NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Basis of Presentation
Southwest Georgia Financial Corporation
(the “Corporation”), a bank-holding company organized under the laws of Georgia, provides deposit, lending, and other
financial services to businesses and individuals primarily in the Southwest region of Georgia. The Corporation and its subsidiaries
are subject to regulation by certain federal and state agencies.
The accompanying unaudited consolidated
financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information
and footnotes necessary for a fair presentation of financial position, results of operations, and changes in financial position
in conformity with generally accepted accounting principles. The interim financial statements furnished reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. The interim
consolidated financial statements should be read in conjunction with the Corporation’s 2018 Annual Report on Form 10K.
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies
of Southwest Georgia Financial Corporation (the “Corporation”) and its direct and indirect subsidiaries, including
its wholly-owned banking subsidiary, Southwest Georgia Bank (the “Bank”), conform to U.S. generally accepted accounting
principles (“GAAP”) and to general practices within the banking industry. The following is a description of the more
significant of those policies.
Principles of Consolidation
The consolidated financial statements
include the accounts of the Corporation and its direct and indirect subsidiaries. All significant intercompany accounts and transactions
have been eliminated in the consolidation.
Nature of Operations
The Corporation offers comprehensive
financial services to consumer, business, and governmental entity customers through its banking offices in southwest Georgia. Its
primary deposit products are money market, NOW, savings and certificates of deposit, and its primary lending products are consumer
and commercial mortgage loans. In addition to conventional banking services, the Corporation provides investment planning and management,
trust management, and commercial and individual insurance products. Insurance products and advice are provided by the Bank’s
Southwest Georgia Insurance Services Division.
The Corporation’s primary
business is providing banking services through the Bank to individuals and businesses principally in the counties of Colquitt,
Baker, Worth, Lowndes, Tift and the surrounding counties of southwest Georgia. The Bank operates six branch offices in its trade
area. In Valdosta, Georgia, lending services are offered at our Commercial Banking Center at 3520 N Valdosta Road, located next
door to the branch. Trust and retail brokerage services are offered at an office building located at 25 2nd Avenue SW in Moultrie.
Use of Estimates
The preparation of financial statements
in conformity with 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 those estimates.
Material estimates that are particularly
susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate
acquired in connection with foreclosures or in satisfaction of loans. In connection with these evaluations, management obtains
independent appraisals for significant properties.
A substantial portion of the Corporation’s
loans are secured by real estate located primarily in Georgia. Accordingly, the ultimate collection of these loans is susceptible
to changes in the real estate market conditions of this market area
Cash and Cash Equivalents and Statement
of Cash Flows
For purposes of reporting cash flows, the
Corporation considers cash and cash equivalents to include all cash on hand, deposit amounts due from banks, interest-bearing
deposits in other banks, and federal funds sold. The Corporation maintains its cash balances in several financial institutions.
Accounts at the financial institutions are secured by the Federal Deposit Insurance Corporation (the “FDIC”) up to
$250,000. There were uninsured deposits of $282,543 as of September 30, 2019.
Investment Securities
Investment
securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity”
and recorded at amortized cost. Securities not classified as held to maturity or trading are classified as available for sale and
recorded at fair value with unrealized gains and losses (net of tax effect) reported in other comprehensive income.
Purchase
premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in
the fair value of held to maturity and available for sale securities below their cost that are deemed to be other-than-temporarily
impaired are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers
(1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term
prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period
of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded
on the trade date and are determined using the specific identification method.
Premises and Equipment
Premises and equipment are stated at cost,
less accumulated depreciation and amortization. Depreciation has been calculated primarily using the straight-line method for buildings
and building improvements over the assets estimated useful lives. Equipment and furniture are depreciated using the modified accelerated
recovery system method over the assets estimated useful lives for financial reporting and income tax purposes for assets purchased
on or before December 31, 2003. For assets acquired after 2003, the Corporation used the straight-line method of depreciation.
The following estimated useful lives are used for financial statement purposes:
Land improvements
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5 – 31 years
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Building and improvements
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10 – 40 years
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Machinery and equipment
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5 – 10 years
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Computer equipment
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3 – 5 years
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Office furniture and fixtures
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5 – 10 years
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All of the Corporation’s leases are operating
leases and are not capitalized as assets for financial reporting purposes. Maintenance and repairs are charged to expense and betterments
are capitalized.
Long-lived assets are evaluated regularly for
other-than-temporary impairment. If circumstances suggest that their value may be impaired and the write-down would be material,
an assessment of recoverability is performed prior to any write-down of the asset. Impairment on intangibles is evaluated at each
balance sheet date or whenever events or changes in circumstances indicate that the carrying amount should be assessed. Impairment,
if any, is recognized through a valuation allowance with a corresponding charge recorded in the income statement.
During second quarter 2019, the Corporation
sold a parcel of vacant land in Moultrie, Georgia, for $430,000 and recorded a gain on the sale in the amount of $266,225.
Bank Property Held for Sale
In 2016, the Bank’s former branch in
Pavo, Georgia, was transferred from premises to bank property held for sale and depreciation was discontinued. The property was
booked at the lower of cost or market value based on the current appraisal of $211,500. On November 30, 2018, the Corporation sold
this property and recorded a loss in the amount of $96,750.
Loans and Allowances for Loan Losses
Loans are stated at principal amounts outstanding
less unearned income and the allowance for loan losses. Interest income is credited to income based on the principal amount outstanding
at the respective rate of interest except for interest on certain installment loans made on a discount basis which is recognized
in a manner that results in a level-yield on the principal outstanding.
Accrual of interest income is discontinued
on loans when, in the opinion of management, collection of such interest income becomes doubtful. Accrual of interest on such loans
is resumed when, in management’s judgment, the collection of interest and principal becomes probable.
Fees on loans and costs incurred in origination
of most loans are recognized at the time the loan is placed on the books. Because loan fees are not significant, the results on
operations are not materially different from the results which would be obtained by accounting for loan fees and costs as amortized
over the term of the loan as an adjustment of the yield.
A loan is considered impaired when, based on
current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal
or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments
when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of
the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s
prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on
a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted
at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the
loan is collateral dependent.
Large groups of smaller balance homogeneous
loans are collectively evaluated for impairment. Accordingly, the Corporation does not separately identify individual consumer
and residential loans for impairment disclosures.
The allowance for loan losses is established
through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management
believes the collection of the principal is unlikely. The allowance is an amount which management believes will be adequate to
absorb estimated losses on existing loans that may become uncollectible based on evaluation of the collectability of loans and
prior loss experience. This evaluation takes into consideration such factors as changes in the nature and volume of the loan portfolios,
current economic conditions that may affect the borrowers’ ability to pay, overall portfolio quality, and review of specific
problem loans.
Management believes that the allowance for
loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance
may be necessary based upon changes in economic conditions. Also, various regulatory agencies, as an integral part of their examination
process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize
additions to the allowance based on their judgments of information available to them at the time of their examination.
Foreclosed Assets
In accordance with policy guidelines and regulations,
properties acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the fair market value
less costs to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically
performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. A valuation
allowance is established to record market value changes in foreclosed assets. Revenue and expenses from operations and changes
in the valuation allowance are included in net expenses from foreclosed assets. There was no valuation allowance for foreclosed
asset losses at September 30, 2019. Foreclosed assets totaled $169,550 at September 30, 2019 and $127,605 at December 31, 2018.
Intangible Assets
Intangible assets are amortized over a determined
useful life using the straight-line basis. These assets are evaluated annually as to the recoverability of the carrying value.
All intangibles were fully amortized as of September 30, 2019.
Credit Related Financial Instruments
In the ordinary course of business, the Corporation
has entered into commitments to extend credit, including commitments under credit card arrangements, commercial letters of credit,
and standby letters of credit. Such financial instruments are recorded when they are funded.
Retirement Plans
The Corporation and its direct and indirect
subsidiaries have post-retirement plans covering substantially all employees. The Corporation makes annual contributions to the
plans in amounts not exceeding the regulatory requirements.
Bank Owned Life Insurance
The Bank
owns life insurance policies on a group of employees. Banking laws and regulations allow the Bank to purchase life insurance policies
on certain employees in order to help offset the Bank’s overall employee compensation costs. The beneficial aspects of these
life insurance policies are tax-free earnings and a tax-free death benefit, which are realized by the Bank as the owner of the
policies. The cash surrender value of these policies is included as an asset on the balance sheet, and any increases in cash surrender
value are recorded as noninterest income on the statement of income. At September 30, 2019, and December 31, 2018, the policies
had a value of $6,879,976 and $6,779,242, respectively, and were 14.2% and 15.5%, respectively, of shareholders’ equity.
These values are within regulatory guidelines.
Income Taxes
The Corporation and its direct and indirect
subsidiaries file a consolidated income tax return. Each subsidiary computes its income tax expense as if it filed an individual
return except that it does not receive any portion of the surtax allocation. Any benefits or disadvantages of the consolidation
are absorbed by the parent company. Each subsidiary pays its allocation of federal income taxes to the parent company or
receives payment from the parent company to the extent that tax benefits are realized.
The Corporation reports income under the Financial
Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, which requires recognition
of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between
the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences
are expected to reverse. Recognition of deferred tax assets is based on management’s belief that it is more likely than not
that the tax benefit associated with certain temporary differences and tax credits will be realized.
The Corporation will recognize a tax position
as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with an examination
being presumed to occur. The amount recognized is the largest amount of a tax benefit that is greater than fifty percent likely
of being realized on examination. No benefit is recorded for tax positions that do not meet the more than likely than not test.
The Corporation recognizes penalties related
to income tax matters in income tax expense. The Corporation is subject to U.S. federal and Georgia state income tax audit
for returns for the tax period ending December 31, 2016 and subsequent years.
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss)
includes all changes in shareholders’ equity during a period, except those resulting from transactions with shareholders.
Besides net income, other components of the Corporation’s accumulated other comprehensive income (loss) includes the after
tax effect of changes in the net unrealized gain/loss on securities available for sale and the unrealized gain/loss on pension
plan benefits.
Trust Department
Trust income is included in the accompanying
consolidated financial statements on the cash basis in accordance with established industry practices. Reporting of such fees on
the accrual basis would have no material effect on reported income.
Advertising Costs
It is the policy of the Corporation to expense
advertising costs as they are incurred. The Corporation does not engage in any direct-response advertising and accordingly has
no advertising costs reported as assets on its balance sheet. Costs expensed were $34,903 and $191,690 for the three and nine month
periods ended September 30, 2019, respectively.
Recent Market and Regulatory Developments
The Corporation and the Bank are subject to
various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Corporation and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative
measures of their assets, liabilities and certain off-balance sheet items, as calculated under regulatory accounting practices.
The capital amounts and classifications are also subject to qualitative judgments by the federal banking agencies about components,
risk weightings and other factors.
Quantitative measures established by regulation
to ensure capital adequacy require the Corporation and the Bank to maintain minimum Tier 1 leverage, Tier 1 risk-based capital
and Total risk-based capital ratios. In July 2013, the Board of Governors of the Federal Reserve System published the Basel III
Capital Rules. These rules establish a comprehensive capital framework applicable to all depository institutions, certain bank
holding companies with total consolidated assets below a certain threshold and all and savings and loan holding companies except
for those that are substantially engaged in insurance underwriting or commercial activities. These rules implement higher minimum
capital requirements for banks and certain bank holding companies, include a new common equity Tier 1 capital requirement and establish
criteria that instruments must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital.
The Basel III Capital Rules became effective
for the Bank on January 1, 2015, subject to a phase-in period, but are not applicable to bank holding companies, like the Corporation,
with less than $1 billion in total consolidated assets that meet certain criteria.
The minimum capital level requirements applicable
to the Bank under the Basel III Capital Rules are: (i) a common equity Tier 1 risk-based capital ratio of 4.5%; (ii) a Tier
1 risk-based capital ratio of 6% (increased from 4%); (iii) a Total risk-based capital ratio of 8% (unchanged from the rules effective
for the year ended December 31, 2014); and (iv) a Tier 1 leverage ratio of 4% for all institutions. Common equity Tier 1 capital
will consist of retained earnings and common stock instruments, subject to certain adjustments.
The Basel III Capital Rules set forth
changes in the methods of calculating certain risk-weighted assets, which in turn affect the calculation of risk-based ratios.
The new risk weightings are more punitive for assets held by banks that are deemed to be of higher risk. These changes were also
effective beginning January 1, 2015.
The Basel III Capital Rules also introduce
a “capital conservation buffer”, which is in addition to each capital ratio and is phased-in over a three-year period
beginning in January 2016.
As of September 30, 2019, the Bank is considered
to be well-capitalized under the Basel III Capital Rules. There have been no conditions or events since September 30, 2019, that
management believes has changed the Bank’s status as “well-capitalized.” The capital ratios of the Corporation
and Bank are presented in Management Discussion and Analysis of the Corporation’s Notes to Consolidated Financial Statements.
Adoption of New Accounting Standards
In March 2018, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") 2018-05, Income Taxes (Topic 740): Amendments to
SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The purpose of this ASU is to codify the SEC's guidance issued
in Staff Accounting Bulletin 118. The amendments in this update were effective upon issuance. The adoption of ASU 2018-05 had no
material impact on the Corporation’s consolidated financial statements.
In March 2018, FASB issued ASU 2018-04, Investment
- Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 117 and SEC Release No. 33-9273. The purpose of this ASU is to codify the SEC's guidance issued in Staff Accounting
Bulletin 117. The amendments in this update were effective upon issuance. The adoption of ASU 2018-04 had no material impact on
the Corporation’s consolidated financial statements.
In February 2018, FASB issued ASU 2018-03,
Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10). This Update clarifies certain aspects
of the guidance issued in ASU 2016-01 including (i) an entity measuring an equity security using the measurement alternative may
make an irrevocable election to change its measurement approach to a fair value method under Topic 820 for that security and any
identical or similar investments of the same issuer, (ii) fair value adjustments under the measurement alternative should be as
of the date the observable transaction for a similar security occurred, (iii) requiring the remeasurement of the entire value of
forward contracts and purchased options when observable transactions occur on the underlying equity securities, (iv) financial
liabilities for which the fair value option is elected should follow the guidance in paragraph 825-10-45-5, (v) changes in the
fair value of financial liabilities for which the fair value option is elected relating to the instrument-specific credit risk
should first be measured in the currency of denomination and then both components of the change in fair value should be remeasured
into the reporting entity's functional currency using end-of-period spot rates, and (vi) the prospective transition approach should
only be applied for instances in which the measurement alternative is applied. The guidance was effective for interim periods beginning
after June 15, 2018 and may be early adopted provided ASU 2016-01 was adopted. The Company adopted the amendments in this ASU effective
January 1, 2018. The adoption of ASU 2018-03 had no material impact on the Corporation’s consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02,
Income Statement – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 provides
guidance on accounting for the effects of the Tax Cuts and Jobs Act, which was enacted in December, 2017. The guidance allows reclassification
of the tax effects that were stranded in accumulated other comprehensive income as a result of the tax rate change from accumulated
other comprehensive income to retained earnings. This guidance is effective for fiscal years beginning after December 15, 2018.
The adoption of ASU 2018-02 had no material impact on the Corporation’s consolidated financial statements.
In May 2017, the FASB issued ASU No. 2017-09,
“Stock Compensation, Scope of Modification Accounting.” This ASU clarifies when changes to the terms of conditions
of a share-based payment award must be accounted for as modifications. Companies will apply the modification accounting guidance
if the value, vesting conditions or classification of the award changes. The new guidance should reduce diversity in practice and
result in fewer changes to the terms of an award being accounted for as modifications, as the guidance will allow companies to
make certain non-substantive changes to awards without accounting for them as modifications. It does not change the accounting
for modifications. ASU No. 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017; early
adoption is permitted. The adoption of ASU 2017-09 had no material impact on the Corporation’s consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-08,
Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities.
This ASU shortens the amortization period for certain callable debt securities held at a premium. The premium on individual callable
debt securities shall be amortized to the earliest call date. This guidance does not apply to securities for which prepayments
are estimated on a large number of similar loans where prepayments are probable and reasonable estimable. The amendments in this
update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early
adoption is permitted. This update should be adopted on a modified retrospective basis with a cumulative effect adjustment to retained
earnings on the date of adoption. The adoption of ASU 2017-08 had no material impact on the Corporation’s consolidated financial
statements.
In March 2017, the FASB issued ASU No. 2017-07,
Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost. The updated accounting guidance requires changes to the presentation of the components of net periodic benefit cost
on the income statement by requiring service cost to be presented with other employee compensation costs and other components of
net periodic pension cost to be presented outside of any subtotal of operating income. This ASU also stipulates that only the service
cost component of net benefit cost is eligible for capitalization. This ASU is effective for fiscal years beginning after December
15, 2017, including interim periods within those fiscal years.
The adoption of ASU 2017-07 had no material impact on the Corporation’s
consolidated financial statements.
In January 2017, the FASB issued ASU
2017-01, Business Combinations (Topic 805), which provides a new framework for determining whether transactions should be accounted
for as acquisitions or disposals of assets or businesses. This ASU is effective for public business entities for annual and interim
periods in fiscal years beginning after December 15, 2017. Early adoption will be permitted and should apply it to transactions
that have not been reported in financial statements that have been issued or made available for issuance. The adoption of ASU
2017-01 had no material impact on the Corporation’s consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01,
Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The
amendments in this ASU (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair
value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair
values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities
to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial
instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion
when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in
other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific
credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial
instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form
of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity
should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination
with the entity's other deferred tax assets. The accounting guidance is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2017. The Corporation adopted the amendments in this ASU effective January 1, 2018. The
adoption of 2016-01 had no material impact on the Corporation’s consolidated financial statements.
In May 2014, the FASB began issuing guidance
to change the recognition of revenue from contracts with customers. The last guidance was issued in February 2017. The standards
issued during this time are as follows: ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ASU 2015-14 Revenue from
Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08 Revenue from Contracts with Customers (Topic
606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10 Revenue from Contracts with Customers
(Topic 606): Identifying Performance Obligations and Licensing, ASU 2016-11 Revenue Recognition (Topic 605) and Derivatives and
Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff
Announcements at the March 3, 2016 EITF Meeting, ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements
and Practical Expedients, ASU 2016-20 Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,
and ASU 2017-05 Other Income - Gains and losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) - Clarifying the
Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This new guidance, which does not
apply to financial instruments, provides that revenue should be recognized for the transfer of goods and services to customers
in an amount equal to the consideration it receives or expects to receive. The guidance also includes expanded disclosure requirements
that provide comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from
contracts with customers. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2017. The Corporation adopted the amendments in this ASU effective January 1, 2018, using the modified retrospective
method. Since there was no change to net income upon adoption of the new guidance, a cumulative effect adjustment to opening retained
earnings was not necessary. See below for additional information related to revenue generated from contracts with customers.
In 2016, the FASB issued ASU 2016-02 –
Leases (Topic 842). ASU 2016-02 amends the existing standards for lease accounting effectively requiring most leases be carried
on the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability.
ASU 2016-02 includes qualitative and quantitative disclosure requirements intended to provide greater insight into the nature of
an entity’s leasing activities. The standard must be adopted using a modified retrospective transition with a cumulative-effect
adjustment to equity as of the beginning of the period in which it is adopted. ASU 2016-02 is effective for annual reporting periods
beginning after December 15, 2018, and interim periods within those annual periods with early adoption permitted. The adoption
of ASU No. 2016-02 had no material impact on the Corporation’s consolidated financial statements.
Revenue Recognition
On January 1, 2018, the Corporation adopted
ASC Topic 606, using the modified retrospective method. Disclosures of revenue from contracts with customers for periods beginning
after January 1, 2018, are presented under ASC Topic 606 and have not materially changed from the prior year amounts. Noninterest
income, within the scope of this guidance, is recognized as services are transferred to customers in an amount that reflects the
considerations expected to be entitled to in exchange for those services. The Corporation's revenue streams that were in scope
include service charges on deposit accounts, income from insurance services, income from trust services, Automated Teller Machine
(“ATM”) surcharge and other noninterest income.
Services Charges on Deposit Accounts - Service
charges on deposit accounts primarily consist of monthly maintenance charges, analysis charges and Non-sufficient funds (“NSF”)
charges. The NSF charges and certain service charges are fixed and the performance obligation is typically satisfied at the time
of the related transaction. The consideration for analysis charges and monthly maintenance charges are variable as the fee can
be reduced if the customer meets certain qualifying metrics. The Corporation's performance obligations are satisfied either at
the time of the transaction or over the course of a month.
Income from Insurance Services – Income
from insurance services consists primarily of property and casualty insurance, life, health, and disability insurance. Property
and casualty, life, health, and disability insurance includes the brokerage of both personal and commercial coverages. The placement
of the policy is completion of the Corporation's performance obligation and revenue is recognized at that time. The Corporation's
commission is primarily a percentage of the premium.
Income from Trust Services – Income from
Trust services consists of revenue generated from services provided for corporate, pension, and personal trusts, trustee services,
and administrative services for employee benefit plans. The Corporation’s performance obligation and revenue is recognized
once the service has been performed.
ATM Surcharge - ATM surcharge represents revenues
earned from certain terminal activity. ATM surcharges primarily consist of charges assessed to our customers for using a non-Bank
ATM or a non-Bank customer using our ATM. Such surcharges generally are recognized concurrently with the delivery of services on
a daily basis.
Other - Other noninterest income primarily
consists of transaction based revenue where the performance obligation is satisfied concurrent with the revenue recognition.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is essentially the
final rule on use of the “CECL” model, or current expected credit losses. Among other things, the amendments in this
ASU require 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. Financial institutions and other organizations will now use forward-looking
information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted,
although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU
amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.
For SEC filers, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019, with later effective dates for non-SEC registrant public companies and other organizations. Early adoption
will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December
15, 2018. The adoption of ASU No. 2016-13 is being reviewed for any material impact on the Corporation’s consolidated financial
statements.
NOTE 2
Fair Value Measurements
The Corporation utilizes fair value measurements
to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities
available for sale are recorded at fair value on a recurring basis. From time to time, the Corporation may be required
to record at fair value other assets on a nonrecurring basis, such as impaired loans and foreclosed real estate. Additionally,
the Corporation is required to disclose, but not record, the fair value of other financial instruments.
Fair Value Hierarchy:
Under ASC Topic 820, the Corporation 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
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Valuation is based upon quoted prices for identical instruments traded in active markets.
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Level 2
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Valuation is based upon quoted prices for similar
instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based
valuation techniques for which all significant assumptions are observable in the market.
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Level 3
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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 use of option pricing models, discounted cash flow models and similar techniques.
|
Following is a description of valuation methodologies
used for assets and liabilities which are either recorded or disclosed at fair value.
Cash and Cash Equivalents:
For disclosure purposes for cash and due from
banks, interest bearing deposits in other banks and federal funds sold, the carrying amount is a reasonable estimate of fair value.
Certificates of Deposit in Other Banks:
For disclosure purposes for certificates of
deposit in other banks, the carrying amount is a reasonable estimate of fair value.
Investment Securities Available for Sale:
Investment securities available for sale are
recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If
quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques
such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other
factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the
New York Stock Exchange and U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter market funds. Level
2 securities include mortgage-backed securities issued by government sponsored enterprises and state, county and municipal bonds. Other
securities classified as available for sale are reported at fair value utilizing Level 2 inputs. Securities classified as Level
3 include asset-backed securities in less liquid markets.
Investment Securities Held to Maturity:
Investment securities held to maturity are
not recorded at fair value on a recurring basis. For disclosure purposes, fair value measurement is based upon quoted prices, if
available.
Federal Home Loan Bank Stock:
For disclosure purposes, the carrying value
of other investments approximate fair value.
Loans:
The Corporation does not record loans at fair
value on a recurring basis. However, from time to time, a loan is considered impaired and a specific allocation is established
within the allowance for loan losses. Loans for which it is probable that payment of interest and principal will not
be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified
as individually impaired, management measures impairment in accordance with ASC Topic 310, Accounting by Creditors for
Impairment of a Loan. The fair value of impaired loans is estimated using one of three methods, including collateral
value, market value of similar debt, and discounted cash flows. Those impaired loans not requiring an allowance represent
loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In
accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification
in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current
appraised value, the Corporation records the impaired loan as nonrecurring Level 2. When an appraised value is not available
or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable
market price, the Corporation records the impaired loan as nonrecurring Level 3.
For disclosure purposes, the fair value of
fixed rate loans which are not considered impaired, 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 unimpaired variable rate loans, the carrying amount
is a reasonable estimate of fair value for disclosure purposes.
Foreclosed Assets:
Other real estate properties are adjusted
to fair value upon transfer of the loans to other real estate. Subsequently, other real estate assets are carried at the lower
of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral
or management’s estimation of the value of the collateral. When the fair value of the collateral is based on
an observable market price or a current appraised value, the Corporation records the other real estate as nonrecurring Level 2. When
an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised
value and there is no observable market price, the Corporation records the other real estate asset as nonrecurring Level 3.
Bank Owned Life Insurance:
For disclosure purposes, for cash surrender
value of life insurance, the carrying value is a reasonable estimate of fair value.
Deposits:
For disclosure purposes, the fair value of
demand deposits, savings accounts, NOW accounts and money market deposits is the amount payable on demand at the reporting date,
while the fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using current
rates at which comparable certificates would be issued.
FHLB Advances:
For disclosure purposes, the fair value of
the FHLB fixed rate borrowing is estimated using discounted cash flows, based on the current incremental borrowing rates for similar
types of borrowing arrangements.
Commitments to Extend Credit and Standby Letters
of Credit:
Because commitments to extend credit and standby
letters of credit are made using variable rates and have short maturities, the carrying value and the fair value are immaterial
for disclosure.
Assets Recorded at Fair Value on a Recurring Basis:
The table below presents the recorded amount of assets measured
at fair value on a recurring basis as of September 30, 2019, and December 31, 2018.
September 30, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Investment securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
4,039,040
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,039,040
|
|
U.S. government agency securities
|
|
|
0
|
|
|
|
40,812,814
|
|
|
|
0
|
|
|
|
40,812,814
|
|
State and municipal securities
|
|
|
0
|
|
|
|
4,544,201
|
|
|
|
0
|
|
|
|
4,544,201
|
|
Residential mortgage-backed securities
|
|
|
0
|
|
|
|
22,027,438
|
|
|
|
0
|
|
|
|
22,027,438
|
|
Total
|
|
$
|
4,039,040
|
|
|
$
|
67,384,453
|
|
|
$
|
0
|
|
|
$
|
71,423,493
|
|
December 31, 2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Investment securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
954,570
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
954,570
|
|
U.S. government agency securities
|
|
|
0
|
|
|
|
45,207,005
|
|
|
|
0
|
|
|
|
45,207,005
|
|
State and municipal securities
|
|
|
0
|
|
|
|
7,377,935
|
|
|
|
0
|
|
|
|
7,377,935
|
|
Residential mortgage-backed securities
|
|
|
0
|
|
|
|
4,774,067
|
|
|
|
0
|
|
|
|
4,774,067
|
|
Total
|
|
$
|
954,570
|
|
|
$
|
57,359,007
|
|
|
$
|
0
|
|
|
$
|
58,313,577
|
|
Assets Recorded at Fair Value on a Nonrecurring
Basis:
The Corporation may be required, from
time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These include
assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets
measured at fair value on a nonrecurring basis are included in the table below as of September 30, 2019, and December 31, 2018.
September 30, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Foreclosed assets
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
169,550
|
|
|
$
|
169,550
|
|
Impaired loans
|
|
|
0
|
|
|
|
0
|
|
|
|
3,483,992
|
|
|
|
3,483,992
|
|
Total assets at fair value
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,653,542
|
|
|
$
|
3,653,542
|
|
December 31, 2018
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Foreclosed assets
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
127,605
|
|
|
$
|
127,605
|
|
Impaired loans
|
|
|
0
|
|
|
|
0
|
|
|
|
3,838,151
|
|
|
|
3,838,151
|
|
Total assets at fair value
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,965,756
|
|
|
$
|
3,965,756
|
|
Foreclosed properties that are included above
as measured at fair value on a nonrecurring basis are those properties that resulted from a loan that had been foreclosed and charged
down or have been written down subsequent to foreclosure. Foreclosed properties are generally recorded at the appraised value less
estimated selling costs in the range of 15 – 20%. Loans that are reported above as being measured at fair value on a nonrecurring
basis are generally impaired loans that have been either partially charged off or have specific reserves assigned to them. Nonaccrual
impaired loans that are collateral dependent are generally written down to a range of 80 – 85% of appraised value which considers
the estimated costs to sell. Specific reserves are established for impaired loans based on appraised value of collateral or discounted
cash flows.
The carrying amount and estimated fair values
of the Corporation’s assets and liabilities which are required to be either disclosed or recorded at fair value at September
30, 2019, and December 31, 2018:
|
|
|
|
Estimated Fair Value
|
September 30, 2019
|
|
Carrying
Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(Dollars in thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
23,841
|
|
|
$
|
23,841
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
23,841
|
|
Certificates of deposit in other banks
|
|
|
2,977
|
|
|
|
2,977
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,977
|
|
Investment securities available for sale
|
|
|
71,423
|
|
|
|
4,039
|
|
|
|
67,384
|
|
|
|
0
|
|
|
|
71,423
|
|
Investment securities held to maturity
|
|
|
31,167
|
|
|
|
0
|
|
|
|
31,850
|
|
|
|
0
|
|
|
|
31,850
|
|
Federal Home Loan Bank stock
|
|
|
1,715
|
|
|
|
0
|
|
|
|
1,715
|
|
|
|
0
|
|
|
|
1,715
|
|
Loans, net
|
|
|
391,108
|
|
|
|
0
|
|
|
|
376,672
|
|
|
|
3,484
|
|
|
|
380,156
|
|
Bank owned life insurance
|
|
|
6,880
|
|
|
|
0
|
|
|
|
6,880
|
|
|
|
0
|
|
|
|
6,880
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
466,138
|
|
|
|
0
|
|
|
|
457,146
|
|
|
|
0
|
|
|
|
457,146
|
|
Federal Home Loan Bank advances
|
|
|
29,046
|
|
|
|
0
|
|
|
|
29,509
|
|
|
|
0
|
|
|
|
29,509
|
|
|
|
|
|
Estimated Fair Value
|
December 31, 2018
|
|
Carrying
Amount
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
(Dollars in thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
35,499
|
|
|
$
|
35,499
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
35,499
|
|
Certificates of deposit in other banks
|
|
|
2,732
|
|
|
|
2,732
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,732
|
|
Investment securities available for sale
|
|
|
58,314
|
|
|
|
955
|
|
|
|
57,359
|
|
|
|
0
|
|
|
|
58,314
|
|
Investment securities held to maturity
|
|
|
36,827
|
|
|
|
0
|
|
|
|
37,010
|
|
|
|
0
|
|
|
|
37,010
|
|
Federal Home Loan Bank stock
|
|
|
1,820
|
|
|
|
0
|
|
|
|
1,820
|
|
|
|
0
|
|
|
|
1,820
|
|
Loans, net
|
|
|
373,321
|
|
|
|
0
|
|
|
|
362,373
|
|
|
|
3,838
|
|
|
|
366,211
|
|
Bank owned life insurance
|
|
|
6,779
|
|
|
|
0
|
|
|
|
6,779
|
|
|
|
0
|
|
|
|
6,779
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
455,640
|
|
|
|
0
|
|
|
|
456,245
|
|
|
|
0
|
|
|
|
456,245
|
|
Federal Home Loan Bank advances
|
|
|
31,629
|
|
|
|
0
|
|
|
|
31,591
|
|
|
|
0
|
|
|
|
31,591
|
|
Limitations:
Fair value estimates are made at a specific
point in time, based on relevant market information and information about the financial statement element. These estimates are
subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates included herein are based
on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business
and the fair value of assets and liabilities that are not required to be recorded or disclosed at fair value like premises and
equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant
effect on fair value estimates and have not been considered in the estimates.
NOTE 3
Investment Securities
Debt securities have been classified in the
consolidated balance sheets according to management’s intent. The amortized cost of securities as shown in the consolidated
balance sheets and their estimated fair values at September 30, 2019, and December 31, 2018, were as follows:
Securities Available For Sale:
September 30, 2019
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
3,969,317
|
|
|
$
|
69,723
|
|
|
$
|
0
|
|
|
$
|
4,039,040
|
|
U.S. government agency securities
|
|
|
39,676,381
|
|
|
|
1,147,249
|
|
|
|
10,816
|
|
|
|
40,812,814
|
|
State and municipal securities
|
|
|
4,364,312
|
|
|
|
180,397
|
|
|
|
508
|
|
|
|
4,544,201
|
|
Residential mortgage-backed securities
|
|
|
21,870,020
|
|
|
|
194,406
|
|
|
|
36,988
|
|
|
|
22,027,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities AFS
|
|
$
|
69,880,030
|
|
|
$
|
1,591,775
|
|
|
$
|
48,312
|
|
|
$
|
71,423,493
|
|
December 31, 2018
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
982,044
|
|
|
$
|
0
|
|
|
$
|
27,474
|
|
|
$
|
954,570
|
|
U.S. government agency securities
|
|
|
45,823,595
|
|
|
|
264,567
|
|
|
|
881,157
|
|
|
|
45,207,005
|
|
State and municipal securities
|
|
|
7,394,278
|
|
|
|
30,579
|
|
|
|
46,922
|
|
|
|
7,377,935
|
|
Residential mortgage-backed securities
|
|
|
4,769,668
|
|
|
|
21,579
|
|
|
|
17,180
|
|
|
|
4,774,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities AFS
|
|
$
|
58,969,585
|
|
|
$
|
316,725
|
|
|
$
|
972,733
|
|
|
$
|
58,313,577
|
|
Securities Held to Maturity:
September 30, 2019
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
State and municipal securities
|
|
$
|
25,819,763
|
|
|
$
|
510,207
|
|
|
$
|
4,972
|
|
|
$
|
26,324,998
|
|
Residential mortgage-backed securities
|
|
|
5,347,008
|
|
|
|
178,244
|
|
|
|
0
|
|
|
|
5,525,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities HTM
|
|
$
|
31,166,771
|
|
|
$
|
688,451
|
|
|
$
|
4,972
|
|
|
$
|
31,850,250
|
|
December 31, 2018
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
State and municipal securities
|
|
$
|
30,582,785
|
|
|
$
|
208,480
|
|
|
$
|
67,434
|
|
|
$
|
30,723,831
|
|
Residential mortgage-backed securities
|
|
|
6,244,288
|
|
|
|
49,490
|
|
|
|
7,282
|
|
|
|
6,286,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities HTM
|
|
$
|
36,827,073
|
|
|
$
|
257,970
|
|
|
$
|
74,716
|
|
|
$
|
37,010,327
|
|
The amortized cost and estimated fair value
of securities at September 30, 2019, and December 31, 2018, 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 penalties.
September 30, 2019
|
|
|
|
|
Available for Sale:
|
|
|
Amortized
Cost
|
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Amounts maturing in:
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
4,153,906
|
|
|
$
|
4,160,100
|
|
After one through five years
|
|
|
30,550,250
|
|
|
|
31,436,182
|
|
After five through ten years
|
|
|
13,166,732
|
|
|
|
13,650,251
|
|
After ten years
|
|
|
22,009,142
|
|
|
|
22,176,960
|
|
|
|
|
|
|
|
|
|
|
Total debt securities AFS
|
|
$
|
69,880,030
|
|
|
$
|
71,423,493
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity:
|
|
|
Amortized
Cost
|
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Amounts maturing in:
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
6,407,204
|
|
|
$
|
6,415,966
|
|
After one through five years
|
|
|
10,186,745
|
|
|
|
10,390,617
|
|
After five through ten years
|
|
|
9,794,246
|
|
|
|
10,066,110
|
|
After ten years
|
|
|
4,778,576
|
|
|
|
4,977,557
|
|
|
|
|
|
|
|
|
|
|
Total securities HTM
|
|
$
|
31,166,771
|
|
|
$
|
31,850,250
|
|
December 31, 2018
|
|
|
|
|
Available for Sale:
|
|
|
Amortized
Cost
|
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Amounts maturing in:
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
2,147,059
|
|
|
$
|
2,124,645
|
|
After one through five years
|
|
|
29,691,474
|
|
|
|
29,674,236
|
|
After five through ten years
|
|
|
21,585,776
|
|
|
|
20,968,318
|
|
After ten years
|
|
|
5,545,276
|
|
|
|
5,546,378
|
|
|
|
|
|
|
|
|
|
|
Total debt securities AFS
|
|
$
|
58,969,585
|
|
|
$
|
58,313,577
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity:
|
|
|
Amortized
Cost
|
|
|
|
Estimated
Fair Value
|
|
|
|
|
|
|
|
|
|
|
Amounts maturing in:
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
6,483,464
|
|
|
$
|
6,497,910
|
|
After one through five years
|
|
|
12,885,021
|
|
|
|
12,961,209
|
|
After five through ten years
|
|
|
11,035,146
|
|
|
|
11,097,382
|
|
After ten years
|
|
|
6,423,442
|
|
|
|
6,453,826
|
|
|
|
|
|
|
|
|
|
|
Total securities HTM
|
|
$
|
36,827,073
|
|
|
$
|
37,010,327
|
|
The following tables summarize the activity
of security sales by intention and year for the three and nine months ended September 30, 2019, and 2018.
Securities Available For Sale:
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30
|
|
September 30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Proceeds of sales
|
|
$
|
9,358,503
|
|
|
$
|
0
|
|
|
$
|
9,358,503
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross gains
|
|
$
|
174,283
|
|
|
$
|
0
|
|
|
$
|
174,283
|
|
|
$
|
0
|
|
Gross losses
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Net gains on sales of available for sale securities
|
|
$
|
174,283
|
|
|
$
|
0
|
|
|
$
|
174,283
|
|
|
$
|
0
|
|
Information pertaining to securities with gross unrealized losses
aggregated by investment category and length of time that individual securities have been in continuous loss position, follows:
September 30, 2019
|
|
Less Than Twelve Months
|
|
Twelve Months or More
|
|
|
Gross Unrealized Losses
|
|
Fair
Value
|
|
Gross Unrealized Losses
|
|
Fair
Value
|
Securities
Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily impaired debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
U.S. government agency securities
|
|
|
10,350
|
|
|
|
989,650
|
|
|
|
466
|
|
|
|
2,146,593
|
|
State and municipal securities
|
|
|
508
|
|
|
|
204,928
|
|
|
|
0
|
|
|
|
0
|
|
Residential mortgage-backed securities
|
|
|
35,716
|
|
|
|
8,179,689
|
|
|
|
1,272
|
|
|
|
108,200
|
|
Total debt securities available for sale
|
|
$
|
46,574
|
|
|
$
|
9,374,267
|
|
|
$
|
1,738
|
|
|
$
|
2,254,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily impaired debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal securities
|
|
$
|
4,972
|
|
|
$
|
470,837
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Residential mortgage-backed securities
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total securities held to maturity
|
|
$
|
4,972
|
|
|
$
|
470,837
|
|
|
$
|
0
|
|
|
$
|
0
|
|
December 31, 2018
|
|
Less Than Twelve Months
|
|
Twelve Months or More
|
|
|
Gross Unrealized Losses
|
|
Fair
Value
|
|
Gross Unrealized Losses
|
|
Fair
Value
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily impaired debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government treasury securities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,474
|
|
|
$
|
954,570
|
|
U.S. government agency securities
|
|
|
33,077
|
|
|
|
6,073,337
|
|
|
|
848,080
|
|
|
|
20,015,052
|
|
State and municipal securities
|
|
|
3,209
|
|
|
|
306,792
|
|
|
|
43,713
|
|
|
|
1,813,173
|
|
Residential mortgage-backed securities
|
|
|
14,199
|
|
|
|
3,032,237
|
|
|
|
2,981
|
|
|
|
129,410
|
|
Total debt securities available for sale
|
|
$
|
50,485
|
|
|
$
|
9,412,366
|
|
|
$
|
922,248
|
|
|
$
|
22,912,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily impaired debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and municipal securities
|
|
$
|
20,209
|
|
|
$
|
7,359,536
|
|
|
$
|
47,225
|
|
|
$
|
2,782,627
|
|
Residential mortgage-backed securities
|
|
|
5,671
|
|
|
|
879,487
|
|
|
|
1,611
|
|
|
|
89,464
|
|
Total securities held to maturity
|
|
$
|
25,880
|
|
|
$
|
8,239,023
|
|
|
$
|
48,836
|
|
|
$
|
2,872,091
|
|
Management evaluates securities for other-than-temporary
impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration
is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition
and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer
for a period of time sufficient to allow for any anticipated recovery in fair value.
At September 30, 2019, nine debt securities
with unrealized losses have depreciated 0.4% from the Corporation’s amortized cost basis. These unrealized losses relate
principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management
considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by
bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. Management has the ability
to hold debt securities until maturity, or for the foreseeable future if classified as available for sale. Also, no declines in
debt securities are deemed to be other-than-temporary.
NOTE 4
Loans and Allowance for Loan Losses
The composition of the Corporation’s
loan portfolio and the percentage of loans in each category to total loans at September 30, 2019 and December 31, 2018, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
Commercial, financial and agricultural loans
|
|
$
|
91,063,471
|
|
|
|
23.1
|
%
|
|
$
|
88,403,215
|
|
|
|
23.5
|
%
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
25,449,257
|
|
|
|
6.4
|
%
|
|
|
24,890,536
|
|
|
|
6.6
|
%
|
Commercial mortgage loans
|
|
|
139,295,471
|
|
|
|
35.3
|
%
|
|
|
123,477,369
|
|
|
|
32.8
|
%
|
Residential loans
|
|
|
101,723,469
|
|
|
|
25.8
|
%
|
|
|
103,347,898
|
|
|
|
27.4
|
%
|
Agricultural loans
|
|
|
31,769,398
|
|
|
|
8.1
|
%
|
|
|
31,561,686
|
|
|
|
8.4
|
%
|
Consumer & other loans
|
|
|
5,329,082
|
|
|
|
1.3
|
%
|
|
|
5,086,984
|
|
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans outstanding
|
|
|
394,630,148
|
|
|
|
100.0
|
%
|
|
|
376,767,688
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned interest and discount
|
|
|
(17,397
|
)
|
|
|
|
|
|
|
(17,451
|
)
|
|
|
|
|
Allowance for loan losses
|
|
|
(3,505,044
|
)
|
|
|
|
|
|
|
(3,428,869
|
)
|
|
|
|
|
Net loans
|
|
$
|
391,107,707
|
|
|
|
|
|
|
$
|
373,321,368
|
|
|
|
|
|
The Corporation’s only significant concentration
of credit at September 30, 2019, occurred in real estate loans which totaled $298,237,595 compared with $283,277,489 at December
31, 2018. However, this amount was not concentrated in any specific segment within the market or geographic area.
At September 30, 2019, the lendable collateral
value of the 1 – 4 family and multifamily mortgage loans that were pledged to FHLB to secure outstanding advances was $65,678,819.
FHLB has a blanket lien on the 1 – 4 family and multifamily portfolios, which totaled $121,214,745
The following table shows maturities as
well as interest sensitivity of the commercial, financial, agricultural, and construction loan portfolio at September 30, 2019.
|
|
Commercial,
Financial,
Agricultural and
Construction
|
|
|
|
Distribution of loans which are due:
|
|
|
|
|
In one year or less
|
|
$
|
40,434,774
|
|
After one year but within five years
|
|
|
56,000,603
|
|
After five years
|
|
|
20,077,351
|
|
|
|
|
|
|
Total
|
|
$
|
116,512,728
|
|
The following table shows, for such loans
due after one year, the amounts which have predetermined interest rates and the amounts which have floating or adjustable interest
rates at September 30, 2019.
|
|
Loans With
|
|
|
|
|
|
|
Predetermined
|
|
Loans With
|
|
|
|
|
Rates
|
|
Floating Rates
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial,
|
|
|
|
|
|
|
|
|
|
|
agricultural and construction
|
|
$
|
74,824,037
|
|
|
$ 1,253,917
|
|
$
|
76,077,954
|
|
Appraisal Policy
When a loan is first identified as a problem
loan, the appraisal is reviewed to determine if the appraised value is still appropriate for the collateral. For the duration that
a loan is considered a problem loan, the appraised value of the collateral is monitored on a quarterly basis. If significant changes
occur in market conditions or in the condition of the collateral, a new appraisal will be obtained.
Nonaccrual Policy
The Corporation does not accrue interest on
any loan (1) that is maintained on a cash basis due to the deteriorated financial condition of the borrower, (2) for which payment
in full of principal or interest is not expected, or (3) upon which principal or interest has been past due for ninety days or
more unless the loan is well secured and in the process of collection.
A loan subsequently placed on nonaccrual status
may be returned to accrual status if (1) all past due interest and principal is paid with expectations of any remaining contractual
principal and interest being repaid or (2) the loan becomes well secured and in the process of collection.
Loans placed on nonaccrual status
amounted to $1,917,775 and $1,204,861 at September 30, 2019, and December 31, 2018, respectively. There were $4,532 in past
due loans over ninety days and still accruing at September 30, 2019, and none at December 31, 2018. The accrual of interest
is discontinued when the loan is placed on nonaccrual. Interest income that would have been recorded on these nonaccrual
loans in accordance with their original terms totaled $67,145 for September 30, 2019, and $64,015 for December 31, 2018.
The following tables present an age analysis
of past due loans still accruing interest and nonaccrual loans segregated by class of loans.
|
|
Age Analysis of Past Due Loans
As of September 30, 2019
|
|
|
30-89 Days Past Due
|
|
Greater than 90
Days
|
|
Total Past Due Loans
|
|
Nonaccrual Loans
|
|
Current Loans
|
|
Total Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural loans
|
|
$
|
372,558
|
|
|
$
|
0
|
|
|
$
|
372,558
|
|
|
$
|
550,699
|
|
|
$
|
90,140,214
|
|
|
$
|
91,063,471
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
185,239
|
|
|
|
25,264,018
|
|
|
|
25,449,257
|
|
Commercial mortgage loans
|
|
|
695,138
|
|
|
|
0
|
|
|
|
695,138
|
|
|
|
787,000
|
|
|
|
137,813,333
|
|
|
|
139,295,471
|
|
Residential loans
|
|
|
656,746
|
|
|
|
0
|
|
|
|
656,746
|
|
|
|
394,838
|
|
|
|
100,671,885
|
|
|
|
101,723,469
|
|
Agricultural loans
|
|
|
11,790
|
|
|
|
0
|
|
|
|
11,790
|
|
|
|
0
|
|
|
|
31,757,608
|
|
|
|
31,769,398
|
|
Consumer & other loans
|
|
|
49,416
|
|
|
|
4,532
|
|
|
|
53,948
|
|
|
|
0
|
|
|
|
5,275,134
|
|
|
|
5,329,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
1,785,648
|
|
|
$
|
4,532
|
|
|
$
|
1,790,181
|
|
|
$
|
1,917,775
|
|
|
$
|
390,922,192
|
|
|
$
|
394,630,148
|
|
|
|
Age Analysis of Past Due Loans
As of December 31, 2018
|
|
|
30-89 Days Past Due
|
|
Greater than 90
Days
|
|
Total Past Due Loans
|
|
Nonaccrual Loans
|
|
Current Loans
|
|
Total Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural loans
|
|
$
|
247,397
|
|
|
$
|
0
|
|
|
$
|
247,397
|
|
|
$
|
36,157
|
|
|
$
|
88,119,661
|
|
|
$
|
88,403,215
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,890,536
|
|
|
|
24,890,536
|
|
Commercial mortgage loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,022,550
|
|
|
|
122,454,819
|
|
|
|
123,477,369
|
|
Residential loans
|
|
|
1,560,913
|
|
|
|
0
|
|
|
|
1,560,913
|
|
|
|
146,154
|
|
|
|
101,640,831
|
|
|
|
103,347,898
|
|
Agricultural loans
|
|
|
321,319
|
|
|
|
0
|
|
|
|
321,319
|
|
|
|
0
|
|
|
|
31,240,367
|
|
|
|
31,561,686
|
|
Consumer & other loans
|
|
|
36,654
|
|
|
|
0
|
|
|
|
36,654
|
|
|
|
0
|
|
|
|
5,050,330
|
|
|
|
5,086,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
2,166,283
|
|
|
$
|
0
|
|
|
$
|
2,166,283
|
|
|
$
|
1,204,861
|
|
|
$
|
373,396,544
|
|
|
$
|
376,767,688
|
|
Impaired Loans
A loan is considered impaired when, based on
current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal
or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining
impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments
when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of
the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s
prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on
a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted
at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the
loan is collateral dependent.
At September 30, 2019, and December 31, 2018,
impaired loans amounted to $4,156,267 and $4,356,381, respectively. A reserve amount of $672,275 and $518,230 was recorded in the
allowance for loan losses for these impaired loans as of September 30, 2019, and December 31, 2018, respectively.
The following tables present impaired loans, segregated by class
of loans as of September 30, 2019, and December 31, 2018:
|
|
Unpaid
|
|
Recorded Investment
|
|
|
|
Year-to-date
Average
|
|
Interest
Income Received
|
September 30, 2019
|
|
Principal Balance
|
|
With No Allowance
|
|
With Allowance
|
|
Total
|
|
Related Allowance
|
|
Recorded Investment
|
|
During Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural loans
|
|
$
|
1,256,525
|
|
|
$
|
65,774
|
|
|
$
|
1,104,097
|
|
|
$
|
1,169,871
|
|
|
$
|
437,299
|
|
|
$
|
758,854
|
|
|
$
|
48,957
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
390,576
|
|
|
|
269,776
|
|
|
|
0
|
|
|
|
269,776
|
|
|
|
0
|
|
|
|
269,776
|
|
|
|
12,072
|
|
Commercial mortgage loans
|
|
|
1,640,771
|
|
|
|
252,437
|
|
|
|
937,983
|
|
|
|
1,190,420
|
|
|
|
46,292
|
|
|
|
1,087,462
|
|
|
|
34,327
|
|
Residential loans
|
|
|
1,730,816
|
|
|
|
712,055
|
|
|
|
800,874
|
|
|
|
1,512,929
|
|
|
|
187,929
|
|
|
|
1,337,169
|
|
|
|
77,245
|
|
Agricultural loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Consumer & other loans
|
|
|
13,271
|
|
|
|
0
|
|
|
|
13,271
|
|
|
|
13,271
|
|
|
|
755
|
|
|
|
13,271
|
|
|
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
5,031,959
|
|
|
$
|
1,300,042
|
|
|
$
|
2,856,225
|
|
|
$
|
4,156,267
|
|
|
$
|
672,275
|
|
|
$
|
3,466,532
|
|
|
$
|
173,275
|
|
|
|
Unpaid
|
|
Recorded Investment
|
|
|
|
Year-to-date
Average
|
|
Interest
Income Received
|
December 31, 2018
|
|
Principal Balance
|
|
With No Allowance
|
|
With Allowance
|
|
Total
|
|
Related Allowance
|
|
Recorded Investment
|
|
During Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial and
agricultural loans
|
|
$
|
184,899
|
|
|
$
|
87,525
|
|
|
$
|
568,816
|
|
|
$
|
656,341
|
|
|
$
|
276,392
|
|
|
$
|
370,038
|
|
|
$
|
52,411
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
402,234
|
|
|
|
281,434
|
|
|
|
0
|
|
|
|
281,434
|
|
|
|
0
|
|
|
|
281,434
|
|
|
|
25,364
|
|
Commercial mortgage loans
|
|
|
1,787,305
|
|
|
|
1,277,611
|
|
|
|
333,892
|
|
|
|
1,611,503
|
|
|
|
51,854
|
|
|
|
1,544,299
|
|
|
|
45,403
|
|
Residential loans
|
|
|
1,801,002
|
|
|
|
1,027,647
|
|
|
|
752,443
|
|
|
|
1,780,090
|
|
|
|
188,368
|
|
|
|
1,594,390
|
|
|
|
127,806
|
|
Agricultural loans
|
|
|
12,526
|
|
|
|
12,526
|
|
|
|
0
|
|
|
|
12,526
|
|
|
|
0
|
|
|
|
12,526
|
|
|
|
5,530
|
|
Consumer & other loans
|
|
|
0
|
|
|
|
0
|
|
|
|
14,487
|
|
|
|
14,487
|
|
|
|
1,616
|
|
|
|
14,487
|
|
|
|
820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
$
|
4,187,966
|
|
|
$
|
2,686,743
|
|
|
$
|
1,669,638
|
|
|
$
|
4,356,381
|
|
|
$
|
518,230
|
|
|
$
|
3,817,174
|
|
|
$
|
257,334
|
|
At September 30, 2018, the year-to-date average
recorded investment of impaired loans was $3,803,239 and the interest income received during impairment was $193,104.
At September 30, 2019, and December 31, 2018,
included in impaired loans were $3,384 and $7,458, respectively, of troubled debt restructurings.
Troubled Debt Restructurings (TDR)
Loans are considered to have been modified
in a troubled debt restructuring, or TDR, when due to a borrower’s financial difficulty the Corporation makes certain concessions
to the borrower that it would not otherwise consider for new debt with similar risk characteristics. Modifications may include
interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss
and to avoid foreclosure or repossession of the collateral. Each potential loan modification is reviewed individually and the terms
of the loan are modified to meet the borrower’s specific circumstances at a point in time. Not all loan modifications are
TDRs. However, performance prior to the modification, or significant events that coincide with the modification, are included in
assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of
loan modification or after a shorter performance period.
Loan modifications are reviewed and recommended
by the Corporation’s senior credit officer, who determines whether the loan meets the criteria for a TDR. Generally, the
types of concessions granted to borrowers that are evaluated in determining whether the loan is classified as a TDR include:
|
·
|
Interest rate reductions – Occur when the stated interest rate
is reduced to a nonmarket rate or a rate the borrower would not be able to obtain elsewhere under similar circumstances.
|
|
·
|
Amortization or maturity date changes – Result when the amortization
period of the loan is extended beyond what is considered a normal amortization period for loans of similar type with similar collateral.
|
|
·
|
Principal reductions – Arise when the Corporation charges off
a portion of the principal that is not fully collateralized and collectability is uncertain; however, this portion of principal
may be recovered in the future under certain circumstances.
|
The following tables present the amount of
troubled debt restructuring by loan class, classified separately as accrual and nonaccrual at September 30, 2019, and December
31, 2018, as well as those currently paying under restructured terms and those that have defaulted under restructured terms as
of September 30, 2019, and December 31, 2018. Loans modified in a troubled debt restructuring are considered to be in default once
the loan becomes 30 or more days past due.
|
|
September 30, 2019
|
|
|
|
|
|
|
Under restructured terms
|
|
|
Accruing
|
|
Non-accruing
|
|
#
|
|
Current
|
|
#
|
|
Default
|
Commercial, financial, and
agricultural loans
|
|
$
|
3,384
|
|
|
$
|
0
|
|
|
|
1
|
|
|
$
|
3,384
|
|
|
|
0
|
|
|
$
|
0
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Commercial mortgage loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Residential loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Agricultural loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Consumer & other loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total TDR’s
|
|
$
|
3,384
|
|
|
$
|
0
|
|
|
|
1
|
|
|
$
|
3,384
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
Under restructured terms
|
|
|
Accruing
|
|
Non-accruing
|
|
#
|
|
Current
|
|
#
|
|
Default
|
Commercial, financial, and
agricultural loans
|
|
$
|
5,570
|
|
|
$
|
0
|
|
|
|
1
|
|
|
$
|
5,570
|
|
|
|
0
|
|
|
$
|
0
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Commercial mortgage loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Residential loans
|
|
|
1,888
|
|
|
|
0
|
|
|
|
1
|
|
|
|
1,888
|
|
|
|
0
|
|
|
|
0
|
|
Agricultural loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Consumer & other loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total TDR’s
|
|
$
|
7,458
|
|
|
$
|
0
|
|
|
|
2
|
|
|
$
|
7,458
|
|
|
|
0
|
|
|
$
|
0
|
|
The following table presents the amount of
troubled debt restructurings by types of concessions made, classified separately as accrual and non-accrual at September 30, 2019,
and December 31, 2018.
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
Accruing
|
|
Nonaccruing
|
|
Accruing
|
|
Nonaccruing
|
|
|
#
|
|
Balance
|
|
#
|
|
Balance
|
|
#
|
|
Balance
|
|
#
|
|
Balance
|
Type of concession:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment modification
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Rate reduction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Rate reduction, payment modification
|
|
|
1
|
|
|
|
3,384
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1
|
|
|
|
1,888
|
|
|
|
0
|
|
|
|
0
|
|
Forbearance of interest
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1
|
|
|
|
5,570
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
1
|
|
|
$
|
3,834
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
2
|
|
|
$
|
7,458
|
|
|
|
0
|
|
|
$
|
0
|
|
As of September 30, 2019, and December 31,
2018, the Corporation had a balance of $3,384 and $7,458, respectively, in troubled debt restructurings. The Corporation had no
charge-offs on such loans at September 30, 2019, and December 31, 2018. The Corporation had $3,384 in the allowance for loan losses
allocated to such troubled debt restructurings at September 30, 2019, and no balance allocated at December 31, 2018. The Corporation
had no unfunded commitments to lend to a customer that has a troubled debt restructured loan as of September 30, 2019.
Credit Risk Monitoring and Loan Grading
The Corporation employs several means to monitor
the risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans,
historical loss experience and economic conditions.
Loans are subject to an internal risk-grading
system which indicates the risk and acceptability of that loan. The loan grades used by the Corporation are for internal risk identification
purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions.
The general characteristics of the risk grades
are as follows:
Grade 1 – Exceptional –
Loans graded 1 are characterized as having a very high credit quality, exhibit minimum risk to the Corporation and have low administrative
cost. These loans are usually secured by highly liquid and marketable collateral and a strong primary and secondary source of repayment
is available.
Grade 2 – Above Average –
Loans graded 2 are basically sound credits secured by sound assets and/or backed by the financial strength of borrowers of integrity
with a history of satisfactory payments of credit obligations.
Grade 3 – Acceptable – Loans
graded 3 are secured by sound assets of sufficient value and/or supported by the sufficient financial strength of the borrower.
The borrower will have experience in their business area or employed a reasonable amount of time at their current employment. The
borrower will have a sound primary source of repayment, and preferably a secondary source, which will allow repayment in a prompt
and reasonable period of time.
Grade 4 – Fair – Loans graded
4 are those which exhibit some weakness or downward trend in financial condition and although the repayment history is satisfactory,
it requires supervision by bank personnel. The borrower may have little experience in their business area or employed only a short
amount of time at their current employment. The loan may be secured by good collateral; however, it may require close supervision
as to value and/or quality and may not have sufficient liquidation value to completely cover the loan.
Grade 5a – Watch – Loans
graded 5a contain a discernible weakness; however, the weakness is not sufficiently pronounced so as to cause concern for the possible
loss of interest or principal. Loans in this category may exhibit outward signs of stress, such as slowness in financial disclosures
or recent payments. However, such signs are not of long duration or of sufficient severity that default appears imminent. Loans
in this category are not so deficient as to cause alarm, but do require close monitoring for further deterioration and possible
downgrade.
Grade 5b – Other Assets Especially
Mentioned (OAEM) – Loans graded 5b may otherwise be classified more severely except that the loan is well secured by
properly margined collateral, it is generally performing in accordance with the original contract or modification thereof and such
performance has seasoned for a period of 90 days, or the ultimate collection of all principal and interest is reasonably expected.
Loans in this grade are unsupported by sufficient evidence of the borrower’s sound net worth or repayment capacity or may
be subject to third party action that would cause concern for future prompt repayment.
Grade 6 – Substandard –
Loans graded 6 contain clearly pronounced credit weaknesses that are below acceptable credit standards for the Corporation. Such
weaknesses may be due to either collateral deficiencies or inherent financial weakness of the borrower, but in either case represents
less than acceptable credit risk. Loans in this grade are unsupported by sufficient evidence of the borrower’s sound net
worth, repayment capacity or acceptable collateral.
Grade 7 – Doubtful – Loans
graded 7 have such pronounced credit weaknesses that the Corporation is clearly exposed to a significant degree of potential loss
of principal or interest. Theses loan generally have a defined weakness which jeopardizes the ultimate repayment of the debt.
Grade 8 – Loss – Loans graded
8 are of such deteriorated credit quality that repayment of principal and interest can no longer be considered. These loans are
of such little value that their continuance as an active bank asset is not warranted. As of September 30, 2019, all Grade 8 loans
have been charged-off.
The following tables present internal
loan grading by class of loans as of September 30, 2019, and December 31, 2018:
September 30, 2019
|
|
Commercial, Financial, and Agricultural
|
|
Construction Real Estate
|
|
Commercial Real Estate
|
|
Residential Real Estate
|
|
Agricultural Real Estate
|
|
Consumer and Other
|
|
Total
|
Rating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade 1- Exceptional
|
|
$
|
1,656,967
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
22,179
|
|
|
$
|
0
|
|
|
$
|
208,527
|
|
|
$
|
1,887,673
|
|
Grade 2- Above Avg.
|
|
|
24,350
|
|
|
|
0
|
|
|
|
910,378
|
|
|
|
189,986
|
|
|
|
1,200,000
|
|
|
|
34,135
|
|
|
|
2,358,849
|
|
Grade 3- Acceptable
|
|
|
25,348,723
|
|
|
|
3,383,917
|
|
|
|
32,494,802
|
|
|
|
26,187,325
|
|
|
|
16,011,003
|
|
|
|
1,845,744
|
|
|
|
105,271,514
|
|
Grade 4- Fair
|
|
|
61,686,810
|
|
|
|
21,669,594
|
|
|
|
101,643,753
|
|
|
|
69,424,473
|
|
|
|
14,106,195
|
|
|
|
3,222,036
|
|
|
|
271,752,861
|
|
Grade 5a- Watch
|
|
|
1,743,039
|
|
|
|
269,775
|
|
|
|
1,452,992
|
|
|
|
2,325,553
|
|
|
|
0
|
|
|
|
17,551
|
|
|
|
5,808,910
|
|
Grade 5b- OAEM
|
|
|
231,019
|
|
|
|
0
|
|
|
|
0
|
|
|
|
26,679
|
|
|
|
0
|
|
|
|
0
|
|
|
|
257,698
|
|
Grade 6- Substandard
|
|
|
372,563
|
|
|
|
0
|
|
|
|
2,464,494
|
|
|
|
384,841
|
|
|
|
0
|
|
|
|
1,089
|
|
|
|
3,222,987
|
|
Grade 7- Doubtful
|
|
|
0
|
|
|
|
125,971
|
|
|
|
329,052
|
|
|
|
3,162,433
|
|
|
|
452,200
|
|
|
|
0
|
|
|
|
4,069,656
|
|
Total loans
|
|
$
|
91,063,471
|
|
|
$
|
25,449,257
|
|
|
$
|
139,295,471
|
|
|
$
|
101,723,469
|
|
|
$
|
31,769,398
|
|
|
$
|
5,329,082
|
|
|
$
|
394,630,148
|
|
December 31, 2018
|
|
Commercial, Financial, and Agricultural
|
|
Construction Real Estate
|
|
Commercial Real Estate
|
|
Residential Real Estate
|
|
Agricultural Real Estate
|
|
Consumer and Other
|
|
Total
|
Rating:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade 1- Exceptional
|
|
$
|
1,237,602
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
22,905
|
|
|
$
|
0
|
|
|
$
|
210,045
|
|
|
$
|
1,470,552
|
|
Grade 2- Above Avg.
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
43,711
|
|
|
|
43,711
|
|
Grade 3- Acceptable
|
|
|
23,821,846
|
|
|
|
1,860,003
|
|
|
|
30,398,565
|
|
|
|
25,839,646
|
|
|
|
16,863,356
|
|
|
|
1,151,239
|
|
|
|
99,934,655
|
|
Grade 4- Fair
|
|
|
58,753,931
|
|
|
|
22,749,099
|
|
|
|
88,122,957
|
|
|
|
73,114,310
|
|
|
|
14,698,330
|
|
|
|
3,657,108
|
|
|
|
261,095,735
|
|
Grade 5a- Watch
|
|
|
473,616
|
|
|
|
0
|
|
|
|
2,411,710
|
|
|
|
722,441
|
|
|
|
0
|
|
|
|
6,206
|
|
|
|
3,613,973
|
|
Grade 5b- OAEM
|
|
|
3,079,098
|
|
|
|
0
|
|
|
|
446,841
|
|
|
|
1,299,587
|
|
|
|
0
|
|
|
|
2,168
|
|
|
|
4,827,694
|
|
Grade 6- Substandard
|
|
|
787,309
|
|
|
|
281,434
|
|
|
|
2,097,296
|
|
|
|
2,349,009
|
|
|
|
0
|
|
|
|
16,507
|
|
|
|
5,531,555
|
|
Grade 7- Doubtful
|
|
|
249,813
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
249,813
|
|
Total loans
|
|
$
|
88,403,215
|
|
|
$
|
24,890,536
|
|
|
$
|
123,477,369
|
|
|
$
|
103,347,898
|
|
|
$
|
31,561,686
|
|
|
$
|
5,086,984
|
|
|
$
|
376,767,688
|
|
Allowance for Loan Losses Methodology
The allowance for loan losses (ALL) is
determined by a calculation based on segmenting the loans into the following categories: (1) impaired loans and nonaccrual loans,
(2) loans with a credit risk rating of 5b, 6, 7 or 8, (3) other outstanding loans, and (4) other commitments to lend. In addition,
unallocated general reserves are estimated based on migration and economic analysis of the loan portfolio.
The ALL is calculated by the addition of
the estimated loss derived from each of the above categories. The impaired loans and nonaccrual loans are analyzed on an individual
basis to determine if the future collateral value is sufficient to support the outstanding debt of the loan. If an estimated loss
is calculated, it is included in the estimated ALL until it is charged to the loan loss reserve. The calculation for loan risk
graded 5b, 6, 7 or 8, other outstanding loans and other commitments to lend is based on assigning an estimated loss factor based
on a twelve quarter rolling historical weighted average net loss rate. The estimated requirement for unallocated general reserves
from migration and economic analysis is determined by considering (1) trends in asset quality, (2) level and trends in charge-off
experience, (3) macroeconomic trends and conditions, (4) microeconomic trends and conditions and (5) risk profile of lending activities.
Within each of these categories, a risk factor percentage from a rating of excessive, high, moderate or low will be determined
by management and applied to the loan portfolio. By adding the estimated value from the migration and economic analysis to the
estimated reserve from the loan portfolio, a total estimated loss reserves is obtained. This amount is then compared to the actual
amount in the loan loss reserve.
The calculation of ALL is performed on
a monthly basis and is presented to the Loan Committee and the Board of Directors.
The following table details activity in
the ALL and loans evaluated for impairment by class of loans for the three and nine-month period ended September 30, 2019. Allocation
of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
The annualized net charge-offs to average loans outstanding ratio was 0.23% for the nine months ended September 30, 2019, compared
with 0.13% at December 31, 2018.
Three months ended September 30, 2019:
September 30, 2019
|
|
Commercial, Financial, and Agricultural
|
|
Construction Real Estate
|
|
Commercial Real Estate
|
|
Residential Real Estate
|
|
Agricultural Real Estate
|
|
Consumer and Other
|
|
Total
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance, June 30, 2019
|
|
$
|
533,553
|
|
|
$
|
1,043,027
|
|
|
$
|
1,126,245
|
|
|
$
|
478,963
|
|
|
$
|
76,880
|
|
|
$
|
206,472
|
|
|
$
|
3,465,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs
|
|
|
57,143
|
|
|
|
56,220
|
|
|
|
0
|
|
|
|
226,540
|
|
|
|
0
|
|
|
|
6,793
|
|
|
|
346,697
|
|
Recoveries
|
|
|
6,773
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
931
|
|
|
|
7,704
|
|
Net charge-offs
|
|
|
50 ,370
|
|
|
|
56,220
|
|
|
|
0
|
|
|
|
226,540
|
|
|
|
0
|
|
|
|
5,863
|
|
|
|
338,993
|
|
Provisions charged to operations
|
|
|
10,912
|
|
|
|
39,216
|
|
|
|
188,691
|
|
|
|
132,955
|
|
|
|
0
|
|
|
|
7,123
|
|
|
|
378,897
|
|
Balance at end of period, September 30, 2019
|
|
$
|
494,095
|
|
|
$
|
1,026,023
|
|
|
$
|
1,314,936
|
|
|
$
|
385,378
|
|
|
$
|
76,880
|
|
|
$
|
207,733
|
|
|
$
|
3,505,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2019:
September 30, 2019
|
|
Commercial, Financial, and Agricultural
|
|
Construction Real Estate
|
|
Commercial Real Estate
|
|
Residential Real Estate
|
|
Agricultural Real Estate
|
|
Consumer and Other
|
|
Total
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance, December 31, 2018
|
|
$
|
402,251
|
|
|
$
|
1,043,027
|
|
|
$
|
1,210,302
|
|
|
$
|
458,871
|
|
|
$
|
108,878
|
|
|
$
|
205,540
|
|
|
$
|
3,428,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs
|
|
|
159,360
|
|
|
|
56,220
|
|
|
|
274,550
|
|
|
|
226,540
|
|
|
|
0
|
|
|
|
13,571
|
|
|
|
730,241
|
|
Recoveries
|
|
|
18,953
|
|
|
|
0
|
|
|
|
3,368
|
|
|
|
35,941
|
|
|
|
0
|
|
|
|
2,959
|
|
|
|
61,221
|
|
Net charge-offs
|
|
|
140,407
|
|
|
|
56,220
|
|
|
|
271,182
|
|
|
|
190,599
|
|
|
|
0
|
|
|
|
10,612
|
|
|
|
699,020
|
|
Provisions charged to operations
|
|
|
232,251
|
|
|
|
39,216
|
|
|
|
375,815
|
|
|
|
117,107
|
|
|
|
(31,998
|
)
|
|
|
12,804
|
|
|
|
745,195
|
|
Balance at end of period, September 30, 2019
|
|
$
|
494,095
|
|
|
$
|
1,026,023
|
|
|
$
|
1,314,935
|
|
|
$
|
385,379
|
|
|
$
|
76,880
|
|
|
$
|
207,732
|
|
|
$
|
3,505,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
|
|
$
|
437,299
|
|
|
$
|
0
|
|
|
$
|
46,292
|
|
|
$
|
187,929
|
|
|
$
|
0
|
|
|
$
|
755
|
|
|
$
|
672,275
|
|
Collectively evaluated for impairment
|
|
|
56,796
|
|
|
|
1,026,023
|
|
|
|
1,268,643
|
|
|
|
197,450
|
|
|
|
76,880
|
|
|
|
206,977
|
|
|
|
2,832,769
|
|
Balance at end of period
|
|
$
|
494,095
|
|
|
$
|
1,026,023
|
|
|
$
|
1,314,935
|
|
|
$
|
385,379
|
|
|
$
|
76,880
|
|
|
$
|
207,732
|
|
|
$
|
3,505,044
|
|
Loans :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
|
|
$
|
1,169,871
|
|
|
$
|
269,776
|
|
|
$
|
1,190,420
|
|
|
$
|
1,512,929
|
|
|
$
|
0
|
|
|
$
|
13,271
|
|
|
$
|
4,156,267
|
|
Collectively evaluated for impairment
|
|
|
89,893,600
|
|
|
|
25,179,481
|
|
|
|
138,105,051
|
|
|
|
100,210,540
|
|
|
|
31,769,398
|
|
|
|
5,315,811
|
|
|
|
390,473,881
|
|
Balance at end of period
|
|
$
|
91,063,471
|
|
|
$
|
25,449,257
|
|
|
$
|
139,295,471
|
|
|
$
|
101,723,469
|
|
|
$
|
31,769,398
|
|
|
$
|
5,329,082
|
|
|
$
|
394,630,148
|
|
At September 30, 2019, of the $4,156,267
loans that were individually evaluated for impairment, all $4,156,267 were deemed impaired.
The following table details activity in the
ALL and loans evaluated for impairment by class of loans for the year ended December 31, 2018.
December 31, 2018
|
|
Commercial, Financial, and Agricultural
|
|
Construction Real Estate
|
|
Commercial Real Estate
|
|
Residential Real Estate
|
|
Agricultural Real Estate
|
|
Consumer and Other
|
|
Total
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance, December 31, 2017
|
|
$
|
324,260
|
|
|
$
|
1,043,083
|
|
|
$
|
1,056,595
|
|
|
$
|
416,474
|
|
|
$
|
11,560
|
|
|
$
|
191,660
|
|
|
$
|
3,043,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs
|
|
|
548,460
|
|
|
|
783
|
|
|
|
43,349
|
|
|
|
6,909
|
|
|
|
0
|
|
|
|
6,844
|
|
|
|
606,345
|
|
Recoveries
|
|
|
12,025
|
|
|
|
0
|
|
|
|
590
|
|
|
|
0
|
|
|
|
147,252
|
|
|
|
2,215
|
|
|
|
162,082
|
|
Net charge-offs
|
|
|
536,435
|
|
|
|
783
|
|
|
|
42,759
|
|
|
|
6,909
|
|
|
|
(147,252
|
)
|
|
|
4,629
|
|
|
|
444,263
|
|
Provisions charged to operations
|
|
|
614,426
|
|
|
|
727
|
|
|
|
196,466
|
|
|
|
49,306
|
|
|
|
(49,934
|
)
|
|
|
18,509
|
|
|
|
829,500
|
|
Balance at end of period, December 31, 2018
|
|
$
|
402,251
|
|
|
$
|
1,043,027
|
|
|
$
|
1,210,302
|
|
|
$
|
458,871
|
|
|
$
|
108,878
|
|
|
$
|
205,540
|
|
|
$
|
3,428,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
|
|
$
|
276,392
|
|
|
$
|
0
|
|
|
$
|
51,854
|
|
|
$
|
188,368
|
|
|
$
|
0
|
|
|
$
|
1,616
|
|
|
$
|
518,230
|
|
Collectively evaluated for impairment
|
|
|
125,859
|
|
|
|
1,043,027
|
|
|
|
1,158,448
|
|
|
|
270,503
|
|
|
|
108,878
|
|
|
|
203,924
|
|
|
|
2,910,639
|
|
Balance at end of period
|
|
$
|
402,251
|
|
|
$
|
1,043,027
|
|
|
$
|
1,210,302
|
|
|
$
|
458,871
|
|
|
$
|
108,878
|
|
|
$
|
205,540
|
|
|
$
|
3,428,869
|
|
Loans :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
|
|
$
|
656,341
|
|
|
$
|
281,434
|
|
|
$
|
1,611,503
|
|
|
$
|
1,929,214
|
|
|
$
|
12,526
|
|
|
$
|
14,487
|
|
|
$
|
4,505,505
|
|
Collectively evaluated for impairment
|
|
|
87,746,874
|
|
|
|
24,609,102
|
|
|
|
121,865,866
|
|
|
|
101,418,684
|
|
|
|
31,549,160
|
|
|
|
5,072,497
|
|
|
|
372,262,183
|
|
Balance at end of period
|
|
$
|
88,403,215
|
|
|
$
|
24,890,536
|
|
|
$
|
123,477,369
|
|
|
$
|
103,347,898
|
|
|
$
|
31,561,686
|
|
|
$
|
5,086,984
|
|
|
$
|
376,767,688
|
|
At December 31, 2018, of the $4,505,505
loans that were individually evaluated for impairment, only $4,356,381 were deemed impaired.