Company Quick10K Filing
National Bankshares
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 7 $250
10-Q 2019-11-07 Quarter: 2019-09-30
10-Q 2019-08-07 Quarter: 2019-06-30
10-Q 2019-05-08 Quarter: 2019-03-31
10-K 2019-03-13 Annual: 2018-12-31
10-Q 2018-11-07 Quarter: 2018-09-30
10-Q 2018-08-08 Quarter: 2018-06-30
10-Q 2018-05-09 Quarter: 2018-03-31
10-K 2018-03-14 Annual: 2017-12-31
10-Q 2017-11-08 Quarter: 2017-09-30
10-Q 2017-08-09 Quarter: 2017-06-30
10-Q 2017-05-10 Quarter: 2017-03-31
10-K 2017-03-08 Annual: 2016-12-31
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-05 Quarter: 2016-06-30
10-Q 2016-05-09 Quarter: 2016-03-31
10-K 2016-03-09 Annual: 2015-12-31
10-Q 2015-11-05 Quarter: 2015-09-30
10-Q 2015-08-06 Quarter: 2015-06-30
10-Q 2015-05-07 Quarter: 2015-03-31
10-K 2015-03-11 Annual: 2014-12-31
10-Q 2014-11-03 Quarter: 2014-09-30
10-Q 2014-08-06 Quarter: 2014-06-30
10-Q 2014-05-12 Quarter: 2014-03-31
10-K 2014-03-12 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-08 Quarter: 2013-06-30
10-Q 2013-05-08 Quarter: 2013-03-31
10-K 2013-03-08 Annual: 2012-12-31
10-Q 2012-11-07 Quarter: 2012-09-30
10-Q 2012-08-08 Quarter: 2012-06-30
10-Q 2012-05-09 Quarter: 2012-03-31
10-K 2012-03-09 Annual: 2011-12-31
10-Q 2011-11-09 Quarter: 2011-09-30
10-Q 2011-08-08 Quarter: 2011-06-30
10-Q 2011-05-09 Quarter: 2011-03-31
10-K 2011-03-11 Annual: 2010-12-31
10-Q 2010-11-03 Quarter: 2010-09-30
10-Q 2010-08-06 Quarter: 2010-06-30
10-Q 2010-05-05 Quarter: 2010-03-31
10-K 2010-03-12 Annual: 2009-12-31
8-K 2020-01-30 Earnings, Exhibits
8-K 2019-11-13 Other Events, Exhibits
8-K 2019-07-18 Earnings, Exhibits
8-K 2019-05-15 Other Events, Exhibits
8-K 2019-05-14 Officers, Shareholder Vote
8-K 2019-04-18 Earnings, Exhibits
8-K 2019-03-13 Amend Bylaw, Exhibits
8-K 2019-02-13 Other Events
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-11-14 Other Events, Exhibits
8-K 2018-11-14 Officers
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-10-15 Officers
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-05-10
8-K 2018-05-09 Other Events, Exhibits
8-K 2018-05-08 Shareholder Vote
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-03-08 Officers, Exhibits
8-K 2018-02-22 Earnings, Exhibits
NKSH 2019-09-30
Part I
Item 1. Financial Statements
Note 1: General
Note 2: Loan Portfolio
Note 3: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans
Note 4: Securities
Note 5: Recent Accounting Pronouncements
Note 6: Defined Benefit Plan
Note 7: Fair Value Measurements
Note 8: Components of Accumulated Other Comprehensive Loss
Note 9: Revenue Recognition
Note 10: Leases
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
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.I ex_161361.htm
EX-31.II ex_161367.htm
EX-32.I ex_161362.htm
EX-32.II ex_161363.htm

National Bankshares Earnings 2019-09-30

NKSH 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
FVCB 261 1,485 1,314 0 0 13 33 246 0% 7.4 1%
RBNC 261 1,794 1,580 0 0 16 39 225 5.7 1%
ACNB 258 1,679 1,498 0 0 24 37 260 7.1 1%
PKBK 256 1,550 1,383 0 0 28 57 89 1.6 2%
ORRF 254 2,400 2,180 0 0 11 35 220 6.3 0%
ATLO 252 1,469 1,285 0 0 18 33 229 6.8 1%
FCBP 250 1,730 1,476 2 0 23 45 12 0% 0.3 1%
NKSH 250 1,270 1,086 6 0 17 21 250 0% 11.9 1%
FDBC 248 997 896 0 0 12 20 229 11.3 1%
LCNB 246 1,642 1,419 0 0 19 33 223 6.8 1%

10-Q 1 nksh20190930_10q.htm FORM 10-Q nksh20190930_10q.htm
 

 

Table of Contents


 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2019

[  ] 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 0-15204

 

NATIONAL BANKSHARES, INC.

 (Exact name of registrant as specified in its charter)

 

Virginia

(State or other jurisdiction of incorporation or organization)

54-1375874

(I.R.S. Employer Identification No.)

 

101 Hubbard Street

P. O. Box 90002

Blacksburg, VA

 

 

24062-9002

(Address of principal executive offices)

(Zip Code)

 

(540) 951-6300

(Registrant’s telephone number, including area code)

 

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

Title of Each Class

Common Stock

Trading Symbol

NKSH

Name of each exchange on which registered

NASDAQ

 

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.  [x] 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). [x] 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 [x ] Non-accelerated filer [  ] 
Smaller reporting company [x ]    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.

[ ] Yes   [ ] No

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).

[ ] Yes   [x] No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

Common Stock

Par Value

$1.25

Trading Symbol

NKSH

Exchange on which Registered

NASDAQ

Outstanding shares at November 5, 2019

6,489,574

 

(This report contains 68 pages)

 


 

 

NATIONAL BANKSHARES, INC. AND SUBSIDIARIES

Form 10-Q

Index

 

Part I – Financial Information

Page

     

Item 1

Financial Statements

3

     
 

Consolidated Balance Sheets, September 30, 2019 (Unaudited) and December 31, 2018

3 - 4

     
 

Consolidated Statements of Income for the Three Months Ended September 30, 2019 and 2018 (Unaudited)

5 – 6

     
 

Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2019 and 2018 (Unaudited)

7

     
 

Consolidated Statements of Income for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

8 – 9

     
 

Consolidated Statements of Comprehensive Income for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

10

     
 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2019 and 2018 (Unaudited)

11

     
 

Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

11

 

 

 
 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

12 – 13

 

 

 
 

Notes to Consolidated Financial Statements (Unaudited) 

14 – 38

     

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39
     

Item 3

Quantitative and Qualitative Disclosures About Market Risk  

60
     

Item 4

Controls and Procedures

60

     

Part II – Other Information

 
     

Item 1

Legal Proceedings

61

     

Item 1A

Risk Factors

61
     

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds 

61

     

Item 3

Defaults Upon Senior Securities

61

 

 

 

Item 4

Mine Safety Disclosures

61

 

 

 

Item 5

Other Information

61

     

Item 6

Exhibits 

62 - 63

     

Signatures

 

64

     

Certifications

 

65 – 68

 


 

Part I

Item 1. Financial Statements

 

Financial Information

National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

 

   

(Unaudited)

       
   

September 30,

 

December 31,

(in thousands, except share and per share data)

 

2019

 

2018

Assets

               

Cash and due from banks

  $ 14,206     $ 12,882  

Interest-bearing deposits

    135,490       43,491  

Securities available for sale, at fair value

    334,150       425,010  

Restricted stock, at cost

    1,220       1,220  

Loans held for sale

    2,333       72  

Loans:

               

Loans, net of unearned income and deferred fees and costs

    722,287       709,799  

Less allowance for loan losses

    (7,262

)

    (7,390

)

Loans, net

    715,025       702,409  

Premises and equipment, net

    8,993       8,646  

Operating lease right-of-use asset

    2,351       ---  

Accrued interest receivable

    4,233       5,160  

Other real estate owned, net

    1,470       2,052  

Goodwill

    5,848       5,848  

Bank-owned life insurance

    35,338       34,657  

Other assets

    12,064       14,585  

Total assets

  $ 1,272,721     $ 1,256,032  
                 

Liabilities and Stockholders' Equity

               

Noninterest-bearing demand deposits

  $ 217,720     $ 195,441  

Interest-bearing demand deposits

    580,533       616,527  

Savings deposits

    145,188       138,175  

Time deposits

    124,586       101,799  

Total deposits

    1,068,027       1,051,942  

Accrued interest payable

    133       89  

Operating lease liability

    2,358       ---  

Other liabilities

    14,215       13,763  

Total liabilities

    1,084,733       1,065,794  

Commitments and contingencies

               

(continued

)

 


 

Stockholders' Equity

               

Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding

    ---       ---  

Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding 6,489,574 shares at September 30, 2019 and 6,957,974 shares at December 31, 2018

    8,112       8,698  

Retained earnings

    184,016       193,625  

Accumulated other comprehensive loss, net

    (4,140

)

    (12,085

)

Total stockholders' equity

    187,988       190,238  

Total liabilities and stockholders' equity

  $ 1,272,721     $ 1,256,032  

 

See accompanying notes to consolidated financial statements.

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

Three Months Ended September 30, 2019 and 2018

(Unaudited)

 

   

September 30,

 

September 30,

(in thousands, except share and per share data)

 

2019

 

2018

Interest Income

               

Interest and fees on loans

  $ 8,548     $ 8,005  

Interest on interest-bearing deposits

    407       111  

Interest on securities – taxable

    1,565       1,771  

Interest on securities – nontaxable

    768       1,058  

Total interest income

    11,288       10,945  
                 

Interest Expense

               

Interest on time deposits

    523       107  

Interest on other deposits

    1,342       1,034  

Interest on borrowed funds

    ---       104  

Total interest expense

    1,865       1,245  

Net interest income

    9,423       9,700  

Provision for loan losses

    95       223  

Net interest income after provision for loan losses

    9,328       9,477  
                 

Noninterest Income

               

Service charges on deposit accounts

    643       673  

Other service charges and fees

    46       20  

Credit and debit card fees

    350       362  

Trust income

    440       355  

BOLI income

    230       222  

Other income

    227       282  

Realized securities gain, net

    162       ---  

Total noninterest income

    2,098       1,914  
                 

Noninterest Expense

               

Salaries and employee benefits

    3,823       3,639  

Occupancy, furniture and fixtures

    468       433  

Data processing and ATM

    823       684  

FDIC assessment

    ---       88  

Intangible assets amortization

    ---       12  

Net costs of other real estate owned

    17       274  

Franchise taxes

    343       314  

Other operating expenses

    912       1,019  

Total noninterest expense

    6,386       6,463  

Income before income taxes

    5,040       4,928  

Income tax expense

    788       677  

(continued

)

 


 

Net Income

  $ 4,252     $ 4,251  

Basic net income per common share

  $ 0.65     $ 0.61  

Fully diluted net income per common share

  $ 0.65     $ 0.61  

Weighted average number of common shares outstanding – basic and diluted

    6,499,957       6,957,974  

Dividends declared per common share

    ---       ---  

 

See accompanying notes to consolidated financial statements.

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Three Months Ended September 30, 2019 and 2018

(Unaudited)

 

   

September 30,

 

September 30,

(in thousands)

 

2019

 

2018

Net Income

  $ 4,252     $ 4,251  
                 

Other Comprehensive Income (Loss), Net of Tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of $146 and ($517) for the periods ended September 30, 2019 and 2018, respectively

    544       (1,945

)

Reclassification adjustment for gain included in net income, net of tax of ($34) for the period ended September 30, 2019

    (128

)

    ---  

Other comprehensive income (loss), net of tax

    416       (1,945

)

Total Comprehensive Income

  $ 4,668     $ 2,306  

 

See accompanying notes to consolidated financial statements.

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

Nine Months Ended September 30, 2019 and 2018

(Unaudited)

 

   

September 30,

 

September 30,

(in thousands, except share and per share data)

 

2019

 

2018

Interest Income

               

Interest and fees on loans

  $ 25,277     $ 23,159  

Interest on interest-bearing deposits

    1,048       509  

Interest on securities – taxable

    4,851       5,125  

Interest on securities – nontaxable

    2,543       3,362  

Total interest income

    33,719       32,155  
                 

Interest Expense

               

Interest on time deposits

    1,239       344  

Interest on other deposits

    4,333       3,023  

Interest on borrowed funds

    ---       104  

Total interest expense

    5,572       3,471  

Net interest income

    28,147       28,684  

Provision for loan losses

    350       93  

Net interest income after provision for loan losses

    27,797       28,591  
                 

Noninterest Income

               

Service charges on deposit accounts

    1,840       2,037  

Other service charges and fees

    149       87  

Credit and debit card fees

    1,015       1,071  

Trust income

    1,208       1,131  

BOLI income

    681       678  

Other income

    1,368       801  

Realized securities gain, net

    182       ---  

Total noninterest income

    6,443       5,805  
                 

Noninterest Expense

               

Salaries and employee benefits

    11,446       10,878  

Occupancy, furniture and fixtures

    1,410       1,396  

Data processing and ATM

    2,363       2,024  

FDIC assessment

    167       269  

Intangible assets amortization

    ---       37  

Net costs of other real estate owned

    45       523  

Franchise taxes

    990       965  

Write-down of insurance receivable

    ---       2,010  

Other operating expenses

    2,883       2,949  

Total noninterest expense

    19,304       21,051  

Income before income taxes

    14,936       13,345  

Income tax expense

    2,247       1,757  

(continued

)

 


 

Net Income

  $ 12,689     $ 11,588  

Basic net income per common share

  $ 1.92     $ 1.67  

Fully diluted net income per common share

  $ 1.92     $ 1.67  

Weighted average number of common shares outstanding – basic and diluted

    6,611,354       6,957,974  

Dividends declared per common share

   $ 0.67     $ 0.58  

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Nine Months Ended September 30, 2019 and 2018

(Unaudited)

 

   

September 30,

 

September 30,

(in thousands)

 

2019

 

2018

Net Income

  $ 12,689     $ 11,588  
                 

Other Comprehensive Income (Loss), Net of Tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of $2,149 and ($1,378) for the periods ended September 30, 2019 and 2018, respectively

    8,089       (5,182

)

Reclassification adjustment for gain included in net income, net of tax of ($38) for the period ended September 30, 2019

    (144

)

    ---  

Unrealized holding gain on securities transferred from held to maturity to available for sale, net of tax of $237 for the period ended September 30, 2018

    ---       891  

Other comprehensive income (loss), net of tax

    7,945       (4,291

)

Total Comprehensive Income

  $ 20,634     $ 7,297  

 

See accompanying notes to consolidated financial statements.

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

Three Months Ended September 30, 2019 and 2018

 

(in thousands except share data)

 

Common Stock

 

Retained Earnings

 

Accumulated Other Comprehensive Loss

 

Total

Balances at June 30, 2018

  $ 8,698     $ 189,194     $ (12,041

)

  $ 185,851  

Net income

    ---       4,251       ---       4,251  

Other comprehensive loss, net of tax of ($517)

    ---       ---       (1,945

)

    (1,945

)

Balances at September 30, 2018

  $ 8,698     $ 193,445     $ (13,986

)

  $ 188,157  
                                 

Balances at June 30, 2019

  $ 8,132     $ 180,272     $ (4,556

)

  $ 183,848  

Net income

    ---       4,252       ---       4,252  

Common stock repurchased, 16,000 shares

    (20

)

    (508

)

    ---       (528

)

Other comprehensive income, net of tax of $112

    ---       ---       416       416  

Balances at September 30, 2019

  $ 8,112     $ 184,016     $ (4,140

)

  $ 187,988  

 

See accompanying notes to consolidated financial statements.

 

Nine Months Ended September 30, 2019 and 2018

 

(in thousands except share and per share data)

 

Common Stock

 

Retained Earnings

 

Accumulated Other Comprehensive Loss

 

Total

Balances at December 31, 2017

  $ 8,698     $ 185,893     $ (9,695

)

  $ 184,896  

Net income

    ---       11,588       ---       11,588  

Dividends $0.58 per share

    ---       (4,036

)

    ---       (4,036

)

Other comprehensive loss, net of tax of ($1,141)

    ---       ---       (4,291

)

    (4,291

)

Balances at September 30, 2018

  $ 8,698     $ 193,445     $ (13,986

)

  $ 188,157  
                                 

Balances at December 31, 2018

  $ 8,698     $ 193,625     $ (12,085

)

  $ 190,238  

Net income

    ---       12,689       ---       12,689  

Common stock repurchased, 468,400 shares

    (586

)

    (17,939

)

    ---       (18,525

)

Dividends $0.67 per share

    ---       (4,359

)

    ---       (4,359

)

Other comprehensive income, net of tax of $2,111

    ---       ---       7,945       7,945  

Balances at September 30, 2019

  $ 8,112     $ 184,016     $ (4,140

)

  $ 187,988  

 

See accompanying notes to consolidated financial statements.

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2019 and 2018

(Unaudited)

 

   

September 30,

 

September 30,

(in thousands)

 

2019

 

2018

Cash Flows from Operating Activities

               

Net income

  $ 12,689     $ 11,588  

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

               

Provision for loan losses

    350       93  

Depreciation of bank premises and equipment

    552       595  

Amortization of intangibles

    ---       37  

Amortization of premiums and accretion of discounts, net

    52       43  

Gains on disposal of fixed assets

    (6

)

    ---  

Gain on sales and calls of securities available for sale, net

    (182

)

    ---  

Loss and write-down on other real estate owned, net

    5       464  

Gain on sale of repossessed assets, net

    4       ---  

Increase in cash value of bank-owned life insurance

    (681

)

    (678

)

Origination of mortgage loans held for sale

    (15,191

)

    (11,032

)

Proceeds from sale of mortgage loans held for sale

    13,127       10,430  

Gain on sale of mortgage loans held for sale

    (197

)

    (165

)

Write-down of insurance receivable

    ---       2,010  

Lease expense – Operating

    7       ---  

Net change in:

               

Accrued interest receivable

    927       (292

)

Other assets

    409       323  

Accrued interest payable

    44       103  

Other liabilities

    452       726  

Net cash provided by operating activities

    12,361       14,245  
                 

Cash Flows from Investing Activities

               

Net change in interest-bearing deposits

    (91,999

)

    22,905  

Proceeds from calls, principal payments, sales and maturities of securities available for sale

    235,900       22,424  

Proceeds from calls, principal payments and maturities of securities held to maturity

    ---       6,430  

Purchase of securities available for sale

    (134,854

)

    (24,263

)

Net change in restricted stock

    ---       (1,508

)

Purchase of loan participations

    (673

)

    (7,726

)

Collection of loan participations

    3,219       856  

Loan originations and principal collections, net

    (15,788

)

    (27,382

)

Proceeds from sale of other real estate owned

    592       139  

Proceeds from sale of repossessed assets

    40       ---  

Recoveries on loans charged off

    218       182  

Proceeds from sale and purchases of premises and equipment, net

    (893

)

    (1,101

)

Net cash used in investing activities

    (4,238

)

    (9,044

)

(continued

)

 


 

Cash Flows from Financing Activities

               

Net change in time deposits

    22,787       (18,717

)

Net change in other deposits

    (6,702

)

    (18,841

)

Common stock repurchased

    (18,525

)

    ---  

Cash dividends paid

    (4,359

)

    (4,036

)

Borrowing advances

    ---       35,000  

Net cash used in financing activities

    (6,799

)

    (6,594

)

Net change in cash and due from banks

    1,324       (1,393

)

Cash and due from banks at beginning of period

    12,882       12,926  

Cash and due from banks at end of period

  $ 14,206     $ 11,533  
                 

Supplemental Disclosures of Cash Flow Information

               

Interest paid on deposits

  $ 5,528     $ 3,368  

Income taxes paid

    1,756       1,054  
                 

Supplemental Disclosure of Noncash Activities

               

Loans charged against the allowance for loan losses

  $ 696     $ 487  

Loans transferred to OREO

    15       ---  

Unrealized net gain (loss) on securities available for sale

    10,056       (6,560

)

Unrealized net gain on securities transferred from held to maturity to available for sale

    ---       1,128  

Fair value of securities transferred from held to maturity to available for sale

    ---       119,790  

Increase in operating lease right-of-use asset upon adoption of ASU 2016-02

    968       ---  

Increase in operating lease liability upon adoption of ASU 2016-02

    968       ---  

 

See accompanying notes to consolidated financial statements.

 


 

National Bankshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

$ in thousands, except per share data

 

 

Note 1: General

 

The consolidated financial statements of National Bankshares, Inc. (“NBI”) and its wholly-owned subsidiaries, The National Bank of Blacksburg (“NBB”) and National Bankshares Financial Services, Inc. (“NBFS”) (collectively, the “Company”), conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. The accompanying interim period consolidated financial statements are unaudited; however, in the opinion of management, all adjustments consisting of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements, have been included.  The results of operations for the three and nine month periods ended September 30, 2019 are not necessarily indicative of results of operations for the full year or any other interim period.  The interim period consolidated financial statements and financial information included in this Form 10-Q should be read in conjunction with the notes to consolidated financial statements included in the Company’s 2018 Form 10-K.  The Company posts all reports required to be filed under the Securities and Exchange Act of 1934 on its web site at www.nationalbankshares.com.

 

Accounting Standards Adopted in 2019

 

ASU No. 2016-02, Leases (Topic 842)

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Among other things, the standard requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. For financial reporting purposes, the standard provides for a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.

Subsequent to the issuance of ASU 2016-02, the FASB issued targeted updates to clarify specific implementation issues including ASU No. 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842,” ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” ASU No. 2018-20, “Leases (Topic 842): Narrow-Scope Improvements for Lessors,” and ASU No. 2019-01 “Leases (Topic 842): Codification Improvements.” One of the amendments in ASU 2018-11 provides an additional (and optional) transition method to adopt the standard. If elected, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with previous GAAP (Topic 840, Leases).

Upon adoption on January 1, 2019, the Company elected the prospective application approach provided by ASU 2018-11. There was no cumulative effect adjustment at adoption. The Company also elected certain practical expedients within the standard and did not reassess whether any expired or existing contracts are or contain leases, did not reassess the lease classification for any expired or existing leases and did not reassess any initial direct costs for existing leases. The Company evaluated its existing leases as of January 1, 2019 and recognized a right-of-use asset and lease liability for leases with a remaining term greater than 12 months. The Company also recognized a right-of-use asset and lease liability for leases that commenced after January 1, 2019.

 

ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities

In March 2017, the FASB issued ASU 2017‐08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 31020), Premium Amortization on Purchased Callable Debt Securities.” The amendments in this ASU shorten the amortization period for certain callable debt securities purchased at a premium. Premiums on qualifying callable debt securities will be amortized to the earliest call date. Discounts on purchased debt securities will continue to be accreted to maturity. The ASU provided for adoption on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company adopted the ASU on January 1, 2019. Adoption did not have a material impact and no cumulative effect adjustment was recorded.

 


 

 

Note 2: Loan Portfolio

 

The loan portfolio, excluding loans held for sale, was comprised of the following.

 

   

September 30,

2019

 

December 31,

2018

Real estate construction

  $ 42,972     $ 37,845  

Consumer real estate

    179,114       175,456  

Commercial real estate

    360,493       353,546  

Commercial non real estate

    45,866       46,535  

Public sector and IDA

    59,731       60,777  

Consumer non real estate

    34,583       36,238  

Gross loans

    722,759       710,397  

Less unearned income and deferred fees and costs

    (472

)

    (598

)

Loans, net of unearned income and deferred fees and costs

  $ 722,287     $ 709,799  

 

 

Note 3: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans

 

The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan’s payment history, the borrower’s current financial situation and value of the underlying collateral.

 

Impaired Loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts will not be collected when due according to the contractual terms of the loan agreement. Impaired loans are those loans that have been modified in a troubled debt restructure (“TDR” or “restructure”) and larger, usually non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate that collection probably will not occur when due according to the loan’s terms. Generally, impaired loans are given risk ratings that indicate higher risk, such as “classified” or “special mention.” Impaired loans are individually evaluated to determine appropriate reserves and are measured at the lower of the invested amount or the fair value. Impaired loans that are not troubled debt restructures and for which fair value measurement indicates an impairment loss are designated nonaccrual. A restructured loan that maintains current status for at least six months may be in accrual status. Please refer to the Company’s 2018 Form 10-K, Note 1: Summary of Significant Accounting Policies for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs.

Troubled debt restructurings impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal or accrued interest, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Restructured loans are individually evaluated for impairment, and the amount of a restructured loan’s book value in excess of its fair value is accrued as a specific allocation in the allowance for loan losses. If a TDR loan payment exceeds 90 days past due, it is examined to determine whether the late payment indicates collateral dependency or cash flows below those that were used in the fair value measurement. TDRs, as well as all impaired loans, that are determined to be collateral dependent are charged down to fair value. Deficiencies indicated by impairment measurements for TDRs that are not collateral dependent may be accrued in the allowance for loan losses or charged off if deemed uncollectible.

 

Collectively-Evaluated Loans

The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment. These characteristics include collateral type, repayment sources, and (if applicable) the borrower’s business model. The methodology for calculating reserves for collectively-evaluated loans is applied at the class level.

 


 

Portfolio Segments and Classes

The segments and classes used in determining the allowance for loan losses are as follows.

Real Estate Construction

Construction, residential

Construction, other

 

Consumer Real Estate

Equity lines

Residential closed-end first liens

Residential closed-end junior liens

Investor-owned residential real estate

 

Commercial Real Estate

Multifamily real estate

Commercial real estate, owner-occupied

Commercial real estate, other

Commercial Non Real Estate

Commercial and industrial

 

Public Sector and IDA

Public sector and IDA

 

Consumer Non Real Estate

Credit cards

Automobile

Other consumer loans

Historical Loss Rates

The Company’s allowance methodology for collectively-evaluated loans applies historical loss rates by class to current class balances as part of the process of determining required reserves. Class loss rates are calculated as the net charge-offs for the class as a percentage of average class balance. The Company averages loss rates for the most recent 8 quarters to determine the historical loss rate for each class.

Two loss rates for each class are calculated: total net charge-offs for the class as a percentage of average class loan balance (“class loss rate”), and total net charge-offs for the class as a percentage of average classified loans in the class (“classified loss rate”). Classified loans are those with risk ratings of “substandard” or lower. Net charge-offs in both calculations include charge-offs and recoveries of classified and non-classified loans as well as those associated with impaired loans. Class historical loss rates are applied to non-classified loan balances at the reporting date, and classified historical loss rates are applied to classified balances at the reporting date. 

 

Risk Factors

In addition to historical loss rates, risk factors pertinent to credit risk for each class are analyzed to estimate reserves for collectively-evaluated loans. Factors include changes in national and local economic and business conditions, the nature and volume of classes within the portfolio, loan quality, loan officers’ experience, lending policies and the Company’s loan review system.

The analysis of certain factors results in standard allocations to all segments and classes. These factors include the risk from changes in lending policies, loan officers’ average years of experience, unemployment levels, bankruptcy rates, interest rate environment, and competition/legal/regulatory environments. Factors analyzed for each class, with resultant allocations based upon the level of risk assessed for each class, include the risk from changes in loan review, levels of past due loans, levels of nonaccrual loans, current class balance as a percentage of total loans, and the percentage of high risk loans within the class. Additionally, factors specific to each segment are analyzed and result in allocations to the segment. Please refer to Note 1: Summary of Significant Accounting Policies of Form 10-K for a discussion of risk factors pertinent to each class.

Real estate construction loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. These risks are measured by market-area unemployment rates, bankruptcy rates, building market trends, and interest rates.

The credit quality of consumer real estate is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, local housing market trends, and interest rates.

The commercial real estate segment includes loans secured by multifamily residential real estate, commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for multi-family housing and commercial buildings, business bankruptcy rates, local unemployment and interest rate trends that would impact the businesses housed by the commercial real estate.

Commercial non real estate loans are secured by collateral other than real estate, or are unsecured. Credit risk for commercial non real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, and interest rates.

Public sector and IDA loans are extended to municipalities and related entities. Credit risk is based upon the entity’s ability to repay and interest rate trends.

Consumer non real estate includes credit cards, automobile and other consumer loans. Credit cards and certain other consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay, measured by average unemployment, average personal bankruptcy rates and interest rates.

Factor allocations applied to each class are increased for loans rated special mention and increased to a greater extent for loans rated classified. The Company allocates additional reserves for “high risk” loans. High risk loans include junior liens, interest only and high loan to value loans.

 


 

A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows.

 

   

Activity in the Allowance for Loan Losses for the Nine Months Ended September 30, 2019

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Balance, December 31, 2018   $ 398     $ 2,049     $ 2,798     $ 602     $ 583     $ 750     $ 210     $ 7,390  

Charge-offs

    ---       (147

)

    (150

)

    ---

 

    ---       (399

)

    ---       (696

)

Recoveries

    ---       ---       37       ---       ---       181       ---       218  

Provision for (recovery of) loan losses

    56       199       14       (75

)

    (93

)

    156       93       350  

Balance, September 30, 2019

  $ 454     $ 2,101     $ 2,699     $ 527     $ 490     $ 688     $ 303     $ 7,262  

 

   

Activity in the Allowance for Loan Losses for the Nine Months Ended September 30, 2018

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Balance, December 31, 2017   $ 337     $ 2,027     $ 3,044     $ 1,072     $ 419     $ 707     $ 319     $ 7,925  

Charge-offs

    ---       (36

)

    ---       (107

)

    ---       (344

)

    ---       (487

)

Recoveries

    ---       2       37       22       ---       121       ---       182  

Provision for (recovery of) loan losses

    137       185       (42

)

    (305

)

    151       240       (273

)

    93  

Balance, September 30, 2018

  $ 474     $ 2,178     $ 3,039     $ 682     $ 570     $ 724     $ 46     $ 7,713  

 

   

Activity in the Allowance for Loan Losses for the Year Ended December 31, 2018

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Balance, December 31, 2017   $ 337     $ 2,027     $ 3,044     $ 1,072     $ 419     $ 707     $ 319     $ 7,925  

Charge-offs

    ---       (38

)

    ---       (107

)

    ---       (544

)

    ---       (689

)

Recoveries

    ---       3       49       22       ---       161       ---       235  

Provision for (recovery of) loan losses

    61       57       (295

)

    (385

)

    164       426       (109

)

    (81

)

Balance, December 31, 2018

  $ 398     $ 2,049     $ 2,798     $ 602     $ 583     $ 750     $ 210     $ 7,390  

 

   

Allowance for Loan Losses as of September 30, 2019

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Individually evaluated for impairment

  $ ---     $ 3     $ ---     $ 117     $ ---     $ ---     $ ---     $ 120  

Collectively evaluated for impairment

    454       2,098       2,699       410       490       688       303       7,142  

Total

  $ 454     $ 2,101     $ 2,699     $ 527     $ 490     $ 688     $ 303     $ 7,262  

 


 

   

Allowance for Loan Losses as of December 31, 2018

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Individually evaluated for impairment

  $ ---     $ 4     $ ---     $ 135     $ ---     $ ---     $ ---     $ 139  

Collectively evaluated for impairment

    398       2,045       2,798       467       583       750       210       7,251  

Total

  $ 398     $ 2,049     $ 2,798     $ 602     $ 583     $ 750     $ 210     $ 7,390  

 

   

Loans as of September 30, 2019

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Individually evaluated for impairment

  $ ---     $ 1,398     $ 3,892     $ 938     $ ---     $ 5     $ ---     $ 6,233  

Collectively evaluated for impairment

    42,972       177,716       356,601       44,928       59,731       34,578       ---       716,526  

Total

  $ 42,972     $ 179,114     $ 360,493     $ 45,866     $ 59,731     $ 34,583     $ ---     $ 722,759  

 

   

Loans as of December 31, 2018

   

Real Estate Construction

 

Consumer Real Estate

 

Commercial Real Estate

 

Commercial Non Real Estate

 

Public Sector and IDA

 

Consumer Non Real Estate

 

Unallocated

 

Total

Individually evaluated for impairment

  $ ---     $ 1,452     $ 4,340     $ 1,015     $ ---     $ 13     $ ---     $ 6,820  

Collectively evaluated for impairment

    37,845       174,004       349,206       45,520       60,777       36,225       ---       703,577  

Total

  $ 37,845     $ 175,456     $ 353,546     $ 46,535     $ 60,777     $ 36,238     $ ---     $ 710,397  

 

A summary of ratios for the allowance for loan losses follows.

 

   

As of and for the

   

Nine Months Ended

September 30,

 

Year Ended

December 31,

   

2019

 

2018

 

2018

Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs

    1.01

%

    1.10

%

    1.04

%

Ratio of net charge-offs to average loans, net of unearned income and deferred fees and costs(1)

    0.09

%

    0.06

%

    0.07

%

 

 

(1)

Net charge-offs are on an annualized basis.

 


 

A summary of nonperforming assets follows.

 

   

September 30,

 

December 31,

   

2019

 

2018

 

2018

Nonperforming assets:

                       

Nonaccrual loans

  $ 699     $ 220     $ 311  

Restructured loans in nonaccrual

    3,377       2,856       3,109  

Total nonperforming loans

    4,076       3,076       3,420  

Other real estate owned, net

    1,470       2,214       2,052  

Total nonperforming assets

  $ 5,546     $ 5,290     $ 5,472  

Ratio of nonperforming assets to loans, net of unearned income and deferred fees and costs, plus other real estate owned

    0.77

%

    0.75

%

    0.77

%

Ratio of allowance for loan losses to nonperforming loans(1)

    178.16

%

    250.75

%

    216.08

%

 

(1)

The Company defines nonperforming loans as nonaccrual loans and restructured loans that are nonaccrual. Nonperforming loans do not include loans 90 days past due and still accruing or accruing restructured loans.

 

A summary of loans past due 90 days or more and impaired loans follows.

 

   

September 30,

 

December 31,

   

2019

 

2018

 

2018

Loans past due 90 days or more and still accruing

  $ 212     $ 63     $ 35  

Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees and costs

    0.03

%

    0.01

%

    0.00

%

Accruing restructured loans

  $ 1,880     $ 7,843     $ 2,552  

Impaired loans:

                       

Impaired loans with no valuation allowance

  $ 5,163     $ 10,530     $ 5,667  

Impaired loans with a valuation allowance

    1,070       1,404       1,153  

Total impaired loans

  $ 6,233     $ 11,934     $ 6,820  

Valuation allowance

    (120

)

    (156

)

    (139

)

Impaired loans, net of allowance

  $ 6,113     $ 11,778     $ 6,681  

Average recorded investment in impaired loans(1)

  $ 6,729     $ 12,684     $ 9,788  

Interest income recognized on impaired loans, after designation as impaired

  $ 144     $ 414     $ 250  

Amount of income recognized on a cash basis

  $ ---     $ ---     $ ---  

 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

 

Nonaccrual loan relationships that meet the Company’s balance threshold of $250 and all TDRs are designated as impaired. The Company also designates as impaired other loan relationships that meet the Company’s balance threshold of $250 and for which the Company does not expect to collect according to the note’s contractual terms. No interest income was recognized on nonaccrual loans for the nine months ended September 30, 2019 or September 30, 2018 or for the year ended December 31, 2018.

 


 

A detailed analysis of investment in impaired loans and associated reserves, segregated by loan class follows.     

 

   

Impaired Loans as of September 30, 2019

   

Principal Balance

 

Total Recorded Investment(1)

 

Recorded Investment(1)for Which

There is No Related Allowance

 

Recorded Investment(1) for Which There is a Related Allowance

 

Related Allowance

Consumer Real Estate(2)

                                       

Equity lines

  $ 98     $ 98     $ 98     $ ---     $ ---  

Residential closed-end first liens

    749       737       737       ---       ---  

Residential closed-end junior liens

    132       132       ---       132       3  

Investor-owned residential real estate

    441       431       431       ---       ---  

Commercial Real Estate(2)

                                       

Multifamily

    281       281       281       ---       ---  

Commercial real estate, owner-occupied

    1,185       1,160       1,160       ---       ---  

Commercial real estate, other

    2,867       2,451       2,451       ---       ---  

Commercial Non Real Estate(2)

                                       

Commercial and industrial

    938       938       ---       938       117  

Consumer Non Real Estate(2)

                                       

Automobile

    5       5       5       ---       ---  

Total

  $ 6,696     $ 6,233     $ 5,163     $ 1,070     $ 120  

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

   

Impaired Loans as of December 31, 2018

   

Principal Balance

 

Total Recorded Investment(1)

 

Recorded Investment(1) for Which

There is No Related Allowance

 

Recorded Investment(1) for Which There is a

Related Allowance

 

Related Allowance

Consumer Real Estate(2)

                                       

Residential closed-end first liens

  $ 728     $ 719     $ 719     $ ---     $ ---  

Residential closed-end junior liens

    144       143       ---       143       4  

Investor-owned residential real estate

    593       590       590       ---       ---  

Commercial Real Estate(2)

                                       

Multifamily real estate

    485       483       483       ---       ---  

Commercial real estate, owner occupied

    1,363       1,363       1,363       ---       ---  

Commercial real estate, other

    2,867       2,494       2,494       ---       ---  

Commercial Non Real Estate(2)

                                       

Commercial and industrial

    1,018       1,015       5       1,010       135  

Consumer Non Real Estate(2)

                                       

Automobile

    13       13       13       ---       ---  

Total

  $ 7,211     $ 6,820     $ 5,667     $ 1,153     $ 139  

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 


 

The following tables show the average recorded investment and interest income recognized for impaired loans.

 

   

For the Nine Months Ended

September 30, 2019

   

Average Recorded

Investment(1)

 

Interest Income

Recognized

Consumer Real Estate(2)

               

Equity lines

  $ 97     $ 5  

Residential closed-end first liens

    990       10  

Residential closed-end junior liens

    137       6  

Investor-owned residential real estate

    432       14  

Commercial Real Estate(2)

               

Multifamily real estate

    463       9  

Commercial real estate, owner occupied

    1,174       39  

Commercial real estate, other

    2,451       43  

Commercial Non Real Estate(2)

               

Commercial and industrial

    976       18  

Consumer Non Real Estate(2)

               

Automobile

    9       ---  

Total

  $ 6,729     $ 144  

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

   

For the Nine Months Ended

September 30, 2018

   

Average Recorded

Investment(1)

 

Interest Income

Recognized

Real Estate Construction(2)

               

Construction 1-4 family residential

  $ 2,697     $ 108  

Consumer Real Estate(2)

               

Residential closed-end first liens

    891       40  

Residential closed-end junior liens

    162       7  

Investor-owned residential real estate

    661       18  

Commercial Real Estate(2)

               

Multifamily real estate

    298       12  

Commercial real estate, owner occupied

    3,934       145  

Commercial real estate, other

    2,829       55  

Commercial Non Real Estate(2)

               

Commercial and industrial

    1,188       28  

Consumer Non Real Estate

               

Automobile

    24       1  

Total

  $ 12,684     $ 414  

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 


 

   

For the Year Ended

December 31, 2018

   

Average Recorded

Investment(1)

 

Interest Income

Recognized

Consumer Real Estate(2)

               

Residential closed-end first liens

  $ 1,202     $ 41  

Residential closed-end junior liens

    159       9  

Investor-owned residential real estate

    808       23  

Commercial Real Estate(2)

               

Multifamily real estate

    491       20  

Commercial real estate, owner occupied

    3,038       75  

Commercial real estate, other

    2,744       54  

Commercial Non Real Estate(2)

               

Commercial and industrial

    1,326       27  

Consumer Non Real Estate(2)

               

Automobile

    20       1  

Total

  $ 9,788     $ 250  

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

The Company reviews nonaccrual loans on an individual loan basis to determine whether future payments are reasonably assured. To satisfy this criteria, the Company’s evaluation must determine that the underlying cause of the original delinquency or weakness that indicated nonaccrual status has been resolved, such as receipt of new guarantees, increased cash flows that cover the debt service or other resolution. Nonaccrual loans that demonstrate reasonable assurance of future payments and that have made at least six consecutive payments in accordance with repayment terms and timeframes may be returned to accrual status.

 


 

An analysis of past due and nonaccrual loans follows.

 

September 30, 2019

 

   

30 – 89 Days

Past Due and

Accruing

 

90 or More

Days Past Due

 

90 or More Days

Past Due and

Accruing

 

Nonaccruals(2)

Consumer Real Estate(1)

                               

Residential closed-end first liens

  $ 888     $ 717     $ 36     $ 681  

Residential closed-end junior liens