For the fiscal year ended
|
December 31, 2019
|
For the transition period from
|
to
|
Commission file number
|
000-13222
|
CITIZENS FINANCIAL SERVICES, INC.
|
||||||
(Exact name of registrant as specified in its charter)
|
||||||
Pennsylvania
|
23-2265045
|
|||||
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|||||
15 South Main Street, Mansfield, Pennsylvania
|
16933
|
|||||
(Address of principal executive offices)
|
(Zip Code)
|
|||||
Registrant’s telephone number, including area code
|
(570) 662-2121
|
|||||
Securities registered pursuant to Section 12(b) of the Act:
|
None
|
|||||
Securities registered pursuant to Section 12(g) of the Act:
|
||||||
Common Stock, par value $1.00 per share
|
||||||
(Title of class)
|
Citizens Financial Services, Inc.
Form 10-K
INDEX
|
|
Page
|
|
PART I
|
|
ITEM 1 – BUSINESS
|
1 – 9
|
ITEM 1A – RISK FACTORS
|
9 – 16
|
ITEM 1B – UNRESOLVED STAFF COMMENTS
|
16
|
ITEM 2 – PROPERTIES
|
16 - 17
|
ITEM 3 – LEGAL PROCEEDINGS
|
17
|
ITEM 4 – MINE SAFETY DISCLOSURES
|
17
|
PART II
|
|
ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
17 – 19
|
ITEM 6 – SELECTED FINANCIAL DATA
|
20
|
ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
21 – 51
|
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
51
|
ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
52 – 111
|
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
112
|
ITEM 9A – CONTROLS AND PROCEDURES
|
112
|
ITEM 9B– OTHER INFORMATION
|
112
|
PART III
|
|
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
113
|
ITEM 11 – EXECUTIVE COMPENSATION
|
113
|
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
113 – 114
|
ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
114
|
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
114
|
PART IV
|
|
ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
115 – 117
|
ITEM 16 – FORM 10-K SUMMARY
|
117
|
SIGNATURES
|
118
|
•
|
Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
|
•
|
Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public
officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
|
• |
Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
|
•
|
Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;
|
•
|
Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
|
•
|
Truth in Savings Act; and
|
•
|
Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such laws.
|
•
|
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative subpoenas of financial records;
|
•
|
Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and
withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;
|
•
|
Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital
check images and copies made from that image, the same legal standing as the original paper check;
|
•
|
The USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering
compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial
institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and
|
•
|
The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with
unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy
and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.
|
•
|
adverse weather conditions (such as hail, drought and floods), restrictions on water supply or other conditions that prevent the planting or
harvesting of a crop or limit crop yields;
|
•
|
loss of crops or livestock due to disease or other factors;
|
•
|
declines in the market prices or demand for agricultural products (both domestically and internationally), for any reason;
|
•
|
increases in production costs (such as the costs of labor, rent, feed, fuel and fertilizer);
|
•
|
the impact of domestic and international government policies and regulations (including changes in price supports, subsidies,
government-sponsored crop insurance, minimum ethanol content requirements for gasoline, tariffs, trade barriers, trade agreements and health and environmental regulations);
|
•
|
access to technology and the successful implementation of production technologies; and
|
•
|
changes in the general economy that could affect the availability of off-farm sources of income and prices of real estate for borrowers.
|
•
|
Disruptions in the dairy supply chain as retailers open plants that allow them to process and bottle milk.
|
Dividends
|
Dividends
|
|||||||||||||||||||||||
|
2019
|
declared
|
2018
|
declared
|
||||||||||||||||||||
High
|
Low
|
per share
|
High
|
Low
|
per share
|
|||||||||||||||||||
First quarter
|
$
|
59.66
|
$
|
55.00
|
$
|
0.445
|
$
|
62.38
|
$
|
61.25
|
$
|
0.435
|
||||||||||||
Second quarter
|
61.39
|
59.70
|
|
0.445
|
62.75
|
61.49
|
|
0.435
|
||||||||||||||||
Third quarter
|
60.55
|
57.75
|
0.450
|
63.25
|
61.75
|
0.440
|
||||||||||||||||||
Fourth quarter
|
61.50
|
58.30
|
0.450
|
62.60
|
55.12
|
0.440
|
Period
|
Total Number of Shares (or units Purchased)
|
Average Price Paid per Share (or Unit)
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans of Programs
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
|
||||||||||||
|
||||||||||||||||
10/1/19 to 10/31/19
|
-
|
$
|
0.00
|
-
|
49,909
|
|||||||||||
11/1/19 to 11/30/19
|
1,269
|
$
|
60.02
|
1,269
|
48,640
|
|||||||||||
12/1/19 to 12/31/19
|
-
|
$
|
0.00
|
-
|
48,640
|
|||||||||||
Total
|
1,269
|
$
|
60.02
|
1,269
|
48,640
|
(1)
|
On October 20, 2015, the Company announced that the Board of Directors authorized the Company to
repurchase up to an additional 150,000 shares. The repurchases will be conducted through open-market purchases or privately negotiated transactions and will be made from time to time depending on market conditions and other factors. No
time limit was placed on the duration of the share repurchase program. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.
|
|
Period Ending
|
|||||
Index
|
12/31/2014
|
12/31/2015
|
12/31/2016
|
12/31/2017
|
12/31/2018
|
12/31/2019
|
Citizens Financial Services, Inc.
|
100
|
94.62
|
106.90
|
137.51
|
125.96
|
145.12
|
S&P 500
|
100
|
101.38
|
113.51
|
138.29
|
132.23
|
138.10
|
SNL Mid-Atlantic Bank
|
100
|
103.75
|
131.87
|
161.62
|
138.10
|
196.39
|
SNL Bank $1B-$5B
|
100
|
111.94
|
161.04
|
171.69
|
150.42
|
182.85
|
(in thousands, except per share data)
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||
Interest and dividend income
|
$
|
61,980
|
$
|
56,758
|
$
|
48,093
|
$
|
43,005
|
$
|
35,653
|
||||||||||
Interest expense
|
12,040
|
9,574
|
5,839
|
5,041
|
4,820
|
|||||||||||||||
Net interest income
|
49,940
|
47,184
|
42,254
|
37,964
|
30,833
|
|||||||||||||||
Provision for loan losses
|
1,675
|
1,925
|
2,540
|
1,520
|
480
|
|||||||||||||||
Net interest income after provision
|
||||||||||||||||||||
for loan losses
|
48,265
|
45,259
|
39,714
|
36,444
|
30,353
|
|||||||||||||||
Non-interest income
|
8,242
|
7,754
|
7,621
|
7,644
|
6,994
|
|||||||||||||||
Investment securities gains (losses), net
|
144
|
(19
|
)
|
1,035
|
255
|
429
|
||||||||||||||
Non-interest expenses
|
33,341
|
31,557
|
29,314
|
28,671
|
23,429
|
|||||||||||||||
Income before provision for income taxes
|
23,310
|
21,437
|
19,056
|
15,672
|
14,347
|
|||||||||||||||
Provision for income taxes
|
3,820
|
3,403
|
6,031
|
3,034
|
2,721
|
|||||||||||||||
Net income
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
$
|
12,638
|
$
|
11,626
|
||||||||||
|
||||||||||||||||||||
Per share data:
|
||||||||||||||||||||
Net income - Basic (1)
|
$
|
5.54
|
$
|
5.09
|
$
|
3.67
|
$
|
3.53
|
$
|
3.52
|
||||||||||
Net income - Diluted (1)
|
5.53
|
5.09
|
3.67
|
3.53
|
3.52
|
|||||||||||||||
Cash dividends declared (1)
|
1.78
|
1.73
|
1.64
|
1.55
|
1.59
|
|||||||||||||||
Stock dividend
|
1
|
%
|
1
|
%
|
5
|
%
|
1
|
%
|
0
|
%
|
||||||||||
Book value (1) (2)
|
44.08
|
40.45
|
37.24
|
35.08
|
33.31
|
|||||||||||||||
|
||||||||||||||||||||
End of Period Balances:
|
||||||||||||||||||||
Total assets
|
$
|
1,466,339
|
$
|
1,430,712
|
$
|
1,361,886
|
$
|
1,223,018
|
$
|
1,162,984
|
||||||||||
Available for sale securities
|
240,706
|
241,010
|
254,782
|
314,017
|
359,737
|
|||||||||||||||
Loans
|
1,115,569
|
1,081,883
|
1,000,525
|
799,611
|
695,031
|
|||||||||||||||
Allowance for loan losses
|
13,845
|
12,884
|
11,190
|
8,886
|
7,106
|
|||||||||||||||
Total deposits
|
1,211,118
|
1,185,156
|
1,104,943
|
1,005,503
|
988,031
|
|||||||||||||||
Total borrowings
|
85,117
|
91,194
|
114,664
|
79,662
|
41,631
|
|||||||||||||||
Stockholders' equity
|
154,774
|
139,229
|
129,011
|
123,268
|
119,760
|
|||||||||||||||
|
||||||||||||||||||||
Key Ratios
|
||||||||||||||||||||
Return on assets (net income to average total assets)
|
1.34
|
%
|
1.29
|
%
|
1.03
|
%
|
1.06
|
%
|
1.22
|
%
|
||||||||||
Return on equity (net income to average total equity)
|
13.00
|
%
|
13.00
|
%
|
10.04
|
%
|
10.24
|
%
|
11.20
|
%
|
||||||||||
Equity to asset ratio (average equity to average total assets,
|
||||||||||||||||||||
excluding other comprehensive income)
|
10.31
|
%
|
9.90
|
%
|
10.31
|
%
|
10.35
|
%
|
10.91
|
%
|
||||||||||
Net interest margin (tax equivalent)
|
3.72
|
%
|
3.66
|
%
|
3.80
|
%
|
3.68
|
%
|
3.76
|
%
|
||||||||||
Efficiency (3)
|
54.27
|
%
|
55.04
|
%
|
54.82
|
%
|
57.97
|
%
|
54.50
|
%
|
||||||||||
Dividend payout ratio (dividends declared divided
|
||||||||||||||||||||
by net income)
|
32.40
|
%
|
34.08
|
%
|
44.97
|
%
|
44.12
|
%
|
46.00
|
%
|
||||||||||
Tier 1 leverage
|
9.77
|
%
|
9.15
|
%
|
9.18
|
%
|
9.46
|
%
|
11.01
|
%
|
||||||||||
Common equity risk based capital
|
12.11
|
%
|
11.47
|
%
|
11.27
|
%
|
12.89
|
%
|
14.14
|
%
|
||||||||||
Tier 1 risk-based capital
|
12.79
|
%
|
12.18
|
%
|
12.04
|
%
|
13.81
|
%
|
15.20
|
%
|
||||||||||
Total risk-based capital
|
14.04
|
%
|
13.42
|
%
|
13.21
|
%
|
14.93
|
%
|
16.23
|
%
|
||||||||||
Nonperforming assets/total loans
|
1.38
|
%
|
1.33
|
%
|
1.18
|
%
|
1.61
|
%
|
1.22
|
%
|
||||||||||
Nonperforming loans/total loans
|
1.08
|
%
|
1.27
|
%
|
1.07
|
%
|
1.48
|
%
|
1.03
|
%
|
||||||||||
Allowance for loan losses/total loans
|
1.24
|
%
|
1.19
|
%
|
1.12
|
%
|
1.11
|
%
|
1.02
|
%
|
||||||||||
Net (recoveries)charge-offs/average loans
|
0.06
|
%
|
0.02
|
%
|
0.03
|
%
|
(0.04
|
%)
|
0.03
|
%
|
||||||||||
|
||||||||||||||||||||
(1) Amounts were adjusted to reflect stock dividends.
|
||||||||||||||||||||
(2) Calculation excludes accumulated other comprehensive income.
|
||||||||||||||||||||
(3) Bank expenses to tax adjusted net interest income and non-interest income, excluding security gains. Interest income is a non-gaap measure and is reconciled
to the GAAP equivalent measure on page 25 of this 10k. The efficiency ratio calculated using non-tax effected net interest income was 55.36%, 56.26%, 57.68%, 61.74%, and 58.72%, for the years ended 2019, 2018 2017, 2016 and 2015,
respectively.
|
· |
Interest rates could change more rapidly or more significantly than we expect.
|
· |
The economy could change significantly in an unexpected way, which would cause the demand for new loans and the ability of borrowers to repay outstanding loans to change in ways that our models
do not anticipate.
|
· |
The financial markets could suffer a significant disruption, which may have a negative effect on our financial condition and that of our borrowers, and on our ability to raise money by issuing
new securities.
|
· |
It could take us longer than we anticipate implementing strategic initiatives, including expansions, designed to increase revenues or manage expenses, or we may be unable to implement those
initiatives at all.
|
· |
Acquisitions and dispositions of assets could affect us in ways that management has not anticipated.
|
· |
We may become subject to new legal obligations or the resolution of litigation may have a negative effect on our financial condition or operating results.
|
· |
We may become subject to new and unanticipated accounting, tax, regulatory or compliance practices or requirements. Failure to comply with any one or more of these requirements could have an
adverse effect on our operations.
|
· |
We could experience greater loan delinquencies than anticipated, adversely affecting our earnings and financial condition.
|
· |
We could lose the services of some or all of our key personnel, which would negatively impact our business because of their business development skills, financial expertise, lending experience,
technical expertise and market area knowledge.
|
· |
The agricultural economy is subject to extreme swings in both the costs of resources and the prices received from the sale of products, as a result of weather,
government regulations, international trade agreements and consumer tastes, which could negatively impact certain of our customers.
|
· |
Loan concentrations in certain industries could negatively impact our results, if financial results or economic conditions deteriorate.
|
· |
A budget impasse in the Commonwealth of Pennsylvania could impact our asset values, liquidity and profitability as a result of either delayed or reduced funding to school districts and
municipalities who are customers of the bank.
|
· |
Companies providing support services related to the exploration and drilling of the natural gas reserves in our market area may be affected by federal, state and
local laws and regulations such as restrictions on production, permitting, changes in taxes and environmental protection, which could negatively impact our customers and, as a result, negatively impact our loan and deposit volume and
loan quality. Additionally, the activities the companies providing support services related to the exploration and drilling of the natural gas reserves may be dependent on the market price of natural gas. As a result, decreases in the
market price of natural gas could also negatively impact these companies, our customers.
|
(market values - in thousands)
|
2019
|
2018
|
||||||
INVESTMENTS:
|
||||||||
Bonds
|
$
|
17,349
|
$
|
17,559
|
||||
Stock
|
18,632
|
16,372
|
||||||
Savings and Money Market Funds
|
16,085
|
16,100
|
||||||
Mutual Funds
|
75,158
|
60,847
|
||||||
Mineral interests
|
1,045
|
4,500
|
||||||
Mortgages
|
696
|
1,082
|
||||||
Real Estate
|
4,982
|
839
|
||||||
Miscellaneous
|
351
|
279
|
||||||
Cash
|
-
|
9
|
||||||
TOTAL
|
$
|
134,298
|
$
|
117,587
|
||||
ACCOUNTS:
|
||||||||
Trusts
|
34,975
|
30,736
|
||||||
Guardianships
|
5,929
|
2,347
|
||||||
Employee Benefits
|
51,870
|
51,907
|
||||||
Investment Management
|
41,520
|
32,595
|
||||||
Custodial
|
4
|
2
|
||||||
TOTAL
|
$
|
134,298
|
$
|
117,587
|
Analysis of Average Balances and Interest Rates
|
||||||||||||||||||||||||||||||||||||
|
2019
|
2018
|
2017
|
|||||||||||||||||||||||||||||||||
|
Average
|
Interest
|
Average
|
Average
|
Interest
|
Average
|
Average
|
Interest
|
Average
|
|||||||||||||||||||||||||||
|
Balance(1)
|
(3)
|
|
Rate
|
Balance(1)
|
(3)
|
|
Rate
|
Balance(1)
|
(3)
|
|
Rate
|
||||||||||||||||||||||||
(dollars in thousands)
|
$
|
$
|
|
%
|
$
|
$ |
|
%
|
|
$ |
$ |
|
%
|
|||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||||||||||||||
Interest-bearing deposits at banks
|
9,693
|
23
|
0.24
|
8,929
|
20
|
0.22
|
8,790
|
15
|
0.17
|
|||||||||||||||||||||||||||
Total short-term investments
|
9,693
|
23
|
0.24
|
8,929
|
20
|
0.22
|
8,790
|
15
|
0.17
|
|||||||||||||||||||||||||||
Interest bearing time deposits at banks
|
15,085
|
384
|
2.55
|
12,734
|
299
|
2.35
|
8,346
|
171
|
2.05
|
|||||||||||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||||||||||||||
Taxable
|
188,697
|
5,170
|
2.74
|
191,991
|
4,237
|
2.21
|
194,716
|
3,366
|
1.73
|
|||||||||||||||||||||||||||
Tax-exempt (3)
|
58,637
|
1,889
|
3.22
|
64,728
|
2,208
|
3.41
|
84,235
|
3,657
|
4.34
|
|||||||||||||||||||||||||||
Total investment securities
|
247,334
|
7,059
|
2.85
|
256,719
|
6,445
|
2.51
|
278,951
|
7,023
|
2.52
|
|||||||||||||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||||||
Residential mortgage loans
|
215,749
|
11,473
|
5.32
|
214,458
|
11,205
|
5.22
|
206,321
|
10,660
|
5.17
|
|||||||||||||||||||||||||||
Construction loans
|
19,085
|
984
|
5.16
|
25,698
|
1,235
|
4.80
|
24,299
|
1,040
|
4.28
|
|||||||||||||||||||||||||||
Commercial Loans
|
415,681
|
22,741
|
5.47
|
388,037
|
20,611
|
5.31
|
329,767
|
17,525
|
5.31
|
|||||||||||||||||||||||||||
Agricultural Loans
|
344,586
|
15,879
|
4.61
|
305,003
|
13,638
|
4.47
|
214,200
|
9,251
|
4.32
|
|||||||||||||||||||||||||||
Loans to state & political subdivisions
|
97,780
|
3,845
|
3.93
|
101,496
|
3,759
|
3.70
|
98,427
|
4,146
|
4.21
|
|||||||||||||||||||||||||||
Other loans
|
9,684
|
740
|
7.64
|
9,558
|
737
|
7.71
|
10,341
|
823
|
7.96
|
|||||||||||||||||||||||||||
Loans, net of discount (2)(3)(4)
|
1,102,565
|
55,662
|
5.05
|
1,044,250
|
51,185
|
4.90
|
883,355
|
43,445
|
4.92
|
|||||||||||||||||||||||||||
Total interest-earning assets
|
1,374,677
|
63,128
|
4.59
|
1,322,632
|
57,949
|
4.38
|
1,179,442
|
50,654
|
4.29
|
|||||||||||||||||||||||||||
Cash and due from banks
|
6,168
|
6,807
|
6,774
|
|||||||||||||||||||||||||||||||||
Bank premises and equipment
|
16,074
|
16,338
|
16,799
|
|||||||||||||||||||||||||||||||||
Other assets
|
57,038
|
54,722
|
55,910
|
|||||||||||||||||||||||||||||||||
Total non-interest earning assets
|
79,280
|
77,867
|
79,483
|
|||||||||||||||||||||||||||||||||
Total assets
|
1,453,957
|
1,400,499
|
1,258,925
|
|||||||||||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||||||||||
NOW accounts
|
331,906
|
2,282
|
0.69
|
326,040
|
1,642
|
0.50
|
323,105
|
1,139
|
0.35
|
|||||||||||||||||||||||||||
Savings accounts
|
218,240
|
814
|
0.37
|
192,727
|
323
|
0.17
|
179,557
|
191
|
0.11
|
|||||||||||||||||||||||||||
Money market accounts
|
164,872
|
1,978
|
1.20
|
164,916
|
1,618
|
0.98
|
127,888
|
650
|
0.51
|
|||||||||||||||||||||||||||
Certificates of deposit
|
277,946
|
4,145
|
1.49
|
276,213
|
3,327
|
1.20
|
261,758
|
2,645
|
1.01
|
|||||||||||||||||||||||||||
Total interest-bearing deposits
|
992,964
|
9,219
|
0.93
|
959,896
|
6,910
|
0.72
|
892,308
|
4,625
|
0.52
|
|||||||||||||||||||||||||||
Other borrowed funds
|
109,041
|
2,821
|
2.59
|
117,912
|
2,664
|
2.26
|
68,536
|
1,214
|
1.77
|
|||||||||||||||||||||||||||
Total interest-bearing liabilities
|
1,102,005
|
12,040
|
1.09
|
1,077,808
|
9,574
|
0.89
|
960,844
|
5,839
|
0.61
|
|||||||||||||||||||||||||||
Demand deposits
|
187,991
|
171,353
|
153,523
|
|||||||||||||||||||||||||||||||||
Other liabilities
|
14,074
|
12,647
|
14,802
|
|||||||||||||||||||||||||||||||||
Total non-interest-bearing liabilities
|
202,065
|
184,000
|
168,325
|
|||||||||||||||||||||||||||||||||
Stockholders' equity
|
149,887
|
138,691
|
129,756
|
|||||||||||||||||||||||||||||||||
Total liabilities & stockholders' equity
|
1,453,957
|
1,400,499
|
1,258,925
|
|||||||||||||||||||||||||||||||||
Net interest income
|
51,088
|
48,375
|
44,815
|
|||||||||||||||||||||||||||||||||
Net interest spread (5)
|
3.50
|
%
|
3.49
|
%
|
3.68
|
%
|
||||||||||||||||||||||||||||||
Net interest income as a percentage
|
||||||||||||||||||||||||||||||||||||
of average interest-earning assets
|
3.72
|
%
|
3.66
|
%
|
3.80
|
%
|
||||||||||||||||||||||||||||||
Ratio of interest-earning assets
|
||||||||||||||||||||||||||||||||||||
to interest-bearing liabilities
|
1.25
|
1.23
|
1.23
|
|||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
(1) Averages are based on daily averages.
|
||||||||||||||||||||||||||||||||||||
(2) Includes loan origination and commitment fees.
|
||||||||||||||||||||||||||||||||||||
(3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using
|
||||||||||||||||||||||||||||||||||||
a statutory federal income tax rate of 21% for 2019 and 2018 and 34% for 2017. Tax
equivalent income is considered a non-gaap measure. See reconciliation to equivalent GAAP
measure on page 25.
|
||||||||||||||||||||||||||||||||||||
(4) Income on non-accrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets.
|
||||||||||||||||||||||||||||||||||||
(5) Interest rate spread represents the difference between the average rate earned on interest-earning assets
|
||||||||||||||||||||||||||||||||||||
and the average rate paid on interest-bearing liabilities.
|
|
2019
|
2018
|
2017
|
|||||||||
Interest and dividend income from investment securities,
|
||||||||||||
interest bearing time deposits and short-term investments (non-tax adjusted) (GAAP)
|
$
|
7,069
|
$
|
6,300
|
$
|
5,966
|
||||||
Tax equivalent adjustment
|
397
|
464
|
1,243
|
|||||||||
Interest and dividend income from investment securities,
|
||||||||||||
interest bearing time deposits and short-term investments (tax equivalent basis) (Non-GAAP)
|
$
|
7,466
|
$
|
6,764
|
$
|
7,209
|
||||||
|
||||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Interest and fees on loans (non-tax adjusted) (GAAP)
|
$
|
54,911
|
$
|
50,458
|
$
|
42,127
|
||||||
Tax equivalent adjustment
|
751
|
727
|
1,318
|
|||||||||
Interest and fees on loans (tax equivalent basis) (Non-GAAP)
|
$
|
55,662
|
$
|
51,185
|
$
|
43,445
|
||||||
|
||||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Total interest income
|
$
|
61,980
|
$
|
56,758
|
$
|
48,093
|
||||||
Total interest expense
|
12,040
|
9,574
|
5,839
|
|||||||||
Net interest income (GAAP)
|
49,940
|
47,184
|
42,254
|
|||||||||
Total tax equivalent adjustment
|
1,148
|
1,191
|
2,561
|
|||||||||
Net interest income (tax equivalent basis) (Non-GAAP)
|
$
|
51,088
|
$
|
48,375
|
$
|
44,815
|
Analysis of Changes in Net Interest Income on a Tax-Equivalent Basis
|
||||||||||||||||||||||||
|
2019 vs. 2018 (1)
|
2018 vs. 2017 (1)
|
||||||||||||||||||||||
|
Change in
|
Change
|
Total
|
Change in
|
Change
|
Total
|
||||||||||||||||||
|
Volume
|
in Rate
|
Change
|
Volume
|
in Rate
|
Change
|
||||||||||||||||||
Interest Income:
|
||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||
Interest-bearing deposits at banks
|
$
|
2
|
$
|
1
|
$
|
3
|
$
|
-
|
$
|
5
|
$
|
5
|
||||||||||||
Interest bearing time deposits at banks
|
58
|
27
|
85
|
100
|
28
|
128
|
||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Taxable
|
(71
|
)
|
1,004
|
933
|
(46
|
)
|
917
|
871
|
||||||||||||||||
Tax-exempt
|
(200
|
)
|
(119
|
)
|
(319
|
)
|
(752
|
)
|
(697
|
)
|
(1,449
|
)
|
||||||||||||
Total investment securities
|
(271
|
)
|
885
|
614
|
(798
|
)
|
220
|
(578
|
)
|
|||||||||||||||
Total investment income
|
(211
|
)
|
913
|
702
|
(698
|
)
|
253
|
(445
|
)
|
|||||||||||||||
Loans:
|
||||||||||||||||||||||||
Residential mortgage loans
|
68
|
200
|
268
|
424
|
121
|
545
|
||||||||||||||||||
Construction loans
|
(350
|
)
|
99
|
(251
|
)
|
63
|
132
|
195
|
||||||||||||||||
Commercial Loans
|
1,500
|
630
|
2,130
|
3,095
|
(9
|
)
|
3,086
|
|||||||||||||||||
Agricultural Loans
|
1,814
|
427
|
2,241
|
4,049
|
338
|
4,387
|
||||||||||||||||||
Loans to state & political subdivisions
|
(124
|
)
|
210
|
86
|
136
|
(523
|
)
|
(387
|
)
|
|||||||||||||||
Other loans
|
9
|
(6
|
)
|
3
|
(62
|
)
|
(24
|
)
|
(86
|
)
|
||||||||||||||
Total loans, net of discount
|
2,917
|
1,560
|
4,477
|
7,705
|
35
|
7,740
|
||||||||||||||||||
Total Interest Income
|
2,706
|
2,473
|
5,179
|
7,007
|
288
|
7,295
|
||||||||||||||||||
Interest Expense:
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
NOW accounts
|
30
|
610
|
640
|
11
|
492
|
503
|
||||||||||||||||||
Savings accounts
|
48
|
443
|
491
|
15
|
117
|
132
|
||||||||||||||||||
Money Market accounts
|
(1
|
)
|
361
|
360
|
229
|
739
|
968
|
|||||||||||||||||
Certificates of deposit
|
21
|
797
|
818
|
152
|
530
|
682
|
||||||||||||||||||
Total interest-bearing deposits
|
98
|
2,211
|
2,309
|
407
|
1,878
|
2,285
|
||||||||||||||||||
Other borrowed funds
|
(170
|
)
|
327
|
157
|
1,049
|
401
|
1,450
|
|||||||||||||||||
Total interest expense
|
(72
|
)
|
2,538
|
2,466
|
1,456
|
2,279
|
3,735
|
|||||||||||||||||
Net interest income
|
$
|
2,778
|
$
|
(65
|
)
|
$
|
2,713
|
$
|
5,551
|
$
|
(1,991
|
)
|
$
|
3,560
|
||||||||||
|
||||||||||||||||||||||||
(1) The portion of the total change attributable to both volume and rate changes during the year has been allocated
|
||||||||||||||||||||||||
to volume and rate components based upon the absolute dollar amount of the change in each component prior to allocation.
|
•
|
Interest income on residential mortgage loans increased $268,000. The average balance of residential
mortgage loans increased $1.3 million, resulting in an increase of $68,000 due to volume. The change due to rate was an increase of $200,000 as the average yield on residential mortgages increased from 5.22% in 2018 to 5.32% in 2019 as a
result of a higher rate environment during the year as a result of rate increases in 2018.
|
•
|
The average balance of construction loans decreased $6.6 million from 2018 to 2019 as projects were
completed, which resulted in a decrease of $350,000 in interest income. The average yield on construction loans increased from 4.80% to 5.16%, which correlated to a $99,000 increase in interest income.
|
•
|
Interest income on commercial loans increased $2,130,000 from 2018 to 2019. The increase in the average
balance of commercial loans of $27.6 million is attributable organic growth in the central and south central markets as well as completed construction projects. The increase in the average balance of these loans resulted in an increase in
interest income due to volume of $1,500,000. Our lenders have been able to attract and retain loan relationships in their markets by providing excellent customer service and having attractive products. We believe our lenders are adept at
customizing and structuring loans to customers that meet their needs and satisfy our commitment to credit quality. In many cases, the Bank works with the Small Business Administration (SBA) guaranteed loan programs to offset risk and to
further promote economic growth in our market area. The average yield on commercial loans increased 16 basis points to 5.47% in 2019, resulting in an increase in interest income due to rate of $630,000.
|
•
|
Interest income on agricultural loans increased $2,241,000 from 2018 to 2019. The increase in the
average balance of agricultural loans of $39.6 million is primarily attributable to the central and south central markets as well as completed construction projects. The increase in the average balance of these loans resulted in an increase
in interest income due to volume of $1,814,000. The average yield on agricultural loans increased from 4.47% in 2018 to 4.61% in 2019 due to a general increase in rates, resulting in an increase in interest income due to rate of $427,000.
We believe our lenders are adept at customizing, understanding and have the expertise to structure loans for customers that meet their needs and satisfy our commitment to credit quality. In many cases, the Bank works with the United States
Department of Agriculture’s (USDA) guaranteed loan programs to offset risk and to further promote economic growth in our market area.
|
•
|
The average balance of loans to state and political subdivisions decreased $3.7 million from 2018 to
2019 which had a negative impact of $124,000 on total interest income due to volume. The average tax equivalent yield on loans to state and political subdivisions increased from 3.70% in 2018 to 3.93% in 2019, increasing interest income by
$210,000.
|
•
|
Interest income on residential mortgage loans increased $545,000. The average balance of residential
mortgage loans increased $8.1 million, primarily due to the State College branch acquisition, resulting in an increase of $424,000 due to volume. The change due to rate was an increase of $121,000 as the average yield on residential
mortgages increased from 5.17% in 2017 to 5.22% in 2018.
|
•
|
The average balance of construction loans increased $1.4 million from 2017 to 2018, which resulted in an
increase of $63,000 in interest income. Additionally, the average yield on construction loans increased from 4.28% to 4.80% in 2018, which correlated to a $132,000 increase in interest income.
|
•
|
Interest income on commercial loans increased $3,086,000 from 2017 to 2018. The increase in the average
balance of commercial loans of $58.3 million is attributable to the acquisition of the State College branch and organic growth in the central and south central markets. The acquisition of the State College branch provided us with a new
expanding market. Our lenders benefited from the market disruption created by several bank mergers in the Lebanon and Lancaster markets. The increase in the average balance of these loans resulted in an increase in interest income due to
volume of $3,095,000.
|
•
|
Interest income on agricultural loans increased $4,387,000 from 2017 to 2018. The increase in the
average balance of agricultural loans of $90.8 million is primarily attributable to the lenders hired to serve the central and south central markets. The increase in the average balance of these loans resulted in an increase in interest
income due to volume of $4,049,000. The average yield on agricultural loans increased from 4.32% in 2017 to 4.47% in 2018 due to a general increase in rates, resulting in an increase in interest income due to rate of $338,000.
|
•
|
The average balance of loans to state and political subdivisions increased $3.1 million from 2017 to
2018 which had a positive impact of $136,000 on total interest income due to volume. The average tax equivalent yield on loans to state and political subdivisions decreased from 4.21% in 2017 to 3.70% in 2018, decreasing interest income by
$523,000. The decrease in the tax equivalent yield is primarily due to the change in tax rates from 34% in 2017 to 21% in 2018.
|
NON-INTEREST INCOME
|
||||||||||||
|
||||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Service charges
|
$
|
4,687
|
$
|
4,667
|
$
|
4,456
|
||||||
Trust
|
750
|
705
|
755
|
|||||||||
Brokerage and insurance
|
1,141
|
790
|
635
|
|||||||||
Equity security gains, net
|
120
|
-
|
-
|
|||||||||
Available for sale security gains (losses), net
|
24
|
(19
|
)
|
1,035
|
||||||||
Gains on loans sold
|
473
|
382
|
578
|
|||||||||
Earnings on bank owned life insurance
|
623
|
622
|
660
|
|||||||||
Other
|
568
|
588
|
537
|
|||||||||
Total
|
$
|
8,386
|
$
|
7,735
|
$
|
8,656
|
2019/2018 | 2018/2017 | |||||||||||||||
|
Change
|
Change
|
||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
||||||||||||
Service charges
|
$
|
20
|
0.4
|
$
|
211
|
4.7
|
||||||||||
Trust
|
45
|
6.4
|
(50
|
)
|
(6.6
|
)
|
||||||||||
Brokerage and insurance
|
351
|
44.4
|
155
|
24.4
|
||||||||||||
Equity security gains, net
|
120
|
NA
|
-
|
NA
|
||||||||||||
Available for sale security gains (losses), net
|
43
|
(226.3
|
)
|
(1,054
|
)
|
(101.8
|
)
|
|||||||||
Gains on loans sold
|
91
|
23.8
|
(196
|
)
|
(33.9
|
)
|
||||||||||
Earnings on bank owned life insurance
|
1
|
0.2
|
(38
|
)
|
(5.8
|
)
|
||||||||||
Other
|
(20
|
)
|
(3.4
|
)
|
51
|
9.5
|
||||||||||
Total
|
$
|
651
|
8.4
|
$
|
(921
|
)
|
(10.6
|
)
|
|
2019
|
2018
|
2017
|
|||||||||
Salaries and employee benefits
|
$
|
20,456
|
$
|
19,094
|
$
|
17,655
|
||||||
Occupancy
|
2,174
|
2,126
|
1,988
|
|||||||||
Furniture and equipment
|
674
|
536
|
603
|
|||||||||
Professional fees
|
1,423
|
1,925
|
1,299
|
|||||||||
FDIC insurance
|
75
|
417
|
385
|
|||||||||
Pennsylvania shares tax
|
808
|
835
|
705
|
|||||||||
Amortization of intangibles
|
259
|
296
|
297
|
|||||||||
Merger and acquisition
|
466
|
-
|
165
|
|||||||||
ORE expenses
|
376
|
158
|
395
|
|||||||||
Software expenses
|
948
|
876
|
795
|
|||||||||
Other
|
5,682
|
5,294
|
5,027
|
|||||||||
Total
|
$
|
33,341
|
$
|
31,557
|
$
|
29,314
|
2019/2018 | 2018/2017 | |||||||||||||||
|
Change
|
Change
|
||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
||||||||||||
Salaries and employee benefits
|
$
|
1,362
|
7.1
|
$
|
1,439
|
8.2
|
||||||||||
Occupancy
|
48
|
2.3
|
138
|
6.9
|
||||||||||||
Furniture and equipment
|
138
|
25.7
|
(67
|
)
|
(11.1
|
)
|
||||||||||
Professional fees
|
(502
|
)
|
(26.1
|
)
|
626
|
48.2
|
||||||||||
FDIC insurance
|
(342
|
)
|
(82.0
|
)
|
32
|
8.3
|
||||||||||
Pennsylvania shares tax
|
(27
|
)
|
(3.2
|
)
|
130
|
18.4
|
||||||||||
Amortization of intangibles
|
(37
|
)
|
(12.5
|
)
|
(1
|
)
|
(0.3
|
)
|
||||||||
Merger and acquisition
|
466
|
N/A
|
(165
|
)
|
(100.0
|
)
|
||||||||||
ORE expenses
|
218
|
138.0
|
(237
|
)
|
(60.0
|
)
|
||||||||||
Software expenses
|
72
|
8.2
|
81
|
10.2
|
||||||||||||
Other
|
388
|
7.3
|
267
|
5.3
|
||||||||||||
Total
|
$
|
1,784
|
5.7
|
$
|
2,243
|
7.7
|
|
2019
|
%
|
2018
|
%
|
2017
|
|||||||||||||||||||||||
|
Balance
|
Increase
|
Change
|
Balance
|
Increase
|
Change
|
Balance
|
|||||||||||||||||||||
Total assets
|
$
|
1,466.3
|
$
|
35.6
|
2.5
|
$
|
1,430.7
|
$
|
68.8
|
5.1
|
$
|
1,361.9
|
||||||||||||||||
Total investments
|
240.7
|
(0.3
|
)
|
(0.1
|
)
|
241.0
|
(13.8
|
)
|
(5.4
|
)
|
254.8
|
|||||||||||||||||
Total loans, net
|
1,101.7
|
32.7
|
3.1
|
1,069.0
|
79.7
|
8.1
|
989.3
|
|||||||||||||||||||||
Total deposits
|
1,211.1
|
25.9
|
2.2
|
1,185.2
|
80.3
|
7.3
|
1,104.9
|
|||||||||||||||||||||
Total borrowings
|
85.1
|
(6.1
|
)
|
(6.7
|
)
|
91.2
|
(23.5
|
)
|
(20.5
|
)
|
114.7
|
|||||||||||||||||
Total stockholders' equity
|
154.8
|
15.6
|
11.2
|
139.2
|
10.2
|
7.9
|
129.0
|
|
2019
|
% of
|
2018
|
% of
|
2017
|
% of
|
2016
|
% of
|
2015
|
% of
|
||||||||||||||||||||||||||||||
|
Amount
|
Total
|
Amount
|
Total
|
Amount
|
Total
|
Amount
|
Total
|
Amount
|
Total
|
||||||||||||||||||||||||||||||
Available-for-sale:
|
||||||||||||||||||||||||||||||||||||||||
U. S. Agency securities
|
$
|
84,863
|
35.1
|
$
|
106,385
|
44.0
|
$
|
98,887
|
38.8
|
$
|
170,414
|
54.3
|
$
|
199,591
|
55.5
|
|||||||||||||||||||||||||
U.S. Treasuries
|
27,661
|
11.5
|
33,358
|
13.8
|
28,604
|
11.2
|
3,000
|
0.9
|
10,082
|
2.8
|
||||||||||||||||||||||||||||||
Obligations of state & political
|
||||||||||||||||||||||||||||||||||||||||
subdivisions
|
61,455
|
25.5
|
52,047
|
21.5
|
79,090
|
31.0
|
96,926
|
30.9
|
102,863
|
28.6
|
||||||||||||||||||||||||||||||
Corporate obligations
|
3,328
|
1.4
|
3,034
|
1.3
|
3,083
|
1.2
|
3,050
|
1.0
|
14,565
|
4.0
|
||||||||||||||||||||||||||||||
Mortgage-backed securities
|
63,399
|
26.2
|
46,186
|
19.1
|
45,027
|
17.7
|
37,728
|
12.0
|
30,204
|
8.4
|
||||||||||||||||||||||||||||||
Equity securities (a)
|
701
|
0.3
|
516
|
0.3
|
91
|
0.1
|
2,899
|
0.9
|
2,432
|
0.7
|
||||||||||||||||||||||||||||||
Total
|
$
|
241,407
|
100.0
|
$
|
241,526
|
100.0
|
$
|
254,782
|
100.0
|
$
|
314,017
|
100.0
|
$
|
359,737
|
100.0
|
(a)
|
As of January 1, 2018, the Company adopted ASU 2016-01 resulting in the reclassification of equity
securities from available for sale securities to equity securities in the Consolidated Balance Sheet.
|
One Year or Less |
After One Year
to Five Years
|
After Five Years
to Ten Years
|
|
After Ten Years |
Total |
|||||||||||||||||||||||||||||||||||
Amortized
|
Yield
|
Amortized
|
Yield
|
Amortized
|
Yield
|
Amortized
|
Yield
|
Amortized
|
Yield
|
|||||||||||||||||||||||||||||||
Cost
|
%
|
Cost
|
%
|
Cost
|
%
|
Cost
|
%
|
Cost
|
%
|
|||||||||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||||||||||||||||||
U.S. agency securities
|
$
|
28,650
|
1.7
|
$
|
52,387
|
2.6
|
$
|
2,373
|
3.1
|
$
|
-
|
-
|
$
|
83,410
|
2.3
|
|||||||||||||||||||||||||
U.S. treasuries
|
-
|
-
|
27,394
|
2.1
|
-
|
-
|
-
|
-
|
27,394
|
2.1
|
||||||||||||||||||||||||||||||
Obligations of state & political
|
||||||||||||||||||||||||||||||||||||||||
Subdivisions
|
13,598
|
2.5
|
28,602
|
2.9
|
15,192
|
3.2
|
3,275
|
3.2
|
60,667
|
2.9
|
||||||||||||||||||||||||||||||
Corporate obligations
|
-
|
-
|
-
|
-
|
3,250
|
5.8
|
-
|
-
|
3,250
|
5.8
|
||||||||||||||||||||||||||||||
Mortgage-backed securities
|
17,171
|
2.3
|
19,489
|
2.4
|
17,624
|
2.5
|
8,802
|
2.8
|
63,086
|
2.5
|
||||||||||||||||||||||||||||||
Total available-for-sale
|
$
|
59,419
|
2.1
|
$
|
127,872
|
2.5
|
$
|
38,439
|
3.1
|
$
|
12,077
|
2.9
|
$
|
237,807
|
2.5
|
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||||||||||||||
Residential
|
$
|
217,088
|
19.4
|
$
|
215,305
|
19.9
|
$
|
214,479
|
21.4
|
$
|
207,423
|
25.9
|
$
|
203,407
|
29.3
|
|||||||||||||||||||||||||
Commercial
|
342,023
|
30.7
|
319,265
|
29.5
|
308,084
|
30.8
|
252,577
|
31.6
|
237,542
|
34.2
|
||||||||||||||||||||||||||||||
Agricultural
|
311,464
|
27.9
|
284,520
|
26.3
|
239,957
|
24.0
|
123,624
|
15.5
|
57,822
|
8.3
|
||||||||||||||||||||||||||||||
Construction
|
15,519
|
1.4
|
33,913
|
3.1
|
13,502
|
1.3
|
25,441
|
3.2
|
15,011
|
2.2
|
||||||||||||||||||||||||||||||
Consumer
|
9,947
|
0.9
|
9,858
|
0.9
|
9,944
|
1.0
|
11,005
|
1.4
|
11,543
|
1.7
|
||||||||||||||||||||||||||||||
Other commercial loans
|
69,970
|
6.3
|
74,118
|
6.9
|
72,013
|
7.2
|
58,639
|
7.3
|
57,549
|
8.2
|
||||||||||||||||||||||||||||||
Other agricultural loans
|
55,112
|
4.9
|
42,186
|
3.9
|
37,809
|
3.8
|
23,388
|
2.9
|
13,657
|
2.0
|
||||||||||||||||||||||||||||||
State & political subdivision loans
|
94,446
|
8.5
|
102,718
|
9.5
|
104,737
|
10.5
|
97,514
|
12.2
|
98,500
|
14.1
|
||||||||||||||||||||||||||||||
Total loans
|
1,115,569
|
100.0
|
1,081,883
|
100.0
|
1,000,525
|
100.0
|
799,611
|
100.0
|
695,031
|
100.0
|
||||||||||||||||||||||||||||||
Less allowance for loan losses
|
13,845
|
12,884
|
1,190
|
8,886
|
7,106
|
|||||||||||||||||||||||||||||||||||
Net loans
|
$
|
1,101,724
|
$
|
1,068,999
|
$
|
989,335
|
$
|
790,725
|
$
|
687,925
|
2019/2018 | 2018/2017 | |||||||||||||||
|
Change
|
Change
|
||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
||||||||||||
Real estate:
|
||||||||||||||||
Residential
|
$
|
1,783
|
0.8
|
$
|
826
|
0.4
|
||||||||||
Commercial
|
22,758
|
7.1
|
11,181
|
3.6
|
||||||||||||
Agricultural
|
26,944
|
9.5
|
44,563
|
18.6
|
||||||||||||
Construction
|
(18,394
|
)
|
(54.2
|
)
|
20,411
|
151.2
|
||||||||||
Consumer
|
89
|
0.9
|
(86
|
)
|
(0.9
|
)
|
||||||||||
Other commercial loans
|
(4,148
|
)
|
(5.6
|
)
|
2,105
|
2.9
|
||||||||||
Other agricultural loans
|
12,926
|
30.6
|
4,377
|
11.6
|
||||||||||||
State & political subdivision loans
|
(8,272
|
)
|
(8.1
|
)
|
(2,019
|
)
|
(1.9
|
)
|
||||||||
Total loans
|
$
|
33,686
|
3.1
|
$
|
81,358
|
8.1
|
|
Commercial,
|
|||||||||||
|
municipal,
|
Real estate
|
||||||||||
|
agricultural
|
construction
|
Total
|
|||||||||
Maturity of loans:
|
||||||||||||
One year or less
|
$
|
21,040
|
$
|
400
|
$
|
21,440
|
||||||
Over one year through five years
|
98,245
|
5,536
|
103,781
|
|||||||||
Over five years
|
753,730
|
9,583
|
763,313
|
|||||||||
Total
|
$
|
873,015
|
$
|
15,519
|
$
|
888,534
|
||||||
Sensitivity of loans to changes in interest
|
||||||||||||
rates - loans due after December 31, 2020:
|
||||||||||||
Fixed interest rate
|
$
|
91,200
|
$
|
7,233
|
$
|
98,433
|
||||||
Floating or adjustable interest rate
|
760,775
|
7,886
|
768,661
|
|||||||||
Total
|
$
|
851,975
|
$
|
15,119
|
$
|
867,094
|
|
December 31,
|
|||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||
Balance
|
||||||||||||||||||||
at beginning of period
|
$
|
12,884
|
$
|
11,190
|
$
|
8,886
|
$
|
7,106
|
$
|
6,815
|
||||||||||
Charge-offs:
|
||||||||||||||||||||
Real estate:
|
||||||||||||||||||||
Residential
|
32
|
118
|
107
|
85
|
66
|
|||||||||||||||
Commercial
|
578
|
66
|
41
|
100
|
84
|
|||||||||||||||
Agricultural
|
-
|
-
|
30
|
-
|
-
|
|||||||||||||||
Consumer
|
49
|
40
|
130
|
100
|
47
|
|||||||||||||||
Other commercial loans
|
38
|
91
|
-
|
55
|
41
|
|||||||||||||||
Other agricultural loans
|
60
|
50
|
5
|
-
|
-
|
|||||||||||||||
Total loans charged-off
|
757
|
365
|
313
|
340
|
238
|
|||||||||||||||
Recoveries:
|
||||||||||||||||||||
Real estate:
|
||||||||||||||||||||
Residential
|
-
|
69
|
-
|
-
|
-
|
|||||||||||||||
Commercial
|
-
|
3
|
11
|
479
|
14
|
|||||||||||||||
Agricultural
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Consumer
|
33
|
31
|
49
|
88
|
33
|
|||||||||||||||
Other commercial loans
|
10
|
30
|
16
|
33
|
2
|
|||||||||||||||
Other agricultural loans
|
-
|
1
|
1
|
-
|
-
|
|||||||||||||||
Total loans recovered
|
43
|
134
|
77
|
600
|
49
|
|||||||||||||||
|
||||||||||||||||||||
Net loans charged-off (recovered)
|
714
|
231
|
236
|
(260
|
)
|
189
|
||||||||||||||
Provision charged to expense
|
1,675
|
1,925
|
2,540
|
1,520
|
480
|
|||||||||||||||
Balance at end of year
|
$
|
13,845
|
$
|
12,884
|
$
|
11,190
|
$
|
8,886
|
$
|
7,106
|
||||||||||
|
||||||||||||||||||||
Loans outstanding at end of period
|
$
|
1,115,569
|
$
|
1,081,883
|
$
|
1,000,525
|
$
|
799,611
|
$
|
695,031
|
||||||||||
Average loans outstanding, net
|
$
|
1,102,565
|
$
|
1,044,250
|
$
|
883,355
|
$
|
725,881
|
$
|
577,992
|
||||||||||
Non-performing assets:
|
||||||||||||||||||||
Non-accruing loans
|
$
|
11,536
|
$
|
13,724
|
$
|
10,171
|
$
|
11,454
|
$
|
6,531
|
||||||||||
Accrual loans - 90 days or more past due
|
487
|
68
|
555
|
405
|
623
|
|||||||||||||||
Total non-performing loans
|
$
|
12,023
|
$
|
13,792
|
$
|
10,726
|
$
|
11,859
|
$
|
7,154
|
||||||||||
Foreclosed assets held for sale
|
3,404
|
601
|
1,119
|
1,036
|
1,354
|
|||||||||||||||
Total non-performing assets
|
$
|
15,427
|
$
|
14,393
|
$
|
11,845
|
$
|
12,895
|
$
|
8,508
|
||||||||||
|
||||||||||||||||||||
Troubled debt restructurings (TDR)
|
||||||||||||||||||||
Non-accruing TDRs
|
$
|
6,223
|
$
|
10,621
|
$
|
6,798
|
$
|
6,758
|
$
|
3,397
|
||||||||||
Accrual TDRs
|
7,341
|
8,333
|
13,056
|
6,095
|
2,243
|
|||||||||||||||
Total troubled debt restructurings
|
$
|
13,564
|
$
|
18,954
|
$
|
19,854
|
$
|
12,853
|
$
|
5,640
|
||||||||||
Net charge-offs (recoveries) to average loans
|
0.06
|
%
|
0.02
|
%
|
0.03
|
%
|
(0.04
|
%)
|
0.03
|
%
|
||||||||||
Allowance to total loans
|
1.24
|
%
|
1.19
|
%
|
1.12
|
%
|
1.11
|
%
|
1.02
|
%
|
||||||||||
Allowance to total non-performing loans
|
115.15
|
%
|
93.42
|
%
|
104.33
|
%
|
74.93
|
%
|
99.33
|
%
|
||||||||||
Non-performing loans as a percent of loans
|
||||||||||||||||||||
net of unearned income
|
1.08
|
%
|
1.27
|
%
|
1.07
|
%
|
1.48
|
%
|
1.03
|
%
|
||||||||||
Non-performing assets as a percent of loans
|
||||||||||||||||||||
net of unearned income
|
1.38
|
%
|
1.33
|
%
|
1.18
|
%
|
1.61
|
%
|
1.22
|
%
|
•
|
Level of and trends in delinquencies, impaired/classified loans
|
◾
|
Change in volume and severity of past due loans
|
◾
|
Volume of non-accrual loans
|
◾
|
Volume and severity of classified, adversely or graded loans
|
•
|
Level of and trends in charge-offs and recoveries
|
•
|
Trends in volume, terms and nature of the loan portfolio
|
•
|
Effects of any changes in risk selection and underwriting standards and any other changes in lending and recovery policies, procedures and practices
|
•
|
Changes in the quality of the Bank’s loan review system
|
•
|
Experience, ability and depth of lending management and other relevant staff
|
•
|
National, state, regional and local economic trends and business conditions
|
◾
|
General economic conditions
|
◾
|
Unemployment rates
|
◾
|
Inflation / CPI
|
◾
|
Changes in values of underlying collateral for collateral-dependent loans
|
•
|
Industry conditions including the effects of external factors such as competition, legal, and regulatory requirements on the level of estimated credit losses.
|
•
|
Existence and effect of any credit concentrations, and changes in the level of such concentrations
|
•
|
Any change in the level of board oversight
|
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||||||||||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||||||||||||||
Residential
|
$
|
1,114
|
19.4
|
$
|
1,105
|
19.9
|
$
|
1,049
|
21.4
|
$
|
1,064
|
25.9
|
$
|
905
|
29.3
|
|||||||||||||||||||||||||
Commercial
|
4,549
|
30.7
|
4,115
|
29.5
|
3,867
|
30.8
|
3,589
|
31.6
|
3,376
|
34.2
|
||||||||||||||||||||||||||||||
Agricultural
|
5,022
|
27.9
|
4,264
|
26.3
|
3,143
|
24.0
|
1,494
|
15.5
|
409
|
8.3
|
||||||||||||||||||||||||||||||
Construction
|
43
|
1.4
|
58
|
3.1
|
23
|
1.3
|
47
|
3.2
|
24
|
2.2
|
||||||||||||||||||||||||||||||
Consumer
|
112
|
0.9
|
120
|
0.9
|
124
|
1.0
|
122
|
1.4
|
102
|
1.7
|
||||||||||||||||||||||||||||||
Other commercial loans
|
1,255
|
6.3
|
1,354
|
6.9
|
1,272
|
7.2
|
1,327
|
7.3
|
1,183
|
8.2
|
||||||||||||||||||||||||||||||
Other agricultural loans
|
961
|
4.9
|
752
|
3.9
|
492
|
3.8
|
312
|
2.9
|
122
|
2.0
|
||||||||||||||||||||||||||||||
State & political subdivision loans
|
536
|
8.5
|
762
|
9.5
|
816
|
10.5
|
833
|
12.2
|
593
|
14.1
|
||||||||||||||||||||||||||||||
Unallocated
|
253
|
N/A
|
354
|
N/A
|
404
|
N/A
|
98
|
N/A
|
392
|
N/A
|
||||||||||||||||||||||||||||||
Total allowance for loan losses
|
$
|
13,845
|
100.0
|
$
|
12,884
|
100.0
|
$
|
11,190
|
100.0
|
$
|
8,886
|
100.0
|
$
|
7,106
|
100.0
|
|
December 31, 2019
|
December 31, 2018
|
||||||||||||||||||||||||||||||
|
Non-Performing Loans
|
Non-Performing Loans
|
||||||||||||||||||||||||||||||
|
30 - 89 Days
|
90 Days Past
|
Non-
|
Total Non-
|
30 - 89 Days
|
90 Days Past
|
Non-
|
Total Non-
|
||||||||||||||||||||||||
|
Past Due
|
Due Accruing
|
accrual
|
Performing
|
Past Due
|
Due Accruing
|
accrual
|
Performing
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||||||
Residential
|
$
|
933
|
$
|
2
|
$
|
962
|
$
|
964
|
$
|
1,624
|
$
|
20
|
$
|
1,161
|
$
|
1,181
|
||||||||||||||||
Commercial
|
1,225
|
-
|
5,080
|
5,080
|
1,444
|
36
|
5,957
|
5,993
|
||||||||||||||||||||||||
Agricultural
|
118
|
299
|
2,578
|
2,877
|
121
|
-
|
3,206
|
3,206
|
||||||||||||||||||||||||
Consumer
|
123
|
2
|
6
|
8
|
37
|
12
|
14
|
26
|
||||||||||||||||||||||||
Other commercial loans
|
283
|
184
|
1,837
|
2,021
|
73
|
-
|
2,185
|
2,185
|
||||||||||||||||||||||||
Other agricultural loans
|
29
|
-
|
1,073
|
1,073
|
9
|
-
|
1,201
|
1,201
|
||||||||||||||||||||||||
Total nonperforming loans
|
$
|
2,711
|
$
|
487
|
$
|
11,536
|
$
|
12,023
|
$
|
3,308
|
$
|
68
|
$
|
13,724
|
$
|
13,792
|
|
Change in Non-Performing Loans
|
|||||||
2019/2018 | ||||||||
|
Amount
|
%
|
||||||
Real estate:
|
||||||||
Residential
|
$
|
(217
|
)
|
(18.4
|
)
|
|||
Commercial
|
(913
|
)
|
(15.2
|
)
|
||||
Agricultural
|
(329
|
)
|
(10.3
|
)
|
||||
Construction
|
-
|
-
|
||||||
Consumer
|
(18
|
)
|
(69.2
|
)
|
||||
Other commercial loans
|
(164
|
)
|
(7.5
|
)
|
||||
Other agricultural loans
|
(128
|
)
|
(10.7
|
)
|
||||
Total nonperforming loans
|
$
|
(1,769
|
)
|
(12.8
|
)
|
|
Non-Performing Loans
|
|||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
|||||||||||||||
Real estate:
|
||||||||||||||||||||
Residential
|
$
|
964
|
$
|
1,181
|
$
|
1,604
|
$
|
1,903
|
$
|
1,402
|
||||||||||
Commercial
|
5,080
|
5,993
|
5,354
|
4,445
|
4,482
|
|||||||||||||||
Agricultural
|
2,877
|
3,206
|
205
|
1,340
|
34
|
|||||||||||||||
Construction
|
-
|
-
|
133
|
-
|
-
|
|||||||||||||||
Consumer
|
8
|
26
|
49
|
109
|
64
|
|||||||||||||||
Other commercial loans
|
2,021
|
2,185
|
2,669
|
4,057
|
1,172
|
|||||||||||||||
Other agricultural loans
|
1,073
|
1,201
|
712
|
5
|
-
|
|||||||||||||||
State & political subdivision loans
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total nonperforming loans
|
12,023
|
13,792
|
10,726
|
11,859
|
7,154
|
•
|
A commercial loan relationship with $2.5 million outstanding, and additional letters of credit of $2.1 million available, secured by undeveloped land, stone
quarries and equipment, was on non-accrual status as of December 31, 2019. The slowdown in the exploration for natural gas has significantly impacted the cash flows of the customer, who provides excavation services and stone for pad
construction related to these activities. During 2019, the Company had the underlying equipment collateral appraised. The 2019 appraisal indicated a decrease in collateral values compared to the appraisal ordered for the loan origination
and an appraisal performed in 2017, however, the loan is still considered well secured on a loan to value basis. Management determined that no specific reserve was required as of December 31, 2019.
|
•
|
An agricultural customer with a total loan relationship of $2.8 million, secured by real estate, equipment and cattle, was on non-accrual status as of
December 31, 2019. The customer declared bankruptcy during the fourth quarter of 2018 and developed a workout plan that was approved in the fourth quarter of 2019 and resulted in two monthly payments being made in the fourth quarter.
Included within these loans to this customer are $1,022,000 of loans which are subject to Farm Service Agency guarantees. Depressed milk prices have created cash flow difficulties for this customer. Absent a sizable and sustained increase
in milk prices, which is not assured, we will need to rely upon the collateral for repayment of interest and principal. As of December 31, 2019, there was a specific reserve of $268,000 for this relationship.
|
•
|
A commercial customer with a loan relationship of $1.7 million, secured by commercial real estate, business assets and vehicles, was on non-accrual status
as of December 31, 2019. The business expanded into a new market, which has not grown as originally expected and has created cashflow issues. Management reviewed the collateral and determined that no specific reserve was required as of
December 31, 2019.
|
•
|
Three loan relationships comprise 57.4% of the non-performing loan balance, which has approximately $268,000 of specific reserves as of December 31, 2019.
|
•
|
The Company has a history of low charge-offs, and while higher in 2019 than the Bank’s historical average were still
only 0.06% of average loans and primarily related to two relationships.
|
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||
Non-interest-bearing deposits
|
$
|
203,793
|
16.9
|
$
|
179,971
|
15.2
|
$
|
171,840
|
15.6
|
|||||||||||||||
NOW accounts
|
340,273
|
28.1
|
336,756
|
28.4
|
337,307
|
30.5
|
||||||||||||||||||
Savings deposits
|
224,456
|
18.5
|
205,334
|
17.3
|
184,057
|
16.7
|
||||||||||||||||||
Money market deposit accounts
|
169,865
|
14.0
|
164,625
|
13.9
|
145,287
|
13.1
|
||||||||||||||||||
Certificates of deposit
|
272,731
|
22.5
|
298,470
|
25.2
|
266,452
|
24.1
|
||||||||||||||||||
Total
|
$
|
1,211,118
|
100.0
|
$
|
1,185,156
|
100.0
|
$
|
1,104,943
|
100.0
|
2019/2018 | 2018/2017 | |||||||||||||||
|
Change
|
Change
|
||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
||||||||||||
Non-interest-bearing deposits
|
$
|
23,822
|
13.2
|
$
|
8,131
|
4.7
|
||||||||||
NOW accounts
|
3,517
|
1.0
|
(551
|
)
|
(0.2
|
)
|
||||||||||
Savings deposits
|
19,122
|
9.3
|
21,277
|
11.6
|
||||||||||||
Money market deposit accounts
|
5,240
|
3.2
|
19,338
|
13.3
|
||||||||||||
Certificates of deposit
|
(25,739
|
)
|
(8.6
|
)
|
32,018
|
12.0
|
||||||||||
Total
|
$
|
25,962
|
2.2
|
$
|
80,213
|
7.3
|
|
2019
|
2018
|
2017
|
|||||||||
3 months or less
|
$
|
10,245
|
$
|
29,574
|
$
|
15,118
|
||||||
Over 3 months through 6 months
|
14,463
|
10,880
|
12,461
|
|||||||||
Over 6 months through 12 months
|
35,604
|
26,778
|
23,775
|
|||||||||
Over 12 months
|
80,589
|
85,719
|
82,572
|
|||||||||
Total
|
$
|
140,901
|
$
|
152,951
|
$
|
133,926
|
||||||
As a percent of total
|
||||||||||||
certificates of deposit
|
51.66
|
%
|
51.25
|
%
|
50.26
|
%
|
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
|
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
||||||||||||||||||
Individuals
|
$
|
664,065
|
54.8
|
$
|
666,255
|
56.2
|
$
|
651,845
|
59.0
|
|||||||||||||||
Businesses and other organizations
|
306,873
|
25.3
|
276,248
|
23.3
|
229,425
|
20.8
|
||||||||||||||||||
State & political subdivisions
|
240,180
|
19.9
|
242,653
|
20.5
|
223,673
|
20.2
|
||||||||||||||||||
Total
|
$
|
1,211,118
|
100.0
|
$
|
1,185,156
|
100.0
|
$
|
1,104,943
|
100.0
|
◾
|
Leasehold improvements and certain equipment for an office opened in 2019 totaling $28,000
|
◾
|
Building and ground improvements totaling $90,000
|
◾
|
Company vehicle purchased totaling $42,000
|
◾
|
Generator totaling $23,000
|
◾
|
Computer, network and copier upgrades totaling $300,000
|
◾
|
Leasehold improvements and certain equipment for an office to be opened in 2019 totaling $236,000
|
◾
|
Building and ground improvements totaling $109,834
|
◾
|
Company vehicle purchased totaling $60,000
|
◾
|
Generator project totaling $24,000
|
◾
|
Computer and copier upgrades totaling $50,000
|
|
One year
|
One to
|
Three to
|
Over Five
|
||||||||||||||||
Contractual Obligations
|
or Less
|
Three Years
|
Five Years
|
Years
|
Total
|
|||||||||||||||
Deposits without a stated maturity
|
$
|
938,387
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
938,387
|
||||||||||
Time deposits
|
119,834
|
118,616
|
29,722
|
4,559
|
272,731
|
|||||||||||||||
FHLB Advances
|
24,794
|
-
|
-
|
-
|
24,794
|
|||||||||||||||
Term borrowings - FHLB
|
20,000
|
11,525
|
10,000
|
-
|
41,525
|
|||||||||||||||
Note Payable
|
7,500
|
-
|
-
|
-
|
7,500
|
|||||||||||||||
Repurchase agreements
|
11,298
|
-
|
-
|
11,298
|
||||||||||||||||
Operating leases
|
279
|
468
|
247
|
291
|
1,285
|
|||||||||||||||
Total
|
$
|
1,122,092
|
$
|
130,609
|
$
|
39,969
|
$
|
4,850
|
$
|
1,297,520
|
Maturity or Re-pricing of Company Assets and Liabilities as of December 31, 2019
|
||||||||||||||||||||||||||||
|
Within
|
Four to
|
One to
|
Two to
|
Three to
|
Over
|
||||||||||||||||||||||
|
Three
|
Twelve
|
Two
|
Three
|
Five
|
Five
|
||||||||||||||||||||||
Months
|
Months
|
Years
|
Years
|
Years
|
Years
|
Total
|
||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||||||
Interest-bearing deposits at banks
|
$
|
793
|
$
|
598
|
$
|
2,982
|
$
|
7,944
|
$
|
2,732
|
$
|
-
|
$
|
15,049
|
||||||||||||||
Investment securities
|
41,499
|
29,847
|
40,188
|
44,546
|
49,637
|
32,090
|
237,807
|
|||||||||||||||||||||
Residential mortgage loans
|
40,932
|
49,136
|
49,478
|
33,784
|
33,233
|
10,525
|
217,088
|
|||||||||||||||||||||
Construction loans
|
4,201
|
5,539
|
5,779
|
-
|
-
|
-
|
15,519
|
|||||||||||||||||||||
Commercial and farm loans
|
178,919
|
105,703
|
165,599
|
165,726
|
139,979
|
22,643
|
778,569
|
|||||||||||||||||||||
Loans to state & political subdivisions
|
21,129
|
18,357
|
10,375
|
2,945
|
7,732
|
33,908
|
94,446
|
|||||||||||||||||||||
Other loans
|
3,037
|
2,134
|
2,038
|
1,243
|
993
|
502
|
9,947
|
|||||||||||||||||||||
Total interest-earning assets
|
$
|
290,510
|
$
|
211,314
|
$
|
276,439
|
$
|
256,188
|
$
|
234,306
|
$
|
99,668
|
$
|
1,368,425
|
||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||||||
NOW accounts
|
$
|
205,531
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
134,742
|
$
|
340,273
|
||||||||||||||
Savings accounts
|
-
|
-
|
-
|
-
|
-
|
224,456
|
224,456
|
|||||||||||||||||||||
Money Market accounts
|
151,940
|
-
|
-
|
-
|
-
|
17,925
|
169,865
|
|||||||||||||||||||||
Certificates of deposit
|
37,408
|
82,426
|
68,690
|
49,926
|
29,722
|
4,559
|
272,731
|
|||||||||||||||||||||
Short-term borrowing
|
56,092
|
-
|
-
|
-
|
-
|
-
|
56,092
|
|||||||||||||||||||||
Long-term borrowing
|
7,500
|
-
|
6,800
|
4,725
|
10,000
|
-
|
29,025
|
|||||||||||||||||||||
Total interest-bearing liabilities
|
$
|
458,471
|
$
|
82,426
|
$
|
75,490
|
$
|
54,651
|
$
|
39,722
|
$
|
381,682
|
$
|
1,092,442
|
||||||||||||||
Excess interest-earning
|
||||||||||||||||||||||||||||
assets (liabilities)
|
$
|
(167,961
|
)
|
$
|
128,888
|
$
|
200,949
|
$
|
201,537
|
$
|
194,584
|
$
|
(282,014
|
)
|
||||||||||||||
Cumulative interest-earning assets
|
$
|
290,510
|
$
|
501,824
|
$
|
778,263
|
$
|
1,034,451
|
$
|
1,268,757
|
$
|
1,368,425
|
||||||||||||||||
Cumulative interest-bearing liabilities
|
458,471
|
540,897
|
616,387
|
671,038
|
710,760
|
1,092,442
|
||||||||||||||||||||||
Cumulative gap
|
$
|
(167,961
|
)
|
$
|
(39,073
|
)
|
$
|
161,876
|
$
|
363,413
|
$
|
557,997
|
$
|
275,983
|
||||||||||||||
Cumulative interest rate
|
||||||||||||||||||||||||||||
sensitivity ratio (1)
|
0.63
|
0.93
|
1.26
|
1.54
|
1.79
|
1.25
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
(1) Cumulative interest-earning assets divided by interest-bearing liabilities.
|
|
Change In
|
% Change In
|
||||||||||
|
Prospective One-Year
|
Prospective
|
Prospective
|
|||||||||
Changes in Rates
|
Net Interest Income
|
Net Interest Income
|
Net Interest Income
|
|||||||||
-100 Shock
|
$
|
50,418
|
$
|
(146
|
)
|
(0.29
|
)
|
|||||
Base
|
50,564
|
-
|
-
|
|||||||||
+100 Shock
|
49,572
|
(992
|
)
|
(1.96
|
)
|
|||||||
+200 Shock
|
48,508
|
(2,056
|
)
|
(4.07
|
)
|
|||||||
+300 Shock
|
47,389
|
(3,175
|
)
|
(6.28
|
)
|
|||||||
+400 Shock
|
46,152
|
(4,412
|
)
|
(8.73
|
)
|
Citizens Financial Services, Inc.
|
|||||||||||
Consolidated Balance Sheet
|
|||||||||||
December 31,
|
|||||||||||
(in thousands, except share data)
|
2019
|
2018
|
|||||||||
ASSETS:
|
|||||||||||
Cash and cash equivalents:
|
|||||||||||
Noninterest-bearing
|
$
|
17,727
|
$
|
15,327
|
|||||||
Interest-bearing
|
793
|
1,470
|
|||||||||
Total cash and cash equivalents
|
18,520
|
16,797
|
|||||||||
Interest bearing time deposits with other banks
|
14,256
|
15,498
|
|||||||||
Equity securities
|
701
|
516
|
|||||||||
Available-for-sale securities
|
240,706
|
241,010
|
|||||||||
Loans held for sale
|
815
|
1,127
|
|||||||||
Loans (net of allowance for loan losses:
|
|||||||||||
|
2019, $13,845; 2018, $12,884)
|
|
1,101,724
|
1,068,999
|
|||||||
Premises and equipment
|
15,933
|
16,273
|
|||||||||
Accrued interest receivable
|
4,555
|
4,452
|
|||||||||
Goodwill
|
23,296
|
23,296
|
|||||||||
Bank owned life insurance
|
28,128
|
27,505
|
|||||||||
Other intangibles
|
1,346
|
1,623
|
|||||||||
Other assets
|
16,359
|
13,616
|
|||||||||
TOTAL ASSETS
|
$
|
1,466,339
|
$
|
1,430,712
|
|||||||
LIABILITIES:
|
|||||||||||
Deposits:
|
|||||||||||
Noninterest-bearing
|
$
|
203,793
|
$
|
179,971
|
|||||||
Interest-bearing
|
1,007,325
|
1,005,185
|
|||||||||
Total deposits
|
1,211,118
|
1,185,156
|
|||||||||
Borrowed funds
|
85,117
|
91,194
|
|||||||||
Accrued interest payable
|
1,088
|
1,076
|
|||||||||
Other liabilities
|
14,242
|
14,057
|
|||||||||
TOTAL LIABILITIES
|
1,311,565
|
1,291,483
|
|||||||||
STOCKHOLDERS' EQUITY:
|
|||||||||||
Preferred Stock $1.00 par value; authorized 3,000,000 shares
|
|||||||||||
2019 and 2018; none issued in 2019 or 2018
|
-
|
-
|
|||||||||
Common Stock
|
|||||||||||
$1.00 par value; authorized 25,000,000 shares 2019 and 2018;
|
|||||||||||
issued 3,938,668 and 3,904,212 shares in 2019 and 2018, respectively
|
3,939
|
3,904
|
|||||||||
Additional paid-in capital
|
55,089
|
53,099
|
|||||||||
Retained earnings
|
110,800
|
99,727
|
|||||||||
Accumulated other comprehensive loss
|
(629
|
)
|
(3,921
|
)
|
|||||||
Treasury stock, at cost:
|
|||||||||||
413,607 and 399,616 shares for 2019 and 2018, respectively
|
(14,425
|
)
|
(13,580
|
)
|
|||||||
TOTAL STOCKHOLDERS' EQUITY
|
154,774
|
139,229
|
|||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
1,466,339
|
$
|
1,430,712
|
|||||||
See accompanying notes to consolidated financial statements.
|
Citizens Financial Services, Inc.
|
||||||||||||
Consolidated Statement of Income
|
||||||||||||
Year Ended December 31,
|
||||||||||||
(in thousands, except per share data)
|
2019
|
2018
|
2017
|
|||||||||
INTEREST AND DIVIDEND INCOME:
|
||||||||||||
Interest and fees on loans
|
$
|
54,911
|
$
|
50,458
|
$
|
42,127
|
||||||
Interest-bearing deposits with banks
|
407
|
319
|
186
|
|||||||||
Investment securities:
|
||||||||||||
Taxable
|
4,673
|
3,790
|
3,095
|
|||||||||
Nontaxable
|
1,492
|
1,744
|
2,414
|
|||||||||
Dividends
|
497
|
447
|
271
|
|||||||||
TOTAL INTEREST AND DIVIDEND INCOME
|
61,980
|
56,758
|
48,093
|
|||||||||
INTEREST EXPENSE:
|
||||||||||||
Deposits
|
9,219
|
6,910
|
4,625
|
|||||||||
Borrowed funds
|
2,821
|
2,664
|
1,214
|
|||||||||
TOTAL INTEREST EXPENSE
|
12,040
|
9,574
|
5,839
|
|||||||||
NET INTEREST INCOME
|
49,940
|
47,184
|
42,254
|
|||||||||
Provision for loan losses
|
1,675
|
1,925
|
2,540
|
|||||||||
NET INTEREST INCOME AFTER PROVISION FOR
|
||||||||||||
LOAN LOSSES
|
48,265
|
45,259
|
39,714
|
|||||||||
NON-INTEREST INCOME:
|
||||||||||||
Service charges
|
4,687
|
4,667
|
4,456
|
|||||||||
Trust
|
750
|
705
|
755
|
|||||||||
Brokerage and insurance
|
1,141
|
790
|
635
|
|||||||||
Equity security gains, net
|
120
|
-
|
-
|
|||||||||
Available for sale security gains (losses), net
|
24
|
(19
|
)
|
1,035
|
||||||||
Gains on loans sold
|
473
|
382
|
578
|
|||||||||
Earnings on bank owned life insurance
|
623
|
622
|
660
|
|||||||||
Other
|
568
|
588
|
537
|
|||||||||
TOTAL NON-INTEREST INCOME
|
8,386
|
7,735
|
8,656
|
|||||||||
NON-INTEREST EXPENSES:
|
||||||||||||
Salaries and employee benefits
|
20,456
|
19,094
|
17,655
|
|||||||||
Occupancy
|
2,174
|
2,126
|
1,988
|
|||||||||
Furniture and equipment
|
674
|
536
|
603
|
|||||||||
Professional fees
|
1,423
|
1,925
|
1,299
|
|||||||||
Federal depository insurance
|
75
|
417
|
385
|
|||||||||
Pennsylvania shares tax
|
808
|
835
|
705
|
|||||||||
Amortization of intangibles
|
259
|
296
|
297
|
|||||||||
Merger and acquisition
|
466
|
-
|
165
|
|||||||||
ORE expenses
|
376
|
158
|
395
|
|||||||||
Software expenses
|
948
|
876
|
795
|
|||||||||
Other
|
5,682
|
5,294
|
5,027
|
|||||||||
TOTAL NON-INTEREST EXPENSES
|
33,341
|
31,557
|
29,314
|
|||||||||
Income before provision for income taxes
|
23,310
|
21,437
|
19,056
|
|||||||||
Provision for income taxes
|
3,820
|
3,403
|
6,031
|
|||||||||
NET INCOME
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
||||||
PER COMMON SHARE DATA:
|
||||||||||||
NET INCOME - BASIC
|
$
|
5.54
|
$
|
5.09
|
$
|
3.67
|
||||||
NET INCOME - DILUTED
|
$
|
5.53
|
$
|
5.09
|
$
|
3.67
|
||||||
CASH DIVIDENDS PER SHARE
|
$
|
1.78
|
$
|
1.73
|
$
|
1.64
|
||||||
|
||||||||||||
Number of shares used in computation - basic
|
3,520,832
|
3,539,674
|
3,550,094
|
|||||||||
Number of shares used in computation - diluted
|
3,522,928
|
3,541,662
|
3,551,818
|
|||||||||
See accompanying notes to consolidated financial statements.
|
Citizens Financial Services, Inc.
|
||||||||||||
Consolidated Statement of Changes in Comprehensive Income
|
||||||||||||
Year Ended December 31,
|
||||||||||||
|
||||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Net Income
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
||||||
|
||||||||||||
Other Comprehensive income (loss)
|
||||||||||||
Securities available for sale
|
||||||||||||
Unrealized holding gain (loss) during the period
|
4,155
|
(913
|
)
|
(1,283
|
)
|
|||||||
Income tax (benefit)
|
872
|
(193
|
)
|
(436
|
)
|
|||||||
Subtotal
|
3,283
|
(720
|
)
|
(847
|
)
|
|||||||
Reclassification adjustment for (gains) losses
|
||||||||||||
included in income
|
(24
|
)
|
19
|
(1,035
|
)
|
|||||||
Income tax (benefit)
|
(4
|
)
|
4
|
(352
|
)
|
|||||||
Subtotal
|
(20
|
)
|
15
|
(683
|
)
|
|||||||
|
||||||||||||
Change in unrecognized pension costs
|
36
|
229
|
127
|
|||||||||
Income tax (benefit)
|
7
|
48
|
44
|
|||||||||
Subtotal
|
29
|
181
|
83
|
|||||||||
|
||||||||||||
Net other comprehensive income (loss)
|
3,292
|
(524
|
)
|
(1,447
|
)
|
|||||||
Comprehensive income
|
$
|
22,782
|
$
|
17,510
|
$
|
11,578
|
||||||
See accompanying notes to consolidated financial statements.
|
Citizens Financial Services, Inc.
|
||||||||||||||||||||||||||||
Consolidated Statement of Changes in Stockholders' Equity
|
||||||||||||||||||||||||||||
|
Accumulated
|
|||||||||||||||||||||||||||
|
Additional
|
Other
|
||||||||||||||||||||||||||
|
Common Stock
|
Paid-in
|
Retained
|
Comprehensive
|
Treasury
|
|||||||||||||||||||||||
(in thousands, except share data)
|
Shares
|
Amount
|
Capital
|
Earnings
|
(Loss)
|
Stock
|
Total
|
|||||||||||||||||||||
Balance, December 31, 2016
|
3,704,375
|
$
|
3,704
|
$
|
42,250
|
$
|
91,278
|
$
|
(1,392
|
)
|
$
|
(12,572
|
)
|
$
|
123,268
|
|||||||||||||
Net income
|
13,025
|
13,025
|
||||||||||||||||||||||||||
Net other comprehensive income
|
(1,447
|
)
|
(1,447
|
)
|
||||||||||||||||||||||||
Stock dividend
|
165,564
|
166
|
8,857
|
(9,023
|
)
|
-
|
||||||||||||||||||||||
Purchase of treasury stock (17,990 shares)
|
(979
|
)
|
(979
|
)
|
||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards
|
(224
|
)
|
296
|
72
|
||||||||||||||||||||||||
Restricted stock vesting
|
206
|
206
|
||||||||||||||||||||||||||
Sale of treasury stock
|
-
|
43
|
43
|
|||||||||||||||||||||||||
Forfeited restricted stock
|
2
|
(2
|
)
|
-
|
||||||||||||||||||||||||
Change in other comprehensive income due to change
|
||||||||||||||||||||||||||||
in the federal tax rate
|
559
|
(559
|
)
|
-
|
||||||||||||||||||||||||
Cash dividend reinvestment paid from treasury stock
|
17
|
(680
|
)
|
663
|
-
|
|||||||||||||||||||||||
Cash dividends, $1.64 per share
|
(5,177
|
)
|
(5,177
|
)
|
||||||||||||||||||||||||
Balance, December 31, 2017
|
3,869,939
|
$
|
3,870
|
$
|
51,108
|
$
|
89,982
|
$
|
(3,398
|
)
|
$
|
(12,551
|
)
|
$
|
129,011
|
|||||||||||||
Net income
|
18,034
|
18,034
|
||||||||||||||||||||||||||
Net other comprehensive income
|
(524
|
)
|
(524
|
)
|
||||||||||||||||||||||||
Stock dividend
|
34,273
|
34
|
2,108
|
(2,142
|
)
|
-
|
||||||||||||||||||||||
Purchase of treasury stock (18,943 shares)
|
(1,175
|
)
|
(1,175
|
)
|
||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards
|
(364
|
)
|
116
|
(248
|
)
|
|||||||||||||||||||||||
Restricted stock vesting
|
247
|
247
|
||||||||||||||||||||||||||
Change in Accounting policy for equity securities
|
(1
|
)
|
1
|
-
|
||||||||||||||||||||||||
Cash dividend reinvestment paid from treasury stock
|
-
|
(30
|
)
|
30
|
-
|
|||||||||||||||||||||||
Cash dividends, $1.73 per share
|
(6,116
|
)
|
(6,116
|
)
|
||||||||||||||||||||||||
Balance, December 31, 2018
|
3,904,212
|
$
|
3,904
|
$
|
53,099
|
$
|
99,727
|
$
|
(3,921
|
)
|
$
|
(13,580
|
)
|
$
|
139,229
|
|||||||||||||
|
||||||||||||||||||||||||||||
Net income
|
19,490
|
19,490
|
||||||||||||||||||||||||||
Net other comprehensive income
|
3,292
|
3,292
|
||||||||||||||||||||||||||
Stock dividend
|
34,456
|
35
|
2,067
|
(2,102
|
)
|
-
|
||||||||||||||||||||||
Purchase of treasury stock (21,551 shares)
|
(1,291
|
)
|
(1,291
|
)
|
||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards
|
(374
|
)
|
489
|
115
|
||||||||||||||||||||||||
Restricted stock vesting
|
254
|
254
|
||||||||||||||||||||||||||
Forfeited restricted stock
|
43
|
(43
|
)
|
-
|
||||||||||||||||||||||||
Cash dividends, $1.78 per share
|
(6,315
|
)
|
(6,315
|
)
|
||||||||||||||||||||||||
Balance, December 31, 2019
|
3,938,668
|
$
|
3,939
|
$
|
55,089
|
$
|
110,800
|
$
|
(629
|
)
|
$
|
(14,425
|
)
|
$
|
154,774
|
|||||||||||||
|
||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
|
Citizens Financial Services, Inc.
|
||||||||||||
Consolidated Statement of Cash Flows
|
||||||||||||
|
Year Ended December 31,
|
|||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Cash Flows from Operating Activities:
|
||||||||||||
Net income
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
||||||
Adjustments to reconcile net income to net
|
||||||||||||
cash provided by operating activities:
|
||||||||||||
Provision for loan losses
|
1,675
|
1,925
|
2,540
|
|||||||||
Depreciation and amortization
|
498
|
387
|
200
|
|||||||||
Amortization and accretion on investment securities
|
308
|
999
|
1,441
|
|||||||||
Deferred income taxes
|
317
|
(435
|
)
|
1,448
|
||||||||
Investment securities (gains) losses, net
|
(144
|
)
|
19
|
(1,035
|
)
|
|||||||
Earnings on bank owned life insurance
|
(623
|
)
|
(622
|
)
|
(660
|
)
|
||||||
Stock awards
|
369
|
308
|
278
|
|||||||||
Originations of loans held for sale
|
(21,157
|
)
|
(19,153
|
)
|
(25,305
|
)
|
||||||
Proceeds from sales of loans held for sale
|
21,780
|
19,696
|
26,086
|
|||||||||
Realized gains on loans sold
|
(473
|
)
|
(382
|
)
|
(578
|
)
|
||||||
Increase in accrued interest receivable
|
(103
|
)
|
(256
|
)
|
(34
|
)
|
||||||
Increase in accrued interest payable
|
12
|
179
|
147
|
|||||||||
Other, net
|
(182
|
)
|
787
|
(1,814
|
)
|
|||||||
Net cash provided by operating activities
|
21,767
|
21,486
|
15,739
|
|||||||||
Cash Flows from Investing Activities:
|
||||||||||||
Available-for-sale securities:
|
||||||||||||
Proceeds from sales of available-for-sale securities
|
10,489
|
27,149
|
58,177
|
|||||||||
Proceeds from maturity and principal repayments of securities
|
62,625
|
54,041
|
60,081
|
|||||||||
Purchase of securities
|
(68,963
|
)
|
(67,899
|
)
|
(54,003
|
)
|
||||||
Purchase of equity securities
|
(65
|
)
|
(425
|
)
|
-
|
|||||||
Proceeds from redemption of Regulatory Stock
|
10,787
|
10,209
|
7,425
|
|||||||||
Purchase of Regulatory Stock
|
(11,526
|
)
|
(9,537
|
)
|
(8,903
|
)
|
||||||
Net increase in loans
|
(37,492
|
)
|
(81,113
|
)
|
(161,127
|
)
|
||||||
Purchase of interest bearing time deposits
|
(248
|
)
|
(6,457
|
)
|
(7,301
|
)
|
||||||
Proceeds from matured interest bearing time deposits with other banks
|
1,490
|
-
|
744
|
|||||||||
Proceeds from sale of interest bearing time deposits with other banks
|
-
|
1,239
|
3,243
|
|||||||||
Purchase of premises, equipment and software
|
(483
|
)
|
(500
|
)
|
(208
|
)
|
||||||
Proceeds from sale of premises and equipment
|
7
|
-
|
-
|
|||||||||
Proceeds from sale of foreclosed assets held for sale
|
1,056
|
942
|
846
|
|||||||||
Acquisition, net of cash paid
|
-
|
-
|
(4,399
|
)
|
||||||||
Net cash used in investing activities
|
(32,323
|
)
|
(72,351
|
)
|
(105,425
|
)
|
||||||
Cash Flows from Financing Activities:
|
||||||||||||
Net increase in deposits
|
25,962
|
80,213
|
61,560
|
|||||||||
Proceeds from long-term borrowings
|
10,000
|
10
|
9
|
|||||||||
Repayments of long-term borrowings
|
(3,123
|
)
|
(1,000
|
)
|
(2,000
|
)
|
||||||
Net (decrease) increase in short-term borrowed funds
|
(12,954
|
)
|
(22,480
|
)
|
36,993
|
|||||||
Purchase of treasury stock
|
(1,291
|
)
|
(1,175
|
)
|
(979
|
)
|
||||||
Purchase of restricted stock
|
-
|
(307
|
)
|
-
|
||||||||
Reissuance of treasury stock to employee stock purchase plan
|
-
|
-
|
43
|
|||||||||
Dividends paid
|
(6,315
|
)
|
(6,116
|
)
|
(5,177
|
)
|
||||||
Net cash provided by financing activities
|
12,279
|
49,145
|
90,449
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
1,723
|
(1,720
|
)
|
763
|
Cash and Cash Equivalents at Beginning of Year
|
16,797
|
18,517
|
17,754
|
|||||||||
Cash and Cash Equivalents at End of Year
|
$
|
18,520
|
$
|
16,797
|
$
|
18,517
|
||||||
|
||||||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||||||
Interest paid
|
$
|
12,028
|
$
|
9,395
|
$
|
5,662
|
||||||
Income taxes paid
|
$
|
3,300
|
$
|
3,050
|
$
|
4,550
|
||||||
Non-cash activities:
|
||||||||||||
Stock dividend
|
$
|
2,102
|
$
|
2,142
|
$
|
9,023
|
||||||
Real estate acquired in settlement of loans
|
$
|
3,836
|
$
|
393
|
$
|
911
|
||||||
Investments purchased and not settled included in other liabilities
|
$
|
-
|
$
|
1,564
|
$
|
-
|
||||||
Right of use asset and liability
|
$
|
1,454
|
$
|
-
|
$
|
-
|
||||||
|
||||||||||||
Acquisition of
|
State College S&T branch
|
|||||||||||
Non-cash assets acquired
|
||||||||||||
Available-for-sale securities
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Interest bearing time deposits with other banks
|
-
|
-
|
-
|
|||||||||
Loans
|
-
|
-
|
39,847
|
|||||||||
Premises and equipment
|
-
|
-
|
86
|
|||||||||
Accrued interest receivable
|
-
|
-
|
74
|
|||||||||
Bank owned life insurance
|
-
|
-
|
-
|
|||||||||
Intangibles
|
-
|
-
|
145
|
|||||||||
Deferred tas asset
|
-
|
-
|
-
|
|||||||||
Other assets
|
-
|
-
|
-
|
|||||||||
Goodwill
|
-
|
-
|
2,207
|
|||||||||
|
-
|
-
|
42,359
|
|||||||||
|
||||||||||||
Liabilities assumed
|
||||||||||||
Noninterest-bearing deposits
|
-
|
-
|
37,880
|
|||||||||
Interest-bearing deposits
|
-
|
-
|
-
|
|||||||||
Accrued interest payable
|
-
|
-
|
29
|
|||||||||
Other liabilities
|
-
|
-
|
51
|
|||||||||
|
-
|
-
|
37,960
|
|||||||||
Net non-cash liabilities acquired
|
-
|
-
|
4,399
|
|||||||||
Cash and cash equivalents acquired
|
$
|
-
|
$
|
-
|
$
|
154
|
||||||
|
||||||||||||
See accompanying notes to consolidated financial statements.
|
•
|
Level of and trends in delinquencies, impaired/classified loans
|
◾
|
Change in volume and severity of past due loans
|
◾
|
Volume of non-accrual loans
|
◾
|
Volume and severity of classified, adversely or graded loans
|
•
|
Level of and trends in charge-offs and recoveries
|
•
|
Trends in volume, terms and nature of the loan portfolio
|
•
|
Effects of any changes in risk selection and underwriting standards and any other changes in lending and recovery policies, procedures and practices
|
•
|
Changes in the quality of the Bank’s loan review system
|
•
|
Experience, ability and depth of lending management and other relevant staff
|
•
|
National, state, regional and local economic trends and business conditions
|
◾
|
General economic conditions
|
◾
|
Unemployment rates
|
◾
|
Inflation / CPI
|
◾
|
Changes in values of underlying collateral for collateral-dependent loans
|
•
|
Industry conditions including the effects of external factors such as competition, legal, and regulatory requirements on the level of estimated credit losses.
|
•
|
Existence and effect of any credit concentrations, and changes in the level of such concentrations
|
•
|
Any change in the level of board oversight
|
2019
|
2018
|
2017
|
||||||||||
Basic earnings per share computation:
|
||||||||||||
Net income applicable to common stock
|
$
|
19,490,000
|
$
|
18,034,000
|
$
|
13,025,000
|
||||||
Weighted average common shares outstanding
|
3,520,832
|
3,539,674
|
3,550,094
|
|||||||||
Earnings per share - basic
|
$
|
5.54
|
$
|
5.09
|
$
|
3.67
|
||||||
|
||||||||||||
Diluted earnings per share computation:
|
||||||||||||
Net income applicable to common stock
|
$
|
19,490,000
|
$
|
18,034,000
|
$
|
13,025,000
|
||||||
|
||||||||||||
Weighted average common shares outstanding for basic earnings per share
|
3,520,832
|
3,539,674
|
3,550,094
|
|||||||||
Add: Dilutive effects of restricted stock
|
2,096
|
1,988
|
1,724
|
|||||||||
Weighted average common shares outstanding for dilutive earnings per share
|
3,522,928
|
3,541,662
|
3,551,818
|
|||||||||
Earnings per share - dilutive
|
$
|
5.53
|
$
|
5.09
|
$
|
3.67
|
•
|
Service charges on deposit accounts – The Company has contracts with its deposit customers where fees are charged if
certain parameters are not met. These agreements can be cancelled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Company has an unconditional right to the
fee consideration. The Company also has transaction fees related to specific transactions or activities resulting from a customer request or activity that include overdraft fees, online banking fees, interchange fees, ATM fees and other
transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time upon the completion of the requested service/transaction.
|
•
|
Trust fees – Typical contracts for trust services are based on a fixed percentage of the assets earned ratably over a defined period and
billed on a monthly basis. Fees charged to customers’ accounts are recognized as revenue over the period during which the Company fulfills its performance obligation under the contract (i.e., holding client asset in a managed fiduciary
trust account). For these accounts, the performance obligation of the Company is typically satisfied by holding and managing the customer’s assets over time. Other fees related to specific customer requests are attributable to specific
performance obligations of the Company where the revenue is recognized at a defined point in time, upon completion of the requested service/transaction.
|
•
|
Gains (losses) on sale of other real estate owned – Gains and losses are recognized at the completion of the property sale when the buyer
obtains control of the real estate and all of the performance obligations of the Company have been satisfied. Evidence of the buyer obtaining control of the asset include transfer of the property title, physical possession of the asset, and
the buyer obtaining control of the risks and rewards related to the asset. In situations where the Company agrees to provide financing to facilitate the sale, additional analysis is performed to ensure that the contract for sale identifies
the buyer and seller, the asset to be transferred, payment terms, and that the contract has a true commercial substance and that collection of amounts due from the buyer are reasonable. In situations where financing terms are not reflective
of current market terms, the transaction price is discounted impacting the gain/loss and the carrying value of the asset.
|
•
|
Brokerage and insurance – Fees includes commissions from the sales of investments and insurance products recognized on a trade date basis
as the performance obligation is satisfied at the point in time in which the trade is processed. Additional fees are based on a percentage of the market value of customer accounts and billed on a monthly or quarterly basis. The Company’s
performance obligation under the contracts with certain customers is generally satisfied through the passage of time as the Company monitors and manages the assets in the customer’s portfolio and is not dependent on certain return or
performance level of the customer’s portfolio. Fees for these services are billed monthly and are recorded as revenue at the end of the month for which the wealth management service has been performed. Other performance obligations (such as
the delivery of account statements to customers) are generally considered immaterial to the overall transaction price.
|
Revenue stream
|
||||||||
Service charges on deposit accounts
|
2019
|
2018
|
||||||
Overdraft fees
|
$
|
1,536
|
$
|
1,551
|
||||
Statement fees
|
206
|
206
|
||||||
Interchange revenue
|
2,294
|
2,259
|
||||||
ATM income
|
392
|
400
|
||||||
Other service charges
|
259
|
251
|
||||||
Total Service Charges
|
4,687
|
4,667
|
||||||
Trust
|
750
|
705
|
||||||
Brokerage and insurance
|
1,141
|
790
|
||||||
Other
|
348
|
350
|
||||||
Total
|
$
|
6,926
|
$
|
6,512
|
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
|||||||||||||
December 31, 2019
|
Cost
|
Gains
|
Losses
|
Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
U.S. Agency securities
|
$
|
83,410
|
$
|
1,523
|
$
|
(70
|
)
|
$
|
84,863
|
|||||||
U.S. Treasuries
|
27,394
|
267
|
-
|
27,661
|
||||||||||||
Obligations of state and
|
||||||||||||||||
political subdivisions
|
60,667
|
865
|
(77
|
)
|
61,455
|
|||||||||||
Corporate obligations
|
3,250
|
78
|
-
|
3,328
|
||||||||||||
Mortgage-backed securities in
|
||||||||||||||||
government sponsored entities
|
63,086
|
468
|
(155
|
)
|
63,399
|
|||||||||||
Total available-for-sale securities
|
$
|
237,807
|
$
|
3,201
|
$
|
(302
|
)
|
$
|
240,706
|
|||||||
December 31, 2018
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
U.S. Agency securities
|
$
|
106,516
|
$
|
509
|
$
|
(640
|
)
|
$
|
106,385
|
|||||||
U.S. Treasuries
|
33,813
|
-
|
(455
|
)
|
33,358
|
|||||||||||
Obligations of state and
|
||||||||||||||||
political subdivisions
|
52,074
|
150
|
(177
|
)
|
52,047
|
|||||||||||
Corporate obligations
|
3,000
|
34
|
-
|
3,034
|
||||||||||||
Mortgage-backed securities in
|
||||||||||||||||
government sponsored entities
|
46,839
|
59
|
(712
|
)
|
46,186
|
|||||||||||
Total available-for-sale securities
|
$
|
242,242
|
$
|
752
|
$
|
(1,984
|
)
|
$
|
241,010
|
|
Less than Twelve Months
|
Twelve Months or Greater
|
Total
|
|||||||||||||||||||||
Gross
|
Gross
|
Gross
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
2019
|
Value
|
Losses
|
Value
|
Losses
|
Value
|
Losses
|
||||||||||||||||||
U.S. agency securities
|
$
|
14,587
|
$
|
(63
|
)
|
$
|
13,094
|
$
|
(7
|
)
|
$
|
27,681
|
$
|
(70
|
)
|
|||||||||
U.S. Treasuries
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Obligations of states and
|
||||||||||||||||||||||||
political subdivisions
|
7,508
|
(75
|
)
|
1,507
|
(2
|
)
|
9,015
|
(77
|
)
|
|||||||||||||||
Corporate obligations
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Mortgage-backed securities in
|
||||||||||||||||||||||||
government sponsored entities
|
27,737
|
(97
|
)
|
9,559
|
(58
|
)
|
37,296
|
(155
|
)
|
|||||||||||||||
Total securities
|
$
|
49,832
|
$
|
(235
|
)
|
$
|
24,160
|
$
|
(67
|
)
|
$
|
73,992
|
$
|
(302
|
)
|
|||||||||
2018
|
||||||||||||||||||||||||
U.S. agency securities
|
$
|
5,981
|
$
|
(5
|
)
|
$
|
52,673
|
$
|
(635
|
)
|
$
|
58,654
|
$
|
(640
|
)
|
|||||||||
U.S. Treasuries
|
4,948
|
(31
|
)
|
28,410
|
(424
|
)
|
33,358
|
(455
|
)
|
|||||||||||||||
Obligations of states and
|
||||||||||||||||||||||||
political subdivisions
|
8,979
|
(22
|
)
|
12,441
|
(155
|
)
|
21,420
|
(177
|
)
|
|||||||||||||||
Corporate obligations
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Mortgage-backed securities in
|
||||||||||||||||||||||||
government sponsored entities
|
5,272
|
(18
|
)
|
32,570
|
(694
|
)
|
37,842
|
(712
|
)
|
|||||||||||||||
Total securities
|
$
|
25,180
|
$
|
(76
|
)
|
$
|
126,094
|
$
|
(1,908
|
)
|
$
|
151,274
|
$
|
(1,984
|
)
|
|
2019
|
2018
|
2017
|
|||||||||
Gross gains
|
$
|
25
|
$
|
160
|
$
|
1,205
|
||||||
Gross losses
|
(1
|
)
|
(179
|
)
|
(170
|
)
|
||||||
Net (losses) gains
|
$
|
24
|
$
|
(19
|
)
|
$
|
1,035
|
Equity Securities
|
2019
|
2018
|
||||||
Net gains recognized in equity securities during the period
|
$
|
120
|
$
|
-
|
||||
Less: Net gains realized on the sale of equity securities during the period
|
-
|
-
|
||||||
Net unrealized gains
|
$
|
120
|
$
|
-
|
Amortized
|
||||||||
|
Cost
|
Fair Value
|
||||||
Available-for-sale securities:
|
||||||||
Due in one year or less
|
$
|
24,612
|
$
|
24,626
|
||||
Due after one year through five years
|
79,537
|
81,217
|
||||||
Due after five years through ten years
|
42,306
|
42,728
|
||||||
Due after ten years
|
91,352
|
92,135
|
||||||
Total
|
$
|
237,807
|
$
|
240,706
|
2019
|
Total Loans
|
Individually evaluated for impairment
|
Loans acquired with deteriorated credit quality
|
Collectively evaluated for impairment
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Residential
|
$
|
217,088
|
$
|
1,166
|
$
|
23
|
$
|
215,899
|
||||||||
Commercial
|
342,023
|
11,537
|
1,210
|
329,276
|
||||||||||||
Agricultural
|
311,464
|
3,782
|
-
|
307,682
|
||||||||||||
Construction
|
15,519
|
-
|
-
|
15,519
|
||||||||||||
Consumer
|
9,947
|
4
|
-
|
9,943
|
||||||||||||
Other commercial loans
|
69,970
|
1,902
|
49
|
68,019
|
||||||||||||
Other agricultural loans
|
55,112
|
1,281
|
-
|
53,831
|
||||||||||||
State and political subdivision loans
|
94,446
|
-
|
-
|
94,446
|
||||||||||||
Total
|
1,115,569
|
19,672
|
1,282
|
1,094,615
|
||||||||||||
Allowance for loan losses
|
13,845
|
735
|
-
|
13,110
|
||||||||||||
Net loans
|
$
|
1,101,724
|
$
|
18,937
|
$
|
1,282
|
$
|
1,081,505
|
2018
|
Total Loans
|
Individually evaluated for impairment
|
Loans acquired with deteriorated credit quality
|
Collectively evaluated for impairment
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Residential
|
$
|
215,305
|
$
|
890
|
$
|
28
|
$
|
214,387
|
||||||||
Commercial
|
319,265
|
13,327
|
1,321
|
304,617
|
||||||||||||
Agricultural
|
284,520
|
5,592
|
-
|
278,928
|
||||||||||||
Construction
|
33,913
|
-
|
-
|
33,913
|
||||||||||||
Consumer
|
9,858
|
-
|
-
|
9,858
|
||||||||||||
Other commercial loans
|
74,118
|
2,206
|
510
|
71,402
|
||||||||||||
Other agricultural loans
|
42,186
|
1,435
|
-
|
40,751
|
||||||||||||
State and political subdivision loans
|
102,718
|
-
|
-
|
102,718
|
||||||||||||
Total
|
1,081,883
|
23,450
|
1,859
|
1,056,574
|
||||||||||||
Allowance for loan losses
|
12,884
|
676
|
-
|
12,208
|
||||||||||||
Net loans
|
$
|
1,068,999
|
$
|
22,774
|
$
|
1,859
|
$
|
1,044,366
|
|
December 31, 2019
|
December 31, 2018
|
||||||
Balance at beginning of period
|
$
|
104
|
$
|
106
|
||||
Accretion
|
(15
|
)
|
(95
|
)
|
||||
Reclassification of non-accretable discount
|
-
|
93
|
||||||
Balance at end of period
|
$
|
89
|
$
|
104
|
December 31, 2019
|
December 31, 2018
|
|||||||
Outstanding balance
|
$
|
4,072
|
$
|
4,529
|
||||
Carrying amount
|
1,282
|
1,859
|
|
Recorded
|
Recorded
|
||||||||||||||||||
|
Unpaid
|
Investment
|
Investment
|
Total
|
||||||||||||||||
|
Principal
|
With No
|
With
|
Recorded
|
Related
|
|||||||||||||||
2019
|
Balance
|
Allowance
|
Allowance
|
Investment
|
Allowance
|
|||||||||||||||
Real estate loans:
|
||||||||||||||||||||
Mortgages
|
$
|
1,212
|
$
|
794
|
$
|
223
|
$
|
1,017
|
$
|
20
|
||||||||||
Home Equity
|
170
|
83
|
66
|
149
|
12
|
|||||||||||||||
Commercial
|
12,070
|
10,723
|
814
|
11,537
|
251
|
|||||||||||||||
Agricultural
|
3,900
|
1,580
|
2,202
|
3,782
|
151
|
|||||||||||||||
Consumer
|
4
|
4
|
-
|
4
|
-
|
|||||||||||||||
Other commercial loans
|
2,517
|
1,555
|
347
|
1,902
|
147
|
|||||||||||||||
Other agricultural loans
|
1,347
|
126
|
1,155
|
1,281
|
154
|
|||||||||||||||
Total
|
$
|
21,220
|
$
|
14,865
|
$
|
4,807
|
$
|
19,672
|
$
|
735
|
Recorded
|
Recorded
|
|||||||||||||||||||
|
Unpaid
|
Investment
|
Investment
|
Total
|
||||||||||||||||
2018
|
Principal
|
With No
|
With
|
Recorded
|
Related
|
|||||||||||||||
Real estate loans:
|
Balance
|
Allowance
|
Allowance
|
Investment
|
Allowance
|
|||||||||||||||
Mortgages
|
$
|
932
|
$
|
515
|
$
|
288
|
$
|
803
|
$
|
10
|
||||||||||
Home Equity
|
106
|
12
|
75
|
87
|
14
|
|||||||||||||||
Commercial
|
16,326
|
11,933
|
1,394
|
13,327
|
216
|
|||||||||||||||
Agricultural
|
5,598
|
2,386
|
3,206
|
5,592
|
84
|
|||||||||||||||
Other commercial loans
|
2,711
|
1,836
|
370
|
2,206
|
193
|
|||||||||||||||
Other agricultural loans
|
1,487
|
120
|
1,315
|
1,435
|
159
|
|||||||||||||||
Total
|
$
|
27,160
|
$
|
16,802
|
$
|
6,648
|
$
|
23,450
|
$
|
676
|
Interest
|
||||||||||||
|
Average
|
Interest
|
Income
|
|||||||||
|
Recorded
|
Income
|
Recognized
|
|||||||||
2019
|
Investment
|
Recognized
|
Cash Basis
|
|||||||||
Real estate loans:
|
||||||||||||
Mortgages
|
$
|
1,062
|
$
|
16
|
$
|
-
|
||||||
Home Equity
|
119
|
6
|
-
|
|||||||||
Commercial
|
11,756
|
453
|
24
|
|||||||||
Agricultural
|
4,899
|
78
|
-
|
|||||||||
Consumer
|
2
|
-
|
-
|
|||||||||
Other commercial loans
|
2,056
|
1
|
-
|
|||||||||
Other agricultural loans
|
1,400
|
4
|
-
|
|||||||||
Total
|
$
|
21,294
|
$
|
558
|
$
|
24
|
||||||
|
||||||||||||
2018
|
||||||||||||
Real estate loans:
|
||||||||||||
Mortgages
|
$
|
944
|
$
|
13
|
$
|
-
|
||||||
Home Equity
|
95
|
4
|
-
|
|||||||||
Commercial
|
13,907
|
506
|
20
|
|||||||||
Agricultural
|
4,736
|
151
|
-
|
|||||||||
Consumer
|
1
|
-
|
-
|
|||||||||
Other commercial loans
|
3,659
|
89
|
-
|
|||||||||
Other agricultural loans
|
1,401
|
23
|
-
|
|||||||||
Total
|
$
|
24,743
|
$
|
786
|
$
|
20
|
|
Interest
|
|||||||||||
|
Average
|
Interest
|
Income
|
|||||||||
|
Recorded
|
Income
|
Recognized
|
|||||||||
2017
|
Investment
|
Recognized
|
Cash Basis
|
|||||||||
Real estate loans:
|
||||||||||||
Mortgages
|
$
|
900
|
$
|
13
|
$
|
-
|
||||||
Home Equity
|
67
|
4
|
-
|
|||||||||
Commercial
|
11,567
|
385
|
7
|
|||||||||
Agricultural
|
3,574
|
131
|
-
|
|||||||||
Consumer
|
3
|
-
|
-
|
|||||||||
Other commercial loans
|
4,790
|
152
|
52
|
|||||||||
Other agricultural loans
|
1,491
|
65
|
-
|
|||||||||
Total
|
$
|
22,392
|
$
|
750
|
$
|
59
|
•
|
Pass (Grades 1-5) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth
and paying capacity of the obligor or by the value of the underlying collateral.
|
•
|
Special Mention (Grade 6) – This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could
cause a more serious problem if not corrected.
|
•
|
Substandard (Grade 7) – This loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective
evidence and are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
|
•
|
Doubtful (Grade 8) – This loan grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset.
In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.
|
•
|
Loss (Grade 9) – This loan grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that
continuance as an asset is not warranted.
|
2019
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Loss
|
Ending Balance
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
329,831
|
$
|
4,305
|
$
|
7,848
|
$
|
39
|
$
|
-
|
$
|
342,023
|
||||||||||||
Agricultural
|
287,044
|
14,261
|
10,159
|
-
|
-
|
311,464
|
||||||||||||||||||
Construction
|
15,519
|
-
|
-
|
-
|
-
|
15,519
|
||||||||||||||||||
Other commercial loans
|
66,880
|
984
|
2,042
|
64
|
-
|
69,970
|
||||||||||||||||||
Other agricultural loans
|
51,711
|
1,077
|
2,324
|
-
|
-
|
55,112
|
||||||||||||||||||
State and political
|
||||||||||||||||||||||||
subdivision loans
|
93,993
|
-
|
453
|
-
|
-
|
94,446
|
||||||||||||||||||
Total
|
$
|
844,978
|
$
|
20,627
|
$
|
22,826
|
$
|
103
|
$
|
-
|
$
|
888,534
|
2018
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Loss
|
Ending Balance
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
297,690
|
$
|
10,792
|
$
|
10,743
|
$
|
40
|
$
|
-
|
$
|
319,265
|
||||||||||||
Agricultural
|
264,732
|
10,017
|
9,771
|
-
|
-
|
284,520
|
||||||||||||||||||
Construction
|
33,913
|
-
|
-
|
-
|
-
|
33,913
|
||||||||||||||||||
Other commercial loans
|
70,425
|
777
|
2,800
|
116
|
-
|
74,118
|
||||||||||||||||||
Other agricultural loans
|
38,628
|
1,724
|
1,834
|
-
|
-
|
42,186
|
||||||||||||||||||
State and political
|
||||||||||||||||||||||||
subdivision loans
|
92,666
|
9,481
|
571
|
-
|
-
|
102,718
|
||||||||||||||||||
Total
|
$
|
798,054
|
$
|
32,791
|
$
|
25,719
|
$
|
156
|
$
|
-
|
$
|
856,720
|
2019
|
Performing
|
Non-performing
|
PCI
|
Total
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
156,151
|
$
|
904
|
$
|
23
|
$
|
157,078
|
||||||||
Home Equity
|
59,950
|
60
|
-
|
60,010
|
||||||||||||
Consumer
|
9,939
|
8
|
-
|
9,947
|
||||||||||||
Total
|
$
|
226,040
|
$
|
972
|
$
|
23
|
$
|
227,035
|
2018
|
Performing
|
Non-performing
|
PCI
|
Total
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
155,360
|
$
|
1,099
|
$
|
28
|
$
|
156,487
|
||||||||
Home Equity
|
58,736
|
82
|
-
|
58,818
|
||||||||||||
Consumer
|
9,832
|
26
|
-
|
9,858
|
||||||||||||
Total
|
$
|
223,928
|
$
|
1,207
|
$
|
28
|
$
|
225,163
|
|
90 Days
|
|||||||||||||||||||||||||||||||
|
30-59 Days
|
60-89 Days
|
90 Days
|
Total Past
|
Total Financing
|
Past due
|
||||||||||||||||||||||||||
2019
|
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
PCI
|
Receivables
|
and Accruing
|
||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||||||
Mortgages
|
$
|
581
|
$
|
57
|
$
|
319
|
$
|
957
|
$
|
156,098
|
$
|
23
|
$
|
157,078
|
$
|
1
|
||||||||||||||||
Home Equity
|
334
|
11
|
56
|
401
|
59,609
|
-
|
60,010
|
1
|
||||||||||||||||||||||||
Commercial
|
750
|
573
|
3,720
|
5,043
|
335,770
|
1,210
|
342,023
|
-
|
||||||||||||||||||||||||
Agricultural
|
118
|
-
|
785
|
903
|
310,561
|
-
|
311,464
|
299
|
||||||||||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
15,519
|
-
|
15,519
|
-
|
||||||||||||||||||||||||
Consumer
|
113
|
10
|
8
|
131
|
9,816
|
-
|
9,947
|
2
|
||||||||||||||||||||||||
Other commercial loans
|
217
|
71
|
1,946
|
2,234
|
67,687
|
49
|
69,970
|
184
|
||||||||||||||||||||||||
Other agricultural loans
|
29
|
32
|
-
|
61
|
55,051
|
-
|
55,112
|
-
|
||||||||||||||||||||||||
State and political
|
||||||||||||||||||||||||||||||||
subdivision loans
|
-
|
-
|
-
|
-
|
94,446
|
-
|
94,446
|
-
|
||||||||||||||||||||||||
Total
|
$
|
2,142
|
$
|
754
|
$
|
6,834
|
$
|
9,730
|
$
|
1,104,557
|
$
|
1,282
|
$
|
1,115,569
|
$
|
487
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Loans considered non-accrual
|
$
|
90
|
$
|
95
|
$
|
6,347
|
$
|
6,532
|
$
|
5,004
|
$
|
-
|
$
|
11,536
|
||||||||||||||||||
Loans still accruing
|
2,052
|
659
|
487
|
3,198
|
1,099,553
|
1,282
|
1,104,033
|
|||||||||||||||||||||||||
Total
|
$
|
2,142
|
$
|
754
|
$
|
6,834
|
$
|
9,730
|
$
|
1,104,557
|
$
|
1,282
|
$
|
1,115,569
|
|
30-59 Days
|
60-89 Days
|
90 Days
|
Total Past
|
Total Financing
|
90 Days
Past Due
|
||||||||||||||||||||||||||
2018
|
Past Due
|
Past Due
|
Or Greater
|
Due
|
Current
|
PCI
|
Receivables
|
And Accruing
|
||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||||||
Mortgages
|
$
|
483
|
$
|
789
|
$
|
686
|
$
|
1,958
|
$
|
154,501
|
$
|
28
|
$
|
156,487
|
$
|
20
|
||||||||||||||||
Home Equity
|
257
|
108
|
63
|
428
|
58,390
|
-
|
58,818
|
-
|
||||||||||||||||||||||||
Commercial
|
999
|
631
|
4,706
|
6,336
|
311,608
|
1,321
|
319,265
|
36
|
||||||||||||||||||||||||
Agricultural
|
121
|
-
|
3,184
|
3,305
|
281,215
|
-
|
284,520
|
-
|
||||||||||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
33,913
|
-
|
33,913
|
-
|
||||||||||||||||||||||||
Consumer
|
37
|
14
|
12
|
63
|
9,795
|
-
|
9,858
|
12
|
||||||||||||||||||||||||
Other commercial loans
|
141
|
53
|
2,061
|
2,255
|
71,353
|
510
|
74,118
|
-
|
||||||||||||||||||||||||
Other agricultural loans
|
-
|
-
|
1,201
|
1,201
|
40,985
|
-
|
42,186
|
-
|
||||||||||||||||||||||||
State and political
|
||||||||||||||||||||||||||||||||
subdivision loans
|
-
|
-
|
-
|
-
|
102,718
|
-
|
102,718
|
-
|
||||||||||||||||||||||||
Total
|
$
|
2,038
|
$
|
1,595
|
$
|
11,913
|
$
|
15,546
|
$
|
1,064,478
|
$
|
1,859
|
$
|
1,081,883
|
$
|
68
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Loans considered non-accrual
|
$
|
72
|
$
|
253
|
$
|
11,845
|
$
|
12,170
|
$
|
1,554
|
$
|
-
|
$
|
13,724
|
||||||||||||||||||
Loans still accruing
|
1,966
|
1,342
|
68
|
3,376
|
1,062,924
|
1,859
|
1,068,159
|
|||||||||||||||||||||||||
Total
|
$
|
2,038
|
$
|
1,595
|
$
|
11,913
|
$
|
15,546
|
$
|
1,064,478
|
$
|
1,859
|
$
|
1,081,883
|
|
2019
|
2018
|
||||||
Real estate loans:
|
||||||||
Mortgages
|
$
|
903
|
$
|
1,079
|
||||
Home Equity
|
59
|
82
|
||||||
Commercial
|
5,080
|
5,957
|
||||||
Agricultural
|
2,578
|
3,206
|
||||||
Consumer
|
6
|
14
|
||||||
Other commercial loans
|
1,837
|
2,185
|
||||||
Other agricultural loans
|
1,073
|
1,201
|
||||||
|
$
|
11,536
|
$
|
13,724
|
Number of contracts
|
Pre-modification Outstanding Recorded Investment
|
Post-Modification Outstanding Recorded Investment
|
||||||||||||||||||||||
2019
|
Interest Modification
|
Term Modification
|
Interest Modification
|
Term Modification
|
Interest Modification
|
Term Modification
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Mortgages
|
-
|
1
|
$
|
-
|
$
|
4
|
$
|
-
|
$
|
4
|
||||||||||||||
Home Equity
|
-
|
1
|
-
|
40
|
-
|
40
|
||||||||||||||||||
Commercial
|
-
|
6
|
-
|
918
|
-
|
918
|
||||||||||||||||||
Agricultural
|
-
|
5
|
-
|
1,731
|
-
|
1,731
|
||||||||||||||||||
Consumer
|
-
|
1
|
-
|
3
|
3
|
|||||||||||||||||||
Other commercial loans
|
-
|
1
|
-
|
55
|
55
|
|||||||||||||||||||
Other agricultural loans
|
-
|
5
|
-
|
1,054
|
-
|
1,054
|
||||||||||||||||||
Total
|
-
|
20
|
$
|
-
|
$
|
3,805
|
$
|
-
|
$
|
3,805
|
|
Number of contracts
|
Pre-modification Outstanding Recorded Investment
|
Post-Modification Outstanding Recorded Investment
|
|||||||||||||||||||||
2018
|
Interest Modification
|
Term Modification
|
Interest Modification
|
Term Modification
|
Interest Modification
|
Term Modification
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Mortgages
|
-
|
1
|
$
|
-
|
$
|
7
|
$
|
-
|
$
|
7
|
||||||||||||||
Home Equity
|
-
|
1
|
-
|
1
|
-
|
1
|
||||||||||||||||||
Commercial
|
-
|
2
|
-
|
683
|
-
|
683
|
||||||||||||||||||
Agricultural
|
-
|
5
|
-
|
3,209
|
-
|
3,209
|
||||||||||||||||||
Other agricultural loans
|
-
|
4
|
-
|
176
|
-
|
176
|
||||||||||||||||||
Total
|
-
|
13
|
$
|
-
|
$
|
4,076
|
$
|
-
|
$
|
4,076
|
||||||||||||||
|
||||||||||||||||||||||||
2017
|
||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Home Equity
|
-
|
1
|
$
|
-
|
$
|
25
|
$
|
-
|
$
|
25
|
||||||||||||||
Commercial
|
-
|
5
|
-
|
7,021
|
-
|
7,021
|
||||||||||||||||||
Agricultural
|
-
|
4
|
-
|
1,475
|
-
|
1,475
|
||||||||||||||||||
Other commercial loans
|
-
|
1
|
-
|
9
|
-
|
9
|
||||||||||||||||||
Other agricultural loans
|
-
|
1
|
-
|
161
|
-
|
161
|
||||||||||||||||||
Total
|
-
|
12
|
$
|
-
|
$
|
8,691
|
$
|
-
|
$
|
8,691
|
|
December 31, 2019
|
December 31, 2018
|
December 31, 2017
|
|||||||||||||||||||||
|
Number of contracts
|
Recorded investment
|
Number of contracts
|
Recorded investment
|
Number of contracts
|
Recorded investment
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Commercial
|
-
|
$
|
-
|
2
|
$
|
683
|
-
|
$
|
-
|
|||||||||||||||
Agricultural
|
1
|
1,439
|
2
|
1,325
|
-
|
-
|
||||||||||||||||||
Other agricultural loans
|
3
|
137
|
1
|
161
|
2
|
632
|
||||||||||||||||||
Total recidivism
|
4
|
$
|
1,576
|
5
|
$
|
2,169
|
2
|
$
|
632
|
|
Balance at December 31, 2018
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at December 31, 2019
|
Individually evaluated for impairment
|
Collectively evaluated for impairment
|
|||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Residential
|
$
|
1,105
|
$
|
(32
|
)
|
$
|
-
|
$
|
41
|
$
|
1,114
|
$
|
32
|
$
|
1,082
|
|||||||||||||
Commercial
|
4,115
|
(578
|
)
|
-
|
1,012
|
4,549
|
251
|
4,298
|
||||||||||||||||||||
Agricultural
|
4,264
|
-
|
-
|
758
|
5,022
|
151
|
4,871
|
|||||||||||||||||||||
Construction
|
58
|
-
|
-
|
(15
|
)
|
43
|
-
|
43
|
||||||||||||||||||||
Consumer
|
120
|
(49
|
)
|
33
|
8
|
112
|
-
|
112
|
||||||||||||||||||||
Other commercial loans
|
1,354
|
(38
|
)
|
10
|
(71
|
)
|
1,255
|
147
|
1,108
|
|||||||||||||||||||
Other agricultural loans
|
752
|
(60
|
)
|
-
|
269
|
961
|
154
|
807
|
||||||||||||||||||||
State and political
|
||||||||||||||||||||||||||||
subdivision loans
|
762
|
-
|
-
|
(226
|
)
|
536
|
-
|
536
|
||||||||||||||||||||
Unallocated
|
354
|
-
|
-
|
(101
|
)
|
253
|
-
|
253
|
||||||||||||||||||||
Total
|
$
|
12,884
|
$
|
(757
|
)
|
$
|
43
|
$
|
1,675
|
$
|
13,845
|
$
|
735
|
$
|
13,110
|
|||||||||||||
|
||||||||||||||||||||||||||||
|
Balance at December 31, 2017
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at December 31, 2018
|
Individually evaluated for impairment
|
Collectively evaluated for impairment
|
|||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Residential
|
$
|
1,049
|
$
|
(118
|
)
|
$
|
69
|
$
|
105
|
$
|
1,105
|
$
|
24
|
$
|
1,081
|
|||||||||||||
Commercial
|
3,867
|
(66
|
)
|
3
|
311
|
4,115
|
216
|
3,899
|
||||||||||||||||||||
Agricultural
|
3,143
|
-
|
-
|
1,121
|
4,264
|
84
|
4,180
|
|||||||||||||||||||||
Construction
|
23
|
-
|
-
|
35
|
58
|
-
|
58
|
|||||||||||||||||||||
Consumer
|
124
|
(40
|
)
|
31
|
5
|
120
|
-
|
120
|
||||||||||||||||||||
Other commercial loans
|
1,272
|
(91
|
)
|
30
|
143
|
1,354
|
193
|
1,161
|
||||||||||||||||||||
Other agricultural loans
|
492
|
(50
|
)
|
1
|
309
|
752
|
159
|
593
|
||||||||||||||||||||
State and political
|
||||||||||||||||||||||||||||
subdivision loans
|
816
|
-
|
-
|
(54
|
)
|
762
|
-
|
762
|
||||||||||||||||||||
Unallocated
|
404
|
-
|
-
|
(50
|
)
|
354
|
-
|
354
|
||||||||||||||||||||
Total
|
$
|
11,190
|
$
|
(365
|
)
|
$
|
134
|
$
|
1,925
|
$
|
12,884
|
$
|
676
|
$
|
12,208
|
|
Balance at December 31, 2016
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at December 31, 2017
|
Individually evaluated for impairment
|
Collectively evaluated for impairment
|
|||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Residential
|
$
|
1,064
|
$
|
(107
|
)
|
$
|
-
|
$
|
92
|
$
|
1,049
|
$
|
56
|
$
|
993
|
|||||||||||||
Commercial
|
3,589
|
(41
|
)
|
11
|
308
|
3,867
|
94
|
3,773
|
||||||||||||||||||||
Agricultural
|
1,494
|
(30
|
)
|
-
|
1,679
|
3,143
|
3
|
3,140
|
||||||||||||||||||||
Construction
|
47
|
-
|
-
|
(24
|
)
|
23
|
-
|
23
|
||||||||||||||||||||
Consumer
|
122
|
(130
|
)
|
49
|
83
|
124
|
-
|
124
|
||||||||||||||||||||
Other commercial loans
|
1,327
|
-
|
16
|
(71
|
)
|
1,272
|
231
|
1,041
|
||||||||||||||||||||
Other agricultural loans
|
312
|
(5
|
)
|
1
|
184
|
492
|
26
|
466
|
||||||||||||||||||||
State and political
|
||||||||||||||||||||||||||||
subdivision loans
|
833
|
-
|
-
|
(17
|
)
|
816
|
-
|
816
|
||||||||||||||||||||
Unallocated
|
98
|
-
|
-
|
306
|
404
|
-
|
404
|
|||||||||||||||||||||
Total
|
$
|
8,886
|
$
|
(313
|
)
|
$
|
77
|
$
|
2,540
|
$
|
11,190
|
$
|
410
|
$
|
10,780
|
|
December 31,
|
|||||||
|
2019
|
2018
|
||||||
Land
|
$
|
5,110
|
$
|
5,110
|
||||
Buildings
|
17,835
|
17,496
|
||||||
Furniture, fixtures and equipment
|
6,916
|
6,798
|
||||||
Construction in process
|
192
|
300
|
||||||
|
30,053
|
29,704
|
||||||
Less: accumulated depreciation
|
14,120
|
13,431
|
||||||
Premises and equipment, net
|
$
|
15,933
|
$
|
16,273
|
|
December 31, 2019
|
December 31, 2018
|
||||||||||||||||||||||
|
Gross carrying value
|
Accumulated amortization
|
Net carrying value
|
Gross carrying value
|
Accumulated amortization
|
Net carrying value
|
||||||||||||||||||
Amortized intangible assets (1):
|
||||||||||||||||||||||||
MSRs
|
$
|
1,718
|
$
|
(1,077
|
)
|
$
|
641
|
$
|
1,725
|
$
|
(1,066
|
)
|
$
|
659
|
||||||||||
Core deposit intangibles
|
1,786
|
(1,081
|
)
|
705
|
1,786
|
(851
|
)
|
935
|
||||||||||||||||
Covenant not to compete
|
125
|
(125
|
)
|
-
|
125
|
(96
|
)
|
29
|
||||||||||||||||
Total amortized intangible assets
|
$
|
3,629
|
$
|
(2,283
|
)
|
$
|
1,346
|
$
|
3,636
|
$
|
(2,013
|
)
|
$
|
1,623
|
||||||||||
Unamortized intangible assets:
|
||||||||||||||||||||||||
Goodwill
|
$
|
23,296
|
$
|
23,296
|
||||||||||||||||||||
(1) Excludes fully amortized intangible assets
|
|
MSRs
|
Core deposit intangibles
|
Covenant not to compete
|
Total
|
||||||||||||
Year ended December 31, 2019 (actual)
|
$
|
181
|
$
|
230
|
$
|
29
|
$
|
440
|
||||||||
Estimate for year ending December 31,
|
||||||||||||||||
2020
|
179
|
197
|
-
|
376
|
||||||||||||
2021
|
141
|
165
|
-
|
306
|
||||||||||||
2022
|
108
|
133
|
-
|
241
|
||||||||||||
2023
|
80
|
100
|
-
|
180
|
||||||||||||
2024
|
57
|
68
|
-
|
125
|
|
2019
|
2018
|
||||||
Non-interest-bearing deposits
|
$
|
203,793
|
$
|
179,971
|
||||
NOW accounts
|
340,273
|
336,756
|
||||||
Savings deposits
|
224,456
|
205,334
|
||||||
Money market deposit accounts
|
169,865
|
164,625
|
||||||
Certificates of deposit
|
272,731
|
298,470
|
||||||
Total
|
$
|
1,211,118
|
$
|
1,185,156
|
2020
|
$
|
119,834
|
||
2021
|
68,690
|
|||
2022
|
49,926
|
|||
2023
|
19,057
|
|||
2024
|
10,665
|
|||
Thereafter
|
4,559
|
|||
Total certificates of deposit
|
$
|
272,731
|
|
Securities
|
|||||||||||||||||||||||||||
|
Sold Under
|
Total
|
||||||||||||||||||||||||||
|
Agreements to
|
FHLB
|
Federal Funds
|
FRB
|
Notes
|
Term
|
Borrowed
|
|||||||||||||||||||||
|
Repurchase(a)
|
Advances(b)
|
Lines (c)
|
BIC Line (d)
|
Payable(e)
|
Loans(f)
|
Funds
|
|||||||||||||||||||||
2019
|
||||||||||||||||||||||||||||
Balance at December 31
|
$
|
11,298
|
$
|
24,794
|
$
|
-
|
$
|
-
|
$
|
7,500
|
$
|
41,525
|
$
|
85,117
|
||||||||||||||
Highest balance at any month-end
|
16,161
|
82,779
|
-
|
-
|
7,500
|
41,525
|
147,965
|
|||||||||||||||||||||
Average balance
|
13,644
|
69,477
|
3
|
7
|
7,500
|
18,410
|
109,041
|
|||||||||||||||||||||
Weighted average interest rate:
|
||||||||||||||||||||||||||||
Paid during the year
|
1.98
|
%
|
2.46
|
%
|
2.67
|
%
|
2.49
|
%
|
5.32
|
%
|
2.40
|
%
|
2.59
|
%
|
||||||||||||||
As of year-end
|
1.45
|
%
|
1.81
|
%
|
0.00
|
%
|
0.00
|
%
|
4.70
|
%
|
2.08
|
%
|
2.15
|
%
|
||||||||||||||
2018
|
||||||||||||||||||||||||||||
Balance at December 31
|
$
|
17,983
|
$
|
52,186
|
$
|
-
|
$
|
-
|
$
|
7,500
|
$
|
13,525
|
$
|
91,194
|
||||||||||||||
Highest balance at any month-end
|
17,983
|
114,817
|
-
|
-
|
7,500
|
14,525
|
154,825
|
|||||||||||||||||||||
Average balance
|
15,226
|
81,123
|
-
|
12
|
7,500
|
14,051
|
117,912
|
|||||||||||||||||||||
Weighted average interest rate:
|
||||||||||||||||||||||||||||
Paid during the year
|
1.77
|
%
|
2.06
|
%
|
2.38
|
%
|
2.47
|
%
|
5.03
|
%
|
2.44
|
%
|
2.26
|
%
|
||||||||||||||
As of year-end
|
2.19
|
%
|
2.62
|
%
|
0.00
|
%
|
0.00
|
%
|
5.56
|
%
|
2.40
|
%
|
2.74
|
%
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
Overnight and
|
Up to
|
Greater than
|
||||||||||||||||||
2019
|
Continuous
|
30 Days
|
30 - 90 Days
|
90 days
|
Total
|
|||||||||||||||
Repurchase Agreements:
|
||||||||||||||||||||
U.S. agency securities
|
$
|
15,964
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15,964
|
||||||||||
Total carrying value of collateral pledged
|
$
|
15,964
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15,964
|
||||||||||
Total liability recognized for repurchase agreements
|
$
|
11,298
|
Remaining Contractual Maturity of the Agreements
|
||||||||||||||||||||
Overnight and
|
Up to
|
Greater than
|
||||||||||||||||||
2018
|
Continuous
|
30 Days
|
30 - 90 Days
|
90 days
|
Total
|
|||||||||||||||
Repurchase Agreements:
|
||||||||||||||||||||
U.S. agency securities
|
$
|
18,970
|
$
|
-
|
$
|
-
|
$
|
2,008
|
$
|
20,978
|
||||||||||
Total carrying value of collateral pledged
|
$
|
18,970
|
$
|
-
|
$
|
-
|
$
|
2,008
|
$
|
20,978
|
||||||||||
Total liability recognized for repurchase agreements
|
$
|
17,983
|
|
December 31,
|
December 31,
|
||||||||||
Interest Rate
|
Maturity
|
2019
|
2018
|
|||||||||
Fixed:
|
|
|||||||||||
1.87
|
%
|
February 4, 2019
|
-
|
2,000
|
||||||||
1.84
|
%
|
January 13, 2020
|
20,000
|
-
|
||||||||
2.61
|
%
|
February 3, 2021
|
2,000
|
2,000
|
||||||||
3.52
|
%
|
July 12, 2021
|
2,000
|
2,000
|
||||||||
2.37
|
%
|
August 20, 2021
|
2,800
|
2,800
|
||||||||
2.08
|
%
|
January 6, 2022
|
4,725
|
4,725
|
||||||||
2.46
|
%
|
March 28, 2024
|
5,000
|
-
|
||||||||
1.69
|
%
|
August 20, 2024
|
5,000
|
-
|
||||||||
Total term loans
|
$
|
41,525
|
$
|
13,525
|
2020
|
$
|
63,592
|
||
2021
|
6,800
|
|||
2022
|
4,725
|
|||
2023
|
-
|
|||
2024
|
10,000
|
|||
Thereafter
|
-
|
|||
Total borrowed funds
|
$
|
85,117
|
|
2019
|
2018
|
||||||
Change in benefit obligation
|
||||||||
Benefit obligation at beginning of year
|
$
|
17,895
|
$
|
19,833
|
||||
Service cost
|
289
|
359
|
||||||
Interest cost
|
588
|
652
|
||||||
Actuarial Loss / (Gain)
|
1,706
|
(1,693
|
)
|
|||||
Settlement gain
|
(259
|
)
|
-
|
|||||
Benefits paid
|
(7,192
|
)
|
(1,256
|
)
|
||||
Benefit obligation at end of year
|
13,027
|
17,895
|
||||||
|
||||||||
Change in plan assets
|
||||||||
Fair value of plan assets at beginning of year
|
18,212
|
19,992
|
||||||
Actual return (loss) on plan assets
|
2,394
|
(524
|
)
|
|||||
Employer contribution
|
-
|
-
|
||||||
Plan expenses
|
(37
|
)
|
-
|
|||||
Transfer to 401(k) plan
|
(100
|
)
|
-
|
|||||
Benefits paid
|
(7,192
|
)
|
(1,256
|
)
|
||||
Fair value of plan assets at end of year
|
13,277
|
18,212
|
||||||
|
||||||||
Funded status
|
$
|
250
|
$
|
317
|
Amounts recognized in accumulated other
|
||||||||
comprehensive loss consists of:
|
2019
|
2018
|
||||||
Net loss
|
$
|
3,727
|
$
|
3,811
|
||||
Prior service cost
|
(32
|
)
|
(80
|
)
|
||||
Total
|
$
|
3,695
|
$
|
3,731
|
|
2019
|
2018
|
2017
|
Affected line item on the Consolidated Statement of Income
|
|||||||||
|
|
||||||||||||
Service cost
|
$
|
289
|
$
|
359
|
$
|
349
|
Salary and Employee Benefits
|
||||||
Interest cost
|
588
|
652
|
671
|
Other Expenses
|
|||||||||
Return on plan assets
|
(924
|
)
|
(1,126
|
)
|
(1,094
|
)
|
Other Expenses
|
||||||
Settlement gain
|
(259
|
)
|
-
|
-
|
Other Expenses
|
||||||||
Net amortization and deferral
|
272
|
186
|
224
|
Other Expenses
|
|||||||||
Net periodic benefit cost (income)
|
$
|
(34
|
)
|
$
|
71
|
$
|
150
|
|
|
|
|
2019
|
|
2018
|
Discount rate FCCB Plan
|
|
2.75%
|
|
4.00%
|
|
Discount rate FNB Plan
|
|
3.33%
|
|
3.49%
|
|
Rate of compensation increase
|
|
3.00%
|
|
3.00%
|
|
|
|
2019
|
|
2018
|
|
2017
|
Discount rate FCCB Plan
|
|
4.00%
|
|
3.35%
|
|
3.78%
|
|
Discount rate FNB Plan
|
|
3.49%
|
|
3.35%
|
|
3.78%
|
|
Expected long-term return on plan assets FCCB plan
|
7.00%
|
|
7.00%
|
|
7.00%
|
||
Expected long-term return on plan assets FNB plan
|
NA
|
|
3.00%
|
|
7.00%
|
||
Rate of compensation increase
|
|
3.00%
|
|
3.00%
|
|
3.00%
|
2019
|
Level I
|
Level II
|
Level III
|
Total
|
Allocation
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
924
|
$
|
-
|
$
|
-
|
$
|
924
|
7.0
|
%
|
||||||||||
Equity Securities
|
5,084
|
-
|
-
|
5,084
|
38.3
|
%
|
||||||||||||||
Mutual Funds and ETF's
|
4,175
|
-
|
-
|
4,175
|
31.4
|
%
|
||||||||||||||
Corporate Bonds
|
-
|
3,094
|
-
|
3,094
|
23.3
|
%
|
||||||||||||||
Total
|
$
|
10,183
|
$
|
3,094
|
$
|
-
|
$
|
13,277
|
100.0
|
%
|
||||||||||
|
||||||||||||||||||||
2018
|
Level I
|
Level II
|
Level III
|
Total
|
Allocation
|
|||||||||||||||
Assets
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
5,057
|
$
|
-
|
$
|
-
|
$
|
5,057
|
27.8
|
%
|
||||||||||
Equity Securities
|
4,891
|
-
|
-
|
4,891
|
26.8
|
%
|
||||||||||||||
Mutual Funds and ETF's
|
5,114
|
-
|
-
|
5,114
|
28.1
|
%
|
||||||||||||||
Corporate Bonds
|
-
|
3,150
|
-
|
3,150
|
17.3
|
%
|
||||||||||||||
Total
|
$
|
15,062
|
$
|
3,150
|
$
|
-
|
$
|
18,212
|
100.0
|
%
|
2020
|
$
|
892
|
||
2021
|
794
|
|||
2022
|
563
|
|||
2023
|
598
|
|||
2024
|
975
|
|||
2025 - 2029
|
5,745
|
|
2019
|
|||||||
|
Weighted
|
|||||||
|
Average
|
|||||||
|
Shares
|
Market Price
|
||||||
Outstanding, beginning of year
|
9,764
|
$
|
58.21
|
|||||
Granted
|
6,371
|
60.02
|
||||||
Forfeited
|
(716
|
)
|
60.49
|
|||||
Vested
|
(4,542
|
)
|
55.86
|
|||||
Outstanding, end of year
|
10,877
|
$
|
60.11
|
|
Year Ended December 31,
|
|||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Currently payable
|
$
|
3,503
|
$
|
3,838
|
$
|
4,583
|
||||||
Change in corporate tax rate
|
-
|
-
|
1,531
|
|||||||||
Deferred tax liability (asset)
|
317
|
(435
|
)
|
(83
|
)
|
|||||||
Provision for income taxes
|
$
|
3,820
|
$
|
3,403
|
$
|
6,031
|
|
2019
|
2018
|
||||||
Deferred tax assets:
|
||||||||
Allowance for loan losses
|
$
|
3,470
|
$
|
3,323
|
||||
Deferred compensation
|
500
|
479
|
||||||
Pension and other retirement obligation
|
368
|
301
|
||||||
Interest on non-accrual loans
|
726
|
1,126
|
||||||
Incentive plan accruals
|
418
|
361
|
||||||
Unrealized losses on available-for-sale securities
|
-
|
259
|
||||||
Low income housing tax credits
|
135
|
139
|
||||||
NOL carry forward
|
83
|
212
|
||||||
Other
|
146
|
145
|
||||||
Total
|
$
|
5,846
|
$
|
6,345
|
||||
|
||||||||
Deferred tax liabilities:
|
||||||||
Premises and equipment
|
$
|
(662
|
)
|
$
|
(612
|
)
|
||
Investment securities accretion
|
(70
|
)
|
(53
|
)
|
||||
Loan fees and costs
|
(238
|
)
|
(253
|
)
|
||||
Goodwill and core deposit intangibles
|
(2,248
|
)
|
(2,229
|
)
|
||||
Mortgage servicing rights
|
(134
|
)
|
(139
|
)
|
||||
Unrealized gains on available-for-sale securities
|
(630
|
)
|
-
|
|||||
Other
|
(1
|
)
|
(4
|
)
|
||||
Total
|
(3,983
|
)
|
(3,290
|
)
|
||||
Deferred tax asset, net
|
$
|
1,863
|
$
|
3,055
|
|
Year Ended December 31,
|
|||||||||||
|
2019
|
2018
|
2017
|
|||||||||
Provision at statutory rates on
|
||||||||||||
pre-tax income
|
$
|
4,895
|
$
|
4,502
|
$
|
6,505
|
||||||
Effect of tax-exempt income
|
(920
|
)
|
(955
|
)
|
(1,710
|
)
|
||||||
Low income housing tax credits
|
(141
|
)
|
(141
|
)
|
(141
|
)
|
||||||
Bank owned life insurance
|
(131
|
)
|
(131
|
)
|
(225
|
)
|
||||||
Nondeductible interest
|
52
|
41
|
54
|
|||||||||
Nondeductible merger and acquisition expenses
|
38
|
-
|
-
|
|||||||||
Change in tax rate
|
-
|
-
|
1,531
|
|||||||||
Other items
|
27
|
87
|
17
|
|||||||||
Provision for income taxes
|
$
|
3,820
|
$
|
3,403
|
$
|
6,031
|
||||||
Statutory tax rates
|
21
|
%
|
21
|
%
|
35
|
%
|
||||||
Effective tax rates
|
16.4
|
%
|
15.9
|
%
|
31.6
|
%
|
|
2019
|
2018
|
||||||
Net unrealized gain (loss) on securities available for sale
|
$
|
2,899
|
$
|
(1,232
|
)
|
|||
Tax effect
|
(609
|
)
|
259
|
|||||
Net -of-tax amount
|
2,290
|
(973
|
)
|
|||||
|
||||||||
|
||||||||
Unrecognized pension costs
|
(3,695
|
)
|
(3,731
|
)
|
||||
Tax effect
|
776
|
783
|
||||||
Net -of-tax amount
|
(2,919
|
)
|
(2,948
|
)
|
||||
|
||||||||
Total accumulated other comprehensive loss
|
$
|
(629
|
)
|
$
|
(3,921
|
)
|
|
Unrealized gain (loss) on available for sale securities (a)
|
Defined Benefit Pension Items (a)
|
Total
|
|||||||||
Balance as of December 31, 2016
|
$
|
1,306
|
$
|
(2,698
|
)
|
$
|
(1,392
|
)
|
||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(847
|
)
|
(65
|
)
|
(912
|
)
|
||||||
Amounts reclassified from accumulated other
|
||||||||||||
comprehensive income (loss) (net of tax)
|
(683
|
)
|
148
|
(535
|
)
|
|||||||
Net current period other comprehensive income (loss)
|
(1,530
|
)
|
83
|
(1,447
|
)
|
|||||||
Change in other comprehensive income due to change
|
||||||||||||
in the federal tax rate
|
(45
|
)
|
(514
|
)
|
(559
|
)
|
||||||
Balance as of December 31, 2017
|
$
|
(269
|
)
|
$
|
(3,129
|
)
|
$
|
(3,398
|
)
|
|||
|
||||||||||||
Balance as of December 31, 2017
|
$
|
(269
|
)
|
$
|
(3,129
|
)
|
$
|
(3,398
|
)
|
|||
Change in Accounting policy for equity securities
|
1
|
1
|
||||||||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(720
|
)
|
34
|
(686
|
)
|
|||||||
Amounts reclassified from accumulated other
|
||||||||||||
comprehensive income (loss) (net of tax)
|
15
|
147
|
162
|
|||||||||
Net current period other comprehensive income (loss)
|
(705
|
)
|
181
|
(524
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
(973
|
)
|
$
|
(2,948
|
)
|
$
|
(3,921
|
)
|
|||
|
||||||||||||
Balance as of December 31, 2018
|
$
|
(973
|
)
|
$
|
(2,948
|
)
|
$
|
(3,921
|
)
|
|||
Other comprehensive income (loss) before reclassifications (net of tax)
|
3,283
|
(186
|
)
|
3,097
|
||||||||
Amounts reclassified from accumulated other
|
||||||||||||
comprehensive income (loss) (net of tax)
|
(20
|
)
|
215
|
195
|
||||||||
Net current period other comprehensive income
|
3,263
|
29
|
3,292
|
|||||||||
Balance as of December 31, 2019
|
$
|
2,290
|
$
|
(2,919
|
)
|
$
|
(629
|
)
|
||||
(a) Amounts in parentheses indicate debits
|
Details about accumulated other comprehensive income (loss)
|
Amount reclassified from accumulated comprehensive income (loss) (a)
|
Affected line item in the Consolidated Statement of Income
|
|||||||||||
|
December 31,
|
|
|||||||||||
|
2019
|
2018
|
2017
|
|
|||||||||
Unrealized gains and losses on available for sale securities
|
|
||||||||||||
|
$
|
24
|
$
|
(19
|
)
|
$
|
1,035
|
Available for sale securities gains, net
|
|||||
|
(4
|
)
|
4
|
(352
|
)
|
Provision for income taxes
|
|||||||
|
$
|
20
|
$
|
(15
|
)
|
$
|
683
|
Net of tax
|
|||||
|
|
||||||||||||
Defined benefit pension items
|
|
||||||||||||
|
$
|
(272
|
)
|
$
|
(186
|
)
|
$
|
(225
|
)
|
Other expenses
|
|||
|
57
|
39
|
77
|
Provision for income taxes
|
|||||||||
|
$
|
(215
|
)
|
$
|
(147
|
)
|
$
|
(148
|
)
|
Net of tax
|
|||
Total reclassifications
|
$
|
(195
|
$
|
(162
|
)
|
$
|
535
|
|
|||||
|
|
||||||||||||
(a) Amounts in parentheses indicate debits
|
|
Year Ended December 31,
|
||||||||
|
2019
|
2018
|
||||||
Balance, beginning of year
|
$
|
14,094
|
$
|
4,585
|
||||
New loans
|
4,681
|
14,377
|
||||||
Repayments
|
(5,318
|
)
|
(4,868
|
)
|
||||
Balance, end of year
|
$
|
13,457
|
$
|
14,094
|
|
Actual
|
For Capital Adequacy Purposes
|
To Be Well Capitalized Under Prompt Corrective Action Provisions
|
|||||||||||||||||||||
2019
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Total Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
154,708
|
14.04
|
%
|
$
|
88,166
|
8.00
|
%
|
$
|
110,208
|
10.00
|
%
|
||||||||||||
Bank
|
$
|
146,925
|
13.34
|
%
|
$
|
88,102
|
8.00
|
%
|
$
|
110,128
|
10.00
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
140,929
|
12.79
|
%
|
$
|
66,125
|
6.00
|
%
|
$
|
88,166
|
8.00
|
%
|
||||||||||||
Bank
|
$
|
133,156
|
12.09
|
%
|
$
|
66,077
|
6.00
|
%
|
$
|
88,102
|
8.00
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Common Equity Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
133,429
|
12.11
|
%
|
$
|
49,593
|
4.50
|
%
|
$
|
71,635
|
6.50
|
%
|
||||||||||||
Bank
|
$
|
133,156
|
12.09
|
%
|
$
|
49,557
|
4.50
|
%
|
$
|
71,583
|
6.50
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Tier 1 Capital (to Average Assets):
|
||||||||||||||||||||||||
Company
|
$
|
140,929
|
9.77
|
%
|
$
|
57,705
|
4.00
|
%
|
$
|
72,132
|
5.00
|
%
|
||||||||||||
Bank
|
$
|
133,156
|
9.23
|
%
|
$
|
57,681
|
4.00
|
%
|
$
|
72,101
|
5.00
|
%
|
||||||||||||
|
||||||||||||||||||||||||
|
Actual
|
For Capital Adequacy Purposes
|
To Be Well Capitalized Under Prompt Corrective Action Provisions
|
|||||||||||||||||||||
2018
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Total Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
141,272
|
13.42
|
%
|
$
|
84,227
|
8.00
|
%
|
$
|
105,284
|
10.00
|
%
|
||||||||||||
Bank
|
$
|
134,841
|
12.82
|
%
|
$
|
84,141
|
8.00
|
%
|
$
|
105,176
|
10.00
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
128,224
|
12.18
|
%
|
$
|
63,171
|
6.00
|
%
|
$
|
84,227
|
8.00
|
%
|
||||||||||||
Bank
|
$
|
121,792
|
11.58
|
%
|
$
|
63,106
|
6.00
|
%
|
$
|
84,141
|
8.00
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Common Equity Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
120,724
|
11.47
|
%
|
$
|
47,378
|
4.50
|
%
|
$
|
68,435
|
6.50
|
%
|
||||||||||||
Bank
|
$
|
121,792
|
11.58
|
%
|
$
|
47,329
|
4.50
|
%
|
$
|
68,364
|
6.50
|
%
|
||||||||||||
|
||||||||||||||||||||||||
Tier 1 Capital (to Average Assets):
|
||||||||||||||||||||||||
Company
|
$
|
128,224
|
9.15
|
%
|
$
|
56,041
|
4.00
|
%
|
$
|
70,051
|
5.00
|
%
|
||||||||||||
Bank
|
$
|
121,792
|
8.70
|
%
|
$
|
56,018
|
4.00
|
%
|
$
|
70,023
|
5.00
|
%
|
|
2019
|
2018
|
||||||
Commitments to extend credit
|
$
|
211,530
|
$
|
199,183
|
||||
Standby letters of credit
|
17,857
|
16,311
|
||||||
|
$
|
229,387
|
$
|
215,494
|
Lease Type
|
Balance at December 31, 2019
|
Affected line item on the Consolidated Balance Sheet
|
|||
Right of Use Assets
|
|
||||
Operating
|
$
|
1,163
|
Other Assets
|
||
|
|
||||
Lease Liabilities:
|
|
||||
Operating
|
$
|
1,163
|
Other Liabilities
|
|
Operating
|
Weighted average term (years)
|
6.07
|
Weighted average discount rate
|
3.15%
|
Lease Cost
|
||||
Operating lease cost
|
$
|
340
|
||
Variable lease cost
|
88
|
|||
Total lease cost
|
$
|
428
|
Undiscounted cash flows due in:
|
Operating
|
|||
2020
|
$
|
279
|
||
2021
|
238
|
|||
2022
|
230
|
|||
2023
|
142
|
|||
2024
|
105
|
|||
2025 and thereafter
|
291
|
|||
Total undiscounted cash flows
|
1,285
|
|||
Impact of present value discount
|
122
|
|||
Amount reported on balance sheet
|
$
|
1,163
|
Level I:
|
Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
|
Level II:
|
Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and
liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|
Level III:
|
Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best
estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
|
2019
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Fair value measurements on a recurring basis:
|
||||||||||||||||
Assets
|
||||||||||||||||
Equity securities
|
$
|
701
|
$
|
-
|
$
|
-
|
$
|
701
|
||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Agency securities
|
-
|
84,863
|
-
|
84,863
|
||||||||||||
U.S. Treasuries securities
|
27,661
|
-
|
-
|
27,661
|
||||||||||||
Obligations of state and
|
||||||||||||||||
political subdivisions
|
-
|
61,455
|
-
|
61,455
|
||||||||||||
Corporate obligations
|
-
|
3,328
|
-
|
3,328
|
||||||||||||
Mortgage-backed securities in
|
||||||||||||||||
government sponsored entities
|
-
|
63,399
|
-
|
63,399
|
2018
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Fair value measurements on a recurring basis:
|
||||||||||||||||
Assets
|
||||||||||||||||
Equity securities
|
$
|
516
|
$
|
-
|
$
|
-
|
$
|
516
|
||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Agency securities
|
-
|
106,385
|
-
|
106,385
|
||||||||||||
U.S. Treasuries securities
|
33,358
|
-
|
-
|
33,358
|
||||||||||||
Obligations of state and
|
||||||||||||||||
political subdivisions
|
-
|
52,047
|
-
|
52,047
|
||||||||||||
Corporate obligations
|
-
|
3,034
|
-
|
3,034
|
||||||||||||
Mortgage-backed securities in
|
||||||||||||||||
government sponsored entities
|
-
|
46,186
|
-
|
46,186
|
2019
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Impaired Loans
|
$
|
-
|
$
|
-
|
$
|
3,860
|
$
|
3,860
|
||||||||
Other real estate owned
|
-
|
-
|
3,299
|
3,299
|
||||||||||||
|
||||||||||||||||
2018
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Impaired Loans
|
$
|
-
|
$
|
-
|
$
|
5,815
|
$
|
5,815
|
||||||||
Other real estate owned
|
-
|
-
|
532
|
532
|
•
|
Impaired Loans - The Company has measured impairment on impaired loans generally
based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal,
changes in market conditions, or observable deterioration of the property since the appraisal was completed. Additionally, management makes estimates about expected costs to sell the property which are also included in the net realizable
value. If the fair value of the collateral dependent loan is less than the carrying amount of the loan a specific reserve for the loan is made in the allowance for loan losses or a charge-off is taken to reduce the loan to the fair value
of the collateral (less estimated selling costs) and the loan is included in the table above as a Level III measurement. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan is not included in the
table above as it is not currently being carried at its fair value. The fair values above excluded estimated selling costs of $424,000 and $563,000 at December 31, 2019 and 2018, respectively.
|
•
|
Other Real Estate Owned – OREO is carried at the lower of cost or fair value, less estimated costs to sell, which is measured at the date of foreclosure. If the fair value of the collateral exceeds the carrying amount of the loan, no
charge-off or adjustment is necessary, the loan is not considered to be carried at fair value, and is therefore not included in the table above. If the fair value of the collateral is less than the carrying amount of the loan, management
will charge the loan down to its estimated realizable value. The fair value of OREO is based on the appraised value of the property, which is generally unadjusted by management and is based on comparable sales for similar properties in
the same geographic region as the subject property, and is included in the above table as a Level II measurement. In some cases, management may adjust the appraised value due to the age of the appraisal, changes in market conditions, or
observable deterioration of the property since the appraisal was completed. In these cases, the loans are categorized in the above table as a Level III measurement since these adjustments are considered to be unobservable inputs. Income
and expenses from operations and further declines in the fair value of the collateral subsequent to foreclosure are included in net expenses from OREO.
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||
2019
|
Fair Value
|
Valuation Technique(s)
|
Unobservable input
|
Range
|
Weighted average
|
Impaired Loans
|
3,860
|
Appraised Collateral Values
|
Discount for time since appraisal
|
0-100%
|
19.22%
|
|
|
|
Selling costs
|
5%-10%
|
9.26%
|
|
|
|
Holding period
|
6 - 12 months
|
11.76 months
|
|
|
|
|
|
|
Other real estate owned
|
3,299
|
Appraised Collateral Values
|
Discount for time since appraisal
|
5-43%
|
16.37%
|
|
|
|
|
|
|
2018
|
Fair Value
|
Valuation Technique(s)
|
Unobservable input
|
Range
|
Weighted average
|
Impaired Loans
|
5,815
|
Appraised Collateral Values
|
Discount for time since appraisal
|
0-100%
|
19.22%
|
|
|
|
Selling costs
|
5%-12%
|
8.70%
|
|
|
|
Holding period
|
6 - 12 months
|
11.61 months
|
|
|
|
|
|
|
Other real estate owned
|
532
|
Appraised Collateral Values
|
Discount for time since appraisal
|
20-55%
|
31.44%
|
|
Carrying
|
|||||||||||||||||||
December 31, 2019
|
Amount
|
Fair Value
|
Level I
|
Level II
|
Level III
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
Interest bearing time deposits with other banks
|
$
|
14,256
|
$
|
14,635
|
$
|
-
|
$
|
-
|
$
|
14,635
|
||||||||||
Loans held for sale
|
815
|
815
|
-
|
-
|
815
|
|||||||||||||||
Net loans
|
1,101,724
|
1,091,006
|
-
|
-
|
1,091,006
|
|||||||||||||||
|
||||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
1,211,118
|
1,211,200
|
938,387
|
-
|
272,816
|
|||||||||||||||
Borrowed funds
|
85,117
|
84,581
|
-
|
-
|
84,581
|
|||||||||||||||
|
||||||||||||||||||||
December 31, 2018
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Interest bearing time deposits with other banks
|
$
|
15,498
|
$
|
15,422
|
$
|
-
|
$
|
-
|
$
|
15,422
|
||||||||||
Loans held for sale
|
1,127
|
1,126
|
-
|
-
|
1,126
|
|||||||||||||||
Net loans
|
1,068,999
|
1,062,645
|
-
|
-
|
1,062,645
|
|||||||||||||||
|
||||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
1,185,156
|
1,180,694
|
886,686
|
-
|
294,008
|
|||||||||||||||
Borrowed funds
|
91,194
|
90,427
|
-
|
-
|
90,427
|
CONDENSED BALANCE SHEET
|
||||||||
|
December 31,
|
|||||||
(in thousands)
|
2019
|
2018
|
||||||
Assets:
|
||||||||
Cash
|
$
|
7,166
|
$
|
5,576
|
||||
Available-for-sale securities
|
617
|
516
|
||||||
Investment in subsidiary - First Citizens Community Bank
|
154,501
|
140,298
|
||||||
Other assets
|
744
|
813
|
||||||
Total assets
|
$
|
163,028
|
$
|
147,203
|
||||
Liabilities:
|
||||||||
Other liabilities
|
$
|
754
|
$
|
474
|
||||
Borrowed funds
|
7,500
|
7,500
|
||||||
Total liabilities
|
8,254
|
7,974
|
||||||
Stockholders' equity
|
154,774
|
139,229
|
||||||
Total liabilities and stockholders' equity
|
$
|
163,028
|
$
|
147,203
|
CITIZENS FINANCIAL SERVICES, INC.
|
||||||||||||
CONDENSED STATEMENT OF INCOME
|
||||||||||||
|
Year Ended December 31,
|
|||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Dividends from:
|
||||||||||||
Bank subsidiary
|
$
|
9,565
|
$
|
8,248
|
$
|
7,507
|
||||||
Equity securities
|
17
|
7
|
60
|
|||||||||
Total income
|
9,582
|
8,255
|
7,567
|
|||||||||
Realized securities gains, net
|
101
|
-
|
1,021
|
|||||||||
Expenses
|
1,103
|
642
|
824
|
|||||||||
Income before equity
|
||||||||||||
in undistributed earnings
|
||||||||||||
of subsidiary
|
8,580
|
7,613
|
7,764
|
|||||||||
Equity in undistributed
|
||||||||||||
earnings - First Citizens Community Bank
|
10,910
|
10,421
|
5,261
|
|||||||||
Net income
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
||||||
Comprehensive income
|
$
|
22,782
|
$
|
17,510
|
$
|
11,578
|
CITIZENS FINANCIAL SERVICES, INC.
|
||||||||||||
STATEMENT OF CASH FLOWS
|
||||||||||||
|
Year Ended December 31,
|
|||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
19,490
|
$
|
18,034
|
$
|
13,025
|
||||||
Adjustments to reconcile net income to net
|
||||||||||||
cash provided by operating activities:
|
||||||||||||
Equity in undistributed earnings of subsidiaries
|
(10,910
|
)
|
(10,421
|
)
|
(5,261
|
)
|
||||||
Investment securities (gains), net
|
(101
|
)
|
-
|
(1,021
|
)
|
|||||||
Other, net
|
717
|
(251
|
)
|
629
|
||||||||
Net cash provided by operating activities
|
9,196
|
7,362
|
7,372
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of equity securities
|
-
|
(425
|
)
|
(94
|
)
|
|||||||
Proceeds from the sale of available-for-sale securities
|
-
|
-
|
2,828
|
|||||||||
Net cash (used in) provided by investing activities
|
-
|
(425
|
)
|
2,734
|
||||||||
Cash flows from financing activities:
|
||||||||||||
Cash dividends paid
|
(6,315
|
)
|
(6,116
|
)
|
(5,177
|
)
|
||||||
Purchase of treasury stock
|
(1,291
|
)
|
(1,483
|
)
|
(979
|
)
|
||||||
Reissuance of treasury stock to employee stock purchase plan
|
-
|
-
|
43
|
|||||||||
Purchase of restricted stock
|
-
|
-
|
-
|
|||||||||
Net cash used in financing activities
|
(7,606
|
)
|
(7,599
|
)
|
(6,113
|
)
|
||||||
Net increase (decrease) in cash
|
1,590
|
(662
|
)
|
3,993
|
||||||||
Cash at beginning of year
|
5,576
|
6,238
|
2,245
|
|||||||||
Cash at end of year
|
$
|
7,166
|
$
|
5,576
|
$
|
6,238
|
(in thousands, except share data)
|
Three Months Ended,
|
|||||||||||||||
2019
|
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
||||||||||||
Interest income
|
$
|
15,017
|
$
|
15,502
|
$
|
15,874
|
$
|
15,587
|
||||||||
Interest expense
|
3,102
|
3,166
|
2,975
|
2,797
|
||||||||||||
Net interest income
|
11,915
|
12,336
|
12,899
|
12,790
|
||||||||||||
Provision for loan losses
|
400
|
350
|
400
|
525
|
||||||||||||
Non-interest income
|
2,022
|
1,997
|
2,140
|
2,083
|
||||||||||||
Investment securities gains, net
|
11
|
30
|
37
|
66
|
||||||||||||
Non-interest expenses
|
8,322
|
8,237
|
8,414
|
8,368
|
||||||||||||
Income before provision for income taxes
|
5,226
|
5,776
|
6,262
|
6,046
|
||||||||||||
Provision for income taxes
|
821
|
930
|
1,066
|
1,003
|
||||||||||||
Net income
|
$
|
4,405
|
$
|
4,846
|
$
|
5,196
|
$
|
5,043
|
||||||||
Earnings Per Share Basic
|
$
|
1.24
|
$
|
1.38
|
$
|
1.48
|
$
|
1.43
|
||||||||
Earnings Per Share Diluted
|
$
|
1.24
|
$
|
1.38
|
$
|
1.48
|
$
|
1.43
|
||||||||
|
||||||||||||||||
|
Three Months Ended,
|
|||||||||||||||
2018
|
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
||||||||||||
Interest income
|
$
|
13,383
|
$
|
14,028
|
$
|
14,259
|
$
|
15,088
|
||||||||
Interest expense
|
1,963
|
2,277
|
2,489
|
2,845
|
||||||||||||
Net interest income
|
11,420
|
11,751
|
11,770
|
12,243
|
||||||||||||
Provision for loan losses
|
500
|
325
|
475
|
625
|
||||||||||||
Non-interest income
|
1,900
|
1,835
|
2,022
|
1,997
|
||||||||||||
Investment securities gains, net
|
6
|
7
|
(12
|
)
|
(20
|
)
|
||||||||||
Non-interest expenses
|
7,832
|
7,702
|
7,788
|
8,235
|
||||||||||||
Income before provision for income taxes
|
4,994
|
5,566
|
5,517
|
5,360
|
||||||||||||
Provision for income taxes
|
747
|
875
|
936
|
845
|
||||||||||||
Net income
|
$
|
4,247
|
$
|
4,691
|
$
|
4,581
|
$
|
4,515
|
||||||||
Earnings Per Share Basic
|
$
|
1.19
|
$
|
1.32
|
$
|
1.30
|
$
|
1.28
|
||||||||
Earnings Per Share Diluted
|
$
|
1.19
|
$
|
1.32
|
$
|
1.30
|
$
|
1.28
|
(In Thousands)
|
||||||||
Purchase Price Consideration in cash
|
$
|
1,044
|
||||||
Net Assets Acquired for cash
|
||||||||
Loans, interest, PP&E less deposits, interest and escrow payable
|
3,509
|
|||||||
Total cash consideration
|
4,553
|
|||||||
Net Assets Acquired for cash
|
$
|
3,509
|
||||||
Adjustments to reflect assets acquired at fair value:
|
||||||||
Loans
|
||||||||
Interest rate
|
(522
|
)
|
||||||
General credit
|
(740
|
)
|
||||||
Core deposit intangible
|
145
|
|||||||
Adjustments to reflect liabilities acquired at fair value:
|
||||||||
Time deposits
|
(46
|
)
|
||||||
Acquired net assets at fair value
|
2,346
|
|||||||
Goodwill resulting from acquisition
|
$
|
2,207
|
(In Thousands)
|
||||||||
Total purchase price
|
$
|
4,553
|
||||||
Net assets acquired:
|
||||||||
Cash and cash equivalents
|
$
|
154
|
||||||
Loans
|
39,847
|
|||||||
Premises and equipment, net
|
86
|
|||||||
Accrued interest receivable
|
74
|
|||||||
Intangibles
|
145
|
|||||||
Deposits
|
(37,880
|
)
|
||||||
Accrued interest payable
|
(29
|
)
|
||||||
Other liabilities
|
(51
|
)
|
||||||
|
2,346
|
|||||||
Goodwill resulting from the branch acquisition
|
$
|
2,207
|
(a)
|
Disclosure Controls and Procedures
|
(b)
|
Internal Control Over Financial Reporting
|
(c) |
Changes to Internal Control Over Financial Reporting
|
(a)
|
Security Ownership of Certain Beneficial Owners Information required by this item is incorporated herein by reference to the section captioned “Stock Ownership” in the Company’s 2020 Proxy Statement.
|
(b)
|
Security Ownership of Management Information required by this item is incorporated herein by reference to the section captioned “Stock Ownership” in the Company’s 2020 Proxy Statement.
|
(c)
|
Changes in Control
|
(d)
|
Equity Compensation Plan Informtion
|
Plan Category
|
Number of securities to be issued upon the exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities
reflected in the first column)
|
|||
Equity compensation plans approved by security holders
|
n/a
|
n/a
|
129,211
|
|||
Equity compensation plans not approved by security holders
|
n/a
|
n/a
|
n/a
|
|||
Total
|
n/a
|
n/a
|
129,211
|
10.13 | *First Citizens Community Bank Long Term Incentive Plan | ||
101
|
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL
(Extensible Business Reporting Language): (i) The Consolidated Balance Sheet, (ii) the Consolidated Statement of Income, (iii) the Consolidated Statement of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’
Equity, (v) the Consolidated Statement of Cash Flows and (vi) related notes.
|
Signature and Capacity
|
Date
|
/s/ Randall E. Black
Randall E. Black, Chief Executive Officer, President and Director
(Principal Executive Officer)
|
March 12, 2020
|
/s/ Stephen J. Guillaume
Stephen J. Guillaume, Chief Financial Officer
(Principal Financial & Accounting Officer)
|
March 12, 2020
|
/s/ R. Lowell Coolidge
R. Lowell Coolidge, Director |
March 12, 2020
|
/s/ Robert W. Chappell
Robert W. Chappell, Director |
March 12, 2020
|
/s/ R. Joseph Landy
R. Joseph Landy, Director |
March 12, 2020
|
/s/ Roger C. Graham, Jr.
Roger C. Graham, Director |
March 12, 2020
|
/s/ E. Gene Kosa
E. Gene Kosa, Director |
March 12, 2020
|
/s/ Rinaldo A. DePaola
Rinaldo A. DePaola, Director |
March 12, 2020
|
/s/ Thomas E. Freeman
Thomas E. Freeman, Director |
March 12, 2020
|
/s/ Alletta M. Schadler
Alletta M. Schadler, Director |
March 12, 2020
|
/s/ Christopher W. Kunes
Christopher W. Kunes |
March 12, 2020
|
/s/ David Z, Richards, Jr.
David Z. Richards, Jr., Director |
March 12, 2020 |
/s/ Mickey L. Jones
Mickey L. Jones, Director |
March 12, 2020 |
FIRST CITIZENS COMMUNITY BANK
Long Term Deferred Incentive Plan
The First Citizens Community Bank Deferred Incentive Plan (the "Plan") is hereby adopted by First Citizens Community Bank (the “Bank”), effective on January 1, 2018
The purpose of the Plan is to recognize the value certain employees bring to the Bank as well as the anticipated continued invaluable contribution to the general welfare of the Bank, and to reward these employees for such contribution.
The Plan, and all incentive amounts distributed thereunder, are designed and intended to meet the requirements of Section 1.409A-1(b)(4) of the U.S. Treasury Department Regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), governing “short-term deferrals” so that no incentive amount distributed under the Plan is determined to provide, or treated as providing, for a deferral of compensation under Code Section 409A. To the extent the Plan, or any incentive amount thereunder, ultimately is determined to provide, or treated as providing, for the deferral of compensation under Code Section 409A, the Bank reserves the right to take such action as the Bank deems necessary or desirable to ensure compliance with Code Section 409A and the regulations thereunder.
Definitions
“Administrator” shall mean such person or group as determined by Management of the Bank to oversee and make decisions relative to the Plan.
“Change in Control” shall mean the event whereby (i) any person or entity, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, other than the Employer, a wholly-owned subsidiary thereof, or any employee benefit plan of the Employer or any of its subsidiaries becomes the beneficial owner of Employer securities having fifty percent (50%) or more of the combined voting power of the then outstanding securities of the Employer that may be cast for the election of directors of the Employer (other than as a result of the issuance of securities initiated by the Employer in the ordinary course of business); or (ii) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the holders of all Employer’s securities entitled to vote generally in the election of directors of the Employer immediately prior to such transaction constitute, following such transaction, less than a majority of the combined voting power of the then-outstanding securities of the Employer or any successor corporation or entity entitled to vote generally in the election of the directors of Employer or such other corporation or entity after such transactions.
“For Cause” shall mean a material violation by the employee of any applicable law or regulation respecting the business of the Bank or the Bank; the employee’s gross negligence or gross neglect of duties or intentional and material failure to perform the assigned duties of his position; disloyalty or dishonesty by the employee in the performance of his duties, or a breach of the employee’s fiduciary duties for personal profit; or conviction of the employee for or plea of nolo contendere to a felony or conviction of or plea of nolo contendere to a misdemeanor involving moral turpitude.
“Deferred Incentive Account” shall mean an account established with respect to the Participant to which Bank awards may be credited solely for recordkeeping purposes. The Participant's Deferred Incentive Account will be credited with the contributions made to the Account, credited (or charged, as the case may be) with the hypothetical or deemed investment earnings and charged with benefit distributions from the Deferred Incentive Account.
“Incentive Award” shall mean the award as granted by Management of the Bank that is applied to the Participant’s Deferred Incentive Account.
“Participant” shall mean an employee of the Bank who is eligible to be in the Plan and receive Incentive Awards as determined by Management.
“Vesting Period” shall mean the period during which each Incentive Award remains at risk of forfeiture. A Vesting Period shall apply to each Incentive Award equal to five (5) years from the date of grant, such that no portion of an Incentive Award shall vest prior to the end of the Vesting Period.
Eligibility and Participation
Annually, Management will determine eligibility for any and all Participants. Eligibility under the Plan for one year does not guarantee eligibility in subsequent years. Also, eligibility does not represent a commitment or guarantee that the Participant will receive a payment under the Plan. Furthermore, the decision to pay any incentive amount under the Plan remains in the full discretion of Management of the Bank. In any case, the Participant must remain an active employee in good standing on the date that amounts are paid to receive any payment under the Plan. The initial list of Participants is shown in Exhibit A, attached hereto, which shall be updated and approved annually by Management.
Incentive Awards, Valuation and Distribution
On an annual basis, the Bank may make a contribution to the Participant’s Deferred Incentive Account. The amount of the contribution will be credited to the Participant’s Deferred Incentive Account and shall constitute a general, unsecured liability of the Bank.
At the end of the Vesting Period of each Incentive Award, the amount of the Incentive Award plus any interest credited will be distributed to the Participant within two and one-half months of the end of the Vesting Period. Notwithstanding the foregoing, all unvested amounts in the Deferred Incentive Account shall become fully vested in the event of a Change in Control of the Bank, as defined in this Plan, or the death of the Participant. The Participant shall have the right to designate or change the designation of a Beneficiary to receive any benefits payable under this Plan upon the death of the Participant by submitting to the Bank a beneficiary designation on an approved form.
Incentive Payment Qualifications and Forfeiture
In order to receive any payment under the Plan, the Participant must remain an active employee in good standing on the date that the vested portion of the Deferred Incentive Account is paid to such Participant. If, before an incentive payment date, the Participant’s employment is terminated, whether voluntary or involuntary, the Participant will not be eligible to receive subsequent payments under the Plan, any unvested incentive amounts will be forfeited by the Participant, and the Participant’s eligibility to participate in the Plan will terminate.
If the Participant is terminated for Cause, as defined herein, any incentive amounts yet to be distributed will be forfeited and the Participant will not be eligible for subsequent payments or participation under the Plan. In addition, if the Bank is placed under regulatory action by regulators, any incentive amounts yet to be distributed will be forfeited and this Plan will terminate.
Plan Administration
The Bank and/or Administrator may amend, suspend or terminate the Plan at any time and in any manner subject to the Plan Terminations and Amendments section contained herein. The Administrator shall have the authority to interpret the Plan, to resolve ambiguities, inconsistencies and omissions, to determine any question of fact, and to determine the rights and benefits, if any, of any Participant, applicant or beneficiary, in accordance with the Plan. All determinations, interpretations, rules and decisions of the Bank and/or Administrator shall be final, conclusive and binding upon any and all persons claiming to have any interest or right under the Plan.
Recoupment of Deferred Incentive Award
If Management determines that the Participant has engaged in fraud or willful misconduct that caused or otherwise contributed to the need for a material restatement of the Bank’s financial results, Management will review all Deferred Incentive Awards awarded to or earned by that Participant on the basis of performance during fiscal periods materially affected by the restatement. If, in Management’s view, the Deferred Incentive Award would have been lower if it had been based on the restated results, Management will, to the extent permitted by applicable law, recoup from that Participant’s Deferred Incentive Account any portion of such Award as it deems appropriate after a review of all relevant facts and circumstances. Generally, this review would include consideration of (i) Management’s view of what Deferred Incentive Awards would have been awarded to or earned by the Participant had the financial statements been properly reported; (ii) the nature of the events that led to the restatement; (iii) the conduct of the Participant in connection with the events that led to the restatement; (iv) whether the assertion of a claim against the Participant could prejudice the Bank’s overall interests and whether other penalties or punishments are being imposed on the Participant, including by third parties such as regulators or other authorities; and (v) any other facts and circumstances that Management deems relevant.
Plan Termination and Amendments
The Plan may be terminated or amended by the Bank at any time and in any manner. However, no such amendment, modification or termination shall be detrimental to a Participant without the consent of such participant. A Plan termination followed by full settlement of all Deferred Incentive Accounts which are vested or unvested as of the Plan termination date shall not be considered detrimental to a Participant.
Operating Guidelines
Any benefits payable under this Plan cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner. The Participant may not rely on any verbal or other information outside of this Plan agreement and eligibility for an incentive payment under this Plan does not guarantee eligibility for any future payments or incentive compensation programs.
At Will Employment
Nothing in this Plan agreement shall confer any right to continued employment or service with the Bank for any specific duration or otherwise restrict in any way the rights of the Bank or the Participant to terminate employment at any time, for any reason, with or without cause.
Tax Withholding
The Bank shall withhold from the payments under the Plan all federal, state and local income or other taxes required to be withheld therefrom and any other required payroll deductions, and as a condition precedent to payment under the Plan, all recipients shall make arrangements satisfactory to the Bank for the payment of any personal income or other taxes. All payments hereunder are intended to qualify for the short-term deferral exception under Section 409A of the Internal Revenue Code and, if required to qualify for such exception, shall be made no later than two and one-half months following the end of the taxable year in which an individual becomes legally entitled to, or vested in, a payment hereunder.
Miscellaneous
It is the intention and purpose of the Bank that the Plan shall be deemed to be “unfunded” for tax purposes and deemed a plan as would properly be described as “unfunded” for purposes of Title I of ERISA. The Plan shall be administered in such a manner, notwithstanding any contrary provision of the Plan, in order that it will be so deemed and would be so described. In no event may the Participant sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan or relating hereto. At no time will any such right or interest under the Plan be subject to the claims of the Participant’s creditors or liable to attachment, execution or other legal process.
March 12, 2020
|
By:
|
/s/ Randall E. Black | |
Randall E. Black | |||
President and Chief Executive Officer
(Principal Executive Officer)
|
|||
March 12, 2020
|
By:
|
/s/ Stephen J. Guillaume |
|
Stephen J. Guillaume |
|||
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
|
|||
1.
|
The Report fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
|
|
|
Date: March 12, 2020 |
By: | /s/ Randall E. Black |
|
||
Randall E. Black
Chief Executive Officer and President
(Principal Executive Officer)
|
1. |
The Report fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934; and
|
2. |
To my knowledge, the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
|
|
|
Date: March 12, 2020 |
By: | /s/ Stephen J. Guillaume |
|
||
Stephen J. Guillaume
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
|
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