Company Quick10K Filing
Eagle Financial Services
Price31.50 EPS3
Shares3 P/E12
MCap108 P/FCF13
Net Debt-39 EBIT13
TEV69 TEV/EBIT5
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-13
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-15
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-15
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-08-14
10-Q 2017-03-31 Filed 2017-05-12
10-K 2016-12-31 Filed 2017-03-29
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-13
10-K 2015-12-31 Filed 2016-03-29
10-Q 2015-09-30 Filed 2015-11-13
10-Q 2015-06-30 Filed 2015-08-12
10-Q 2015-03-31 Filed 2015-05-13
10-K 2014-12-31 Filed 2015-03-30
10-Q 2014-09-30 Filed 2014-11-12
10-Q 2014-06-30 Filed 2014-08-12
10-Q 2014-03-31 Filed 2014-05-13
10-K 2013-12-31 Filed 2014-03-26
10-Q 2013-09-30 Filed 2013-11-13
10-Q 2013-06-30 Filed 2013-08-14
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-03-28
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-15
10-K 2011-12-31 Filed 2012-03-23
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-03-30
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-12
10-Q 2010-03-31 Filed 2010-05-12
10-K 2009-12-31 Filed 2010-03-17
8-K 2020-05-01 Earnings, Exhibits
8-K 2020-04-22 Other Events, Exhibits
8-K 2020-04-15 Officers, Amend Bylaw, Exhibits
8-K 2020-02-20 Officers
8-K 2020-01-29 Earnings, Exhibits
8-K 2020-01-22 Other Events, Exhibits
8-K 2020-01-16 Officers, Exhibits
8-K 2019-10-29 Officers
8-K 2019-10-18 Earnings, Exhibits
8-K 2019-10-03 Officers
8-K 2019-07-17 Earnings, Officers, Exhibits
8-K 2019-07-12 Officers, Exhibits
8-K 2019-05-14 Shareholder Vote, Regulation FD, Exhibits
8-K 2019-05-02 Officers
8-K 2019-04-17 Earnings, Exhibits
8-K 2019-01-30 Earnings, Exhibits
8-K 2019-01-16 Officers, Exhibits
8-K 2019-01-16 Other Events, Exhibits
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-07-18 Earnings, Exhibits
8-K 2018-05-17 Shareholder Vote
8-K 2018-05-16 Regulation FD, Exhibits
8-K 2018-04-19 Earnings, Exhibits
8-K 2018-01-25 Earnings, Exhibits
8-K 2018-01-17 Officers, Other Events, Exhibits

EFSI 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1. General
Note 2. Stock - Based Compensation Plan
Note 3. Earnings per Common Share
Note 4. Securities
Note 5. Loans and Allowance for Loan Losses
Note 6. Troubled Debt Restructurings
Note 7. Deposits
Note 8. Leases
Note 9. Fair Value Measurements
Note 10. Change in Accumulated Other Comprehensive Income
Note 11. Other Real Estate Owned
Note 12. Qualified Affordable Housing Project Investments
Note 13. Recent Accounting Pronouncements and Other Authoritative Guidance
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 efsi-20200331exhibit311.htm
EX-31.2 efsi-20200331exhibit312.htm
EX-32.1 efsi-20200331exhibit321.htm

Eagle Financial Services Earnings 2020-03-31

Balance SheetIncome StatementCash Flow

10-Q 1 efsi-20200331x10q.htm 10-Q Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 0-20146 
EAGLE FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Virginia
 
54-1601306
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
2 East Main Street
P.O. Box 391
Berryville, Virginia
 
22611
(Address of principal executive offices)
 
(Zip Code)
(540) 955-2510
(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Date 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  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
¨
  
Accelerated filer
 
ý
 
 
 
 
Non-accelerated filer
 
¨
 
Smaller reporting company
 
ý
 
 
 
 
Emerging growth company
 
¨

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

 
¨


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

The number of shares of the registrant’s Common Stock ($2.50 par value) outstanding as of May 4, 2020 was 3,409,688.




TABLE OF CONTENTS
 
 
 
 
PART I - FINANCIAL INFORMATION
 
 
 
 
Item 1.
Financial Statements:
 
 
Consolidated Balance Sheets at March 31, 2020 and December 31, 2019
 
Consolidated Statements of Income for the Three Months Ended March 31, 2020 and 2019
 
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019
 
Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2020 and 2019
 
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019
 
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
 
 
PART II - OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits




PART I - FINANCIAL INFORMATION
 
Item 1.        Financial Statements

EAGLE FINANCIAL SERVICES, INC.
Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
 
 
March 31,
2020
 
December 31,
2019
 
(Unaudited)
 
 
Assets
 
 
 
Cash and due from banks
$
10,515

 
$
10,920

Interest-bearing deposits with other institutions
12,242

 
22,487

Federal funds sold
288

 
252

Total cash and cash equivalents
23,045

 
33,659

Securities available for sale, at fair value
156,391

 
165,003

Restricted investments
1,268

 
1,197

Loans
674,032

 
644,760

Allowance for loan losses
(5,387
)
 
(4,973
)
Net Loans
668,645

 
639,787

Bank premises and equipment, net
19,179

 
19,297

Other real estate owned, net of allowance
442

 
183

Other assets
29,907

 
18,194

Total assets
$
898,877

 
$
877,320

Liabilities and Shareholders’ Equity
 
 
 
Liabilities
 
 
 
Deposits:
 
 
 
Noninterest bearing demand deposits
$
271,508

 
$
269,171

Savings and interest bearing demand deposits
377,677

 
364,175

Time deposits
140,814

 
138,198

Total deposits
$
789,999

 
$
771,544

Other liabilities
9,079

 
9,450

Total liabilities
$
799,078

 
$
780,994

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

 
$

Common stock, $2.50 par value; authorized 10,000,000 shares; issued and outstanding 2020, 3,406,927 including 20,480 shares of unvested restricted stock; issued and outstanding 2019, 3,430,103 including 18,488 shares of unvested restricted stock
8,466

 
8,529

Surplus
10,578

 
11,406

Retained earnings
76,457

 
74,909

Accumulated other comprehensive income
4,298

 
1,482

Total shareholders’ equity
$
99,799

 
$
96,326

Total liabilities and shareholders’ equity
$
898,877

 
$
877,320

See Notes to Consolidated Financial Statements

1



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
 
 
Three Months Ended
 
March 31,
 
2020
 
2019
Interest and Dividend Income
 
 
 
Interest and fees on loans
$
7,939

 
$
7,518

Interest and dividends on investment securities:
 
 
 
Taxable interest income
895

 
785

Interest income exempt from federal income taxes
167

 
242

Dividends
19

 
16

Interest on deposits with other institutions
86

 
31

Interest on federal funds sold
1

 
1

Total interest and dividend income
$
9,107

 
$
8,593

Interest Expense
 
 
 
Interest on deposits
$
1,102

 
$
944

Interest on federal funds purchased

 
25

Total interest expense
$
1,102

 
$
969

Net interest income
$
8,005

 
$
7,624

(Recovery of) Provision for Loan Losses
(97
)
 
194

Net interest income after (recovery of) provision for loan losses
$
8,102

 
$
7,430

Noninterest Income
 
 
 
Income from fiduciary activities
$
297

 
$
282

Service charges on deposit accounts
284

 
285

Other service charges and fees
1,104

 
1,071

(Loss) on sale of securities

 
(3
)
Gain on disposal of bank premises and equipment

 
120

Other operating income
5

 
89

Total noninterest income
$
1,690

 
$
1,844

Noninterest Expenses
 
 
 
Salaries and employee benefits
$
4,088

 
$
3,542

Occupancy expenses
395

 
428

Equipment expenses
232

 
202

Advertising and marketing expenses
205

 
218

Stationery and supplies
32

 
29

ATM network fees
242

 
230

Other real estate owned expense
2

 

(Gain) on other real estate owned
(132
)
 

FDIC assessment

 
53

Computer software expense
120

 
110

Bank franchise tax
174

 
146

Professional fees
354

 
385

Data processing fees
481

 
240

Other operating expenses
682

 
648

Total noninterest expenses
$
6,875

 
$
6,231

Income before income taxes
$
2,917

 
$
3,043

Income Tax Expense
476

 
472

Net income
$
2,441

 
$
2,571

Earnings Per Share
 
 
 
Net income per common share, basic
$
0.71

 
$
0.74

Net income per common share, diluted
$
0.71

 
$
0.74

See Notes to Consolidated Financial Statements

2



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Comprehensive Income
(Unaudited)
(dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2020
 
2019
Net income
$
2,441

 
$
2,571

Other comprehensive income:
 
 
 
Unrealized gain on available for sale securities net of reclassification adjustments, and net of deferred income tax of $749 and $450 for the three months ended, respectively
2,816

 
1,690

Total other comprehensive income
$
2,816

 
$
1,690

Total comprehensive income
$
5,257

 
$
4,261

See Notes to Consolidated Financial Statements

3



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollars in thousands, except per share amounts)
 
 
Common
Stock
 
Surplus
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Balance, December 31, 2018
$
8,573

 
$
11,992

 
$
68,587

 
$
(1,553
)
 
$
87,599

Net income
 
 
 
 
2,571

 
 
 
2,571

Other comprehensive income
 
 
 
 
 
 
1,690

 
1,690

Vesting of restricted stock awards, stock incentive plan (10,000 shares)
25

 
(25
)
 
 
 
 
 

Stock-based compensation expense
 
 
86

 
 
 
 
 
86

Issuance of common stock, dividend investment plan (3,685 shares)
9

 
107

 
 
 
 
 
116

Repurchase and retirement of common stock (1,500 shares)
(3
)
 
(44
)
 
 
 
 
 
(47
)
Dividends declared ($0.24 per share)
 
 
 
 
(830
)
 
 
 
(830
)
Balance, March 31, 2019
$
8,604

 
$
12,116

 
$
70,328

 
$
137

 
$
91,185

 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2019
$
8,529

 
$
11,406

 
$
74,909

 
$
1,482

 
96,326

Net income
 
 
 
 
2,441

 
 
 
2,441

Other comprehensive income
 
 
 
 
 
 
2,816

 
2,816

Vesting of restricted stock awards, stock incentive plan (9,933 shares)
25

 
(25
)
 
 
 
 
 

Stock-based compensation expense
 
 
114

 
 
 
 
 
114

Issuance of common stock, dividend investment plan (3,514 shares)
9

 
102

 
 
 
 
 
111

Repurchase and retirement of common stock (38,614 shares)
(97
)
 
(1,019
)
 
 
 
 
 
(1,116
)
Dividends declared ($0.26 per share)
 
 
 
 
(893
)
 
 
 
(893
)
Balance, March 31, 2020
$
8,466

 
$
10,578

 
$
76,457

 
$
4,298

 
$
99,799

See Notes to Consolidated Financial Statements

4



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)
 
 
Three Months Ended
 
March 31,
 
2020
 
2019
Cash Flows from Operating Activities
 
 
 
Net income
$
2,441

 
$
2,571

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
258

 
231

Amortization of other assets
103

 
58

(Recovery of) provision for loan losses
(97
)
 
194

(Gain) on other real estate owned
(132
)
 

(Gain) on the sale and disposal of premises and equipment

 
(120
)
Loss on the sale of securities

 
3

Stock-based compensation expense
114

 
86

Premium amortization on securities, net
145

 
99

Changes in assets and liabilities:
 
 
 
(Increase) in other assets
(16
)
 
(47
)
(Decrease) in other liabilities
(919
)
 
(1,050
)
Net cash provided by operating activities
$
1,897

 
$
2,025

Cash Flows from Investing Activities
 
 
 
Proceeds from maturities, calls, and principal payments of securities available for sale
$
12,032

 
$
2,431

Proceeds from the sale of securities available for sale

 
3,818

Purchases of securities available for sale

 
(3,888
)
Purchases of restricted investments
(71
)
 

Purchases of bank-owned life insurance
(12,000
)
 

Purchases of bank premises and equipment
(140
)
 
(494
)
Proceeds from the sale of other real estate owned
183

 

Proceeds from the sale of bank premises and equipment


 
258

Net (increase) in loans
(29,071
)
 
(12,346
)
Net cash (used in) investing activities
$
(29,067
)
 
$
(10,221
)
Cash Flows from Financing Activities
 
 
 
Net increase in noninterest bearing demand deposits, savings, and interest bearing demand deposits
$
15,839

 
$
3,714

Net increase in time deposits
2,616

 
621

Net (decrease)in federal funds purchased

 
(1,516
)
Repurchase and retirement of common stock
(1,116
)
 
(47
)
Cash dividends paid
(783
)
 
(714
)
Net cash provided by financing activities
$
16,556

 
$
2,058



5



EAGLE FINANCIAL SERVICES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)
(continued)
 
 
Three Months Ended
 
March 31,
 
2020
 
2019
(Decrease) in cash and cash equivalents
$
(10,614
)
 
$
(6,138
)
Cash and Cash Equivalents
 
 
 
Beginning
33,659

 
18,353

Ending
$
23,045

 
$
12,215

Supplemental Disclosures of Cash Flow Information
 
 
 
Cash payments for:
 
 
 
Interest
$
1,109

 
$
954

Income taxes
$

 
$

Supplemental Schedule of Noncash Investing and Financing Activities:
 
 
 
Unrealized gain on securities available for sale
$
3,565

 
$
2,140

Other real estate and repossessed assets acquired in settlement of loans
$
310

 
$

Issuance of common stock, dividend investment plan
$
110

 
$
116

Lease liabilities arising from right-of-use assets

$
549

 
$
3,751

See Notes to Consolidated Financial Statements


6



EAGLE FINANCIAL SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2020
NOTE 1. General

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP.

In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at March 31, 2020 and December 31, 2019, the results of operations and the changes in stockholders' equity for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”).

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

Certain amounts in the consolidated financial statements have been reclassified to conform to current year presentations. None of the reclassifications were of a material nature and they had no effect on prior year net income or shareholders' equity.

Risks and Uncertainties
The novel coronavirus (“COVID-19”) spread rapidly across the world in the first quarter of 2020 and was declared a pandemic by the World Health Organization. The government and private sector responses to contain its spread began to significantly affect our operations in March and will likely adversely affect our operations in subsequent quarters, although such effects may vary significantly. The duration and extent of the effects over longer terms cannot be reasonably estimated at this time. The risks and uncertainties resulting from the pandemic will most likely affect the future earnings, cash flows and financial condition of the Company. These uncertainties primarily include the nature and duration of the financial effects felt by our customers and the ability of those customers to fulfill their financial obligations to the Company, the Company’s ability to generate demand for non-loan related products and services, as well as the potential decline of real estate values resulting from market disruption which may impair the recorded values of collateral-dependent loans and other real estate owned. Further, these factors, in addition to those present in local economies throughout the U.S. may necessitate impairment charges for our non-agency debt securities. Accordingly, estimates used in the preparation of our financial statements may be subject to significant adjustments in future periods. The greater the duration and severity of the pandemic the more likely that estimates will be materially impacted by its effects.

NOTE 2. Stock-Based Compensation Plan

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

The Company periodically grants restricted stock to its directors, executive officers and certain non-executive officers. Restricted stock provides grantees with rights to shares of common stock upon completion of a service period or achievement of Company performance measures. During the restriction period, all shares are considered outstanding and dividends are paid to the grantee. In general, outside directors are periodically granted restricted shares which vest over a period of less than 9 months. Beginning during 2006, executive officers were granted restricted shares which vest over a 3 year service period and restricted shares which vest based on meeting annual performance measures over a 1 year period. Beginning in 2018, certain non-executive officers also were granted restricted shares which vest over a 3 year service period. The Company recognizes compensation expense over the restricted period based on the fair value of the Company's stock on the grant date. The Company's policy is to recognize forfeitures as they occur. As of March 31, 2020, there was $251 thousand of unrecognized compensation cost related to nonvested restricted stock.


7



The following table presents restricted stock activity for the three months ended March 31, 2020 and 2019:
 
 
Three Months Ended
 
March 31,
 
2020
 
2019
 
Shares
 
Weighted
Average
Grant Date
Fair Value
 
Shares
 
Weighted
Average
Grant Date
Fair Value
Nonvested, beginning of period
18,488

 
$
30.39

 
16,701

 
$
29.72

Granted
11,925

 
31.05

 
11,450

 
30.51

Vested
(9,933
)
 
30.13

 
(10,000
)
 
29.30

Forfeited

 

 

 

Nonvested, end of period
20,480

 
30.90

 
18,151

 
30.40



NOTE 3. Earnings Per Common Share

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

The following table shows the weighted average number of shares used in computing earnings per share for the three months ended March 31, 2020 and 2019. During 2020 and 2019, there were no potentially dilutive securities outstanding.
 
Three Months Ended
 
March 31,
 
2020
 
2019
Weighted average number of common shares outstanding used to calculate basic and diluted earnings per share
3,437,085

 
3,458,213



8



NOTE 4. Securities

Amortized costs and fair values of securities available for sale at March 31, 2020 and December 31, 2019 were as follows:
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
(Losses)
 
Fair
Value
 
March 31, 2020
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
17,051

 
$
1,348

 
$

 
$
18,399

Mortgage-backed securities
102,500

 
3,580

 

 
106,080

Obligations of states and political subdivisions
31,453

 
520

 
(61
)
 
31,912

 
$
151,004

 
$
5,448

 
$
(61
)
 
$
156,391

 
December 31, 2019
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
21,917

 
$
363

 
$
(94
)
 
$
22,186

Mortgage-backed securities
107,410

 
966

 
(215
)
 
108,161

Obligations of states and political subdivisions
33,854

 
858

 
(56
)
 
34,656

 
$
163,181

 
$
2,187

 
$
(365
)
 
$
165,003


During the three months ended March 31, 2020, the Company sold no available for sale securities recognizing no gains or losses. During the three months ended March 31, 2019, the Company sold $3.8 million of available for sale securities for gross gains of $6 thousand and $9 thousand in gross losses.
The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at March 31, 2020 and December 31, 2019 were as follows:
 
 
Less than 12 months
 
12 months or more
 
Total
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
Fair Value
 
Gross
Unrealized
Losses
 
March 31, 2020
 
(in thousands)
Obligations of states and political subdivisions
$
4,874

 
$
61

 
$

 
$

 
$
4,874

 
$
61

 
$
4,874

 
$
61

 
$

 
$

 
$
4,874

 
$
61

 
December 31, 2019
 
(in thousands)
Obligations of U.S. government corporations and agencies
$
5,466

 
$
91

 
$
1,997

 
$
3

 
$
7,463

 
$
94

Mortgage-backed securities
19,509

 
176

 
5,271

 
39

 
24,780

 
215

Obligations of states and political subdivisions
3,127

 
49

 
923

 
7

 
4,050

 
56

 
$
28,102

 
$
316

 
$
8,191

 
$
49

 
$
36,293

 
$
365



9



Gross unrealized losses on available for sale securities included eleven (11) and twenty-eight (28) debt securities at March 31, 2020 and December 31, 2019, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at March 31, 2020 and December 31, 2019 was changes in market interest rates and other market conditions and not credit concerns of the issuers. Since the losses can be primarily attributed to changes in market interest rates and conditions and not expected cash flows or an issuer’s financial condition and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, the unrealized losses were deemed to be temporary. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements.

Securities having a carrying value of $2.9 million at March 31, 2020 were pledged as security for public deposits.

The composition of restricted investments at March 31, 2020 and December 31, 2019 was as follows:
 
 
March 31, 2020
 
December 31, 2019
 
(in thousands)
Federal Reserve Bank Stock
$
344

 
$
344

Federal Home Loan Bank Stock
784

 
713

Community Bankers’ Bank Stock
140

 
140

 
$
1,268

 
$
1,197




10



NOTE 5. Loans and Allowance for Loan Losses

The composition of loans at March 31, 2020 and December 31, 2019 was as follows:
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
 
(in thousands)
Mortgage loans on real estate:
 
 
 
 
Construction and land development
 
$
35,755

 
$
42,561

Secured by farmland
 
16,326

 
13,917

Secured by 1-4 family residential properties
 
225,839

 
219,580

Multifamily
 
13,884

 
14,415

Commercial
 
301,799

 
286,600

Commercial and industrial loans
 
53,611

 
46,543

Consumer installment loans
 
13,923

 
9,541

All other loans
 
11,810

 
12,050

Total loans
 
$
672,947

 
$
645,207

Net deferred loan costs (fees)
 
1,085

 
(447
)
Allowance for loan losses
 
(5,387
)
 
(4,973
)
Net Loans
 
$
668,645

 
$
639,787

 
 
 
 
 

Changes in the allowance for loan losses for the three months ended March 31, 2020 and 2019 and the year ended December 31, 2019 were as follows:
 
 
Three Months Ended
 
Year Ended
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2020
 
2019
 
2019
 
 
 
(in thousands)
 
 
Balance, beginning
$
4,973

 
$
5,456

 
$
5,456

(Recovery of) provision for loan losses
(97
)
 
629

 
194

Recoveries added to the allowance
578

 
201

 
45

Loan losses charged to the allowance
(67
)
 
(1,313
)
 
(10
)
Balance, ending
$
5,387

 
$
4,973

 
$
5,685



11



Nonaccrual and past due loans by class at March 31, 2020 and December 31, 2019 were as follows:
 
 
March 31, 2020
 
(in thousands)
 
30 - 59
Days
Past Due
 
60 - 89
Days
Past Due
 
90 or More
Days
Past Due
 
Total Past
Due
 
Current
 
Total Loans
 
90 or More
Days Past 
Due Still Accruing
 
Nonaccrual
Loans
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
16

 
$

 
$

 
$
16

 
$
53,595

 
$
53,611

 
$

 
$

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner Occupied
594

 
1,495

 

 
2,089

 
151,495

 
153,584

 

 
212

Non-owner occupied
3,038

 

 

 
3,038

 
145,177

 
148,215

 

 
248

Construction and Farmland:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 
7,838

 
7,838

 

 

Commercial
2,411

 

 
187

 
2,598

 
41,645

 
44,243

 

 
187

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Installment
74

 

 

 
74

 
13,849

 
13,923

 

 
8

Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Lines

 
149

 

 
149

 
32,232

 
32,381

 

 
58

Single family
924

 
578

 
393

 
1,895

 
191,563

 
193,458

 

 
984

Multifamily

 

 

 

 
13,884

 
13,884

 

 

All Other Loans

 

 

 

 
11,810

 
11,810

 

 

Total
$
7,057

 
$
2,222

 
$
580

 
$
9,859

 
$
663,088

 
$
672,947

 
$

 
$
1,697

 
 
December 31, 2019
 
(in thousands)
 
30 - 59
Days
Past Due
 
60 - 89
Days
Past Due
 
90 or More
Days
Past Due
 
Total Past
Due
 
Current
 
Total Loans
 
90 or More
Past Due 
Still
Accruing
 
Nonaccrual
Loans
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
47

 
$

 
$
32

 
$
79

 
$
46,464

 
$
46,543

 
$

 
$
32

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner Occupied
1,078

 

 

 
1,078

 
147,879

 
148,957

 

 
320

Non-owner occupied

 

 

 

 
137,643

 
137,643

 

 
329

Construction and Farmland:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 
7,867

 
7,867

 

 

Commercial

 

 
187

 
187

 
48,424

 
48,611

 

 
187

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Installment
55

 
6

 

 
61

 
9,480

 
9,541

 

 
8

Residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Lines
121

 

 

 
121

 
33,127

 
33,248

 

 
65

Single family
471

 
541

 
1,251

 
2,263

 
184,069

 
186,332

 

 
1,244

Multifamily

 

 

 

 
14,415

 
14,415

 

 

All Other Loans

 

 

 

 
12,050

 
12,050

 

 

Total
$
1,772

 
$
547

 
$
1,470

 
$
3,789

 
$
641,418

 
$
645,207

 
$

 
$
2,185



12



Allowance for loan losses by segment at March 31, 2020 and December 31, 2019 were as follows:
 
 
As of and for the Three Months Ended
 
March 31, 2020
 
(in thousands)
 
Construction
and Farmland
 
Residential
 
Commercial
Real Estate
 
Commercial - Non Real Estate
 
Consumer
 
All Other
Loans
 
Unallocated
 
Total
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance
$
446

 
$
1,601

 
$
1,991

 
$
565

 
$
54

 
$
120

 
$
196

 
$
4,973

Charge-Offs

 

 

 
(49
)
 
(6
)
 
(12
)
 

 
(67
)
Recoveries
2

 
52

 
40

 
472

 
10

 
2

 

 
578

Provision for (recovery of) loan losses
(11
)
 
92

 
201

 
(417
)
 
28

 
10

 

 
(97
)
Ending balance
$
437

 
$
1,745

 
$
2,232

 
$
571

 
$
86

 
$
120

 
$
196

 
$
5,387

Ending balance: Individually evaluated for impairment
$
100

 
$
39

 
$
142

 
$

 
$

 
$

 
$

 
$
281

Ending balance: collectively evaluated for impairment
$
337

 
$
1,706

 
$
2,090

 
$
571

 
$
86

 
$
120

 
$
196

 
$
5,106

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
52,081

 
$
239,723

 
$
301,799

 
$
53,611

 
$
13,923

 
$
11,810

 
$

 
$
672,947

Ending balance individually evaluated for impairment
$
230

 
$
3,020

 
$
2,855

 
$
186

 
$
8

 
$

 
$

 
$
6,299

Ending balance collectively evaluated for impairment
$
51,851

 
$
236,703

 
$
298,944

 
$
53,425

 
$
13,915

 
$
11,810

 
$

 
$
666,648

 
 
As of and for the Twelve Months Ended
 
December 31, 2019
 
(in thousands)
 
Construction
and Farmland
 
Residential
 
Commercial
Real Estate
 
Commercial - Non Real Estate
 
Consumer
 
All Other
Loans
 
Unallocated
 
Total
Allowance for credit losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning Balance
$
583

 
$
1,788

 
$
1,988

 
$
919

 
$
53

 
$
97

 
$
28

 
$
5,456

Charge-Offs

 
(406
)
 

 
(850
)
 
(5
)
 
(52
)
 

 
(1,313
)
Recoveries
8

 
72

 
20

 
52

 
26

 
23

 

 
201

Provision for (recovery of) loan losses
(145
)
 
147

 
(17
)
 
444

 
(20
)
 
52

 
168

 
629

Ending balance
$
446

 
$
1,601

 
$
1,991

 
$
565

 
$
54

 
$
120

 
$
196

 
$
4,973

Ending balance: Individually evaluated for impairment
$
100

 
$
51

 
$
149

 
$

 
$

 
$

 
$

 
$
300

Ending balance: collectively evaluated for impairment
$
346

 
$
1,550

 
$
1,842

 
$
565

 
$
54

 
$
120

 
$
196

 
$
4,673

Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
56,478

 
$
233,995

 
$
286,600

 
$
46,543

 
$
9,541

 
$
12,050

 
$

 
$
645,207

Ending balance individually evaluated for impairment
$
433

 
$
3,681

 
$
3,053

 
$
228

 
$
8

 
$

 
$

 
$
7,403

Ending balance collectively evaluated for impairment
$
56,045

 
$
230,314

 
$
283,547

 
$
46,315

 
$
9,533

 
$
12,050

 
$

 
$
637,804




13



Impaired loans by class as of and for the periods ended March 31, 2020 and December 31, 2019 were as follows:
 
As of and for the Three Months Ended
 
March 31, 2020
 
(in thousands)
 
Unpaid
Principal
Balance
 
Recorded
Investment (1)
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance:
 
 
 
 
 
 
 
 
 
Commercial - Non Real Estate:
 
 
 
 
 
 
 
 
 
Commercial & Industrial
$
313

 
$
186

 
$

 
$
198

 
$
4

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Owner Occupied
260

 
247

 

 
252

 
1

Non-owner occupied
331

 
248

 

 
277

 

Construction and Farmland:
 
 
 
 
 
 
 
 
 
Residential

 

 

 

 

Commercial
51

 
43

 

 
44

 
1

Consumer:
 
 
 
 
 
 
 
 
 
Installment
8

 
8

 

 
8

 

Residential:
 
 
 
 
 
 
 
 
 
Equity lines
276

 
57

 

 
58

 

Single family
2,568

 
2,170

 

 
2,447

 
15

Multifamily

 

 

 

 

Other Loans

 

 

 

 

 
$
3,807