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EX-32.1 - EXHIBIT 32.1 - EAGLE FINANCIAL SERVICES INCefsi-20170331exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - EAGLE FINANCIAL SERVICES INCefsi-20170331exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - EAGLE FINANCIAL SERVICES INCefsi-20170331exhibit311.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2017
or
¨
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: 0-20146 
EAGLE FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Virginia
 
54-1601306
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
2 East Main Street
P.O. Box 391
Berryville, Virginia
 
22611
(Address of principal executive offices)
 
(Zip Code)
(540) 955-2510
(Registrant’s telephone number, including area code) 
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  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date 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  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
¨
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨
(Do not check if a smaller reporting company.)
Smaller reporting company
 
ý
 
 
 
 
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.

 
¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of shares of the registrant’s Common Stock ($2.50 par value) outstanding as of May 5, 2017 was 3,474,659.




TABLE OF CONTENTS
 
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements:
 
 
Consolidated Balance Sheets at March 31, 2017 and December 31, 2016
 
Consolidated Statements of Income for the Three Months Ended March 31, 2017 and 2016
 
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2017 and 2016
 
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2017 and 2016
 
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016
 
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits




PART I - FINANCIAL INFORMATION
 
Item 1.        Financial Statements

EAGLE FINANCIAL SERVICES, INC.
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
 
 
March 31,
2017
 
December 31,
2016
 
(Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
9,773

 
$
12,515

Interest-bearing deposits with other institutions
15,054

 
22,610

Federal funds sold
132

 
156

Total cash and cash equivalents
24,959

 
35,281

Securities available for sale, at fair value
131,381

 
119,262

Restricted investments
1,068

 
1,068

Loans
519,358

 
516,942

Allowance for loan losses
(4,418
)
 
(4,505
)
Net Loans
514,940

 
512,437

Bank premises and equipment, net
19,959

 
20,169

Other real estate owned, net of allowance
106

 
370

Other assets
12,727

 
11,562

Total assets
$
705,140

 
$
700,149

Liabilities and Shareholders’ Equity
 
 
 
Liabilities
 
 
 
Deposits:
 
 
 
Noninterest bearing demand deposits
$
213,542

 
$
208,948

Savings and interest bearing demand deposits
317,325

 
306,847

Time deposits
85,006

 
88,082

Total deposits
$
615,873

 
$
603,877

Other liabilities
8,740

 
16,856

Total liabilities
$
624,613

 
$
620,733

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Shareholders’ Equity
 
 
 
Preferred stock, $10 par value; 500,000 shares authorized and unissued
$

 
$

Common stock, $2.50 par value; authorized 10,000,000 shares; issued and outstanding 2017, 3,472,186 including 19,301 shares of unvested restricted stock; issued and outstanding 2016, 3,468,243 including 14,901 shares of unvested restricted stock
8,632

 
8,633

Surplus
12,548

 
12,642

Retained earnings
59,442

 
58,165

Accumulated other comprehensive (loss)
(95
)
 
(24
)
Total shareholders’ equity
$
80,527

 
$
79,416

Total liabilities and shareholders’ equity
$
705,140

 
$
700,149

See Notes to Consolidated Financial Statements

1



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
Interest and Dividend Income
 
 
 
Interest and fees on loans
$
5,736

 
$
5,709

Interest and dividends on securities available for sale:
 
 
 
Taxable interest income
550

 
440

Interest income exempt from federal income taxes
254

 
233

Dividends
5

 
23

Interest on deposits with other institutions
21

 
16

Total interest and dividend income
$
6,566

 
$
6,421

Interest Expense
 
 
 
Interest on deposits
$
203

 
$
201

Interest on Federal Home Loan Bank advances

 
65

Interest on interest rate swap

 
41

Total interest expense
$
203

 
$
307

Net interest income
$
6,363

 
$
6,114

(Recovery of) Provision For Loan Losses
(527
)
 
79

Net interest income after (recovery of) provision for loan losses
$
6,890

 
$
6,035

Noninterest Income
 
 
 
Income from fiduciary activities
$
292

 
$
328

Service charges on deposit accounts
299

 
290

Other service charges and fees
953

 
829

Gain on sale of securities
50

 
86

Other operating income
79

 
102

Total noninterest income
$
1,673

 
$
1,635

Noninterest Expenses
 
 
 
Salaries and employee benefits
$
3,350

 
$
3,264

Occupancy expenses
377

 
408

Equipment expenses
239

 
246

Advertising and marketing expenses
178

 
162

Stationery and supplies
41

 
50

ATM network fees
220

 
177

Other real estate owned expense
1

 

(Gain) on sales of other real estate owned
(1
)
 

FDIC assessment
52

 
105

Computer software expense
196

 
136

Bank franchise tax
125

 
126

Professional fees
291

 
228

Data processing fees
117

 
64

Other operating expenses
525

 
588

Total noninterest expenses
$
5,711

 
$
5,554

Income before income taxes
$
2,852

 
$
2,116

Income Tax Expense
810

 
591

Net income
$
2,042

 
$
1,525

Earnings Per Share
 
 
 
Net income per common share, basic
$
0.59

 
$
0.43

Net income per common share, diluted
$
0.59

 
$
0.43

See Notes to Consolidated Financial Statements

2



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited)
(dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
Net income
$
2,042

 
$
1,525

Other comprehensive (loss) income:
 
 
 
Unrealized (loss) gain on available for sale securities net of reclassification adjustments, and net of deferred income tax of ($37) and $289 for the three months ended, respectively
(71
)
 
563

Total other comprehensive (loss) income
(71
)
 
563

Total comprehensive income
$
1,971

 
$
2,088

See Notes to Consolidated Financial Statements

3



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollars in thousands, except share amounts)
 
 
Common
Stock
 
Surplus
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Balance, December 31, 2015
$
8,758

 
$
13,730

 
$
54,682

 
$
1,051

 
$
78,221

Net income
 
 
 
 
1,525

 
 
 
1,525

Other comprehensive income
 
 
 
 
 
 
563

 
563

Vesting of restricted stock awards, stock incentive plan (5,000 shares)
13

 
(13
)
 
 
 
 
 

Stock-based compensation expense
 
 
55

 
 
 
 
 
55

Issuance of common stock, dividend investment plan (7,738 shares)
19

 
150

 
 
 
 
 
169

Issuance of common stock, employee benefit plan (648 shares)
2

 
14

 
 
 
 
 
16

Dividends declared ($0.20 per share)
 
 
 
 
(706
)
 
 
 
(706
)
Balance, March 31, 2016
$
8,792

 
$
13,936

 
$
55,501

 
$
1,614

 
$
79,843

 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2016
$
8,633

 
$
12,642

 
$
58,165

 
$
(24
)
 
79,416

Net income
 
 
 
 
2,042

 
 
 
2,042

Other comprehensive (loss)
 
 
 
 
 
 
(71
)
 
(71
)
Vesting of restricted stock awards, stock incentive plan (5,250 shares)
13

 
(13
)
 
 
 
 
 

Stock-based compensation expense
 
 
65

 
 
 
 
 
65

Issuance of common stock, dividend investment plan (3,150 shares)
8

 
77

 
 
 
 
 
85

Repurchase and retirement of common stock (8,857 shares)
(22
)
 
(223
)
 
 
 
 
 
(245
)
Dividends declared ($0.22 per share)
 
 
 
 
(765
)
 
 
 
(765
)
Balance, March 31, 2017
$
8,632

 
$
12,548

 
$
59,442

 
$
(95
)
 
$
80,527

See Notes to Consolidated Financial Statements

4



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
Cash Flows from Operating Activities
 
 
 
Net income
$
2,042

 
$
1,525

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 
 
Depreciation
236

 
231

Amortization of intangible and other assets
54

 
32

(Recovery of) Provision for loan losses
(527
)
 
79

(Gain) on sale of other real estate owned
(1
)
 

Loss on the sale and disposal of premises and equipment
6

 

Loss on the sale of repossessed assets
2

 

(Gain) on the sale of securities
(50
)
 
(86
)
Fair value adjustment on derivative contract

 
(33
)
Stock-based compensation expense
65

 
55

Premium amortization on securities, net
133

 
91

Changes in assets and liabilities:
 
 
 
(Increase) decrease in other assets
(1,181
)
 
650

(Decrease) increase in other liabilities
(8,116
)
 
689

Net cash (used in) provided by operating activities
$
(7,337
)
 
$
3,233

Cash Flows from Investing Activities
 
 
 
Proceeds from maturities, calls, and principal payments of securities available for sale
$
2,016

 
$
5,876

Proceeds from the sale of securities available for sale
2,925

 
4,314

Purchases of securities available for sale
(17,251
)
 
(3,876
)
Purchases of bank premises and equipment
(32
)
 
(23
)
Proceeds from the sale of other real estate owned
265

 

Proceeds from the sale of repossessed assets
2

 
1

Net (increase) in loans
(1,981
)
 
(15,496
)
Net cash (used in) investing activities
$
(14,056
)
 
$
(9,204
)
Cash Flows from Financing Activities
 
 
 
Net increase in noninterest bearing demand deposits, savings, and interest bearing demand deposits
$
15,072

 
$
13,962

Net (decrease) in time deposits
(3,076
)
 
(5,241
)
Issuance of common stock, employee benefit plan

 
16

Repurchase and retirement of common stock
(245
)
 

Cash dividends paid
(680
)
 
(537
)
Net cash provided by financing activities
$
11,071

 
$
8,200



5



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(continued)
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
(Decrease) increase in cash and cash equivalents
$
(10,322
)
 
$
2,229

Cash and Cash Equivalents
 
 
 
Beginning
35,281

 
23,221

Ending
$
24,959

 
$
25,450

Supplemental Disclosures of Cash Flow Information
 
 
 
Cash payments for:
 
 
 
Interest
$
210

 
$
316

Income taxes
$

 
$

Supplemental Schedule of Noncash Investing and Financing Activities:
 
 
 
Unrealized (loss) gain on securities available for sale
$
(108
)
 
$
852

Other real estate and repossessed assets acquired in settlement of loans
$
5

 
$
1

Issuance of common stock, dividend investment plan
$
85

 
$
169

See Notes to Consolidated Financial Statements


6



EAGLE FINANCIAL SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2017
NOTE 1. General

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America.

In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at March 31, 2017 and December 31, 2016, the results of operations for the three months ended March 31, 2017 and 2016, and cash flows for the three months ended March 31, 2017 and 2016. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Eagle Financial Services, Inc. (the "Company") owns 100% of Bank of Clarke County (the “Bank”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions between the Company and the Bank have been eliminated.

Certain amounts in the consolidated financial statements have been reclassified to conform to current year presentations. None of the reclassifications were of a material nature.

NOTE 2. Stock-Based Compensation Plan

During 2014, the Company’s shareholders approved a stock incentive plan which allows key employees and directors to increase their personal financial interest in the Company. This plan permits the issuance of incentive stock options and non-qualified stock options and the award of stock appreciation rights, common stock, restricted stock, and phantom stock. The plan authorizes the issuance of up to 500,000 shares of common stock.

The Company periodically grants Restricted Stock to its directors and executive officers. Restricted Stock provides grantees with rights to shares of common stock upon completion of a service period or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid to the grantee. In general, outside directors are periodically granted restricted shares which vest over a period of less than 9 months. Beginning during 2006, executive officers were granted restricted shares which vest over a 3 year service period and restricted shares which vest based on meeting annual performance measures over a 1 year period. The Company recognizes compensation expense over the restricted period. As of March 31, 2017, there was $170 thousand of unrecognized compensation cost related to nonvested restricted stock.

The following table presents Restricted Stock activity for the three months ended March 31, 2017 and 2016:
 
 
Three Months Ended
 
March 31,
 
2017
 
2016
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Nonvested, beginning of period
14,901

 
$
23.05

 
14,401

 
$
22.98

Granted
9,650

 
25.50

 
9,650

 
23.00

Vested
(5,250
)
 
23.15

 
(5,000
)
 
22.78

Forfeited

 

 

 

Nonvested, end of period
19,301

 
24.25

 
19,051

 
23.04




7



NOTE 3. Earnings Per Common Share

Basic earnings per share represents income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Nonvested restricted shares are included in the weighted average number of common shares used to compute basic earnings per share because of dividend participation and voting rights. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. The number of potential common shares is determined using the treasury method.

The following table shows the weighted average number of shares used in computing earnings per share for the three months ended March 31, 2017 and 2016. During 2017 and 2016, there were no potentially dilutive securities outstanding.
 
Three Months Ended
 
March 31,
 
2017
 
2016
Weighted average number of common shares outstanding used to calculate basic and diluted earnings per share
3,478,053

 
3,531,134


NOTE 4. Securities

Amortized costs and fair values of securities available for sale at March 31, 2017 and December 31, 2016 were as follows:
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
March 31, 2017
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
32,421

 
$
317

 
$
(307
)
 
$
32,431

Mortgage-backed securities
49,847

 
88

 
(554
)
 
49,381

Obligations of states and political subdivisions
49,315

 
788

 
(534
)
 
49,569

 
$
131,583

 
$
1,193

 
$
(1,395
)
 
$
131,381

 
December 31, 2016
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
30,404

 
$
316

 
$
(279
)
 
$
30,441

Mortgage-backed securities
42,681

 
147

 
(456
)
 
42,372

Obligations of states and political subdivisions
46,271

 
770

 
(592
)
 
46,449

 
$
119,356

 
$
1,233

 
$
(1,327
)
 
$
119,262


During the three months ended March 31, 2017, the Company received proceeds of $2.9 million on sales of available for sale securities for a gross gain of $50 thousand. There were no losses on the sale of available for sale securities during the three months ended March 31, 2017. During the three months ended March 31, 2016, the Company sold $4.3 million of available for sale securities for a gross gain of $86 thousand. There were no losses on the sale of available for sale securities during the three months ended March 31, 2016.

8



The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at March 31, 2017 and December 31, 2016 were as follows:
 
 
Less than 12 months
 
12 months or more
 
Total
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
March 31, 2017
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
16,174

 
$
307

 
$

 
$

 
$
16,174

 
$
307

Mortgage-backed securities
39,342

 
554

 

 

 
39,342

 
554

Obligations of states and political subdivisions
18,417

 
534

 

 

 
18,417

 
534

 
$
73,933

 
$
1,395

 
$

 
$

 
$
73,933

 
$
1,395

 
December 31, 2016
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
19,129

 
$
279

 
$

 
$

 
$
19,129

 
$
279

Mortgage-backed securities
28,013

 
456

 

 

 
28,013

 
456

Obligations of states and political subdivisions
16,823

 
592

 

 

 
16,823

 
592

 
$
63,965

 
$
1,327

 
$

 
$

 
$
63,965

 
$
1,327


Gross unrealized losses on available for sale securities included eighty-eight (88) and eighty (80) debt securities at March 31, 2017 and December 31, 2016, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at March 31, 2017 and December 31, 2016 was changes in market interest rates. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition, the unrealized losses were deemed to be temporary. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements. In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others. These events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company’s securities.

Securities having a carrying value of $2.9 million at March 31, 2017 were pledged for various purposes required by law.


9



The composition of restricted investments at March 31, 2017 and December 31, 2016 was as follows:
 
 
March 31, 2017
 
December 31, 2016
 
(in thousands)
Federal Reserve Bank Stock
$
344

 
$
344

Federal Home Loan Bank Stock
584

 
584

Community Bankers’ Bank Stock
140

 
140

 
$
1,068

 
$
1,068


NOTE 5. Allowance for Loan Losses

Changes in the allowance for loan losses for the three months ended March 31, 2017 and 2016 and the year ended December 31, 2016 were as follows:
 
 
Three Months Ended
 
Year Ended
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2017
 
2016
 
2016
 
 
 
(in thousands)
 
 
Balance, beginning
$
4,505

 
$
4,959

 
$
4,959

(Recovery of) provision for loan losses
(527
)
 
(188
)
 
79

Recoveries added to the allowance
502

 
341

 
38

Loan losses charged to the allowance
(62
)
 
(607
)
 
(73
)
Balance, ending
$
4,418

 
$
4,505

 
$
5,003


Nonaccrual and past due loans by class at March 31, 2017 and December 31, 2016 were as follows:
 
 
March 31, 2017
 
(in thousands)
 
30 - 59
Days
Past Due
 
60 - 89
Days
Past Due
 
90 or More
Days
Past Due
 
Total Past
Due
 
Current
 
Total Loans
 
90 or More
Days Past 
Due Still Accruing
 
Nonaccrual
Loans
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
55

 
$

 
$

 
$
55

 
$
33,227

 
$
33,282

 
$

 
$
258

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner Occupied
202

 

 

 
202

 
115,493

 
115,695

 

 
423

Non-owner occupied
198

 

 
183

 
381

 
94,337

 
94,718

 

 
370

Construction and Farmland:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 
2,711

 
2,711

 

 

Commercial

 

 

 

 
31,183

 
31,183

 

 

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Installment
44

 
7

 

 
51

 
11,785

 
11,836

 

 
9

Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Lines
33

 

 

 
33

 
31,577

 
31,610

 

 
111

Single family
1,271

 
155

 
4,295

 
5,721

 
187,110

 
192,831

 

 
5,163

Multifamily

 

 

 

 
3,498

 
3,498

 

 

All Other Loans

 

 

 

 
1,994

 
1,994

 

 

Total
$
1,803

 
$
162

 
$
4,478

 
$
6,443

 
$
512,915

 
$
519,358

 
$

 
$
6,334

 

10



 
December 31, 2016
 
(in thousands)
 
30 - 59
Days
Past Due
 
60 - 89
Days
Past Due
 
90 or More
Days
Past Due
 
Total Past
Due
 
Current
 
Total Loans
 
90 or More
Past Due 
Still
Accruing
 
Nonaccrual
Loans
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
69

 
$
49

 
$

 
$
118

 
$
30,223

 
$
30,341

 
$

 
$
278

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner Occupied
150

 
384

 

 
534

 
114,820

 
115,354

 

 
431

Non-owner occupied

 
54

 
135

 
189

 
92,982

 
93,171

 

 
1,066

Construction and Farmland:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
50

 

 

 
50

 
4,627

 
4,677

 

 

Commercial
499

 

 

 
499

 
26,615

 
27,114

 

 

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Installment
23

 
2

 
11

 
36

 
12,641

 
12,677

 
8

 
8

Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Lines
66

 

 

 
66

 
31,240

 
31,306

 

 
132

Single family
444

 
51

 
166

 
661

 
195,999

 
196,660

 

 
5,076

Multifamily

 

 

 

 
3,566

 
3,566

 

 

All Other Loans

 

 

 

 
2,076

 
2,076

 

 

Total
$
1,301

 
$
540

 
$
312

 
$
2,153

 
$
514,789

 
$
516,942

 
$
8

 
$
6,991


Allowance for loan losses by segment at March 31, 2017 and December 31, 2016 were as follows:
 
 
As of and for the Three Months Ended
 
March 31, 2017
 
(in thousands)
 
Construction
and Farmland
 
Residential
 
Commercial
Real Estate
 
Commercial - Non Real Estate
 
Consumer
 
All Other
Loans
 
Unallocated
 
Total
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance
$
450

 
$
1,992

 
$
1,522

 
$
235

 
$
69

 
$
22

 
$
215

 
$
4,505

Charge-Offs

 

 

 
(41
)
 
(17
)
 
(4
)
 

 
(62
)
Recoveries
482

 
6

 
1

 
1

 
11

 
1

 

 
502

(Recovery of) provision for loan losses
(519
)
 
(80
)
 
2

 
72

 
1

 
1

 
(4
)
 
(527
)
Ending balance
$
413

 
$
1,918

 
$
1,525

 
$
267

 
$
64

 
$
20

 
$
211

 
$
4,418

Ending balance: Individually evaluated for impairment
$

 
$
252

 
$
100

 
$
14

 
$

 
$

 
$

 
$
366

Ending balance: collectively evaluated for impairment
$
413

 
$
1,666

 
$
1,425

 
$
253

 
$
64

 
$
20

 
$
211

 
$
4,052

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
33,894

 
$
227,939

 
$
210,413

 
$
33,282

 
$
11,836

 
$
1,994

 
$

 
$
519,358

Ending balance individually evaluated for impairment
$
338

 
$
8,993

 
$
2,152

 
$
536

 
$
9

 
$

 
$

 
$
12,028

Ending balance collectively evaluated for impairment
$
33,556

 
$
218,946

 
$
208,261

 
$
32,746

 
$
11,827

 
$
1,994

 
$

 
$
507,330

 

11



 
As of and for the Twelve Months Ended
 
December 31, 2016
 
(in thousands)
 
Construction
and Farmland
 
Residential
 
Commercial
Real Estate
 
Commercial - Non Real Estate
 
Consumer
 
All Other
Loans
 
Unallocated
 
Total
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance
$
775

 
$
2,322

 
$
1,268

 
$
211

 
$
109

 
$
53

 
$
221

 
$
4,959

Charge-Offs

 
(535
)
 

 

 
(30
)
 
(42
)
 

 
(607
)
Recoveries
144

 
124

 
8

 
11

 
49

 
5

 

 
341

(Recovery of) provision for loan losses
(469
)
 
81

 
246

 
13

 
(59
)
 
6

 
(6
)
 
(188
)
Ending balance
$
450

 
$
1,992

 
$
1,522

 
$
235

 
$
69

 
$
22

 
$
215

 
$
4,505

Ending balance: Individually evaluated for impairment
$

 
$
268

 
$
102

 
$
15

 
$

 
$

 
$

 
$
385

Ending balance: collectively evaluated for impairment
$
450

 
$
1,724

 
$
1,420

 
$
220

 
$
69

 
$
22

 
$
215

 
$
4,120

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
31,791

 
$
231,532

 
$
208,525

 
$
30,341

 
$
12,677

 
$
2,076

 
$

 
$
516,942

Ending balance individually evaluated for impairment
$
1,320

 
$
8,608

 
$
2,864

 
$
581

 
$
7

 
$

 
$

 
$
13,380

Ending balance collectively evaluated for impairment
$
30,471

 
$
222,924

 
$
205,661

 
$
29,760

 
$
12,670

 
$
2,076

 
$

 
$
503,562



12



Impaired loans by class as of and for the periods ended March 31, 2017 and December 31, 2016 were as follows:
 
 
As of and for the Three Months Ended
 
March 31, 2017
 
(in thousands)
 
Unpaid
Principal
Balance
 
Recorded
Investment (1)
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance:
 
 
 
 
 
 
 
 
 
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
278

 
$
261

 
$

 
$
279

 
$
4

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Owner Occupied
867

 
761

 

 
762

 
4

Non-owner occupied
511

 
371

 

 
371

 

Construction and Farmland:
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 

Commercial
338

 
339

 

 
343

 
7

Consumer:
 
 
 
 
 
 
 
 
 
Installment
10

 
9

 

 
10

 

Residential:
 
 
 
 
 
 
 
 
 
Equity lines

 

 

 

 

Single family
7,720

 
7,491

 

 
7,510

 
29

Multifamily

 

 

 

 

Other Loans

 

 

 

 

 
$
9,724

 
$
9,232

 
$

 
$
9,275

 
$
44

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
275

 
$
275

 
$
14

 
$
280

 
$
3

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Owner Occupied
202

 
203

 
37

 
203

 
1

Non-owner occupied
819

 
822

 
63

 
824

 
9

Construction and Farmland:
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 

Commercial

 

 

 

 

Residential:
 
 
 
 
 
 
 
 
 
Equity lines
456

 
111

 
52

 
113

 


Single family
1,446

 
1,401

 
200

 
1,406

 
15

Multifamily

 

 

 

 

Other Loans

 

 

 

 

 
$
3,198

 
$
2,812

 
$
366

 
$
2,826

 
$
28

Total:
 
 
 
 
 
 
 
 
 
Commercial
$
553

 
$
536

 
$
14

 
$
559

 
$
7

Commercial Real Estate
2,399

 
2,157

 
100

 
2,160

 
14

Construction and Farmland
338

 
339

 

 
343

 
7

Consumer
10

 
9

 

 
10

 

Residential
9,622

 
9,003

 
252

 
9,029

 
44

Other

 

 

 

 

Total
$
12,922

 
$
12,044

 
$
366

 
$
12,101

 
$
72

(1) Recorded investment is defined as the summation of the outstanding principal balance, accrued interest, net deferred loan fees or costs, and any partial charge-offs.



13



 
As of and for the Twelve Months End
 
December 31, 2016
 
(in thousands)
 
Unpaid
Principal
Balance
 
Recorded
Investment (1)
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance:
 
 
 
 
 
 
 
 
 
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
311

 
$
299

 
$

 
$
356

 
$
21

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Owner Occupied
869

 
772

 

 
778

 
15

Non-owner occupied
1,298

 
1,066

 

 
1,137

 
13

Construction and Farmland:
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 

Commercial
1,320

 
1,324

 

 
1,358

 
75

Consumer:
 
 
 
 
 
 
 
 
 
Installment
8

 
8

 

 
9

 

Residential:
 
 
 
 
 
 
 
 
 
Equity lines
17

 
17

 

 
18

 

Single family
7,072

 
6,849

 

 
6,930

 
170

Multifamily

 

 

 

 

Other Loans

 

 

 

 

 
$
10,895

 
$
10,335

 
$

 
$
10,586

 
$
294

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
283

 
$
283

 
$
15

 
$
298

 
$
14

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Owner Occupied
203

 
203

 
37

 
205

 
10

Non-owner occupied
824

 
826

 
65

 
834

 
37

Construction and Farmland:
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 

Commercial