Company Quick10K Filing
Quick10K
CB Financial Services
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$24.00 5 $130
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
8-K 2019-07-29 Earnings, Exhibits
8-K 2019-07-29 Regulation FD, Exhibits
8-K 2019-05-22 Officers, Exhibits
8-K 2019-05-15 Other Events, Exhibits
8-K 2019-05-15 Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2019-05-07 Regulation FD, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-02-20 Other Events, Exhibits
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-12-19 Officers, Exhibits
8-K 2018-11-21 Other Events, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-08-15 Other Events, Exhibits
8-K 2018-07-30 Other Events, Exhibits
8-K 2018-07-30 Earnings, Exhibits
8-K 2018-07-30 Regulation FD, Exhibits
8-K 2018-06-20 Officers, Shareholder Vote, Regulation FD, Exhibits
8-K 2018-05-16 Other Events, Exhibits
8-K 2018-05-08 Regulation FD, Exhibits
8-K 2018-05-04 Other Events
8-K 2018-04-30 M&A, Officers, Exhibits
8-K 2018-04-27 Other Events, Exhibits
8-K 2018-04-12 Shareholder Vote, Other Events, Exhibits
8-K 2018-03-30 Other Events, Exhibits
8-K 2018-03-22 Other Events
8-K 2018-03-06 Other Events, Exhibits
8-K 2018-02-21 Other Events, Exhibits
8-K 2018-02-12 Earnings, Exhibits
8-K 2018-01-17 Officers
USFD US Foods Holding 8,440
LTM Life Time Fitness 5,850
FWRD Forward Air 1,780
CBAY Cymabay Therapeutics 885
NESR National Energy Services Reunited 849
CAC Camden National 712
NAII Natural Alternatives International 103
CLRO Clearone 37
CARV Carver Bancorp 13
CQH Cheniere Energy Partners Holdings 0
CBFV 2019-06-30
Part I - Financial Information
Item 1. Financial Statements.
Note 1. Summary of Significant Accounting Policies
Note 2. Merger
Note 3. Earnings per Share
Note 4. Revenue Recognition From Contracts with Customers
Note 5. Investment Securities
Note 6. Loans and Related Allowance for Loan Loss
Note 7. Leases
Note 8. Deposits
Note 9. Short-Term Borrowings
Note 10. Other Borrowed Funds
Note 11. Commitments and Contingent Liabilities
Note 12. Fair Value Disclosure
Note 13. Income Taxes
Note 14. Other Noninterest Expense
Note 15. Segment and Related Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits
EX-31.1 exh_311.htm
EX-31.2 exh_312.htm
EX-32.1 exh_321.htm
EX-32.2 exh_322.htm

CB Financial Services Earnings 2019-06-30

CBFV 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 f10q_080719p.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

 

Commission file number: 001-36706

 

  CB FINANCIAL SERVICES, INC.  
  (Exact name of registrant as specified in its charter)  

 

Pennsylvania   51-0534721
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

100 N. Market Street, Carmichaels, PA      15320
(Address of principal executive offices)   (Zip Code)

 

  (724) 966-5041  
  (Registrant’s telephone number, including area code)  

 

  N/A  
  (Former name, former address and former fiscal year, if changed since last report)  

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common stock, par value $0.4167 per share  CBFV  The Nasdaq Stock Market, LLC
(Title of each class)  (Trading symbol)  (Name of each exchange on which registered)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐  Accelerated filer ☒
Non-accelerated filer ☐  Smaller reporting company ☒
Emerging growth company ☒   

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

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

 

As of August 2, 2019, the number of shares outstanding of the Registrant’s Common Stock was 5,433,489.

 

 

 

 

FORM 10-Q

 

INDEX

 

Page

PART I – FINANCIAL INFORMATION  
Item 1.  Financial Statements (Unaudited) 1
Consolidated Statement of Financial Condition 1
Consolidated Statement of Income 2
Consolidated Statement of Comprehensive Income 3
Consolidated Statement of Changes In Stockholders’ Equity 3
Consolidated Statement of Cash Flows 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations. 37
Item 3. Quantitative and Qualitative Disclosure about Market Risk. 48
Item 4. Controls and Procedures. 48
PART II - OTHER INFORMATION  
Item 1. Legal Proceedings. 50
Item 1A. Risk Factors. 50
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. 50
Item 3.  Defaults Upon Senior Securities. 50
Item 4. Mine Safety Disclosures. 50
Item 5. Other Information. 50
Item 6. Exhibits 50
SIGNATURES 51

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

 

   (Unaudited)   
   June 30,  December 31,
(Dollars in thousands, except share data)  2019  2018
       
ASSETS          
Cash and Due From Banks:          
Interest Bearing  $21,490   $36,736 
Non-Interest Bearing   22,884    16,617 
Total Cash and Due From Banks   44,374    53,353 
           
Investment Securities:          
Available-for-Sale   236,004    225,409 
Loans, Net   926,197    903,314 
Premises and Equipment, Net   22,858    23,448 
Bank-Owned Life Insurance   23,188    22,922 
Goodwill   28,425    28,425 
Core Deposit Intangible, Net   9,964    10,934 
Accrued Interest and Other Assets   14,178    13,496 
TOTAL ASSETS  $1,305,188   $1,281,301 
           
LIABILITIES          
Deposits:          
Demand Deposits  $273,175   $253,201 
NOW Accounts   214,157    218,687 
Money Market Accounts   175,760    187,627 
Savings Accounts   218,369    209,985 
Time Deposits   221,524    214,891 
Brokered Deposits   4,118    2,267 
Total Deposits   1,107,103    1,086,658 
           
Short-Term Borrowings   27,730    30,979 
Other Borrowed Funds   17,000    20,000 
Accrued Interest and Other Liabilities   7,848    6,039 
TOTAL LIABILITIES   1,159,681    1,143,676 
           
STOCKHOLDERS' EQUITY          
Preferred Stock, No Par Value; 5,000,000 Shares Authorized   -    - 
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 5,680,993 Shares Issued and 5,433,489 and 5,432,289 Shares Outstanding at June 30, 2019 and December 31, 2018, Respectively   2,367    2,367 
Capital Surplus   83,380    83,225 
Retained Earnings   61,140    57,843 
Treasury Stock, at Cost (247,504 and 248,704 Shares at June 30, 2019 and December 31, 2018, Respectively)   (4,350)   (4,370)
Accumulated Other Comprehensive Income (Loss)   2,970    (1,440)
TOTAL STOCKHOLDERS' EQUITY   145,507    137,625 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $1,305,188   $1,281,301 

 

The accompanying notes are an integral part of these consolidated financial statements

 1 

 

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,
(Dollars in thousands, except share and per share data)  2019  2018  2019  2018
             
INTEREST AND DIVIDEND INCOME                    
Loans, Including Fees  $10,673   $9,257   $21,106   $17,228 
Federal Funds Sold   165    54    279    60 
Investment Securities:                    
Taxable   1,390    988    2,654    1,422 
Exempt From Federal Income Tax   232    303    513    539 
Other Interest and Dividend Income   209    88    413    148 
TOTAL INTEREST AND DIVIDEND INCOME   12,669    10,690    24,965    19,397 
                     
INTEREST EXPENSE                    
Deposits   1,824    1,186    3,543    1,974 
Federal Funds Purchased   -    -    -    1 
Short-Term Borrowings   50    208    96    405 
Other Borrowed Funds   90    123    187    236 
TOTAL INTEREST EXPENSE   1,964    1,517    3,826    2,616 
                     
NET INTEREST INCOME   10,705    9,173    21,139    16,781 
Provision For Loan Losses   350    600    375    2,100 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   10,355    8,573    20,764    14,681 
                     
NONINTEREST INCOME                    
Service Fees on Deposit Accounts   798    719    1,551    1,310 
Insurance Commissions   1,083    880    2,234    1,811 
Other Commissions   131    263    289    696 
Net Gains on Sales of Loans   50    46    142    54 
Net Gain (Loss) on Sales of Investments   7    -    (53)   - 
Fair Value of Equity Securities   109    44    129    19 
Net Gains on Purchased Tax Credits   9    11    18    22 
Net Gain on Disposal of Fixed Assets   8    -    2    - 
Income from Bank-Owned Life Insurance   134    127    266    235 
Other   70    35    136    64 
TOTAL NONINTEREST INCOME   2,399    2,125    4,714    4,211 
                     
NONINTEREST EXPENSE                    
Salaries and Employee Benefits   4,708    4,865    9,643    8,560 
Occupancy   663    788    1,422    1,358 
Equipment   665    632    1,369    1,130 
FDIC Assessment   175    158    363    294 
PA Shares Tax   249    197    517    396 
Contracted Services   361    171    633    310 
Legal and Professional Fees   160    145    341    285 
Advertising   259    211    407    342 
Bankcard Processing Expense   230    139    427    268 
Other Real Estate Owned (Income)   (31)   (19)   (94)   (12)
Amortization of Core Deposit Intangible   485    400    970    534 
Merger-Related   -    769    -    793 
Other   1,107    1,038    2,114    1,903 
TOTAL NONINTEREST EXPENSE   9,031    9,494    18,112    16,161 
                     
Income Before Income Taxes   3,723    1,204    7,366    2,731 
Income Taxes   744    234    1,462    401 
NET INCOME  $2,979   $970   $5,904   $2,330 
                     
EARNINGS PER SHARE                    
Basic  $0.55   $0.19   $1.09   $0.51 
Diluted   0.55    0.19    1.08    0.51 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING                    
Basic   5,433,537    5,000,209    5,433,198    4,550,580 
Diluted   5,444,824    5,061,788    5,448,040    4,601,134 

 

The accompanying notes are an integral part of these consolidated financial statements

 2 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,
(Dollars in thousands)  2019  2018  2019  2018
             
Net Income  $2,979   $970   $5,904   $2,330 
                     
Other Comprehensive Income:                    
Unrealized Gains (Losses) on Available-for-Sale Securities Net of Income Tax Expense (Benefit) of $540 and ($31) for the Three Months Ended June 30, 2019 and 2018, Respectively, and $1,162 and ($409) for the Six Months Ended June 30, 2019 and 2018, Respectively   2,031    (70)   4,368    (1,491)
                     
Reclassification Adjustment for (Gains) Losses on Securities: Included in Net Income, Net of Income Tax (Expense) Benefit of ($2) and $11 for the Three and Six Months Ended June 30, 2019, Respectively (1)    (5)   -    42    - 
Other Comprehensive Income (Loss), Net of Income Tax Expense (Benefit)   2,026    (70)   4,410    (1,491)
Total Comprehensive Income  $5,005   $900   $10,314   $839 

 

(1)The gross amount of gains (losses) on securities of $7 and ($53) for the Three and Six Months Ended June 30, 2019, respectively are reported as Net Gain (Loss) on Sales of Investments on the Consolidated Statement of Income. The income tax expense (benefit) effect is included in Income Taxes on the Consolidated Statement of Income.

 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

 

                  Accumulated   
                  Other  Total
   Shares  Common  Capital  Retained  Treasury  Comprehensive  Stockholders'
(Dollars in thousands, except share and per share data)  Issued  Stock  Surplus  Earnings  Stock  Loss  Equity
December 31, 2017   4,363,346   $1,818   $42,089   $55,280   $(4,590)  $(1,341)  $93,256 
Comprehensive Income:                                   
Net Income   -    -    -    2,330    -    -    2,330 
Other Comprehensive Loss   -    -    -    -    -    (1,491)   (1,491)
Impact of change in method of accounting for marketable equity securities (1)   -    -    -    40    -    (40)   - 
Issuance of Common Stock                            
(net of issuance expenses of $515)   1,317,647    549    40,978    -    -    -    41,527 
Stock-Based Compensation Expense   -    -    239    -    -    -    239 
Exercise of Stock Options   -    -    5    -    208    -    213 
Treasury Stock Purchased, at cost (8,624 shares)   -    -    -    -    (298)   -    (298)
Dividends Paid ($0.44 Per Share)   -    -    -    (2,092)   -    -    (2,092)
June 30, 2018   5,680,993   $2,367   $83,311   $55,558   $(4,680)  $(2,872)  $133,684 

 

                  Accumulated   
                  Other  Total
   Shares  Common  Capital  Retained  Treasury  Comprehensive  Stockholders'
(Dollars in thousands, except share and per share data)  Issued  Stock  Surplus  Earnings  Stock  Income (Loss)  Equity
December 31, 2018   5,680,993   $2,367   $83,225   $57,843   $(4,370)  $(1,440)  $137,625 
Comprehensive Income:                                   
Net Income   -    -    -    5,904    -    -    5,904 
Other Comprehensive Income   -    -    -    -    -    4,410    4,410 
Restricted Stock Awards Granted   -    -    (11)   -    11    -    - 
Restricted Stock Awards Forfeited   -    -    8    -    (8)   -    - 
Stock-Based Compensation Expense   -    -    153    -    -    -    153 
Exercise of Stock Options   -    -    5    -    36    -    41 
Treasury stock purchased, at cost (800 shares)   -    -    -    -    (19)   -    (19)
Dividends Paid ($0.48 Per Share)   -    -    -    (2,607)   -    -    (2,607)
June 30, 2019   5,680,993   $2,367   $83,380   $61,140   $(4,350)  $2,970   $145,507 

 

(1)Reclassification due to the adoption of ASU 2016-01. See Note 1 for additional information.

 

The accompanying notes are an integral part of these consolidated financial statements

 3 

 

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

 

   Six Months Ended
   June 30,
(Dollars in thousands)  2019  2018
       
OPERATING ACTIVITIES          
Net Income  $5,904   $2,330 
Αdjustmеnts to Rеconcilе Net Income to Net Cash Provided By Operating Activities:          
Net Amortization on Investments   20    115 
Depreciation and Amortization   1,833    1,347 
Provision for Loan Losses   375    2,100 
Unrealized (Gain) Loss on Equity Securities   (129)   (19)
Gains on Purchased Tax Credits   (18)   (22)
Income from Bank-Owned Life Insurance   (266)   (235)
Proceeds From Mortgage Loans Sold   5,724    2,539 
Originations of Mortgage Loans for Sale   (5,582)   (2,485)
Gains on Sales of Loans   (142)   (54)
Losses on Sales of Investment Securities   53    - 
Gains on Sales of Other Real Estate Owned and Repossessed Assets   (94)   (19)
Noncash Expense for Stock-Based Compensation   153    239 
Increase in Accrued Interest Receivable   (343)   (832)
Net Gain on Disposal of Fixed Assets   (2)   - 
Increase (Decrease) in Taxes Payable   536    (1,914)
Increase in Accrued Interest Payable   293    106 
Net Payment of Federal/State Income Taxes   (1,365)   (820)
Other, Net   851    1,427 
NET CASH PROVIDED BY OPERATING ACTIVITIES   7,801    3,803 
           
INVESTING ACTIVITIES          
Investment Securities Available for Sale:          
Proceeds From Principal Repayments and Maturities   15,703    4,823 
Purchases of Securities   (33,331)   (1,069)
Proceeds from Sales of Securities   12,672    80,314 
Net Increase in Loans   (23,397)   (53,526)
Purchase of Premises and Equipment   (54)   (3,742)
Asset Acquisition of a Customer List   (900)   - 
Proceeds From a Claim on Bank-Owned Life Insurance   -    951 
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets   773    214 
Decrease (Increase) in Restricted Equity Securities   143    (306)
Net Cash Received from Acquisition   -    20,632 
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES   (28,391)   48,291 
           
FINANCING ACTIVITIES          
Net Increase (Decrease) in Deposits   20,445    (30,404)
Net Decrease in Short-Term Borrowings   (3,249)   (12,457)
Principal Payments on Other Borrowed Funds   (3,000)   (3,500)
Cash Dividends Paid   (2,607)   (2,092)
Treasury Stock, Purchases at Cost   (19)   (298)
Exercise of Stock Options   41    213 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   11,611    (48,538)
           
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (8,979)   3,556 
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR   53,353    20,622 
CASH AND DUE FROM BANKS AT END OF PERIOD  $44,374   $24,178 
           
SUPPLEMENTAL CASH FLOW INFORMATION:          
Cash paid for:          
Interest on deposits and borrowings (including interest credited to deposit accounts of $3,543 and $1,974, respectively)  $3,532   $2,511 
Income taxes   1,365    820 
           
Real estate acquired in settlement of loans   158    - 
SUPPLEMENTAL NONCASH DISCLOSURE:          
Right of use asset recognized   1,706    - 
Lease liability recognized   1,712    - 

 

The accompanying notes are an integral part of these consolidated financial statements

 4 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1. Summary of Significant Accounting Policies

 

Principles of Consolidation and Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters” or “EU”). CB Financial and the Bank are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

 

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading in any material respect. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, evaluation of securities for other-than-temporary impairment including related cash flow projections, goodwill and intangible assets impairment, and the valuation of deferred tax assets.

 

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Interim results are not necessarily indicative of results for a full year.

 

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC and incorporated into the consolidated financial statements the effect of all material known events determined by ASC Topic 855, Subsequent Events, to be recognizable events.

 

Nature of Operations

 

The Company derives substantially all its income from banking and bank-related services which include interest earnings on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest earnings on investment securities and fees generated from deposit services to its customers. The Company provides banking services through its subsidiary, Community Bank, a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank operates from twenty offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania, seven offices in Brooke, Marshall, Ohio, Upshur and Wetzel Counties in West Virginia, and one office in Belmont County in Ohio. The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, the Bank’s wholly owned subsidiary that is a full-service, independent insurance agency.

 

Acquired Loans

 

Loans that were acquired in previous mergers, were recorded at fair value with no carryover of the related allowance for credit losses. The fair value of the acquired loans was estimated by management with the assistance of a third-party valuation specialist.

 

For performing loans acquired in a merger, the excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. For purchased credit impaired (“PCI”) loans acquired in a merger, the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require an evaluation to determine the need for an allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which is then reclassified as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. The evaluation of the amount of future cash flows that is expected to be collected is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment.

 5 

 

Recognition of Prior Period Errors

 

In April 2018, the Company discovered an error with the collateral position on a commercial and industrial classified loan relationship that had occurred in April 2017. This error resulted in the loss of the Company’s first lien position, leaving the loan with insufficient collateral. The Company recognized the error by recording a specific reserve and recognizing an additional $300,000 (pre-tax) of provision for loan losses for the quarter-ended March 31, 2018. There was no financial statement impact for the three months ended June 30, 2018. The impact of the correction of the error resulted in a decrease of $300,000 in income before income taxes and a decrease of $63,000 in income taxes. This resulted in a decrease of $237,000 (after-tax) in net income ($0.05 per share) for the six months ended June 30, 2018.

 

As a result of this error, the Company’s 2017 results were overstated by $237,000 and the Company’s March 31, 2018 quarterly and six months ended June 30, 2018 results were understated by the same amount. Management of the Company concluded the effect of the error was immaterial to the Company’s 2017 and 2018 results.

 

In March 2019, the Company discovered an error in loan classifications within the commercial and industrial segment of the loan portfolio. The loan reclassifications were due to term loans and revolving lines of credit that were classified as commercial and industrial loans but were partially or primarily secured by commercial and residential real estate. The error resulted in loan reclassifications of $21.7 million from commercial and industrial segment to commercial real estate and residential real estate segments as of and for the year ended December 31, 2018. In addition, as a result of the loan segment reclassifications, the allocated components of the allowance for loan losses were adjusted to reflect the revised loan balances with the residual of $257,000 added to the unallocated component of the allowance for loan loss as of December 31, 2018. Management of the Company has evaluated the loan reclassification error and determined that, based on quantitative and qualitative analysis, this error was not material to the December 31, 2018 consolidated financial statements as presented.

 

Reclassifications

 

Certain comparative amounts for the prior year have been reclassified to conform to the current year presentation. Such reclassifications did not affect net income or stockholders’ equity.

 

Recent Accounting Standards

 

In January 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-01, Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842. ASU 2018-01 is intended to be effective with ASU 2016-02, as amended. The amendments in ASU 2018-01 are as follows: provide an optional transition practical expedient for the adoption of ASU 2016-02 that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old lease standards; and clarify that new or modified land easements should be evaluated under ASU 2016-02, once an entity has adopted the new standard. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company adopted the provisions of ASU 2016-02 effective January 1, 2019, which increased assets and liabilities approximately $1.9 million at the time of adoption, as a result of reporting additional leases on the Company's consolidated statement of financial condition.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 amendments simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The Company adopted the provisions of ASU 2017-11 effective January 1, 2019 and the adoption did not have a material impact on the Company's consolidated financial condition or results of operations.

 6 

 

In March 2017, the FASB issued ASU 2017-08, Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchases of Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchases of callable debt securities. The amendments shorten the amortization period of premiums on certain purchases of callable debt securities to the earliest call date. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted the provisions of ASU 2017-08 effective January 1, 2019 and the adoption did not have a material impact on the Company's consolidated statement of financial condition or results of operations.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the second step of the goodwill impairment test. Instead, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-04 is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently evaluating the provisions of ASU 2017-04, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

 

In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP; and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-13, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations. In July 2019, the FASB tentatively decided to delay the required implementation date of ASU 2016-13 for smaller reporting companies. If the decision to delay the required implementation is finalized, the Company would be required to implement the ASU on January 1, 2023.

 

Note 2. Merger

 

Effective April 30, 2018, the Company merged with First West Virginia Bancorp, Inc. (“FWVB”), the holding company for Progressive Bank, N.A. (“PB”), a national association. In addition, effective April 30, 2018, PB merged into the Bank. The FWVB merger enhanced the Bank’s exposure into the core of the PA-WV-OH Tri-State region. Through the FWVB merger, the Company anticipates future revenue and earnings growth from an expanded menu of financial services expanding the Company’s business footprint into the Ohio Valley. The FWVB merger resulted in the addition of eight branches and expanded the Company’s reach into West Virginia with seven branches and one branch in Eastern Ohio. The FWVB merger value was approximately $51.3 million. In connection with the FWVB merger, the Company issued 1,317,647 shares of common stock based on the Company’s closing stock price on April 30, 2018, of $31.9068, and paid cash consideration of $9.8 million in exchange for all the outstanding shares of FWVB common stock.

 

Merger-related expenses are recorded in the Consolidated Statement of Income and include costs relating to the Company’s acquisition of FWVB, as described above.  These charges represent one-time costs associated with acquisition activities and do not represent ongoing costs of the fully integrated combined organization.  Accounting guidance requires that acquisition-related transactional and restructuring costs incurred by the Company be charged to expense as incurred. There were approximately $1.2 million of cumulative merger-related expenses, of which $769,000 and $793,000, were recorded in the Consolidated Statement of Income for the three and six months ended June 30, 2018, respectively.

 

As of the date of merger, FWVB had approximately $334.0 million of assets, $96.8 million of loans, and $282.9 million of deposits held across a network of 8 branches located in West Virginia and eastern Ohio. The Company stockholders and FWVB stockholders now own approximately 76% and 24% of the combined company, respectively.

 

The FWVB merger was accounted for as an acquisition in accordance with the acquisition method of accounting as detailed in Accounting Standards Codification ("ASC") 805, Business Combinations. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed based on their fair values as of the date of acquisition. This process is heavily reliant on measuring and estimating the fair values of all the assets and liabilities of the acquired entity. To the extent we did not have the requisite expertise to determine the fair values of the assets acquired and liabilities assumed, we engaged third-party valuation specialists to assist us in determining such values. The preliminary results of the fair value evaluation generated goodwill and intangible assets. Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill because of contractual obligations or other legal rights.

 7 

 

The assets acquired and liabilities assumed in the FWVB merger were recorded on the Company’s Consolidated Statement of Financial Condition at their estimated fair values as of April 30, 2018. Based on a purchase price allocation, the Company recorded $23.5 million in goodwill and $9.1 million in core deposit intangibles related to FWVB merger.

 

None of the goodwill is deductible for income tax purposes, as the merger is accounted for as a tax-free exchange for tax purposes.

 

The fair value of the assets acquired, and liabilities assumed in the FWVB merger were as follows (dollars in thousands):

 

      Measurement   
Consideration Paid:  June 30, 2018  Period Adjustments  December 31, 2018
Cash Paid for Redemption of FWVB Common Stock  $9,801        $9,801 
CB Financial Common Stock Issued in               
Exchange for FWVB Common Stock   41,527         41,527 
Total Consideration Paid   51,328    -    51,328 
                
Assets Acquired:               
Cash and Cash Equivalents   30,433         30,433 
Net Loans   95,456         95,456 
Investment Securities   187,628         187,628 
Premises and Equipment   13,047    (9,335)   3,712 
Bank Owned Life Insurance   4,212         4,212 
Core Deposit Intangible   12,789    (3,662)   9,127 
Deferred Tax Assets   (87)   1,411    1,324 
Other Assets   3,030         3,030 
Total Assets Acquired   346,508    (11,586)   334,922 
                
Liabilities Assumed:               
Deposits   281,620         281,620 
Borrowings   22,329         22,329 
Other Liabilities   3,117         3,117 
Total Liabilities Assumed   307,066    -    307,066 
Total Identifiable Net Assets   39,442    (11,586)   27,856 
Goodwill Recognized  $11,886    11,586   $23,472 

 

As part of the FWVB merger, the Company identified employees from FWVB who would be retained and estimated a severance cost of $100,000 if those employees were terminated without cause within the first year of the merger. For the six months ended June 30, 2019, the Company paid out $52,000 in severance cost according to the FWVB merger agreement. In accordance with the merger agreement and GAAP, the severance accrual that was remaining as of the one-year anniversary of the April 30, 2018 merger, would be reversed, and recorded as an offset to current period compensation expense. As of the three months ended June 30, 2019, $48,000 was offset against compensation expense.

 

 8 

 

Note 3. Earnings Per Share

 

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used as the numerator.

 

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2019  2018  2019  2018
Weighted-Average Common Shares Outstanding   5,680,993    5,266,714    5,680,993    4,817,525 
Average Treasury Stock Shares   (247,456)   (266,505)   (247,795)   (266,945)
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Basic Earnings Per Share   5,433,537    5,000,209    5,433,198    4,550,580 
Additional Common Stock Equivalents (Stock Options and Restricted Stock) Used to Calculate Diluted Earnings Per Share   11,287    61,579    14,842    50,554 
Weighted-Average Common Shares and Common Stock Equivalents Used to Calculate Diluted Earnings Per Share   5,444,824    5,061,788    5,448,040    4,601,134 
                     
Earnings per share:                    
Basic  $0.55   $0.19   $1.09   $0.51 
Diluted   0.55    0.19    1.08    0.51 

 

Note 4. Revenue Recognition from Contracts with Customers

 

The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying ASC 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

 

All the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized as Non-Interest Income except for Other Real Estate Owned (Income), which is accounted for in Non-Interest Expense. The following table presents the Company’s sources of Non-Interest Income and Expense as of the periods indicated:

 

   (Dollars in thousands)
   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2019  2018  2019  2018
             
NONINTEREST INCOME                    
Service Fees on Deposit Accounts (a)  $798   $719   $1,551   $1,310 
Insurance Commissions   1,083    880    2,234    1,811 
Other Commissions (c)   131    263    289    696 
Net Gains on Sales of Loans (b)   50    46    142    54 
Net Gain (Loss) on Sales of Investments (b)   7    -    (53)   - 
Fair Value of Equity Securities (b)   109    44    129    19 
Net Gains on Purchased Tax Credits (b)   9    11    18    22 
Net Gain on Disposal of Fixed Assets (b)   8    -    2    - 
Income from Bank-Owned Life Insurance (b)   134    127    266    235 
Other (b)   70    35    136    64 
Total non-interest income   2,399    2,125    4,714    4,211 
                     
NONINTEREST EXPENSE                    
Other Real Estate Owned (Income)   (31)   (19)   (94)   (12)
Total non-interest expense   (31)   (19)   (94)   (12)
                     
Net non-interest income  $2,430   $2,144   $4,808   $4,223 

 

(a)Interchange fees and ATM fees are included within this line item.
(b)Not within the scope of ASC 606.
(c)The Other Commissions category includes wealth management referral fees, merchant service fees, check sales and safe deposit box rentals totaling $124,000 and $110,000 for the three months ended June 30, 2019 and 2018, and $254,000 and $209,000 for the six months ended June 30, 2019 and 2018, respectively, which are in the scope of ASC 606. The remaining balances of $7,000 and $36,000 for the three and six months ended June 30, 2019, respectively, represent income from other various commissions. The remaining balances of $152,000 and $487,000 for the three and six months ended June 30, 2018, respectively, mainly represents income derived from an assumable rate conversion (“ARC”) loan referral fee for the three and six months ended June 30, 2018, and a bank-owned life insurance policy claim for the six months ended June 30, 2018, which are all outside the scope of ASC 606. The following narrative describes the Company’s revenue streams accounted for under the guidance of ASC 606 as follows:

 9 

 

Service Fees on Deposit Accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees include services fees for ATM uses, stop payment charges, statement production, ACH and wire fees, which are recognized into income at the occurrence of an executed transaction and the point in time the Company fulfills the customer’s request. Account maintenance fees, which are primarily based on monthly maintenance activities, are earned over the course of the month, and satisfy the Company’s performance obligation. Overdraft fees are recognized as the overdrafts on customer’s accounts are incurred. The services fees on deposit accounts are automatically withdrawn from the customer’s accounts balance per their account agreement with the Company.

 

Interchange Fees: The Company earns interchange fees from debit/credit cardholder transactions conducted through the MasterCard network for our debit cards and through the Visa network for our credit cards. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The Company currently does not offer a cardholder rewards program.

 

Insurance Commissions: The Company’s insurance subsidiary, Exchange Underwriters, derives commission and fee income from direct and agency bill insurance policies. Direct bill policies are invoiced directly from the insurance company provider to the customer, once the customer remits payment for the policy, the insurance company provider then remits the commission or fee income to EU on a monthly basis. Agency bill policies are invoiced from EU, the insurance underwriting agency, to the customer. EU records the insurance company policy payable and the commission or fee income earned on the policy. As all insurance policies are contracts with customers, each policy has different terms and conditions.

 

EU utilizes a report from their core insurance data processing program, The Agency Manager, otherwise known as “TAM”. The report from TAM captures all in force policies that are active in the system and annualizes the commission over the life of each individual contract. The report then provides an overall commission and fee income total for the monthly reporting financial statement period. This income is then compared to the amount of direct and agency bill income recorded in TAM for the reporting month and an adjustment to income is made according to the report and this is the income recognized for the portion of the insurance contract that has been earned by EU.

 

Other Commissions: The Company earns other commissions; such as, wealth management referral fees, merchant service fees, check sales and safe deposit box rentals to customers. The wealth management referral fees are earned as a referral of a bank customer initiates a customer relationship with an associated wealth management firm. These fees fulfill the contract/agreement between the Company and the wealth management firm. Merchant service fees are earned on customers who contract with the Company by utilizing credit card terminals issued and serviced by the Company. These fees are based on the volume and processing of card transactions accepted by customer businesses. Check sales are recognized as customers contact the Company for check supplies or the customer initiates the check order through the Company website to our third-party check company. These commissions are recognized as the third-party check company satisfies the contract of providing check stock to our customers. Safe deposit box rental income is recognized on a monthly basis, per each contract agreement with our customers. The safe deposit box income is automatically withdrawn from the customer’s deposit account on a monthly basis as this revenue is earned by the contract.

 

Gains/Losses on Sales of Other Real Estate Owned (“OREO”): The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. It is not common policy that the Company will finance an OREO property with the buyer. It is the Company’s belief that once loan collateral has been recognized as an OREO property, it needs to be sold to free the Company of any additional possible loss exposure. In addition, the Company occasionally will receive ownership in mineral rights with an OREO property. It has been the Company’s practice to retain ownership in the mineral rights and proceed to recognize the value of these rights to offset any potential loss exposure.

 

 10 

 

Note 5. Investment Securities

 

The following table presents the amortized cost and fair value of investment securities available-for-sale at the dates indicated:

 

   (Dollars in thousands)
   June 30, 2019
      Gross  Gross   
   Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
             
U.S. Government Agencies  $83,545   $587   $(162)  $83,970 
Obligations of States and Political Subdivisions   28,775    760    (6)   29,529 
Mortgage-Backed Securities - Government-Sponsored Enterprises   117,309    2,611    (34)   119,886 
Equity Securities - Mutual Funds   1,000    5    (10)   995 
Equity Securities - Other   1,534    129    (39)   1,624 
Total  $232,163   $4,092   $(251)  $236,004 

 

   December 31, 2018
      Gross  Gross   
   Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
             
U.S. Government Agencies  $82,506   $160   $(2,087)  $80,579 
Obligations of States and Political Subdivisions   44,737    230    (366)   44,601 
Mortgage-Backed Securities - Government-Sponsored Enterprises   97,535    582    (346)   97,771 
Equity Securities - Mutual Funds   1,000    -    (32)   968 
Equity Securities - Other   1,502    92    (104)   1,490 
Total  $227,280   $1,064   $(2,935)  $225,409 

 

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at the dates indicated:

 

   (Dollars in thousands)
   June 30, 2019
   Less than 12 months  12 Months or Greater  Total
   Number     Gross  Number     Gross  Number     Gross
   of  Fair  Unrealized  of  Fair  Unrealized  of  Fair  Unrealized
   Securities  Value  Losses  Securities  Value  Losses  Securities  Value  Losses
U.S. Government Agencies   2   $5,965   $(35)   14   $38,372   $(127)   16   $44,337   $(162)
Obligations of States and Political Subdivisions   -    -    -    3    1,861    (6)   3    1,861    (6)
Mortgage-Backed Securities - Government Sponsored Enterprises   -    -    -    6    11,131    (34)   6    11,131    (34)
Equity Securities - Mutual Fund   -    -    -    1    489    (10)   1    489    (10)
Equity Securities - Other   7    590    (34)   1    56    (5)   8    646    (39)
Total   9   $6,555   $(69)   25   $51,909   $(182)   34   $58,464   $(251)

 

 11 

 

   December 31, 2018
   Less than 12 months  12 Months or Greater  Total
   Number     Gross  Number     Gross  Number     Gross
   of  Fair  Unrealized  of  Fair  Unrealized  of  Fair  Unrealized
   Securities  Value  Losses  Securities  Value  Losses  Securities  Value  Losses
U.S. Government Agencies   -   $-   $-    23   $65,450   $(2,087)   23   $65,450   $(2,087)
Obligations of States and Political Subdivisions   24    13,212    (133)   25    11,918    (233)   49    25,130    (366)
Mortgage-Backed Securities - Government Sponsored Enterprises   -    -    -    9    13,874    (346)   9    13,874    (346)
Equity Securities - Mutual Fund   2    968    (32)   -    -    -    2    968    (32)
Equity Securities - Other   7    592    (68)   3    225    (36)   10    817    (104)
Total   33   $14,772   $(233)   60   $91,467   $(2,702)   93   $106,239   $(2,935)

 

For debt securities, the Company does not believe that any individual unrealized loss as of June 30, 2019 or December 31, 2018, represents an other-than-temporary impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment. The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer. The securities that are temporarily impaired at June 30, 2019 and December 31, 2018 relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell, or it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

 

The following table presents the scheduled maturities of investment securities as of the date indicated:

 

   (Dollars in thousands)
   June 30, 2019
   Available-for-Sale
   Amortized  Fair
   Cost  Value
Due in One Year or Less  $7,205   $7,217 
Due after One Year through Five Years   67,921    68,038 
Due after Five Years through Ten Years   40,535    41,481 
Due after Ten Years   116,502    119,268 
Total  $232,163   $236,004 

 

Equity Securities – Mutual Funds and Equity Securities – Other do not have a scheduled maturity date but have been included in the Due After Ten Years category.

 12 

 

Note 6. Loans and Related Allowance for Loan Loss

 

The Company’s loan portfolio is made up of four classifications: real estate loans, commercial and industrial loans, consumer loans and other loans. These segments are further segregated between loans accounted for under the amortized cost method (“Originated Loans”) and acquired loans that were originally recorded at fair value with no carryover of the related pre-merger allowance for loan losses (“Loans Acquired at Fair Value”). The following table presents the classifications of loans as of the dates indicated.

 

   (Dollars in thousands)
   June 30, 2019  December 31, 2018
   Amount  Percent  Amount  Percent
Originated Loans                    
Real Estate:                    
Residential  $246,963    32.7%  $235,492    32.6%
Commercial   247,671    32.7    229,455    31.8 
Construction   56,054    7.4    46,824    6.5 
Commercial and Industrial   79,040    10.4    78,466    10.9 
Consumer   114,897    15.2    119,731    16.6 
Other   12,242    1.6    11,623    1.6 
Total Originated Loans   756,867    100.0%   721,591    100.0%
Allowance for Loan Losses   (9,091)        (8,942)     
Loans, Net  $747,776        $712,649      
                     
Loans Acquired at Fair Value                    
Real Estate:                    
Residential  $83,902    46.9%  $91,277    47.8%
Commercial   69,511    38.8    77,609    40.5 
Construction   4,361    2.4    2,000    1.0 
Commercial and Industrial   14,810    8.3    12,997    6.8 
Consumer   1,830    1.0    2,510    1.3 
Other   4,607    2.6    4,888    2.6 
Total Loans Acquired at Fair Value   179,021    100.0%   191,281    100.0%
Allowance for Loan Losses   (600)        (616)     
Loans, Net  $178,421        $190,665      
                     
Total Loans                    
Real Estate:                    
Residential  $330,865    35.3%  $326,769    35.9%
Commercial   317,182    33.9    307,064    33.6 
Construction   60,415    6.5    48,824    5.3 
Commercial and Industrial   93,850    10    91,463    10.0 
Consumer   116,727    12.5    122,241    13.4 
Other   16,849    1.8    16,511    1.8 
Total Loans   935,888    100.0%   912,872    100.0%
Allowance for Loan Losses   (9,691)        (9,558)     
Loans, Net  $926,197        $903,314      

 

Total unamortized net deferred loan fees were $766,000 and $926,000 at June 30, 2019 and December 31, 2018, respectively.

 

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $101.4 million and $99.0 million at June 30, 2019 and December 31, 2018, respectively.

 13 

 

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At June 30, 2019 and December 31, 2018, there were no loans in the criticized category of Loss within the internal risk rating system.

 

   (Dollars in thousands)
   June 30, 2019
      Special         
   Pass  Mention  Substandard  Doubtful  Total
Originated Loans                         
Real Estate:                         
Residential  $245,071   $1,026   $866   $-   $246,963 
Commercial   231,612    11,161    3,803    1,095    247,671 
Construction   55,759    -    295    -    56,054 
Commercial and Industrial   69,880    8,126    39    995    79,040 
Consumer   114,792    -    105    -    114,897 
Other   12,242    -    -    -    12,242 
Total Originated Loans  $729,356   $20,313   $5,108   $2,090   $756,867 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $83,116   $-   $786   $-   $83,902 
Commercial   60,354    7,004    2,153    -    69,511 
Construction   4,361    -    -    -    4,361 
Commercial and Industrial   14,794    -    16    -    14,810 
Consumer   1,830    -    -    -    1,830 
Other   4,509    98    -    -    4,607 
Total Loans Acquired at Fair Value  $168,964   $7,102   $2,955   $-   $179,021 
                          
Total Loans                         
Real Estate:                         
Residential  $328,187   $1,026   $1,652   $-   $330,865 
Commercial   291,966    18,165    5,956    1,095    317,182 
Construction   60,120    -    295    -    60,415 
Commercial and Industrial   84,674    8,126    55    995    93,850 
Consumer   116,622    -    105    -    116,727 
Other   16,751    98    -    -    16,849 
Total Loans  $898,320   $27,415   $8,063   $2,090   $935,888 

 

The increase of $4.7 million in the substandard loan category as of June 30, 2019 was mainly due to two commercial real estate relationships for $2.9 million and $1.7 million that were evaluated for impairment and were identified as having additional credit risk. The $2.9 million relationship has been assigned to a receiver to manage the property. The $1.7 million relationship paid current after quarter-end. Additionally, the loan is expected to be paid off without anticipated loss in the third quarter of 2019.

 14 

 

   December 31, 2018
      Special         
   Pass  Mention  Substandard  Doubtful  Total
Originated Loans                         
Real Estate:                         
Residential  $233,872   $1,071   $549   $-   $235,492 
Commercial   222,279    5,301    704    1,171    229,455 
Construction   43,522    2,902    400    -    46,824 
Commercial and Industrial   68,553    8,618    228    1,067    78,466 
Consumer   119,648    -    83    -    119,731 
Other   11,623    -    -    -    11,623 
Total Originated Loans  $699,497   $17,892   $1,964   $2,238   $721,591 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $89,490   $851   $936   $-   $91,277 
Commercial   69,954    7,175    480    -    77,609 
Construction   2,000    -    -    -    2,000 
Commercial and Industrial   12,981    -    16    -    12,997 
Consumer   2,510    -    -    -    2,510 
Other   4,785    103    -    -    4,888 
Total Loans Acquired at Fair Value  $181,720   $8,129   $1,432   $-   $191,281 
                          
Total Loans                         
Real Estate:                         
Residential  $323,362   $1,922   $1,485   $-   $326,769 
Commercial   292,233    12,476    1,184    1,171    307,064 
Construction   45,522    2,902    400    -    48,824 
Commercial and Industrial   81,534    8,618    244    1,067    91,463 
Consumer   122,158    -    83    -    122,241 
Other   16,408    103    -    -    16,511 
Total Loans  $881,217   $26,021   $3,396   $2,238   $912,872 

 

 15 

 

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated.

 

   (Dollars in thousands)
   June 30, 2019
      30-59  60-89  90 Days         
   Loans  Days  Days  Or More  Total  Non-  Total
   Current  Past Due  Past Due  Past Due  Past Due  Accrual  Loans
Originated Loans                                   
Real Estate:                                   
Residential  $245,623   $229   $30   $20   $279   $1,061   $246,963 
Commercial   244,490    32    -    -    32    3,149    247,671 
Construction   56,054    -    -    -    -    -    56,054 
Commercial and Industrial   78,247    -    -    -    -    793    79,040 
Consumer   114,044    611    120    17    748    105    114,897 
Other   12,242    -    -    -    -    -    12,242 
Total Originated Loans  $750,700   $872   $150   $37   $1,059   $5,108   $756,867 
                                    
Loans Acquired at Fair Value                                   
Real Estate:                                   
Residential  $82,696   $43   $-   $-   $43   $1,163   $83,902 
Commercial   67,867    -    -    1,644    1,644    -    69,511 
Construction   4,361    -    -    -    -    -    4,361 
Commercial and Industrial   14,725    69    -    -    69    16    14,810 
Consumer   1,830    -    -    -    -    -    1,830 
Other   4,607    -    -    -    -    -    4,607 
Total Loans Acquired at Fair Value  $176,086   $112   $-   $1,644   $1,756   $1,179   $179,021 
                                    
Total Loans                                   
Real Estate:                                   
Residential  $328,319   $272   $30   $20   $322   $2,224   $330,865 
Commercial   312,357    32    -    1,644    1,676    3,149    317,182 
Construction   60,415    -    -    -    -    -    60,415 
Commercial and Industrial   92,972    69    -    -    69    809    93,850 
Consumer   115,874    611    120    17    748    105    116,727 
Other   16,849    -    -    -    -    -    16,849 
Total Loans  $926,786   $984   $150   $1,681   $2,815   $6,287   $935,888 

 

 16 

 

   December 31, 2018
      30-59  60-89  90 Days         
   Loans  Days  Days  Or More  Total  Non-  Total
   Current  Past Due  Past Due  Past Due  Past Due  Accrual  Loans
Originated Loans                                   
Real Estate:                                   
Residential  $232,967   $1,374   $72   $324   $1,770   $755   $235,492 
Commercial   229,189    84    182    -    266    -    229,455 
Construction   46,824    -    -    -    -    -    46,824 
Commercial and Industrial   77,222    216    -    -    216    1,028    78,466 
Consumer   118,256    1,319    70    3    1,392    83    119,731 
Other   11,623    -    -    -    -    -    11,623 
Total Originated Loans  $716,081   $2,993   $324   $327   $3,644   $1,866   $721,591 
                                    
Loans Acquired at Fair Value                                   
Real Estate:                                   
Residential  $89,405   $408   $65   $-   $473   $1,399   $91,277 
Commercial   77,532    77    -    -    77    -    77,609 
Construction   2,000    -    -    -    -    -    2,000 
Commercial and Industrial   12,929    52    -    -    52    16    12,997 
Consumer   2,491    18    1    -    19    -    2,510 
Other   4,888    -    -    -    -    -    4,888 
Total Loans Acquired at Fair Value  $189,245   $555   $66   $-   $621   $1,415   $191,281 
                                    
Total Loans                                   
Real Estate:                                   
Residential  $322,372   $1,782   $137   $324   $2,243   $2,154   $326,769 
Commercial   306,721    161    182    -    343    -    307,064 
Construction   48,824    -    -    -    -    -    48,824 
Commercial and Industrial   90,151    268    -    -    268    1,044    91,463 
Consumer   120,747    1,337    71    3    1,411    83    122,241 
Other   16,511    -    -    -    -    -    16,511 
Total Loans  $905,326   $3,548   $390   $327   $4,265   $3,281   $912,872 

 

 17 

 

The following table sets forth the amounts and categories of our nonperforming assets at the dates indicated. Included in nonperforming loans and assets are troubled debt restructurings (“TDRs”), which are loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties. Nonaccrual TDRs are included in their specific loan category in the nonaccrual loans section.

 

   (Dollars in Thousands)
   June 30,  December 31,
   2019  2018
Nonaccrual Loans:          
Originated Loans:          
Real Estate:          
Residential  $1,061   $755 
Commercial   3,149    - 
Commercial and Industrial   793    1,028 
Consumer   105    83 
Total Originated Nonaccrual Loans   5,108    1,866 
           
Loans Acquired at Fair Value:          
Real Estate:          
Residential   1,163    1,399 
Commercial and Industrial   16    16 
Total Loans Acquired at Fair Value Nonaccrual Loans   1,179    1,415 
Total Nonaccrual Loans   6,287    3,281 
           
Accruing Loans Past Due 90 Days or More:          
Originated Loans:          
Real Estate:          
Residential   20    324 
Consumer   17    3 
Total Originated Accruing Loans 90 Days or More Past Due   37    327 
           
Loans Acquired at Fair Value:          
Real Estate:          
Commercial   1,644    - 
Total Loans Acquired at Fair Value Accruing Loans 90 Days or More Past Due   1,644    - 
Total Accruing Loans 90 Days or More Past Due   1,681    327 
Total Nonaccrual Loans and Accruing Loans 90 Days or More Past Due   7,968    3,608 
           
Troubled Debt Restructurings, Accruing:          
Originated Loans:          
Real Estate - Residential   85    26 
Real Estate - Commercial   1,072    980 
Commercial and Industrial   113    154 
Total Originated Loans   1,270    1,160 
Loans Acquired at Fair Value:          
Real Estate - Residential   351    1,212 
Real Estate - Commercial   313    333 
Total Loans Acquired at Fair Value   664    1,545 
Total Troubled Debt Restructurings, Accruing   1,934    2,705 
           
Total Nonperforming Loans   9,902    6,313 
           
Real Estate Owned:          
Residential   158    46 
Commercial   174    871 
Total Real Estate Owned   332    917 
           
Total Nonperforming Assets  $10,234   $7,230 
           
Nonperforming Loans to Total Loans   1.06%   0.69%
Nonperforming Assets to Total Assets   0.78    0.56 

 

 18 

 

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $962,000 and $1.4 million at June 30, 2019 and December 31, 2018, respectively.

 

TDRs typically are the result of our loss mitigation activities whereby concessions are granted to minimize loss and avoid foreclosure or repossession of collateral. The concessions granted for the TDRs in the portfolio primarily consist of, but are not limited to, modification of payment or other terms, temporary rate modification and extension of maturity date. Loans classified as TDRs consisted of 13 loans totaling $2.8 million and 12 loans totaling $3.6 million at June 30, 2019 and December 31, 2018, respectively. Originated loans classified as TDRs consisted of eight loans totaling $2.2 million and six loans totaling $2.1 million at June 30, 2019 and December 31, 2018, respectively. Loans acquired at fair value classified as TDRs consisted of five loans totaling $664,000 and six loans totaling $1.5 million at June 30, 2019 and December 31, 2018, respectively.

 

During the three months ended June 30, 2019, one originated commercial real estate loan modified terms in a TDR transaction.

 

For three months ended June 30, 2018, one originated commercial and industrial line of credit loan entered into a TDR transaction and was termed-out due to declining updated financial information and one acquired loan at fair value TDR for residential real estate was due to the FWVB merger. In addition, there was one acquired loan at fair value TDR from the FFCO merger for commercial real estate that paid off during the three months ended June 30, 2018.

 

During the six months ended June 30, 2019, one residential real estate loan previously identified as an acquired loan at fair value TDR paid off, and one originated residential real estate loan modified in a TDR transaction by extending the term of the loan.

 

For the six months ended June 30, 2018, one originated commercial and industrial TDR loan was fully charged-off due to declining updated financial information, one originated consumer loan previously identified as a TDR paid off and one commercial and industrial loan previously identified as an acquired loan at fair value paid off.

 

No TDRs subsequently defaulted during the three and six months ended June 30, 2019 and 2018, respectively.

 

 

 

 

 

 

 

 19 

 

The following table presents information at the time of modification related to loans modified in a TDR during the three months ended June 30, 2019 and 2018, and the six months ended June 30, 2019. There were no loans modified into a TDR transaction during the quarter-ended March 31, 2018.

 

   (Dollars in thousands)
   Three Months Ended June 30, 2019
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Commercial   1   $114   $114   $- 
Total   1   $114   $114   $- 

 

   Three Months Ended June 30, 2018
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Commercial and Industrial   1   $161   $161   $- 
Total   1   $161   $161   $- 
Loans Acquired at Fair Value                    
Real Estate                    
Residential   1   $7   $7   $- 
Total   1   $7   $7   $- 

 

   Six Months Ended June 30, 2019
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Residential   1   $61   $61   $- 
Commercial   1    114    114    - 
Total   2   $175   $175   $- 

 

 20 

 

The following table presents a summary of the loans considered to be impaired as of the dates indicated.

 

   (Dollars in thousands)
   June 30, 2019
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
With No Related Allowance Recorded:               
Originated Loans                         
Real Estate:                         
Residential  $146   $-   $150   $153   $2 
Commercial   1,825    -    1,835    1,890    44 
Construction   296    -    296    362    11 
Commercial and Industrial   152    -    154    173    4 
Total With No Related Allowance Recorded  $2,419   $-   $2,435   $2,578   $61 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $351   $-   $351   $355   $8 
Commercial   2,465    -    2,465    2,488    76 
Total With No Related Allowance Recorded  $2,816   $-   $2,816   $2,843   $84 
                          
Total Loans                         
Real Estate:                         
Residential  $497   $-   $501   $508   $10 
Commercial   4,290    -    4,300    4,378    120 
Construction   296    -    296    362    11 
Commercial and Industrial   152    -    154    173    4 
Total With No Related Allowance Recorded  $5,235   $-   $5,251   $5,421   $145 
                          
With A Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Commercial  $3,523   $656   $3,523   $3,528   $92 
Commercial and Industrial   995    764    1,123    1,147    31 
Total With A Related Allowance Recorded  $4,518   $1,420   $4,646   $4,675   $123 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Commercial and Industrial  $16   $7   $16   $16   $- 
Total With A Related Allowance Recorded  $16   $7   $16   $16   $- 
                          
Total Loans                         
Real Estate:                         
Commercial  $3,523   $656   $3,523   $3,528   $92 
Commercial and Industrial   1,011    771    1,139    1,163    31 
Total With A Related Allowance Recorded  $4,534   $1,427   $4,662   $4,691   $123 

 

 21 

 

   June 30, 2019 (cont.)
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
Total Impaired Loans:                         
Originated Loans                         
Real Estate:                         
Residential  $146   $-   $150   $153   $2 
Commercial   5,348    656    5,358    5,418    136 
Construction   296    -    296    362    11 
Commercial and Industrial   1,147    764    1,277    1,320    35 
Total Impaired Loans  $6,937   $1,420   $7,081   $7,253   $184 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $351   $-   $351   $355   $8 
Commercial   2,465    -    2,465    2,488    76 
Commercial and Industrial   16    7    16    16    - 
Total Impaired Loans  $2,832   $7   $2,832   $2,859   $84 
                          
Total Loans                         
Real Estate:                         
Residential  $497   $-   $501   $508   $10 
Commercial   7,813    656    7,823    7,906    212 
Construction   296    -    296    362    11 
Commercial and Industrial   1,163    771    1,293    1,336    35 
Total Impaired Loans  $9,769   $1,427   $9,913   $10,112   $268 

 

The increase of $1.9 million in impaired loans as of June 30, 2019 was mainly due to additional credit risk assessed on a commercial real estate relationship.

 

 

 

 

 22 

 

 

 

 

   December 31, 2018
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
With No Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Residential  $71   $   $74   $82   $4 
Commercial   1,550        1,550    1,626    74 
Construction   400        400    466    25 
Commercial and Industrial   382        394    403    5 
Total With No Related Allowance Recorded  $2,403   $   $2,418   $2,577   $108 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $1,212   $   $1,212   $1,234   $63 
Commercial   2,466        2,466    1,868    123 
Total With No Related Allowance Recorded  $3,678   $   $3,678   $3,102   $186 
                          
Total Loans                         
Real Estate:                         
Residential  $1,283   $   $1,286   $1,316   $67 
Commercial   4,016        4,016    3,494    197 
Construction   400        400    466    25 
Commercial and Industrial   382        394    403    5 
Total With No Related Allowance Recorded  $6,081   $   $6,096   $5,679   $294 
                          
With A Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Commercial  $674   $211   $674   $716   $40 
Commercial and Industrial   1,066    787    1,171    1,193    63 
Total With A Related Allowance Recorded  $1,740   $998   $1,845   $1,909   $103 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Commercial  $44   $8   $44   $29   $3 
Commercial and Industrial   16    6    16    16     
Total With A Related Allowance Recorded  $60   $14   $60   $45   $3 
                          
Total Loans                         
Real Estate:                         
Commercial  $718   $219   $718   $745   $43 
Commercial and Industrial   1,082    793    1,187    1,209    63 
Total With A Related Allowance Recorded  $1,800   $1,012   $1,905   $1,954   $106 

 

 23 

 

 

   December 31, 2018 (cont.)
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
Total Impaired Loans                         
Originated Loans                         
Real Estate:                         
Residential  $71   $   $74   $82   $4 
Commercial   2,224    211    2,224    2,342    114 
Construction   400        400    466    25 
Commercial and Industrial   1,448    787    1,565    1,596    68 
Total Impaired Loans  $4,143   $998   $4,263   $4,486   $211 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $1,212   $   $1,212   $1,234   $63 
Commercial   2,510    8    2,510    1,897    126 
Commercial and Industrial   16    6    16    16     
Total Impaired Loans  $3,738   $14   $3,738   $3,147   $189 
                          
Total Loans                         
Real Estate:                         
Residential  $1,283   $   $1,286   $1,316   $67 
Commercial   4,734    219    4,734    4,239    240 
Construction   400        400    466    25 
Commercial and Industrial   1,464    793    1,581    1,612    68 
Total Impaired Loans  $7,881   $1,012   $8,001   $7,633   $400 

 

 

 

 

 

 

 24 

 

The following table presents the activity in the allowance for loan losses summarized by major classifications and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment at the dates and for the periods indicated.

 

   (Dollars in thousands)
   June 30, 2019
   Real  Real  Real  Commercial            
   Estate  Estate  Estate  and            
   Residential  Commercial  Construction  Industrial  Consumer  Other  Unallocated  Total
Originated Loans                                        
March 31, 2019  $1,154   $2,127   $500   $2,468   $1,733   $   $811   $8,793 
Charge-offs   (21)               (73)           (94)
Recoveries   5    7        1    29            42 
Provision   (42)   866    (12)   136    (189)       (409)   350 
June 30, 2019  $1,096   $3,000   $488   $2,605   $1,500   $   $402   $9,091 
                                         
Loans Acquired at Fair Value                                        
March 31, 2019  $   $423   $   $85   $   $   $111   $619 
Charge-offs   (22)                           (22)
Recoveries       1            2            3 
Provision   22    22        28    (2)       (70)    
June 30, 2019  $   $446   $   $113   $   $   $41   $600 
                                         
Total Allowance for Loan Losses                                        
March 31, 2019  $1,154   $2,550   $500   $2,553   $1,733   $   $922   $9,412 
Charge-offs   (43)               (73)           (116)
Recoveries   5    8        1    31            45 
Provision   (20)   888    (12)   164    (191)       (479)   350 
June 30, 2019  $1,096   $3,446   $488   $2,718   $1,500   $   $443   $9,691 
                                         
Originated Loans                                        
December 31, 2018  $1,050   $2,217   $395   $2,698   $2,027   $   $555   $8,942 
Charge-offs   (21)               (285)           (306)
Recoveries   9    19        2    50            80 
Provision   58    764    93    (95)   (292)       (153)   375 
June 30, 2019  $1,096   $3,000   $488   $2,605   $1,500   $   $402   $9,091 
                                         
Loans Acquired at Fair Value                                        
December 31, 2018  $   $476   $   $109   $   $   $31   $616 
Charge-offs   (22)               (1)           (23)
Recoveries       2            5            7 
Provision   22    (32)       4    (4)       10     
June 30, 2019  $   $446   $   $113   $   $   $41   $600 
                                         
Total Allowance for Loan Losses                                        
December 31, 2018  $1,050   $2,693   $395   $2,807   $2,027   $   $586   $9,558 
Charge-offs   (43)               (286)           (329)
Recoveries   9    21        2    55            87 
Provision   80    732    93    (91)   (296)       (143)   375 
June 30, 2019  $1,096   $3,446   $488   $2,718   $1,500   $   $443   $9,691 

 

 

 25 

 

 

 

   June 30, 2019
   Real  Real  Real  Commercial            
   Estate  Estate  Estate  and            
   Residential  Commercial  Construction  Industrial  Consumer  Other  Unallocated  Total
Originated Loans                                        
Individually Evaluated for Impairment  $   $656   $   $764   $   $   $   $1,420 
Collectively Evaluated for Potential Impairment  $1,096   $2,344   $488   $1,841   $1,500   $   $402   $7,671 
                                         
Loans Acquired at Fair Value                                        
Individually Evaluated for Impairment  $   $   $   $7   $   $   $   $7 
Collectively Evaluated for Potential Impairment  $   $446   $   $106   $   $   $41   $593 
                                         
Total Allowance for Loan Losses                                        
Individually Evaluated for Impairment  $   $656   $   $771   $   $   $   $1,427 
Collectively Evaluated for Potential Impairment  $1,096   $2,790   $488   $1,947   $1,500   $   $443   $8,264