ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Michigan | 38-2830092 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
401 N. Main St, Mt. Pleasant, MI | 48858 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | ¨ | Accelerated filer | ý | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 1. | ||||
Item 1A. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 5. | ||||
Item 6. | ||||
AFS: Available-for-sale | GAAP: U.S. generally accepted accounting principles | |
ALLL: Allowance for loan and lease losses | GLB Act: Gramm-Leach-Bliley Act of 1999 | |
AOCI: Accumulated other comprehensive income | IFRS: International Financial Reporting Standards | |
ASC: FASB Accounting Standards Codification | IRR: Interest rate risk | |
ASU: FASB Accounting Standards Update | ISDA: International Swaps and Derivatives Association | |
ATM: Automated Teller Machine | JOBS Act: Jumpstart our Business Startups Act | |
BHC Act: Bank Holding Company Act of 1956 | LIBOR: London Interbank Offered Rate | |
CECL: Current Expected Credit Losses | N/A: Not applicable | |
CFPB: Consumer Financial Protection Bureau | N/M: Not meaningful | |
CIK: Central Index Key | NASDAQ: NASDAQ Stock Market Index | |
CRA: Community Reinvestment Act | NASDAQ Banks: NASDAQ Bank Stock Index | |
DIF: Deposit Insurance Fund | NAV: Net asset value | |
DIFS: Department of Insurance and Financial Services | NOW: Negotiable order of withdrawal | |
Directors Plan: Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors | NSF: Non-sufficient funds | |
Dividend Reinvestment Plan: Isabella Bank Corporation Stockholder Dividend Reinvestment Plan and Employee Stock Purchase Plan | OCI: Other comprehensive income (loss) | |
Dodd-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | OMSR: Originated mortgage servicing rights | |
ESOP: Employee Stock Ownership Plan | OREO: Other real estate owned | |
Exchange Act: Securities Exchange Act of 1934 | OTTI: Other-than-temporary impairment | |
FASB: Financial Accounting Standards Board | PBO: Projected benefit obligation | |
FDI Act: Federal Deposit Insurance Act | PCAOB: Public Company Accounting Oversight Board | |
FDIC: Federal Deposit Insurance Corporation | Rabbi Trust: A trust established to fund the Directors Plan | |
FFIEC: Federal Financial Institutions Examinations Council | SEC: U.S. Securities and Exchange Commission | |
FRB: Federal Reserve Bank | SOX: Sarbanes-Oxley Act of 2002 | |
FHLB: Federal Home Loan Bank | Tax Act: Tax Cuts and Jobs Act, enacted December 22, 2017 | |
Freddie Mac: Federal Home Loan Mortgage Corporation | TDR: Troubled debt restructuring | |
FTE: Fully taxable equivalent | XBRL: eXtensible Business Reporting Language |
June 30 2018 | December 31 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | |||||||
Cash and demand deposits due from banks | $ | 22,055 | $ | 25,267 | |||
Interest bearing balances due from banks | 158 | 5,581 | |||||
Total cash and cash equivalents | 22,213 | 30,848 | |||||
AFS securities, at fair value | 524,108 | 548,730 | |||||
Equity securities, at fair value | — | 3,577 | |||||
Mortgage loans AFS | 1,420 | 1,560 | |||||
Loans | |||||||
Commercial | 691,623 | 634,759 | |||||
Agricultural | 125,249 | 128,269 | |||||
Residential real estate | 273,607 | 272,368 | |||||
Consumer | 61,277 | 56,123 | |||||
Gross loans | 1,151,756 | 1,091,519 | |||||
Less allowance for loan and lease losses | 8,200 | 7,700 | |||||
Net loans | 1,143,556 | 1,083,819 | |||||
Premises and equipment | 28,267 | 28,450 | |||||
Corporate owned life insurance policies | 27,377 | 27,026 | |||||
Accrued interest receivable | 5,684 | 7,063 | |||||
Equity securities without readily determinable fair values | 23,743 | 23,454 | |||||
Goodwill and other intangible assets | 48,497 | 48,547 | |||||
Other assets | 12,090 | 10,056 | |||||
TOTAL ASSETS | $ | 1,836,955 | $ | 1,813,130 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits | |||||||
Noninterest bearing | $ | 234,377 | $ | 237,511 | |||
NOW accounts | 222,678 | 231,666 | |||||
Certificates of deposit under $250 and other savings | 745,065 | 728,090 | |||||
Certificates of deposit over $250 | 72,642 | 67,991 | |||||
Total deposits | 1,274,762 | 1,265,258 | |||||
Borrowed funds | 362,496 | 344,878 | |||||
Accrued interest payable and other liabilities | 7,748 | 8,089 | |||||
Total liabilities | 1,645,006 | 1,618,225 | |||||
Shareholders’ equity | |||||||
Common stock — no par value 15,000,000 shares authorized; issued and outstanding 7,933,250 shares (including 21,652 shares held in the Rabbi Trust) in 2018 and 7,857,293 shares (including 31,769 shares held in the Rabbi Trust) in 2017 | 142,489 | 140,277 | |||||
Shares to be issued for deferred compensation obligations | 5,423 | 5,502 | |||||
Retained earnings | 54,204 | 51,728 | |||||
Accumulated other comprehensive income (loss) | (10,167 | ) | (2,602 | ) | |||
Total shareholders’ equity | 191,949 | 194,905 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,836,955 | $ | 1,813,130 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest income | |||||||||||||||
Loans, including fees | $ | 12,076 | $ | 10,685 | $ | 23,372 | $ | 20,805 | |||||||
AFS securities | |||||||||||||||
Taxable | 2,110 | 2,188 | 4,232 | 4,301 | |||||||||||
Nontaxable | 1,331 | 1,413 | 2,713 | 2,828 | |||||||||||
Federal funds sold and other | 196 | 212 | 517 | 425 | |||||||||||
Total interest income | 15,713 | 14,498 | 30,834 | 28,359 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 2,230 | 1,615 | 4,276 | 3,155 | |||||||||||
Borrowings | 1,511 | 1,413 | 2,866 | 2,704 | |||||||||||
Total interest expense | 3,741 | 3,028 | 7,142 | 5,859 | |||||||||||
Net interest income | 11,972 | 11,470 | 23,692 | 22,500 | |||||||||||
Provision for loan losses | 328 | 9 | 712 | 36 | |||||||||||
Net interest income after provision for loan losses | 11,644 | 11,461 | 22,980 | 22,464 | |||||||||||
Noninterest income | |||||||||||||||
Service charges and fees | 1,488 | 1,405 | 2,976 | 2,935 | |||||||||||
Net gain on sale of mortgage loans | 87 | 199 | 168 | 354 | |||||||||||
Earnings on corporate owned life insurance policies | 181 | 183 | 351 | 363 | |||||||||||
Net gains on sale of AFS securities | — | 142 | — | 142 | |||||||||||
Other | 980 | 859 | 1,728 | 1,610 | |||||||||||
Total noninterest income | 2,736 | 2,788 | 5,223 | 5,404 | |||||||||||
Noninterest expenses | |||||||||||||||
Compensation and benefits | 5,679 | 4,817 | 11,173 | 10,374 | |||||||||||
Furniture and equipment | 1,571 | 1,352 | 3,050 | 2,696 | |||||||||||
Occupancy | 807 | 815 | 1,631 | 1,652 | |||||||||||
Other | 2,727 | 2,523 | 5,026 | 4,736 | |||||||||||
Total noninterest expenses | 10,784 | 9,507 | 20,880 | 19,458 | |||||||||||
Income before federal income tax expense | 3,596 | 4,742 | 7,323 | 8,410 | |||||||||||
Federal income tax expense | 263 | 898 | 528 | 1,430 | |||||||||||
NET INCOME | $ | 3,333 | $ | 3,844 | $ | 6,795 | $ | 6,980 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.42 | $ | 0.49 | $ | 0.86 | $ | 0.89 | |||||||
Diluted | $ | 0.41 | $ | 0.48 | $ | 0.84 | $ | 0.87 | |||||||
Cash dividends per common share | $ | 0.26 | $ | 0.25 | $ | 0.52 | $ | 0.50 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 3,333 | $ | 3,844 | $ | 6,795 | $ | 6,980 | |||||||
Unrealized gains (losses) on AFS securities | |||||||||||||||
Unrealized gains (losses) on AFS securities arising during the period | (1,978 | ) | 2,570 | (10,035 | ) | 4,247 | |||||||||
Reclassification adjustment for net (gains) losses included in net income | — | (142 | ) | — | (142 | ) | |||||||||
Tax effect (1) | 442 | (762 | ) | 2,126 | (1,212 | ) | |||||||||
Unrealized gains (losses) on AFS securities, net of tax | (1,536 | ) | 1,666 | (7,909 | ) | 2,893 | |||||||||
Unrealized gains (losses) on derivative instruments arising during the period | 31 | (61 | ) | 153 | (44 | ) | |||||||||
Tax effect (1) | (6 | ) | 21 | (32 | ) | 15 | |||||||||
Unrealized gains (losses) on derivative instruments, net of tax | 25 | (40 | ) | 121 | (29 | ) | |||||||||
Other comprehensive income (loss), net of tax | (1,511 | ) | 1,626 | (7,788 | ) | 2,864 | |||||||||
Comprehensive income | $ | 1,822 | $ | 5,470 | $ | (993 | ) | $ | 9,844 |
(1) | See “Note 11 – Accumulated Other Comprehensive Income” for tax effect reconciliation. |
Common Stock | ||||||||||||||||||||||
Common Shares Outstanding | Amount | Common Shares to be Issued for Deferred Compensation Obligations | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Totals | |||||||||||||||||
Balance, January 1, 2017 | 7,821,069 | $ | 139,525 | $ | 5,038 | $ | 46,114 | $ | (2,778 | ) | $ | 187,899 | ||||||||||
Comprehensive income (loss) | — | — | — | 6,980 | 2,864 | 9,844 | ||||||||||||||||
Issuance of common stock | 135,516 | 3,764 | — | — | — | 3,764 | ||||||||||||||||
Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations | — | 176 | (176 | ) | — | — | — | |||||||||||||||
Share-based payment awards under equity compensation plan | — | — | 302 | — | — | 302 | ||||||||||||||||
Common stock purchased for deferred compensation obligations | — | (197 | ) | — | — | — | (197 | ) | ||||||||||||||
Common stock repurchased pursuant to publicly announced repurchase plan | (94,032 | ) | (2,622 | ) | — | — | — | (2,622 | ) | |||||||||||||
Cash dividends paid ($0.50 per common share) | — | — | — | (3,920 | ) | — | (3,920 | ) | ||||||||||||||
Balance, June 30, 2017 | 7,862,553 | $ | 140,646 | $ | 5,164 | $ | 49,174 | $ | 86 | $ | 195,070 | |||||||||||
Balance, January 1, 2018 | 7,857,293 | $ | 140,277 | $ | 5,502 | $ | 51,728 | $ | (2,602 | ) | $ | 194,905 | ||||||||||
Comprehensive income (loss) | — | — | — | 6,795 | (7,788 | ) | (993 | ) | ||||||||||||||
Adoption of ASU 2016-01 | — | — | — | (223 | ) | 223 | — | |||||||||||||||
Issuance of common stock | 121,437 | 3,272 | — | — | — | 3,272 | ||||||||||||||||
Common stock transferred from the Rabbi Trust to satisfy deferred compensation obligations | — | 383 | (383 | ) | — | — | — | |||||||||||||||
Share-based payment awards under equity compensation plan | — | — | 304 | — | — | 304 | ||||||||||||||||
Common stock purchased for deferred compensation obligations | — | (205 | ) | — | — | — | (205 | ) | ||||||||||||||
Common stock repurchased pursuant to publicly announced repurchase plan | (45,480 | ) | (1,238 | ) | — | — | — | (1,238 | ) | |||||||||||||
Cash dividends paid ($0.52 per common share) | — | — | — | (4,096 | ) | — | (4,096 | ) | ||||||||||||||
Balance, June 30, 2018 | 7,933,250 | $ | 142,489 | $ | 5,423 | $ | 54,204 | $ | (10,167 | ) | $ | 191,949 |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 6,795 | $ | 6,980 | |||
Reconciliation of net income to net cash provided by operating activities: | |||||||
Provision for loan losses | 712 | 36 | |||||
Impairment of foreclosed assets | — | 28 | |||||
Depreciation | 1,448 | 1,440 | |||||
Amortization of OMSR | 153 | 170 | |||||
Amortization of acquisition intangibles | 50 | 62 | |||||
Net amortization of AFS securities | 969 | 1,062 | |||||
Net unrealized (gains) losses on equity securities, at fair value | 41 | — | |||||
Net (gains) losses on sale of AFS securities | — | (142 | ) | ||||
Net (gains) losses on sale of equity securities, at fair value | (1 | ) | — | ||||
Net gain on sale of mortgage loans | (168 | ) | (354 | ) | |||
Increase in cash value of corporate owned life insurance policies | (351 | ) | (363 | ) | |||
Share-based payment awards under equity compensation plan | 304 | 302 | |||||
Origination of loans held-for-sale | (10,178 | ) | (19,081 | ) | |||
Proceeds from loan sales | 10,486 | 19,769 | |||||
Net changes in operating assets and liabilities which provided (used) cash: | |||||||
Accrued interest receivable | 1,379 | 894 | |||||
Other assets | (353 | ) | (1,734 | ) | |||
Accrued interest payable and other liabilities | (341 | ) | (382 | ) | |||
Net cash provided by (used in) operating activities | 10,945 | 8,687 | |||||
INVESTING ACTIVITIES | |||||||
Activity in AFS securities | |||||||
Sales | — | 12,827 | |||||
Maturities, calls, and principal payments | 39,609 | 45,021 | |||||
Purchases | (25,991 | ) | (64,429 | ) | |||
Sale of equity securities, at fair value | 3,537 | — | |||||
Net loan principal (originations) collections | (60,517 | ) | (37,842 | ) | |||
Proceeds from sales of foreclosed assets | 192 | 98 | |||||
Purchases of premises and equipment | (1,265 | ) | (805 | ) | |||
Net cash provided by (used in) investing activities | (44,435 | ) | (45,130 | ) |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
FINANCING ACTIVITIES | |||||||
Net increase (decrease) in deposits | $ | 9,504 | $ | 15,112 | |||
Net increase (decrease) in borrowed funds | 17,618 | 23,246 | |||||
Cash dividends paid on common stock | (4,096 | ) | (3,920 | ) | |||
Proceeds from issuance of common stock | 3,272 | 3,764 | |||||
Common stock repurchased | (1,238 | ) | (2,622 | ) | |||
Common stock purchased for deferred compensation obligations | (205 | ) | (197 | ) | |||
Net cash provided by (used in) financing activities | 24,855 | 35,383 | |||||
Increase (decrease) in cash and cash equivalents | (8,635 | ) | (1,060 | ) | |||
Cash and cash equivalents at beginning of period | 30,848 | 22,894 | |||||
Cash and cash equivalents at end of period | $ | 22,213 | $ | 21,834 | |||
SUPPLEMENTAL CASH FLOWS INFORMATION: | |||||||
Interest paid | $ | 7,120 | $ | 5,872 | |||
Income taxes paid | $ | — | $ | 1,630 | |||
SUPPLEMENTAL NONCASH INFORMATION: | |||||||
Transfers of loans to foreclosed assets | $ | 68 | $ | 124 |
June 30, 2018 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Government sponsored enterprises | $ | 194 | $ | — | $ | 4 | $ | 190 | |||||||
States and political subdivisions | 200,976 | 1,857 | 560 | 202,273 | |||||||||||
Auction rate money market preferred | 3,200 | — | 65 | 3,135 | |||||||||||
Mortgage-backed securities | 204,411 | 41 | 6,815 | 197,637 | |||||||||||
Collateralized mortgage obligations | 124,544 | 50 | 3,721 | 120,873 | |||||||||||
Total | $ | 533,325 | $ | 1,948 | $ | 11,165 | $ | 524,108 |
December 31, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Government sponsored enterprises | $ | 217 | $ | — | $ | 1 | $ | 216 | |||||||
States and political subdivisions | 204,131 | 4,486 | 143 | 208,474 | |||||||||||
Auction rate money market preferred | 3,200 | — | 151 | 3,049 | |||||||||||
Mortgage-backed securities | 210,757 | 390 | 2,350 | 208,797 | |||||||||||
Collateralized mortgage obligations | 129,607 | 160 | 1,573 | 128,194 | |||||||||||
Total | $ | 547,912 | $ | 5,036 | $ | 4,218 | $ | 548,730 |
Maturing | Securities with Variable Monthly Payments or Noncontractual Maturities | ||||||||||||||||||||||
Due in One Year or Less | After One Year But Within Five Years | After Five Years But Within Ten Years | After Ten Years | Total | |||||||||||||||||||
Government sponsored enterprises | $ | — | $ | 194 | $ | — | $ | — | $ | — | $ | 194 | |||||||||||
States and political subdivisions | 27,593 | 81,665 | 62,446 | 29,272 | — | 200,976 | |||||||||||||||||
Auction rate money market preferred | — | — | — | — | 3,200 | 3,200 | |||||||||||||||||
Mortgage-backed securities | — | — | — | — | 204,411 | 204,411 | |||||||||||||||||
Collateralized mortgage obligations | — | — | — | — | 124,544 | 124,544 | |||||||||||||||||
Total amortized cost | $ | 27,593 | $ | 81,859 | $ | 62,446 | $ | 29,272 | $ | 332,155 | $ | 533,325 | |||||||||||
Fair value | $ | 27,640 | $ | 82,336 | $ | 63,199 | $ | 29,288 | $ | 321,645 | $ | 524,108 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Proceeds from sales of AFS securities | $ | — | $ | 12,827 | $ | — | $ | 12,827 | |||||||
Gross realized gains (losses) | $ | — | $ | 142 | $ | — | $ | 142 | |||||||
Applicable income tax expense (benefit) | $ | — | $ | 48 | $ | — | $ | 48 |
June 30, 2018 | |||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | ||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Total Unrealized Losses | |||||||||||||||
Government sponsored enterprises | $ | 4 | $ | 190 | $ | — | $ | — | $ | 4 | |||||||||
States and political subdivisions | 378 | 32,949 | 182 | 9,012 | 560 | ||||||||||||||
Auction rate money market preferred | — | — | 65 | 3,135 | 65 | ||||||||||||||
Mortgage-backed securities | 3,265 | 125,130 | 3,550 | 69,214 | 6,815 | ||||||||||||||
Collateralized mortgage obligations | 2,490 | 94,355 | 1,231 | 22,523 | 3,721 | ||||||||||||||
Total | $ | 6,137 | $ | 252,624 | $ | 5,028 | $ | 103,884 | $ | 11,165 | |||||||||
Number of securities in an unrealized loss position: | 159 | 91 | 250 |
December 31, 2017 | |||||||||||||||||||
Less Than Twelve Months | Twelve Months or More | ||||||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Total Unrealized Losses | |||||||||||||||
Government sponsored enterprises | $ | 1 | $ | 216 | $ | — | $ | — | $ | 1 | |||||||||
States and political subdivisions | 142 | 16,139 | 1 | 188 | 143 | ||||||||||||||
Auction rate money market preferred | — | — | 151 | 3,049 | 151 | ||||||||||||||
Mortgage-backed securities | 454 | 72,007 | 1,896 | 76,065 | 2,350 | ||||||||||||||
Collateralized mortgage obligations | 701 | 76,435 | 872 | 25,308 | 1,573 | ||||||||||||||
Total | $ | 1,298 | $ | 164,797 | $ | 2,920 | $ | 104,610 | $ | 4,218 | |||||||||
Number of securities in an unrealized loss position: | 81 | 24 | 105 |
• | Has the value of the investment declined more than what is deemed to be reasonable based on a risk and maturity adjusted discount rate? |
• | Is the investment credit rating below investment grade? |
• | Is it probable the issuer will be unable to pay the amount when due? |
• | Is it more likely than not that we will have to sell the security before recovery of its cost basis? |
• | Has the duration of the investment been extended? |
• | Evaluation of the borrower’s ability to make monthly payments. |
• | Evaluation of the value of the property securing the loan. |
• | Ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income. |
• | Ensuring all debt servicing does not exceed 40% of income. |
• | Verification of acceptable credit reports. |
• | Verification of employment, income, and financial information. |
Allowance for Loan Losses | |||||||||||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
April 1, 2018 | $ | 1,840 | $ | 1,224 | $ | 2,482 | $ | 795 | $ | 1,859 | $ | 8,200 | |||||||||||
Charge-offs | (489 | ) | — | (29 | ) | (48 | ) | — | (566 | ) | |||||||||||||
Recoveries | 101 | — | 69 | 68 | — | 238 | |||||||||||||||||
Provision for loan losses | 745 | (242 | ) | (355 | ) | 67 | 113 | 328 | |||||||||||||||
June 30, 2018 | $ | 2,197 | $ | 982 | $ | 2,167 | $ | 882 | $ | 1,972 | $ | 8,200 |
Allowance for Loan Losses | |||||||||||||||||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
January 1, 2018 | $ | 1,706 | $ | 611 | $ | 2,563 | $ | 900 | $ | 1,920 | $ | 7,700 | |||||||||||
Charge-offs | (494 | ) | — | (39 | ) | (136 | ) | — | (669 | ) | |||||||||||||
Recoveries | 204 | — | 125 | 128 | — | 457 | |||||||||||||||||
Provision for loan losses | 781 | 371 | (482 | ) | (10 | ) | 52 | 712 | |||||||||||||||
June 30, 2018 | $ | 2,197 | $ | 982 | $ | 2,167 | $ | 882 | $ | 1,972 | $ | 8,200 |
Allowance for Loan Losses and Recorded Investment in Loans | |||||||||||||||||||||||
June 30, 2018 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
ALLL | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 506 | $ | 102 | $ | 1,451 | $ | — | $ | — | $ | 2,059 | |||||||||||
Collectively evaluated for impairment | 1,691 | 880 | 716 | 882 | 1,972 | 6,141 | |||||||||||||||||
Total | $ | 2,197 | $ | 982 | $ | 2,167 | $ | 882 | $ | 1,972 | $ | 8,200 | |||||||||||
Loans | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 10,030 | $ | 12,894 | $ | 7,748 | $ | 11 | $ | 30,683 | |||||||||||||
Collectively evaluated for impairment | 681,593 | 112,355 | 265,859 | 61,266 | 1,121,073 | ||||||||||||||||||
Total | $ | 691,623 | $ | 125,249 | $ | 273,607 | $ | 61,277 | $ | 1,151,756 |
Allowance for Loan Losses | |||||||||||||||||||||||
Three Months Ended June 30, 2017 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
April 1, 2017 | $ | 1,771 | $ | 527 | $ | 3,098 | $ | 671 | $ | 1,433 | $ | 7,500 | |||||||||||
Charge-offs | (25 | ) | — | — | (44 | ) | — | (69 | ) | ||||||||||||||
Recoveries | 55 | — | 63 | 42 | — | 160 | |||||||||||||||||
Provision for loan losses | 177 | (52 | ) | (563 | ) | (86 | ) | 533 | 9 | ||||||||||||||
June 30, 2017 | $ | 1,978 | $ | 475 | $ | 2,598 | $ | 583 | $ | 1,966 | $ | 7,600 |
Allowance for Loan Losses | |||||||||||||||||||||||
Six Months Ended June 30, 2017 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
January 1, 2017 | $ | 1,814 | $ | 884 | $ | 2,664 | $ | 624 | $ | 1,414 | $ | 7,400 | |||||||||||
Charge-offs | (52 | ) | — | (43 | ) | (118 | ) | — | (213 | ) | |||||||||||||
Recoveries | 188 | — | 99 | 90 | — | 377 | |||||||||||||||||
Provision for loan losses | 28 | (409 | ) | (122 | ) | (13 | ) | 552 | 36 | ||||||||||||||
June 30, 2017 | $ | 1,978 | $ | 475 | $ | 2,598 | $ | 583 | $ | 1,966 | $ | 7,600 |
Allowance for Loan Losses and Recorded Investment in Loans | |||||||||||||||||||||||
December 31, 2017 | |||||||||||||||||||||||
Commercial | Agricultural | Residential Real Estate | Consumer | Unallocated | Total | ||||||||||||||||||
ALLL | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 650 | $ | — | $ | 1,480 | $ | — | $ | — | $ | 2,130 | |||||||||||
Collectively evaluated for impairment | 1,056 | 611 | 1,083 | 900 | 1,920 | 5,570 | |||||||||||||||||
Total | $ | 1,706 | $ | 611 | $ | 2,563 | $ | 900 | $ | 1,920 | $ | 7,700 | |||||||||||
Loans | |||||||||||||||||||||||
Individually evaluated for impairment | $ | 8,099 | $ | 10,598 | $ | 7,939 | $ | 17 | $ | 26,653 | |||||||||||||
Collectively evaluated for impairment | 626,660 | 117,671 | 264,429 | 56,106 | 1,064,866 | ||||||||||||||||||
Total | $ | 634,759 | $ | 128,269 | $ | 272,368 | $ | 56,123 | $ | 1,091,519 |
June 30, 2018 | |||||||||||||||||||||||||||||||
Commercial | Agricultural | ||||||||||||||||||||||||||||||
Real Estate | Other | Advances to Mortgage Brokers | Total | Real Estate | Other | Total | Total | ||||||||||||||||||||||||
Rating | |||||||||||||||||||||||||||||||
1 - Excellent | $ | 23 | $ | 30 | $ | — | $ | 53 | $ | — | $ | 34 | $ | 34 | $ | 87 | |||||||||||||||
2 - High quality | 6,144 | 19,832 | — | 25,976 | 3,026 | 521 | 3,547 | 29,523 | |||||||||||||||||||||||
3 - High satisfactory | 117,355 | 55,626 | 23,864 | 196,845 | 19,751 | 7,037 | 26,788 | 223,633 | |||||||||||||||||||||||
4 - Low satisfactory | 353,308 | 91,678 | — | 444,986 | 45,287 | 17,964 | 63,251 | 508,237 | |||||||||||||||||||||||
5 - Special mention | 12,205 | 2,171 | — | 14,376 | 9,970 | 5,245 | 15,215 | 29,591 | |||||||||||||||||||||||
6 - Substandard | 5,368 | 2,073 | — | 7,441 | 6,623 | 6,034 | 12,657 | 20,098 | |||||||||||||||||||||||
7 - Vulnerable | 1,646 | 300 | — | 1,946 | 2,152 | 1,605 | 3,757 | 5,703 | |||||||||||||||||||||||
8 - Doubtful | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Total | $ | 496,049 | $ | 171,710 | $ | 23,864 | $ | 691,623 | $ | 86,809 | $ | 38,440 | $ | 125,249 | $ | 816,872 |
December 31, 2017 | |||||||||||||||||||||||||||||||||
Commercial | Agricultural | ||||||||||||||||||||||||||||||||
Real Estate | Other | Advances to Mortgage Brokers | Total | Real Estate | Other | Total | Total | ||||||||||||||||||||||||||
Rating | |||||||||||||||||||||||||||||||||
1 - Excellent | $ | 24 | $ | 316 | $ | — | $ | 340 | $ | — | $ | 34 | $ | 34 | $ | 374 | |||||||||||||||||
2 - High quality | 8,402 | 12,262 | — | 20,664 | 2,909 | 1,024 | 3,933 | 24,597 | |||||||||||||||||||||||||
3 - High satisfactory | 131,826 | 46,668 | 12,081 | 190,575 | 21,072 | 8,867 | 29,939 | 220,514 | |||||||||||||||||||||||||
4 - Low satisfactory | 326,166 | 75,591 | — | 401,757 | 47,835 | 18,467 | 66,302 | 468,059 | |||||||||||||||||||||||||
5 - Special mention | 8,986 | 3,889 | — | 12,875 | 10,493 | 8,546 | 19,039 | 31,914 | |||||||||||||||||||||||||
6 - Substandard | 5,521 | 2,298 | — | 7,819 | 4,325 | 2,747 | 7,072 | 14,891 | |||||||||||||||||||||||||
7 - Vulnerable | 729 | — | — | 729 | 1,531 | 419 | 1,950 | 2,679 | |||||||||||||||||||||||||
8 - Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 481,654 | $ | 141,024 | $ | 12,081 | $ | 634,759 | $ | 88,165 | $ | 40,104 | $ | 128,269 | $ | — | $ | 763,028 |
• | High liquidity, strong cash flow, low leverage. |
• | Unquestioned ability to meet all obligations when due. |
• | Experienced management, with management succession in place. |
• | Secured by cash. |
• | Favorable liquidity and leverage ratios. |
• | Ability to meet all obligations when due. |
• | Management with successful track record. |
• | Steady and satisfactory earnings history. |
• | If loan is secured, collateral is of high quality and readily marketable. |
• | Access to alternative financing. |
• | Well defined primary and secondary source of repayment. |
• | If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident. |
• | Working capital adequate to support operations. |
• | Cash flow sufficient to pay debts as scheduled. |
• | Management experience and depth appear favorable. |
• | Loan performing according to terms. |
• | If loan is secured, collateral is acceptable and loan is fully protected. |
• | Would include most start-up businesses. |
• | Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year. |
• | Management’s abilities are apparent, yet unproven. |
• | Weakness in primary source of repayment with adequate secondary source of repayment. |
• | Loan structure generally in accordance with policy. |
• | If secured, loan collateral coverage is marginal. |
• | Adequate cash flow to service debt, but coverage is low. |
• | Downward trend in sales, profit levels, and margins. |
• | Impaired working capital position. |
• | Cash flow is strained in order to meet debt repayment. |
• | Loan delinquency (30-60 days) and overdrafts may occur. |
• | Shrinking equity cushion. |
• | Diminishing primary source of repayment and questionable secondary source. |
• | Management abilities are questionable. |
• | Weak industry conditions. |
• | Litigation pending against the borrower. |
• | Collateral or guaranty offers limited protection. |
• | Negative debt service coverage, however the credit is well collateralized and payments are current. |
• | Sustained losses have severely eroded the equity and cash flow. |
• | Deteriorating liquidity. |
• | Serious management problems or internal fraud. |
• | Original repayment terms liberalized. |
• | Likelihood of bankruptcy. |
• | Inability to access other funding sources. |
• | Reliance on secondary source of repayment. |
• | Litigation filed against borrower. |
• | Collateral provides little or no value. |
• | Requires excessive attention of the loan officer. |
• | Borrower is uncooperative with loan officer. |
• | Insufficient cash flow to service debt. |
• | Minimal or no payments being received. |
• | Limited options available to avoid the collection process. |
• | Transition status, expect action will take place to collect loan without immediate progress being made. |
• | Normal operations are severely diminished or have ceased. |
• | Seriously impaired cash flow. |
• | Original repayment terms materially altered. |
• | Secondary source of repayment is inadequate. |
• | Survivability as a “going concern” is impossible. |
• | Collection process has begun. |
• | Bankruptcy petition has been filed. |
• | Judgments have been filed. |
• | Portion of the loan balance has been charged-off. |
June 30, 2018 | |||||||||||||||||||||||||||
Accruing Interest and Past Due: | Total Past Due and Nonaccrual | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | 90 Days or More | Nonaccrual | Current | Total | ||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||
Commercial real estate | $ | 1,531 | $ | 60 | $ | — | $ | 1,646 | $ | 3,237 | $ | 492,812 | $ | 496,049 | |||||||||||||
Commercial other | 565 | 827 | — | 300 | 1,692 | 170,018 | 171,710 | ||||||||||||||||||||
Advances to mortgage brokers | — | — | — | — | — | 23,864 | 23,864 | ||||||||||||||||||||
Total commercial | 2,096 | 887 | — | 1,946 | 4,929 | 686,694 | 691,623 | ||||||||||||||||||||
Agricultural | |||||||||||||||||||||||||||
Agricultural real estate | 576 | 149 | 125 | 2,152 | 3,002 | 83,807 | 86,809 | ||||||||||||||||||||
Agricultural other | 34 | 410 | — | 1,605 | 2,049 | 36,391 | 38,440 | ||||||||||||||||||||
Total agricultural | 610 | 559 | 125 | 3,757 | 5,051 | 120,198 | 125,249 | ||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||
Senior liens | 1,028 | 350 | 29 | 779 | 2,186 | 230,258 | 232,444 | ||||||||||||||||||||
Junior liens | 33 | — | 10 | 43 | 6,261 | 6,304 | |||||||||||||||||||||
Home equity lines of credit | 38 | 185 | — | — | 223 | 34,636 | 34,859 | ||||||||||||||||||||
Total residential real estate | 1,099 | 535 | 29 | 789 | 2,452 | 271,155 | 273,607 | ||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||
Secured | 18 | 8 | — | — | 26 | 57,393 | 57,419 | ||||||||||||||||||||
Unsecured | 17 | — | — | — | 17 | 3,841 | 3,858 | ||||||||||||||||||||
Total consumer | 35 | 8 | — | — | 43 | 61,234 | 61,277 | ||||||||||||||||||||
Total | $ | 3,840 | $ | 1,989 | $ | 154 | $ | 6,492 | $ | 12,475 | $ | 1,139,281 | $ | 1,151,756 |
December 31, 2017 | |||||||||||||||||||||||||||
Accruing Interest and Past Due: | Total Past Due and Nonaccrual | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | 90 Days or More | Nonaccrual | Current | Total | ||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||
Commercial real estate | $ | 295 | $ | 325 | $ | 54 | $ | 729 | $ | 1,403 | $ | 480,251 | $ | 481,654 | |||||||||||||
Commercial other | 1,069 | 28 | 18 | — | 1,115 | 139,909 | 141,024 | ||||||||||||||||||||
Advances to mortgage brokers | — | — | — | — | — | 12,081 | 12,081 | ||||||||||||||||||||
Total commercial | 1,364 | 353 | 72 | 729 | 2,518 | 632,241 | 634,759 | ||||||||||||||||||||
Agricultural | |||||||||||||||||||||||||||
Agricultural real estate | 84 | 190 | — | 1,531 | 1,805 | 86,360 | 88,165 | ||||||||||||||||||||
Agricultural other | 39 | — | 104 | 419 | 562 | 39,542 | 40,104 | ||||||||||||||||||||
Total agricultural | 123 | 190 | 104 | 1,950 | 2,367 | 125,902 | 128,269 | ||||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||
Senior liens | 3,718 | 234 | 132 | 325 | 4,409 | 225,007 | 229,416 | ||||||||||||||||||||
Junior liens | 69 | 10 | — | 23 | 102 | 6,812 | 6,914 | ||||||||||||||||||||
Home equity lines of credit | 293 | — | 77 | — | 370 | 35,668 | 36,038 | ||||||||||||||||||||
Total residential real estate | 4,080 | 244 | 209 | 348 | 4,881 | 267,487 | 272,368 | ||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||
Secured | 37 | 10 | 10 | — | 57 | 52,005 | 52,062 | ||||||||||||||||||||
Unsecured | 13 | — | — | — | 13 | 4,048 | 4,061 | ||||||||||||||||||||
Total consumer | 50 | 10 | 10 | — | 70 | 56,053 | 56,123 | ||||||||||||||||||||
Total | $ | 5,617 | $ | 797 | $ | 395 | $ | 3,027 | $ | 9,836 | $ | 1,081,683 | $ | 1,091,519 |
1. | There has been a charge-off of its principal balance (in whole or in part); |
2. | The loan has been classified as a TDR; or |
3. | The loan is in nonaccrual status. |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
Recorded Balance | Unpaid Principal Balance | Valuation Allowance | Recorded Balance | Unpaid Principal Balance | Valuation Allowance | ||||||||||||||||||
Impaired loans with a valuation allowance | |||||||||||||||||||||||
Commercial real estate | $ | 4,065 | $ | 4,354 | $ | 492 | $ | 4,089 | $ | 4,378 | $ | 626 | |||||||||||
Commercial other | 827 | 827 | 14 | 995 | 995 | 24 | |||||||||||||||||
Agricultural real estate | 396 | 396 | 102 | — | — | — | |||||||||||||||||
Residential real estate senior liens | 7,662 | 8,232 | 1,447 | 7,816 | 8,459 | 1,473 | |||||||||||||||||
Residential real estate junior liens | 23 | 23 | 4 | 44 | 44 | 7 | |||||||||||||||||
Total impaired loans with a valuation allowance | 12,973 | 13,832 | 2,059 | 12,944 | 13,876 | 2,130 | |||||||||||||||||
Impaired loans without a valuation allowance | |||||||||||||||||||||||
Commercial real estate | 3,701 | 3,816 | 1,791 | 1,865 | |||||||||||||||||||
Commercial other | 1,437 | 1,481 | 1,224 | 1,224 | |||||||||||||||||||
Agricultural real estate | 7,137 | 7,137 | 7,913 | 7,913 | |||||||||||||||||||
Agricultural other | 5,361 | 5,361 | 2,685 | 2,685 | |||||||||||||||||||
Home equity lines of credit | 63 | 363 | 79 | 379 | |||||||||||||||||||
Consumer secured | 11 | 11 | 17 | 17 | |||||||||||||||||||
Total impaired loans without a valuation allowance | 17,710 | 18,169 | 13,709 | 14,083 | |||||||||||||||||||
Impaired loans | |||||||||||||||||||||||
Commercial | 10,030 | 10,478 | 506 | 8,099 | 8,462 | 650 | |||||||||||||||||
Agricultural | 12,894 | 12,894 | 102 | 10,598 | 10,598 | — | |||||||||||||||||
Residential real estate | 7,748 | 8,618 | 1,451 | 7,939 | 8,882 | 1,480 | |||||||||||||||||
Consumer | 11 | 11 | — | 17 | 17 | — | |||||||||||||||||
Total impaired loans | $ | 30,683 | $ | 32,001 | $ | 2,059 | $ | 26,653 | $ | 27,959 | $ | 2,130 |
Three Months Ended June 30 | |||||||||||||||
2018 | 2017 | ||||||||||||||
Average Recorded Balance | Interest Income Recognized | Average Recorded Balance | Interest Income Recognized | ||||||||||||
Impaired loans with a valuation allowance | |||||||||||||||
Commercial real estate | $ | 5,006 | $ | 13 | $ | 4,641 | $ | 84 | |||||||
Commercial other | 1,463 | 15 | 1,146 | 23 | |||||||||||
Agricultural real estate | 639 | 2 | — | — | |||||||||||
Residential real estate senior liens | 7,747 | 16 | 8,385 | 83 | |||||||||||
Residential real estate junior liens | 30 | — | 77 | 1 | |||||||||||
Home equity lines of credit | — | 35 | — | ||||||||||||
Total impaired loans with a valuation allowance | 14,885 | 46 | 14,284 | 191 | |||||||||||
Impaired loans without a valuation allowance | |||||||||||||||
Commercial real estate | 3,084 | 12 | 1,576 | 19 | |||||||||||
Commercial other | 1,301 | 2 | 119 | 2 | |||||||||||
Agricultural real estate | 7,610 | 237 | 5,937 | 58 | |||||||||||
Agricultural other | 3,933 | 115 | 2,401 | 33 | |||||||||||
Home equity lines of credit | 68 | — | 126 | 5 | |||||||||||
Consumer secured | 12 | — | 22 | — | |||||||||||
Total impaired loans without a valuation allowance | 16,008 | 366 | 10,181 | 117 | |||||||||||
Impaired loans | |||||||||||||||
Commercial | 10,854 | 42 | 7,482 | 128 | |||||||||||
Agricultural | 12,182 | 354 | 8,338 | 91 | |||||||||||
Residential real estate | 7,845 | 16 | 8,623 | 89 | |||||||||||
Consumer | 12 | — | 22 | — | |||||||||||
Total impaired loans | $ | 30,893 | $ | 412 | $ | 24,465 | $ | 308 |
Six Months Ended June 30 | |||||||||||||||
2018 | 2017 | ||||||||||||||
Average Recorded Balance | Interest Income Recognized | Average Recorded Balance | Interest Income Recognized | ||||||||||||
Impaired loans with a valuation allowance | |||||||||||||||
Commercial real estate | $ | 5,012 | $ | 104 | $ | 4,825 | $ | 157 | |||||||
Commercial other | 1,505 | 39 | 1,211 | 47 | |||||||||||
Agricultural real estate | 540 | 6 | — | — | |||||||||||
Agricultural other | — | — | 34 | — | |||||||||||
Residential real estate senior liens | 7,785 | 90 | 8,403 | 166 | |||||||||||
Residential real estate junior liens | 35 | — | 76 | 1 | |||||||||||
Home equity lines of credit | — | — | 18 | — | |||||||||||
Total impaired loans with a valuation allowance | 14,877 | 239 | 14,567 | 371 | |||||||||||
Impaired loans without a valuation allowance | |||||||||||||||
Commercial real estate | 2,606 | 47 | 1,451 | 52 | |||||||||||
Commercial other | 1,248 | 19 | 117 | 4 | |||||||||||
Agricultural real estate | 7,804 | 277 | 4,990 | 120 | |||||||||||
Agricultural other | 3,264 | 151 | 1,920 | 46 | |||||||||||
Home equity lines of credit | 72 | 5 | 129 | 10 | |||||||||||
Consumer secured | 13 | — | 23 | — | |||||||||||
Total impaired loans without a valuation allowance | 15,007 | 499 | 8,630 | 232 | |||||||||||
Impaired loans | |||||||||||||||
Commercial | 10,371 | 209 | 7,604 | 260 | |||||||||||
Agricultural | 11,608 | 434 | 6,944 | 166 | |||||||||||
Residential real estate | 7,892 | 95 | 8,626 | 177 | |||||||||||
Consumer | 13 | — | 23 | — | |||||||||||
Total impaired loans | $ | 29,884 | $ | 738 | $ | 23,197 | $ | 603 |
• | The borrower is currently in default on any of their debt. |
• | The borrower would likely default on any of their debt if the concession was not granted. |
• | The borrower’s cash flow was insufficient to service all of their debt if the concession was not granted. |
• | The borrower has declared, or is in the process of declaring, bankruptcy. |
• | The borrower is unlikely to continue as a going concern (if the entity is a business). |
Three Months Ended June 30 | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | ||||||||||||||||
Commercial other | 1 | $ | 105 | $ | 105 | 1 | $ | 86 | $ | 86 | |||||||||||
Agricultural other | 13 | 3,330 | 3,306 | 7 | 5,445 | 5,445 | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Senior liens | 5 | 327 | 327 | 3 | 255 | 255 | |||||||||||||||
Junior liens | — | — | — | — | — | — | |||||||||||||||
Total residential real estate | 5 | 327 | 327 | 3 | 255 | 255 | |||||||||||||||
Consumer unsecured | — | — | — | — | — | — | |||||||||||||||
Total | 19 | $ | 3,762 | $ | 3,738 | 11 | $ | 5,786 | $ | 5,786 |
Six Months Ended June 30 | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Post-Modification Recorded Investment | ||||||||||||||||
Commercial other | 4 | $ | 1,360 | $ | 1,360 | 3 | $ | 313 | $ | 313 | |||||||||||
Agricultural other | 15 | 4,391 | 4,368 | 7 | 5,445 | 5,445 | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Senior liens | 7 | 493 | 493 | 3 | 255 | 255 | |||||||||||||||
Junior liens | — | — | — | 1 | 8 | 8 | |||||||||||||||
Total residential real estate | 7 | 493 | 493 | 4 | 263 | 263 | |||||||||||||||
Consumer unsecured | — | — | — | — | — | — | |||||||||||||||
Total | 26 | $ | 6,244 | $ | 6,221 | 14 | $ | 6,021 | $ | 6,021 |
Three Months Ended June 30 | |||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||
Below Market Interest Rate | Below Market Interest Rate and Extension of Amortization Period | Below Market Interest Rate | Below Market Interest Rate and Extension of Amortization Period | ||||||||||||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | ||||||||||||||||||||
Commercial other | — | $ | — | 1 | $ | 105 | — | $ | — | 1 | $ | 86 | |||||||||||||||
Agricultural other | 6 | 1,770 | 7 | 1,560 | 4 | 1,349 | 3 | 4,096 | |||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||
Senior liens | 1 | 56 | 4 | 271 | — | — | 3 | 255 | |||||||||||||||||||
Junior liens | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total residential real estate | 1 | 56 | 4 | 271 | — | — | 3 | 255 | |||||||||||||||||||
Consumer unsecured | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | 7 | $ | 1,826 | 12 | $ | 1,936 | 4 | $ | 1,349 | 7 | $ | 4,437 |
Six Months Ended June 30 | |||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||
Below Market Interest Rate | Below Market Interest Rate and Extension of Amortization Period | Below Market Interest Rate | Below Market Interest Rate and Extension of Amortization Period | ||||||||||||||||||||||||
Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | Number of Loans | Pre-Modification Recorded Investment | ||||||||||||||||||||
Commercial other | 1 | $ | 174 | 3 | $ | 1,186 | — | $ | — | 3 | $ | 313 | |||||||||||||||
Agricultural other | 7 | 1,868 | 8 | 2,523 | 4 | 1,349 | 3 | 4,096 | |||||||||||||||||||
Residential real estate | |||||||||||||||||||||||||||
Senior liens | 1 | 56 | 6 | 437 | — | — | 3 | 255 | |||||||||||||||||||
Junior liens | — | — | — | — | 1 | 8 | — | — | |||||||||||||||||||
Total residential real estate | 1 | 56 | 6 | 437 | 1 | 8 | 3 | 255 | |||||||||||||||||||
Consumer unsecured | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | 9 | $ | 2,098 | 17 | $ | 4,146 | 5 | $ | 1,357 | 9 | $ | 4,664 |
June 30, 2018 | December 31, 2017 | ||||||
TDRs | $ | 27,801 | $ | 26,197 |
June 30 2018 | December 31 2017 | ||||||
FHLB Stock | $ | 13,925 | $ | 13,700 | |||
Corporate Settlement Solutions, LLC | 7,485 | 7,421 | |||||
FRB Stock | 1,999 | 1,999 | |||||
Other | 334 | 334 | |||||
Total | $ | 23,743 | $ | 23,454 |
June 30, 2018 | December 31, 2017 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
FHLB advances | $ | 315,000 | 2.09 | % | $ | 290,000 | 1.94 | % | |||||
Securities sold under agreements to repurchase without stated maturity dates | 31,296 | 0.10 | % | 54,878 | 0.12 | % | |||||||
Federal funds purchased | 16,200 | 2.14 | % | — | — | % | |||||||
Total | $ | 362,496 | 1.92 | % | $ | 344,878 | 1.65 | % |
June 30, 2018 | December 31, 2017 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
Fixed rate due 2018 | $ | 40,000 | 1.90 | % | $ | 70,000 | 1.96 | % | |||||
Fixed rate due 2019 | 100,000 | 1.94 | % | 85,000 | 1.87 | % | |||||||
Fixed rate due 2020 | 55,000 | 2.18 | % | 35,000 | 1.80 | % | |||||||
Fixed rate due 2021 | 50,000 | 1.91 | % | 50,000 | 1.91 | % | |||||||
Variable rate due 2021 1 | 10,000 | 2.63 | % | 10,000 | 1.72 | % | |||||||
Fixed rate due 2022 | 20,000 | 1.97 | % | 20,000 | 1.97 | % | |||||||
Fixed rate due 2023 | 20,000 | 3.36 | % | 10,000 | 3.90 | % | |||||||
Fixed rate due 2024 | 10,000 | 2.97 | % | — | — | % | |||||||
Fixed rate due 2026 | 10,000 | 1.17 | % | 10,000 | 1.17 | % | |||||||
Total | $ | 315,000 | 2.09 | % | $ | 290,000 | 1.94 | % |
(1) | Hedged advance (see "Derivative Instruments" section below) |
Three Months Ended June 30 | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Maximum Month End Balance | Average Balance | Weighted Average Interest Rate During the Period | Maximum Month End Balance | Average Balance | Weighted Average Interest Rate During the Period | ||||||||||||||||
Securities sold under agreements to repurchase without stated maturity dates | $ | 34,242 | $ | 32,957 | 0.09 | % | $ | 55,731 | $ | 53,841 | 0.13 | % | |||||||||
Federal funds purchased | 16,200 | 9,199 | 1.82 | % | 5,965 | 7,496 | 1.13 | % | |||||||||||||
FRB Discount Window | — | — | — | % | — | 88 | 1.48 | % |
Six Months Ended June 30 | |||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||
Maximum Month End Balance | Average Balance | Weighted Average Interest Rate During the Period | Maximum Month End Balance | Average Balance | Weighted Average Interest Rate During the Period | ||||||||||||||||
Securities sold under agreements to repurchase without stated maturity dates | $ | 38,967 | $ | 34,467 | 0.09 | % | $ | 61,131 | $ | 55,663 | 0.13 | % | |||||||||
Federal funds purchased | 16,200 | 6,843 | 1.77 | % | 27,300 | 4,197 | 1.11 | % | |||||||||||||
FRB Discount Window | — | — | — | % | — | 44 | 1.48 | % |
June 30 2018 | December 31 2017 | ||||||
Pledged to secure borrowed funds | $ | 423,968 | $ | 410,988 | |||
Pledged to secure repurchase agreements | 31,315 | 54,898 | |||||
Pledged for public deposits and for other purposes necessary or required by law | 34,386 | 27,976 | |||||
Total | $ | 489,669 | $ | 493,862 |
June 30 2018 | December 31 2017 | ||||||
States and political subdivisions | $ | 3,346 | $ | 7,332 | |||
Mortgage-backed securities | 6,537 | 13,199 | |||||
Collateralized mortgage obligations | 21,432 | 34,367 | |||||
Total | $ | 31,315 | $ | 54,898 |
June 30, 2018 | ||||||||||||||||
Pay Rate | Receive Rate | Remaining Life (Years) | Notional Amount | Balance Sheet Location | Fair Value | |||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||
Interest rate swaps | 1.56 | % | 3-Month LIBOR | 2.7 | $ | 10,000 | Other Assets | $ | 444 |
December 31, 2017 | ||||||||||||||||
Pay Rate | Receive Rate | Remaining Life (Years) | Notional Amount | Balance Sheet Location | Fair Value | |||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||
Interest rate swaps | 1.56 | % | 3-Month LIBOR | 3.3 | $ | 10,000 | Other Assets | $ | 291 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Debit card income | $ | 621 | $ | 594 | $ | 1,209 | $ | 1,124 | |||||||
Trust service fees | 434 | 500 | 936 | 911 | |||||||||||
Brokerage advisory fees | 174 | 166 | 330 | 326 | |||||||||||
Service charges and fees related to deposit accounts | 82 | 86 | 167 | 171 | |||||||||||
Total | $ | 1,311 | $ | 1,346 | $ | 2,642 | $ | 2,532 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Consulting fees | $ | 359 | $ | 208 | $ | 609 | $ | 413 | |||||||
ATM and debit card fees | 234 | 404 | 466 | 620 | |||||||||||
Audit and related fees | 258 | 237 | 460 | 435 | |||||||||||
Director fees | 222 | 213 | 431 | 422 | |||||||||||
Donations and community relations | 210 | 168 | 361 | 298 | |||||||||||
FDIC insurance premiums | 156 | 155 | 320 | 308 | |||||||||||
Loan underwriting fees | 165 | 192 | 314 | 309 | |||||||||||
Marketing costs | 149 | 100 | 259 | 189 | |||||||||||
Postage and freight | 91 | 110 | 222 | 219 | |||||||||||
Education and travel | 101 | 93 | 216 | 189 | |||||||||||
Printing and supplies | 145 | 103 | 205 | 210 | |||||||||||
All other | 637 | 540 | 1,163 | 1,124 | |||||||||||
Total other | $ | 2,727 | $ | 2,523 | $ | 5,026 | $ | 4,736 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Income taxes at statutory rate (21% in 2018 and 34% in 2017) | $ | 755 | $ | 1,612 | $ | 1,538 | $ | 2,859 | |||||||
Effect of nontaxable income | |||||||||||||||
Interest income on tax exempt municipal securities | (264 | ) | (454 | ) | (538 | ) | (909 | ) | |||||||
Earnings on corporate owned life insurance policies | (38 | ) | (62 | ) | (74 | ) | (123 | ) | |||||||
Effect of tax credits | (201 | ) | (191 | ) | (401 | ) | (380 | ) | |||||||
Other | (8 | ) | (18 | ) | (19 | ) | (36 | ) | |||||||
Total effect of nontaxable income | (511 | ) | (725 | ) | (1,032 | ) | (1,448 | ) | |||||||
Effect of nondeductible expenses | 19 | 11 | 22 | 19 | |||||||||||
Federal income tax expense | $ | 263 | $ | 898 | $ | 528 | $ | 1,430 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Average number of common shares outstanding for basic calculation | 7,912,374 | 7,841,822 | 7,887,961 | 7,834,523 | |||||||||||
Average potential effect of common shares in the Directors Plan (1) | 173,222 | 190,528 | 186,174 | 191,028 | |||||||||||
Average number of common shares outstanding used to calculate diluted earnings per common share | 8,085,596 | 8,032,350 | 8,074,135 | 8,025,551 | |||||||||||
Net income | $ | 3,333 | $ | 3,844 | $ | 6,795 | $ | 6,980 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.42 | $ | 0.49 | $ | 0.86 | $ | 0.89 | |||||||
Diluted | $ | 0.41 | $ | 0.48 | $ | 0.84 | $ | 0.87 |
(1) | Exclusive of shares held in the Rabbi Trust |
Three Months Ended June 30 | |||||||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||||||
Unrealized Holding Gains (Losses) on AFS Securities | Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Pension Plan | Total | Unrealized Holding Gains (Losses) on AFS Securities | Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Pension Plan | Total | ||||||||||||||||||||||||
Balance, April 1 | $ | (5,759 | ) | $ | 326 | $ | (3,223 | ) | $ | (8,656 | ) | $ | 1,257 | $ | 175 | $ | (2,972 | ) | (1,540 | ) | |||||||||||
OCI before reclassifications | (1,978 | ) | 31 | — | (1,947 | ) | 2,570 | (61 | ) | — | 2,509 | ||||||||||||||||||||
Amounts reclassified from AOCI | — | — | — | — | (142 | ) | — | — | (142 | ) | |||||||||||||||||||||
Subtotal | (1,978 | ) | 31 | — | (1,947 | ) | 2,428 | (61 | ) | — | 2,367 | ||||||||||||||||||||
Tax effect | 442 | (6 | ) | — | 436 | (762 | ) | 21 | — | (741 | ) | ||||||||||||||||||||
OCI, net of tax | (1,536 | ) | 25 | — | (1,511 | ) | 1,666 | (40 | ) | — | 1,626 | ||||||||||||||||||||
Balance, June 30 | $ | (7,295 | ) | $ | 351 | $ | (3,223 | ) | $ | (10,167 | ) | $ | 2,923 | $ | 135 | $ | (2,972 | ) | $ | 86 |
Six Months Ended June 30 | |||||||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||||||
Unrealized Holding Gains (Losses) on AFS Securities | Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Pension Plan | Total | Unrealized Holding Gains (Losses) on AFS Securities | Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Pension Plan | Total | ||||||||||||||||||||||||
Balance, January 1 | $ | 391 | $ | 230 | $ | (3,223 | ) | $ | (2,602 | ) | $ | 30 | $ | 164 | $ | (2,972 | ) | $ | (2,778 | ) | |||||||||||
OCI before reclassifications | (10,035 | ) | 153 | — | (9,882 | ) | 4,247 | (44 | ) | — | 4,203 | ||||||||||||||||||||
Amounts reclassified from AOCI | — | — | — | — | (142 | ) | — | — | (142 | ) | |||||||||||||||||||||
Subtotal | (10,035 | ) | 153 | — | (9,882 | ) | 4,105 | (44 | ) | — | 4,061 | ||||||||||||||||||||
Tax effect | 2,126 | (32 | ) | — | 2,094 | (1,212 | ) | 15 | — | (1,197 | ) | ||||||||||||||||||||
OCI, net of tax | (7,909 | ) | 121 | — | (7,788 | ) | 2,893 | (29 | ) | — | 2,864 | ||||||||||||||||||||
Adoption of ASU 2016-01 | 223 | — | — | 223 | — | — | — | — | |||||||||||||||||||||||
Balance, June 30 | $ | (7,295 | ) | $ | 351 | $ | (3,223 | ) | $ | (10,167 | ) | $ | 2,923 | $ | 135 | $ | (2,972 | ) | $ | 86 |
Three Months Ended June 30 | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Auction Rate Money Market Preferred Stocks | All Other AFS Securities | Total | Auction Rate Money Market Preferred and Preferred Stocks | All Other AFS Securities | Total | ||||||||||||||||||
Unrealized gains (losses) arising during the period | $ | 123 | $ | (2,101 | ) | $ | (1,978 | ) | $ | 186 | $ | 2,384 | $ | 2,570 | |||||||||
Reclassification adjustment for net (gains) losses included in net income | — | — | — | — | (142 | ) | (142 | ) | |||||||||||||||
Net unrealized gains (losses) | 123 | (2,101 | ) | (1,978 | ) | 186 | 2,242 | 2,428 | |||||||||||||||
Tax effect | — | 442 | 442 | — | (762 | ) | (762 | ) | |||||||||||||||
Unrealized gains (losses), net of tax | $ | 123 | $ | (1,659 | ) | $ | (1,536 | ) | $ | 186 | $ | 1,480 | $ | 1,666 |
Six Months Ended June 30 | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Auction Rate Money Market Preferred Stocks | All Other AFS Securities | Total | Auction Rate Money Market Preferred and Preferred Stocks | All Other AFS Securities | Total | ||||||||||||||||||
Unrealized gains (losses) arising during the period | $ | 86 | $ | (10,121 | ) | $ | (10,035 | ) | $ | 541 | $ | 3,706 | $ | 4,247 | |||||||||
Reclassification adjustment for net (gains) losses included in net income | — | — | $ | — | — | (142 | ) | $ | (142 | ) | |||||||||||||
Net unrealized gains (losses) | 86 | (10,121 | ) | (10,035 | ) | 541 | 3,564 | 4,105 | |||||||||||||||
Tax effect | — | 2,126 | 2,126 | — | (1,212 | ) | (1,212 | ) | |||||||||||||||
Unrealized gains (losses), net of tax | $ | 86 | $ | (7,995 | ) | $ | (7,909 | ) | $ | 541 | $ | 2,352 | $ | 2,893 |
Level 1: | Valuation is based upon quoted prices for identical instruments traded in active markets. |
Level 2: | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model based valuation techniques for which all significant assumptions are observable in the market. |
Level 3: | Valuation is generated from model based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. |
June 30, 2018 | ||||
Valuation Technique | Fair Value | Unobservable Input | Actual Range | |
Discount applied to collateral: | ||||
Real Estate | 20% - 30% | |||
Equipment | 20% - 40% | |||
Cash crop inventory | 30% - 40% | |||
Discounted value | $28,624 | Livestock | 30% | |
Other inventory | 50% - 75% | |||
Accounts receivable | 25% - 50% | |||
Liquor license | 75% | |||
Furniture, fixtures & equipment | 35% - 45% |
December 31, 2017 | ||||
Valuation Technique | Fair Value | Unobservable Input | Actual Range | |
Discount applied to collateral: | ||||
Real Estate | 20% - 30% | |||
Equipment | 20% - 35% | |||
Cash crop inventory | 30% - 40% | |||
Discounted value | $15,956 | Livestock | 30% | |
Other inventory | 50% - 75% | |||
Accounts receivable | 50% | |||
Liquor license | 75% | |||
Furniture, fixtures & equipment | 35% - 45% |
June 30, 2018 | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 22,213 | $ | 22,213 | $ | 22,213 | $ | — | $ | — | |||||||||
Mortgage loans AFS | 1,420 | 1,440 | — | 1,440 | — | ||||||||||||||
Gross loans | 1,151,756 | 1,151,688 | — | — | 1,151,688 | ||||||||||||||
Less allowance for loan and lease losses | 8,200 | 8,200 | — | — | 8,200 | ||||||||||||||
Net loans | 1,143,556 | 1,143,488 | — | — | 1,143,488 | ||||||||||||||
Accrued interest receivable | 5,684 | 5,684 | 5,684 | — | — | ||||||||||||||
Equity securities without readily determinable fair values (1) | 23,743 | N/A | — | — | — | ||||||||||||||
OMSR | 2,398 | 2,400 | — | 2,400 | — | ||||||||||||||
LIABILITIES | |||||||||||||||||||
Deposits without stated maturities | 821,442 | 821,442 | 821,442 | — | — | ||||||||||||||
Deposits with stated maturities | 453,320 | 441,266 | — | 441,266 | — | ||||||||||||||
Borrowed funds | 362,496 | 357,079 | — | 357,079 | — | ||||||||||||||
Accrued interest payable | 702 | 702 | 702 | — | — |
December 31, 2017 | |||||||||||||||||||
Carrying Value | Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and cash equivalents | $ | 30,848 | $ | 30,848 | $ | 30,848 | $ | — | $ | — | |||||||||
Mortgage loans AFS | 1,560 | 1,587 | — | 1,587 | — | ||||||||||||||
Gross loans | 1,091,519 | 1,056,906 | — | — | 1,056,906 | ||||||||||||||
Less allowance for loan and lease losses | 7,700 | 7,700 | — | — | 7,700 | ||||||||||||||
Net loans | 1,083,819 | 1,049,206 | — | — | 1,049,206 | ||||||||||||||
Accrued interest receivable | 7,063 | 7,063 | 7,063 | — | — | ||||||||||||||
Equity securities without readily determinable fair values (1) | 23,454 | N/A | — | — | — | ||||||||||||||
OMSR | 2,409 | 2,409 | — | 2,409 | — | ||||||||||||||
LIABILITIES | |||||||||||||||||||
Deposits without stated maturities | 811,992 | 811,992 | 811,992 | — | — | ||||||||||||||
Deposits with stated maturities | 453,266 | 443,892 | — | 443,892 | — | ||||||||||||||
Borrowed funds | 344,878 | 342,089 | — | 342,089 | — | ||||||||||||||
Accrued interest payable | 680 | 680 | 680 | — | — |
(1) | Due to the characteristics of equity securities without readily determinable fair values, they are not disclosed under a specific fair value hierarchy. If we were to record an impairment adjustment related to these securities, such amount would be classified as a nonrecurring Level 3 fair value adjustment. |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
Recurring items | |||||||||||||||||||||||||||||||
AFS securities | |||||||||||||||||||||||||||||||
Government-sponsored enterprises | $ | 190 | $ | — | $ | 190 | $ | — | $ | 216 | $ | — | $ | 216 | $ | — | |||||||||||||||
States and political subdivisions | 202,273 | — | 202,273 | — | 208,474 | — | 208,474 | — | |||||||||||||||||||||||
Auction rate money market preferred | 3,135 | — | 3,135 | — | 3,049 | — | 3,049 | — | |||||||||||||||||||||||
Mortgage-backed securities | 197,637 | — | 197,637 | — | 208,797 | — | 208,797 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | 120,873 | — | 120,873 | — | 128,194 | — | 128,194 | — | |||||||||||||||||||||||
Total AFS securities | 524,108 | — | 524,108 | — | 548,730 | — | 548,730 | — | |||||||||||||||||||||||
Equity securities | — | — | — | — | 3,577 | 3,577 | — | — | |||||||||||||||||||||||
Derivative instruments | 444 | — | 444 | — | 291 | — | 291 | — | |||||||||||||||||||||||
Nonrecurring items | |||||||||||||||||||||||||||||||
Impaired loans (net of the ALLL) | 28,624 | — | — | 28,624 | 15,956 | — | — | 15,956 | |||||||||||||||||||||||
Total | $ | 553,176 | $ | — | $ | 524,552 | $ | 28,624 | $ | 568,554 | $ | 3,577 | $ | 549,021 | $ | 15,956 | |||||||||||||||
Percent of assets and liabilities measured at fair value | — | % | 94.83 | % | 5.17 | % | 0.63 | % | 96.56 | % | 2.81 | % |
June 30 2018 | December 31 2017 | ||||||
ASSETS | |||||||
Cash on deposit at the Bank | $ | 3,008 | $ | 185 | |||
Investments in subsidiaries | 140,413 | 145,962 | |||||
Premises and equipment | 1,902 | 1,950 | |||||
Other assets | 51,234 | 52,253 | |||||
TOTAL ASSETS | $ | 196,557 | $ | 200,350 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Other liabilities | $ | 4,608 | $ | 5,445 | |||
Shareholders' equity | 191,949 | 194,905 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 196,557 | $ | 200,350 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Income | |||||||||||||||
Dividends from subsidiaries | $ | 3,900 | $ | 2,600 | $ | 6,000 | $ | 4,300 | |||||||
Interest income | — | — | — | 2 | |||||||||||
Management fee and other | 855 | 1,691 | 1,530 | 3,241 | |||||||||||
Total income | 4,755 | 4,291 | 7,530 | 7,543 | |||||||||||
Expenses | |||||||||||||||
Compensation and benefits | 1,175 | 1,118 | 2,159 | 2,490 | |||||||||||
Occupancy and equipment | 126 | 432 | 249 | 876 | |||||||||||
Audit and related fees | 104 | 140 | 173 | 264 | |||||||||||
Other | 380 | 634 | 774 | 1,175 | |||||||||||
Total expenses | 1,785 | 2,324 | 3,355 | 4,805 | |||||||||||
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 2,970 | 1,967 | 4,175 | 2,738 | |||||||||||
Federal income tax benefit | 192 | 212 | 380 | 528 | |||||||||||
Income before equity in undistributed earnings of subsidiaries | 3,162 | 2,179 | 4,555 | 3,266 | |||||||||||
Undistributed earnings of subsidiaries | 171 | 1,665 | 2,240 | 3,714 | |||||||||||
Net income | $ | 3,333 | $ | 3,844 | $ | 6,795 | $ | 6,980 |
Six Months Ended June 30 | |||||||
2018 | 2017 | ||||||
Operating activities | |||||||
Net income | $ | 6,795 | $ | 6,980 | |||
Adjustments to reconcile net income to cash provided by operations | |||||||
Undistributed earnings of subsidiaries | (2,240 | ) | (3,714 | ) | |||
Undistributed earnings of equity securities without readily determinable fair values | (64 | ) | 93 | ||||
Share-based payment awards under equity compensation plan | 304 | 302 | |||||
Depreciation | 64 | 77 | |||||
Changes in operating assets and liabilities which provided (used) cash | |||||||
Other assets | 1,084 | 80 | |||||
Accrued interest and other liabilities | (837 | ) | (1,219 | ) | |||
Net cash provided by (used in) operating activities | 5,106 | 2,599 | |||||
Investing activities | |||||||
Maturities, calls, principal payments, and sales of AFS securities | — | 249 | |||||
Sales (purchases) of premises and equipment | (16 | ) | (26 | ) | |||
Net cash provided by (used in) investing activities | (16 | ) | 223 | ||||
Financing activities | |||||||
Cash dividends paid on common stock | (4,096 | ) | (3,920 | ) | |||
Proceeds from the issuance of common stock | 3,272 | 3,764 | |||||
Common stock repurchased | (1,238 | ) | (2,622 | ) | |||
Common stock purchased for deferred compensation obligations | (205 | ) | (197 | ) | |||
Net cash provided by (used in) financing activities | (2,267 | ) | (2,975 | ) | |||
Increase (decrease) in cash and cash equivalents | 2,823 | (153 | ) | ||||
Cash and cash equivalents at beginning of period | 185 | 1,297 | |||||
Cash and cash equivalents at end of period | $ | 3,008 | $ | 1,144 |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
INCOME STATEMENT DATA | |||||||||||||||||||
Interest income | $ | 15,713 | $ | 15,121 | $ | 15,078 | $ | 14,976 | $ | 14,498 | |||||||||
Interest expense | 3,741 | 3,401 | 3,435 | 3,200 | 3,028 | ||||||||||||||
Net interest income | 11,972 | 11,720 | 11,643 | 11,776 | 11,470 | ||||||||||||||
Provision for loan losses | 328 | 384 | 168 | 49 | 9 | ||||||||||||||
Noninterest income | 2,736 | 2,487 | 2,710 | 2,698 | 2,788 | ||||||||||||||
Noninterest expenses | 10,784 | 10,096 | 10,628 | 10,139 | 9,507 | ||||||||||||||
Federal income tax expense** | 263 | 265 | 836 | 750 | 898 | ||||||||||||||
Net income | $ | 3,333 | $ | 3,462 | $ | 2,721 | $ | 3,536 | $ | 3,844 | |||||||||
PER SHARE | |||||||||||||||||||
Basic earnings | $ | 0.42 | $ | 0.44 | $ | 0.35 | $ | 0.45 | $ | 0.49 | |||||||||
Diluted earnings | $ | 0.41 | $ | 0.43 | $ | 0.34 | $ | 0.44 | $ | 0.48 | |||||||||
Dividends | $ | 0.26 | $ | 0.26 | $ | 0.26 | $ | 0.26 | $ | 0.25 | |||||||||
Tangible book value* | $ | 19.36 | $ | 19.16 | $ | 18.96 | $ | 18.82 | $ | 18.62 | |||||||||
Quoted market value | |||||||||||||||||||
High | $ | 27.25 | $ | 28.25 | $ | 29.95 | $ | 29.10 | $ | 28.45 | |||||||||
Low | $ | 26.25 | $ | 26.11 | $ | 27.99 | $ | 27.65 | $ | 27.60 | |||||||||
Close* | $ | 26.65 | $ | 27.40 | $ | 28.25 | $ | 29.00 | $ | 28.00 | |||||||||
Common shares outstanding* | 7,933,250 | 7,894,341 | 7,857,293 | 7,856,664 | 7,862,553 | ||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||
Return on average total assets | 0.74 | % | 0.77 | % | 0.61 | % | 0.79 | % | 0.87 | % | |||||||||
Return on average shareholders' equity | 6.89 | % | 7.11 | % | 5.48 | % | 7.11 | % | 7.85 | % | |||||||||
Return on average tangible shareholders' equity | 8.75 | % | 9.23 | % | 7.33 | % | 9.61 | % | 10.59 | % | |||||||||
Net interest margin yield (FTE)** | 2.95 | % | 2.95 | % | 3.02 | % | 3.08 | % | 3.03 | % | |||||||||
BALANCE SHEET DATA* | |||||||||||||||||||
Gross loans | $ | 1,151,756 | $ | 1,093,002 | $ | 1,091,519 | $ | 1,077,544 | $ | 1,048,497 | |||||||||
AFS securities | $ | 524,108 | $ | 547,762 | $ | 548,730 | $ | 549,274 | $ | 564,197 | |||||||||
Total assets | $ | 1,836,955 | $ | 1,799,592 | $ | 1,813,130 | $ | 1,791,967 | $ | 1,777,298 | |||||||||
Deposits | $ | 1,274,762 | $ | 1,297,868 | $ | 1,265,258 | $ | 1,216,062 | $ | 1,210,152 | |||||||||
Borrowed funds | $ | 362,496 | $ | 303,113 | $ | 344,878 | $ | 367,027 | $ | 360,940 | |||||||||
Shareholders' equity | $ | 191,949 | $ | 191,090 | $ | 194,905 | $ | 196,463 | $ | 195,070 | |||||||||
Gross loans to deposits | 90.35 | % | 84.22 | % | 86.27 | % | 88.61 | % | 86.64 | % | |||||||||
ASSETS UNDER MANAGEMENT* | |||||||||||||||||||
Loans sold with servicing retained | $ | 257,865 | $ | 262,541 | $ | 266,789 | $ | 268,817 | $ | 269,595 | |||||||||
Assets managed by our Investment and Trust Services Department | $ | 494,533 | $ | 470,578 | $ | 478,146 | $ | 467,601 | $ | 454,294 | |||||||||
Total assets under management | $ | 2,589,353 | $ | 2,532,711 | $ | 2,558,065 | $ | 2,528,385 | $ | 2,501,187 | |||||||||
ASSET QUALITY* | |||||||||||||||||||
Nonperforming loans to gross loans | 0.58 | % | 0.63 | % | 0.31 | % | 0.21 | % | 0.26 | % | |||||||||
Nonperforming assets to total assets | 0.37 | % | 0.40 | % | 0.20 | % | 0.14 | % | 0.17 | % | |||||||||
ALLL to gross loans | 0.71 | % | 0.75 | % | 0.71 | % | 0.71 | % | 0.72 | % | |||||||||
CAPITAL RATIOS* | |||||||||||||||||||
Shareholders' equity to assets | 10.45 | % | 10.62 | % | 10.75 | % | 10.96 | % | 10.98 | % | |||||||||
Tier 1 leverage | 8.71 | % | 8.69 | % | 8.54 | % | 8.50 | % | 8.50 | % | |||||||||
Common equity tier 1 capital | 12.11 | % | 12.34 | % | 12.23 | % | 12.20 | % | 12.43 | % | |||||||||
Tier 1 risk-based capital | 12.11 | % | 12.34 | % | 12.23 | % | 12.20 | % | 12.43 | % | |||||||||
Total risk-based capital | 12.76 | % | 13.01 | % | 12.86 | % | 12.84 | % | 13.07 | % |
June 30 2018 | June 30 2017 | June 30 2016 | June 30 2015 | June 30 2014 | |||||||||||||||
INCOME STATEMENT DATA | |||||||||||||||||||
Interest income | $ | 30,834 | $ | 28,359 | $ | 26,299 | $ | 25,512 | $ | 25,318 | |||||||||
Interest expense | 7,142 | 5,859 | 5,292 | 5,006 | 4,968 | ||||||||||||||
Net interest income | 23,692 | 22,500 | 21,007 | 20,506 | 20,350 | ||||||||||||||
Provision for loan losses | 712 | 36 | 168 | (1,261 | ) | (442 | ) | ||||||||||||
Noninterest income | 5,223 | 5,404 | 4,975 | 4,757 | 4,683 | ||||||||||||||
Noninterest expenses | 20,880 | 19,458 | 18,298 | 17,005 | 17,349 | ||||||||||||||
Federal income tax expense** | 528 | 1,430 | 1,092 | 1,748 | 1,252 | ||||||||||||||
Net income | $ | 6,795 | $ | 6,980 | $ | 6,424 | $ | 7,771 | $ | 6,874 | |||||||||
PER SHARE | |||||||||||||||||||
Basic earnings | $ | 0.86 | $ | 0.89 | $ | 0.82 | $ | 1.00 | $ | 0.89 | |||||||||
Diluted earnings | $ | 0.84 | $ | 0.87 | $ | 0.80 | $ | 0.98 | $ | 0.87 | |||||||||
Dividends | $ | 0.52 | $ | 0.50 | $ | 0.48 | $ | 0.46 | $ | 0.44 | |||||||||
Tangible book value* | $ | 19.36 | $ | 18.62 | $ | 17.72 | $ | 17.17 | $ | 16.08 | |||||||||
Quoted market value | |||||||||||||||||||
High | $ | 28.25 | $ | 29.00 | $ | 29.90 | $ | 23.80 | $ | 23.94 | |||||||||
Low | $ | 26.11 | $ | 27.60 | $ | 27.25 | $ | 22.00 | $ | 22.52 | |||||||||
Close* | $ | 26.65 | $ | 28.00 | $ | 27.90 | $ | 23.75 | $ | 22.95 | |||||||||
Common shares outstanding* | 7,933,250 | 7,862,553 | 7,836,442 | 7,797,188 | 7,735,156 | ||||||||||||||
PERFORMANCE RATIOS | |||||||||||||||||||
Return on average total assets | 0.75 | % | 0.80 | % | 0.77 | % | 1.00 | % | 0.91 | % | |||||||||
Return on average shareholders' equity | 7.00 | % | 7.21 | % | 6.71 | % | 8.69 | % | 8.24 | % | |||||||||
Return on average tangible shareholders' equity | 8.92 | % | 9.67 | % | 9.37 | % | 11.71 | % | 11.17 | % | |||||||||
Net interest margin yield (FTE)** | 2.95 | % | 3.01 | % | 2.97 | % | 3.15 | % | 3.21 | % | |||||||||
BALANCE SHEET DATA* | |||||||||||||||||||
Gross loans | $ | 1,151,756 | $ | 1,048,497 | $ | 919,594 | $ | 831,831 | $ | 819,253 | |||||||||
AFS securities | $ | 524,108 | $ | 564,197 | $ | 602,463 | $ | 595,318 | $ | 550,518 | |||||||||
Total assets | $ | 1,836,955 | $ | 1,777,298 | $ | 1,680,359 | $ | 1,586,975 | $ | 1,522,135 | |||||||||
Deposits | $ | 1,274,762 | $ | 1,210,152 | $ | 1,156,870 | $ | 1,090,469 | $ | 1,060,928 | |||||||||
Borrowed funds | $ | 362,496 | $ | 360,940 | $ | 318,596 | $ | 307,599 | $ | 279,457 | |||||||||
Shareholders' equity | $ | 191,949 | $ | 195,070 | $ | 195,133 | $ | 178,025 | $ | 171,099 | |||||||||
Gross loans to deposits | 90.35 | % | 86.64 | % | 79.49 | % | 76.28 | % | 77.22 | % | |||||||||
ASSETS UNDER MANAGEMENT* | |||||||||||||||||||
Loans sold with servicing retained | $ | 257,865 | $ | 269,595 | $ | 275,958 | $ | 289,089 | $ | 290,590 | |||||||||
Assets managed by our Investment and Trust Services Department | $ | 494,533 | $ | 454,294 | $ | 415,762 | $ | 400,827 | $ | 374,092 | |||||||||
Total assets under management | $ | 2,589,353 | $ | 2,501,187 | $ | 2,372,079 | $ | 2,276,891 | $ | 2,186,817 | |||||||||
ASSET QUALITY* | |||||||||||||||||||
Nonperforming loans to gross loans | 0.58 | % | 0.26 | % | 0.13 | % | 0.19 | % | 0.57 | % | |||||||||
Nonperforming assets to total assets | 0.37 | % | 0.17 | % | 0.09 | % | 0.15 | % | 0.38 | % | |||||||||
ALLL to gross loans | 0.71 | % | 0.72 | % | 0.83 | % | 1.08 | % | 1.31 | % | |||||||||
CAPITAL RATIOS* | |||||||||||||||||||
Shareholders' equity to assets | 10.45 | % | 10.98 | % | 11.61 | % | 11.22 | % | 11.24 | % | |||||||||
Tier 1 leverage | 8.71 | % | 8.50 | % | 8.50 | % | 8.77 | % | 8.50 | % | |||||||||
Common equity tier 1 capital | 12.11 | % | 12.43 | % | 13.08 | % | 13.94 | % | N/A | ||||||||||
Tier 1 risk-based capital | 12.11 | % | 12.43 | % | 13.08 | % | 13.94 | % | 13.86 | % | |||||||||
Total risk-based capital | 12.76 | % | 13.07 | % | 13.80 | % | 14.88 | % | 15.11 | % |
Three Months Ended | ||||||||||||||||||||||||||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||||||||||||||||||||||
Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | ||||||||||||||||||||||||
INTEREST EARNING ASSETS | ||||||||||||||||||||||||||||||||
Loans | $ | 1,114,669 | $ | 12,076 | 4.33 | % | $ | 1,076,667 | $ | 11,296 | 4.20 | % | $ | 1,028,875 | $ | 10,685 | 4.15 | % | ||||||||||||||
Taxable investment securities (1) | 350,449 | 2,127 | 2.43 | % | 355,867 | 2,160 | 2.43 | % | 374,156 | 2,226 | 2.38 | % | ||||||||||||||||||||
Nontaxable investment securities | 196,773 | 1,809 | 3.68 | % | 197,519 | 1,892 | 3.83 | % | 206,668 | 2,314 | 4.48 | % | ||||||||||||||||||||
Fed Funds Sold | 1 | — | — | % | — | — | — | % | 95 | — | — | % | ||||||||||||||||||||
Other | 24,095 | 179 | 2.97 | % | 27,160 | 283 | 4.17 | % | 23,299 | 174 | 2.99 | % | ||||||||||||||||||||
Total earning assets | 1,685,987 | 16,191 | 3.84 | % | 1,657,213 | 15,631 | 3.77 | % | 1,633,093 | 15,399 | 3.77 | % | ||||||||||||||||||||
NONEARNING ASSETS | ||||||||||||||||||||||||||||||||
Allowance for loan losses | (8,240 | ) | (7,771 | ) | (7,554 | ) | ||||||||||||||||||||||||||
Cash and demand deposits due from banks | 18,744 | 19,437 | 18,425 | |||||||||||||||||||||||||||||
Premises and equipment | 28,473 | 28,578 | 28,895 | |||||||||||||||||||||||||||||
Accrued income and other assets | 86,441 | 91,471 | 99,468 | |||||||||||||||||||||||||||||
Total assets | $ | 1,811,405 | $ | 1,788,928 | $ | 1,772,327 | ||||||||||||||||||||||||||
INTEREST BEARING LIABILITIES | ||||||||||||||||||||||||||||||||
Interest bearing demand deposits | $ | 226,309 | $ | 61 | 0.11 | % | $ | 231,308 | $ | 71 | 0.12 | % | $ | 209,638 | $ | 55 | 0.10 | % | ||||||||||||||
Savings deposits | 363,842 | 397 | 0.44 | % | 354,445 | 322 | 0.36 | % | 360,870 | 259 | 0.29 | % | ||||||||||||||||||||
Time deposits | 465,745 | 1,772 | 1.52 | % | 463,236 | 1,653 | 1.43 | % | 436,716 | 1,301 | 1.19 | % | ||||||||||||||||||||
Borrowed funds | 334,573 | 1,511 | 1.81 | % | 319,789 | 1,355 | 1.69 | % | 356,096 | 1,413 | 1.59 | % | ||||||||||||||||||||
Total interest bearing liabilities | 1,390,469 | 3,741 | 1.08 | % | 1,368,778 | 3,401 | 0.99 | % | 1,363,320 | 3,028 | 0.89 | % | ||||||||||||||||||||
NONINTEREST BEARING LIABILITIES | ||||||||||||||||||||||||||||||||
Demand deposits | 220,293 | 217,658 | 202,597 | |||||||||||||||||||||||||||||
Other | 7,108 | 7,793 | 10,579 | |||||||||||||||||||||||||||||
Shareholders’ equity | 193,535 | 194,699 | 195,831 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,811,405 | $ | 1,788,928 | $ | 1,772,327 | ||||||||||||||||||||||||||
Net interest income (FTE) | $ | 12,450 | $ | 12,230 | $ | 12,371 | ||||||||||||||||||||||||||
Net yield on interest earning assets (FTE) | 2.95 | % | 2.95 | % | 3.03 | % |
Six Months Ended | |||||||||||||||||||||
June 30, 2018 | June 30, 2017 | ||||||||||||||||||||
Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | ||||||||||||||||
INTEREST EARNING ASSETS | |||||||||||||||||||||
Loans | $ | 1,095,773 | $ | 23,372 | 4.27 | % | $ | 1,013,248 | $ | 20,805 | 4.11 | % | |||||||||
Taxable investment securities (1) | 353,143 | 4,287 | 2.43 | % | 369,231 | 4,377 | 2.37 | % | |||||||||||||
Nontaxable investment securities | 197,144 | 3,701 | 3.75 | % | 206,023 | 4,627 | 4.49 | % | |||||||||||||
Fed Funds Sold | — | — | — | % | 1,240 | 4 | 0.65 | % | |||||||||||||
Other | 25,639 | 462 | 3.60 | % | 25,128 | 345 | 2.75 | % | |||||||||||||
Total earning assets | 1,671,699 | 31,822 | 3.81 | % | 1,614,870 | 30,158 | 3.74 | % | |||||||||||||
NONEARNING ASSETS | |||||||||||||||||||||
Allowance for loan losses | (8,009 | ) | (7,517 | ) | |||||||||||||||||
Cash and demand deposits due from banks | 19,068 | 18,551 | |||||||||||||||||||
Premises and equipment | 28,525 | 29,068 | |||||||||||||||||||
Accrued income and other assets | 88,945 | 98,588 | |||||||||||||||||||
Total assets | $ | 1,800,228 | $ | 1,753,560 | |||||||||||||||||
INTEREST BEARING LIABILITIES | |||||||||||||||||||||
Interest bearing demand deposits | $ | 228,794 | $ | 132 | 0.12 | % | $ | 211,616 | $ | 108 | 0.10 | % | |||||||||
Savings deposits | 359,170 | 719 | 0.40 | % | 357,456 | 481 | 0.27 | % | |||||||||||||
Time deposits | 464,497 | 3,425 | 1.47 | % | 436,362 | 2,566 | 1.18 | % | |||||||||||||
Borrowed funds | 327,222 | 2,866 | 1.75 | % | 342,307 | 2,704 | 1.58 | % | |||||||||||||
Total interest bearing liabilities | 1,379,683 | 7,142 | 1.04 | % | 1,347,741 | 5,859 | 0.87 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES | |||||||||||||||||||||
Demand deposits | 218,977 | 201,613 | |||||||||||||||||||
Other | 7,461 | 10,707 | |||||||||||||||||||
Shareholders’ equity | 194,107 | 193,499 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,800,228 | $ | 1,753,560 | |||||||||||||||||
Net interest income (FTE) | $ | 24,680 | $ | 24,299 | |||||||||||||||||
Net yield on interest earning assets (FTE) | 2.95 | % | 3.01 | % |
Three Months Ended June 30, 2018 Compared to March 31, 2018 Increase (Decrease) Due to | Three Months Ended June 30, 2018 Compared to June 30, 2017 Increase (Decrease) Due to | Six Months Ended June 30, 2018 Compared to June 30, 2017 Increase (Decrease) Due to | |||||||||||||||||||||||||||||||||
Volume | Rate | Net | Volume | Rate | Net | Volume | Rate | Net | |||||||||||||||||||||||||||
Changes in interest income | |||||||||||||||||||||||||||||||||||
Loans | $ | 405 | $ | 375 | $ | 780 | $ | 916 | $ | 475 | $ | 1,391 | $ | 1,739 | $ | 828 | $ | 2,567 | |||||||||||||||||
Taxable investment securities | (33 | ) | — | (33 | ) | (143 | ) | 44 | (99 | ) | (194 | ) | 104 | (90 | ) | ||||||||||||||||||||
Nontaxable investment securities | (7 | ) | (76 | ) | (83 | ) | (107 | ) | (398 | ) | (505 | ) | (193 | ) | (733 | ) | (926 | ) | |||||||||||||||||
Fed Funds Sold | — | — | — | — | — | — | — | (4 | ) | (4 | ) | ||||||||||||||||||||||||
Other | (29 | ) | (75 | ) | (104 | ) | 6 | (1 | ) | 5 | 7 | 110 | 117 | ||||||||||||||||||||||
Total changes in interest income | 336 | 224 | 560 | 672 | 120 | 792 | 1,359 | 305 | 1,664 | ||||||||||||||||||||||||||
Changes in interest expense | |||||||||||||||||||||||||||||||||||
Interest bearing demand deposits | (2 | ) | (8 | ) | (10 | ) | 4 | 2 | 6 | 9 | 15 | 24 | |||||||||||||||||||||||
Savings deposits | 9 | 66 | 75 | 2 | 136 | 138 | 2 | 236 | 238 | ||||||||||||||||||||||||||
Time deposits | 9 | 110 | 119 | 91 | 380 | 471 | 174 | 685 | 859 | ||||||||||||||||||||||||||
Borrowed funds | 64 | 92 | 156 | (89 | ) | 187 | 98 | (123 | ) | 285 | 162 | ||||||||||||||||||||||||
Total changes in interest expense | 80 | 260 | 340 | 8 | 705 | 713 | 62 | 1,221 | 1,283 | ||||||||||||||||||||||||||
Net change in interest margin (FTE) | $ | 256 | $ | (36 | ) | $ | 220 | $ | 664 | $ | (585 | ) | $ | 79 | $ | 1,297 | $ | (916 | ) | $ | 381 |
Average Yield / Rate for the Three Month Periods Ended: | ||||||||||||||
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | ||||||||||
Total earning assets | 3.84 | % | 3.77 | % | 3.86 | % | 3.86 | % | 3.77 | % | ||||
Total interest bearing liabilities | 1.08 | % | 0.99 | % | 1.01 | % | 0.93 | % | 0.89 | % | ||||
Net yield on interest earning assets (FTE) | 2.95 | % | 2.95 | % | 3.02 | % | 3.08 | % | 3.03 | % |
Quarter to Date Net Interest Income (FTE) | |||||||||||||||||||
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Total interest income (FTE) | $ | 16,191 | $ | 15,631 | $ | 15,939 | $ | 15,872 | $ | 15,399 | |||||||||
Total interest expense | 3,741 | 3,401 | 3,435 | 3,200 | 3,028 | ||||||||||||||
Net interest income (FTE) | $ | 12,450 | $ | 12,230 | $ | 12,504 | $ | 12,672 | $ | 12,371 |
Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
ALLL at beginning of period | $ | 8,200 | $ | 7,500 | $ | 7,700 | $ | 7,400 | |||||||
Charge-offs | |||||||||||||||
Commercial and agricultural | 489 | 25 | 494 | 52 | |||||||||||
Residential real estate | 29 | — | 39 | 43 | |||||||||||
Consumer | 48 | 44 | 136 | 118 | |||||||||||
Total charge-offs | 566 | 69 | 669 | 213 | |||||||||||
Recoveries | |||||||||||||||
Commercial and agricultural | 101 | 55 | 204 | 188 | |||||||||||
Residential real estate | 69 | 63 | 125 | 99 | |||||||||||
Consumer | 68 | 42 | 128 | 90 | |||||||||||
Total recoveries | 238 | 160 | 457 | 377 | |||||||||||
Net loan charge-offs (recoveries) | 328 | (91 | ) | 212 | (164 | ) | |||||||||
Provision for loan losses | 328 | 9 | 712 | 36 | |||||||||||
ALLL at end of period | $ | 8,200 | $ | 7,600 | $ | 8,200 | $ | 7,600 | |||||||
Net loan charge-offs (recoveries) to average loans outstanding | 0.03 | % | (0.01 | )% | 0.02 | % | (0.02 | )% |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Total charge-offs | $ | 566 | $ | 103 | $ | 401 | $ | 157 | $ | 69 | |||||||||
Total recoveries | 238 | 219 | 233 | 208 | 160 | ||||||||||||||
Net loan charge-offs (recoveries) | 328 | (116 | ) | 168 | (51 | ) | (91 | ) | |||||||||||
Net loan charge-offs (recoveries) to average loans outstanding | 0.03 | % | (0.01 | )% | 0.02 | % | — | % | (0.01 | )% | |||||||||
Provision for loan losses | $ | 328 | $ | 384 | $ | 168 | $ | 49 | $ | 9 | |||||||||
Provision for loan losses to average loans outstanding | 0.03 | % | 0.04 | % | 0.02 | % | — | % | — | % | |||||||||
ALLL | $ | 8,200 | $ | 8,200 | $ | 7,700 | $ | 7,700 | $ | 7,600 | |||||||||
ALLL as a % of loans at end of period | 0.71 | % | 0.75 | % | 0.71 | % | 0.71 | % | 0.72 | % |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
ALLL | |||||||||||||||||||
Individually evaluated for impairment | $ | 2,059 | $ | 2,503 | $ | 2,130 | $ | 2,551 | $ | 2,455 | |||||||||
Collectively evaluated for impairment | 6,141 | 5,697 | 5,570 | 5,149 | 5,145 | ||||||||||||||
Total | $ | 8,200 | $ | 8,200 | $ | 7,700 | $ | 7,700 | $ | 7,600 | |||||||||
ALLL to gross loans | |||||||||||||||||||
Individually evaluated for impairment | 0.18 | % | 0.23 | % | 0.20 | % | 0.24 | % | 0.23 | % | |||||||||
Collectively evaluated for impairment | 0.53 | % | 0.52 | % | 0.51 | % | 0.47 | % | 0.49 | % | |||||||||
Total | 0.71 | % | 0.75 | % | 0.71 | % | 0.71 | % | 0.72 | % |
Total Past Due and Nonaccrual Loans | |||||||||||||||||||
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Commercial and agricultural | $ | 9,980 | $ | 9,398 | $ | 4,885 | $ | 3,600 | $ | 4,920 | |||||||||
Residential real estate | 2,452 | 4,614 | 4,881 | 2,201 | 2,358 | ||||||||||||||
Consumer | 43 | 115 | 70 | 52 | 64 | ||||||||||||||
Total | $ | 12,475 | $ | 14,127 | $ | 9,836 | $ | 5,853 | $ | 7,342 | |||||||||
Total past due and nonaccrual loans to gross loans | 1.08 | % | 1.29 | % | 0.90 | % | 0.54 | % | 0.70 | % |
Three Months Ended June 30, 2018 | ||||||||||||||||||||
Accruing Interest | Nonaccrual | Total | ||||||||||||||||||
Number of Loans | Balance | Number of Loans | Balance | Number of Loans | Balance | |||||||||||||||
April 1, 2018 | 143 | $ | 24,350 | 15 | $ | 3,190 | 158 | $ | 27,540 | |||||||||||
New modifications | 15 | 3,081 | 4 | 657 | 19 | 3,738 | ||||||||||||||
Principal advances (payments) | — | 66 | — | (483 | ) | — | (417 | ) | ||||||||||||
Loans paid off | (13 | ) | (3,037 | ) | (1 | ) | (23 | ) | (14 | ) | (3,060 | ) | ||||||||
Partial charge-offs | — | — | — | — | — | — | ||||||||||||||
Balances charged-off | — | — | — | — | — | — | ||||||||||||||
Transfers to OREO | — | — | — | — | — | — | ||||||||||||||
Transfers to accrual status | — | — | — | — | — | — | ||||||||||||||
Transfers to nonaccrual status | (3 | ) | (730 | ) | 3 | 730 | — | — | ||||||||||||
June 30, 2018 | 142 | $ | 23,730 | 21 | $ | 4,071 | 163 | $ | 27,801 |
Six Months Ended June 30, 2018 | ||||||||||||||||||||
Accruing Interest | Nonaccrual | Total | ||||||||||||||||||
Number of Loans | Balance | Number of Loans | Balance | Number of Loans | Balance | |||||||||||||||
January 1, 2018 | 147 | $ | 23,284 | 13 | $ | 2,913 | 160 | $ | 26,197 | |||||||||||
New modifications | 22 | 5,564 | 4 | 657 | 26 | 6,221 | ||||||||||||||
Principal advances (payments) | — | (321 | ) | — | (575 | ) | — | (896 | ) | |||||||||||
Loans paid off | (22 | ) | (3,698 | ) | (1 | ) | (23 | ) | (23 | ) | (3,721 | ) | ||||||||
Partial charge-offs | — | — | — | — | — | — | ||||||||||||||
Balances charged-off | — | — | — | — | — | — | ||||||||||||||
Transfers to OREO | — | — | — | — | — | — | ||||||||||||||
Transfers to accrual status | — | — | — | — | — | — | ||||||||||||||
Transfers to nonaccrual status | (5 | ) | (1,099 | ) | 5 | 1,099 | — | — | ||||||||||||
June 30, 2018 | 142 | $ | 23,730 | 21 | $ | 4,071 | 163 | $ | 27,801 |
Three Months Ended June 30, 2017 | ||||||||||||||||||||
Accruing Interest | Nonaccrual | Total | ||||||||||||||||||
Number of Loans | Balance | Number of Loans | Balance | Number of Loans | Balance | |||||||||||||||
April 1, 2017 | 150 | $ | 20,251 | 6 | $ | 800 | 156 | $ | 21,051 | |||||||||||
New modifications | 10 | 5,320 | 1 | 466 | 11 | 5,786 | ||||||||||||||
Principal advances (payments) | — | (113 | ) | — | (16 | ) | — | (129 | ) | |||||||||||
Loans paid off | (5 | ) | (276 | ) | — | — | (5 | ) | (276 | ) | ||||||||||
Partial charge-offs | — | — | — | — | — | — | ||||||||||||||
Balances charged-off | — | — | — | — | — | — | ||||||||||||||
Transfers to OREO | — | — | (2 | ) | (91 | ) | (2 | ) | (91 | ) | ||||||||||
Transfers to accrual status | — | — | — | — | — | — | ||||||||||||||
Transfers to nonaccrual status | — | — | — | — | — | — | ||||||||||||||
June 30, 2017 | 155 | $ | 25,182 | 5 | $ | 1,159 | 160 | $ | 26,341 |
Six Months Ended June 30, 2017 | ||||||||||||||||||||
Accruing Interest | Nonaccrual | Total | ||||||||||||||||||
Number of Loans | Balance | Number of Loans | Balance | Number of Loans | Balance | |||||||||||||||
January 1, 2017 | 153 | $ | 20,593 | 5 | $ | 789 | 158 | $ | 21,382 | |||||||||||
New modifications | 13 | 5,555 | 1 | 466 | 14 | 6,021 | ||||||||||||||
Principal advances (payments) | — | (422 | ) | — | (22 | ) | — | (444 | ) | |||||||||||
Loans paid off | (10 | ) | (527 | ) | — | — | (10 | ) | (527 | ) | ||||||||||
Partial charge-offs | — | — | — | — | — | — | ||||||||||||||
Balances charged-off | — | — | — | — | — | — | ||||||||||||||
Transfers to OREO | — | — | (2 | ) | (91 | ) | (2 | ) | (91 | ) | ||||||||||
Transfers to accrual status | 1 | 75 | (1 | ) | (75 | ) | — | — | ||||||||||||
Transfers to nonaccrual status | (2 | ) | (92 | ) | 2 | 92 | — | — | ||||||||||||
June 30, 2017 | 155 | $ | 25,182 | 5 | $ | 1,159 | 160 | $ | 26,341 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
Accruing Interest | Nonaccrual | Total | Accruing Interest | Nonaccrual | Total | Total Change | |||||||||||||||||||||
Current | $ | 21,999 | $ | 2,892 | $ | 24,891 | $ | 21,234 | $ | — | $ | 21,234 | $ | 3,657 | |||||||||||||
Past due 30-59 days | 598 | 57 | 655 | 1,778 | 805 | 2,583 | (1,928 | ) | |||||||||||||||||||
Past due 60-89 days | 1,008 | 13 | 1,021 | 219 | 708 | 927 | 94 | ||||||||||||||||||||
Past due 90 days or more | 125 | 1,109 | 1,234 | 53 | 1,400 | 1,453 | (219 | ) | |||||||||||||||||||
Total | $ | 23,730 | $ | 4,071 | $ | 27,801 | $ | 23,284 | $ | 2,913 | $ | 26,197 | $ | 1,604 |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
Recorded Balance | Unpaid Principal Balance | Valuation Allowance | Recorded Balance | Unpaid Principal Balance | Valuation Allowance | ||||||||||||||||||
TDRs | |||||||||||||||||||||||
Commercial real estate | $ | 6,721 | $ | 7,022 | $ | 492 | $ | 5,780 | $ | 6,082 | $ | 626 | |||||||||||
Commercial other | 1,964 | 1,964 | 14 | 2,219 | 2,219 | 24 | |||||||||||||||||
Agricultural real estate | 6,913 | 6,913 | 102 | 7,913 | 7,913 | — | |||||||||||||||||
Agricultural other | 5,020 | 5,020 | — | 2,685 | 2,685 | — | |||||||||||||||||
Residential real estate senior liens | 7,096 | 7,458 | 1,341 | 7,460 | 7,839 | 1,406 | |||||||||||||||||
Residential real estate junior liens | 13 | 13 | 2 | 44 | 44 | 7 | |||||||||||||||||
Home equity lines of credit | 63 | 363 | — | 79 | 379 | — | |||||||||||||||||
Consumer secured | 11 | 11 | — | 17 | 17 | — | |||||||||||||||||
Total TDRs | 27,801 | 28,764 | 1,951 | 26,197 | 27,178 | 2,063 | |||||||||||||||||
Other impaired loans | |||||||||||||||||||||||
Commercial real estate | 1,045 | 1,148 | — | 100 | 161 | — | |||||||||||||||||
Commercial other | 300 | 344 | — | — | — | — | |||||||||||||||||
Agricultural real estate | 620 | 620 | — | — | — | — | |||||||||||||||||
Agricultural other | 341 | 341 | — | — | — | — | |||||||||||||||||
Residential real estate senior liens | 566 | 774 | 106 | 356 | 620 | 67 | |||||||||||||||||
Residential real estate junior liens | 10 | 10 | 2 | — | — | — | |||||||||||||||||
Home equity lines of credit | — | — | — | — | — | — | |||||||||||||||||
Consumer secured | — | — | — | — | — | — | |||||||||||||||||
Total other impaired loans | 2,882 | 3,237 | 108 | 456 | 781 | 67 | |||||||||||||||||
Total impaired loans | $ | 30,683 | $ | 32,001 | $ | 2,059 | $ | 26,653 | $ | 27,959 | $ | 2,130 |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Nonaccrual status loans | $ | 6,492 | $ | 6,237 | $ | 3,027 | $ | 1,605 | $ | 1,563 | |||||||||
Accruing loans past due 90 days or more | 154 | 664 | 395 | 646 | 1,203 | ||||||||||||||
Total nonperforming loans | 6,646 | 6,901 | 3,422 | 2,251 | 2,766 | ||||||||||||||
Foreclosed assets | 167 | 229 | 291 | 240 | 229 | ||||||||||||||
Total nonperforming assets | $ | 6,813 | $ | 7,130 | $ | 3,713 | $ | 2,491 | $ | 2,995 | |||||||||
Nonperforming loans as a % of total loans | 0.58 | % | 0.63 | % | 0.31 | % | 0.21 | % | 0.26 | % | |||||||||
Nonperforming assets as a % of total assets | 0.37 | % | 0.40 | % | 0.20 | % | 0.14 | % | 0.17 | % |
June 30 2018 | December 31 2017 | ||||||
Commercial and agricultural | $ | 3,489 | $ | 2,679 | |||
Residential real estate | 582 | 234 | |||||
Total | $ | 4,071 | $ | 2,913 |
Three Months Ended June 30 | ||||||||||||||
Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||
Service charges and fees | ||||||||||||||
ATM and debit card fees | $ | 708 | $ | 675 | $ | 33 | 4.89 | % | ||||||
NSF and overdraft fees | 465 | 461 | 4 | 0.87 | % | |||||||||
Freddie Mac servicing fee | 163 | 170 | (7 | ) | (4.12 | )% | ||||||||
Service charges on deposit accounts | 82 | 86 | (4 | ) | (4.65 | )% | ||||||||
Paper statement fees | 63 | — | 63 | — | % | |||||||||
Net OMSR income (loss) | (23 | ) | (17 | ) | (6 | ) | (35.29 | )% | ||||||
All other | 30 | 30 | — | — | % | |||||||||
Total service charges and fees | 1,488 | 1,405 | 83 | 5.91 | % | |||||||||
Net gain on sale of mortgage loans | 87 | 199 | (112 | ) | (56.28 | )% | ||||||||
Earnings on corporate owned life insurance policies | 181 | 183 | (2 | ) | (1.09 | )% | ||||||||
Net gains on sale of AFS securities | — | 142 | (142 | ) | (100.00 | )% | ||||||||
Other | ||||||||||||||
Trust and brokerage advisory fees | 738 | 666 | 72 | 10.81 | % | |||||||||
Other | 242 | 193 | 49 | 25.39 | % | |||||||||
Total other | 980 | 859 | 121 | 14.09 | % | |||||||||
Total noninterest income | $ | 2,736 | $ | 2,788 | $ | (52 | ) | (1.87 | )% |
Six Months Ended June 30 | ||||||||||||||
Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||
Service charges and fees | ||||||||||||||
ATM and debit card fees | $ | 1,377 | $ | 1,278 | $ | 99 | 7.75 | % | ||||||
NSF and overdraft fees | 924 | 902 | 22 | 2.44 | % | |||||||||
Freddie Mac servicing fee | 325 | 339 | (14 | ) | (4.13 | )% | ||||||||
Service charges on deposit accounts | 167 | 171 | (4 | ) | (2.34 | )% | ||||||||
Paper statement fees | 133 | — | 133 | — | % | |||||||||
Net OMSR income (loss) | (11 | ) | 184 | (195 | ) | (105.98 | )% | |||||||
All other | 61 | 61 | — | — | % | |||||||||
Total service charges and fees | 2,976 | 2,935 | 41 | 1.40 | % | |||||||||
Net gain on sale of mortgage loans | 168 | 354 | (186 | ) | (52.54 | )% | ||||||||
Earnings on corporate owned life insurance policies | 351 | 363 | (12 | ) | (3.31 | )% | ||||||||
Net gains on sale of AFS securities | — | 142 | (142 | ) | (100.00 | )% | ||||||||
Other | ||||||||||||||
Trust and brokerage advisory fees | 1,396 | 1,237 | 159 | 12.85 | % | |||||||||
Other | 332 | 373 | (41 | ) | (10.99 | )% | ||||||||
Total other | 1,728 | 1,610 | 118 | 7.33 | % | |||||||||
Total noninterest income | $ | 5,223 | $ | 5,404 | $ | (181 | ) | (3.35 | )% |
• | ATM and debit card fees fluctuate from period-to-period based primarily on usage of ATM and debit cards. While we do not anticipate significant changes to our ATM and debit card fee transaction charges, we do expect that fee income will continue to increase in 2018 as the trend of ATM and debit card usage continues to increase. |
• | Paper statement fees were implemented during the third quarter of 2017; therefore, there was no paper statement fee income for the three and six month periods ended June 30, 2017. |
• | OMSR income (loss) results are based on OMSR valuation changes which are driven, in part, by changes in offering rates on residential mortgage loans, prepayments in the servicing-retained portfolio, and volume of loans within the servicing-retained portfolio. OMSR income during the remainder of 2018 will be based on valuation changes and may not exceed 2017 OMSR income based on changes in offering rates. |
• | We anticipate increases in our originations in purchase money mortgage activity as a result of our various initiatives to drive growth. Additionally, we anticipate selling more residential mortgage loan originations as opposed carrying them in our residential real estate portfolio. As a result, we expect net gains on the sale of mortgage loans to increase during the remainder of 2018 but may not exceed 2017 levels. |
• | We are continually analyzing our AFS securities for potential sale opportunities. Securities with unrealized gains and less than desirable yields may be sold for funding and profitability purposes. During 2017, we identified several mortgage-backed securities that were desirable to be sold and recognized gains with these sales. We will continue to analyze our AFS securities portfolio for potential sale opportunities in 2018 and sell AFS securities when appropriate. |
• | In recent periods, we have invested considerable efforts to increase our market penetration with investment and trust services. We anticipate that fee income will continue to increase during the remainder of 2018 and exceed 2017 levels. |
• | The fluctuations in all other income are spread throughout various categories, none of which are individually significant. |
Three Months Ended June 30 | ||||||||||||||
Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||
Compensation and benefits | ||||||||||||||
Employee salaries | $ | 4,077 | $ | 3,961 | $ | 116 | 2.93 | % | ||||||
Employee benefits | 1,602 | 856 | 746 | 87.15 | % | |||||||||
Total compensation and benefits | 5,679 | 4,817 | 862 | 17.89 | % | |||||||||
Furniture and equipment | ||||||||||||||
Service contracts | 533 | 471 | 62 | 13.16 | % | |||||||||
Computer expense | 458 | 313 | 145 | 46.33 | % | |||||||||
Depreciation | 512 | 508 | 4 | 0.79 | % | |||||||||
All other | 68 | 60 | 8 | 13.33 | % | |||||||||
Total furniture and equipment | 1,571 | 1,352 | 219 | 16.20 | % | |||||||||
Occupancy | ||||||||||||||
Outside services | 176 | 200 | (24 | ) | (12.00 | )% | ||||||||
Depreciation | 219 | 210 | 9 | 4.29 | % | |||||||||
Utilities | 126 | 115 | 11 | 9.57 | % | |||||||||
Property taxes | 146 | 146 | — | — | % | |||||||||
All other | 140 | 144 | (4 | ) | (2.78 | )% | ||||||||
Total occupancy | 807 | 815 | (8 | ) | (0.98 | )% | ||||||||
Other | ||||||||||||||
Consulting fees | 359 | 208 | 151 | 72.60 | % | |||||||||
ATM and debit card fees | 234 | 404 | (170 | ) | (42.08 | )% | ||||||||
Director fees | 222 | 213 | 9 | 4.23 | % | |||||||||
Audit and related fees | 258 | 237 | 21 | 8.86 | % | |||||||||
FDIC insurance premiums | 156 | 155 | 1 | 0.65 | % | |||||||||
Donations and community relations | 210 | 168 | 42 | 25.00 | % | |||||||||
Loan underwriting fees | 165 | 192 | (27 | ) | (14.06 | )% | ||||||||
Printing and supplies | 145 | 103 | 42 | 40.78 | % | |||||||||
Postage and freight | 91 | 110 | (19 | ) | (17.27 | )% | ||||||||
Education and travel | 101 | 93 | 8 | 8.60 | % | |||||||||
Marketing costs | 149 | 100 | 49 | 49.00 | % | |||||||||
All other | 637 | 540 | 97 | 17.96 | % | |||||||||
Total other | 2,727 | 2,523 | 204 | 8.09 | % | |||||||||
Total noninterest expenses | $ | 10,784 | $ | 9,507 | $ | 1,277 | 13.43 | % |
Six Months Ended June 30 | ||||||||||||||
Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||
Compensation and benefits | ||||||||||||||
Employee salaries | $ | 8,261 | $ | 8,122 | $ | 139 | 1.71 | % | ||||||
Employee benefits | 2,912 | 2,252 | 660 | 29.31 | % | |||||||||
Total compensation and benefits | 11,173 | 10,374 | 799 | 7.70 | % | |||||||||
Furniture and equipment | ||||||||||||||
Service contracts | 1,039 | 949 | 90 | 9.48 | % | |||||||||
Depreciation | 1,010 | 1,020 | (10 | ) | (0.98 | )% | ||||||||
Computer expense | 882 | 623 | 259 | 41.57 | % | |||||||||
All other | 119 | 104 | 15 | 14.42 | % | |||||||||
Total furniture and equipment | 3,050 | 2,696 | 354 | 13.13 | % | |||||||||
Occupancy | ||||||||||||||
Depreciation | 438 | 420 | 18 | 4.29 | % | |||||||||
Outside services | 361 | 399 | (38 | ) | (9.52 | )% | ||||||||
Utilities | 278 | 258 | 20 | 7.75 | % | |||||||||
Property taxes | 291 | 292 | (1 | ) | (0.34 | )% | ||||||||
All other | 263 | 283 | (20 | ) | (7.07 | )% | ||||||||
Total occupancy | 1,631 | 1,652 | (21 | ) | (1.27 | )% | ||||||||
Other | ||||||||||||||
Consulting fees | 609 | 413 | 196 | 47.46 | % | |||||||||
ATM and debit card fees | 466 | 620 | (154 | ) | (24.84 | )% | ||||||||
Director fees | 431 | 422 | 9 | 2.13 | % | |||||||||
Audit and related fees | 460 | 435 | 25 | 5.75 | % | |||||||||
FDIC insurance premiums | 320 | 308 | 12 | 3.90 | % | |||||||||
Donations and community relations | 361 | 298 | 63 | 21.14 | % | |||||||||
Loan underwriting fees | 314 | 309 | 5 | 1.62 | % | |||||||||
Printing and supplies | 205 | 210 | (5 | ) | (2.38 | )% | ||||||||
Postage and freight | 222 | 219 | 3 | 1.37 | % | |||||||||
Education and travel | 216 | 189 | 27 | 14.29 | % | |||||||||
Marketing costs | 259 | 189 | 70 | 37.04 | % | |||||||||
All other | 1,163 | 1,124 | 39 | 3.47 | % | |||||||||
Total other | 5,026 | 4,736 | 290 | 6.12 | % | |||||||||
Total noninterest expenses | $ | 20,880 | $ | 19,458 | $ | 1,422 | 7.31 | % |
• | The increase in employee benefits is primarily related to a settlement with an insurance claim administrator in 2017 in favor of Isabella Bank. Additional expenses are related to our pension plan as a result of early distributions. Employee benefits are expected to increase moderately during the remainder of 2018 due to anticipated increases in health care costs and exceed 2017 levels as a result of the settlement. |
• | Computer expense increased in 2018 due to data and system upgrades, additional network security costs, and one-time implementation costs. Expenses in 2018 are expected to continue to exceed 2017 levels. |
• | Consulting fees have increased, in part, due to professional services related to income tax strategies. As result, consulting fees are expected to exceed 2017 levels for the remainder of 2018. |
• | ATM and debit card fees decreased primarily as a result of recognition of an early contract termination fee in the second quarter of 2017. As a result, these expenses in 2018 are not expected to exceed 2017 levels. |
• | The fluctuations in all other expenses are spread throughout various categories, none of which are individually significant. |
June 30 2018 | December 31 2017 | $ Change | % Change (unannualized) | |||||||||||
ASSETS | ||||||||||||||
Cash and cash equivalents | $ | 22,213 | $ | 30,848 | $ | (8,635 | ) | (27.99 | )% | |||||
AFS securities | ||||||||||||||
Amortized cost of AFS securities | 533,325 | 547,912 | (14,587 | ) | (2.66 | )% | ||||||||
Unrealized gains (losses) on AFS securities | (9,217 | ) | 818 | (10,035 | ) | N/M | ||||||||
AFS securities | 524,108 | 548,730 | (24,622 | ) | (4.49 | )% | ||||||||
Equity securities, at fair value | — | 3,577 | (3,577 | ) | (100.00 | )% | ||||||||
Mortgage loans AFS | 1,420 | 1,560 | (140 | ) | (8.97 | )% | ||||||||
Loans | ||||||||||||||
Gross loans | 1,151,756 | 1,091,519 | 60,237 | 5.52 | % | |||||||||
Less allowance for loan and lease losses | 8,200 | 7,700 | 500 | 6.49 | % | |||||||||
Net loans | 1,143,556 | 1,083,819 | 59,737 | 5.51 | % | |||||||||
Premises and equipment | 28,267 | 28,450 | (183 | ) | (0.64 | )% | ||||||||
Corporate owned life insurance policies | 27,377 | 27,026 | 351 | 1.30 | % | |||||||||
Accrued interest receivable | 5,684 | 7,063 | (1,379 | ) | (19.52 | )% | ||||||||
Equity securities without readily determinable fair values | 23,743 | 23,454 | 289 | 1.23 | % | |||||||||
Goodwill and other intangible assets | 48,497 | 48,547 | (50 | ) | (0.10 | )% | ||||||||
Other assets | 12,090 | 10,056 | 2,034 | 20.23 | % | |||||||||
TOTAL ASSETS | $ | 1,836,955 | $ | 1,813,130 | $ | 23,825 | 1.31 | % | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Liabilities | ||||||||||||||
Deposits | $ | 1,274,762 | $ | 1,265,258 | $ | 9,504 | 0.75 | % | ||||||
Borrowed funds | 362,496 | 344,878 | 17,618 | 5.11 | % | |||||||||
Accrued interest payable and other liabilities | 7,748 | 8,089 | (341 | ) | (4.22 | )% | ||||||||
Total liabilities | 1,645,006 | 1,618,225 | 26,781 | 1.65 | % | |||||||||
Shareholders’ equity | 191,949 | 194,905 | (2,956 | ) | (1.52 | )% | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,836,955 | $ | 1,813,130 | $ | 23,825 | 1.31 | % |
June 30 2018 | December 31 2017 | $ Change | % Change (unannualized) | |||||||||||
Commercial | $ | 691,623 | $ | 634,759 | $ | 56,864 | 8.96 | % | ||||||
Agricultural | 125,249 | 128,269 | (3,020 | ) | (2.35 | )% | ||||||||
Residential real estate | 273,607 | 272,368 | 1,239 | 0.45 | % | |||||||||
Consumer | 61,277 | 56,123 | 5,154 | 9.18 | % | |||||||||
Total | $ | 1,151,756 | $ | 1,091,519 | $ | 60,237 | 5.52 | % |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Commercial | $ | 691,623 | $ | 643,636 | $ | 634,759 | $ | 620,135 | $ | 600,584 | |||||||||
Agricultural | 125,249 | 122,330 | 128,269 | 132,998 | 130,954 | ||||||||||||||
Residential real estate | 273,607 | 270,150 | 272,368 | 271,480 | 270,207 | ||||||||||||||
Consumer | 61,277 | 56,886 | 56,123 | 52,931 | 46,752 | ||||||||||||||
Total | $ | 1,151,756 | $ | 1,093,002 | $ | 1,091,519 | $ | 1,077,544 | $ | 1,048,497 |
June 30 2018 | December 31 2017 | $ Change | % Change (unannualized) | |||||||||||
Noninterest bearing demand deposits | $ | 234,377 | $ | 237,511 | $ | (3,134 | ) | (1.32 | )% | |||||
Interest bearing demand deposits | 222,678 | 231,666 | (8,988 | ) | (3.88 | )% | ||||||||
Savings deposits | 364,387 | 342,815 | 21,572 | 6.29 | % | |||||||||
Certificates of deposit | 340,247 | 331,718 | 8,529 | 2.57 | % | |||||||||
Brokered certificates of deposit | 98,734 | 102,808 | (4,074 | ) | (3.96 | )% | ||||||||
Internet certificates of deposit | 14,339 | 18,740 | (4,401 | ) | (23.48 | )% | ||||||||
Total | $ | 1,274,762 | $ | 1,265,258 | $ | 9,504 | 0.75 | % |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Noninterest bearing demand deposits | $ | 234,377 | $ | 223,798 | $ | 237,511 | $ | 212,608 | $ | 210,122 | |||||||||
Interest bearing demand deposits | 222,678 | 235,965 | 231,666 | 220,601 | 212,365 | ||||||||||||||
Savings deposits | 364,387 | 366,045 | 342,815 | 358,358 | 357,756 | ||||||||||||||
Certificates of deposit | 340,247 | 338,219 | 331,718 | 309,778 | 314,482 | ||||||||||||||
Brokered certificates of deposit | 98,734 | 114,656 | 102,808 | 95,979 | 94,948 | ||||||||||||||
Internet certificates of deposit | 14,339 | 19,185 | 18,740 | 18,738 | 20,479 | ||||||||||||||
Total | $ | 1,274,762 | $ | 1,297,868 | $ | 1,265,258 | $ | 1,216,062 | $ | 1,210,152 |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
Government sponsored enterprises | $ | 190 | $ | 202 | $ | 216 | $ | 232 | $ | 281 | |||||||||
States and political subdivisions | 202,273 | 211,633 | 208,474 | 213,457 | 222,093 | ||||||||||||||
Auction rate money market preferred | 3,135 | 3,012 | 3,049 | 3,172 | 3,095 | ||||||||||||||
Mortgage-backed securities | 197,637 | 206,861 | 208,797 | 215,914 | 221,957 | ||||||||||||||
Collateralized mortgage obligations | 120,873 | 126,054 | 128,194 | 116,499 | 116,771 | ||||||||||||||
Total | $ | 524,108 | $ | 547,762 | $ | 548,730 | $ | 549,274 | $ | 564,197 |
June 30 2018 | March 31 2018 | December 31 2017 | September 30 2017 | June 30 2017 | |||||||||||||||
FHLB advances | $ | 315,000 | $ | 260,000 | $ | 290,000 | $ | 310,000 | $ | 310,000 | |||||||||
Securities sold under agreements to repurchase without stated maturity dates | 31,296 | 32,913 | 54,878 | 54,977 | 49,950 | ||||||||||||||
Federal funds purchased | 16,200 | 10,200 | — | 2,050 | 990 | ||||||||||||||
Total | $ | 362,496 | $ | 303,113 | $ | 344,878 | $ | 367,027 | $ | 360,940 |
June 30 2018 | December 31 2017 | ||||||
Unfunded commitments under lines of credit | $ | 164,436 | $ | 184,317 | |||
Commitments to grant loans | 45,730 | 24,782 | |||||
Commercial and standby letters of credit | 1,612 | 1,622 | |||||
Total | $ | 211,778 | $ | 210,721 |
June 30, 2018 | December 31, 2017 | ||||||||||
Actual | Minimum Required | Actual | Minimum Required | ||||||||
Common equity tier 1 capital | 12.110 | % | 6.375 | % | 12.230 | % | 5.750 | % | |||
Tier 1 capital | 12.110 | % | 7.875 | % | 12.230 | % | 7.250 | % | |||
Tier 2 capital | 0.650 | % | 2.000 | % | 0.630 | % | 2.000 | % | |||
Total Capital | 12.760 | % | 9.875 | % | 12.860 | % | 9.250 | % |
2018 | 2017 | $ Variance | |||||||||
Net cash provided by (used in) operating activities | $ | 10,945 | $ | 8,687 | $ | 2,258 | |||||
Net cash provided by (used in) investing activities | (44,435 | ) | (45,130 | ) | 695 | ||||||
Net cash provided by (used in) financing activities | 24,855 | 35,383 | (10,528 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (8,635 | ) | (1,060 | ) | (7,575 | ) | |||||
Cash and cash equivalents January 1 | 30,848 | 22,894 | 7,954 | ||||||||
Cash and cash equivalents June 30 | $ | 22,213 | $ | 21,834 | $ | 379 |
June 30, 2018 | |||||||||||||||||||||||||||||
12 Months | 24 Months | ||||||||||||||||||||||||||||
Immediate basis point change assumption (short-term) | -100 | +100 | +200 | +300 | +400 | -100 | +100 | +200 | +300 | +400 | |||||||||||||||||||
Percent change in net interest income vs. constant rates | (2.35 | )% | 1.39 | % | 2.62 | % | 4.70 | % | 5.49 | % | (2.66 | )% | 1.45 | % | 2.32 | % | 3.79 | % | 2.88 | % |
December 31, 2017 | |||||||||||||||||||||||||||||
12 Months | 24 Months | ||||||||||||||||||||||||||||
Immediate basis point change assumption (short-term) | -100 | +100 | +200 | +300 | +400 | -100 | +100 | +200 | +300 | +400 | |||||||||||||||||||
Percent change in net interest income vs. constant rates | (2.43 | )% | 2.36 | % | 4.18 | % | 5.99 | % | 7.94 | % | (2.29 | )% | 2.61 | % | 4.17 | % | 5.39 | % | 6.09 | % |
June 30, 2018 | |||||||||||||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
Rate sensitive assets | |||||||||||||||||||||||||||||||
Other interest bearing assets | $ | 58 | $ | 100 | $ | — | $ | — | $ | — | $ | — | $ | 158 | $ | 159 | |||||||||||||||
Average interest rates | 2.56 | % | 1.72 | % | — | % | — | % | — | % | — | % | 2.03 | % | |||||||||||||||||
AFS securities | $ | 94,232 | $ | 82,429 | $ | 70,077 | $ | 60,782 | $ | 71,837 | $ | 144,751 | $ | 524,108 | $ | 524,108 | |||||||||||||||
Average interest rates | 2.32 | % | 2.57 | % | 2.54 | % | 2.44 | % | 2.50 | % | 2.78 | % | 2.55 | % | |||||||||||||||||
Fixed interest rate loans (1) | $ | 163,208 | $ | 123,885 | $ | 121,901 | $ | 125,638 | $ | 118,530 | $ | 215,090 | $ | 868,252 | $ | 827,882 | |||||||||||||||
Average interest rates | 4.20 | % | 4.36 | % | 4.34 | % | 4.26 | % | 4.43 | % | 4.06 | % | 4.25 | % | |||||||||||||||||
Variable interest rate loans (1) | $ | 99,556 | $ | 24,988 | $ | 33,567 | $ | 29,638 | $ | 19,014 | $ | 76,741 | $ | 283,504 | $ | 276,590 | |||||||||||||||
Average interest rates | 5.51 | % | 5.17 | % | 5.45 | % | 4.89 | % | 4.63 | % | 3.73 | % | 4.87 | % | |||||||||||||||||
Rate sensitive liabilities | |||||||||||||||||||||||||||||||
Fixed rate borrowed funds | $ | 152,496 | $ | 75,000 | $ | 25,000 | $ | 50,000 | $ | 30,000 | $ | 20,000 | $ | 352,496 | $ | 347,079 | |||||||||||||||
Average interest rates | 1.65 | % | 1.99 | % | 1.54 | % | 2.07 | % | 2.86 | % | 2.07 | % | 1.90 | % | |||||||||||||||||
Variable rate borrowed funds | $ | — | $ | — | $ | 10,000 | $ | — | $ | — | $ | — | $ | 10,000 | $ | 10,000 | |||||||||||||||
Average interest rates | — | % | — | % | 2.63 | % | — | % | — | % | — | % | 2.63 | % | |||||||||||||||||
Savings and NOW accounts | $ | 51,470 | $ | 46,568 | $ | 41,765 | $ | 37,492 | $ | 33,688 | $ | 376,082 | $ | 587,065 | $ | 587,065 | |||||||||||||||
Average interest rates | 0.33 | % | 0.33 | % | 0.32 | % | 0.32 | % | 0.32 | % | 0.33 | % | 0.33 | % | |||||||||||||||||
Fixed interest rate certificates of deposit | $ | 228,784 | $ | 76,830 | $ | 49,078 | $ | 43,648 | $ | 32,459 | $ | 15,404 | $ | 446,203 | $ | 434,186 | |||||||||||||||
Average interest rates | 1.37 | % | 1.64 | % | 1.70 | % | 1.81 | % | 1.92 | % | 2.00 | % | 1.56 | % | |||||||||||||||||
Variable interest rate certificates of deposit | $ | 3,129 | $ | 3,988 | $ | — | $ | — | $ | — | $ | — | $ | 7,117 | $ | 7,080 | |||||||||||||||
Average interest rates | 1.88 | % | 2.23 | % | — | % | — | % | — | % | — | % | 2.07 | % |
December 31, 2017 | |||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
Rate sensitive assets | |||||||||||||||||||||||||||||||
Other interest bearing assets | $ | 5,481 | $ | — | $ | 100 | $ | — | $ | — | $ | — | $ | 5,581 | $ | 5,581 | |||||||||||||||
Average interest rates | 1.65 | % | — | % | 0.35 | % | — | % | — | % | — | % | 1.63 | % | |||||||||||||||||
AFS securities | $ | 95,000 | $ | 72,551 | $ | 71,591 | $ | 68,127 | $ | 60,607 | $ | 180,854 | $ | 548,730 | $ | 548,730 | |||||||||||||||
Average interest rates | 2.33 | % | 2.46 | % | 2.59 | % | 2.58 | % | 2.38 | % | 2.56 | % | 2.49 | % | |||||||||||||||||
Equity securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,577 | $ | 3,577 | $ | 3,577 | |||||||||||||||
Average interest rates | — | % | — | % | — | % | — | % | — | % | 4.00 | % | 4.00 | % | |||||||||||||||||
Fixed interest rate loans (1) | $ | 153,100 | $ | 118,068 | $ | 114,872 | $ | 129,992 | $ | 116,779 | $ | 222,971 | $ | 855,782 | $ | 825,855 | |||||||||||||||
Average interest rates | 4.12 | % | 4.34 | % | 4.24 | % | 4.16 | % | 4.34 | % | 4.01 | % | 4.17 | % | |||||||||||||||||
Variable interest rate loans (1) | $ | 70,738 | $ | 35,473 | $ | 27,164 | $ | 25,494 | $ | 20,158 | $ | 56,710 | $ | 235,737 | $ | 231,051 | |||||||||||||||
Average interest rates | 5.48 | % | 4.79 | % | 4.91 | % | 4.43 | % | 4.39 | % | 3.72 | % | 4.68 | % | |||||||||||||||||
Rate sensitive liabilities | |||||||||||||||||||||||||||||||
Fixed rate borrowed funds | $ | 124,878 | $ | 85,000 | $ | 35,000 | $ | 50,000 | $ | 20,000 | $ | 20,000 | $ | 334,878 | $ | 332,146 | |||||||||||||||
Average interest rates | 1.15 | % | 1.87 | % | 1.80 | % | 1.91 | % | 1.97 | % | 2.54 | % | 1.65 | % | |||||||||||||||||
Variable rate borrowed funds | $ | — | $ | — | $ | — | $ | 10,000 | $ | — | $ | — | $ | 10,000 | $ | 9,943 | |||||||||||||||
Average interest rates | — | % | — | % | — | % | 1.72 | % | — | % | — | % | 1.72 | % | |||||||||||||||||
Savings and NOW accounts | $ | 49,140 | $ | 44,096 | $ | 39,607 | $ | 35,611 | $ | 32,051 | $ | 373,976 | $ | 574,481 | $ | 574,481 | |||||||||||||||
Average interest rates | 0.22 | % | 0.22 | % | 0.22 | % | 0.22 | % | 0.21 | % | 0.27 | % | 0.25 | % | |||||||||||||||||
Fixed interest rate certificates of deposit | $ | 188,598 | $ | 109,047 | $ | 37,604 | $ | 50,814 | $ | 38,843 | $ | 21,840 | $ | 446,746 | $ | 437,400 | |||||||||||||||
Average interest rates | 1.05 | % | 1.57 | % | 1.62 | % | 1.76 | % | 1.85 | % | 2.05 | % | 1.42 | % | |||||||||||||||||
Variable interest rate certificates of deposit | $ | 2,414 | $ | 4,106 | $ | — | $ | — | $ | — | $ | — | $ | 6,520 | $ | 6,492 | |||||||||||||||
Average interest rates | 1.40 | % | 1.66 | % | — | % | — | % | — | % | — | % | 1.56 | % |
(A) | None |
(B) | None |
(C) | Repurchases of Common Stock |
Common Shares Repurchased | Total Number of Common Shares Purchased as Part of Publicly Announced Plan or Program | Maximum Number of Common Shares That May Yet Be Purchased Under the Plans or Programs | ||||||||||
Number | Average Price Per Common Share | |||||||||||
Balance, March 31 | 193,159 | |||||||||||
April 1 - 30 | 9,223 | $ | 27.00 | 9,223 | 183,936 | |||||||
May 1 - 31 | 7,201 | 26.94 | 7,201 | 176,735 | ||||||||
June 1 - 30 | 6,544 | 26.74 | 6,544 | 170,191 | ||||||||
Balance, June 30 | 22,968 | $ | 26.91 | 22,968 | 170,191 |
Exhibit Number | Exhibits | |
101.1* | 101.INS (XBRL Instance Document) | |
101.SCH (XBRL Taxonomy Extension Schema Document) | ||
101.CAL (XBRL Calculation Linkbase Document) | ||
101.LAB (XBRL Taxonomy Label Linkbase Document) | ||
101.DEF (XBRL Taxonomy Linkbase Document) | ||
101.PRE (XBRL Taxonomy Presentation Linkbase Document) |
* | In accordance with Rule 406T of Regulations S-T, the XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
Isabella Bank Corporation | ||||
Date: | August 6, 2018 | /s/ Jae A. Evans | ||
Jae A. Evans | ||||
President, Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | August 6, 2018 | /s/ Neil M. McDonnell | ||
Neil M. McDonnell | ||||
Chief Financial Officer | ||||
(Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Isabella Bank Corporation (the “registrant”). |
2. | Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report. |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors: |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 6, 2018 | /s/ Jae A. Evans | |
President, Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Isabella Bank Corporation (the “registrant”). |
2. | Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report. |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors: |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 6, 2018 | /s/ Neil M. McDonnell | |
Chief Financial Officer | |||
(Principal Financial 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 Corporation. |
/s/ Jae A. Evans | |
President, Chief Executive Officer | |
(Principal Executive Officer) | |
August 6, 2018 | |
/s/ Neil M. McDonnell | |
Chief Financial Officer | |
(Principal Financial Officer) | |
August 6, 2018 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 01, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ISABELLA BANK CORP | |
Entity Central Index Key | 0000842517 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 7,845,606 |
Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Available-for-sale securities, amortized cost | $ 533,325 | |
Common stock, shares authorized | 15,000,000 | 15,000,000 |
Common stock, shares issued | 7,933,250 | 7,857,293 |
Common stock, shares outstanding | 7,933,250 | 7,857,293 |
Common stock, shares held in Rabbi Trust | 21,652 | 31,769 |
Interim Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Interest income | ||||
Loans, including fees | $ 12,076 | $ 10,685 | $ 23,372 | $ 20,805 |
AFS securities | ||||
Taxable | 2,110 | 2,188 | 4,232 | 4,301 |
Nontaxable | 1,331 | 1,413 | 2,713 | 2,828 |
Federal funds sold and other | 196 | 212 | 517 | 425 |
Total interest income | 15,713 | 14,498 | 30,834 | 28,359 |
Interest expense | ||||
Deposits | 2,230 | 1,615 | 4,276 | 3,155 |
Borrowings | 1,511 | 1,413 | 2,866 | 2,704 |
Total interest expense | 3,741 | 3,028 | 7,142 | 5,859 |
Net interest income | 11,972 | 11,470 | 23,692 | 22,500 |
Provision for loan losses | 328 | 9 | 712 | 36 |
Net interest income after provision for loan losses | 11,644 | 11,461 | 22,980 | 22,464 |
Noninterest Income, Service Charges and Fees | 1,488 | 1,405 | 2,976 | 2,935 |
Noninterest income | ||||
Net gain on sale of mortgage loans | 87 | 199 | 168 | 354 |
Earnings on corporate owned life insurance policies | 181 | 183 | 351 | 363 |
Debt Securities, Realized Gain (Loss) | 0 | 142 | 0 | 142 |
Other | 980 | 859 | 1,728 | 1,610 |
Total noninterest income | 2,736 | 2,788 | 5,223 | 5,404 |
Noninterest expenses | ||||
Compensation and benefits | 5,679 | 4,817 | 11,173 | 10,374 |
Furniture and equipment | 1,571 | 1,352 | 3,050 | 2,696 |
Occupancy | 807 | 815 | 1,631 | 1,652 |
Other | 2,727 | 2,523 | 5,026 | 4,736 |
Total noninterest expenses | 10,784 | 9,507 | 20,880 | 19,458 |
Income before federal income tax expense | 3,596 | 4,742 | 7,323 | 8,410 |
Federal Income Tax Expense (Benefit), Continuing Operations | 263 | 898 | 528 | 1,430 |
NET INCOME | $ 3,333 | $ 3,844 | $ 6,795 | $ 6,980 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.42 | $ 0.49 | $ 0.86 | $ 0.89 |
Diluted (in dollars per share) | 0.41 | 0.48 | 0.84 | 0.87 |
Cash dividends per basic share (in dollars per share) | $ 0.26 | $ 0.25 | $ 0.52 | $ 0.50 |
Interim Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,333 | $ 3,844 | $ 6,795 | $ 6,980 |
Unrealized gains (losses) on AFS securities | ||||
Unrealized gains (losses) on AFS securities arising during the period | 1,978 | (2,570) | 10,035 | (4,247) |
Reclassification adjustment for net (gains) losses included in net income | 0 | (142) | 0 | (142) |
Tax effect | 442 | (762) | 2,126 | (1,212) |
Unrealized gains (losses) on AFS securities, net of tax | (1,536) | 1,666 | (7,909) | 2,893 |
Unrealized gains (losses) on derivative instruments arising during the period | 31 | (61) | 153 | (44) |
Tax effect | (6) | 21 | (32) | 15 |
Unrealized gains (losses) on derivative instruments, net of tax | 25 | (40) | 121 | (29) |
Other comprehensive income (loss), net of tax | (1,511) | 1,626 | (7,788) | 2,864 |
Comprehensive income | $ 1,822 | $ 5,470 | $ (993) | $ 9,844 |
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per share (in dollars per share) | $ 0.26 | $ 0.25 | $ 0.52 | $ 0.50 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation As used in these notes, as well as in Management's Discussion and Analysis of Financial Condition and Results of Operations, references to “Isabella,” the “Corporation,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Isabella Bank Corporation and its subsidiaries. Isabella Bank Corporation refers solely to the parent holding company, and Isabella Bank or the “Bank” refers to Isabella Bank Corporation’s subsidiary, Isabella Bank. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2017. Our accounting policies are materially the same as those discussed in Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. Reclassifications: Certain amounts reported in the interim 2017 consolidated financial statements have been reclassified to conform with the 2018 presentation. |
Pending Accounting Standards Updates |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Pending Accounting Standards Updates | Accounting Standards Updates Recently Adopted Accounting Standards Updates ASU No. 2014-09: “Revenue from Contracts with Customers” In May 2014, ASU No. 2014-09 was issued and created new Topic 606 to provide a common revenue standard to achieve consistency and clarification to the revenue recognition principles. The guidance outlines steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. These steps consist of: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new authoritative guidance, as amended, was effective on January 1, 2018. We reviewed our contracts related to trust and investment services and those related to other noninterest income to determine if changes in income recognition were required as a result of this guidance. Implementation of this guidance did not have a significant impact on our operating results for the three and six month periods ended June 30, 2018. ASU No. 2016-01: “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities” and ASU No. 2018-03: “Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10: Recognition and Measurement of Financial Assets and Financial Liabilities” In January 2016, ASU No. 2016-01 was issued and set forth the following: 1) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; 2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and requiring measurement of the investment at fair value when an impairment exists; 3) for public entities, eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; 4) for public entities, requires the use of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 5) requires an entity to present separately in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; 6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and 7) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2017. As a result of this guidance, the change in the fair value of equity investments has been recorded in net income beginning on January 1, 2018. Equity securities are now recorded separately from AFS securities and are recorded at a fair value which approximates an exit price notion. Adoption of this guidance had an insignificant impact on our operations and its future impact will depend on the fair value of these investments at the future measurement dates. The disclosures related to equity investment securities reflect a fully retrospective presentation for comparative purposes. For discussion of the fair value measurement of financial instruments, refer to “Note 12 – Fair Value”. In February 2018, ASU No. 2018-03 was issued and sets forth correction or improvement amendments for specific issues that may arise within the scope of ASU 2016-01. These amendments have been adopted and did not have a significant impact on our operating results or financial statement disclosures. ASU No. 2017-09: “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting” In May 2017, ASU No. 2017-09 was issued and provided guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this update. An entity should account for the effects of a modification unless all of the following are met: 1. The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. 2. The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. 3. The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2017 and did not have a significant impact on our operating results or financial statement disclosures. Pending Accounting Standards Updates ASU No. 2016-02: “Leases (Topic 842)” In February 2016, ASU No. 2016-02 was issued to create Topic 842 - Leases which will require recognition of lease assets and lease liabilities on the balance sheet for leases previously classified as operating leases. Accounting guidance is set forth for both lessee and lessor accounting. Under lessee accounting, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For finance leases, a lessee is required to do the following: 1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income; and 3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, a lessee is required to do the following: 1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position; 2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and 3) classify all cash payments within operating activities in the statement of cash flows. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2018. We have and will continue to review our lease agreements to determine the appropriate treatment under this guidance. We do not expect these changes to have a significant impact on our operating results or financial statement disclosures. ASU No. 2016-13: “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In June 2016, ASU No. 2016-13 was issued and updated the measurement for credit losses for AFS debt securities and assets measured at amortized cost which include loans, trade receivables, and any other financial assets with the contractual right to receive cash. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. Under the incurred loss approach, entities are limited to a probable initial recognition threshold when credit losses are measured under GAAP; an entity generally only considers past events and current conditions in measuring the incurred loss. Under the new guidance, the incurred loss impairment methodology in current GAAP is replaced with a methodology that reflects current expected credit losses (CECL). This methodology requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances which applies to assets measured either collectively or individually. The update allows an entity to revert to historical loss information that is reflective of the contractual term (considering the effect of prepayments) for periods that are beyond the time frame for which the entity is able to develop reasonable and supportable forecasts. In addition, the disclosures of credit quality indicators in relation to the amortized cost of financing receivables, a current disclosure requirement, are further disaggregated by year of origination (or vintage). The vintage information will be useful for financial statement users to better assess changes in underwriting standards and credit quality trends in asset portfolios over time and the effect of those changes on credit losses. Overall, the update will allow entities the ability to measure expected credit losses without the restriction of incurred or probable losses that exist under current GAAP. For users of the financial statements, the update provides decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The new authoritative guidance is effective for interim and annual periods beginning after December 15, 2019 and may have a significant impact on our operations and financial statement disclosures as well as that of the banking industry as a whole. We have invested a considerable amount of effort toward this guidance and will continue to invest considerable effort until its effective date. A committee was formed and has developed a road map to implementation. This committee will monitor progress to ensure timely and accurate adoption of the guidance. We have identified and collected required borrower and loan level data, as we recognize that quality data is key to properly identify loan segments and then apply the most appropriate methodology to each segment. We’ve identified a software solution that will support us in estimating the ALLL under CECL guidance and are currently in contract negotiations with the vendor that will enable us to run parallel models during 2019. This will allow us to solidify our methodology for implementation in 2020. |
AFS Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AFS Securities | AFS Securities The amortized cost and fair value of AFS securities, with gross unrealized gains and losses, are as follows at:
The amortized cost and fair value of AFS securities by contractual maturity at June 30, 2018 are as follows:
Expected maturities for government sponsored enterprises and states and political subdivisions may differ from contractual maturities because issuers may have the right to call or prepay obligations. As the auction rate money market preferred stocks have continual call dates, they are not reported by a specific maturity group. Because of their variable monthly payments, mortgage-backed securities and collateralized mortgage obligations are not reported by a specific maturity group. A summary of the sales activity of AFS securities was as follows for the:
The following information pertains to AFS securities with gross unrealized losses at June 30, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position.
Unrealized losses on our AFS securities portfolio are the result of recent increases in intermediate-term and long-term benchmark interest rates and not credit issues. As of June 30, 2018 and December 31, 2017, we conducted an analysis to determine whether any AFS securities currently in an unrealized loss position should be other-than-temporarily impaired. Such analyses considered, among other factors, the following criteria:
During the fourth quarter of 2016, we identified one municipal bond as other-than-temporarily impaired. While management estimated the OTTI to be realized, we also engaged the services of an independent investment valuation firm to estimate the amount of impairment as of December 31, 2016. The valuation calculated the estimated market value utilizing two different approaches: 1) Market - Appraisal and Comparable Investments 2) Income - Discounted Cash Flow Method The two methods were then weighted, with a higher weighting applied to the Market approach, to determine the estimated impairment. As a result of this analysis, we reduced the carrying value to $230 which required us to recognized an OTTI of $770 in earnings for the year ended December 31, 2016. Based on internal analysis of this bond as of June 30, 2018, there was no additional OTTI recognized as of June 30, 2018 and the carrying value of this bond remained at $230. Based on our analysis which included the criteria outlined above, the fact that we have asserted that we do not have the intent to sell AFS securities in an unrealized loss position, and considering it is unlikely that we will have to sell any AFS securities in an unrealized loss position before recovery of their cost basis, we do not believe that the values of any other AFS securities are other-than-temporarily impaired as of June 30, 2018 or December 31, 2017, with the exception of the one municipal bond discussed above. |
Loans and ALLL |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and ALLL | Loans and ALLL We grant commercial, agricultural, residential real estate, and consumer loans to customers situated primarily in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of the borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. Some loans are unsecured. Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ALLL, and any deferred fees or costs. Interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the level yield method. The accrual of interest on commercial, agricultural, and residential real estate loans is discontinued at the time the loan is 90 days or more past due unless the credit is well-secured and in the process of collection. Upon transferring the loans to nonaccrual status, we perform an evaluation to determine the net realizable value of the underlying collateral. This evaluation is used to help determine if any charge-offs are necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. For loans that are placed on nonaccrual status or charged-off, all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL. Loans may be returned to accrual status after six months of continuous performance and achievement of current payment status. Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $15,000. Borrowers with direct credit needs of more than $15,000 are serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, and property and equipment. Personal guarantees are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we require annual financial statements, prepare cash flow analyses, and review credit reports. We entered into a mortgage purchase program in 2016 with a financial institution where we participate in advances to mortgage brokers ("advances"). The mortgage brokers originate residential mortgage loans with the intent to sell them on the secondary market. We participate in the advance to the mortgage broker, which is secured by the underlying mortgage loan, until it is ultimately sold on the secondary market. As such, the average life of each participated advance is approximately 20-30 days. Funds from the sale of the loan are used to pay off our participation in the advance to the mortgage broker. We classify these advances as commercial loans and include the outstanding balance in commercial loans on our consolidated balance sheet. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $30,000. The difference between our outstanding balances and the maximum outstanding aggregate amount is classified as “Unfunded commitments under lines of credit” in the “Contractual Obligations and Loan Commitments” section of the Management's Discussion and Analysis of Financial Condition and Results of Operations of this report. We offer adjustable rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac. Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees. Underwriting criteria for originated residential real estate loans generally include:
Appraisals are performed by independent appraisers and reviewed for appropriateness. All mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $500 require the approval of our Internal Loan Committee, the Executive Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors. Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market. The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the ALLL when we believe the uncollectability of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALLL. The appropriateness of the ALLL is evaluated on a quarterly basis and is based upon a periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the loan’s outstanding balance and the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell. Historical loss allocations are calculated at the loan class and segment levels based on a migration analysis of the loan portfolio, with the exception of advances to mortgage brokers, over the preceding five years. With no historical losses on advances to mortgage brokers, there is no allocation in the commercial segment displayed in the following tables based on historical loss factors. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. A summary of changes in the ALLL and the recorded investment in loans by segments follows:
The following table displays the credit quality indicators for commercial and agricultural credit exposures based on internally assigned credit risk ratings as of:
Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows: 1. EXCELLENT – Substantially Risk Free Credit has strong financial condition and solid earnings history, characterized by:
2. HIGH QUALITY – Limited Risk Credit with sound financial condition and a positive trend in earnings supplemented by:
3. HIGH SATISFACTORY – Reasonable Risk Credit with satisfactory financial condition and further characterized by:
4. LOW SATISFACTORY – Acceptable Risk Credit with bankable risks, although some signs of weaknesses are shown:
To be classified as less than satisfactory, only one of the following criteria must be met. 5. SPECIAL MENTION – Criticized Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances surrounding a specific loan:
6. SUBSTANDARD – Classified Credit where the borrower’s current net worth, paying capacity, and value of the collateral pledged is inadequate. There is a distinct possibility that we will implement collection procedures if the loan deficiencies are not corrected. In addition, the following characteristics may apply:
7. VULNERABLE – Classified Credit is considered “Substandard” and warrants placing on nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply:
8. DOUBTFUL – Workout Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply:
Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due aging. The following tables summarize the past due and current loans as of:
Impaired Loans Loans may be classified as impaired if they meet one or more of the following criteria:
Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Impairment is measured on a loan-by-loan basis for residential real estate and consumer loans by comparing the loan’s unpaid principal balance to the present value of expected future cash flows discounted at the loan’s effective interest rate. We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not classified as nonaccrual, interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding. The following is a summary of information pertaining to impaired loans as of:
The following is a summary of information pertaining to impaired loans for the:
We had committed to advance $105 and $472 in connection with impaired loans, which includes TDRs, as of June 30, 2018 and December 31, 2017, respectively. Troubled Debt Restructurings Loan modifications are considered to be TDRs when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties. Typical concessions granted include, but are not limited to: •Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics. •Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics. •Agreeing to an interest only payment structure and delaying principal payments. •Forgiving principal. •Forgiving accrued interest. To determine if a borrower is experiencing financial difficulties, factors we consider include:
The following is a summary of information pertaining to TDRs granted for the:
The following table summarizes concessions we granted to borrowers in financial difficulty for the:
We did not restructure any loans by forgiving principal or accrued interest in the three and six month periods ended June 30, 2018 or 2017. Based on our historical loss experience, losses associated with TDRs are not significantly different than other impaired loans within the same loan segment. As such, TDRs, including TDRs that have been modified in the past 12 months that subsequently defaulted, are analyzed in the same manner as other impaired loans within their respective loan segment. We had no loans that defaulted in the three and six month periods ended June 30, 2018 and June 30, 2017 which were modified within 12 months prior to the default date. The following is a summary of TDR loan balances as of:
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Equity Securities Without Readily Determinable Fair Values |
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Equity Securities Without Readily Determinable Fair Values | Equity Securities Without Readily Determinable Fair Values Included in equity securities without readily determinable fair values are restricted securities, which are carried at cost, and investments in unconsolidated entities accounted for under the equity method of accounting. Equity securities without readily determinable fair values consist of the following as of:
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Borrowed Funds |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowed Funds | Borrowed Funds Borrowed funds consist of the following obligations as of:
FHLB advances are collateralized by a blanket lien on all qualified 1-4 family residential real estate loans, specific AFS securities, and FHLB stock. The following table lists the maturities and weighted average interest rates of FHLB advances as of:
Securities sold under agreements to repurchase are classified as secured borrowings and are reflected at the amount of cash received in connection with the transaction. The securities underlying the agreements have a carrying value and a fair value of $31,315 and $54,898 at June 30, 2018 and December 31, 2017, respectively. Such securities remain under our control. We may be required to provide additional collateral based on the fair value of underlying securities. Securities sold under repurchase agreements without stated maturity dates, federal funds purchased, and FRB Discount Window advances generally mature within one to four days from the transaction date. The following table provides a summary of securities sold under repurchase agreements without stated maturity dates and federal funds purchased. We had no FRB Discount Window advances during the three and six month periods ended June 30, 2018.
We had pledged AFS securities and 1-4 family residential real estate loans in the following amounts at:
AFS securities pledged to repurchase agreements without stated maturity dates consisted of the following at:
AFS securities pledged to repurchase agreements are monitored to ensure the appropriate level is collateralized. In the event of maturities, calls, significant principal repayments, or significant decline in market values, we have adequate levels of AFS securities to pledge to satisfy required collateral. As of June 30, 2018, we had the ability to borrow up to an additional $112,113, based on assets pledged as collateral. We had no investment securities that were restricted to be pledged for specific purposes. Derivative Instruments We enter into interest rate swaps to manage exposure to interest rate risk and variability in cash flows. The interest rate swaps, associated with our variable rate borrowings, are designated upon inception as cash flow hedges of forecasted interest payments. We enter into LIBOR-based interest rate swaps that involve the receipt of variable amounts in exchange for fixed rate payments, in effect converting variable rate debt to fixed rate debt. Cash flow hedges are assessed for effectiveness using regression analysis. The effective portion of changes in fair value are recorded in OCI and subsequently reclassified into interest expense in the same period in which the related interest on the variable rate borrowings affects earnings. In the event that a portion of the changes in fair value were determined to be ineffective, the ineffective amount would be recorded in earnings. The following tables provide information on derivatives related to variable rate borrowings as of:
Derivatives contain an element of credit risk which arises from the possibility that we will incur a loss as a result of a counterparty failing to meet its contractual obligations. Credit risk is minimized through counterparty collateral, transaction limits and monitoring procedures. We also manage dealer credit risk by entering into interest rate derivatives only with primary and highly rated counterparties, the use of ISDA master agreements and counterparty limits. We do not anticipate any losses from failure of interest rate derivative counterparties to honor their obligations. |
Revenue |
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Revenue | Revenue Our revenue is comprised primarily of interest income, service charges and fees, gains on the sale of loans and AFS securities, earnings on corporate owned life insurance policies, and other noninterest income. Other noninterest income is typically service and performance driven in nature and comprised primarily of trust and brokerage advisory fees. We recognize revenue, excluding interest income, in accordance with ASC 606, Revenue From Contracts with Customers. Revenue is recognized when our performance obligation has been satisfied according to our contractual obligation. We record receivables when revenue is unpaid and collectability is reasonably assured. Accounts receivable balances primarily represent amounts due from customers for which revenue has been recognized. Accounts receivable balances are recorded in the consolidated balance sheets in accrued interest receivable and other assets. For the three and six month periods ended June 30, 2018 and 2017, we satisfied our performance obligations pursuant to contracts with customers. As a result, we have not recorded contract assets or liabilities. We estimate no returns or allowances for the three and six month periods ended June 30, 2018 and 2017. Our contracts with customers define our performance obligations with clearly established pricing which did not require us to allocate or disaggregate revenue by performance obligation. A summary of revenue recognized for each major category of contracts with customers, subject to ASC 606, is as follows for the:
A large portion of our revenue consists of interest income which is not subject to the requirements set forth in ASC 606. This recently adopted guidance required us to review our other noninterest revenue sources within the scope of the guidance to ensure appropriate recognition of revenue from contracts with customers. This review process did not identify significant changes related to revenue recognition. As such, we did not record or disclose transactions related to the adoption of this guidance. |
Other Noninterest Expenses |
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Other Noninterest Expenses | Other Noninterest Expenses A summary of expenses included in other noninterest expenses is as follows for the:
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Federal Income Taxes |
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Federal Income Taxes | Federal Income Taxes The reconciliation of the provision for federal income taxes and the amount computed at the federal statutory tax rate of income before federal income tax expense, which has significantly changed as a result of 2017 Tax Act, is as follows for the:
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Computation of Earnings Per Common Share |
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Computation of Earnings Per Common Share | Computation of Earnings Per Common Share Basic earnings per common share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued relate solely to outstanding shares in the Directors Plan.
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Accumulated Other Comprehensive Income (Loss) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income The following table summarizes the changes in AOCI by component for the:
Included in OCI for the three and six month period ended June 30, 2018 are changes in unrealized holding gains and losses related to auction rate money market preferred stocks. For the three and six month periods ended June 30, 2017, OCI includes changes in unrealized holding gains and losses related to auction rate money market preferred stocks and preferred stocks. For federal income tax purposes, these securities are considered equity investments. As such, no deferred federal income taxes related to unrealized holding gains or losses are expected or recorded. A summary of the components of unrealized holding gains on AFS securities included in OCI follows for the:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Under fair value measurement and disclosure authoritative guidance, we group assets and liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value, based on the prioritization of inputs in the valuation techniques. These levels are:
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. Transfers between measurement levels are recognized at the end of reporting periods. Fair value measurement requires the use of an exit price notion which may differ from entrance pricing. Generally we believe our assets and liabilities classified as Level 1 or Level 2 approximate an exit price notion. Following is a description of the valuation methodologies, key inputs, and an indication of the level of the fair value hierarchy in which the assets or liabilities are classified. AFS securities: AFS securities are recorded at fair value on a recurring basis. Level 1 fair value measurement is based upon quoted prices for identical instruments. Level 2 fair value measurement is based upon quoted prices for similar instruments. If quoted prices are not available, fair values are measured using independent pricing models or other model based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss and liquidity assumptions. The values for Level 1 and Level 2 investment securities are generally obtained from an independent third party. On a quarterly basis, we compare the values provided to alternative pricing sources. Equity securities, at fair value: Equity securities are recorded at fair value on a recurring basis. Level 1 fair value measurement is based upon quoted prices for identical instruments. The values for Level 1 investment securities are generally obtained from an independent third party. On a quarterly basis, we compare the values provided to alternative pricing sources. Loans: We do not record loans at fair value on a recurring basis. However, from time-to-time, loans are classified as impaired and a specific allowance for loan losses may be established. Loans for which it is probable that payment of interest and principal will be significantly different than the contractual terms of the original loan agreement are considered impaired. Once a loan is identified as impaired, we measure the estimated impairment. The fair value of impaired loans is estimated using one of several methods, including the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. We review the net realizable values of the underlying collateral for collateral dependent impaired loans on at least a quarterly basis for all loan types. To determine the collateral value, we utilize independent appraisals, broker price opinions, or internal evaluations. We review these valuations to determine whether an additional discount should be applied given the age of market information that may have been considered as well as other factors such as costs to sell an asset if it is determined that the collateral will be liquidated in connection with the ultimate settlement of the loan. We use these valuations to determine if any specific reserves or charge-offs are necessary. We may obtain new valuations in certain circumstances, including when there has been significant deterioration in the condition of the collateral, if the foreclosure process has begun, or if the existing valuation is deemed to be outdated. The following tables list the quantitative fair value information about impaired loans as of:
Collateral discount rates may have ranges to accommodate differences in the age of the independent appraisal, broker price opinion, or internal evaluation. Derivative instruments: Derivative instruments, consisting solely of interest rate swaps, are recorded at fair value on a recurring basis. Derivatives qualifying as cash flow hedges, when highly effective, are reported at fair value in other assets or other liabilities on our Consolidated Balance Sheets with changes in value recorded in OCI. Should the hedge no longer be considered effective, the ineffective portion of the change in fair value is recorded directly in earnings in the period in which the change occurs. The fair value of a derivative is determined by quoted market prices and model based valuation techniques. As such, we classify derivative instruments as Level 2. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement. Estimated Fair Values of Financial Instruments Not Recorded at Fair Value in their Entirety on a Recurring Basis Disclosure of the estimated fair values of financial instruments, which differs from carrying values, often requires the use of estimates. In cases where quoted market values in an active market are not available, we use present value techniques and other valuation methods to estimate the fair values of our financial instruments. These valuation methods require considerable judgment and the resulting estimates of fair value can be significantly affected by the assumptions made and methods used. The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis were as follows as of:
Financial Instruments Recorded at Fair Value The table below presents the recorded amount of assets and liabilities measured at fair value on:
Equity securities are recorded at fair value with changes in fair value recognized through earnings on a recurring basis. For the six month period ended June 30, 2018, we recorded a loss of $41 through earnings. We had no other assets or liabilities recorded at fair value with changes in fair value recognized through earnings, on a recurring basis or nonrecurring basis, as of June 30, 2018. |
Parent Company Only Financial Information |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Parent Company Only Financial Information | Parent Company Only Financial Information Interim Condensed Balance Sheets
Interim Condensed Statements of Income
Interim Condensed Statements of Cash Flows
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Operating Segments |
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Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments Our reportable segments are based on legal entities that account for at least 10% of net operating results. The operations of the Bank as of June 30, 2018 and 2017 and each of the three and six month periods then ended, represent approximately 90% or more of our consolidated total assets and operating results. As such, no additional segment reporting is presented. |
Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation | As used in these notes, as well as in Management's Discussion and Analysis of Financial Condition and Results of Operations, references to “Isabella,” the “Corporation,” “we,” “our,” “us,” and similar terms refer to the consolidated entity consisting of Isabella Bank Corporation and its subsidiaries. Isabella Bank Corporation refers solely to the parent holding company, and Isabella Bank or the “Bank” refers to Isabella Bank Corporation’s subsidiary, Isabella Bank. |
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Basis of Accounting | The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to our Annual Report on Form 10-K for the year ended December 31, 2017. |
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Earnings Per Share | Basic earnings per common share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued relate solely to outstanding shares in the Directors Plan. |
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Available-for-sale Securities | As of June 30, 2018 and December 31, 2017, we conducted an analysis to determine whether any AFS securities currently in an unrealized loss position should be other-than-temporarily impaired. Such analyses considered, among other factors, the following criteria:
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Nonaccrual Loan Status | The accrual of interest on commercial, agricultural, and residential real estate loans is discontinued at the time the loan is 90 days or more past due unless the credit is well-secured and in the process of collection. Upon transferring the loans to nonaccrual status, we perform an evaluation to determine the net realizable value of the underlying collateral. This evaluation is used to help determine if any charge-offs are necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. For loans that are placed on nonaccrual status or charged-off, all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL. Loans may be returned to accrual status after six months of continuous performance and achievement of current payment status. |
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Loans Receivable | Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ALLL, and any deferred fees or costs. Interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the level yield method. Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $15,000. Borrowers with direct credit needs of more than $15,000 are serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, and property and equipment. Personal guarantees are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we require annual financial statements, prepare cash flow analyses, and review credit reports. We entered into a mortgage purchase program in 2016 with a financial institution where we participate in advances to mortgage brokers ("advances"). The mortgage brokers originate residential mortgage loans with the intent to sell them on the secondary market. We participate in the advance to the mortgage broker, which is secured by the underlying mortgage loan, until it is ultimately sold on the secondary market. As such, the average life of each participated advance is approximately 20-30 days. Funds from the sale of the loan are used to pay off our participation in the advance to the mortgage broker. We classify these advances as commercial loans and include the outstanding balance in commercial loans on our consolidated balance sheet. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $30,000. The difference between our outstanding balances and the maximum outstanding aggregate amount is classified as “Unfunded commitments under lines of credit” in the “Contractual Obligations and Loan Commitments” section of the Management's Discussion and Analysis of Financial Condition and Results of Operations of this report. We offer adjustable rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac. Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees. Underwriting criteria for originated residential real estate loans generally include:
Appraisals are performed by independent appraisers and reviewed for appropriateness. All mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $500 require the approval of our Internal Loan Committee, the Executive Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors. Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market. |
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Allowance for Loan Losses | The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the ALLL when we believe the uncollectability of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALLL. The appropriateness of the ALLL is evaluated on a quarterly basis and is based upon a periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the loan’s outstanding balance and the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell. Historical loss allocations are calculated at the loan class and segment levels based on a migration analysis of the loan portfolio, with the exception of advances to mortgage brokers, over the preceding five years. With no historical losses on advances to mortgage brokers, there is no allocation in the commercial segment displayed in the following tables based on historical loss factors. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. |
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Internal Credit Risk Ratings | Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows: 1. EXCELLENT – Substantially Risk Free Credit has strong financial condition and solid earnings history, characterized by:
2. HIGH QUALITY – Limited Risk Credit with sound financial condition and a positive trend in earnings supplemented by:
3. HIGH SATISFACTORY – Reasonable Risk Credit with satisfactory financial condition and further characterized by:
4. LOW SATISFACTORY – Acceptable Risk Credit with bankable risks, although some signs of weaknesses are shown:
To be classified as less than satisfactory, only one of the following criteria must be met. 5. SPECIAL MENTION – Criticized Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances surrounding a specific loan:
6. SUBSTANDARD – Classified Credit where the borrower’s current net worth, paying capacity, and value of the collateral pledged is inadequate. There is a distinct possibility that we will implement collection procedures if the loan deficiencies are not corrected. In addition, the following characteristics may apply:
7. VULNERABLE – Classified Credit is considered “Substandard” and warrants placing on nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply:
8. DOUBTFUL – Workout Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply:
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Impaired Loans | Loans may be classified as impaired if they meet one or more of the following criteria:
Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Impairment is measured on a loan-by-loan basis for residential real estate and consumer loans by comparing the loan’s unpaid principal balance to the present value of expected future cash flows discounted at the loan’s effective interest rate. We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not classified as nonaccrual, interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding. |
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Troubled Debt Restructurings | Loan modifications are considered to be TDRs when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties. Typical concessions granted include, but are not limited to: •Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics. •Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics. •Agreeing to an interest only payment structure and delaying principal payments. •Forgiving principal. •Forgiving accrued interest. To determine if a borrower is experiencing financial difficulties, factors we consider include:
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Derivative Instruments | The interest rate swaps, associated with our variable rate borrowings, are designated upon inception as cash flow hedges of forecasted interest payments. We enter into LIBOR-based interest rate swaps that involve the receipt of variable amounts in exchange for fixed rate payments, in effect converting variable rate debt to fixed rate debt. Cash flow hedges are assessed for effectiveness using regression analysis. The effective portion of changes in fair value are recorded in OCI and subsequently reclassified into interest expense in the same period in which the related interest on the variable rate borrowings affects earnings. In the event that a portion of the changes in fair value were determined to be ineffective, the ineffective amount would be recorded in earnings. |
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Fair Value Measurement, Policy [Policy Text Block] | Under fair value measurement and disclosure authoritative guidance, we group assets and liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value, based on the prioritization of inputs in the valuation techniques. These levels are:
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. Transfers between measurement levels are recognized at the end of reporting periods. Fair value measurement requires the use of an exit price notion which may differ from entrance pricing. Generally we believe our assets and liabilities classified as Level 1 or Level 2 approximate an exit price notion. |
AFS Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost and fair value of available-for-sale securities | The amortized cost and fair value of AFS securities, with gross unrealized gains and losses, are as follows at:
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Amortized cost and fair value of available-for-sale securities by contractual maturity | The amortized cost and fair value of AFS securities by contractual maturity at June 30, 2018 are as follows:
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Schedule of Realized Gain (Loss) [Table Text Block] | A summary of the sales activity of AFS securities was as follows for the:
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Available-for-sale securities with gross unrealized losses | The following information pertains to AFS securities with gross unrealized losses at June 30, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position.
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Loans and ALLL (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in the ALLL and the recorded investment in loans by segments |
A summary of changes in the ALLL and the recorded investment in loans by segments follows:
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Allowance for Loan Losses and Recorded Investment in Loans |
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Credit quality indicators for commercial and agricultural credit exposures | The following table displays the credit quality indicators for commercial and agricultural credit exposures based on internally assigned credit risk ratings as of:
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Summary of past due and current loans | The following tables summarize the past due and current loans as of:
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Information pertaining to impaired loans | The following is a summary of information pertaining to impaired loans as of:
The following is a summary of information pertaining to impaired loans for the:
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Information pertaining to TDR's | The following is a summary of TDR loan balances as of:
The following is a summary of information pertaining to TDRs granted for the:
The following table summarizes concessions we granted to borrowers in financial difficulty for the:
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Equity Securities Without Readily Determinable Fair Values (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method And Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of equity method and other investments | Equity securities without readily determinable fair values consist of the following as of:
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Borrowed Funds (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of borrowed funds | Borrowed funds consist of the following obligations as of:
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Federal Home Loan Bank, Advances | The following table lists the maturities and weighted average interest rates of FHLB advances as of:
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Summary of short term borrowings | The following table provides a summary of securities sold under repurchase agreements without stated maturity dates and federal funds purchased. We had no FRB Discount Window advances during the three and six month periods ended June 30, 2018.
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Summary of pledged financial instruments | We had pledged AFS securities and 1-4 family residential real estate loans in the following amounts at:
AFS securities pledged to repurchase agreements without stated maturity dates consisted of the following at:
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Schedule of derivative instruments | The following tables provide information on derivatives related to variable rate borrowings as of:
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Recognized for Each Major Category | A summary of revenue recognized for each major category of contracts with customers, subject to ASC 606, is as follows for the:
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Other Noninterest Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of expenses included in other noninterest expenses | A summary of expenses included in other noninterest expenses is as follows for the:
|
Federal Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of federal income tax expense | The reconciliation of the provision for federal income taxes and the amount computed at the federal statutory tax rate of income before federal income tax expense, which has significantly changed as a result of 2017 Tax Act, is as follows for the:
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Computation of Earnings Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of earnings per common share |
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Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the components of accumulated other comprehensive income | A summary of the components of unrealized holding gains on AFS securities included in OCI follows for the:
The following table summarizes the changes in AOCI by component for the:
|
Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quantitative information about assets measured utilizing Level 3 fair value measurement | The following tables list the quantitative fair value information about impaired loans as of:
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Carrying amount and estimated fair value of financial instruments not recorded at fair value | The carrying amount and estimated fair value of financial instruments not recorded at fair value in their entirety on a recurring basis were as follows as of:
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Assets and liabilities measured at fair value | The table below presents the recorded amount of assets and liabilities measured at fair value on:
|
Parent Company Only Financial Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interim Condensed Balance Sheets | Interim Condensed Balance Sheets
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Interim Condensed Statements of Income | Interim Condensed Statements of Income
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Interim Condensed Statements of Cash Flows | Interim Condensed Statements of Cash Flows
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AFS Securities (Activity related to sales of AFS securities) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sales of AFS of securities | $ 0 | $ 12,827 | $ 0 | $ 12,827 |
Gross realized gains (losses) | 0 | 142 | 0 | 142 |
Applicable income tax expense | $ 0 | $ 48 | $ 0 | $ 48 |
AFS Securities Narratives New (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2016 |
|
Available-for-sale Securities [Member] | Auction Rate Securities [Member] | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, No Previous Impairment | $ 0 | $ 770 |
Loans and ALLL (Summary of TDR loan balances) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Troubled debt restructurings | $ 27,801 | $ 26,197 |
Equity Securities Without Readily Determinable Fair Values (Equity securities without readily determinable fair values) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity Method And Other Investments [Abstract] | ||
FHLB Stock | $ 13,925 | $ 13,700 |
FRB Stock | 1,999 | 1,999 |
Other | 334 | 334 |
Total | 23,743 | 23,454 |
Investment in Corporate Settlement Solutions [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 7,485 | $ 7,421 |
Borrowed Funds (Borrowed funds obligations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Schedule of Debt [Line Items] | |||||
Borrowed funds | $ 362,496 | $ 362,496 | $ 344,878 | ||
Borrowed funds, Rate | 1.92% | 1.92% | 1.65% | ||
Securities Sold under Agreements to Repurchase [Member] | |||||
Schedule of Debt [Line Items] | |||||
Short-term Debt, Maximum Month-end Outstanding Amount | $ 34,242 | $ 55,731 | $ 38,967 | $ 61,131 | |
Borrowed funds | $ 31,296 | $ 31,296 | $ 54,878 | ||
Borrowed funds, Rate | 0.10% | 0.10% | 0.12% | ||
Federal Funds Purchased [Member] | |||||
Schedule of Debt [Line Items] | |||||
Short-term Debt, Maximum Month-end Outstanding Amount | $ 16,200 | $ 5,965 | $ 16,200 | $ 27,300 | |
Borrowed funds | $ 16,200 | $ 16,200 | $ 0 | ||
Borrowed funds, Rate | 2.14% | 2.14% | 0.00% | ||
Federal Home Loan Bank Advances [Member] | |||||
Schedule of Debt [Line Items] | |||||
Borrowed funds | $ 315,000 | $ 315,000 | $ 290,000 | ||
Borrowed funds, Rate | 2.09% | 2.09% | 1.94% |
Borrowed Funds (Short-term borrowings) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Securities Sold under Agreements to Repurchase [Member] | ||||
Short-term Debt [Line Items] | ||||
Maximum Month End Balance | $ 34,242 | $ 55,731 | $ 38,967 | $ 61,131 |
Average Balance | $ 32,957 | $ 53,841 | $ 34,467 | $ 55,663 |
Weighted Average Interest Rate During the Period | 0.09% | 0.13% | 0.09% | 0.13% |
Federal Funds Purchased [Member] | ||||
Short-term Debt [Line Items] | ||||
Maximum Month End Balance | $ 16,200 | $ 5,965 | $ 16,200 | $ 27,300 |
Average Balance | $ 9,199 | $ 7,496 | $ 6,843 | $ 4,197 |
Weighted Average Interest Rate During the Period | 1.82% | 1.13% | 1.77% | 1.11% |
Federal Reserve Bank Advances [Member] | ||||
Short-term Debt [Line Items] | ||||
Maximum Month End Balance | $ 0 | $ 0 | $ 0 | $ 0 |
Average Balance | $ 0 | $ 88 | $ 0 | $ 44 |
Weighted Average Interest Rate During the Period | 0.00% | 1.48% | 0.00% | 1.48% |
Borrowed Funds (Pledged financial instruments) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Pledged to secure borrowed funds | $ 423,968 | $ 410,988 |
Pledged to secure repurchase agreements | 31,315 | 54,898 |
Pledged for public deposits and for other purposes necessary or required by law | 34,386 | 27,976 |
Total | 489,669 | 493,862 |
Short-term Debt [Line Items] | ||
AFS securities pledged without single maturity dates | 31,315 | 54,898 |
State and Local Funds Purchased [Member] | ||
Short-term Debt [Line Items] | ||
AFS securities pledged without single maturity dates | 3,346 | 7,332 |
Mortgage Backed Securities, Other [Member] | ||
Short-term Debt [Line Items] | ||
AFS securities pledged without single maturity dates | 6,537 | 13,199 |
Collateralized Mortgage Obligations [Member] | ||
Short-term Debt [Line Items] | ||
AFS securities pledged without single maturity dates | $ 21,432 | $ 34,367 |
Borrowed Funds (Derivatives) (Details) - Cash Flow Hedging [Member] - Interest Rate Swaps [Member] - Designated as Hedging Instrument [Member] - London Interbank Offered Rate (LIBOR) [Member] - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Derivatives, Fair Value [Line Items] | ||
Pay Rate | 1.56% | 1.56% |
Remaining Life (Years) | 2 years 8 months | 3 years 4 months |
Notional Amount | $ 10,000 | $ 10,000 |
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liability, Fair Value, Gross Liability | $ 444 | $ 291 |
Borrowed Funds (Narrative) (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Debt Disclosure [Abstract] | ||
Carrying value of securities sold under agreements to repurchase | $ 31,315 | $ 54,898 |
Short-term Debt [Line Items] | ||
Additional borrowing capacity | $ 112,113 | |
Federal Funds Purchased [Member] | Minimum [Member] | ||
Short-term Debt [Line Items] | ||
Debt instrument, term | 1 day | |
Federal Funds Purchased [Member] | Maximum [Member] | ||
Short-term Debt [Line Items] | ||
Debt instrument, term | 4 days |
Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,311 | $ 1,346 | $ 2,642 | $ 2,532 |
Debit card income [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 621 | 594 | 1,209 | 1,124 |
Trust service fees [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 434 | 500 | 936 | 911 |
Brokerage advisory fees [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 174 | 166 | 330 | 326 |
Service charges and fees related to deposit accounts [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 82 | $ 86 | $ 167 | $ 171 |
Other Noninterest Expenses (Expenses included in other noninterest expenses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Summary of expenses included in other noninterest expenses | ||||
ATM and Debit Card Expense | $ 234 | $ 404 | $ 466 | $ 620 |
Professional Fees, Audit And Related | 258 | 237 | 460 | 435 |
Directors fees | 222 | 213 | 431 | 422 |
Professional Fees, Consulting | 359 | 208 | 609 | 413 |
Expense Related to Distribution or Servicing and Underwriting Fees | 165 | 192 | 314 | 309 |
FDIC insurance premiums | 156 | 155 | 320 | 308 |
Donations and community relations | 210 | 168 | 361 | 298 |
Postage and freight | 91 | 110 | 222 | 219 |
Marketing Expense | 149 | 100 | 259 | 189 |
Education and travel | 101 | 93 | 216 | 189 |
Printing and supplies expense | 145 | 103 | 205 | 210 |
All other | 637 | 540 | 1,163 | 1,124 |
Total other | $ 2,727 | $ 2,523 | $ 5,026 | $ 4,736 |
Federal Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Federal statutory tax rate | 21.00% | 34.00% | 21.00% | 34.00% |
Income taxes at 34% statutory rate | $ 755 | $ 1,612 | $ 1,538 | $ 2,859 |
Interest income on tax exempt municipal securities | (264) | (454) | (538) | (909) |
Earnings on corporate owned life insurance policies | (38) | (62) | (74) | (123) |
Effect of tax credits | (201) | (191) | (401) | (380) |
Other | (8) | (18) | (19) | (36) |
Total effect of nontaxable income | (511) | (725) | (1,032) | (1,448) |
Effect of nondeductible expenses | 19 | 11 | 22 | 19 |
Federal income tax expense | $ 263 | $ 898 | $ 528 | $ 1,430 |
Computation of Earnings Per Common Share (Schedule of Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|||
Earnings Per Share [Abstract] | ||||||
Average number of common shares outstanding for basic calculation | 7,912,374 | 7,841,822 | 7,887,961 | 7,834,523 | ||
Average potential effect of common shares in the Directors Plan | [1] | 173,222 | 190,528 | 186,174 | 191,028 | |
Average number of common shares outstanding used to calculate diluted earnings per common share | 8,085,596 | 8,032,350 | 8,074,135 | 8,025,551 | ||
Net income | $ 3,333 | $ 3,844 | $ 6,795 | $ 6,980 | ||
Basic (in dollars per share) | $ 0.42 | $ 0.49 | $ 0.86 | $ 0.89 | ||
Diluted (in dollars per share) | $ 0.41 | $ 0.48 | $ 0.84 | $ 0.87 | ||
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Fair Value (Quantitative information related to foreclosed assets) (Details) - Discounted appraisal value [Member] - Level 3 [Member] - Real Estate [Member] |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Minimum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
ImpairedFinancingReceivableFairValueDisclosureAppraisedValueDiscount | 20.00% | 20.00% |
Maximum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
ImpairedFinancingReceivableFairValueDisclosureAppraisedValueDiscount | 30.00% | 30.00% |
Fair Value (Recorded amount of assets and liabilities measured at fair value) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
AFS Securities | ||
AFS securities | $ 524,108 | $ 548,730 |
Available-for-sale Securities, Equity Securities | 0 | 3,577 |
Fair value, total | 553,176 | 568,554 |
Level 1 [Member] | ||
AFS Securities | ||
Fair value, total | $ 0 | $ 3,577 |
Percent of assets and liabilities measured at fair value | 0.00% | 0.63% |
Level 2 [Member] | ||
AFS Securities | ||
Fair value, total | $ 524,552 | $ 549,021 |
Percent of assets and liabilities measured at fair value | 94.83% | 96.56% |
Level 3 [Member] | ||
AFS Securities | ||
Fair value, total | $ 28,624 | $ 15,956 |
Percent of assets and liabilities measured at fair value | 5.17% | 2.81% |
Recurring items [Member] | ||
AFS Securities | ||
AFS securities | $ 524,108 | $ 548,730 |
Available-for-sale Securities, Equity Securities | 0 | 3,577 |
Derivative instruments | (444) | 291 |
Recurring items [Member] | Government sponsored enterprises [Member] | ||
AFS Securities | ||
AFS securities | 190 | 216 |
Recurring items [Member] | States and political subdivisions [Member] | ||
AFS Securities | ||
AFS securities | 202,273 | 208,474 |
Recurring items [Member] | Auction rate money market preferred [Member] | ||
AFS Securities | ||
AFS securities | 3,135 | 3,049 |
Recurring items [Member] | Mortgage-backed securities [Member] | ||
AFS Securities | ||
AFS securities | 197,637 | 208,797 |
Recurring items [Member] | Collateralized mortgage obligations [Member] | ||
AFS Securities | ||
AFS securities | 120,873 | 128,194 |
Recurring items [Member] | Level 1 [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Available-for-sale Securities, Equity Securities | 0 | 3,577 |
Derivative instruments | 0 | 0 |
Recurring items [Member] | Level 1 [Member] | Government sponsored enterprises [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 1 [Member] | States and political subdivisions [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 1 [Member] | Auction rate money market preferred [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 1 [Member] | Mortgage-backed securities [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 1 [Member] | Collateralized mortgage obligations [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 2 [Member] | ||
AFS Securities | ||
AFS securities | 524,108 | 548,730 |
Available-for-sale Securities, Equity Securities | 0 | 0 |
Derivative instruments | 444 | 291 |
Recurring items [Member] | Level 2 [Member] | Government sponsored enterprises [Member] | ||
AFS Securities | ||
AFS securities | 190 | 216 |
Recurring items [Member] | Level 2 [Member] | States and political subdivisions [Member] | ||
AFS Securities | ||
AFS securities | 202,273 | 208,474 |
Recurring items [Member] | Level 2 [Member] | Auction rate money market preferred [Member] | ||
AFS Securities | ||
AFS securities | 3,135 | 3,049 |
Recurring items [Member] | Level 2 [Member] | Mortgage-backed securities [Member] | ||
AFS Securities | ||
AFS securities | 197,637 | 208,797 |
Recurring items [Member] | Level 2 [Member] | Collateralized mortgage obligations [Member] | ||
AFS Securities | ||
AFS securities | 120,873 | 128,194 |
Recurring items [Member] | Level 3 [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Available-for-sale Securities, Equity Securities | 0 | 0 |
Derivative instruments | 0 | 0 |
Recurring items [Member] | Level 3 [Member] | Government sponsored enterprises [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 3 [Member] | States and political subdivisions [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 3 [Member] | Auction rate money market preferred [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 3 [Member] | Mortgage-backed securities [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Recurring items [Member] | Level 3 [Member] | Collateralized mortgage obligations [Member] | ||
AFS Securities | ||
AFS securities | 0 | 0 |
Nonrecurring items [Member] | ||
AFS Securities | ||
Impaired loans (net of the allowance for loan losses) | 28,624 | 15,956 |
Nonrecurring items [Member] | Level 1 [Member] | ||
AFS Securities | ||
Impaired loans (net of the allowance for loan losses) | 0 | 0 |
Nonrecurring items [Member] | Level 2 [Member] | ||
AFS Securities | ||
Impaired loans (net of the allowance for loan losses) | 0 | 0 |
Nonrecurring items [Member] | Level 3 [Member] | ||
AFS Securities | ||
Impaired loans (net of the allowance for loan losses) | $ 28,624 | $ 15,956 |
Fair Value (Narrative) (Details Textual) - Level 3 [Member] |
6 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impairments recorded on equity securities without readily determinable fair values | $ 0 |
Impairments recorded on goodwill and other acquisition intangibles | $ 0 |
Parent Company Only Financial Information (Interim Condensed Balance Sheets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
ASSETS | ||||
AFS securities | $ 524,108 | |||
Premises and equipment | 28,267 | $ 28,450 | ||
Other assets | 12,090 | 10,056 | ||
TOTAL ASSETS | 1,836,955 | 1,813,130 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Shareholders' equity | 191,949 | 194,905 | $ 195,070 | $ 187,899 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 1,836,955 | 1,813,130 | ||
Parent Company [Member] | ||||
ASSETS | ||||
Cash on deposit at subsidiary Bank | 3,008 | 185 | ||
Investments in subsidiaries | 140,413 | 145,962 | ||
Premises and equipment | 1,902 | 1,950 | ||
Other assets | 51,234 | 52,253 | ||
TOTAL ASSETS | 196,557 | 200,350 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Other liabilities | 4,608 | 5,445 | ||
Shareholders' equity | 191,949 | 194,905 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 196,557 | $ 200,350 |
Parent Company Only Financial Information (Interim Condensed Statements of Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Expenses | ||||
Compensation and benefits | $ 5,679 | $ 4,817 | $ 11,173 | $ 10,374 |
Occupancy and equipment | 807 | 815 | 1,631 | 1,652 |
ProfesDonations and community relations | 258 | 237 | 460 | 435 |
Other | 2,727 | 2,523 | 5,026 | 4,736 |
Federal income tax benefit | (263) | (898) | (528) | (1,430) |
Net income | 3,333 | 3,844 | 6,795 | 6,980 |
Parent Company [Member] | ||||
Income | ||||
Dividends from subsidiaries | 3,900 | 2,600 | 6,000 | 4,300 |
Interest income | 0 | 0 | 0 | 2 |
Management fee and other | 855 | 1,691 | 1,530 | 3,241 |
Total income | 4,755 | 4,291 | 7,530 | 7,543 |
Expenses | ||||
Compensation and benefits | 1,175 | 1,118 | 2,159 | 2,490 |
Occupancy and equipment | 126 | 432 | 249 | 876 |
ProfesDonations and community relations | 104 | 140 | 173 | 264 |
Other | 380 | 634 | 774 | 1,175 |
Total expenses | 1,785 | 2,324 | 3,355 | 4,805 |
Income before income tax benefit and equity in undistributed earnings of subsidiaries | 2,970 | 1,967 | 4,175 | 2,738 |
Federal income tax benefit | 192 | 212 | 380 | 528 |
Income before equity in undistributed earnings of subsidiaries | 3,162 | 2,179 | 4,555 | 3,266 |
Undistributed earnings of subsidiaries | 171 | 1,665 | 2,240 | 3,714 |
Net income | $ 3,333 | $ 3,844 | $ 6,795 | $ 6,980 |
Parent Company Only Financial Information (Interim Condensed Statements of Cash Flows) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Operating activities | ||||
Net income | $ 3,333 | $ 3,844 | $ 6,795 | $ 6,980 |
Adjustments to reconcile net income to cash provided by operations | ||||
Share-based payment awards | 304 | 302 | ||
Depreciation | 1,448 | 1,440 | ||
Changes in operating assets and liabilities which used cash | ||||
Other assets | (353) | (1,734) | ||
Accrued interest and other liabilities | (341) | (382) | ||
Net cash provided by (used in) operating activities | 10,945 | 8,687 | ||
Investing activities | ||||
Sales (purchases) of premises and equipment | (1,265) | (805) | ||
Net cash provided by (used in) investing activities | (44,435) | (45,130) | ||
Financing activities | ||||
Cash dividends paid on common stock | (4,096) | (3,920) | ||
Proceeds from the issuance of common stock | 3,272 | 3,764 | ||
Common stock repurchased | (1,238) | (2,622) | ||
Common stock purchased for deferred compensation obligations | (205) | (197) | ||
Net cash provided by (used in) financing activities | 24,855 | 35,383 | ||
Increase (decrease) in cash and cash equivalents | (8,635) | (1,060) | ||
Cash and cash equivalents at beginning of period | 30,848 | 22,894 | ||
Cash and cash equivalents at end of period | 22,213 | 21,834 | 22,213 | 21,834 |
Parent Company [Member] | ||||
Operating activities | ||||
Net income | 3,333 | 3,844 | 6,795 | 6,980 |
Adjustments to reconcile net income to cash provided by operations | ||||
Undistributed earnings of subsidiaries | (2,240) | (3,714) | ||
Undistributed earnings of equity securities without readily determinable fair values | (64) | 93 | ||
Share-based payment awards | 304 | 302 | ||
Depreciation | 64 | 77 | ||
Changes in operating assets and liabilities which used cash | ||||
Other assets | 1,084 | 80 | ||
Accrued interest and other liabilities | (837) | (1,219) | ||
Net cash provided by (used in) operating activities | 5,106 | 2,599 | ||
Investing activities | ||||
Maturities, calls, principal payments, and sales of AFS securities | 0 | 249 | ||
Sales (purchases) of premises and equipment | (16) | (26) | ||
Net cash provided by (used in) investing activities | (16) | 223 | ||
Financing activities | ||||
Cash dividends paid on common stock | (4,096) | (3,920) | ||
Proceeds from the issuance of common stock | 3,272 | 3,764 | ||
Common stock repurchased | (1,238) | (2,622) | ||
Common stock purchased for deferred compensation obligations | (205) | (197) | ||
Net cash provided by (used in) financing activities | (2,267) | (2,975) | ||
Increase (decrease) in cash and cash equivalents | 2,823 | (153) | ||
Cash and cash equivalents at beginning of period | 185 | 1,297 | ||
Cash and cash equivalents at end of period | $ 3,008 | $ 1,144 | $ 3,008 | $ 1,144 |
Operating Segments (Narrative) (Details) |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Segment Reporting [Abstract] | ||
Percentage of reportable segments total assets and operating results, or more | 90.00% | 90.00% |
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