Attached files
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EXCEL - IDEA: XBRL DOCUMENT - AMERICAN RIVER BANKSHARES | Financial_Report.xls |
EX-31.1 - EXHIBIT 31.1 - AMERICAN RIVER BANKSHARES | ex31_1.htm |
EX-31.2 - EXHIBIT 31.2 - AMERICAN RIVER BANKSHARES | ex31_2.htm |
EX-32.1 - EXHIBIT 32.1 - AMERICAN RIVER BANKSHARES | ex32_1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended | June 30, 2014 |
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from | to |
Commission File Number: 0-31525
AMERICAN RIVER BANKSHARES
(Exact name of registrant as specified in its charter)
California | 68-0352144 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3100 Zinfandel Drive, Suite 450, Rancho Cordova, California | 95670 | |
(Address of principal executive offices) | (Zip Code) |
(916) 851-0123
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated filer o | ||
Non-accelerated filer x (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
No par value Common Stock – 8,089,615 shares outstanding at August 4, 2014.
AMERICAN RIVER BANKSHARES
INDEX
TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2014
Part I. | Page | ||
Item 1. | Financial Statements | 3 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 48 | |
Item 4. | Controls and Procedures | 49 | |
Part II. | |||
Item 1. | Legal Proceedings | 49 | |
Item 1A. | Risk Factors | 49 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 49 | |
Item 3. | Defaults Upon Senior Securities | 50 | |
Item 4. | Mine Safety Disclosures | 50 | |
Item 5. | Other Information | 50 | |
Item 6. | Exhibits | 50 | |
Signatures | 55 | ||
Exhibit Index | 56 | ||
31.1 | Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | 57 | |
31.2 | Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | 58 | |
32.1 | Certification of American River Bankshares by its Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 59 | |
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation | ||
101.DEF | XBRL Taxonomy Extension Definition | ||
101.LAB | XBRL Taxonomy Extension Label | ||
101.PRE | XBRL Taxonomy Extension Presentation |
2 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(dollars in thousands) | June 30, 2014 | December 31, 2013 | ||||||
ASSETS | ||||||||
Cash and due from banks | $ | 19,107 | $ | 17,948 | ||||
Interest-bearing deposits in banks | 1,000 | 1,000 | ||||||
Investment securities: | ||||||||
Available-for-sale, at fair value | 279,986 | 272,791 | ||||||
Held-to-maturity, at amortized cost | 1,015 | 1,185 | ||||||
Loans and leases, less allowance for loan and lease losses of $5,462 at June 30, 2014 and $5,346 at December 31, 2013 | 246,521 | 251,747 | ||||||
Premises and equipment, net | 1,595 | 1,500 | ||||||
Federal Home Loan Bank stock | 3,686 | 3,248 | ||||||
Goodwill and other intangible assets | 16,321 | 16,321 | ||||||
Other real estate owned | 6,864 | 6,621 | ||||||
Bank owned life insurance | 12,815 | 12,686 | ||||||
Accrued interest receivable and other assets | 5,824 | 7,706 | ||||||
$ | 594,734 | $ | 592,753 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Noninterest bearing | $ | 149,169 | $ | 145,516 | ||||
Interest-bearing | 341,689 | 338,174 | ||||||
Total deposits | 490,858 | 483,690 | ||||||
Short-term borrowings | 1,500 | 8,000 | ||||||
Long-term borrowings | 9,500 | 8,000 | ||||||
Accrued interest payable and other liabilities | 5,312 | 6,043 | ||||||
Total liabilities | 507,170 | 505,733 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value; 20,000,000 shares authorized; none outstanding | ||||||||
Common stock, no par value; 20,000,000 shares authorized; issued and outstanding – 8,089,615 shares at June 30, 2014 and 8,489,247 shares at December 31, 2013 | 57,031 | 61,108 | ||||||
Retained earnings | 26,830 | 24,789 | ||||||
Accumulated other comprehensive income, net of taxes | 3,703 | 1,123 | ||||||
Total shareholders’ equity | 87,564 | 87,020 | ||||||
$ | 594,734 | $ | 592,753 |
See Notes to Unaudited Consolidated Financial Statements
3 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(dollars in thousands, except per share data) | ||||||||||||||||
For the periods ended June 30, | Three months | Six months | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans | $ | 3,520 | $ | 3,516 | $ | 6,975 | $ | 7,158 | ||||||||
Interest on deposits in banks | 1 | — | 2 | 1 | ||||||||||||
Interest and dividends on investment securities: | ||||||||||||||||
Taxable | 1,340 | 805 | 2,678 | 1,593 | ||||||||||||
Exempt from Federal income taxes | 200 | 221 | 402 | 441 | ||||||||||||
Dividends | 6 | 9 | 6 | 9 | ||||||||||||
Total interest income | 5,067 | 4,551 | 10,063 | 9,202 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 254 | 301 | 516 | 632 | ||||||||||||
Interest on borrowings | 37 | 74 | 79 | 150 | ||||||||||||
Total interest expense | 291 | 375 | 595 | 782 | ||||||||||||
Net interest income | 4,776 | 4,176 | 9,468 | 8,420 | ||||||||||||
Provision for loan and lease losses | — | 100 | — | 200 | ||||||||||||
Net interest income after provision for loan and lease losses | 4,776 | 4,076 | 9,468 | 8,220 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on deposit accounts | 149 | 147 | 305 | 298 | ||||||||||||
Gain on sale of securities | 17 | 3 | 17 | 3 | ||||||||||||
Rental income from other real estate owned | 105 | 71 | 212 | 163 | ||||||||||||
Other noninterest income | 237 | 227 | 476 | 609 | ||||||||||||
Total noninterest income | 508 | 448 | 1,010 | 1,073 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 2,117 | 2,175 | 4,237 | 4,393 | ||||||||||||
Occupancy | 296 | 301 | 603 | 602 | ||||||||||||
Furniture and equipment | 188 | 191 | 366 | 385 | ||||||||||||
Federal Deposit Insurance Corporation assessments | 91 | (16 | ) | 194 | 110 | |||||||||||
Expenses related to other real estate owned | 123 | 195 | 122 | 500 | ||||||||||||
Other expense | 884 | 766 | 1,830 | 1,624 | ||||||||||||
Total noninterest expense | 3,699 | 3,612 | 7,352 | 7,614 | ||||||||||||
Income before provision for income taxes | 1,585 | 912 | 3,126 | 1,679 | ||||||||||||
Provision for income taxes | 550 | 260 | 1,085 | 405 | ||||||||||||
Net income | $ | 1,035 | $ | 652 | $ | 2,041 | $ | 1,274 | ||||||||
Basic earnings per share | $ | 0.13 | $ | 0.07 | $ | 0.25 | $ | 0.14 | ||||||||
Diluted earnings per share | $ | 0.13 | $ | 0.07 | $ | 0.25 | $ | 0.14 | ||||||||
Cash dividends per share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
See notes to Unaudited Consolidated Financial Statements
4 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(dollars in thousands, except per share data) | ||||||||||||||||
For the periods ended June 30, | Three months | Six months | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income | $ | 1,035 | $ | 652 | $ | 2,041 | $ | 1,274 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized holding gains (losses) on investment securities arising during the period | 2,479 | (4,517 | ) | 4,316 | (4,949 | ) | ||||||||||
Deferred tax (expense) benefit | (992 | ) | 1,807 | (1,726 | ) | 1,980 | ||||||||||
Unrealized holding gains (losses) on investment securities arising during the period, net of tax | 1,487 | (2,710 | ) | 2,590 | (2,969 | ) | ||||||||||
Reclassification adjustment for realized gains included in net income | (17 | ) | (3 | ) | (17 | ) | (3 | ) | ||||||||
Tax effect | 7 | 1 | 7 | 1 | ||||||||||||
Realized gains, net of tax | (10 | ) | (2 | ) | (10 | ) | (2 | ) | ||||||||
Total other comprehensive income (loss) | 1,477 | (2,712 | ) | 2,580 | (2,971 | ) | ||||||||||
Comprehensive income (loss) | $ | 2,512 | $ | (2,060 | ) | $ | 4,621 | $ | (1,697 | ) |
See Notes to Unaudited Consolidated Financial Statements
5 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
Accumulated | ||||||||||||||||||||
(dollars in thousands) | Common Stock | Other | Total | |||||||||||||||||
Retained | Comprehensive | Shareholders’ | ||||||||||||||||||
Shares | Amount | Earnings | Income | Equity | ||||||||||||||||
Balance, January 1, 2013 | 9,327,203 | 67,977 | 21,732 | 4,285 | 93,994 | |||||||||||||||
Net income | 3,057 | 3,057 | ||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||
Net change in unrealized gains on available-for-sale investment securities | (3,162 | ) | (3,162 | ) | ||||||||||||||||
Net restricted stock awarded and related compensation expense | 11,448 | 111 | 111 | |||||||||||||||||
Stock option compensation expense | 20 | 20 | ||||||||||||||||||
Retirement of common stock | (849,404 | ) | (7,000 | ) | (7,000 | ) | ||||||||||||||
Balance, December 31, 2013 | 8,489,247 | 61,108 | 24,789 | 1,123 | 87,020 | |||||||||||||||
Net income | 2,041 | 2,041 | ||||||||||||||||||
Other comprehensive loss, net of tax: | ||||||||||||||||||||
Net change in unrealized gains on available-for-sale investment securities | 2,580 | 2,580 | ||||||||||||||||||
Net restricted stock award activity and related compensation expense | 24,830 | 63 | 63 | |||||||||||||||||
Stock option compensation expense | 8 | 8 | ||||||||||||||||||
Retirement of common stock | (424,462 | ) | (4,148 | ) | (4,148 | ) | ||||||||||||||
Balance, June 30, 2014 | 8,089,615 | $ | 57,031 | $ | 26,830 | $ | 3,703 | $ | 87,564 |
See Notes to Unaudited Consolidated Financial Statements
6 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED
STATEMENT OF CASH FLOWS
(Unaudited)
(dollars in thousands) | ||||||||
For the six months ended June 30, | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 2,041 | $ | 1,274 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for loan and lease losses | — | 200 | ||||||
(Decrease) increase in deferred loan origination fees, net | (65 | ) | 16 | |||||
Depreciation and amortization | 226 | 266 | ||||||
Gain on sale and call of investment securities | (17 | ) | (3 | ) | ||||
Amortization of investment security premiums and discounts, net | 2,451 | 2,915 | ||||||
Gain on life insurance death benefit | — | (118 | ) | |||||
Increase in cash surrender values of life insurance policies | (129 | ) | (5 | ) | ||||
Stock based compensation expense | 71 | 63 | ||||||
(Gain) loss on sale and write-down of other real estate owned | (106 | ) | 208 | |||||
Decrease in accrued interest receivable and other assets | 162 | 2,518 | ||||||
Decrease in accrued interest payable and other liabilities | (731 | ) | (705 | ) | ||||
Net cash provided by operating activities | 3,903 | 6,629 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from the sale of available-for-sale investment securities | 2,632 | 5,822 | ||||||
Proceeds from matured available-for-sale investment securities | 105 | 185 | ||||||
Proceeds from called available-for-sale investment securities | 270 | — | ||||||
Purchases of available-for-sale investment securities | (27,600 | ) | (68,408 | ) | ||||
Proceeds from principal repayments for available-for-sale investment securities | 19,262 | 31,731 | ||||||
Proceeds from principal repayments for held-to-maturity investment securities | 171 | 621 | ||||||
Net increase in interest-bearing deposits in banks | — | (250 | ) | |||||
Net decrease in loans | 5,103 | 3,692 | ||||||
Proceeds from sale of other real estate | 106 | 4,529 | ||||||
Capitalized additions to other real estate | (54 | ) | (187 | ) | ||||
Death benefit from life insurance policy | — | 419 | ||||||
Net (increase) decrease in FHLB stock | (438 | ) | 6 | |||||
Purchases of equipment | (321 | ) | (51 | ) | ||||
Net cash used in investing activities | (764 | ) | (21,891 | ) |
See Notes to Unaudited Consolidated Financial Statements
7 |
AMERICAN RIVER BANKSHARES
CONSOLIDATED
STATEMENT OF CASH FLOWS (Continued)
(Unaudited)
(dollars in thousands) | ||||||||
For the six months ended June 30, | ||||||||
2014 | 2013 | |||||||
Cash flows from financing activities: | ||||||||
Net increase (decrease) in demand, interest-bearing and savings deposits | $ | 10,604 | $ | (10,067 | ) | |||
Net decrease in time deposits | (3,436 | ) | (532 | ) | ||||
Net(decrease) increase in short-term borrowings | (6,500 | ) | 6,000 | |||||
Net increase (decrease) in long-term borrowings | 1,500 | (8,000 | ) | |||||
Cash paid to repurchase common stock | (4,148 | ) | (3,906 | ) | ||||
Net cash used in financing activities | $ | (1,980 | ) | $ | (16,505 | ) | ||
Increase (decrease) in cash and cash equivalents | 1,159 | (31,767 | ) | |||||
Cash and cash equivalents at beginning of year | 17,948 | 55,461 | ||||||
Cash and cash equivalents at end of period | $ | 19,107 | $ | 23,694 |
See Notes to Unaudited Consolidated Financial Statements
8 |
AMERICAN RIVER BANKSHARES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2014
1. CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of American River Bankshares (the “Company”) at June 30, 2014 and December 31, 2013, the results of its operations and statement of comprehensive income for the three-month and six-month periods ended June 30, 2014 and 2013, its cash flows for the six-month periods ended June 30, 2014 and 2013 and its statement of changes in shareholders’ equity for the year ended December 31, 2013 and the six months ended June 30, 2014 in conformity with accounting principles generally accepted in the United States of America.
Certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The Company believes that the disclosures are adequate to make the information not misleading. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2013 annual report on Form 10-K. The results of operations for the three-month and six-month periods ended June 30, 2014 may not necessarily be indicative of the operating results for the full year.
In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan and lease losses, the provision for taxes, the valuation of goodwill and the estimated fair value of investment securities, impaired loans and other real estate owned.
Management has determined that since all of the banking products and services offered by the Company are available in each branch office of American River Bank, all branch offices are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate all of the branch offices and report them as a single operating segment. No client accounts for more than ten percent (10%) of revenues for the Company or American River Bank.
2. STOCK-BASED COMPENSATION
Equity Plans
On March 17, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan was approved by the Company’s shareholders on May 20, 2010. In 2000, the Board of Directors adopted and the Company’s shareholders approved a stock option plan (the “2000 Plan”), under which 221,666 options remain outstanding at June 30, 2014. At June 30, 2014, there were 50,034 stock options and 36,110 restricted shares outstanding and the total number of authorized shares that remain available for issuance under the 2010 Plan was 1,419,602. The 2010 Plan provides for the following types of stock-based awards: incentive stock options; nonqualified stock options; stock appreciation rights; restricted stock; restricted performance stock; unrestricted Company stock; and performance units. Awards awarded under the 2000 Plan were either incentive stock options or nonqualified stock options. Under the 2010 Plan, the awards may be granted to employees and directors under incentive and nonstatutory agreements and other awards agreements. The 2010 Plan and the 2000 Plan (collectively the “Plans”) require that the option price may not be less than the fair market value of the stock at the date the option is awarded. The option awards under the Plans expire on dates determined by the Board of Directors, but not later than ten years from the date of award. The vesting period is generally five years; however, the vesting period can be modified at the discretion of the Company’s Board of Directors. Outstanding option awards under the Plans are exercisable until their expiration, however, no new options will be awarded under the 2000 Plan. New shares are issued upon exercise of an option.
9 |
The award date fair value of awards is determined by the market price of the Company’s common stock on the date of award and is recognized ratably as compensation expense or director expense over the vesting periods. The shares of common stock awarded pursuant to such agreements vest in increments over one to five years from the date of award. The shares awarded to employees and directors under the restricted stock agreements vest on the applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated.
Equity Compensation
For the three-month periods ended June 30, 2014 and 2013, the compensation cost recognized for equity compensation was $38,000 and $36,000, respectively. The recognized tax benefit for equity compensation expense was $13,000 and $14,000, respectively, for the three-month periods ended June 30, 2014 and 2013. For the six-month periods ended June 30, 2014 and 2013, the compensation cost recognized for equity compensation was $71,000 and $69,000, respectively. The recognized tax benefit for equity compensation expense was $25,000 and $22,000, respectively, for the six-month periods ended June 30, 2014 and 2013.
At June 30, 2014, the total compensation cost related to nonvested stock option awards not yet recorded was $102,000. This amount will be recognized over the next 5.0 years and the weighted average period of recognizing these costs is expected to be 2.7 years. At June 30, 2014, the total compensation cost related to restricted stock awards not yet recorded was $253,000. This amount will be recognized over the next 5.0 years and the weighted average period of recognizing these costs is expected to be 1.5 years.
Equity Plans Activity
Stock Options
There were 32,705 stock options awarded during the three-month and six-month periods ended June 30, 2014 at an average exercise price of $8.85. There were no stock options awarded during the three-month and six-month periods ended June 30, 2013. The weighted average award date fair value of options awarded for the three-month and six-month periods ended June 30, 2014 was $2.44. A summary of option activity under the Plans as of June 30, 2014 and changes during the period then ended is presented below:
Options | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value ($000) | ||||||||||||
Outstanding at January 1, 2014 | 277,923 | $ | 17.21 | 3.1 years | $ | 82 | ||||||||||
Awarded | 32,705 | 8.85 | — | — | ||||||||||||
Exercised | — | — | — | — | ||||||||||||
Cancelled | 38,928 | 16.79 | — | — | ||||||||||||
Outstanding at June 30, 2014 | 271,700 | $ | 16.27 | 3.9 years | $ | 39 | ||||||||||
Vested at June 30, 2014 | 228,582 | $ | 17.75 | 2.9 years | $ | 22 | ||||||||||
Non-vested at June 30, 2014 | 43,118 | $ | 8.42 | 9.4 years | $ | 17 |
Restricted Stock
There were 24,830 shares of restricted stock awarded during the three-month and six-month periods ended June 30, 2014. There were 11,448 shares of restricted stock awarded during the three-month and six-month periods ended June 30, 2013. Of the restricted shares awarded in 2014, 13,560 restricted common shares will vest one year from the date of the award and 11,270 vest over five years at 20% per year from the date of the award. The 11,448 restricted shares awarded in 2013 vested one year from the date of the award. Award date fair value is determined by the market price of the Company’s common stock on the date of award ($8.85 on May 22, 2014 and $7.86 on May 16, 2013).
10 |
There were 12,710 restricted awards that were fully vested during the three-month and six-month periods ended June 30, 2014 and there were 11,158 restricted awards that were fully vested during the three-month and six-month periods ended June 30, 2013. There were zero awards that had been forfeited during the three-month and six-month periods ended June 30, 2014 and June 30, 2013. The intrinsic value of nonvested restricted stock at June 30, 2014 was $316,000.
Restricted Stock | Shares | Weighted Average Award Date Fair Value | ||||||
Nonvested at January 1, 2014 | 23,990 | $ | 7.22 | |||||
Awarded | 24,830 | 8.85 | ||||||
Less: Vested | 12,710 | 7.78 | ||||||
Less: Cancelled | — | — | ||||||
Nonvested at June 30, 2014 | 36,110 | $ | 8.14 |
Other Equity Awards
There were no stock appreciation rights; restricted performance stock; unrestricted Company stock; or performance units awarded during the three-month or six-month month periods ended June 30, 2014 or 2013.
The intrinsic value used for stock options and restricted stock was derived from the market price of the Company’s common stock of $8.74 as of June 30, 2014.
3. COMMITMENTS AND CONTINGENCIES
In the normal course of business there are outstanding various commitments to extend credit which are not reflected in the financial statements, including loan commitments of approximately $32,616,000 and standby letters of credit of approximately $6,285,000 at June 30, 2014 and loan commitments of approximately $31,681,000 and standby letters of credit of approximately $6,363,000 at December 31, 2013. Such commitments relate primarily to real estate construction loans, revolving lines of credit and other commercial loans. However, all such commitments will not necessarily culminate in actual extensions of credit by the Company during 2014 as some of these are expected to expire without being fully drawn upon.
Standby letters of credit are commitments issued to guarantee the performance or financial obligation of a client to a third party. These guarantees are issued primarily relating to purchases of inventory, insurance programs, performance obligations to government agencies, or as security for real estate rents by commercial clients and are typically short-term in nature. Credit risk is similar to that involved in extending loan commitments to clients and accordingly, evaluation and collateral requirements similar to those for loan commitments are used. The majority of all such commitments are collateralized. The fair value of the liability related to these standby letters of credit, which represents the fees received for issuing the guarantees, was not significant at June 30, 2014 or December 31, 2013.
4. EARNINGS PER SHARE COMPUTATION
Basic earnings per share is computed by dividing net income by the weighted average common shares outstanding for the period (8,082,638 and 8,201,383 shares for the three-month and six-month periods ended June 30, 2014, and 8,893,367 and 9,050,669 for the three-month and six-month periods ended June 30, 2013). Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options or restricted stock, result in the issuance of common stock. Diluted earnings per share is computed by dividing net income by the weighted average common shares outstanding for the period plus the dilutive effect of stock based awards. There were 9,276 and 10,515, respectively, dilutive shares for the three-month and six-month periods ended June 30, 2014 and 4,758 and 3,983, respectively, dilutive shares for the three-month and six-month periods ended June 30, 2013. For the three-month periods ended June 30, 2014 and 2013, there were 217,247 and 278,850 stock options, respectively, that were excluded from the calculation as they were considered antidilutive. For the six-month periods ended June 30, 2014 and 2013, there were 211,024 and 278,850 stock options, respectively, that were excluded from the calculation as they were considered antidilutive. Earnings per share is retroactively adjusted for stock dividends and stock splits, if applicable, for all periods presented.
11 |
5. INVESTMENT SECURITIES
The amortized cost and estimated fair values of investment securities at June 30, 2014 and December 31, 2013 consisted of the following (dollars in thousands):
Available-for-Sale
June 30, 2014 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
Debt securities: | ||||||||||||||||
Mortgage-backed securities | $ | 246,459 | $ | 5,218 | $ | (645 | ) | $ | 251,032 | |||||||
Obligations of states and political subdivisions | 25,797 | 1,426 | (36 | ) | 27,187 | |||||||||||
Corporate bonds | 1,505 | 125 | — | 1,630 | ||||||||||||
Equity securities: | ||||||||||||||||
Corporate stock | 54 | 83 | — | 137 | ||||||||||||
$ | 273,815 | $ | 6,852 | $ | (681 | ) | $ | 279,986 |
December 31, 2013 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
Debt securities: | ||||||||||||||||
Mortgage-backed securities | $ | 243,058 | $ | 3,429 | $ | (2,327 | ) | $ | 244,160 | |||||||
Obligations of states and political subdivisions | 26,302 | 775 | (174 | ) | 26,903 | |||||||||||
Corporate bonds | 1,505 | 104 | — | 1,609 | ||||||||||||
Equity securities: | ||||||||||||||||
Corporate stock | 54 | 65 | — | 119 | ||||||||||||
$ | 270,919 | $ | 4,373 | $ | (2,501 | ) | $ | 272,791 |
Net unrealized gains on available-for-sale investment securities totaling $6,171,000 were recorded, net of $2,468,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at June 30, 2014. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended June 30, 2014 totaled $2,615,000 and $17,000, respectively, and for the six-month period ended June 30, 2014 totaled $2,885,000 and $17,000, respectively. There were no transfers of available-for-sale investment securities for the three-month and six-month periods ended June 30, 2014.
Net unrealized gains on available-for-sale investment securities totaling $1,872,000 were recorded, net of $749,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at December 31, 2013. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended June 30, 2013 totaled zero and zero, respectively, and for the six-month period ended June 30, 2013 totaled $5,822,000 and $3,000, respectively. There were no transfers of available-for-sale investment securities for the three-month and six-month periods ended June 30, 2013.
12 |
Held-to-Maturity | ||||||||||||||||
June 30, 2014 | ||||||||||||||||
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: | ||||||||||||||||
Mortgage-backed securities | $ | 1,015 | $ | 72 | $ | — | $ | 1,087 |
December 31, 2013 | Gross | Gross | Estimated | |||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Debt securities: | ||||||||||||||||
Mortgage-backed securities | $ | 1,185 | $ | 78 | $ | — | $ | 1,263 |
There were no sales or transfers of held-to-maturity investment securities for the periods ended June 30, 2014 and June 30, 2013. Investment securities with unrealized losses at June 30, 2014 and December 31, 2013 are summarized and classified according to the duration of the loss period as follows (dollars in thousands):
2014 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Available-for-Sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | 31,902 | $ | (228 | ) | $ | 31,053 | $ | (417 | ) | $ | 62,955 | $ | (645 | ) | |||||||||
Obligations of states and political subdivisions | — | — | 1,409 | (36 | ) | 1,409 | (36 | ) | ||||||||||||||||
$ | 31,902 | $ | (228 | ) | $ | 32,462 | $ | (453 | ) | $ | 64,364 | $ | (681 | ) |
2013 | ||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
Available-for-Sale | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||
Mortgage-backed Securities | $ | 10,047 | $ | (147 | ) | $ | 98,723 | $ | (2,180 | ) | $ | 108,770 | $ | (2,327 | ) | |||||||||
Obligations of states and political subdivisions | 4,223 | (174 | ) | — | — | 4,223 | (174 | ) | ||||||||||||||||
$ | 14,270 | $ | (321 | ) | $ | 98,723 | $ | (2,180 | ) | $ | 112,993 | $ | (2,501 | ) |
There were no held-to-maturity investment securities with unrealized losses as of June 30, 2014 or December 31, 2013.
At June 30, 2014, the Company held 221 securities of which 16 were in a loss position for less than twelve months and 15 were in a loss position for twelve months or more. Of the 31 securities in a loss position, 29 are mortgage-backed securities and two are obligations of states and political subdivisions. At December 31, 2013, the Company held 216 securities of which 49 were in a loss position for less than twelve months and five were in a loss position for twelve months or more. Of these securities in a loss position for less than twelve months, 44 are mortgage-backed securities and five are obligations of states and political subdivisions. All securities in a loss position for greater than twelve months were mortgage-backed securities.
13 |
The unrealized loss on the Company’s investments in mortgage-backed securities, obligations of states and political subdivisions, and corporate bonds, is primarily driven by interest rates. Because the decline in market value is attributable to a change in interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until recovery of fair value, which may be until maturity, management does not consider these investments to be other-than-temporarily impaired.
The amortized cost and estimated fair values of investment securities at June 30, 2014 by contractual maturity are shown below (dollars in thousands).
Available-for-Sale | Held-to-Maturity | |||||||||||||||
Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||||
Within one year | $ | 240 | $ | 241 | ||||||||||||
After one year through five years | 3,532 | 3,710 | ||||||||||||||
After five years through ten years | 12,134 | 12,891 | ||||||||||||||
After ten years | 11,396 | 11,975 | ||||||||||||||
27,302 | 28,817 | |||||||||||||||
Investment securities not due at a single maturity date: | ||||||||||||||||
Mortgage-backed securities | 246,459 | 251,032 | $ | 1,015 | $ | 1,087 | ||||||||||
Corporate stock | 54 | 137 | — | — | ||||||||||||
$ | 273,815 | $ | 279,986 | $ | 1,015 | $ | 1,087 |
Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.
6. IMPAIRED AND NONPERFORMING LOANS AND LEASES AND OTHER REAL ESTATE OWNED
At June 30, 2014 and December 31, 2013, the recorded investment in nonperforming loans and leases was approximately $1,506,000 and $1,979,000, respectively. Nonperforming loans and leases include all such loans and leases that are either placed on nonaccrual status or are 90 days past due as to principal or interest but still accrue interest because such loans are well-secured and in the process of collection. The Company considers a loan to be impaired when, based on current information and events, it is probable that it will be unable to collect all amounts due (principal and interest) according to the contractual terms of the original loan agreement. At June 30, 2014, the recorded investment in loans and leases that were considered to be impaired totaled $26,157,000, which includes $1,411,000 in nonaccrual loans and leases and $24,746,000 in performing loans and leases. Of the total impaired loans of $26,157,000, loans totaling $11,542,000 were deemed to require no specific reserve and loans totaling $14,615,000 were deemed to require a related valuation allowance of $1,541,000. At December 31, 2013, the recorded investment in loans and leases that were considered to be impaired totaled $27,034,000 and had a related valuation allowance of $1,598,000. If interest had been accruing on the nonperforming loans, such income would have approximated $15,000 and $109,000 for the three months ended June 30, 2014 and 2013, respectively, and approximated $54,000 and $168,000 for the six months ended June 30, 2014 and 2013, respectively.
At June 30, 2014 and December 31, 2013, the recorded investment in other real estate owned (“OREO”) was $6,864,000 and $6,621,000, respectively. For the three months ended March 31, 2014, the Company sold two parcels of land in El Dorado County that abutted an existing OREO property for a $106,000 net gain without any adjustment required to the value of the existing OREO property. The Company continues to own the OREO office building and land upon which the building is located but no longer owns the adjoining land. For the three months ended June 30, 2014, the Company added a single property with an OREO value of $243,000.
The Company periodically obtains property valuations to determine whether the recorded book value is considered fair value. During the second quarter of 2014, this valuation process did not result in the Company adjusting any book values.
The June 30, 2014 OREO balance of $6,864,000 consists of ten properties including four commercial real estate properties in the total amount of $3,988,000, four commercial land properties in the total amount of $1,729,000 and two residential land properties in the total amount of $1,147,000.
14 |
Nonperforming loans and leases and OREO at June 30, 2014 and December 31, 2013 are summarized as follows:
(in thousands) | June 30, 2014 | December 31, 2013 | ||||||
Nonaccrual loans and leases that are current to terms (less than 30 days past due) | $ | 651 | $ | 379 | ||||
Nonaccrual loans and leases that are past due | 855 | 1,520 | ||||||
Loans and leases past due 90 days and accruing interest | — | 80 | ||||||
Other assets | 878 | 878 | ||||||
Other real estate owned | 6,864 | 6,621 | ||||||
Total nonperforming assets | $ | 9,248 | $ | 9,478 | ||||
Nonperforming loans and leases to total loans and leases | 0.60 | % | 0.77 | % | ||||
Total nonperforming assets to total assets | 1.55 | % | 1.60 | % |
Impaired loans and leases as of and for the periods ended June 30, 2014 and December 31, 2013 are summarized as follows:
(in thousands) | As of June 30, 2014 | As of December 31, 2013 | ||||||||||||||||||||||
Recorded Investment | Unpaid Principal Balance |
Related Allowance |
Recorded Investment | Unpaid Principal Balance |
Related Allowance | |||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||||||
Commercial | $ | 493 | $ | 493 | $ | — | $ | 577 | $ | 577 | $ | — | ||||||||||||
Real estate-commercial | 10,771 | 10,969 | — | 10,921 | 11,119 | — | ||||||||||||||||||
Real estate-construction | 241 | 241 | — | 248 | 248 | — | ||||||||||||||||||
Consumer | 37 | 37 | — | 37 | 37 | — | ||||||||||||||||||
Subtotal | $ | 11,542 | $ | 11,740 | $ | — | $ | 11,783 | $ | 11,981 | $ | — | ||||||||||||
With an allowance recorded: | ||||||||||||||||||||||||
Commercial | $ | 943 | $ | 943 | $ | 260 | $ | 1,159 | $ | 1,159 | $ | 392 | ||||||||||||
Real estate-commercial | 8,635 | 8,635 | 761 | 8,998 | 8,998 | 792 | ||||||||||||||||||
Real estate-multi-family | 1,634 | 1,727 | 177 | 1,650 | 1,743 | 108 | ||||||||||||||||||
Real estate-residential | 2,892 | 2,892 | 305 | 3,316 | 3,316 | 276 | ||||||||||||||||||
Agriculture | 386 | 386 | 16 | — | — | — | ||||||||||||||||||
Consumer | 125 | 125 | 22 | 128 | 128 | 30 | ||||||||||||||||||
Subtotal | $ | 14,615 | $ | 14,708 | $ | 1,541 | $ | 15,251 | $ | 15,344 | $ | 1,598 | ||||||||||||
Total: | ||||||||||||||||||||||||
Commercial | $ | 1,436 | $ | 1,436 | $ | 260 | $ | 1,736 | $ | 1,736 | $ | 392 | ||||||||||||
Real estate-commercial | 19,406 | 19,604 | 761 | 19,919 | 20,117 | 792 | ||||||||||||||||||
Real estate-multi-family | 1,634 | 1,727 | 177 | 1,650 | 1,743 | 108 | ||||||||||||||||||
Real estate-construction | 241 | 241 | — | 248 | 248 | — | ||||||||||||||||||
Real estate-residential | 2,892 | 2,892 | 305 | 3,316 | 3,316 | 276 | ||||||||||||||||||
Agriculture | 386 | 386 | 16 | — | — | — | ||||||||||||||||||
Consumer | 162 | 162 | 22 | 165 | 165 | 30 | ||||||||||||||||||
$ | 26,157 | $ | 26,448 | $ | 1,541 | $ | 27,034 | $ | 27,325 | $ | 1,598 |
15 |
The following table presents the average balance related to impaired loans and leases for the periods indicated (in thousands):
Average Recorded Investments for the three months ended | Average Recorded Investments for the six months ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
Commercial | $ | 1,610 | $ | 2,388 | $ | 1,517 | $ | 2,339 | ||||||||
Real estate-commercial | 19,218 | 15,877 | 19,029 | 14,146 | ||||||||||||
Real estate-multi-family | 1,644 | 1,675 | 1,642 | 1,673 | ||||||||||||
Real estate-construction | 246 | 260 | 245 | 259 | ||||||||||||
Real estate-residential | 2,912 | 2,403 | 2,908 | 2,400 | ||||||||||||
Agriculture | 194 | — | 389 | — | ||||||||||||
Consumer | 164 | 210 | 164 | 175 | ||||||||||||
Total | $ | 25,988 | $ | 22,813 | $ | 25,894 | $ | 20,992 |
The following table presents the interest income recognized on impaired loans and leases for the periods indicated (in thousands):
Interest Income Recognized for the three months ended | Interest Income Recognized for the six months ended | |||||||||||||||
June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
Commercial | $ | 9 | $ | 16 | $ | 22 | $ | 32 | ||||||||
Real estate-commercial | 237 | 85 | 484 | 293 | ||||||||||||
Real estate-multi-family | 19 | 20 | 38 | 39 | ||||||||||||
Real estate-construction | 3 | 4 | 6 | 7 | ||||||||||||
Real estate-residential | 29 | 29 | 67 | 52 | ||||||||||||
Agriculture | 10 | — | 10 | — | ||||||||||||
Consumer | — | 1 | 2 | 2 | ||||||||||||
Total | $ | 307 | $ | 155 | $ | 629 | $ | 425 |
7. TROUBLED DEBT RESTRUCTURINGS
At June 30, 2014, there were 15 loans and leases that were considered to be troubled debt restructurings. Of these loans and leases, 11 are currently performing (less than ninety days past due) totaling $13,898,000 and four are considered nonperforming (and included in the $1,506,000 discussed in Note 6), totaling $756,000. Of the four TDRs considered nonperforming, two are current to the modified terms. At June 30, 2014 and December 31, 2013, there were no unfunded commitments on those loans considered troubled debt restructures. See also “Impaired Loans and Leases” in “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The Company has allocated $828,000 and $817,000 of specific reserves to loans whose terms have been modified as troubled debt restructurings as of June 30, 2014 and December 31, 2013.
During the six-month period ended June 30, 2014, the terms of five loans were modified as a troubled debt restructuring. The modifications of the terms of these loans were a line of credit converted to a term loan, extensions of the maturity date and/or interest rates lower than the original loan rate.
16 |
The following table presents loans by class modified as troubled debt restructurings during the three months ended June 30, 2014 (dollars in thousands):
Pre- | Post- | |||||||||||
Modification | Modification | |||||||||||
Outstanding | Outstanding | |||||||||||
Number | Recorded | Recorded | ||||||||||
of Loans | Investment | Investment | ||||||||||
Troubled debt restructurings: | ||||||||||||
Real estate – commercial | 1 | $ | 213 | $ | 213 | |||||||
Consumer | 1 | 46 | 46 | |||||||||
Total | 2 | $ | 259 | $ | 259 |
The following table presents loans by class modified as troubled debt restructurings during the six months ended June 30, 2014 (dollars in thousands):
Pre- | Post- | |||||||||||
Modification | Modification | |||||||||||
Outstanding | Outstanding | |||||||||||
Number | Recorded | Recorded | ||||||||||
of Loans | Investment | Investment | ||||||||||
Troubled debt restructurings: | ||||||||||||
Real estate – commercial | 5 | $ | 5,109 | $ | 5,109 | |||||||
Consumer | 1 | 46 | 46 | |||||||||
Total | 6 | $ | 5,155 | $ | 5,155 |
The troubled debt restructurings described above increased the allowance for loan and lease losses by $151,000 and resulted in no charge-offs during the six months ended June 30, 2014.
The following table presents loans by class modified as troubled debt restructurings during the three months ended June 30, 2013 (dollars in thousands):
Pre- | Post- | |||||||||||
Modification | Modification | |||||||||||
Outstanding | Outstanding | |||||||||||
Number | Recorded | Recorded | ||||||||||
of Loans | Investment | Investment | ||||||||||
Troubled debt restructurings: | ||||||||||||
Real estate – commercial | 3 | $ | 762 | $ | 722 | |||||||
Total | 3 | $ | 762 | $ | 722 |
The following table presents loans by class modified as troubled debt restructurings during the six months ended June 30, 2013 (dollars in thousands):
Pre- | Post- | |||||||||||
Modification | Modification | |||||||||||
Outstanding | Outstanding | |||||||||||
Number | Recorded | Recorded | ||||||||||
of Loans | Investment | Investment | ||||||||||
Troubled debt restructurings: | ||||||||||||
Real estate – commercial | 4 | $ | 1,200 | $ | 1,160 | |||||||
Total | 4 | $ | 1,200 | $ | 1,160 |
The troubled debt restructurings described above increased the allowance for loan and lease losses by $100,000 and resulted in charge-offs of $40,000 during the six months ended June 30, 2013.
17 |
The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period indicated (dollars in thousands):
Six months ended June 30, 2013 | Number | Recorded | ||||||
of Loans | Investment | |||||||
Troubled debt restructurings that subsequently defaulted: | ||||||||
Commercial | 1 | $ | 513 | |||||
Total | 1 | $ | 513 |
There were no payment defaults on troubled debt restructurings within 12 months following the modification for the three-month and six-month periods ended June 30, 2014, as well as for the three-month period ending June 30, 2013.
18 |
8. ALLOWANCE FOR LOAN AND LEASE LOSSES
The Company’s loan and lease portfolio allocated by management’s internal risk ratings as of June 30, 2014 and December 31, 2013 are summarized below:
June 30, 2014 | Credit Risk Profile by Internally Assigned Grade | |||||||||||||||||||
(dollars in thousands) | Real Estate | |||||||||||||||||||
Commercial | Commercial | Multi-family | Construction | Residential | ||||||||||||||||
Grade: | ||||||||||||||||||||
Pass | $ | 19,178 | $ | 150,193 | $ | 8,169 | $ | 2,093 | $ | 9,364 | ||||||||||
Watch | 1,339 | 12,025 | 1,143 | 3,260 | 3,788 | |||||||||||||||
Special mention | 362 | 19,473 | 411 | 574 | 1,329 | |||||||||||||||
Substandard | 3,899 | 3,683 | 501 | — | 2,114 | |||||||||||||||
Doubtful | — | — | — | — | — | |||||||||||||||
Total | $ | 24,778 | $ | 185,374 | $ | 10,224 | $ | 5,927 | $ | 16,595 | ||||||||||
Credit Risk Profile by Internally Assigned Grade Other Credit Exposure | ||||||||||||||||||||
Leases | Agriculture | Consumer | Total | |||||||||||||||||
Grade: | ||||||||||||||||||||
Pass | $ | 1,262 | $ | 2,576 | $ | 4,835 | $ | 197,670 | ||||||||||||
Watch | — | — | 44 | 21,599 | ||||||||||||||||
Special mention | 386 | 83 | 22,618 | |||||||||||||||||
Substandard | — | — | 147 | 10,344 | ||||||||||||||||
Doubtful | — | — | — | — | ||||||||||||||||
Total | $ | 1,262 | $ | 2,962 | $ | 5,109 | $ | 252,231 | ||||||||||||
December 31, 2013 | Credit Risk Profile by Internally Assigned Grade | |||||||||||||||||||
(dollars in thousands) | Real Estate | |||||||||||||||||||
Commercial | Commercial | Multi-family | Construction | Residential | ||||||||||||||||
Grade: | ||||||||||||||||||||
Pass | $ | 20,728 | $ | 147,995 | $ | 9,509 | $ | 5,778 | $ | 11,706 | ||||||||||
Watch | 1,556 | 12,567 | 1,156 | 3,270 | 2,530 | |||||||||||||||
Special mention | 491 | 19,253 | 420 | 585 | 1,281 | |||||||||||||||
Substandard | 1,770 | 4,389 | — | — | 2,186 | |||||||||||||||
Doubtful | — | — | — | — | — | |||||||||||||||
Total | $ | 24,545 | $ | 184,204 | $ | 11,085 | $ | 9,633 | $ | 17,703 | ||||||||||
Credit Risk Profile by Internally Assigned Grade Other Credit Exposure | ||||||||||||||||||||
Leases | Agriculture | Consumer | Total | |||||||||||||||||
Grade: | ||||||||||||||||||||
Pass | $ | 1,344 | $ | 2,728 | $ | 5,486 | $ | 205,274 | ||||||||||||
Watch | — | — | 21 | 21,100 | ||||||||||||||||
Special mention | — | 392 | 111 | 22,533 | ||||||||||||||||
Substandard | — | — | 154 | 8,499 | ||||||||||||||||
Doubtful | — | — | — | — | ||||||||||||||||
Total | $ | 1,344 | $ | 3,120 | $ | 5,772 | $ | 257,406 |
19 |
The allocation of the Company’s allowance for loan and lease losses and by portfolio segment and by impairment methodology are summarized below:
June 30, 2014 | ||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Real Estate | Other | ||||||||||||||||||||||||||||||||||||||
Commercial | Commercial | Multi-Family | Construction | Residential | Leases | Agriculture | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||
Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||||||||||||||||
Beginning balance, January 1, 2014 | $ | 885 | $ | 2,401 | $ | 242 | $ | 542 | $ | 825 | $ | 4 | $ | 80 | $ | 161 | $ | 206 | $ | 5,346 | ||||||||||||||||||||
Provision for loan losses | 365 | (291 | ) | 20 | (103 | ) | (122 | ) | (5 | ) | (11 | ) | 44 | 103 | — | |||||||||||||||||||||||||
Loans charged off | — | — | — | — | — | — | — | (74 | ) | — | (74 | ) | ||||||||||||||||||||||||||||
Recoveries | 141 | 39 | — | 2 | 5 | 3 | — | — | — | 190 | ||||||||||||||||||||||||||||||
Ending balance, June 30, 2014 | $ | 1,391 | $ | 2,149 | $ | 262 | $ | 441 | $ | 708 | $ | 2 | $ | 69 | $ | 131 | $ | 309 | $ | 5,462 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 260 | $ | 761 | $ | 177 | $ | — | $ | 305 | $ | — | $ | 16 | $ | 22 | $ | — | $ | 1,541 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 1,131 | $ | 1,388 | $ | 85 | $ | 441 | $ | 403 | $ | 2 | $ | 53 | $ | 109 | $ | 309 | $ | 3,921 | ||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 24,778 | $ | 185,374 | $ | 10,224 | $ | 5,927 | $ | 16,595 | $ | 1,262 | $ | 2,962 | $ | 5,109 | $ | — | $ | 252,231 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,436 | $ | 19,406 | $ | 1,634 | $ | 241 | $ | 2,892 | $ | — | $ | 386 | $ | 162 | $ | — | $ | 26,157 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 23,342 | $ | 165,968 | $ | 8,590 | $ | 5,686 | $ | 13,703 | $ | 1,262 | $ | 2,576 | $ | 4,947 | $ | — | $ | 226,074 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||||||||||||||||
Beginning balance, March 31, 2014 | $ | 781 | $ | 2,476 | $ | 241 | $ | 485 | $ | 883 | $ | 3 | $ | 73 | $ | 156 | $ | 275 | $ | 5,373 | ||||||||||||||||||||
Provision for loan losses | 489 | (365 | ) | 21 | (45 | ) | (177 | ) | (1 | ) | (4 | ) | 48 | 34 | — | |||||||||||||||||||||||||
Loans charged off | — | — | — | — | — | — | — | (73 | ) | — | (73 | ) | ||||||||||||||||||||||||||||
Recoveries | 121 | 38 | — | 1 | 2 | — | — | — | — | 162 | ||||||||||||||||||||||||||||||
Ending balance, June 30, 2014 | $ | 1,391 | $ | 2,149 | $ | 262 | $ | 441 | $ | 708 | $ | 2 | $ | 69 | $ | 131 | $ | 309 | $ | 5,462 |
20 |
December 31, 2013 | ||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Real Estate | Other | ||||||||||||||||||||||||||||||||||||||
Commercial | Commercial | Multi-Family | Construction | Residential | Leases | Agriculture | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 392 | $ | 792 | $ | 108 | $ | — | $ | 276 | $ | — | $ | — | $ | 30 | $ | — | $ | 1,598 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 493 | $ | 1,609 | $ | 134 | $ | 542 | $ | 549 | $ | 4 | $ | 80 | $ | 131 | $ | 206 | $ | 3,748 | ||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 24,545 | $ | 184,204 | $ | 11,085, | $ | 9,633 | $ | 17,703 | $ | 1,344 | $ | 3,120 | $ | 5,772 | $ | — | $ | 257,406 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 1,736 | $ | 19,919 | $ | 1,650, | $ | 248 | $ | 3,316 | $ | — | $ | — | $ | 165 | $ | — | $ | 27,034 | ||||||||||||||||||||
Ending balance: | ||||||||||||||||||||||||||||||||||||||||
Collectively evaluated for impairment | $ | 22,809 | $ | 164,285 | $ | 9,435, | $ | 9,385 | $ | 14,387 | $ | 1,344 | $ | 3,120 | $ | 5,607 | $ | — | $ | 230,372 | ||||||||||||||||||||
June 30, 2013 | ||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Real Estate | Other | ||||||||||||||||||||||||||||||||||||||
Commercial | Commercial | Multi-Family | Construction | Residential | Leases | Agriculture | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||
Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||||||||||||||||
Beginning balance, January 1, 2013 | $ | 1,351 | $ | 2,526 | $ | 238 | $ | 594 | $ | 477 | $ | 3 | $ | 87 | $ | 262 | $ | 243 | $ | 5,781 | ||||||||||||||||||||
Provision for loan losses | (158 | ) | 402 | 9 | (172 | ) | 115 | — | 4 | (87 | ) | 87 | 200 | |||||||||||||||||||||||||||
Loans charged off | (11 | ) | (355 | ) | — | — | (38 | ) | — | — | (5 | ) | — | (409 | ) | |||||||||||||||||||||||||
Recoveries | 97 | 11 | — | — | — | — | — | — | — | 108 | ||||||||||||||||||||||||||||||
Ending balance, June 30, 2013 | $ | 1,279 | $ | 2,584 | $ | 247 | $ | 422 | $ | 554 | $ | 3 | $ | 91 | $ | 170 | $ | 330 | $ | 5,680 | ||||||||||||||||||||
Allowance for Loan and Lease Losses | ||||||||||||||||||||||||||||||||||||||||
Beginning balance, March 31, 2013 | $ | 1,331 | $ | 2,667 | $ | 256 | $ | 430 | $ | 501 | $ | 3 | $ | 91 | $ | 249 | $ | 375 | $ | 5,903 | ||||||||||||||||||||
Provision for loan losses | (74 | ) | 262 | (9 | ) | (8 | ) | 53 | — | — | (79 | ) | (45 | ) | 100 | |||||||||||||||||||||||||
Loans charged off | (1 | ) | (355 | ) | — | — | — | — | — | — | — | (356 | ) | |||||||||||||||||||||||||||
Recoveries | 23 | 10 | — | — | — | — | — | — | — | 33 | ||||||||||||||||||||||||||||||
Ending balance, June 30, 2013 | $ | 1,279 | $ | 2,584 | $ | 247 | $ | 422 | $ | 554 | $ | 3 | $ | 91 | $ | 170 | $ | 330 | $ | 5,680 |
21 |
The Company’s aging analysis of the loan and lease portfolio at June 30, 2014 and December 31, 2013 are summarized below:
June 30, 2014 | ||||||||||||||||||||||||||||||||
(dollars in thousands) | Past Due | Greater Than | ||||||||||||||||||||||||||||||
30-59 Days | 60-89 Days | Greater Than | Total Past | Past Due | 90 Days and | |||||||||||||||||||||||||||
Past Due | Past Due | 90 Days | Due | Current | Total Loans | Accruing | Nonaccrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial | $ | — | $ | — | $ | 666 | $ | 666 | $ | 24,112 | $ | 24,778 | — | $ | 701 | |||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||
Commercial | 845 | — | 145 | 990 | 184,384 | 185,374 | — | 654 | ||||||||||||||||||||||||
Multi-family | — | — | — | — | 10,224 | 10,224 | — | — | ||||||||||||||||||||||||
Construction | — | — | — | — | 5,927 | 5,927 | — | — | ||||||||||||||||||||||||
Residential | — | — | — | — | 16,595 | 16,595 | — | — | ||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||
Leases | — | — | — | — | 1,262 | 1,262 | — | — | ||||||||||||||||||||||||
Agriculture | — | — | — | — | 2,962 | 2,962 | — | — | ||||||||||||||||||||||||
Consumer | 257 | — | — | 257 | 4,852 | 5,109 | — | 151 | ||||||||||||||||||||||||
Total | $ | 1,102 | $ | — | $ | 811 | $ | 1,913 | $ | 250,318 | $ | 252,231 | $ | — | $ | 1,506 | ||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||
(dollars in thousands) | Past Due | Greater Than | ||||||||||||||||||||||||||||||
30-59 Days | 60-89 Days | Greater Than | Total Past | Past Due | 90 Days and | |||||||||||||||||||||||||||
Past Due | Past Due | 90 Days | Due | Current | Total Loans | Accruing | Nonaccrual | |||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||
Commercial | $ | — | $ | — | $ | 798 | $ | 798 | $ | 23,747 | $ | 24,545 | — | $ | 766 | |||||||||||||||||
Real estate: | ||||||||||||||||||||||||||||||||
Commercial | 1,598 | 336 | 713 | 2,647 | 181,557 | 184,204 | 80 | 977 | ||||||||||||||||||||||||
Multi-family | — | — | — | — | 11,085 | 11,085 | — | — | ||||||||||||||||||||||||
Construction | — | — | — | — | 9,633 | 9,633 | — | — | ||||||||||||||||||||||||
Residential | — | — | — | — | 17,703 | 17,703 | — | — | ||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||
Leases | — | — | — | — | 1,344 | 1,344 | — | — | ||||||||||||||||||||||||
Agriculture | — | — | — | — | 3,120 | 3,120 | — | — | ||||||||||||||||||||||||
Consumer | 25 | 1 | 90 | 116 | 5,656 | 5,772 | — | 156 | ||||||||||||||||||||||||
Total | $ | 1,623 | $ | 337 | $ | 1,601 | $ | 3,561 | $ | 253,845 | $ | 257,406 | $ | 80 | $ | 1,899 |
22 |
9. BORROWING ARRANGEMENTS
At June 30, 2014, the Company had $17,000,000 of unsecured short-term borrowing arrangements with two of its correspondent banks. There were no advances under the borrowing arrangements as of June 30, 2014 or December 31, 2013.
The Company has a line of credit available with the Federal Home Loan Bank of San Francisco (the “FHLB”) which is secured by pledged mortgage loans and investment securities. Borrowings may include overnight advances as well as loans with terms of up to thirty years. Advances (both short-term and long-term) totaling $11,000,000 were outstanding from the FHLB at June 30, 2014, bearing interest rates ranging from 0.24% to 1.91% and maturing between March 16, 2015 and July 12, 2019. Advances totaling $16,000,000 were outstanding from the FHLB at December 31, 2013, bearing interest rates ranging from 1.19% to 2.73% and maturing between January 13, 2014 and July 12, 2019. Remaining amounts available under the borrowing arrangement with the FHLB at June 30, 2014 and December 31, 2013 totaled $69,941,000 and $56,230,000, respectively. In addition, the Company has a secured borrowing agreement with the Federal Reserve Bank of San Francisco. The borrowing can be secured by pledging selected loans and investment securities. Borrowings generally are short-term including overnight advances as well as loans with terms up to ninety days. Amounts available under this borrowing arrangement at June 30, 2014 and December 31, 2013 were $19,842,000 and $21,358,000, respectively. There were no advances outstanding under this borrowing arrangement as of June 30, 2014 and December 31, 2013.
10. INCOME TAXES
The Company files its income taxes on a consolidated basis with its subsidiaries. The allocation of income tax expense (benefit) represents each entity’s proportionate share of the consolidated provision for (benefit from) income taxes.
The Company accounts for income taxes using the balance sheet method, under which deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. On the consolidated balance sheet, net deferred tax assets are included in accrued interest receivable and other assets.
The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above, if applicable, is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if applicable, as a component of interest expense in the consolidated statement of income. There have been no unrecognized tax benefits or accrued interest and penalties for the three-month and six-month periods ended June 30, 2014 and 2013.
The combined federal and state effective tax rate for the quarter ended June 30, 2014 was 34.7%, an increase from 28.5% for the second quarter of 2013. For the six months ended June 30, 2014, the combined federal and state effective tax rate was 34.7% compared to 24.1% for the six months ended June 30, 2013. The higher combined federal and state effective tax rate in 2014 for the three-month and six-month periods resulted from higher pretax income in 2014 and significantly less benefits of Enterprise Zone credits on our State tax return as the program has been significantly reduced effective January 1, 2014. In addition, the 2013 tax provision benefited from the tax-free income related to the bank owned life insurance benefit.
23 |
11. FAIR VALUE MEASUREMENTS
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of June 30, 2014 and December 31, 2013. They indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Estimated fair values are disclosed for financial instruments for which it is practicable to estimate fair value. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.
The carrying amounts and estimated fair values of the Company’s financial instruments are as follows (dollars in thousands):
Carrying | Fair Value Measurements Using: | |||||||||||||||||||
June 30, 2014 | Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 19,107 | $ | 19,107 | $ | 19,107 | ||||||||||||||
Interest-bearing deposits in banks | 1,000 | $ | 1,003 | 1,003 | ||||||||||||||||
Available-for-sale securities | 279,986 | 88 | 279,898 | 279,986 | ||||||||||||||||
Held-to-maturity securities | 1,015 | 1,087 | 1,087 | |||||||||||||||||
FHLB stock | 3,686 | N/A | N/A | N/A | N/A | |||||||||||||||
Net loans and leases: | 246,521 | $ | 249,738 | 249,738 | ||||||||||||||||
Accrued interest receivable | 1,840 | 1,165 | 675 | 1,840 | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest-bearing | $ | 149,169 | $ | 149,169 | $ | 149,169 | ||||||||||||||
Savings | 53,546 | 53,546 | 53,546 | |||||||||||||||||
Money market | 139,592 | 139,592 | 139,592 | |||||||||||||||||
NOW accounts | 59,757 | 59,757 | 59,757 | |||||||||||||||||
Time, $100,000 or more | 66,031 | $ | 66,659 | 66,659 | ||||||||||||||||
Other time | 22,763 | 22,922 | 22,922 | |||||||||||||||||
Short-term borrowings | 1,500 | 1,500 | 1,500 | |||||||||||||||||
Long-term borrowings | 9,500 | 9,702 | 9,702 | |||||||||||||||||
Accrued interest payable | 55 | 55 | 55 |
24 |
Carrying | Fair Value Measurements Using: | |||||||||||||||||||
December 31, 2013 | Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and due from banks | $ | 17,948 | $ | 17,948 | $ | 17,948 | ||||||||||||||
Interest-bearing deposits in banks | 1,000 | $ | 1,000 | 1,000 | ||||||||||||||||
Available-for-sale securities | 272,791 | 70 | 272,721 | 272,791 | ||||||||||||||||
Held-to-maturity securities | 1,185 | 1,263 | 1,263 | |||||||||||||||||
FHLB stock | 3,248 | N/A | N/A | N/A | N/A | |||||||||||||||
Net loans and leases: | 251,747 | $ | 249,931 | 249,931 | ||||||||||||||||
Accrued interest receivable | 1,930 | 1,170 | 760 | 1,930 | ||||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest-bearing | $ | 145,516 | $ | 145,516 | $ | 145,516 | ||||||||||||||
Savings | 51,733 | 51,733 | 51,733 | |||||||||||||||||
Money market | 135,169 | 135,169 | 135,169 | |||||||||||||||||
NOW accounts | 59,042 | 59,042 | 59,042 | |||||||||||||||||
Time, $100,000 or more | 68,990 | $ | 69,763 | 69,763 | ||||||||||||||||
Other time | 23,240 | 23,426 | 23,426 | |||||||||||||||||
Short-term borrowings | 8,000 | 8,000 | 8,000 | |||||||||||||||||
Long-term borrowings | 8,000 | 8,110 | 8,110 | |||||||||||||||||
Accrued interest payable | 125 | 125 | 125 |
Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the fair values presented.
The following methods and assumptions were used by the Company to estimate the fair values of its financial instruments at June 30, 2014 and December 31, 2013:
Cash and due from banks: The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.
Interest-bearing deposits in banks: The fair values of interest-bearing deposits in banks are estimated by discounting their future cash flows using rates at each reporting date for instruments with similar remaining maturities offered by comparable financial institutions and are classified as Level 2.
Investment securities: For investment securities, fair values are based on quoted market prices, where available, and are classified as Level 1. If quoted market prices are not available, fair values are estimated using quoted market prices for similar securities and indications of value provided by brokers and are classified as Level 2.
Loans and leases: Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality also resulting in a Level 3 classification. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.
FHLB stock: It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.
25 |
Deposits: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. For time deposits, the fair values for fixed rate certificates of deposit are estimated using a discounted cash flow methodology that applies market interest rates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.
Short-term and long-term borrowings: The fair value of short-term borrowings is estimated to be the carrying amount and is classified as Level 1. The fair value of long-term borrowings is estimated using a discounted cash flow analysis using interest rates currently available for similar debt instruments and are classified as Level 2.
Accrued interest receivable and payable: The carrying amount of accrued interest receivable approximates fair value resulting in a Level 3 classification and the carrying amount of accrued interest payable approximates fair value resulting in a Level 2 classification.
Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments was not material at June 30, 2014 and December 31, 2013.
Assets and liabilities measured at fair value on a recurring and non-recurring basis along with any related gain or loss recognized in the income statement due to fair value changes are presented in the following table:
Description | Fair Value Measurements Using | Total Gains | ||||||||||||||||||
(dollars in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | (Losses) | |||||||||||||||
June 30, 2014 | ||||||||||||||||||||
Assets and liabilities measured on a recurring basis: | ||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Mortgage-backed securities | $ | 251,032 | $ | 251,032 | ||||||||||||||||
Obligations of states and political subdivisions | 27,187 | 27,187 | ||||||||||||||||||
Corporate bonds | 1,630 | 1,630 | ||||||||||||||||||
Corporate stock | 137 | $ | 88 | 49 | ||||||||||||||||
Total recurring | $ | 279,986 | $ | 88 | $ | 279,898 | $ | — | $ | — | ||||||||||
Assets and liabilities measured on a nonrecurring basis: | ||||||||||||||||||||
Impaired loans: | ||||||||||||||||||||
Commercial | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Real estate: | ||||||||||||||||||||
Commercial | 294 | — | — | 294 | — | |||||||||||||||
Multi-family | — | — | — | — | — | |||||||||||||||
Construction | — | — | — | — | — | |||||||||||||||
Residential | — | — | — | — | — | |||||||||||||||
Other: | ||||||||||||||||||||
Agriculture | — | — | — | — | — | |||||||||||||||
Consumer | — | — | — | — | — | |||||||||||||||
Other real estate owned | 6,864 | — | — | 6,864 | (106 | ) | ||||||||||||||
Total nonrecurring | $ | 7,158 | $ | — | $ | — | $ | 7,158 | $ | (106 | ) |
26 |
Description | Fair Value Measurements Using | Total Gains | ||||||||||||||||||
(dollars in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | (Losses) | |||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Assets and liabilities measured on a recurring basis: | ||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
Mortgage-backed securities | $ | 244,160 | $ | — | $ | 244,160 | $ | — | $ | — | ||||||||||
Corporate Debt securities | 1,609 | — | 1,609 | |||||||||||||||||
Obligations of states and political subdivisions | 26,903 | — | 26,903 | — | — | |||||||||||||||
Corporate stock | 119 | 70 | 49 | — | — | |||||||||||||||
Total recurring | $ | 272,791 | $ | 70 | $ | 272,721 | $ | — | $ | — | ||||||||||