community Bancorp. (Parent Company Only), and should be read in conjunction with the consolidated financial statements of the Company.
The investment in the subsidiary bank is carried under the equity method of accounting. The investment and cash, which is on deposit with the Bank, have been eliminated in consolidation.
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23. Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 23. Quarterly Financial Data (Unaudited) | A summary of financial data for the four quarters of 2018 and 2017 is presented below:
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24. Other Income and Other Expenses |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 24. Other Income and Other Expenses | The components of other income and other expenses which are in excess of one percent of total revenues in either of the two years disclosed are as follows:
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25. Subsequent Events |
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Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Note 25. Subsequent Events | Declaration of Cash Dividend
On December 13, 2018, the Company declared a cash dividend of $0.19 per share payable February 1, 2019 to shareholders of record as of January 15, 2019. On March 13, 2019, the Company declared a cash dividend of $0.19 per share payable May 1, 2019 to shareholders of record as of April 15, 2019. These dividends have been recorded as of each declaration date, including shares issuable under the DRIP.
For purposes of accrual or disclosure in these financial statements, the Company has evaluated subsequent events through the date of issuance of these financial statements. |
1. Significant Accounting Policies (Policies) |
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Basis of presentation and consolidation | In addition to the definitions provided elsewhere in this annual report, the definitions, acronyms and abbreviations identified below are used throughout this Annual Report, including these “Notes to Consolidated Financial Statements” and the section labeled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” immediately following. These definitions are intended to aid the reader and provide a reference page when reviewing this Annual Report.
The consolidated financial statements include the accounts of the Bancorp. and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated. The Company is considered a “smaller reporting company” under the disclosure rules of the SEC, as amended in 2018. Accordingly, the Company has elected to provide its audited consolidated statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two year, rather than a three year, period, and intends to provide smaller reporting company scaled disclosures where management deems it appropriate. Beginning with its periodic reports filed in 2018, the Company is considered an accelerated filer under the financial reporting rules of the SEC.
FASB ASC Topic 810, “Consolidation”, in part, addresses limited purpose trusts formed to issue trust preferred securities. It also establishes the criteria used to identify VIE, and to determine whether or not to consolidate a VIE. In general, ASC Topic 810 provides that the enterprise with the controlling financial interest, known as the primary beneficiary, consolidates the VIE. In 2007, the Company formed CMTV Statutory Trust I for the purposes of issuing trust preferred securities to unaffiliated parties and investing the proceeds from the issuance thereof and the common securities of the trust in junior subordinated debentures issued by the Company. The Company is not the primary beneficiary of CMTV Statutory Trust I; accordingly, the trust is not consolidated with the Company for financial reporting purposes. CMTV Statutory Trust I is considered an affiliate of the Company (see Note 10).
During the years 2011 through 2018, the Company was the sole owner of a LLC formed to facilitate the Company’s purchase of federal NMTC under an investment structure designed by a local community development entity. The NMTC financing matured in the fourth quarter of 2018 and the Company exited the investment and terminated its interest in the LLC. Management evaluated the Company’s interest in the LLC under the ASC guidance relating to VIEs in light of the overall structure and purpose of the NMTC financing transaction and concluded that the LLC should not be consolidated in the Company’s financial statements for financial reporting purposes, as the Company was not the primary beneficiary of the NMTC structure, did not exercise control within the overall structure and was not obligated to absorb a majority of any losses of the NMTC structure (see Note 7).
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Nature of operations | The Company provides a variety of deposit and lending services to individuals, municipalities, and business customers through its branches, ATMs and telephone, mobile and internet banking capabilities in northern and central Vermont, which is primarily a small business and agricultural area. The Company's primary deposit products are checking and savings accounts and certificates of deposit. Its primary lending products are commercial, real estate, municipal and consumer loans.
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Concentration of risk | The Company's operations are affected by various risk factors, including interest rate risk, credit risk, and risk from geographic concentration of its deposit taking and lending activities. Management attempts to manage interest rate risk through various asset/liability management techniques designed to match maturities and repricing of assets and liabilities. Loan policies and administration are designed to provide assurance that loans will only be granted to creditworthy borrowers, although credit losses are expected to occur because of subjective factors inherent in management’s estimate of credit risk and factors beyond the control of the Company. While the Company has a diversified loan portfolio by loan type, most of its lending activities are conducted within the geographic area where its banking offices are located. As a result, the Company and its borrowers may be especially vulnerable to the consequences of changes in the local economy in northern and central Vermont. In addition, a substantial portion of the Company's loans are secured by real estate, which is susceptible to a decline in value, especially during times of adverse economic conditions.
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Use of estimates | The preparation of consolidated financial statements in conformity with US 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 and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions involve inherent uncertainties. Accordingly, actual results could differ from those estimates and those differences could be material.
Material estimates that are particularly susceptible to significant change relate to the determination of the ALL and the valuation of OREO. In connection with evaluating loans for impairment or assigning the carrying value of OREO, management generally obtains independent evaluations or appraisals for significant properties. While the ALL and the carrying value of OREO are determined using management's best estimate of probable loan and OREO losses, respectively, as of the balance sheet date, the ultimate collection of a substantial portion of the Company's loan portfolio and the recovery of a substantial portion of the fair value of OREO are susceptible to uncertainties and changes in a number of factors, especially local real estate market conditions. The amount of the change that is reasonably possible cannot be estimated.
While management uses available information to recognize losses on loans and OREO, future additions to the allowance or write-downs of OREO may be necessary based on changes in local economic conditions or other relevant factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for losses on loans and the carrying value of OREO. Such agencies may require the Company to recognize additions to the allowance or write-downs of OREO based on their judgment about information available to them at the time of their examination.
MSRs associated with loans originated and sold in the secondary market, where servicing is retained, are capitalized and included in other assets in the consolidated balance sheets. MSRs are amortized against non-interest income in proportion to, and over the period of, estimated future net servicing income of the underlying loans. The value of capitalized servicing rights represents the present estimated value of the future servicing fees arising from the right to service loans for third parties. The carrying value of the MSRs is periodically reviewed for impairment based on a determination of estimated fair value as compared to amortized cost, and impairment, if any, is recognized through a valuation allowance and is recorded as a write down. Critical accounting policies for MSRs relate to the initial valuation and subsequent impairment tests. The methodology used to determine the valuation of MSRs requires the development and use of estimates, including anticipated principal amortization and prepayments. Events that may significantly affect the estimates used are changes in interest rates and the payment performance of the underlying loans. Management uses a third party consultant to assist in analyzing the fair value of the Company’s MSRs.
Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to various factors, including the length of time and the extent to which the fair value has been less than cost; the nature of the issuer and its financial condition and near-term prospects; and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The evaluation of these factors is a subjective process and involves estimates and assumptions about matters that are inherently uncertain. Should actual factors and conditions differ materially from those used by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements.
Accounting for a business combination that was completed prior to 2009 requires the application of the purchase method of accounting. Under the purchase method, the Company was required to record the assets and liabilities acquired through the LyndonBank merger in 2007 at fair market value, with the excess of the purchase price over the fair value of the net assets recorded as goodwill and evaluated annually for impairment. Management uses various assumptions in evaluating goodwill for impairment.
Management utilizes numerous techniques to estimate the carrying value of various other assets held by the Company, including, but not limited to, bank premises and equipment and deferred taxes. The assumptions considered in making these estimates are based on historical experience and on various other factors that are believed by management to be reasonable under the circumstances. Management acknowledges that the use of different estimates or assumptions could produce different estimates of carrying values.
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Presentation of cash flows | For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents includes cash on hand, amounts due from banks (including cash items in process of clearing), federal funds sold (generally purchased and sold for one day periods) and overnight deposits.
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Investment securities | Debt securities the Company has the positive intent and ability to hold to maturity are classified as HTM and reported at amortized cost. Debt securities not classified as HTM are classified as AFS, and are carried at fair value, with unrealized gains and losses, net of tax and reclassification adjustments, reflected as a net amount in the shareholders’ equity section of the consolidated balance sheets and in the statements of changes in shareholders’ equity. Investment securities transactions are accounted for on a trade date basis. The specific identification method is used to determine realized gains and losses on sales of debt securities AFS and equity securities. Premiums and discounts are recognized in interest income using the interest method over the period to maturity or call date. The Company does not hold any securities purchased for the purpose of selling in the near term and classified as trading.
For individual debt securities that the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary decline in the fair value of the debt security related to (1) credit loss is recognized in earnings and (2) other factors is recognized in other comprehensive income or loss. Credit loss is deemed to exist if the present value of expected future cash flows using the interest rates at acquisition is less than the amortized cost basis of the debt security. For individual debt securities where the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost, the OTTI is recognized in earnings equal to the entire difference between the security’s cost basis and its fair value at the balance sheet date.
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Other investments | In December 2011, the Company made an equity investment in a NMTC financing structure, which was fully amortized in 2017 (see Note 7). The Company’s investment in the NMTC financing structure was amortized using the effective yield method.
From time to time, the Company acquires partnership interests in limited partnerships for low income housing projects. New investments in limited partnerships are amortized using the proportional amortization method. All investments made before January 1, 2015 are amortized using the effective yield method.
The Company has a one-third ownership interest in CFSG, a non-depository trust company (see Note 7). The Company's investment in CFSG is accounted for under the equity method of accounting.
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Restricted equity securities | The Company holds certain restricted equity securities acquired for non-investment purposes, and required as a matter of law or as a condition to the receipt of certain financial products and services. These securities are carried at cost. As a member of the FRBB, the Company is required to invest in FRBB stock in an amount equal to 6% of the Bank's capital stock and surplus.
As a member of the FHLBB, the Company is required to invest in $100 par value stock of the FHLBB in an amount that approximates 1% of unpaid principal balances on qualifying loans, plus an additional amount to satisfy an activity based requirement. The stock is nonmarketable and redeemable at par value, subject to the FHLBB’s right to temporarily suspend such redemptions. Members are subject to capital calls in some circumstances to ensure compliance with the FHLBB’s capital plan.
In order to access correspondent banking services from the ACBB, the Company is required to invest in a minimum of 20 shares of the common stock of ACBB’s parent company, ACBI.
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Loans held-for-sale | Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.
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Loans | Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, adjusted for any charge-offs, the ALL, loan premiums or discounts for acquired loans and any unearned fees or costs on originated loans.
Loan interest income is accrued daily on the outstanding balances. For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is generally not recognized on specific impaired loans unless the likelihood of further loss is considered by management to be remote. Interest payments received on non-accrual loans are generally applied as a reduction of the loan principal balance. Loans are returned to accrual status when principal and interest payments are brought current and the customer has demonstrated the intent and ability to make future payments on a timely basis. Loans are written down or charged off when collection of principal is considered doubtful.
Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount is amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life of the loans.
Loan premiums and discounts on loans acquired in the merger with LyndonBank are amortized as an adjustment to yield over the life of the loans.
Allowance for loan losses
The ALL is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes that future payments of a loan balance are unlikely. Subsequent recoveries, if any, are credited to the allowance.
Unsecured loans, primarily consumer loans, are charged off when they become uncollectible and no later than 120 days past due. Unsecured loans to customers who subsequently file bankruptcy are charged off within 30 days of receipt of the notification of filing or by the end of the month in which the loans become 120 days past due, whichever occurs first. For secured loans, both residential and commercial, the potential loss on impaired loans is carried as a loan loss reserve specific allocation; the loss portion is charged off when collection of the full loan appears unlikely. The unsecured portion of a real estate loan is that portion of the loan exceeding the "fair value" of the collateral less the estimated cost to sell. Value of the collateral is determined in accordance with the Company’s appraisal policy. The unsecured portion of an impaired real estate secured loan is charged off by the end of the month in which the loan becomes 180 days past due.
As described below, the allowance consists of general, specific and unallocated components. However, the entire allowance is available to absorb losses in the loan portfolio, regardless of specific, general and unallocated components considered in determining the amount of the allowance.
General component
The general component of the ALL is based on historical loss experience and various qualitative factors and is stratified by the following loan segments: commercial and industrial, CRE, residential real estate 1st lien, residential real estate Jr lien and consumer loans. The Company does not disaggregate its portfolio segments further into classes.
Loss ratios are calculated by loan segment for one year, two year, three year, four year and five year look back periods. Management uses an average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment in the current economic climate. During periods of economic stability, a relatively longer period (e.g., five years) may be appropriate. During periods of significant expansion or contraction, the Company may appropriately shorten the historical time period. The Company is currently using an extended look back period of five years.
Qualitative factors include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of CRE loans. This evaluation is inherently subjective as it requires estimates that are susceptible to revision as more information becomes available.
The qualitative factors are determined based on the various risk characteristics of each loan segment. The Company has policies, procedures and internal controls that management believes are commensurate with the risk profile of each of these segments. Major risk characteristics relevant to each portfolio segment are as follows:
Commercial & Industrial – Loans in this segment include commercial and industrial loans and to a lesser extent loans to finance agricultural production. Commercial loans are made to businesses and are generally secured by assets of the business, including trade assets and equipment. While not the primary collateral, in many cases these loans may also be secured by the real estate of the business. Repayment is expected from the cash flows of the business. A weakened economy, soft consumer spending, unfavorable foreign trade conditions and the rising cost of labor or raw materials are examples of issues that can impact the credit quality in this segment.
Commercial Real Estate – Loans in this segment are principally made to businesses and are generally secured by either owner-occupied, or non-owner occupied CRE. A relatively small portion of this segment includes farm loans secured by farm land and buildings. As with commercial and industrial loans, repayment of owner-occupied CRE loans is expected from the cash flows of the business and the segment would be impacted by the same risk factors as commercial and industrial loans. The non-owner occupied CRE portion includes both residential and commercial construction loans, vacant land and real estate development loans, multi-family dwelling loans and commercial rental property loans. Repayment of construction loans is expected from permanent financing takeout; the Company generally requires a commitment or eligibility for the take-out financing prior to construction loan origination. Real estate development loans are generally repaid from the sale of the subject real property as the project progresses. Construction and development lending entail additional risks, including the project exceeding budget, not being constructed according to plans, not receiving permits, or the pre-leasing or occupancy rate not meeting expectations. Repayment of multi-family loans and commercial rental property loans is expected from the cash flow generated by rental payments received from the individuals or businesses occupying the real estate. CRE loans are impacted by factors such as competitive market forces, vacancy rates, cap rates, net operating incomes, lease renewals and overall economic demand. In addition, loans in the recreational and tourism sector can be affected by weather conditions, such as unseasonably low winter snowfalls. CRE lending also carries a higher degree of environmental risk than other real estate lending.
Residential Real Estate - 1st Lien – All loans in this segment are collateralized by first mortgages on 1 – 4 family owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment.
Residential Real Estate – Jr Lien – All loans in this segment are collateralized by junior lien mortgages on 1 – 4 family residential real estate and repayment is primarily dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment.
Consumer – Loans in this segment are made to individuals for consumer and household purposes. This segment includes both loans secured by automobiles and other consumer goods, as well as loans that are unsecured. This segment also includes overdrafts, which are extensions of credit made to both individuals and businesses to cover temporary shortages in their deposit accounts and are generally unsecured. The Company maintains policies restricting the size and term of these extensions of credit. The overall health of the economy, including unemployment rates, has an impact on the credit quality of this segment.
Specific component
The specific component of the ALL relates to loans that are impaired. Impaired loans are loan(s) to a borrower that in the aggregate are greater than $100,000 and that are in non-accrual status or are TDRs regardless of amount. A specific allowance is established for an impaired loan when its estimated impaired basis is less than the carrying value of the loan. For all loan segments, except consumer loans, a loan is considered impaired when, based on current information and events, in management’s estimation it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant or temporary payment delays and payment shortfalls generally are not classified as impaired. Management evaluates the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and frequency of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis, by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.
Impaired loans also include troubled loans that are restructured. A TDR occurs when the Company, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that would otherwise not be granted. TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loan’s terms, or a combination of the two.
Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer loans for impairment evaluation, unless such loans are subject to a restructuring agreement.
Unallocated component
An unallocated component of the ALL is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component reflects management’s estimate of the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
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Bank premises and equipment | Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. The cost of assets sold or otherwise disposed of, and the related accumulated depreciation, are eliminated from the accounts and the resulting gains or losses are reflected in the consolidated statements of income. Maintenance and repairs are charged to current expense as incurred and the cost of major renewals and betterments is capitalized.
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Other real estate owned | Real estate properties acquired through or in lieu of loan foreclosure or properties no longer used for bank operations are initially recorded at fair value less estimated selling cost at the date of acquisition, foreclosure or transfer. Fair value is determined, as appropriate, either by obtaining a current appraisal or evaluation prepared by an independent, qualified appraiser, by obtaining a broker’s market value analysis, and finally, if the Company has limited exposure and limited risk of loss, by the opinion of management as supported by an inspection of the property and its most recent tax valuation. During periods of declining market values, the Company will generally obtain a new appraisal or evaluation. Any write-down based on the asset's fair value at the date of acquisition or institution of foreclosure is charged to the ALL. After acquisition through or in lieu of foreclosure, these assets are carried at the lower of their new cost basis or fair value. Costs of significant property improvements are capitalized, whereas costs relating to holding the property are expensed as incurred. Appraisals by an independent, qualified appraiser are performed periodically on properties that management deems significant, or evaluations may be performed by management or a qualified third party on OREO properties in the portfolio that are deemed less significant or less vulnerable to market conditions. Subsequent write-downs are recorded as a charge to other expense. Gains or losses on the sale of such properties are included in income when the properties are sold.
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Intangible assets | Intangible assets include the excess of the purchase price over the fair value of net assets acquired (goodwill) in the Company’s 2007 acquisition of LyndonBank, and in 2017 and prior years also included a core deposit intangible related to the deposits acquired from LyndonBank (see Note 6). The core deposit intangible was amortized on an accelerated basis over 10 years to approximate the pattern of economic benefit to the Company and was fully amortized as of December 31, 2017. Goodwill is not amortizable and is reviewed for impairment annually, or more frequently as events or circumstances warrant.
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Income taxes | The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting bases and the tax bases of the Company's assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled. Adjustments to the Company's deferred tax assets are recognized as deferred income tax expense or benefit based on management's judgments relating to the outcome of such asset.
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Mortgage servicing | Servicing assets are recognized as separate assets when rights are acquired through purchase or retained upon the sale of loans. Capitalized servicing rights are reported in other assets and initially recorded at fair value, and are amortized against non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are periodically evaluated for impairment, based upon the estimated fair value of the rights as compared to amortized cost. Impairment is determined by stratifying the rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance and is recorded as amortization of other assets, to the extent that estimated fair value is less than the capitalized amount at the valuation date. Subsequent improvement, if any, in the estimated fair value of impaired MSRs is reflected in a positive valuation adjustment and is recognized in other income up to (but not in excess of) the amount of the prior impairment.
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Pension costs | Pension costs are charged to salaries and employee benefits expense and accrued over the active service period.
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Advertising costs | The Company expenses advertising costs as incurred.
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Comprehensive income | US GAAP generally requires recognized revenue, expenses, gains and losses to be included in net income. Certain changes in assets and liabilities, such as the after-tax effect of unrealized gains and losses on available-for-sale securities, are not reflected in the consolidated statement of income, but the cumulative effect of such items from period-to-period is reflected as a separate component of the shareholders’ equity section of the consolidated balance sheet (accumulated other comprehensive income or loss). Other comprehensive income or loss, along with net income, comprises the Company's total comprehensive income.
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Preferred stock | The Company had outstanding 20 shares and 25 shares, as of December 31, 2018 and 2017, respectively, of fixed-to-floating rate non-cumulative perpetual preferred stock, without par value and with a liquidation preference of $100,000 per share, issued in December 2007. Under the terms of the preferred stock, the Company pays non-cumulative cash dividends quarterly, when, as and if declared by the Board. Dividends are payable at a variable dividend rate equal to the Wall Street Journal Prime Rate in effect on the first business day of each quarterly dividend period. A variable rate of 3.75% was in effect for the first quarter of 2017, with increases during 2017 on an almost quarterly basis, to a rate of 4.25% for the fourth quarter of 2017. The variable rate then increased in the fourth quarter of 2017 to 4.50%, and was in effect for the dividend payment due in the first quarter of 2018, followed by quarterly increases each quarter to a rate of 5.25% for the fourth quarter of 2018. The variable rate then increased in the fourth quarter of 2018 to 5.50%, which will be in effect for the first quarter of 2019. A partial redemption of five shares of preferred stock at a redemption price per share of $101,125 (including accrued dividend) occurred on March 31, 2018, accounting for the decrease to 20 outstanding shares at December 31, 2018.
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Earnings per common share | Earnings per common share amounts are computed based on net income, net of dividends to preferred shareholders, and on the weighted average number of shares of common stock issued during the period, including DRIP shares issuable upon reinvestment of dividends (retroactively adjusted for stock splits and stock dividends, if any) and reduced for shares held in treasury.
The following table illustrates the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock:
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Off-balance-sheet financial instruments | In the ordinary course of business, the Company is a party to off-balance-sheet financial instruments consisting of commitments to extend credit, commercial and municipal letters of credit, standby letters of credit, and risk-sharing commitments on residential mortgage loans sold through the FHLBB’s MPF program. Such financial instruments are recorded in the consolidated financial statements when they are funded.
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Transfers of financial assets | Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
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Impact of recently issued accounting standards | The FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, in 2014 to replace a plethora of industry-specific rules with a broad, principles-based framework for recognizing and measuring revenue. Due to the complexity of the new pronouncement and the anticipated effort required by entities in many industries to implement ASU No. 2014-09, FASB delayed the effective date. Adoption of ASU 2014-09, which became effective for the Company on January 1, 2018 and which is being applied prospectively, did not have a material impact on the Company’s consolidated financial statements.
FASB formed a Transition Resource Group to assist it in identifying implementation issues that may require further clarification or amendment to ASU No. 2014-09. As a result of that group’s deliberations, FASB has issued several amendments, which became effective concurrently with ASU No. 2014-09, including ASU No. 2016-08, Principal versus Agent Considerations, which clarifies whether an entity should record the gross amount of revenue or only its ultimate share when a third party is also involved in providing goods or services to a customer. Since the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, the new guidance did not have a material impact on revenue most closely associated with financial instruments, including interest income and expense. Adoption of this ASU and its amendments did not have a material impact on the Company’s consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. This guidance also changes certain disclosure requirements and other aspects of current accounting principles. Public businesses must use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. This guidance became effective for the Company on January 1, 2018. Adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in the ASU is permitted for all entities. Management expects that adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Under the new guidance, which will replace the existing incurred loss model for recognizing credit losses, banks and other lending institutions will be required to recognize the full amount of expected credit losses. The new guidance, which is referred to as the CECL model, requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses. A modified version of these requirements also applies to debt securities classified as available for sale, which will require that credit losses on those securities be recorded through an allowance for credit losses rather than a write-down. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within such years. The Company is evaluating the impact of the adoption of the ASU on its consolidated financial statements. The ASU may have a material impact on the Company's consolidated financial statements upon adoption as it will require a change in the Company's methodology for calculating its ALL and allowance on unused commitments. The Company will transition from an incurred loss model to an expected loss model, which will likely result in an increase in the ALL upon adoption and may negatively impact the Company’s and the Bank's regulatory capital ratios. The Company has formed a committee to assess the implications of this new pronouncement and transitioned to a software solution for preparing the ALL calculation and related reports that provides the Company with stronger data integrity, ease and efficiency in ALL preparation. The new software solution also provides numerous training opportunities for the appropriate personnel within the Company. The Company has gathered and will analyze pertinent historical data to serve as a basis for estimating the ALL under CECL.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The ASU was issued to reduce the cost and complexity of the goodwill impairment test. To simplify the subsequent measurement of goodwill, step two of the goodwill impairment test was eliminated. Instead, a company will recognize an impairment of goodwill should the carrying value of a reporting unit exceed its fair value (i.e., step one). The ASU will be effective for the Company on January 1, 2020 and will be applied prospectively.
The Company has goodwill from its acquisition of LyndonBank in 2007 and performs an impairment test annually or more frequently if circumstances warrant (see Note 6). The Company is evaluating the impact of adoption of the ASU on its consolidated financial statements, but does not anticipate any material impact at this time.
In February 2018, FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU was issued to allow a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the 2017 Tax Act to improve the usefulness of information reported to financial statement users. The ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted for financial statements which have not yet been issued. The Company adopted the ASU for its December 31, 2017 consolidated financial statements. See Note 12 to the audited consolidated financial statements contained in the Company’s December 31, 2017 Annual Report on Form 10-K for more information on the impact of adoption of the ASU on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of adoption of this ASU on its consolidated financial statements, but does not anticipate any material impact at this time.
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1. Significant Accounting Policies (Tables) |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share |
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2. Investment Securities (Tables) |
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Schedule of available for sale securities |
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Schedule of held to maturity securities |
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Schedule of investments pledged as collateral |
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Schedule of maturities of debt securities available for sale |
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Schedule of maturities of debt securities held to maturity |
*Method used to determine fair value rounds values to nearest thousand.
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Schedule of unrealized loss |
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3. Loans, Allowance for Loan Losses and Credit Quality (Tables) |
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Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of net loans |
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Past due loans by segment |
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Residential mortgage loans in process of foreclosure |
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Changes in the allowance for loan losses | As of or for the year ended December 31, 2018
As of or for the year ended December 31, 2017
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Impaired loans by segment |
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Risk ratings | As of December 31, 2018
As of December 31, 2017
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Loans modified as TDRs | Year ended December 31, 2018
Year ended December 31, 2017
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TDRs payment default | Year ended December 31, 2018
Year ended December 31, 2017
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Specific allowances |
|
4. Loan Servicing (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing of Financial Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of mortgage servicing rights |
|
5. Bank Premises and Equipment (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Major classes of bank premises and equipment |
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Minimum future rental payments |
|
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Future minimum lease payments for capital leases |
|
8. Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||
Maturities of Time Deposits [Abstract] | |||||||||||||||||||||||||||||||
Maturity distribution of time deposits |
|
9. Borrowed Funds (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowed Funds | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding advances |
|
11. Repurchase Agreements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities sold under repurchase agreements |
(1) U.S. GSE securities, Agency MBS, ABS and OAS, and CDs were pledged as collateral for the periods presented.
|
12. Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of income tax expense (benefit) |
|
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Schedule of effective income tax rate reconciliation |
|
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Deferred income tax expense (benefit) |
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Components of the net deferred tax asset |
|
15. Financial Instruments with Off-Balance-Sheet Risk (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off balance sheet financial instruments risk |
|
18. Transactions with Related Parties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions |
|
20. Regulatory Capital Requirements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory capital ratios |
(1) Applicable to banks, but not bank holding companies.
|
21. Fair Value (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assets on recurring basis |
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Schedule of fair value assets nonrecurring basis |
(1) Represents MSRs at lower of cost or fair value, including MSRs deemed to be impaired and for which a valuation allowance was established to carry at fair value at December 31, 2018 and 2017. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated fair values of financial instruments |
(1) Reported fair value represents all MSRs serviced by the Company at December 31, 2018, regardless of carrying amount.
(1) Reported fair value represents all MSRs serviced by the Company at December 31, 2017, regardless of carrying amount.
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22. Condensed Financial Information (Parent Company Only) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets |
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Condensed Statements of Income |
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Condensed Statements of Cash Flows |
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23. Quarterly Financial Data (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information |
|
24. Other Income and Other Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other income and other expenses |
|
1. Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Earnings Per Share [Abstract] | ||||||||||
Net income, as reported | $ 2,142,603 | $ 2,269,732 | $ 2,002,654 | $ 1,982,543 | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 8,397,532 | $ 6,231,298 |
Less: dividends to preferred shareholders | 103,125 | 101,563 | ||||||||
Net income available to common shareholders | $ 8,294,407 | $ 6,129,735 | ||||||||
Weighted average number of common shares used in calculating earnings per share | 5,139,297 | 5,084,102 | ||||||||
Earnings per common share | $ .40 | $ 0.44 | $ 0.39 | $ 0.38 | $ .30 | $ 0.35 | $ 0.29 | $ 0.27 | $ 1.61 | $ 1.21 |
2. Investment Securities (Details 1) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investment Securities Details 1Abstract | ||
Book value of available for sale securities, pledged as collateral for repurchase agreements | $ 40,186,557 | $ 38,797,609 |
Fair value of available for sale securities, pledged as collateral for repurchase agreements | $ 39,366,831 | $ 38,450,653 |
2. Investment Securities (Details 2) |
Dec. 31, 2018
USD ($)
|
|||
---|---|---|---|---|
Available for sale Securities | ||||
Amortized Cost | ||||
Due from one to five years, amortized cost | $ 12,714,642 | |||
Due from five to ten years | 11,451,023 | |||
Mortgage-backed securities | 16,020,892 | |||
Amortization cost of debt | 40,186,557 | |||
Fair Value | ||||
Due from one to five years, fair value | 12,519,008 | |||
Due from five to ten years | 11,273,298 | |||
Mortgage-backed securities | 15,574,525 | |||
Fair value of debt | 39,366,831 | |||
Held to maturity Securities | ||||
Amortized Cost | ||||
Due in one year or less, amortized cost | 23,052,312 | |||
Due from one to five years, amortized cost | 5,907,713 | |||
Due from five to ten years | 6,481,941 | |||
Due after ten years, amortized cost | 11,625,057 | |||
Amortization cost of debt | 47,067,023 | |||
Fair Value | ||||
Due in one year or less, fair value | 23,052,000 | [1] | ||
Due from one to five years, fair value | 5,948,000 | [1] | ||
Due from five to ten years | 6,522,000 | [1] | ||
Due after ten years, fair value | 11,706,000 | [1] | ||
Fair value of debt | $ 47,228,000 | [1] | ||
|
2. Investment Securities (Details 3) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Fair Value Less than 12 months | $ 12,134,114 | $ 48,697,774 |
Unrealized Loss Less than 12 months | 73,066 | 243,947 |
Fair Value 12 months or more | 43,204,158 | 8,722,287 |
Unrealized Loss 12 months or more | $ 933,471 | $ 143,283 |
Number of securities | 139 | 131 |
Fair Value | $ 55,338,272 | $ 57,420,061 |
Unrealized Loss | 1,006,537 | 387,230 |
U.S. GSE debt securities | ||
Fair Value Less than 12 months | 1,465,947 | 13,223,739 |
Unrealized Loss Less than 12 months | 6,752 | 84,490 |
Fair Value 12 months or more | 11,284,761 | 3,935,003 |
Unrealized Loss 12 months or more | $ 252,639 | $ 64,997 |
Number of securities | 11 | 15 |
Fair Value | $ 12,750,708 | $ 17,158,742 |
Unrealized Loss | 259,391 | 149,487 |
Agency MBS | ||
Fair Value Less than 12 months | 2,317,838 | 9,251,323 |
Unrealized Loss Less than 12 months | 22,029 | 105,063 |
Fair Value 12 months or more | 12,223,386 | 4,542,446 |
Unrealized Loss 12 months or more | $ 427,039 | $ 75,124 |
Number of securities | 24 | 21 |
Fair Value | $ 14,541,224 | $ 13,793,769 |
Unrealized Loss | 449,068 | 180,187 |
ABS and OAS | ||
Fair Value Less than 12 months | 976,226 | |
Unrealized Loss Less than 12 months | 6,242 | |
Fair Value 12 months or more | 0 | |
Unrealized Loss 12 months or more | $ 0 | |
Number of securities | 1 | |
Fair Value | $ 976,226 | |
Unrealized Loss | 6,242 | |
Other investments | ||
Fair Value Less than 12 months | 1,956,914 | 3,692,571 |
Unrealized Loss Less than 12 months | 20,086 | 25,429 |
Fair Value 12 months or more | 4,113,688 | 244,838 |
Unrealized Loss 12 months or more | $ 100,312 | $ 3,162 |
Number of securities | 25 | 16 |
Fair Value | $ 6,070,602 | $ 3,937,409 |
Unrealized Loss | 120,398 | 28,591 |
US States and Political Subdivisions Debt Securities [Member] | ||
Fair Value Less than 12 months | 5,417,189 | 22,530,141 |
Unrealized Loss Less than 12 months | 17,957 | 28,965 |
Fair Value 12 months or more | 15,582,323 | 0 |
Unrealized Loss 12 months or more | $ 153,481 | $ 0 |
Number of securities | 78 | 79 |
Fair Value | $ 20,999,512 | $ 22,530,141 |
Unrealized Loss | $ 171,438 | $ 28,965 |
2. Investment Securities (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Investment Securities Details Narrative Abstract | ||
Proceeds from sales of securities | $ 5,715,525 | $ 9,015,961 |
Gains from sales of securities | 0 | 8,387 |
Loss from sales of securities | 32,718 | 5,003 |
Investment in FHLBB stock | 1,071,300 | 1,115,500 |
Investment in FRBB stock | $ 588,150 | $ 588,150 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Loans and Leases Receivable Disclosure [Abstract] | |||
Commercial & industrial | $ 80,766,693 | $ 77,110,747 | |
Commercial real estate | 235,318,148 | 207,044,227 | |
Residential real estate - 1st lien | 165,665,175 | 168,184,135 | |
Residential real estate - Junior (Jr) lien | 44,544,987 | 45,256,862 | |
Consumer | 5,088,491 | 5,268,680 | |
Gross Loans | 531,383,494 | 502,864,651 | |
Allowance for loan losses | 5,602,541 | 5,438,099 | $ 5,278,445 |
Deferred net loan costs | (363,614) | (318,651) | |
Net loans | $ 526,144,567 | $ 497,745,203 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 1) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
30-89 Days | $ 6,363,675 | $ 6,267,112 |
90 Days or more | 1,917,425 | 2,599,675 |
Total Past Due | 8,281,100 | 8,866,787 |
Current | 523,102,394 | 493,997,864 |
Total Loans | 531,383,494 | 502,864,651 |
Non-Accrual Loans | 4,263,286 | 3,096,576 |
90 Days or More and Accruing | 729,106 | 1,250,725 |
Commercial and industrial | ||
30-89 Days | 217,385 | 308,712 |
90 Days or more | 0 | 0 |
Total Past Due | 217,385 | 308,712 |
Current | 80,549,308 | 76,802,035 |
Total Loans | 80,766,693 | 77,110,747 |
Non-Accrual Loans | 84,814 | 98,806 |
90 Days or More and Accruing | 0 | 0 |
Commercial Real Estate | ||
30-89 Days | 1,509,839 | 1,482,982 |
90 Days or more | 190,789 | 418,255 |
Total Past Due | 1,700,628 | 1,901,237 |
Current | 233,617,520 | 205,142,990 |
Total Loans | 235,318,148 | 207,044,227 |
Non-Accrual Loans | 1,742,993 | 1,065,385 |
90 Days or More and Accruing | 0 | 0 |
Residential real estate - 1st lien | ||
30-89 Days | 4,108,319 | 4,238,933 |
90 Days or more | 1,371,061 | 2,011,419 |
Total Past Due | 5,479,380 | 6,250,352 |
Current | 160,185,795 | 161,933,783 |
Total Loans | 165,665,175 | 168,184,135 |
Non-Accrual Loans | 2,026,939 | 1,585,473 |
90 Days or More and Accruing | 622,486 | 1,249,241 |
Residential real estate - Jr lien | ||
30-89 Days | 484,855 | 156,101 |
90 Days or more | 353,914 | 168,517 |
Total Past Due | 838,769 | 324,618 |
Current | 43,706,218 | 44,932,244 |
Total Loans | 44,544,987 | 45,256,862 |
Non-Accrual Loans | 408,540 | 346,912 |
90 Days or More and Accruing | 104,959 | 0 |
Consumer | ||
30-89 Days | 43,277 | 80,384 |
90 Days or more | 1,661 | 1,484 |
Total Past Due | 44,938 | 81,868 |
Current | 5,043,553 | 5,186,812 |
Total Loans | 5,088,491 | 5,268,680 |
Non-Accrual Loans | 0 | 0 |
90 Days or More and Accruing | $ 1,661 | $ 1,484 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 2) |
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
---|---|---|
Loans Allowance For Loan Losses And Credit Quality | ||
Residential mortgage loans in process of foreclosure, number of loans | 12 | 10 |
Residential mortgage loans in process of foreclosure, current balance | $ 961,709 | $ 791,944 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 3) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Allowance for loan losses, Beginning balance | $ 5,438,099 | $ 5,278,445 | $ 5,438,099 | $ 5,278,445 | ||||||||
Charge-offs | (742,020) | (582,141) | ||||||||||
Recoveries | 126,462 | 91,795 | ||||||||||
Provision (credit) | $ 210,000 | $ 210,000 | $ 180,000 | 180,000 | $ 200,000 | $ 150,000 | $ 150,000 | 150,000 | 780,000 | 650,000 | ||
Allowance for loan losses, Ending balance | 5,602,541 | 5,438,099 | 5,602,541 | 5,438,099 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | $ 114,726 | $ 220,673 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 5,487,815 | 5,217,426 | ||||||||||
Allowance for loan losses | 5,602,541 | 5,438,099 | 5,438,099 | 5,278,445 | 5,602,541 | 5,438,099 | 5,602,541 | 5,438,099 | ||||
Loans evaluated for impairment, Individually | 6,519,121 | 5,781,288 | ||||||||||
Loans evaluated for impairment, Collectively | 524,864,373 | 497,083,363 | ||||||||||
Total Loans | 531,383,494 | 502,864,651 | ||||||||||
Commercial and industrial | ||||||||||||
Allowance for loan losses, Beginning balance | 675,687 | 726,848 | 675,687 | 726,848 | ||||||||
Charge-offs | (152,860) | (20,000) | ||||||||||
Recoveries | 60,192 | 27,051 | ||||||||||
Provision (credit) | 114,450 | (58,212) | ||||||||||
Allowance for loan losses, Ending balance | 697,469 | 675,687 | 697,469 | 675,687 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 697,469 | 675,687 | ||||||||||
Allowance for loan losses | 697,469 | 675,687 | 675,687 | 726,848 | 697,469 | 726,848 | 697,469 | 675,687 | ||||
Loans evaluated for impairment, Individually | 60,846 | 98,806 | ||||||||||
Loans evaluated for impairment, Collectively | 80,705,847 | 77,011,941 | ||||||||||
Total Loans | 80,766,693 | 77,110,747 | ||||||||||
Commercial Real Estate | ||||||||||||
Allowance for loan losses, Beginning balance | 2,674,029 | 2,496,085 | 2,674,029 | 2,496,085 | ||||||||
Charge-offs | (124,645) | (160,207) | ||||||||||
Recoveries | 0 | 230 | ||||||||||
Provision (credit) | 470,484 | 337,921 | ||||||||||
Allowance for loan losses, Ending balance | 3,019,868 | 2,674,029 | 3,019,868 | 2,674,029 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 69,015 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 3,019,868 | 2,605,014 | ||||||||||
Allowance for loan losses | 3,019,868 | 2,674,029 | 2,674,029 | 2,496,085 | 3,019,868 | 2,496,085 | 3,019,868 | 2,674,029 | ||||
Loans evaluated for impairment, Individually | 1,746,894 | 1,306,057 | ||||||||||
Loans evaluated for impairment, Collectively | 233,571,254 | 205,738,170 | ||||||||||
Total Loans | 235,318,148 | 207,044,227 | ||||||||||
Residential Real Estate 1st Lien | ||||||||||||
Allowance for loan losses, Beginning balance | 1,460,547 | 1,369,757 | 1,460,547 | 1,369,757 | ||||||||
Charge-offs | (251,654) | (159,533) | ||||||||||
Recoveries | 26,832 | 26,826 | ||||||||||
Provision (credit) | 185,769 | 223,497 | ||||||||||
Allowance for loan losses, Ending balance | 1,421,494 | 1,460,547 | 1,421,494 | 1,460,547 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 112,969 | 125,305 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 1,308,525 | 1,335,242 | ||||||||||
Allowance for loan losses | 1,421,494 | 1,460,547 | 1,460,547 | 1,369,757 | 1,421,494 | 1,369,757 | 1,421,494 | 1,460,547 | ||||
Loans evaluated for impairment, Individually | 4,392,060 | 4,075,666 | ||||||||||
Loans evaluated for impairment, Collectively | 161,273,115 | 164,108,469 | ||||||||||
Total Loans | 165,665,175 | 168,184,135 | ||||||||||
Residential Real Estate Jr Lien | ||||||||||||
Allowance for loan losses, Beginning balance | 316,982 | 371,176 | 316,982 | 371,176 | ||||||||
Charge-offs | (69,173) | (118,359) | ||||||||||
Recoveries | 1,420 | 465 | ||||||||||
Provision (credit) | 24,216 | 63,700 | ||||||||||
Allowance for loan losses, Ending balance | 273,445 | 316,982 | 273,445 | 316,982 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 1,757 | 26,353 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 271,688 | 290,629 | ||||||||||
Allowance for loan losses | 273,445 | 316,982 | 316,982 | 371,176 | 273,445 | 371,176 | 273,445 | 316,982 | ||||
Loans evaluated for impairment, Individually | 319,321 | 300,759 | ||||||||||
Loans evaluated for impairment, Collectively | 44,225,666 | 44,956,103 | ||||||||||
Total Loans | 44,544,987 | 45,256,862 | ||||||||||
Consumer | ||||||||||||
Allowance for loan losses, Beginning balance | 43,303 | 83,973 | 43,303 | 83,973 | ||||||||
Charge-offs | (143,688) | (124,042) | ||||||||||
Recoveries | 38,018 | 37,223 | ||||||||||
Provision (credit) | 119,154 | 46,149 | ||||||||||
Allowance for loan losses, Ending balance | 56,787 | 43,303 | 56,787 | 43,303 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 56,787 | 43,303 | ||||||||||
Allowance for loan losses | 56,787 | 43,303 | 43,303 | 83,973 | 56,787 | 83,973 | 56,787 | 43,303 | ||||
Loans evaluated for impairment, Individually | 0 | 0 | ||||||||||
Loans evaluated for impairment, Collectively | 5,088,491 | 5,268,680 | ||||||||||
Total Loans | 5,088,491 | 5,268,680 | ||||||||||
Unallocated | ||||||||||||
Allowance for loan losses, Beginning balance | 267,551 | 230,606 | 267,551 | 230,606 | ||||||||
Charge-offs | 0 | 0 | ||||||||||
Recoveries | 0 | 0 | ||||||||||
Provision (credit) | (134,073) | 36,945 | ||||||||||
Allowance for loan losses, Ending balance | 133,478 | 267,551 | 133,478 | 267,551 | ||||||||
Allowance for loan losses evaluated for impairment, Individually | 0 | 0 | ||||||||||
Allowance for loan losses evaluated for impairment, Collectively | 133,478 | 267,551 | ||||||||||
Allowance for loan losses | $ 133,478 | $ 267,551 | $ 267,551 | $ 230,606 | $ 133,478 | $ 230,606 | $ 133,478 | $ 267,551 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 4) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Recorded Investment With no related allowance recorded | $ 5,586,358 | $ 4,655,956 |
Unpaid Principal Balance With no related allowance recorded | 6,490,501 | 5,158,680 |
Average Recorded Investment With no related allowance recorded | 5,518,460 | 3,227,525 |
Interest income recognized With no related allowance recorded | 107,444 | 460,524 |
Recorded Investment With an allowance recorded | 949,636 | 1,149,525 |
Unpaid Principal Balance With an allowance recorded | 970,615 | 1,356,798 |
Related Allowance With an allowance recorded | 114,726 | 220,673 |
Average Recorded Investment With an allowance recorded | 971,539 | 1,077,963 |
Interest income recognized With an allowance recorded | 45,490 | 29,662 |
Recorded Investment allowance recorded | 6,535,994 | 5,805,481 |
Unpaid Principal Balance allowance recorded | 7,461,116 | 6,515,478 |
Related Allowance recorded | 114,726 | 220,673 |
Average Recorded Investment Allowance recorded | 6,489,999 | 4,305,488 |
Interest income recognized | 152,934 | 490,186 |
Commercial and industrial | ||
Recorded Investment With no related allowance recorded | 60,846 | 98,806 |
Unpaid Principal Balance With no related allowance recorded | 80,894 | 136,590 |
Average Recorded Investment With no related allowance recorded | 120,924 | 75,868 |
Interest income recognized With no related allowance recorded | 0 | 72,426 |
Commercial Real Estate | ||
Recorded Investment With no related allowance recorded | 1,748,323 | 1,102,859 |
Unpaid Principal Balance With no related allowance recorded | 1,975,831 | 1,226,040 |
Average Recorded Investment With no related allowance recorded | 1,663,794 | 1,105,030 |
Interest income recognized With no related allowance recorded | 13,131 | 237,792 |
Recorded Investment With an allowance recorded | 0 | 204,645 |
Unpaid Principal Balance With an allowance recorded | 0 | 225,681 |
Related Allowance With an allowance recorded | 0 | 69,015 |
Average Recorded Investment With an allowance recorded | 57,658 | 210,890 |
Interest income recognized With an allowance recorded | 0 | 0 |
Related Allowance recorded | 0 | 69,015 |
Residential real estate - 1st lien | ||
Recorded Investment With no related allowance recorded | 3,465,117 | 3,300,175 |
Unpaid Principal Balance With no related allowance recorded | 4,082,637 | 3,641,627 |
Average Recorded Investment With no related allowance recorded | 3,497,772 | 1,930,108 |
Interest income recognized With no related allowance recorded | 94,313 | 133,732 |
Recorded Investment With an allowance recorded | 942,365 | 798,226 |
Unpaid Principal Balance With an allowance recorded | 963,367 | 837,766 |
Related Allowance With an allowance recorded | 112,969 | 125,305 |
Average Recorded Investment With an allowance recorded | 836,326 | 646,799 |
Interest income recognized With an allowance recorded | 45,139 | 29,262 |
Related Allowance recorded | 112,969 | 125,305 |
Residential real estate - Jr lien | ||
Recorded Investment With no related allowance recorded | 312,072 | 154,116 |
Unpaid Principal Balance With no related allowance recorded | 351,139 | 154,423 |
Average Recorded Investment With no related allowance recorded | 235,970 | 116,519 |
Interest income recognized With no related allowance recorded | 0 | 16,574 |
Recorded Investment With an allowance recorded | 7,271 | 146,654 |
Unpaid Principal Balance With an allowance recorded | 7,248 | 293,351 |
Related Allowance With an allowance recorded | 1,757 | 26,353 |
Average Recorded Investment With an allowance recorded | 77,555 | 220,274 |
Interest income recognized With an allowance recorded | 351 | 400 |
Related Allowance recorded | $ 1,757 | $ 26,353 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 5) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Group A | $ 515,569,202 | $ 482,463,948 |
Group B | 562,112 | 5,547,642 |
Group C | 15,252,180 | 14,853,061 |
Total Loans | 531,383,494 | 502,864,651 |
Commercial and industrial | ||
Group A | 78,585,348 | 73,352,768 |
Group B | 90,763 | 617,526 |
Group C | 2,090,582 | 3,140,453 |
Total Loans | 80,766,693 | 77,110,747 |
Commercial Real Estate | ||
Group A | 226,785,919 | 194,066,034 |
Group B | 246,357 | 4,609,847 |
Group C | 8,285,872 | 8,368,346 |
Total Loans | 235,318,148 | 207,044,227 |
Residential real estate - 1st lien | ||
Group A | 161,293,233 | 165,089,999 |
Group B | 224,992 | 282,671 |
Group C | 4,146,950 | 2,811,465 |
Total Loans | 165,665,175 | 168,184,135 |
Residential real estate - Jr lien | ||
Group A | 43,817,872 | 44,687,951 |
Group B | 0 | 37,598 |
Group C | 727,115 | 531,313 |
Total Loans | 44,544,987 | 45,256,862 |
Consumer | ||
Group A | 5,086,830 | 5,267,196 |
Group B | 0 | 0 |
Group C | 1,661 | 1,484 |
Total Loans | $ 5,088,491 | $ 5,268,680 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 6) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Number of Contracts modified as TDRs | 11 | 4 |
Pre-Modification Outstanding Recorded Investment | $ 1,438,250 | $ 256,353 |
Post- Modification Outstanding Recorded Investment | $ 1,549,009 | $ 287,385 |
Commercial Real Estate | ||
Number of Contracts modified as TDRs | 1 | |
Pre-Modification Outstanding Recorded Investment | $ 406,920 | |
Post- Modification Outstanding Recorded Investment | $ 406,920 | |
Residential real estate - 1st lien | ||
Number of Contracts modified as TDRs | 10 | 4 |
Pre-Modification Outstanding Recorded Investment | $ 1,031,330 | $ 256,353 |
Post- Modification Outstanding Recorded Investment | $ 1,142,089 | $ 287,385 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 7) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Number of contracts | 4 | 1 |
Recorded Investment | $ 918,858 | $ 87,696 |
Commercial Real Estate | ||
Number of contracts | 1 | |
Recorded Investment | $ 400,646 | |
Residential real estate - 1st lien | ||
Number of contracts | 3 | 1 |
Recorded Investment | $ 518,212 | $ 87,696 |
3. Loans, Allowance for Loan Losses and Credit Quality (Details 8) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | ||
Allowance related to TDRs | $ 114,726 | $ 197,605 |
4. Loan Servicing (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Transfers and Servicing of Financial Assets [Abstract] | ||
Balance at beginning of year | $ 1,083,286 | $ 1,210,695 |
Mortgage servicing rights capitalized | 110,209 | 109,297 |
Mortgage servicing rights amortized | (188,547) | (236,706) |
Change in valuation allowance | 0 | 0 |
Balance at end of year | $ 1,004,948 | $ 1,083,286 |
4. Loan Servicing (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Loan Servicing | ||
Unpaid principal balances of mortgage loans serviced for others | $ 176,083,984 | $ 185,757,658 |
Net gain realized on the sale of loans | $ 345,780 | $ 317,432 |
5. Bank Premises and Equipment (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Buildings and improvements | $ 10,555,868 | $ 11,148,715 |
Land and land improvements | 2,586,373 | 2,433,971 |
Furniture and equipment | 6,460,625 | 6,127,897 |
Leasehold improvements | 1,155,284 | 1,155,284 |
Capital lease | 991,014 | 991,014 |
Other prepaid assets | 55,406 | 0 |
Bank premises and equipment, gross | 21,804,570 | 21,856,881 |
Less accumulated depreciation and amortization | (12,091,115) | (11,512,704) |
Bank premises and equipment, net | $ 9,713,455 | $ 10,344,177 |
5. Bank Premises and Equipment (Details 1) |
Dec. 31, 2018
USD ($)
|
---|---|
Property, Plant and Equipment [Abstract] | |
2019 | $ 238,687 |
2020 | 219,044 |
2021 | 131,517 |
2022 | 100,582 |
2023 | 103,097 |
Subsequent to 2023 | 198,275 |
Operating lease due | $ 991,202 |
5. Bank Premises and Equipment (Details 2) |
Dec. 31, 2018
USD ($)
|
---|---|
Property, Plant and Equipment [Abstract] | |
2019 | $ 141,460 |
2020 | 110,460 |
2021 | 39,117 |
Total minimum lease payments | 291,037 |
Less amount representing interest | (24,290) |
Present value of net minimum lease payments | $ 266,747 |
5. Bank Premises and Equipment (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Abstract] | ||
Total rental expense | $ 247,812 | $ 242,726 |
6. Goodwill and Other Intangible Assets (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 11,574,269 | $ 11,574,269 |
Accumulated amortization expense | 4,161,000 | |
Intangible assets acquired | $ 4,161,000 |
7. Other Investments (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
NMTC [Member] | ||
Equity investment generated tax credits | $ 204,900 | |
Amortization expense | 195,572 | |
Carrying value of equity investment | 1,000 | |
LimitedPartnership [Member] | ||
Amortization expense | $ 410,061 | 421,661 |
Carrying Value Limited Partnerships Investment | 2,263,512 | 1,796,573 |
Tax credits | 437,229 | 414,663 |
CFSG [Member] | ||
Other assets | 2,946,831 | 2,432,346 |
Income | $ 514,485 | $ 415,561 |
8. Deposits (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Time Deposits [Line Items] | |
2019 | $ 86,679,711 |
2020 | 16,061,613 |
2021 | 10,685,904 |
2022 | 8,780,290 |
2023 | 7,971,265 |
Total time certificates of deposit | $ 130,178,783 |
8. Deposits (Details Narrative) |
Dec. 31, 2018
USD ($)
|
---|---|
Deposits | |
Total deposits in excess of the FDIC insurance | $ 159,075,993 |
9. Borrowed Funds (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
||||
Long-term advances | $ 1,550,000 | [1] | $ 3,550,000 | ||
FHLBB term advance One | |||||
Long-term advances | 350,000 | 350,000 | |||
FHLBB term advance Two | |||||
Long-term advances | 1,000,000 | 1,000,000 | |||
FHLBB term advance Three | |||||
Long-term advances | 0 | 2,000,000 | |||
FHLBB term advance Four | |||||
Long-term advances | $ 200,000 | $ 200,000 | |||
|
9. Borrowed Funds (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Primary credit rate value | 300 basis points | |
Line of credit with correspondent bank | $ 12,500,000 | $ 12,500,000 |
FHLBB | ||
Qualified collateral borrowing | 148,323,822 | 154,324,420 |
Potential borrowing capacity | 108,736,234 | 109,726,508 |
Letters of credit collateral deposits | 2,625,000 | 59,850,000 |
Fees paid for issuance of letters of credit | 46,620 | 34,601 |
Line of credit with correspondent bank | 500,000 | 500,000 |
FRBB | ||
Potential borrowing capacity | $ 50,913,351 | $ 45,305,894 |
10. Junior Subordinated Debentures (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Junior Subordinated Notes [Abstract] | ||
Junior subordinated debentures | $ 12,887,000 | $ 12,887,000 |
Floating rate | 4.95% | 4.02% |
Interest paid on the debentures | $ 650,361 | $ 524,696 |
11. Repurchase Agreements (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
||||
Disclosure of Repurchase Agreements [Abstract] | |||||
Current balance | $ 30,521,565 | $ 28,647,848 | |||
Average balance | 30,554,953 | 28,949,820 | |||
Highest month-end balance | 32,938,807 | 31,745,206 | |||
Book Value - Pledged investments | [1] | 40,186,557 | 38,797,609 | ||
Fair Value - Pledged investments | [1] | $ 39,366,831 | $ 38,450,653 | ||
|
11. Repurchase Agreements (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Disclosure of Repurchase Agreements [Abstract] | ||
Weighted average interest rate on repurchase agreement | 0.63% | 0.30% |
12. Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Currently paid or payable | $ 1,749,624 | $ 2,124,999 |
Deferred (benefit) expense | (11,359) | 784,331 |
Total income tax expense | $ 1,738,265 | $ 2,909,330 |
12. Income Taxes (Details 1) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Computed expense at statutory rates | $ 2,128,517 | $ 3,107,813 |
Tax exempt interest & BOLI | (291,550) | (484,454) |
Disallowed interest | 11,631 | 13,867 |
Partnership rehabilitation and tax credits | (437,229) | (549,897) |
Low income housing investment amortization expense | 323,948 | 278,296 |
NMTC amortization expense | 0 | 129,078 |
Deferred tax asset revaluation to enacted tax rates | 0 | 410,304 |
Other | 2,948 | 4,323 |
Income tax expense | $ 1,738,265 | $ 2,909,330 |
12. Income Taxes (Details 2) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Deferred tax (benefit) expense | $ (11,359) | $ 784,331 |
Deferred Income Tax Charges [Member] | ||
Depreciation | 25,782 | 12,377 |
Mortgage servicing rights | (16,451) | (184,146) |
Deferred compensation | 3,681 | 281,886 |
Bad debts | (34,533) | 652,671 |
Limited partnership amortization | (20,129) | (15,573) |
Investment in CFS Partners | (1,014) | (39,644) |
Core deposit intangible | 0 | (92,715) |
Loan fair value | (2,228) | (13,531) |
OREO write down | 13,860 | 80 |
Revaluation effect of unrealized loss on securities AFS | 0 | 45,106 |
Prepaid expenses | (846) | 80,325 |
Other | 20,519 | 57,495 |
Deferred tax (benefit) expense | $ (11,359) | $ 784,331 |
12. Income Taxes (Details 3) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Components of the deferred tax asset: | ||
Bad debts | $ 1,176,534 | $ 1,142,001 |
Deferred compensation | 16,599 | 20,280 |
Contingent liability - MPF program | 17,838 | 17,793 |
OREO write down | 0 | 13,860 |
Capital lease | 23,287 | 32,609 |
Unrealized loss on securities AFS | 172,143 | 72,859 |
Other | 11,968 | 23,210 |
Total deferred tax asset | 1,418,369 | 1,322,612 |
Components of the deferred tax liability: | ||
Depreciation | 257,463 | 231,681 |
Limited partnerships | 16,407 | 36,536 |
Mortgage servicing rights | 211,039 | 227,490 |
Investment in CFS Partners | 74,377 | 75,391 |
Prepaid expenses | 79,479 | 80,325 |
Fair value adjustment on acquired loans | 6,171 | 8,399 |
Total deferred tax liability | 644,936 | 659,822 |
Net deferred tax asset | $ 773,433 | $ 662,790 |
13. 401(k) and Profit-Sharing Plan (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Retirement Benefits [Abstract] | ||
Pension expense | $ 617,800 | $ 572,310 |
14. Deferred Compensation and Supplemental Employee Retirement Plans (Details Narrative) - Directors Deferred Compensation Plan - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Benefits accrued with the plan | $ 79,045 | $ 96,572 |
Expenses associated with the plan | $ 474 | $ 558 |
15. Financial Instruments with Off-Balance-Sheet Risk (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Unused portions of home equity lines of credit | $ 31,328,881 | $ 29,529,411 |
Residential and commercial construction lines of credit | 7,251,560 | 19,068,034 |
Commercial real estate commitments | 26,588,950 | 12,014,332 |
Commercial and industrial commitments | 45,135,452 | 38,369,010 |
Other commitments to extend credit | 53,586,720 | 48,233,850 |
Standby letters of credit and commercial letters of credit | 2,408,581 | 1,939,759 |
Recourse on sale of credit card portfolio | 284,680 | 302,775 |
MPF credit enhancement obligation, net (See Note 16) | $ 552,158 | $ 634,340 |
15. Financial Instruments with Off-Balance-Sheet Risk (Details Narrative) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Binding loan commitments to sell residential mortgages | $ 391,840 | $ 1,789,453 |
Junior subordinated debentures | 12,887,000 | 12,887,000 |
External financing | $ 12,500,000 | $ 12,500,000 |
16. Contingent Liability (Details Narrative) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Loans sold through the MPF program | $ 38,935,411 | $ 43,006,299 |
Notional amount of the maximum CEO | 637,102 | 719,067 |
Accrued contingent liability | $ 84,944 | $ 84,727 |
18. Transactions with Related Parties (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Related Party Transactions [Abstract] | ||
Balance, beginning of year | $ 7,356,906 | $ 14,121,486 |
Loans - New Directors | 936,445 | 0 |
New loans to existing Principal Officers/Directors | 5,582,052 | 6,181,507 |
Retirement/Resignation of Director | 0 | (6,876,144) |
Repayment | (7,144,561) | (6,069,943) |
Balance, end of year | $ 6,730,842 | $ 7,356,906 |
18. Transactions with Related Parties (Details Narrative) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Related Party Transactions [Abstract] | ||
Total deposits with related parties | $ 6,179,453 | $ 5,679,969 |
Amount of rental income received | 30,365 | 62,092 |
Amount paid to CFSG | 47,676 | 48,943 |
Amount paid to SERP | $ 0 | $ 1,412 |
19. Restrictions on Cash and Due From Banks (Details Narrative) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Restricted Cash and Cash Equivalents Items [Line Items] | ||
Contracted balances with other correspondent banks | $ 30,000 | $ 462,500 |
Balance to avoid monthly charges on the Company current federal funds liquidity line | $ 262,500 |
20. Regulatory Capital Requirements (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||
---|---|---|---|---|---|
Company [Member] | |||||
Common equity tier 1 capital to risk-weighted assets amount | $ 64,564 | $ 59,523 | |||
Common equity tier 1 capital to risk-weighted assets ratio | 12.94% | 12.75% | |||
Tier I capital to risk-weighted assets amount | $ 64,564 | $ 59,523 | |||
Tier I capital to risk-weighted assets ratio | 12.94% | 12.75% | |||
Total capital to risk-weighted assets amount | $ 70,210 | $ 65,005 | |||
Total capital to risk-weighted assets ratio | 14.08% | 13.93% | |||
Tier I capital to average assets amount | $ 64,564 | $ 59,523 | |||
Tier I capital to average assets ratio | 9.26% | 9.05% | |||
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 22,446 | $ 21,003 | |||
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 4.50% | 4.50% | |||
Tier I capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 29,928 | $ 28,004 | |||
Tier I capital to risk-weighted assets minimum for capital adequacy purposes ratio | 6.00% | 6.00% | |||
Total capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 39,904 | $ 37,338 | |||
Total capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 8.00% | 8.00% | |||
Tier I capital to average assets Minimum for capital adequacy purposes amount | $ 27,890 | $ 26,304 | |||
Tier I capital to average assets minimum for capital adequacy purposes ratio | 4.00% | 4.00% | |||
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | ||||
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | ||||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | ||||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | ||||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | ||||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | ||||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | ||||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | ||||
Bank | |||||
Common equity tier 1 capital to risk-weighted assets amount | $ 63,960 | $ 58,920 | |||
Common equity tier 1 capital to risk-weighted assets ratio | 12.84% | 12.64% | |||
Tier I capital to risk-weighted assets amount | $ 63,960 | $ 58,920 | |||
Tier I capital to risk-weighted assets ratio | 12.84% | 12.64% | |||
Total capital to risk-weighted assets amount | $ 69,606 | $ 64,401 | |||
Total capital to risk-weighted assets ratio | 13.97% | 13.82% | |||
Tier I capital to average assets amount | $ 63,960 | $ 58,920 | |||
Tier I capital to average assets ratio | 9.18% | 8.97% | |||
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 22,419 | $ 20,972 | |||
Common equity tier 1 capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 4.50% | 4.50% | |||
Tier I capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 29,893 | $ 27,963 | |||
Tier I capital to risk-weighted assets minimum for capital adequacy purposes ratio | 6.00% | 6.00% | |||
Total capital to risk-weighted assets Minimum for capital adequacy purposes amount | $ 39,857 | $ 37,284 | |||
Total capital to risk-weighted assets Minimum for capital adequacy purposes ratio | 8.00% | 8.00% | |||
Tier I capital to average assets Minimum for capital adequacy purposes amount | $ 27,867 | $ 26,279 | |||
Tier I capital to average assets minimum for capital adequacy purposes ratio | 4.00% | 4.00% | |||
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 32,384 | $ 30,293 | ||
Common equity tier 1 capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 6.50% | 6.50% | ||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 39,857 | $ 37,284 | ||
Tier I capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 8.00% | 8.00% | ||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 49,821 | $ 46,605 | ||
Total capital to risk-weighted assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 10.00% | 10.00% | ||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions amount | [1] | $ 34,834 | $ 32,849 | ||
Tier I capital to average assets minimum to be well capitalized under prompt corrective action provisions ratio | [1] | 5.00% | 5.00% | ||
|
20. Regulatory Capital Requirements (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Conservation buffer | 6.08% | 5.93% |
Bank | ||
Conservation buffer | 5.97% | 5.82% |
21. Fair Value (Details) - Fair Value Level 2 - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets: (market approach) | ||
Assets recorded at fair value on a recurring basis | $ 39,366,831 | $ 38,450,653 |
U.S. GSE debt securities | ||
Assets: (market approach) | ||
Assets recorded at fair value on a recurring basis | 13,751,103 | 17,158,742 |
Agency MBS | ||
Assets: (market approach) | ||
Assets recorded at fair value on a recurring basis | 15,574,525 | 16,613,337 |
ABS and OAS | ||
Assets: (market approach) | ||
Assets recorded at fair value on a recurring basis | 1,986,129 | 0 |
Other investments | ||
Assets: (market approach) | ||
Assets recorded at fair value on a recurring basis | $ 8,055,074 | $ 4,678,574 |
21. Fair Value (Details 1) - Fair Value Level 2 - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
||
---|---|---|---|---|
Assets: (market approach) | ||||
MSRs | [1] | $ 1,004,948 | $ 1,083,286 | |
Impaired loans, net of related allowance | 0 | 135,630 | ||
OREO | $ 201,386 | $ 284,235 | ||
|
21. Fair Value (Details 2) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
||||||
---|---|---|---|---|---|---|---|---|
Carrying Amount | ||||||||
Financial assets: (in thousands) | ||||||||
Cash and cash equivalents | $ 67,935 | $ 42,654 | ||||||
Debt securities HTM | 47,067 | 48,825 | ||||||
Debt securities AFS | 39,367 | 38,451 | ||||||
Restricted equity securities | 1,749 | 1,704 | ||||||
Loans and loans held-for-sale, net of ALL | ||||||||
Commercial & industrial | 80,049 | 76,394 | ||||||
Commercial real estate | 232,239 | 204,260 | ||||||
Residential real estate - 1st lien | 164,202 | 167,671 | ||||||
Residential real estate - Jr. lien | 44,260 | 44,916 | ||||||
Consumer | 5,031 | 5,223 | ||||||
Mortgage servicing rights | 1,005 | [1] | 1,083 | [2] | ||||
Accrued interest receivable | 2,301 | 2,052 | ||||||
Financial liabilities: | ||||||||
Other deposits | 573,525 | 509,686 | ||||||
Brokered deposits | 35,292 | 50,949 | ||||||
Long-term borrowings | 1,550 | 3,550 | ||||||
Repurchase agreements | 30,522 | 28,648 | ||||||
Capital lease obligations | 267 | 382 | ||||||
Subordinated debentures | 12,887 | 12,887 | ||||||
Accrued interest payable | 113 | 101 | ||||||
Fair Value Level 1 | ||||||||
Financial assets: (in thousands) | ||||||||
Cash and cash equivalents | 67,935 | 42,654 | ||||||
Debt securities HTM | 0 | 0 | ||||||
Debt securities AFS | 0 | 0 | ||||||
Restricted equity securities | 0 | 0 | ||||||
Loans and loans held-for-sale, net of ALL | ||||||||
Commercial & industrial | 0 | 0 | ||||||
Commercial real estate | 0 | 0 | ||||||
Residential real estate - 1st lien | 0 | 0 | ||||||
Residential real estate - Jr. lien | 0 | 0 | ||||||
Consumer | 0 | 0 | ||||||
Mortgage servicing rights | 0 | [1] | 0 | [2] | ||||
Accrued interest receivable | 0 | 0 | ||||||
Financial liabilities: | ||||||||
Other deposits | 0 | 0 | ||||||
Brokered deposits | 0 | 0 | ||||||
Long-term borrowings | 0 | 0 | ||||||
Repurchase agreements | 0 | 0 | ||||||
Capital lease obligations | 0 | 0 | ||||||
Subordinated debentures | 0 | 0 | ||||||
Accrued interest payable | 0 | 0 | ||||||
Fair Value Level 2 | ||||||||
Financial assets: (in thousands) | ||||||||
Cash and cash equivalents | 0 | 0 | ||||||
Debt securities HTM | 47,228 | 48,796 | ||||||
Debt securities AFS | 39,367 | 38,451 | ||||||
Restricted equity securities | 1,749 | 1,704 | ||||||
Loans and loans held-for-sale, net of ALL | ||||||||
Commercial & industrial | 0 | 0 | ||||||
Commercial real estate | 0 | 136 | ||||||
Residential real estate - 1st lien | 0 | 0 | ||||||
Residential real estate - Jr. lien | 0 | 0 | ||||||
Consumer | 0 | 0 | ||||||
Mortgage servicing rights | 1,481 | [1] | 1,337 | [2] | ||||
Accrued interest receivable | 2,301 | 2,052 | ||||||
Financial liabilities: | ||||||||
Other deposits | 571,952 | 508,407 | ||||||
Brokered deposits | 35,247 | 50,926 | ||||||
Long-term borrowings | 1,425 | 3,191 | ||||||
Repurchase agreements | 30,522 | 28,648 | ||||||
Capital lease obligations | 267 | 382 | ||||||
Subordinated debentures | 12,807 | 12,832 | ||||||
Accrued interest payable | 113 | 101 | ||||||
Fair Value Level 3 | ||||||||
Financial assets: (in thousands) | ||||||||
Cash and cash equivalents | 0 | 0 | ||||||
Debt securities HTM | 0 | 0 | ||||||
Debt securities AFS | 0 | 0 | ||||||
Restricted equity securities | 0 | 0 | ||||||
Loans and loans held-for-sale, net of ALL | ||||||||
Commercial & industrial | 79,773 | 76,799 | ||||||
Commercial real estate | 230,532 | 204,697 | ||||||
Residential real estate - 1st lien | 161,068 | 169,205 | ||||||
Residential real estate - Jr. lien | 44,127 | 45,207 | ||||||
Consumer | 5,063 | 5,425 | ||||||
Mortgage servicing rights | 0 | [1] | 0 | [2] | ||||
Accrued interest receivable | 0 | 0 | ||||||
Financial liabilities: | ||||||||
Other deposits | 0 | 0 | ||||||
Brokered deposits | 0 | 0 | ||||||
Long-term borrowings | 0 | 0 | ||||||
Repurchase agreements | 0 | 0 | ||||||
Capital lease obligations | 0 | 0 | ||||||
Subordinated debentures | 0 | 0 | ||||||
Accrued interest payable | 0 | 0 | ||||||
Fair Value | ||||||||
Financial assets: (in thousands) | ||||||||
Cash and cash equivalents | 67,935 | 42,654 | ||||||
Debt securities HTM | 47,228 | 48,796 | ||||||
Debt securities AFS | 39,367 | 38,451 | ||||||
Restricted equity securities | 1,749 | 1,704 | ||||||
Loans and loans held-for-sale, net of ALL | ||||||||
Commercial & industrial | 79,773 | 76,799 | ||||||
Commercial real estate | 230,532 | 204,833 | ||||||
Residential real estate - 1st lien | 161,068 | 169,205 | ||||||
Residential real estate - Jr. lien | 44,127 | 45,207 | ||||||
Consumer | 5,063 | 5,425 | ||||||
Mortgage servicing rights | 1,481 | [1] | 1,337 | [2] | ||||
Accrued interest receivable | 2,301 | 2,052 | ||||||
Financial liabilities: | ||||||||
Other deposits | 571,952 | 508,407 | ||||||
Brokered deposits | 35,247 | 50,926 | ||||||
Long-term borrowings | 1,425 | 3,191 | ||||||
Repurchase agreements | 30,522 | 28,648 | ||||||
Capital lease obligations | 267 | 382 | ||||||
Subordinated debentures | 12,807 | 12,832 | ||||||
Accrued interest payable | $ 113 | $ 101 | ||||||
|
22. Condensed Financial Information (Parent Company Only) (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Assets | |||
Total assets | $ 720,347,498 | $ 667,045,595 | |
Liabilities | |||
Junior subordinated debentures | 12,887,000 | 12,887,000 | |
Total liabilities | 657,743,787 | 609,109,741 | |
Shareholders' Equity | |||
Preferred stock, 1,000,000 shares authorized, 20 and 25 shares issued and outstanding in 2018 and 2017, respectively ($100,000 liquidation value) | 2,000,000 | 2,500,000 | |
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,382,103 and 5,322,320 shares issued at December 31, 2018 and 2017, respectively (including 17,442 and 13,039 shares issued February 1, 2019 and 2018, respectively) | 13,455,258 | 13,305,800 | |
Additional paid-in capital | 32,536,532 | 31,639,189 | |
Retained earnings | 17,882,282 | 13,387,739 | |
Accumulated other comprehensive loss | (647,584) | (274,097) | |
Less: treasury stock, at cost; 210,101 shares at December 31, 2018 and 2017 | (2,622,777) | (2,622,777) | |
Total shareholders' equity | 62,603,711 | 57,935,854 | $ 54,451,517 |
Total liabilities and shareholders' equity | 720,347,498 | 667,045,595 | |
Parent Company [Member] | |||
Assets | |||
Cash | 720,620 | 556,392 | $ 494,086 |
Investment in subsidiary - Community National Bank | 74,886,386 | 70,219,699 | |
Investment in Capital Trust | 387,000 | 387,000 | |
Income taxes receivable | 207,244 | 290,224 | |
Total assets | 76,201,250 | 71,453,315 | |
Liabilities | |||
Junior subordinated debentures | 12,887,000 | 12,887,000 | |
Dividends payable | 710,539 | 630,461 | |
Total liabilities | 13,597,539 | 13,517,461 | |
Shareholders' Equity | |||
Preferred stock, 1,000,000 shares authorized, 20 and 25 shares issued and outstanding in 2018 and 2017, respectively ($100,000 liquidation value) | 2,000,000 | 2,500,000 | |
Common stock - $2.50 par value; 15,000,000 shares authorized, 5,382,103 and 5,322,320 shares issued at December 31, 2018 and 2017, respectively (including 17,442 and 13,039 shares issued February 1, 2019 and 2018, respectively) | 13,455,258 | 13,305,800 | |
Additional paid-in capital | 32,536,532 | 31,639,189 | |
Retained earnings | 17,882,282 | 13,387,739 | |
Accumulated other comprehensive loss | (647,584) | (274,097) | |
Less: treasury stock, at cost; 210,101 shares at December 31, 2018 and 2017 | (2,622,777) | (2,622,777) | |
Total shareholders' equity | 62,603,711 | 57,935,854 | |
Total liabilities and shareholders' equity | $ 76,201,250 | $ 71,453,315 |
22. Condensed Financial Information (Parent Company Only) (Details 1) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Expense | ||||||||||
Interest on junior subordinated debentures | $ 650,361 | $ 524,696 | ||||||||
Income tax expense/benefit | 1,738,265 | 2,909,330 | ||||||||
Net income | $ 2,142,603 | $ 2,269,732 | $ 2,002,654 | $ 1,982,543 | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | 8,397,532 | 6,231,298 |
Parent Company [Member] | ||||||||||
Income | ||||||||||
Bank subsidiary distributions | 4,137,000 | 3,206,000 | ||||||||
Dividends on Capital Trust | 19,530 | 15,757 | ||||||||
Total income | 4,156,530 | 3,221,757 | ||||||||
Expense | ||||||||||
Interest on junior subordinated debentures | 650,361 | 524,696 | ||||||||
Administrative and other | 356,055 | 344,657 | ||||||||
Total expense | 1,006,416 | 869,353 | ||||||||
Income before applicable income tax benefit and equity in undistributed net income of subsidiary | 3,150,114 | 2,352,404 | ||||||||
Income tax expense/benefit | 207,244 | 290,224 | ||||||||
Income before equity in undistributed net income of subsidiary | 3,357,358 | 2,642,628 | ||||||||
Equity in undistributed net income of subsidiary | 5,040,174 | 3,588,670 | ||||||||
Net income | $ 8,397,532 | $ 6,231,298 |
22. Condensed Financial Information (Parent Company Only) (Details 2) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Cash Flows from Operating Activities | ||||||||||
Net income | $ 2,142,603 | $ 2,269,732 | $ 2,002,654 | $ 1,982,543 | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 8,397,532 | $ 6,231,298 |
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
Net cash provided by operating activities | 10,166,779 | 8,065,644 | ||||||||
Cash Flows from Financing Activities | ||||||||||
Redemption of preferred stock | (500,000) | 0 | ||||||||
Dividends paid on preferred stock | (103,125) | (101,563) | ||||||||
Dividends paid on common stock | (2,672,985) | (2,457,871) | ||||||||
Net cash used in financing activities | 44,664,132 | 23,463,813 | ||||||||
Net increase in cash | 25,281,314 | 13,039,215 | ||||||||
Cash Paid for Interest | 4,472,564 | 3,040,369 | ||||||||
Dividends paid: | ||||||||||
Dividends declared | (3,799,864) | (3,453,884) | ||||||||
Increase in dividends payable attributable to dividends declared | (80,078) | (49,315) | ||||||||
Dividends reinvested | (1,046,801) | (946,698) | ||||||||
Parent Company [Member] | ||||||||||
Cash Flows from Operating Activities | ||||||||||
Net income | 8,397,532 | 6,231,298 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||
Equity in undistributed net income of subsidiary | (5,040,174) | (3,588,670) | ||||||||
Decrease (increase) in income taxes receivable | 82,980 | (20,888) | ||||||||
Net cash provided by operating activities | 3,440,338 | 2,621,740 | ||||||||
Cash Flows from Financing Activities | ||||||||||
Redemption of preferred stock | (500,000) | 0 | ||||||||
Dividends paid on preferred stock | (103,125) | (101,563) | ||||||||
Dividends paid on common stock | (2,672,985) | (2,457,871) | ||||||||
Net cash used in financing activities | (3,276,110) | (2,559,434) | ||||||||
Net increase in cash | 164,228 | 62,306 | ||||||||
Cash Beginning | $ 556,392 | $ 494,086 | 556,392 | 494,086 | ||||||
Cash Ending | $ 720,620 | $ 556,392 | 720,620 | 556,392 | ||||||
Cash Received for Income Taxes | 290,224 | 269,335 | ||||||||
Cash Paid for Interest | 650,361 | 524,696 | ||||||||
Dividends paid: | ||||||||||
Dividends declared | 3,799,864 | 3,453,884 | ||||||||
Increase in dividends payable attributable to dividends declared | (80,078) | (49,315) | ||||||||
Dividends reinvested | (1,046,801) | (946,698) | ||||||||
Total common shares dividends paid | $ 2,672,985 | $ 2,457,871 |
22. Condensed Financial Information (Parent Company Only) (Details Narrative) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 20 | 25 |
Preferred stock, shares outstanding (in shares) | 20 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,382,103 | 5,322,320 |
Treasury stock (in shares) | 210,101 | 210,101 |
Parent Company [Member] | ||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 20 | 25 |
Preferred stock, shares outstanding (in shares) | 20 | 25 |
Preferred stock liquidation value | $ 100,000 | $ 100,000 |
Common stock par value (in dollars per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 5,382,103 | 5,322,320 |
Treasury stock (in shares) | 210,101 | 210,101 |
23. Quarterly Financial Data (Unaudited) (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Quarterly Financial Information Disclosure [Abstract] | ||||||||||
Interest income | $ 7,791,884 | $ 7,517,022 | $ 7,028,859 | $ 6,776,838 | $ 7,019,554 | $ 6,820,165 | $ 6,444,837 | $ 6,156,393 | $ 29,114,603 | $ 26,440,949 |
Interest expense | 1,457,695 | 1,220,145 | 938,499 | 868,749 | 788,283 | 796,192 | 749,504 | 734,411 | 4,485,088 | 3,068,390 |
Provision for loan losses | 210,000 | 210,000 | 180,000 | 180,000 | 200,000 | 150,000 | 150,000 | 150,000 | 780,000 | 650,000 |
Non-interest income | 1,552,684 | 1,542,793 | 1,690,161 | 1,395,670 | 1,383,196 | 1,449,247 | 1,381,731 | 1,370,218 | 6,181,308 | 5,584,392 |
Non-interest expense | 5,185,603 | 4,874,332 | 5,103,975 | 4,731,116 | 4,700,520 | 4,842,116 | 4,892,568 | 4,731,119 | 19,895,026 | 19,166,323 |
Net income | $ 2,142,603 | $ 2,269,732 | $ 2,002,654 | $ 1,982,543 | $ 1,524,620 | $ 1,792,949 | $ 1,499,513 | $ 1,414,216 | $ 8,397,532 | $ 6,231,298 |
Earnings per common share | $ .40 | $ 0.44 | $ 0.39 | $ 0.38 | $ .30 | $ 0.35 | $ 0.29 | $ 0.27 | $ 1.61 | $ 1.21 |
24. Other Income and Other Expenses (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income | ||
Income from investment in CFS Partners | $ 514,485 | $ 415,561 |
Expenses | ||
Outsourcing expense | 480,563 | 538,359 |
Service contracts - administration | 512,902 | 447,374 |
Marketing | 552,617 | 484,330 |
State deposit tax | 633,185 | 590,728 |
ATM fees | $ 412,813 | $ 417,067 |
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