NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
A BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business of The Company
Peoples Financial Corporation (the Company) is a
one-bank
holding company headquartered in
Biloxi, Mississippi. Its two operating subsidiaries are The Peoples Bank, Biloxi, Mississippi (the Bank), and PFC Service Corp. Its principal subsidiary is the Bank, which provides a full range of banking, financial and trust services to
state, county and local government entities and individuals and small and commercial businesses operating in those portions of Mississippi, Louisiana and Alabama which are within a fifty mile radius of the Waveland, Wiggins and Gautier branches, the
Banks three most outlying locations (the trade area).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Basis of Accounting
The Company and its subsidiaries recognize assets and liabilities, and income and expense, on the accrual basis of accounting. The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Material estimates common to
the banking industry that are particularly susceptible to significant change in the near term include, but are not limited to, the determination of the allowance for loan losses, the valuation of other real estate acquired in connection with
foreclosure or in satisfaction of loans, assumptions relating to employee and director benefit plan liabilities and valuation allowances associated with the realization of deferred tax assets, which are based on future taxable income.
New Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU)
No. 2016-02,
Leases (Topic 82)
. ASU
2016-02
provides certain targeted improvements to align lessor accounting with the lessee accounting model. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning
after January 1, 2019. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of operations or cash flows.
69
In March 2016, FASB issued ASU
2016-03,
Intangibles
Goodwill and Other (Topic 350); Business Combinations (Topic 805); Consolidation (Topic 810); Derivatives and Hedging (Topic
815): Effective Date and Transition Guidance.
ASU
2016-03
amends
the guidance in ASUs
2014-02,
2014-03,
2014-07
and
2014-18
to remove their effective
dates and render them effective immediately. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of operations or cash flows.
In March 2016, FASB issued ASU
2016-07,
Investments Equity Method and Joint Ventures (Topic
323): Simplifying the Transition to the Equity Method of Accounting
. ASU
2016-07
eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the
level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step by step basis. This update will be effective for fiscal years, and interim periods within
those fiscal years, beginning after January 1, 2016. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of operations or cash flows.
In June 2016, FASB issued ASU
2016-13,
Financial Instruments Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments
. ASU
2016-13
requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience,
current conditions and reasonable and supportable forecasts. Adoption of ASU
2016-13
will require financial institutions and other organizations to use forward-looking information to better inform their credit
loss estimates. In addition, the ASU amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. This update will be effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2019. Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is in the
process of determining the effect of ASU
2016-13
on its financial position, results of operations and cash flows.
In August 2016, FASB issued ASU
2016-15,
Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force)
. ASU
2016-15
provides classification guidance in order to reduce diversity in practice for certain transactions.
Such transactions include debt prepayment or debt extinguishment costs, settlement of
zero-coupon
debt instruments, contingent consideration payments made after a business combination, proceeds from the
settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and
application of the predominance principle. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2017. Early application will be permitted for all organizations for fiscal
years, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of operations or cash flows.
70
In October 2016, FASB issued ASU
2016-16,
Income Taxes
(Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.
ASU
2016-16
requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory
when the transfer occurs. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this ASU is not expected to have a material effect on the Companys
financial position, results of operations or cash flows.
In November 2016, FASB issued ASU
2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash.
ASU
2016-18
requires that a statement of cash flows explain the change during the period in the
total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.
Early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of
operations or cash flows.
In December 2016, FASB issued ASU
2016-19,
Technical Corrections and
Improvements
. ASU
2016-19
includes amendments to provide guidance clarification and references corrections and provide minor structure changes to headings or minor editing to text to improve usefulness and
understandability. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The adoption of this ASU is not expected to have a material effect on the Companys
financial position, results of operations or cash flows.
In January 2017, FASB issued ASU
2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business.
ASU
2017-01
clarifies the definition of a business to determine
whether a business has been acquired or sold. This update will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application will be permitted for all organizations under
certain circumstances. The adoption of this ASU is not expected to have a material effect on the Companys financial position, results of operations or cash flows.
Cash and Due from Banks
The Company is
required to maintain average reserve balances in its vault or on deposit with the Federal Reserve Bank. The average amount of these reserve requirements was approximately $4,240,000, $2,084,000 and $417,000 for the years ending December 31,
2016, 2015 and 2014, respectively.
Securities
The classification of securities is determined by Management at the time of purchase. Securities are classified as held to maturity when the
Company has the positive intent and ability to hold the security until maturity. Securities held to maturity are stated at amortized cost. Securities not classified as held to maturity are classified as available for sale and are stated at fair
value. Unrealized gains and losses, net of tax, on these securities are recorded in shareholders equity as
71
accumulated other comprehensive income. The amortized cost of available for sale securities and held to maturity securities is adjusted for amortization of premiums and accretion of discounts to
maturity, determined using the interest method. Such amortization and accretion is included in interest income on securities. A decline in the market value of any investment below cost that is deemed to be other-than-temporary is charged to earnings
for the decline in value deemed to be credit related and a new cost basis in the security is established. The decline in value attributed to
non-credit
related factors is recognized in other comprehensive
income. In estimating other-than-temporary losses, Management considers the length of time and the extent to which the fair value has been less than cost, the financial condition and nature of the issuer, the cause of the decline, especially if
related to a change in interest rates, and the intent and ability of the Company to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The specific identification method is used
to determine realized gains and losses on sales of securities, which are reported as gain (loss) on sales and calls of securities in
non-interest
income.
Other Investments
Other investments
include a low income housing partnership in which the Company is a 99% limited partner. The partnership has qualified to receive annual low income housing federal tax credits that are recognized as a reduction of the current tax expense. The
investment is accounted for using the equity method.
Federal Home Loan Bank Stock
The Company is a member of the Federal Home Loan Bank of Dallas (FHLB) and as such is required to maintain a minimum investment in
its stock that varies with the level of FHLB advances outstanding. The stock is bought from and sold to the FHLB based on its $100 par value. The stock does not have a readily determinable fair value and as such is classified as restricted stock,
carried at cost and evaluated for impairment in accordance with GAAP.
Loans
The loan portfolio consists of commercial and industrial and real estate loans within the Companys trade area that we have the intent and
ability to hold for the foreseeable future or until maturity. The loan policy establishes guidelines relating to pricing; repayment terms; collateral standards including loan to value limits, appraisal and environmental standards; lending authority;
lending limits and documentation requirements.
Loans are stated at the amount of unpaid principal, reduced by unearned income and the
allowance for loan losses. Interest on loans is recognized on a daily basis over the terms of each loan based on the unpaid principal balance. Loan origination fees are recognized as income when received. Revenue from these fees is not material to
the financial statements.
The Company continuously monitors its relationships with its loan customers in concentrated industries such as
gaming and hotel/motel, as well as the exposure for out of area, land development, construction and commercial real estate loans, and their direct and indirect impact
72
on its operations. Loan delinquencies and deposit overdrafts are monitored on a weekly basis in order to identify developing problems as early as possible. On a monthly basis, a watch list of
credits based on our loan grading system is prepared. Grades are applied to individual loans based on factors including repayment ability, financial condition of the borrower and payment performance. Loans with lower grades are placed on the watch
list of credits. The watch list is the primary tool for monitoring the credit quality of the loan portfolio. Once loans are determined to be past due, the loan officer and the special assets department work vigorously to return the loans to a
current status.
The Company places loans on a nonaccrual status when, in the opinion of Management, they possess sufficient uncertainty
as to timely collection of interest or principal so as to preclude the recognition in reported earnings of some or all of the contractual interest. Accrued interest on loans classified as nonaccrual is reversed at the time the loans are placed on
nonaccrual. Interest received on nonaccrual loans is applied against principal. Loans are restored to accrual status when the obligation is brought current or has performed in accordance with the contractual terms for a reasonable period of time and
the ultimate collectibility of the total contractual principal and interest is no longer in doubt. The placement of loans on and removal of loans from nonaccrual status must be approved by Management.
Loans which become 90 days delinquent are reviewed relative to collectibility. Unless such loans are in the process of terms revision to bring
them to a current status or foreclosure or in the process of collection, these loans are placed on nonaccrual and, if deemed uncollectible, are charged off against the allowance for loan losses. That portion of a loan which is deemed uncollectible
will be charged off against the allowance as a partial charge off. All charge offs must be approved by Management and are reported to the Board of Directors.
Allowance for Loan Losses
The allowance
for loan losses (ALL) is a valuation account available to absorb losses on loans.The ALL is established through provisions for loan losses charged against earnings. Loans deemed to be uncollectible are charged against the ALL, and
subsequent recoveries, if any, are credited to the allowance.
The ALL is based on Managements evaluation of the loan portfolio
under current economic conditions and is an amount that Management believes will be adequate to absorb probable losses on loans existing at the reporting date. On a quarterly basis, the Companys problem asset committee meets to review the
watch list of credits, which is formulated from the loan grading system. Members of this committee include loan officers, collection officers, the special assets director, the chief lending officer, the chief credit officer, the chief financial
officer and the chief executive officer. The evaluation includes Managements assessment of several factors: review and evaluation of specific loans, changes in the nature and volume of the loan portfolio, current and anticipated economic
conditions and the related impact on specific borrowers and industry groups, a study of loss experience, a review of classified, nonperforming and delinquent loans, the estimated value of any underlying collateral, an estimate of the possibility of
loss based on the risk
73
characteristics of the portfolio, adverse situations that may affect the borrowers ability to repay and the results of regulatory examinations. This evaluation is inherently subjective as
it requires material estimates that may be susceptible to significant change.
The ALL consists of specific and general components. The
specific component relates to loans that are classified as impaired. The general component of the allowance relates to loans that are not impaired. Changes to the components of the ALL are recorded as a component of the provision for the allowance
for loan losses. Management must approve changes to the ALL and must report its actions to the Board of Directors. The Company believes that its allowance for loan losses is appropriate at December 31, 2016.
The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will
be unable to collect all amounts due according to the contractual terms of the loan agreement. The Companys impaired loans include troubled debt restructurings and performing and
non-performing
major
loans for which full payment of principal or interest is not expected. Payments received for impaired loans not on nonaccrual status are applied to principal and interest.
All impaired loans are reviewed, at a minimum, on a quarterly basis. The Company calculates the specific allowance required for impaired loans
based on the present value of expected future cash flows discounted at the loans effective interest rate, the loans observable market price or the fair value of its collateral. Most of the Companys impaired loans are
collateral-dependent.
The fair value of the collateral for collateral-dependent loans is based on appraisals performed by third-party
valuation specialists, comparable sales and other estimates of fair value obtained principally from independent sources such as the Multiple Listing Service or county tax assessment valuations, adjusted for estimated selling costs. The Company has a
Real Estate Appraisal Policy (the Policy) which is in compliance with the guidelines set forth in the Interagency Appraisal and Evaluation Guidelines which implement Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) and the revised Interagency Appraisal and Evaluation Guidelines issued in 2010. The Policy further requires that appraisals be in writing and conform to the Uniform Standards of Professional
Appraisal Practice (USPAP). An appraisal prepared by a state-licensed or state-certified appraiser is required on all new loans secured by real estate in excess of $250,000. Loans secured by real estate in an amount of $250,000 or less,
or that qualify for an exemption under FIRREA, must have a summary appraisal report or
in-house
evaluation, depending on the facts and circumstances. Factors including the assumptions and techniques utilized
by the appraiser, which could result in a downward adjustment to the collateral value estimates indicated in the appraisal, are considered by the Company.
When Management determines that a loan is impaired and the loan is collateral-dependent, an evaluation of the fair value of the collateral is
performed. The Company maintains established criteria for assessing whether an existing appraisal continues to reflect the fair value of the property for collateral-dependent loans. Appraisals are generally considered to be valid for a period of at
74
least twelve months. However, appraisals that are less than 12 months old may need to be adjusted. Management considers such factors as the property type, property condition, current use of the
property, current market conditions and the passage of time when determining the relevance and validity of the most recent appraisal of the property. If Management determines that the most recent appraisal is no longer valid, a new appraisal is
ordered from an independent and qualified appraiser.
During the interim period between ordering and receipt of the new appraisal,
Management considers if the existing appraisal should be discounted to determine the estimated fair value of collateral. Discounts are applied to the existing appraisal and take into consideration the property type, condition of the property,
external market data, internal data, reviews of recently obtained appraisals and evaluations of similar properties, comparable sales of similar properties and tax assessment valuations. When the new appraisal is received and approved by Management,
the valuation stated in the appraisal is used as the fair value of the collateral in determining impairment, if any. If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance is required as a specific
component of the allowance for loan losses. Any specific reserves recorded in the interim are adjusted accordingly.
The general component
of the ALL is the loss estimated by applying historical loss percentages to
non-classified
loans which have been divided into segments. These segments include gaming; residential and land development; real
estate, construction; real estate, mortgage; commercial and industrial and all other. The loss percentages are based on each segments historical five year average loss experience which may be adjusted by qualitative factors such as changes in
the general economy, or economy or real estate market in a particular geographic area or industry.
Bank Premises and Equipment
Bank premises and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by the straight-line method based on
the estimated useful lives of the related assets.
Other Real Estate
Other real estate (ORE) includes real estate acquired through foreclosure. Each other real estate property is carried at fair
value, less estimated costs to sell. Fair value is principally based on appraisals performed by third-party valuation specialists. Any excess of the carrying value of the related loan over the fair value of the real estate at the date of foreclosure
is charged against the ALL. Any expense incurred in connection with holding such real estate or resulting from any writedowns in value subsequent to foreclosure is included in
non-interest
expense. When the
other real estate property is sold, a gain or loss is recognized on the sale for the difference, if any, between the sales proceeds and the carrying amount of the property. If the fair value of the ORE, less estimated costs to sell at the time of
foreclosure, decreases during the holding period, the ORE is written down with a charge to
non-interest
expense. Generally, ORE properties are actively marketed for sale and Management is continuously
monitoring these properties in order to minimize any losses.
75
Trust Department Income and Fees
Corporate trust fees are accounted for on an accrual basis and personal trust fees are recorded when received.
Income Taxes
Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax
benefits, such as net operating loss carry forwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Companys
assets and liabilities results in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset
when it is more likely than not that some portion or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, Management considers the scheduled reversals of deferred tax liabilities, projected
future taxable income and tax planning strategies. The Company currently evaluates income tax positions judged to be uncertain. A loss contingency reserve is accrued if it is probable that the tax position will be challenged, it is probable that the
future resolution of the challenge will confirm that a loss has been incurred and the amount of such loss can be reasonably estimated.
Post-Retirement
Benefit Plan
The Company accounts for its post-retirement benefit plan under Accounting Standards Codification
(Codification or ASC) Topic 715, Retirement Benefits (ASC 715). The under or over funded status of the Companys post-retirement benefit plan is recognized as a liability or asset in the statement of
condition. Changes in the plans funded status are reflected in other comprehensive income. Net actuarial gains and losses and adjustments to prior service costs that are not recorded as components of the net periodic benefit cost are charged
to other comprehensive income.
Earnings Per Share
Basic and diluted earnings per share are computed on the basis of the weighted average number of common shares outstanding of 5,123,186 in
2016, 2015 and 2014.
Accumulated Other Comprehensive Income (Loss)
At December 31, 2016, 2015 and 2014, accumulated other comprehensive income (loss) consisted of net unrealized gains (losses) on available
for sale securities and over (under) funded liabilities related to the Companys post-retirement benefit plan.
76
Statements of Cash Flows
The Company has defined cash and cash equivalents to include cash and due from banks. The Company paid $1,020,177, $874,890 and $1,447,133 in
2016, 2015 and 2014, respectively, for interest on deposits and borrowings. Income tax payments totaled $78,435 and $320,000 in 2016 and 2014, respectively. Loans transferred to other real estate amounted to $1,903,427, $7,502,496 and $1,345,170 in
2016, 2015 and 2014, respectively.
Fair Value Measurement
The Company reports certain assets and liabilities at their estimated fair value. These assets and liabilities are classified and disclosed in
one of three categories based on the inputs used to develop the measurements. The categories establish a hierarchy for ranking the quality and reliability of the information used to determine fair value.
Reclassification
Certain
reclassifications have been made to the prior year statements to conform to current year presentation. The reclassifications had no effect on prior year net income.
77
NOTE B SECURITIES:
The amortized cost and fair value of securities at December 31, 2016, 2015 and 2014, respectively, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
149,676
|
|
|
$
|
39
|
|
|
$
|
(2,091
|
)
|
|
$
|
147,624
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
24,973
|
|
|
|
58
|
|
|
|
(206
|
)
|
|
|
24,825
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
43,939
|
|
|
|
74
|
|
|
|
(1,305
|
)
|
|
|
42,708
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
17,513
|
|
|
|
450
|
|
|
|
|
|
|
|
17,963
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
236,101
|
|
|
|
621
|
|
|
|
(3,602
|
)
|
|
|
233,120
|
|
|
|
|
|
|
Equity securities
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
236,559
|
|
|
$
|
621
|
|
|
$
|
(3,602
|
)
|
|
$
|
233,578
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government agencies
|
|
$
|
10,009
|
|
|
$
|
|
|
|
$
|
(315
|
)
|
|
$
|
9,694
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
36,677
|
|
|
|
29
|
|
|
|
(927
|
)
|
|
|
35,779
|
|
|
|
|
|
|
Corporate bond
|
|
|
1,464
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
1,462
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity securities
|
|
$
|
48,150
|
|
|
$
|
29
|
|
|
$
|
(1,244
|
)
|
|
$
|
46,935
|
|
|
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
63,845
|
|
|
$
|
20
|
|
|
$
|
(111
|
)
|
|
$
|
63,754
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
84,849
|
|
|
|
176
|
|
|
|
(479
|
)
|
|
|
84,546
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
30,106
|
|
|
|
155
|
|
|
|
(131
|
)
|
|
|
30,130
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
22,833
|
|
|
|
894
|
|
|
|
|
|
|
|
23,727
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
201,633
|
|
|
|
1,245
|
|
|
|
(721
|
)
|
|
|
202,157
|
|
|
|
|
|
|
Equity securities
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
202,283
|
|
|
$
|
1,245
|
|
|
$
|
(721
|
)
|
|
$
|
202,807
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
$
|
17,507
|
|
|
$
|
222
|
|
|
$
|
(16
|
)
|
|
$
|
17,713
|
|
|
|
|
|
|
Corporate bond
|
|
|
1,518
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
1,507
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity securities
|
|
$
|
19,025
|
|
|
$
|
222
|
|
|
$
|
(27
|
)
|
|
$
|
19,220
|
|
|
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
29,787
|
|
|
$
|
27
|
|
|
$
|
(160
|
)
|
|
$
|
29,654
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
119,805
|
|
|
|
115
|
|
|
|
(1,931
|
)
|
|
|
117,989
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
35,671
|
|
|
|
282
|
|
|
|
(136
|
)
|
|
|
35,817
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
29,832
|
|
|
|
1,180
|
|
|
|
|
|
|
|
31,012
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
|
215,095
|
|
|
|
1,604
|
|
|
|
(2,227
|
)
|
|
|
214,472
|
|
|
|
|
|
|
Equity securities
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
215,745
|
|
|
$
|
1,604
|
|
|
$
|
(2,227
|
)
|
|
$
|
215,122
|
|
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
$
|
17,784
|
|
|
$
|
132
|
|
|
$
|
(57
|
)
|
|
$
|
17,859
|
|
|
|
|
|
|
|
|
|
|
|
Total held to maturity securities
|
|
$
|
17,784
|
|
|
$
|
132
|
|
|
$
|
(57
|
)
|
|
$
|
17,859
|
|
|
|
|
|
|
The amortized cost and fair value of debt securities at December 31, 2016, (in thousands) by contractual
maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
80
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
33,318
|
|
|
$
|
33,371
|
|
Due after one year through five years
|
|
|
129,693
|
|
|
|
128,893
|
|
Due after five years through ten years
|
|
|
28,818
|
|
|
|
27,797
|
|
Due after ten years
|
|
|
333
|
|
|
|
351
|
|
Mortgage-backed securities
|
|
|
43,939
|
|
|
|
42,708
|
|
|
|
|
|
|
Total
|
|
$
|
236,101
|
|
|
$
|
233,120
|
|
|
|
|
|
|
|
|
|
Held to maturity securities:
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
2,745
|
|
|
$
|
2,742
|
|
Due after one year through five years
|
|
|
7,649
|
|
|
|
7,638
|
|
Due after five years through ten years
|
|
|
20,111
|
|
|
|
19,593
|
|
Due after ten years
|
|
|
17,645
|
|
|
|
16,962
|
|
|
|
|
|
|
Total
|
|
$
|
48,150
|
|
|
$
|
46,935
|
|
|
|
|
|
|
81
Available for sale and held to maturity securities with gross unrealized losses at
December 31, 2016, 2015 and 2014, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than Twelve Months
|
|
|
Over Twelve Months
|
|
|
Total
|
|
|
|
|
|
|
December 31, 2016:
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Losses
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
97,634
|
|
|
$
|
2,091
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
97,634
|
|
|
$
|
2,091
|
|
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
24,478
|
|
|
|
521
|
|
|
|
|
|
|
|
|
|
|
|
24,478
|
|
|
|
521
|
|
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
37,663
|
|
|
|
1,305
|
|
|
|
|
|
|
|
|
|
|
|
37,663
|
|
|
|
1,305
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
24,627
|
|
|
|
926
|
|
|
|
589
|
|
|
|
1
|
|
|
|
25,216
|
|
|
|
927
|
|
|
|
|
|
|
|
|
Corporate bond
|
|
|
|
|
|
|
|
|
|
|
1,462
|
|
|
|
2
|
|
|
|
1,462
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
184,402
|
|
|
$
|
4,843
|
|
|
$
|
2,051
|
|
|
$
|
3
|
|
|
$
|
186,453
|
|
|
$
|
4,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
39,889
|
|
|
$
|
111
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
39,889
|
|
|
$
|
111
|
|
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
14,894
|
|
|
|
87
|
|
|
|
12,581
|
|
|
|
392
|
|
|
|
27,475
|
|
|
|
479
|
|
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
16,557
|
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
16,557
|
|
|
|
131
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
2,225
|
|
|
|
8
|
|
|
|
1,362
|
|
|
|
8
|
|
|
|
3,587
|
|
|
|
16
|
|
|
|
|
|
|
|
|
Corporate bond
|
|
|
1,507
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
1,507
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
75,072
|
|
|
$
|
348
|
|
|
$
|
13,943
|
|
|
$
|
400
|
|
|
$
|
89,015
|
|
|
$
|
748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
4,968
|
|
|
$
|
15
|
|
|
$
|
14,795
|
|
|
$
|
145
|
|
|
$
|
19,763
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
U.S. Government agencies
|
|
|
9,954
|
|
|
|
22
|
|
|
|
92,923
|
|
|
|
1,909
|
|
|
|
102,877
|
|
|
|
1,931
|
|
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
19,436
|
|
|
|
136
|
|
|
|
19,436
|
|
|
|
136
|
|
|
|
|
|
|
|
|
States and political subdivisions
|
|
|
5,485
|
|
|
|
32
|
|
|
|
1,444
|
|
|
|
25
|
|
|
|
6,929
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,407
|
|
|
$
|
69
|
|
|
$
|
128,598
|
|
|
$
|
2,215
|
|
|
$
|
149,005
|
|
|
$
|
2,284
|
|
|
|
|
|
|
82
At December 31, 2016, 20 of the 31 securities issued by the U.S. Treasury, 5 of the 7
securities issued by U.S. Government agencies, 16 of the 19 mortgage-backed securities, 59 of the 147 securities issued by states and political subdivisions and the corporate bond contained unrealized losses.
Management evaluates securities for other-than-temporary impairment on a monthly basis. In performing this evaluation, the length of time and
the extent to which the fair value has been less than cost, the fact that the Companys securities are primarily issued by U.S. Treasury and U.S. Government agencies and the cause of the decline in value are considered. In addition, the Company
does not intend to sell and it is not more likely than not that we will be required to sell these securities before maturity. While some available for sale securities have been sold for liquidity purposes or for gains, the Company has traditionally
held its securities, including those classified as available for sale, until maturity. As a result of this evaluation, the Company has determined that the declines summarized in the tables above are not deemed to be other-than-temporary.
As part of its routine evaluation of securities for other-than-temporary impairment, the Company identified a potential credit loss on bonds
issued by a municipality with a carrying value of $1,875,000 during 2015. The Companys evaluation considered the failure of the issuer to make scheduled interest payments and expectations of future performance. Principal and interest payments
due under the current terms of the bonds are funded by sales and property tax collections by the related municipality. During the third quarter of 2015, the assessed value of the related real estate parcels was significantly reduced, which will
reduce the level of future cash flows supporting the principal and interest payments on the bonds. The present value of the expected future cash flows was calculated by the Company. Based on its evaluation, it was determined that the investment in
the bonds was impaired and that a credit loss should be recognized in earnings. During 2015, the Company recorded a loss of $1,695,000 from the credit impairment of these bonds. Accrued interest of $92,564 relating to these securities was also
charged off during 2015. During 2016, payments totaling $223,861 were received from the municipality which resulted in the Company recognizing a gain of $53,861.
Proceeds from sales of available for sale debt securities were $29,641,206, $5,007,993 and $44,279,605 during 2016, 2015 and 2014,
respectively. Available for sale debt securities were sold and called for realized gains of $157,925, $7,993 and $98,859 during 2016, 2015 and 2014, respectively.
Securities with a fair value of $180,659,168, $168,724,920 and $200,474,637 at December 31, 2016, 2015 and 2014, respectively, were
pledged to secure public deposits, federal funds purchased and other balances required by law.
83
NOTE C - LOANS:
The composition of the loan portfolio at December 31, 2016, 2015 and 2014 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Gaming
|
|
$
|
31,311
|
|
|
$
|
31,655
|
|
|
$
|
31,353
|
|
|
|
|
|
Residential and land development
|
|
|
291
|
|
|
|
933
|
|
|
|
10,119
|
|
|
|
|
|
Real estate, construction
|
|
|
32,503
|
|
|
|
35,414
|
|
|
|
34,010
|
|
|
|
|
|
Real estate, mortgage
|
|
|
206,172
|
|
|
|
219,925
|
|
|
|
234,713
|
|
|
|
|
|
Commercial and industrial
|
|
|
37,035
|
|
|
|
42,480
|
|
|
|
37,534
|
|
|
|
|
|
Other
|
|
|
8,043
|
|
|
|
7,150
|
|
|
|
14,678
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
315,355
|
|
|
$
|
337,557
|
|
|
$
|
362,407
|
|
|
|
|
|
|
In the ordinary course of business, the Companys bank subsidiary extends loans to certain officers and
directors and their personal business interests at, in the opinion of Management, the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans of similar credit risk with persons not related to the
Company or its subsidiaries. These loans do not involve more than normal risk of collectibility and do not include other unfavorable features. An analysis of the activity with respect to such loans to related parties is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
Balance, January 1
|
|
$
|
7,608
|
|
|
$
|
7,760
|
|
|
$
|
6,761
|
|
New loans and advances
|
|
|
312
|
|
|
|
3,958
|
|
|
|
2,516
|
|
Repayments
|
|
|
(1,262)
|
|
|
|
(4,110)
|
|
|
|
(1,517)
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31
|
|
$
|
6,658
|
|
|
$
|
7,608
|
|
|
$
|
7,760
|
|
|
|
|
|
|
As part of its evaluation of the quality of the loan portfolio, Management monitors the Companys credit
concentrations on a monthly basis. Total outstanding concentrations were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Gaming
|
|
$
|
31,311
|
|
|
$
|
31,655
|
|
|
$
|
31,353
|
|
Hotel/motel
|
|
|
40,319
|
|
|
|
39,460
|
|
|
|
47,144
|
|
Out of area
|
|
|
14,461
|
|
|
|
14,526
|
|
|
|
19,179
|
|
84
The age analysis of the loan portfolio, segregated by class of loans, as of December 31,
2016, 2015 and 2014 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Past
Due Greater
Than 90
Days and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Days Past Due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater
|
|
|
Total
|
|
|
|
|
|
Total
|
|
|
|
|
30 - 59
|
|
|
60 - 89
|
|
|
Than 90
|
|
|
Past Due
|
|
|
Current
|
|
|
Loans
|
|
|
Still Accruing
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,311
|
|
|
$
|
31,311
|
|
|
$
|
|
|
Residential and land development
|
|
|
|
|
|
|
|
|
|
|
291
|
|
|
|
291
|
|
|
|
|
|
|
|
291
|
|
|
|
|
|
Real estate, construction
|
|
|
902
|
|
|
|
216
|
|
|
|
1,082
|
|
|
|
2,200
|
|
|
|
30,303
|
|
|
|
32,503
|
|
|
|
|
|
Real estate, mortgage
|
|
|
4,608
|
|
|
|
1,923
|
|
|
|
4,471
|
|
|
|
11,002
|
|
|
|
195,170
|
|
|
|
206,172
|
|
|
|
|
|
Commercial and industrial
|
|
|
867
|
|
|
|
|
|
|
|
8
|
|
|
|
875
|
|
|
|
36,160
|
|
|
|
37,035
|
|
|
|
|
|
Other
|
|
|
44
|
|
|
|
36
|
|
|
|
80
|
|
|
|
160
|
|
|
|
7,883
|
|
|
|
8,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,421
|
|
|
$
|
2,175
|
|
|
$
|
5,932
|
|
|
$
|
14,528
|
|
|
$
|
300,827
|
|
|
$
|
315,355
|
|
|
$
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,655
|
|
|
$
|
31,655
|
|
|
$
|
|
|
Residential and land development
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
|
323
|
|
|
|
610
|
|
|
|
933
|
|
|
|
|
|
Real estate, construction
|
|
|
851
|
|
|
|
448
|
|
|
|
1,346
|
|
|
|
2,645
|
|
|
|
32,769
|
|
|
|
35,414
|
|
|
|
|
|
Real estate, mortgage
|
|
|
7,094
|
|
|
|
3,673
|
|
|
|
1,352
|
|
|
|
12,119
|
|
|
|
207,806
|
|
|
|
219,925
|
|
|
|
146
|
|
Commercial and industrial
|
|
|
1,206
|
|
|
|
31
|
|
|
|
237
|
|
|
|
1,474
|
|
|
|
41,006
|
|
|
|
42,480
|
|
|
|
|
|
Other
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
67
|
|
|
|
7,083
|
|
|
|
7,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,218
|
|
|
$
|
4,152
|
|
|
$
|
3,258
|
|
|
$
|
16,628
|
|
|
$
|
320,929
|
|
|
$
|
337,557
|
|
|
$
|
146
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,353
|
|
|
$
|
31,353
|
|
|
$
|
|
|
Residential and land development
|
|
|
|
|
|
|
|
|
|
|
5,262
|
|
|
|
5,262
|
|
|
|
4,857
|
|
|
|
10,119
|
|
|
|
|
|
Real estate, construction
|
|
|
1,665
|
|
|
|
85
|
|
|
|
1,944
|
|
|
|
3,694
|
|
|
|
30,316
|
|
|
|
34,010
|
|
|
|
30
|
|
Real estate, mortgage
|
|
|
3,257
|
|
|
|
3,101
|
|
|
|
12,007
|
|
|
|
18,365
|
|
|
|
216,348
|
|
|
|
234,713
|
|
|
|
733
|
|
Commercial and industrial
|
|
|
1,154
|
|
|
|
7
|
|
|
|
205
|
|
|
|
1,366
|
|
|
|
36,168
|
|
|
|
37,534
|
|
|
|
|
|
Other
|
|
|
168
|
|
|
|
10
|
|
|
|
|
|
|
|
178
|
|
|
|
14,500
|
|
|
|
14,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,244
|
|
|
$
|
3,203
|
|
|
$
|
19,418
|
|
|
$
|
28,865
|
|
|
$
|
333,542
|
|
|
$
|
362,407
|
|
|
$
|
763
|
|
|
|
|
|
|
The Company monitors the credit quality of its loan portfolio through the use of a loan grading system. A
score of 1 5 is assigned to the loan based on factors including repayment ability, trends in net worth and/or financial condition of the borrower and guarantors, employment stability, management ability, loan to value fluctuations, the type
and structure of the loan, conformity of the loan to bank policy and payment performance. Based on the total score, a loan grade of A, B, C, S, D, E or F is applied. A grade of A will generally be applied to loans for customers that are well known
to the Company and that have excellent sources of repayment. A grade of B will generally be applied to loans for customers that have excellent sources of
85
repayment which have no identifiable risk of collection. A grade of C will generally be applied to loans for customers that have adequate sources of repayment which have little identifiable risk
of collection. A grade of S will generally be applied to loans for customers who meet the criteria for a grade of C but also warrant additional monitoring by placement on the watch list. A grade of D will generally be applied to loans for customers
that are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans with a grade of D have unsatisfactory characteristics such as cash flow deficiencies, bankruptcy filing by the borrower or
dependence on the sale of collateral for the primary source of repayment, causing more than acceptable levels of risk. Loans 60 to 89 days past due receive a grade of D. A grade of E will generally be applied to loans for customers with weaknesses
inherent in the D classification and in which collection or liquidation in full is questionable. In addition, on a monthly basis the Company determines which loans are 90 days or more past due and assigns a grade of E to them. A grade of F is
applied to loans which are considered uncollectible and of such little value that their continuance in an active bank is not warranted. Loans with this grade are charged off, even though partial or full recovery may be possible in the future.
86
An analysis of the loan portfolio by loan grade, segregated by class of loans, as of
December 31, 2016, 2015 and 2014 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans With A Grade Of:
|
|
|
|
|
|
|
|
|
|
|
|
|
A, B or C
|
|
|
S
|
|
|
D
|
|
|
E
|
|
|
F
|
|
|
Total
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
31,311
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,311
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
291
|
|
|
|
|
|
|
|
291
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
|
29,954
|
|
|
|
435
|
|
|
|
517
|
|
|
|
1,597
|
|
|
|
|
|
|
|
32,503
|
|
|
|
|
|
|
|
|
Real estate, mortgage
|
|
|
155,671
|
|
|
|
17,651
|
|
|
|
22,901
|
|
|
|
9,949
|
|
|
|
|
|
|
|
206,172
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
13,926
|
|
|
|
21,680
|
|
|
|
867
|
|
|
|
562
|
|
|
|
|
|
|
|
37,035
|
|
|
|
|
|
|
|
|
Other
|
|
|
7,996
|
|
|
|
|
|
|
|
42
|
|
|
|
5
|
|
|
|
|
|
|
|
8,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
238,858
|
|
|
$
|
39,766
|
|
|
$
|
24,327
|
|
|
$
|
12,404
|
|
|
$
|
|
|
|
$
|
315,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
31,655
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,655
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
|
|
|
|
|
933
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
|
31,935
|
|
|
|
|
|
|
|
883
|
|
|
|
2,596
|
|
|
|
|
|
|
|
35,414
|
|
|
|
|
|
|
|
|
Real estate, mortgage
|
|
|
167,286
|
|
|
|
16,678
|
|
|
|
23,686
|
|
|
|
12,275
|
|
|
|
|
|
|
|
219,925
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
24,466
|
|
|
|
15,007
|
|
|
|
2,368
|
|
|
|
639
|
|
|
|
|
|
|
|
42,480
|
|
|
|
|
|
|
|
|
Other
|
|
|
7,114
|
|
|
|
1
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
7,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
263,066
|
|
|
$
|
31,686
|
|
|
$
|
26,972
|
|
|
$
|
15,833
|
|
|
$
|
|
|
|
$
|
337,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
$
|
31,353
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,353
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
3,520
|
|
|
|
1,319
|
|
|
|
17
|
|
|
|
5,263
|
|
|
|
|
|
|
|
10,119
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
|
27,474
|
|
|
|
723
|
|
|
|
2,496
|
|
|
|
3,317
|
|
|
|
|
|
|
|
34,010
|
|
|
|
|
|
|
|
|
Real estate, mortgage
|
|
|
191,458
|
|
|
|
4,051
|
|
|
|
16,591
|
|
|
|
22,613
|
|
|
|
|
|
|
|
234,713
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
32,505
|
|
|
|
25
|
|
|
|
1,579
|
|
|
|
3,425
|
|
|
|
|
|
|
|
37,534
|
|
|
|
|
|
|
|
|
Other
|
|
|
14,583
|
|
|
|
6
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
14,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
300,893
|
|
|
$
|
6,124
|
|
|
$
|
20,772
|
|
|
$
|
34,618
|
|
|
$
|
|
|
|
$
|
362,407
|
|
|
|
|
|
|
87
A loan may be impaired but not on nonaccrual status when the loan is well secured and in the
process of collection. Total loans on nonaccrual as of December 31, 2016, 2015 and 2014 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
$
|
291
|
|
|
$
|
323
|
|
|
$
|
8,233
|
|
|
|
|
|
Real estate, construction
|
|
|
1,598
|
|
|
|
2,523
|
|
|
|
3,287
|
|
|
|
|
|
Real estate, mortgage
|
|
|
9,445
|
|
|
|
11,759
|
|
|
|
21,398
|
|
|
|
|
|
Commercial and industrial
|
|
|
515
|
|
|
|
581
|
|
|
|
380
|
|
|
|
|
|
Other
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,854
|
|
|
$
|
15,186
|
|
|
$
|
33,298
|
|
|
|
|
|
|
Prior to 2014, certain loans were modified by granting interest rate concessions to these customers with such
loans being classified as troubled debt restructurings. During 2016, 2015 and 2014, the Company did not restructure any additional loans. Specific reserves of $100,000, $107,000 and $50,000 have been allocated to troubled debt restructurings as of
December 31, 2016, 2015, and 2014, respectively. The Bank had no commitments to lend additional amounts to customers with outstanding loans classified as troubled debt restructurings as of December 31, 2016, 2015 and 2014.
88
Impaired loans, which include loans classified as nonaccrual and troubled debt restructurings,
segregated by class of loans, as of December 31, 2016, 2015 and 2014 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
$
|
2,023
|
|
|
$
|
1,331
|
|
|
$
|
|
|
|
$
|
1,395
|
|
|
$
|
|
|
Real estate, mortgage
|
|
|
11,811
|
|
|
|
9,282
|
|
|
|
|
|
|
|
10,582
|
|
|
|
23
|
|
Commercial and industrial
|
|
|
553
|
|
|
|
515
|
|
|
|
|
|
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14,387
|
|
|
|
11,128
|
|
|
|
|
|
|
|
12,515
|
|
|
|
23
|
|
|
|
|
|
|
With a related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
291
|
|
|
|
291
|
|
|
|
66
|
|
|
|
304
|
|
|
|
|
|
Real estate, construction
|
|
|
267
|
|
|
|
267
|
|
|
|
141
|
|
|
|
283
|
|
|
|
|
|
Real estate, mortgage
|
|
|
1,347
|
|
|
|
1,347
|
|
|
|
195
|
|
|
|
1,080
|
|
|
|
30
|
|
Other
|
|
|
5
|
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,910
|
|
|
|
1,910
|
|
|
|
403
|
|
|
|
1,668
|
|
|
|
30
|
|
|
|
|
|
|
Total by class of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
291
|
|
|
|
291
|
|
|
|
66
|
|
|
|
304
|
|
|
|
|
|
Real estate, construction
|
|
|
2,290
|
|
|
|
1,598
|
|
|
|
141
|
|
|
|
1,678
|
|
|
|
|
|
Real estate, mortgage
|
|
|
13,158
|
|
|
|
10,629
|
|
|
|
195
|
|
|
|
11,662
|
|
|
|
53
|
|
Commercial and industrial
|
|
|
553
|
|
|
|
515
|
|
|
|
|
|
|
|
538
|
|
|
|
|
|
Other
|
|
|
5
|
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,297
|
|
|
$
|
13,038
|
|
|
$
|
403
|
|
|
$
|
14,183
|
|
|
$
|
53
|
|
|
|
|
|
|
89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
$
|
2,228
|
|
|
$
|
1,842
|
|
|
$
|
|
|
|
$
|
1,878
|
|
|
$
|
|
|
Real estate, mortgage
|
|
|
9,771
|
|
|
|
9,014
|
|
|
|
|
|
|
|
9,175
|
|
|
|
21
|
|
Commercial and industrial
|
|
|
619
|
|
|
|
581
|
|
|
|
|
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,618
|
|
|
|
11,437
|
|
|
|
|
|
|
|
11,706
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
With a related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
323
|
|
|
|
323
|
|
|
|
109
|
|
|
|
343
|
|
|
|
|
|
Real estate, construction
|
|
|
814
|
|
|
|
681
|
|
|
|
252
|
|
|
|
780
|
|
|
|
|
|
Real estate, mortgage
|
|
|
3,977
|
|
|
|
3,977
|
|
|
|
1,443
|
|
|
|
3,920
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,114
|
|
|
|
4,981
|
|
|
|
1,804
|
|
|
|
5,043
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Total by class of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
323
|
|
|
|
323
|
|
|
|
109
|
|
|
|
343
|
|
|
|
|
|
Real estate, construction
|
|
|
3,042
|
|
|
|
2,523
|
|
|
|
252
|
|
|
|
2,658
|
|
|
|
|
|
Real estate, mortgage
|
|
|
13,748
|
|
|
|
12,991
|
|
|
|
1,443
|
|
|
|
13,095
|
|
|
|
39
|
|
Commercial and industrial
|
|
|
619
|
|
|
|
581
|
|
|
|
|
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17,732
|
|
|
$
|
16,418
|
|
|
$
|
1,804
|
|
|
$
|
16,749
|
|
|
$
|
39
|
|
|
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Average
Recorded
Investment
|
|
|
Interest
Income
Recognized
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
$
|
9,513
|
|
|
$
|
8,233
|
|
|
$
|
|
|
|
$
|
8,380
|
|
|
$
|
|
|
Real estate, construction
|
|
|
2,198
|
|
|
|
2,178
|
|
|
|
|
|
|
|
2,222
|
|
|
|
|
|
Real estate, mortgage
|
|
|
19,517
|
|
|
|
16,243
|
|
|
|
|
|
|
|
18,258
|
|
|
|
26
|
|
Commercial and industrial
|
|
|
380
|
|
|
|
380
|
|
|
|
|
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
31,608
|
|
|
|
27,034
|
|
|
|
|
|
|
|
29,244
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
With a related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate, construction
|
|
|
1,109
|
|
|
|
1,109
|
|
|
|
422
|
|
|
|
1,115
|
|
|
|
|
|
Real estate, mortgage
|
|
|
6,591
|
|
|
|
5,992
|
|
|
|
2,135
|
|
|
|
5,996
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,700
|
|
|
|
7,101
|
|
|
|
2,557
|
|
|
|
7,111
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Total by class of loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential and land development
|
|
|
9,513
|
|
|
|
8,233
|
|
|
|
|
|
|
|
8,380
|
|
|
|
|
|
Real estate, construction
|
|
|
3,307
|
|
|
|
3,287
|
|
|
|
422
|
|
|
|
3,337
|
|
|
|
|
|
Real estate, mortgage
|
|
|
26,108
|
|
|
|
22,235
|
|
|
|
2,135
|
|
|
|
24,254
|
|
|
|
35
|
|
Commercial and industrial
|
|
|
380
|
|
|
|
380
|
|
|
|
|
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
39,308
|
|
|
$
|
34,135
|
|
|
$
|
2,557
|
|
|
$
|
36,355
|
|
|
$
|
35
|
|
|
|
|
|
|
91
Transactions in the allowance for loan losses for the years ended December 31, 2016, 2015
and 2014, and the balances of loans, individually and collectively evaluated for impairment, as of December 31, 2016, 2015 and 2014 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
Residential
and Land
Development
|
|
|
Real Estate,
Construction
|
|
|
Real Estate,
Mortgage
|
|
|
Commercial
and
Industrial
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
582
|
|
|
$
|
189
|
|
|
$
|
589
|
|
|
$
|
5,382
|
|
|
$
|
1,075
|
|
|
$
|
253
|
|
|
$
|
8,070
|
|
Charge-offs
|
|
|
|
|
|
|
|
|
|
|
(260
|
)
|
|
|
(2,499
|
)
|
|
|
(509
|
)
|
|
|
(254
|
)
|
|
|
(3,522
|
)
|
Recoveries
|
|
|
|
|
|
|
|
|
|
|
71
|
|
|
|
107
|
|
|
|
62
|
|
|
|
110
|
|
|
|
350
|
|
Provision
|
|
|
(37
|
)
|
|
|
(123
|
)
|
|
|
(201
|
)
|
|
|
810
|
|
|
|
23
|
|
|
|
96
|
|
|
|
568
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
545
|
|
|
$
|
66
|
|
|
$
|
199
|
|
|
$
|
3,800
|
|
|
$
|
651
|
|
|
$
|
205
|
|
|
$
|
5,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually evaluated for impairment
|
|
$
|
|
|
|
$
|
66
|
|
|
$
|
141
|
|
|
$
|
424
|
|
|
$
|
214
|
|
|
$
|
15
|
|
|
$
|
860
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
545
|
|
|
$
|
|
|
|
$
|
58
|
|
|
$
|
3,376
|
|
|
$
|
437
|
|
|
$
|
190
|
|
|
$
|
4,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually evaluated for impairment
|
|
$
|
|
|
|
$
|
291
|
|
|
$
|
2,114
|
|
|
$
|
32,850
|
|
|
$
|
1,430
|
|
|
$
|
47
|
|
|
$
|
36,732
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
31,311
|
|
|
$
|
|
|
|
$
|
30,389
|
|
|
$
|
173,322
|
|
|
$
|
35,605
|
|
|
$
|
7,996
|
|
|
$
|
278,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
573
|
|
|
$
|
251
|
|
|
$
|
860
|
|
|
$
|
6,609
|
|
|
$
|
587
|
|
|
$
|
326
|
|
|
$
|
9,206
|
|
Charge-offs
|
|
|
|
|
|
|
(1,504
|
)
|
|
|
(955
|
)
|
|
|
(1,171
|
)
|
|
|
(275
|
)
|
|
|
(203
|
)
|
|
|
(4,108
|
)
|
Recoveries
|
|
|
|
|
|
|
|
|
|
|
102
|
|
|
|
190
|
|
|
|
19
|
|
|
|
79
|
|
|
|
390
|
|
Provision
|
|
|
9
|
|
|
|
1,442
|
|
|
|
582
|
|
|
|
(246
|
)
|
|
|
744
|
|
|
|
51
|
|
|
|
2,582
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
582
|
|
|
$
|
189
|
|
|
$
|
589
|
|
|
$
|
5,382
|
|
|
$
|
1,075
|
|
|
$
|
253
|
|
|
$
|
8,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually evaluated for impairment
|
|
$
|
|
|
|
$
|
109
|
|
|
$
|
484
|
|
|
$
|
1,751
|
|
|
$
|
614
|
|
|
$
|
4
|
|
|
$
|
2,962
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
582
|
|
|
$
|
80
|
|
|
$
|
105
|
|
|
$
|
3,631
|
|
|
$
|
461
|
|
|
$
|
249
|
|
|
$
|
5,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually evaluated for impairment
|
|
$
|
|
|
|
$
|
323
|
|
|
$
|
3,479
|
|
|
$
|
35,961
|
|
|
$
|
3,003
|
|
|
$
|
35
|
|
|
$
|
42,801
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
31,655
|
|
|
$
|
610
|
|
|
$
|
31,935
|
|
|
$
|
183,964
|
|
|
$
|
39,477
|
|
|
$
|
7,115
|
|
|
$
|
294,756
|
|
|
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
Residential
and Land
Development
|
|
|
Real Estate,
Construction
|
|
|
Real Estate,
Mortgage
|
|
|
Commercial
and
Industrial
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
977
|
|
|
$
|
776
|
|
|
$
|
695
|
|
|
$
|
5,553
|
|
|
$
|
632
|
|
|
$
|
301
|
|
|
$
|
8,934
|
|
Charge-offs
|
|
|
(992
|
)
|
|
|
(2,060
|
)
|
|
|
(127
|
)
|
|
|
(368
|
)
|
|
|
(3,948
|
)
|
|
|
(235
|
)
|
|
|
(7,730
|
)
|
Recoveries
|
|
|
260
|
|
|
|
|
|
|
|
35
|
|
|
|
193
|
|
|
|
20
|
|
|
|
90
|
|
|
|
598
|
|
Provision
|
|
|
328
|
|
|
|
1,535
|
|
|
|
257
|
|
|
|
1,231
|
|
|
|
3,883
|
|
|
|
170
|
|
|
|
7,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
573
|
|
|
$
|
251
|
|
|
$
|
860
|
|
|
$
|
6,609
|
|
|
$
|
587
|
|
|
$
|
326
|
|
|
$
|
9,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually evaluated for impairment
|
|
$
|
|
|
|
$
|
|
|
|
$
|
742
|
|
|
$
|
2,706
|
|
|
$
|
289
|
|
|
$
|
6
|
|
|
$
|
3,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
573
|
|
|
$
|
251
|
|
|
$
|
118
|
|
|
$
|
3,903
|
|
|
$
|
298
|
|
|
$
|
320
|
|
|
$
|
5,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: individually
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: Individually evaluated for impairment
|
|
$
|
|
|
|
$
|
7,232
|
|
|
$
|
6,830
|
|
|
$
|
39,204
|
|
|
$
|
2,035
|
|
|
$
|
89
|
|
|
$
|
55,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment
|
|
$
|
31,353
|
|
|
$
|
2,887
|
|
|
$
|
27,180
|
|
|
$
|
195,509
|
|
|
$
|
35,499
|
|
|
$
|
14,589
|
|
|
$
|
307,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE D - BANK PREMISES AND EQUIPMENT:
Bank premises and equipment are shown as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Estimated Useful Lives
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Land
|
|
|
|
|
|
$
|
5,792
|
|
|
$
|
5,982
|
|
|
$
|
5,982
|
|
Building
|
|
|
5 - 40 years
|
|
|
|
30,650
|
|
|
|
30,641
|
|
|
|
30,593
|
|
Furniture, fixtures and equipment
|
|
|
3 - 10 years
|
|
|
|
16,422
|
|
|
|
15,879
|
|
|
|
15,511
|
|
|
|
|
|
|
|
|
|
|
Totals, at cost
|
|
|
|
|
|
|
52,864
|
|
|
|
52,502
|
|
|
|
52,086
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
|
31,220
|
|
|
|
30,056
|
|
|
|
28,302
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
|
|
$
|
21,644
|
|
|
$
|
22,446
|
|
|
$
|
23,784
|
|
|
|
|
|
|
|
|
|
|
93
NOTE E OTHER REAL ESTATE:
The Companys other real estate consisted of the following as of December 31, 2016, 2015 and 2014, respectively (in thousands except
number of properties):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
Number of
Properties
|
|
|
Balance
|
|
|
Number of
Properties
|
|
|
Balance
|
|
|
Number of
Properties
|
|
|
Balance
|
|
|
|
|
|
|
Construction, land development and other land
|
|
|
19
|
|
|
$
|
7,658
|
|
|
|
19
|
|
|
$
|
8,792
|
|
|
|
15
|
|
|
$
|
5,034
|
|
1 - 4 family residential properties
|
|
|
3
|
|
|
|
202
|
|
|
|
3
|
|
|
|
368
|
|
|
|
10
|
|
|
|
431
|
|
Nonfarm nonresidential
|
|
|
3
|
|
|
|
653
|
|
|
|
4
|
|
|
|
756
|
|
|
|
14
|
|
|
|
2,030
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
151
|
|
|
|
|
|
|
Total
|
|
|
25
|
|
|
$
|
8,513
|
|
|
|
26
|
|
|
$
|
9,916
|
|
|
|
40
|
|
|
$
|
7,646
|
|
|
|
|
|
|
NOTE
F-
DEPOSITS:
At December 31, 2016, the scheduled maturities of time deposits are as follows (in thousands):
|
|
|
|
|
2017
|
|
|
$ 54,491
|
|
2018
|
|
|
17,645
|
|
2019
|
|
|
2,942
|
|
2020
|
|
|
1,549
|
|
2021
|
|
|
1,033
|
|
|
|
|
|
|
|
|
Total
|
|
|
$77,660
|
|
|
|
|
|
|
Time deposits of $100,000 or more at December 31, 2016 included brokered deposits of $5,000,000, which
mature in 2017.
Time deposits of $250,000 or more totaled approximately $25,143,000, $24,090,000 and $25,321,000 at December 31,
2016, 2015 and 2014, respectively.
Deposits held for related parties amounted to $17,713,230, $7,640,079 and $6,607,646 at
December 31, 2016, 2015 and 2014, respectively.
Overdrafts totaling $800,557, $663,511 and $822,730 were reclassified as loans at
December 31, 2016, 2015 and 2014, respectively.
NOTE G FEDERAL FUNDS PURCHASED:
At December 31, 2016, the Company had facilities in place to purchase federal funds up to $40,000,000 under established credit
arrangements.
94
NOTE H
-
BORROWINGS:
At December 31, 2016, the Company was able to borrow up to $31,367,467 from the Federal Reserve Bank Discount Window Primary Credit
Program. The borrowing limit is based on the amount of collateral pledged, with certain loans from the Banks portfolio serving as collateral. Borrowings bear interest at 25 basis points over the current fed funds rate and have a maturity of
one day. There was no outstanding balance at December 31, 2016.
At December 31, 2016, the Company had $6,256,591 outstanding in
advances under a $33,170,021 line of credit with the FHLB. One advance in the amount of $5,000,000 bears interest at a variable rate of 43.2 basis points above the 1 month LIBOR rate, which was 1.112% at December 31, 2016, and matures in 2017.
New advances may subsequently be obtained based on the liquidity needs of the bank subsidiary. The remaining balance consists of smaller advances bearing interest from 2.604% to 7.00% with maturity dates from 2030 2040. The advances are
collateralized by specific loans, for which certain documents are held in custody by the FHLB, and, if needed, specific investment securities that are held in safekeeping at the FHLB.
NOTE I - INCOME TAXES:
Deferred taxes (or
deferred charges) as of December 31, 2016, 2015 and 2014, included in other assets, were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
1,858
|
|
|
$
|
2,744
|
|
|
$
|
3,130
|
|
Employee benefit plans liabilities
|
|
|
4,784
|
|
|
|
4,633
|
|
|
|
4,490
|
|
Unrealized loss on available for sale securities, charged from equity
|
|
|
1,013
|
|
|
|
|
|
|
|
210
|
|
Loss on credit impairment of securities
|
|
|
576
|
|
|
|
576
|
|
|
|
|
|
Earned retiree health benefits plan liability
|
|
|
1,638
|
|
|
|
1,638
|
|
|
|
1,638
|
|
General business and AMT credits
|
|
|
1,605
|
|
|
|
2,011
|
|
|
|
1,735
|
|
Tax net operating loss carryforward
|
|
|
3,423
|
|
|
|
2,514
|
|
|
|
651
|
|
Other
|
|
|
1,731
|
|
|
|
1,535
|
|
|
|
1,637
|
|
Valuation allowance
|
|
|
(11,560
|
)
|
|
|
(10,106
|
)
|
|
|
(8,140
|
)
|
|
|
|
|
|
Deferred tax assets
|
|
|
5,068
|
|
|
|
5,545
|
|
|
|
5,351
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on available for sale securities, charged to equity
|
|
|
|
|
|
|
180
|
|
|
|
|
|
Unearned retiree health benefits plan asset
|
|
|
720
|
|
|
|
734
|
|
|
|
362
|
|
Bank premises and equipment
|
|
|
4,011
|
|
|
|
4,369
|
|
|
|
4,760
|
|
Other
|
|
|
337
|
|
|
|
262
|
|
|
|
229
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
5,068
|
|
|
|
5,545
|
|
|
|
5,351
|
|
|
|
|
|
|
Net deferred taxes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
95
Income taxes consist of the following components (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Current
|
|
$
|
78
|
|
|
$
|
|
|
|
$
|
(137
|
)
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(247
|
)
|
|
|
(2,728
|
)
|
|
|
(3,277
|
)
|
Change in valuation allowance
|
|
|
247
|
|
|
|
1,966
|
|
|
|
8,140
|
|
|
|
|
|
|
Total deferred
|
|
|
|
|
|
|
(762
|
)
|
|
|
4,863
|
|
|
|
|
|
|
Totals
|
|
$
|
78
|
|
|
$
|
(762
|
)
|
|
$
|
4,726
|
|
|
|
|
|
|
Income taxes amounted to less than the amounts computed by applying the U.S. Federal income tax rate of 34.0%
for 2016, 2015 and 2014 to income (loss) before income taxes. The reasons for these differences are shown below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Tax
|
|
|
Rate
|
|
|
Tax
|
|
|
Rate
|
|
|
Tax
|
|
|
Rate
|
|
|
|
|
|
|
Taxes computed at statutory rate
|
|
$
|
83
|
|
|
|
34
|
|
|
$
|
(1,820
|
)
|
|
|
(34
|
)
|
|
$
|
(1,794
|
)
|
|
|
(34)
|
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt
interest income
|
|
|
(417
|
)
|
|
|
(170
|
)
|
|
|
(447
|
)
|
|
|
(8
|
)
|
|
|
(532
|
)
|
|
|
(10)
|
|
Income from BOLI
|
|
|
(144
|
)
|
|
|
(59
|
)
|
|
|
(166
|
)
|
|
|
(3
|
)
|
|
|
(200
|
)
|
|
|
(4)
|
|
Federal tax credits
|
|
|
(298
|
)
|
|
|
(121
|
)
|
|
|
(298
|
)
|
|
|
(6
|
)
|
|
|
(298
|
)
|
|
|
(6)
|
|
Other
|
|
|
607
|
|
|
|
247
|
|
|
|
3
|
|
|
|
|
|
|
|
(590
|
)
|
|
|
(10)
|
|
Change in valuation allowance
|
|
|
247
|
|
|
|
101
|
|
|
|
1,966
|
|
|
|
37
|
|
|
|
8,140
|
|
|
|
154
|
|
|
|
|
|
|
Total income tax (benefit) expense
|
|
$
|
78
|
|
|
|
32
|
|
|
$
|
(762
|
)
|
|
|
(14
|
)
|
|
$
|
4,726
|
|
|
|
90
|
|
|
|
|
|
|
A valuation allowance is recognized against deferred tax assets when, based on the consideration of all
available positive and negative evidence using a more likely than not criteria, it is determined that all or a portion of these tax benefits may not be realized. This assessment requires consideration of all sources of taxable income available to
realize the deferred tax asset including taxable income in prior carry-back years, future reversals of existing temporary differences, tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards.
The Company incurred losses on a cumulative basis for the three-year period ended December 31, 2014, which is considered to be significant negative evidence. The positive evidence considered in support was insufficient to overcome this negative
evidence. As a result, the Company established a full valuation allowance for its net deferred tax asset in the amount of $8,140,000 as of December 31, 2014.
The Company intends to maintain this valuation allowance until it determines it is more likely than not that the asset can be realized through
current and future taxable income. If not utilized, the Companys federal net operating loss of $7,000,000 will begin to expire in 2034.
96
The Company has reviewed its income tax positions and specifically considered the recognition and
measurement requirements of the benefits recorded in its financial statements for tax positions taken or expected to be taken in its tax returns. The Company currently has no unrecognized tax benefits that, if recognized, would favorably affect the
income tax rate in future periods.
Income tax expense (or benefit) for each year is allocated to continuing operations, discontinued
operations, other comprehensive income and other charges or credits recorded directly to shareholders equity. This allocation is commonly referred to as intra-period tax allocation as outlined in Accounting Standards Codification Topic 740,
Income Taxes (ASC 740). ASC 740 also includes an exception to the general principle of intra-period tax allocation discussed above. This exception requires that all items, i.e., discontinued operations and items charged or credited
directly to other comprehensive income, be considered in determining the amount of the tax benefit that results from a loss from continuing operations. That is, when a company has a current period loss from continuing operations, management must
consider income recorded in other categories in determining the tax benefit that is allocated to continuing operations. The ASC 740 exception, however, only relates to the allocation of the current year tax provision, which may be zero, and does not
change a companys overall tax provision.
Accordingly, for the year ended December 31, 2015, the Company recorded a tax benefit
of $762,000 in continuing operations and a corresponding income tax expense in other comprehensive income associated with the increase in the unrealized gain on available for sale securities and the decrease in the unfunded post-retirement benefit
obligation.
The Company recorded income tax expense of $78,000 during the second quarter of 2016 relating to the resolution of a recent
examination by the Internal Revenue Service.
NOTE J - SHAREHOLDERS EQUITY:
Shareholders equity of the Company includes the undistributed earnings of the bank subsidiary. Dividends to the Companys
shareholders can generally be paid only from dividends paid to the Company by its bank subsidiary. Consequently, dividends are dependent upon the earnings, capital needs, regulatory policies and statutory limitations affecting the bank subsidiary.
Dividends paid by the bank subsidiary are subject to the written approval of the Commissioner of Banking and Consumer Finance of the State of Mississippi and the Federal Deposit Insurance Corporation (the FDIC). At December 31,
2016, $11,408,685 of undistributed earnings of the bank subsidiary included in consolidated surplus and retained earnings was available for future distribution to the Company as dividends. Dividends paid by the Company are subject to the written
approval of the Federal Reserve Bank (FRB).
On February 25, 2009, the Board approved the repurchase of up to 3% of the
outstanding shares of the Companys common stock. As a result of this repurchase plan, 47,756 shares have been repurchased and retired through December 31, 2016.
97
The Company and the bank subsidiary are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on the
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, specific capital guidelines must be met that involve quantitative measures of the assets, liabilities and certain
off-balance
sheet items as calculated under regulatory accounting practices. The capital amounts and classification of the bank subsidiary and the Company are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
New rules relating to risk-based capital requirements and the method for calculating
components of capital and of computing risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act became effective for the Company
January 1, 2015. The rules establish a new Common equity tier 1 minimum capital requirement, increase the minimum capital ratios and assign a higher risk weight to certain assets based on the risk associated with these assets. Quantitative
measures established by regulation to ensure capital adequacy require the bank subsidiary to maintain minimum amounts and ratios of Total, Common equity tier 1 and Tier 1 capital to risk-weighted assets, and Tier 1 capital to average assets.
Beginning January 1, 2016, the Company must hold a capital conservation buffer composed of Common equity tier 1 capital above its minimum risk-based capital requirements in order to avoid limitations on capital distributions, including dividend
payments and certain discretionary bonus payments to executive officers.
As of December 31, 2016, the most recent notification from
the FDIC categorized the bank subsidiary as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the bank subsidiary must have a Total risk-based capital ratio of 10.00% or greater, a
Common equity tier 1 capital ratio of 6.50% or greater, a Tier 1 risk-based capital ratio of 8.00% or greater and a Leverage capital ratio of 5.00% or greater, with a capital conservation buffer above these requirements of .625% for 2016. The buffer
will increase annually until it is fully
phased-in
to 2.50% at January 1, 2019. There are no conditions or events since that notification that Management believes have changed the bank subsidiarys
category.
98
The Companys actual capital amounts and ratios and required minimum capital amounts and
ratios for 2016, 2015 and 2014, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
For Capital Adequacy Purposes
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
Ratio
|
|
|
|
Amount
|
|
|
|
Ratio
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
95,262
|
|
|
|
22.94%
|
|
|
$
|
33,220
|
|
|
|
8.00%
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets)
|
|
|
90,068
|
|
|
|
21.69%
|
|
|
|
18,687
|
|
|
|
4.50%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
90,068
|
|
|
|
21.69%
|
|
|
|
24,915
|
|
|
|
6.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
90,068
|
|
|
|
13.12%
|
|
|
|
27,464
|
|
|
|
4.00%
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
95,395
|
|
|
|
21.83%
|
|
|
$
|
34,954
|
|
|
|
8.00%
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets)
|
|
|
89,901
|
|
|
|
20.58%
|
|
|
|
19,662
|
|
|
|
4.50%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
89,901
|
|
|
|
20.58%
|
|
|
|
26,215
|
|
|
|
6.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
89,901
|
|
|
|
13.18%
|
|
|
|
27,291
|
|
|
|
4.00%
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
100,243
|
|
|
|
21.95%
|
|
|
$
|
36,528
|
|
|
|
8.00%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
94,493
|
|
|
|
20.70%
|
|
|
|
18,264
|
|
|
|
4.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
94,493
|
|
|
|
13.29%
|
|
|
|
28,437
|
|
|
|
4.00%
|
|
The bank subsidiarys actual capital amounts and ratios and required minimum capital amounts and ratios
and capital amounts and ratios to be well capitalized for 2016, 2015 and 2014, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
For Capital
Adequacy Purposes
|
|
|
To Be Well
Capitalized
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
Ratio
|
|
|
|
Amount
|
|
|
|
Ratio
|
|
|
|
Amount
|
|
|
|
Ratio
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
91,882
|
|
|
|
22.29%
|
|
|
$
|
32,975
|
|
|
|
8.00%
|
|
|
$
|
41,219
|
|
|
|
10.00%
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets)
|
|
|
86,726
|
|
|
|
21.04%
|
|
|
|
18,548
|
|
|
|
4.50%
|
|
|
|
26,792
|
|
|
|
6.50%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
86,726
|
|
|
|
21.04%
|
|
|
|
24,731
|
|
|
|
6.00%
|
|
|
|
32,975
|
|
|
|
8.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
86,726
|
|
|
|
12.47%
|
|
|
|
27,820
|
|
|
|
4.00%
|
|
|
|
34,775
|
|
|
|
5.00%
|
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
91,963
|
|
|
|
21.09%
|
|
|
$
|
34,889
|
|
|
|
8.00%
|
|
|
$
|
43,611
|
|
|
|
10.00%
|
|
Common Equity Tier 1 Capital (to Risk Weighted Assets)
|
|
|
86,479
|
|
|
|
19.83%
|
|
|
|
19,625
|
|
|
|
4.50%
|
|
|
|
28,347
|
|
|
|
6.50%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
86,479
|
|
|
|
19.83%
|
|
|
|
26,166
|
|
|
|
6.00%
|
|
|
|
34,889
|
|
|
|
8.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
86,479
|
|
|
|
13.47%
|
|
|
|
25,680
|
|
|
|
4.00%
|
|
|
|
32,100
|
|
|
|
5.00%
|
|
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to Risk Weighted Assets)
|
|
$
|
96,427
|
|
|
|
21.28%
|
|
|
$
|
36,247
|
|
|
|
8.00%
|
|
|
$
|
45,309
|
|
|
|
10.00%
|
|
Tier 1 Capital (to Risk Weighted Assets)
|
|
|
90,720
|
|
|
|
20.02%
|
|
|
|
18,124
|
|
|
|
4.00%
|
|
|
|
27,186
|
|
|
|
6.00%
|
|
Tier 1 Capital (to Average Assets)
|
|
|
90,720
|
|
|
|
13.15%
|
|
|
|
27,599
|
|
|
|
4.00%
|
|
|
|
34,499
|
|
|
|
5.00%
|
|
99
NOTE K - OTHER INCOME AND EXPENSES:
Other income consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Other service charges, commissions and fees
|
|
$
|
116
|
|
|
$
|
109
|
|
|
$
|
84
|
|
Rentals
|
|
|
320
|
|
|
|
393
|
|
|
|
435
|
|
Other
|
|
|
223
|
|
|
|
212
|
|
|
|
113
|
|
|
|
|
|
|
Totals
|
|
$
|
659
|
|
|
$
|
714
|
|
|
$
|
632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Advertising
|
|
$
|
544
|
|
|
$
|
505
|
|
|
$
|
552
|
|
Data processing
|
|
|
1,346
|
|
|
|
1,403
|
|
|
|
1,339
|
|
FDIC and state banking assessments
|
|
|
901
|
|
|
|
928
|
|
|
|
1,033
|
|
Legal and accounting
|
|
|
566
|
|
|
|
785
|
|
|
|
493
|
|
Other real estate
|
|
|
868
|
|
|
|
2,264
|
|
|
|
1,610
|
|
ATM expense
|
|
|
555
|
|
|
|
1,183
|
|
|
|
2,409
|
|
Trust expense
|
|
|
370
|
|
|
|
355
|
|
|
|
323
|
|
Other
|
|
|
1,689
|
|
|
|
2,098
|
|
|
|
1,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
6,839
|
|
|
$
|
9,521
|
|
|
$
|
9,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE L - FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET
RISK:
The Company is a party to financial instruments with
off-balance-sheet
risk in the normal course of
business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and irrevocable letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the balance sheet. The contract amounts of those instruments reflect the extent of involvement the bank subsidiary has in particular classes of financial instruments. The Companys exposure to credit loss in
the event of nonperformance by the other party to the financial instrument for commitments to extend credit and irrevocable letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in
making commitments and conditional obligations as it does for
on-balance-sheet
instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any conditions established in the
agreement. Irrevocable letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Commitments and irrevocable letters of credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since some of the commitments and irrevocable letters of credit may expire without being drawn upon, the total amounts do not
100
necessarily represent future cash requirements. The Company evaluated each customers creditworthiness on a
case-by-case
basis. The amount of collateral obtained upon extension of credit is based on Managements credit evaluation of the customer. Collateral obtained
varies but may include equipment, real property and inventory.
The Company generally grants loans to customers in its trade area.
At December 31, 2016, 2015 and 2014, the Company had outstanding irrevocable letters of credit aggregating $410,286, $1,919,678 and
$1,879,678, respectively. At December 31, 2016, 2015 and 2014, the Company had outstanding unused loan commitments aggregating $42,401,431, $41,935,725 and $66,663,320, respectively. Approximately $16,476,000, $11,335,000 and $30,910,000 of
outstanding commitments were at fixed rates and the remainder was at variable rates at December 31, 2016, 2015 and 2014, respectively.
NOTE M - CONTINGENCIES:
The
Bank is involved in various legal matters and claims which are being defended and handled in the ordinary course of business. None of these matters are expected, in the opinion of Management, to have a material adverse effect upon the financial
position or results of operations of the Company.
NOTE N - CONDENSED PARENT COMPANY ONLY FINANCIAL INFORMATION:
Peoples Financial Corporation began its operations September 30, 1985, when it acquired all the outstanding stock of The Peoples Bank,
Biloxi, Mississippi. A condensed summary of its financial information is shown below.
101
CONDENSED BALANCE SHEETS (IN THOUSANDS):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in subsidiaries, at underlying equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank subsidiary
|
|
$
|
85,118
|
|
|
$
|
88,415
|
|
|
$
|
91,179
|
|
Nonbank subsidiary
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
Cash in bank subsidiary
|
|
|
191
|
|
|
|
28
|
|
|
|
160
|
|
|
|
|
|
Other assets
|
|
|
3,151
|
|
|
|
3,395
|
|
|
|
3,611
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
88,461
|
|
|
$
|
91,839
|
|
|
$
|
94,951
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
88,461
|
|
|
|
91,839
|
|
|
|
94,951
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
88,461
|
|
|
$
|
91,839
|
|
|
$
|
94,951
|
|
|
|
|
|
|
102
CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributed income of bank subsidiary
|
|
$
|
75
|
|
|
$
|
|
|
|
$
|
|
|
Undistributed income (loss) of bank subsidiary
|
|
|
247
|
|
|
|
(4,242
|
)
|
|
|
(10,025)
|
|
Other loss
|
|
|
(32
|
)
|
|
|
(208
|
)
|
|
|
(53)
|
|
|
|
|
|
|
|
|
|
|
Total income (loss)
|
|
|
290
|
|
|
|
(4,450
|
)
|
|
|
(10,078)
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Other
|
|
|
123
|
|
|
|
142
|
|
|
|
124
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
123
|
|
|
|
142
|
|
|
|
124
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
167
|
|
|
|
(4,592
|
)
|
|
|
(10,202)
|
|
|
|
|
|
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
(198)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$ 167
|
|
|
|
$ (4,592)
|
|
|
|
$ (10,004)
|
|
|
|
|
|
|
103
CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
167
|
|
|
|
$ (4,592
|
)
|
|
$
|
(10,004)
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on other investments
|
|
|
51
|
|
|
|
218
|
|
|
|
64
|
|
Undistributed (income) loss of subsidiaries
|
|
|
(247
|
)
|
|
|
4,242
|
|
|
|
10,025
|
|
Other assets
|
|
|
(8
|
)
|
|
|
|
|
|
|
25
|
|
Other liabilities
|
|
|
|
|
|
|
(161
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(37
|
)
|
|
|
(132
|
)
|
|
|
(51
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption of equity securities
|
|
|
200
|
|
|
|
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
200
|
|
|
|
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(512)
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
|
|
|
|
|
|
(512)
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
163
|
|
|
|
(132
|
)
|
|
|
(327)
|
|
Cash, beginning of year
|
|
|
28
|
|
|
|
160
|
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
Cash, end of year
|
|
$
|
191
|
|
|
$
|
28
|
|
|
$
|
160
|
|
|
|
|
|
|
NOTE O - EMPLOYEE AND DIRECTOR BENEFIT PLANS:
The Company sponsors the Peoples Financial Corporation Employee Stock Ownership Plan (ESOP). Employees who are in a position
requiring at least 1,000 hours of service during a plan year and who are 21 years of age are eligible to participate in the ESOP. The Plan included 401(k) provisions and the former Gulf National Bank Profit Sharing Plan. Effective January 1,
2001, the ESOP was amended to separate the 401(k) funds into the Peoples Financial Corporation 401(k) Profit Sharing Plan. The separation had no impact on the eligibility or benefits provided to participants of either plan. The 401(k) provides for a
matching contribution of 75% of the amounts contributed by the employee (up to 6% of compensation). Contributions are determined by the Board of Directors and may be paid either in cash or Peoples Financial Corporation common stock. Total
contributions to the plans charged to operating expense were $276,000, $260,000 and $280,000 in 2016, 2015 and 2014, respectively.
104
Compensation expense of $7,804,295, $7,576,755 and $7,678,640 was the basis for determining the
ESOP contribution allocation to participants for 2016, 2015 and 2014, respectively. The ESOP held 276,628, 285,785 and 315,269 allocated shares at December 31, 2016, 2015 and 2014, respectively.
The Company established an Executive Supplemental Income Plan and a Directors Deferred Income Plan, which provide for
pre-retirement
and post-retirement benefits to certain key executives and directors. Benefits under the Executive Supplemental Income Plan are based upon the position and salary of the officer at retirement or
death. Normal retirement benefits under the plan are equal to 67% of salary for the president and chief executive officer, 58% of salary for the executive vice president and 50% of salary for all other executive officers and are payable monthly over
a period of fifteen years. Under the Directors Deferred Income Plan, the directors are given an opportunity to defer receipt of their annual directors fees until age sixty-five. For those who choose to participate, benefits are payable
monthly for ten years beginning the first day of the month following the directors normal retirement date. The normal retirement date is the later of the normal retirement age (65) or separation of service. Interest on deferred fees
accrues at an annual rate of ten percent, compounded annually. The Company has acquired insurance policies, with the bank subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan participants. These
contracts are carried at their cash surrender value, which amounted to $17,176,771, $16,820,058 and $16,370,384 at December 31, 2016, 2015 and 2014, respectively. The present value of accumulated benefits under these plans, using an interest
rate of 4.25% in 2016 and 4.50% in 2015 and 2014, and the interest
ramp-up
method has been accrued. The accrual amounted to $12,221,421, $11,813,343 and $11,465,119 at December 31, 2016, 2015 and 2014,
respectively, and is included in Employee and director benefit plans liabilities.
The Company also has additional plans for
post-retirement benefits for certain key executives. The Company has acquired insurance policies, with the bank subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan participants. These contracts are
carried at their cash surrender value, which amounted to $1,604,333, $1,473,607 and $1,346,910 at December 31, 2016, 2015 and 2014, respectively. The present value of accumulated benefits under these plans using an interest rate of 4.25% in
2016 and 2015 and 4.50% in 2014, and the projected unit cost method has been accrued. The accrual amounted to $1,544,017, $1,519,537 and $1,450,280 at December 31, 2016, 2015 and 2014, respectively, and is included in Employee and director
benefit plans liabilities.
Additionally, there are two endorsement split dollar policies, with the bank subsidiary as owner and
beneficiary, which provide a guaranteed death benefit to the participants beneficiaries. These contracts are carried at their cash surrender value, which amounted to $292,063, $284,664 and $277,278 at December 31, 2016, 2015 and 2014,
respectively. The present value of accumulated benefits under these plans using an interest rate of 4.25% in 2016 and 4.50% in 2015 and 2014, and the projected unit cost method has been accrued. The accrual amounted to $88,798, $82,202 and $80,997
at December 31, 2016, 2015 and 2014, respectively, and is included in Employee and director benefit plans liabilities.
105
The Company has additional plans for post-retirement benefits for directors. The Company has
acquired insurance policies, with the bank subsidiary as owner and beneficiary, which it may use as a source to pay potential benefits to the plan participants. These contracts are carried at their cash surrender value, which amounted to $166,822,
$157,051 and $150,687 at December 31, 2016, 2015 and 2014, respectively. The present value of accumulated benefits under these plans using an interest rate of 4.25% in 2016 and 4.50% in 2015 and 2014, and the projected unit cost method has been
accrued. The accrual amounted to $216,020, $212,662 and $210,207 at December 31, 2016, 2015 and 2014, respectively, and is included in Employee and director benefit plans liabilities.
The Company provides post-retirement health insurance to certain of its retired employees. Employees are eligible to participate in the
retiree health plan if they retire from active service no earlier than their Social Security normal retirement age, which varies from 65 to 67 based on the year of birth. In addition, the employee must have at least 25 continuous years of service
with the Company immediately preceding retirement. However, any active employee who was at least age 65 as of January 1, 1995, does not have to meet the 25 years of service requirement. The accumulated post-retirement benefit obligation at
January 1, 1995, was $517,599, which the Company elected to amortize over 20 years. The Company reserves the right to modify, reduce or eliminate these health benefits. The Company has chosen to not offer this post-retirement benefit to
individuals entering the employ of the Company after December 31, 2006. Effective January 1, 2012, the Company amended the retiree health plan. This amendment requires that employees who are eligible and enroll in the bank
subsidiarys group medical and dental health care plans upon their retirement must enroll in Medicare Parts A, B and D when first eligible upon their retirement from the bank subsidiary. This results in the bank subsidiarys programs being
secondary insurance coverage for retired employees and any dependent(s), if applicable, while Medicare Parts A and B will be their primary coverage, and Medicare Part D will be the sole and exclusive prescription drug benefit plan for retired
employees. This amendment reduced the accumulated post-retirement benefit obligation by $3,799,308 as of December 31, 2011. Effective January 1, 2014, the Company amended the retiree health plan. This amendment reduces the age for
eligibility to 60 for those employees meeting all other eligibility requirements. This amendment increased the accumulated post-retirement benefit obligation by $1,150,229 as of December 31, 2013.
106
The following is a summary of the components of the net periodic post-retirement benefit cost (credit)(in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
Service cost
|
|
$
|
93
|
|
|
$
|
94
|
|
|
$
|
105
|
|
|
|
|
|
Interest cost
|
|
|
101
|
|
|
|
102
|
|
|
|
132
|
|
|
|
|
|
Amortization of net gain
|
|
|
(73
|
)
|
|
|
(44
|
)
|
|
|
(14)
|
|
|
|
|
|
Amortization of prior service credit
|
|
|
(81
|
)
|
|
|
(82
|
)
|
|
|
(81)
|
|
|
|
|
|
|
|
|
|
|
Net periodic post-retirement benefit cost (credit)
|
|
$
|
40
|
|
|
$
|
70
|
|
|
$
|
142
|
|
|
|
|
|
|
The discount rate used in determining the accumulated post-retirement benefit obligation was 4.00% in 2016,
4.20% in 2015 and 4.00% in 2014. The assumed health care cost trend rate used in measuring the accumulated post-retirement benefit obligation was 6.50% in 2016. The rate was assumed to decrease gradually to 5.00% for 2022 and remain at that level
thereafter. If the health care cost trend rate assumptions were increased 1.00%, the accumulated post-retirement benefit obligation as of December 31, 2016, would be increased by 13.78%, and the aggregate of the service and interest cost
components of the net periodic post-retirement benefit cost for the year then ended would have increased by 17.23%. If the health care cost trend rate assumptions were decreased 1.00%, the accumulated post-retirement benefit obligation as of
December 31, 2016, would be decreased by 11.28%, and the aggregate of the service and interest cost components of the net periodic post-retirement benefit cost for the year then ended would have decreased by 13.83%.
The following table presents the estimated benefit payments for each of the next five years and in the aggregate for the next five years (in
thousands):
|
|
|
|
|
2017
|
|
$
|
145
|
|
2018
|
|
|
119
|
|
2019
|
|
|
56
|
|
2020
|
|
|
77
|
|
2021
|
|
|
106
|
|
2022-2026
|
|
|
922
|
|
The following is a reconciliation of the accumulated post-retirement benefit obligation, which is included in
Employee and director benefit plans liabilities (in thousands):
|
|
|
|
|
Accumulated post-retirement benefit obligation as of December 31, 2015
|
|
$
|
2,508
|
|
Service cost
|
|
|
93
|
|
Interest cost
|
|
|
101
|
|
Actuarial gain
|
|
|
(113
|
)
|
Benefits paid
|
|
|
(75
|
)
|
|
|
|
|
|
Accumulated post-retirement benefit obligation as of December 31, 2016
|
|
$
|
2,514
|
|
|
|
|
|
|
107
The following is a summary of the change in plan assets (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Actual return on assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer contribution
|
|
|
75
|
|
|
|
37
|
|
|
|
64
|
|
Benefits paid, net
|
|
|
(75
|
)
|
|
|
(37
|
)
|
|
|
(64
|
)
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
Amounts recognized in the Accumulated Other Comprehensive Income (Loss), net of tax, were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Net gain (loss)
|
|
$
|
723
|
|
|
$
|
697
|
|
|
$
|
(80
|
)
|
Prior service charge
|
|
|
676
|
|
|
|
730
|
|
|
|
783
|
|
|
|
|
|
|
Total accumulated other comprehensive income
|
|
$
|
1,399
|
|
|
$
|
1,427
|
|
|
$
|
703
|
|
|
|
|
|
|
Amounts recognized in the accumulated post-retirement benefit obligation and other comprehensive income (loss)
were (in thousands):
|
|
|
|
|
For the year ended December 31,
|
|
2016
|
|
Unrecognized actuarial gain
|
|
$
|
39
|
|
Amortization of prior service cost
|
|
|
(81
|
)
|
|
|
|
|
|
Total accumulated other comprehensive loss
|
|
$
|
(42
|
)
|
|
|
|
|
|
The prior service credit that will be recognized in accumulated other comprehensive income during 2017 is
$81,381.
NOTE P - FAIR VALUE MEASUREMENTS AND DISCLOSURES:
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value
disclosures. Available for sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record other assets at fair value on a
non-recurring
basis, such as impaired loans and ORE. These
non-recurring
fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. Additionally, the
Company is required to disclose, but not record, the fair value of other financial instruments.
108
Fair Value Hierarchy
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded
and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 - Valuation is based upon quoted prices
for identical instruments traded in active markets.
Level 2 - Valuation is based upon quoted market prices for similar instruments in
active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These
unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques.
Following is a description of valuation methodologies used to determine the fair value of financial assets and liabilities.
Cash and Due from Banks
The
carrying amount shown as cash and due from banks approximates fair value.
Available for Sale Securities
The fair value of available for sale securities is based on quoted market prices. The Companys available for sale securities are reported
at their estimated fair value, which is determined utilizing several sources. The primary source is Interactive Data Corporation, which utilizes pricing models that vary based by asset class and include available trade, bid and other market
information and whose methodology includes broker quotes, proprietary models and vast descriptive databases. Another source for determining fair value is matrix pricing, which is a mathematical technique used widely in the industry to value debt
securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities relationship to other benchmark securities. The Companys available for sale securities for which fair value is
determined through the use of such pricing models and matrix pricing are classified as Level 2 assets. If the fair value of available for sale securities is generated through model-based techniques including the discounting of estimated cash
flows, such securities are classified as Level 3 assets.
Held to Maturity Securities
The fair value of held to maturity securities is based on quoted market prices.
Other Investments
The carrying
amount shown as other investments approximates fair value.
Federal Home Loan Bank Stock
The carrying amount shown as Federal Home Loan Bank Stock approximates fair value.
109
Loans
The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings for the remaining maturities. The cash flows considered in computing the fair value of such loans are segmented into categories relating to the nature of the contract and collateral based on contractual
principal maturities. Appropriate adjustments are made to reflect probable credit losses. Cash flows have not been adjusted for such factors as prepayment risk or the effect of the maturity of balloon notes. The fair value of floating rate loans is
estimated to be its carrying value. At each reporting period, the Company determines which loans are impaired. Accordingly, the Companys impaired loans are reported at their estimated fair value on a
non-recurring
basis. An allowance for each impaired loan, which are generally collateral-dependent, is calculated based on the fair value of its collateral. The fair value of the collateral is based on
appraisals performed by third-party valuation specialists. Factors including the assumptions and techniques utilized by the appraiser are considered by Management. If the recorded investment in the impaired loan exceeds the measure of fair value of
the collateral, a valuation allowance is recorded as a component of the allowance for loan losses. Impaired loans are
non-recurring
Level 3 assets.
Other Real Estate
In the course
of lending operations, Management may determine that it is necessary to foreclose on the related collateral. Other real estate acquired through foreclosure is carried at fair value, less estimated costs to sell. The fair value of the collateral is
based on appraisals performed by third-party valuation specialists. Factors including the assumptions and techniques utilized by the appraiser are considered by Management. If the current appraisal is more than one year old and/or the loan balance
is more than $200,000, a new appraisal is obtained. Otherwise, the Banks
in-house
property evaluator and Management will determine the fair value of the collateral, based on comparable sales, market
conditions, Managements plans for disposition and other estimates of fair value obtained from principally independent sources, adjusted for estimated selling costs. Other real estate is a
non-recurring
Level 3 asset.
Cash Surrender Value of Life Insurance
The carrying amount of cash surrender value of bank-owned life insurance approximates fair value.
Deposits
The fair value of
non-interest
bearing demand and interest bearing savings and demand deposits is the amount reported in the financial statements. The fair value of time deposits is estimated by discounting the cash flows using
current rates for time deposits with similar remaining maturities. The cash flows considered in computing the fair value of such deposits are based on contractual maturities, since approximately 98% of time deposits provide for automatic renewal at
current interest rates.
110
Borrowings from Federal Home Loan Bank
The fair value of FHLB fixed rate borrowings is estimated using discounted cash flows based on current incremental borrowing rates for similar
types of borrowing arrangements. The fair value of FHLB variable rate borrowings is estimated to be its carrying value.
The balances of
available for sale securities, which are the only assets measured at fair value on a recurring basis, by level within the fair value hierarchy and by investment type, as of December 31, 2016, 2015 and 2014, were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
147,624
|
|
|
$
|
|
|
|
$
|
147,624
|
|
|
$
|
|
|
U.S. Government agencies
|
|
|
24,825
|
|
|
|
|
|
|
|
24,825
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
42,708
|
|
|
|
|
|
|
|
42,708
|
|
|
|
|
|
States and political subdivisions
|
|
|
17,963
|
|
|
|
|
|
|
|
17,963
|
|
|
|
|
|
Equity securities
|
|
|
458
|
|
|
|
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
233,578
|
|
|
$
|
|
|
|
$
|
233,578
|
|
|
$
|
|
|
|
|
|
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
63,754
|
|
|
$
|
|
|
|
$
|
63,754
|
|
|
$
|
|
|
U.S. Government agencies
|
|
|
84,546
|
|
|
|
|
|
|
|
84,546
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
30,130
|
|
|
|
|
|
|
|
30,130
|
|
|
|
|
|
States and political subdivisions
|
|
|
23,727
|
|
|
|
|
|
|
|
23,547
|
|
|
|
180
|
|
Equity securities
|
|
|
650
|
|
|
|
|
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
202,807
|
|
|
$
|
|
|
|
$
|
202,627
|
|
|
$
|
180
|
|
|
|
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries
|
|
$
|
29,654
|
|
|
$
|
|
|
|
$
|
29,654
|
|
|
$
|
|
|
U.S. Government agencies
|
|
|
117,989
|
|
|
|
|
|
|
|
117,989
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
35,817
|
|
|
|
|
|
|
|
35,817
|
|
|
|
|
|
States and political subdivisions
|
|
|
31,012
|
|
|
|
|
|
|
|
31,012
|
|
|
|
|
|
Equity securities
|
|
|
650
|
|
|
|
|
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
215,122
|
|
|
$
|
|
|
|
$
|
215,122
|
|
|
$
|
|
|
|
|
|
|
|
Impaired loans, which are measured at fair value on a
non-recurring
basis, by level within the fair value hierarchy as of December 31, 2016, 2015 and 2014 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
December 31:
|
|
|
Total
|
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
$
|
5,006
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,006
|
|
2015
|
|
|
4,981
|
|
|
|
|
|
|
|
|
|
|
|
4,981
|
|
2014
|
|
|
10,610
|
|
|
|
|
|
|
|
|
|
|
|
10,610
|
|
111
Other real estate, which is measured at fair value on a
non-recurring
basis, by level within the fair value hierarchy as of December 31, 2016, 2015 and 2014 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
December 31:
|
|
|
Total
|
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
|
|
|
2016
|
|
$
|
8,513
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,513
|
|
2015
|
|
|
9,916
|
|
|
|
|
|
|
|
|
|
|
|
9,916
|
|
2014
|
|
|
7,646
|
|
|
|
|
|
|
|
|
|
|
|
7,646
|
|
The following table presents a summary of changes in the fair value of other real estate which is measured
using Level 3 inputs (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Balance, beginning of year
|
|
$
|
9,916
|
|
|
$
|
7,646
|
|
|
$
|
9,630
|
|
|
|
|
|
Loans transferred to ORE
|
|
|
1,903
|
|
|
|
7,502
|
|
|
|
1,345
|
|
|
|
|
|
Sales
|
|
|
(2,524
|
)
|
|
|
(4,295
|
)
|
|
|
(2,068
|
)
|
|
|
|
|
Writedowns
|
|
|
(782
|
)
|
|
|
(937
|
)
|
|
|
(1,261
|
)
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
8,513
|
|
|
$
|
9,916
|
|
|
$
|
7,646
|
|
|
|
|
|
|
112
The carrying value and estimated fair value of financial instruments, by level within the fair
value hierarchy, at December 31, 2016, 2015 and 2014, are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
41,116
|
|
|
$
|
41,116
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
41,116
|
|
Available for sale securities
|
|
|
233,578
|
|
|
|
|
|
|
|
233,578
|
|
|
|
|
|
|
|
233,578
|
|
Held to maturity securities
|
|
|
48,150
|
|
|
|
|
|
|
|
46,935
|
|
|
|
|
|
|
|
46,935
|
|
Other investments
|
|
|
2,693
|
|
|
|
2,693
|
|
|
|
|
|
|
|
|
|
|
|
2,693
|
|
Federal Home Loan Bank stock
|
|
|
539
|
|
|
|
|
|
|
|
539
|
|
|
|
|
|
|
|
539
|
|
Loans, net
|
|
|
309,889
|
|
|
|
|
|
|
|
|
|
|
|
313,613
|
|
|
|
313,613
|
|
Other real estate
|
|
|
8,513
|
|
|
|
|
|
|
|
|
|
|
|
8,513
|
|
|
|
8,513
|
|
Cash surrender value of life insurance
|
|
|
19,249
|
|
|
|
|
|
|
|
19,249
|
|
|
|
|
|
|
|
19,249
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
|
132,381
|
|
|
|
132,381
|
|
|
|
|
|
|
|
|
|
|
|
132,381
|
|
Interest bearing
|
|
|
442,635
|
|
|
|
|
|
|
|
|
|
|
|
442,937
|
|
|
|
442,937
|
|
Borrowings from Federal Home Loan Bank
|
|
|
6,257
|
|
|
|
|
|
|
|
6,491
|
|
|
|
|
|
|
|
6,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
31,396
|
|
|
$
|
31,396
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,396
|
|
Available for sale securities
|
|
|
202,807
|
|
|
|
|
|
|
|
202,627
|
|
|
|
180
|
|
|
|
202,807
|
|
Held to maturity securities
|
|
|
19,025
|
|
|
|
|
|
|
|
19,220
|
|
|
|
|
|
|
|
19,220
|
|
Other investments
|
|
|
2,744
|
|
|
|
2,744
|
|
|
|
|
|
|
|
|
|
|
|
2,744
|
|
Federal Home Loan Bank stock
|
|
|
1,637
|
|
|
|
|
|
|
|
1,637
|
|
|
|
|
|
|
|
1,637
|
|
Loans, net
|
|
|
329,487
|
|
|
|
|
|
|
|
|
|
|
|
331,026
|
|
|
|
331,026
|
|
Other real estate
|
|
|
9,916
|
|
|
|
|
|
|
|
|
|
|
|
9,916
|
|
|
|
9,916
|
|
Cash surrender value of life insurance
|
|
|
18,735
|
|
|
|
|
|
|
|
18,735
|
|
|
|
|
|
|
|
18,735
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
|
122,743
|
|
|
|
122,743
|
|
|
|
|
|
|
|
|
|
|
|
122,743
|
|
Interest bearing
|
|
|
389,964
|
|
|
|
|
|
|
|
|
|
|
|
390,205
|
|
|
|
390,205
|
|
Borrowings from Federal Home Loan Bank
|
|
|
18,409
|
|
|
|
|
|
|
|
19,731
|
|
|
|
|
|
|
|
19,731
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
23,556
|
|
|
$
|
23,556
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
23,556
|
|
Available for sale securities
|
|
|
215,122
|
|
|
|
|
|
|
|
215,122
|
|
|
|
|
|
|
|
215,122
|
|
Held to maturity securities
|
|
|
17,784
|
|
|
|
|
|
|
|
17,859
|
|
|
|
|
|
|
|
17,859
|
|
Other investments
|
|
|
2,962
|
|
|
|
2,962
|
|
|
|
|
|
|
|
|
|
|
|
2,962
|
|
Federal Home Loan Bank stock
|
|
|
2,504
|
|
|
|
|
|
|
|
2,504
|
|
|
|
|
|
|
|
2,504
|
|
Loans, net
|
|
|
353,201
|
|
|
|
|
|
|
|
|
|
|
|
355,004
|
|
|
|
355,004
|
|
Other real estate
|
|
|
7,646
|
|
|
|
|
|
|
|
|
|
|
|
7,646
|
|
|
|
7,646
|
|
Cash surrender value of life insurance
|
|
|
18,145
|
|
|
|
|
|
|
|
18,145
|
|
|
|
|
|
|
|
18,145
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
|
103,607
|
|
|
|
103,607
|
|
|
|
|
|
|
|
|
|
|
|
103,607
|
|
Interest bearing
|
|
|
413,313
|
|
|
|
|
|
|
|
|
|
|
|
413,672
|
|
|
|
413,672
|
|
Borrowings from Federal Home Loan Bank
|
|
|
38,708
|
|
|
|
|
|
|
|
40,720
|
|
|
|
|
|
|
|
40,720
|
|
114